Kevin Drum - February 2012

Chart of the Day: Interstate Highways as a Subway Map

| Wed Feb. 22, 2012 9:13 PM EST

Here's a cool infographic. It shows (most of) the U.S. interstate highway system in the style of a London tube map. Click to enlarge. Click here to see the original version, which allows an even closer look.

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Mitt Romney Releases Exciting Smoke and Mirrors Tax Plan

| Wed Feb. 22, 2012 7:17 PM EST

Mitt Romney has released his new tax plan, and it calls for a 20 percent across-the-board reduction in income tax rates, elimination of the estate tax, repeal of the AMT, and a 30 percent cut in the corporate tax rate. Not to worry, though. It's designed to be revenue neutral because…it's going to…um…something. I really don't know how you get revenue neutral out of all this. I suppose by claiming that lower taxes will supercharge the economy and pay for themselves. That's the usual wheeze, anyway.

Okay, so rich people will pay a lot less in taxes. But how about spending? Well, Romney says he plans to reduce spending by $500 billion in 2016. However, he doesn't want to cut defense. He thinks that Medicare and Social Security reform should only affect "younger generations," so he doesn't plan to cut either of those either, at least not in the medium term. And interest on the debt is obviously outside his control.

So what's left? Domestic discretionary spending. But Romney has no actual proposals here. He wants to repeal Obamacare, but Obamacare is fully funded and repealing it won't save any money. He wants to block grant Medicaid, but that won't save any money either. It's just a different funding mechanism. And he wants government to operate more efficiently. Roger that.

So that still leaves us with $500 billion to cut out of the $1.7 trillion currently projected in domestic spending for 2016. How do you do that? Either with a 30 percent across-the-board cut or with smaller cuts to some programs and larger cuts to others. But which ones? Those are pretty big reductions. I wish guys like Romney had the guts to actually tell us where they want these cuts to fall, but they never do.

So this all seems like so much smoke and mirrors. But on the bright side, his plan for corporate taxes actually has some promise. In theory, anyway. He wants to lower the statutory rate, which would be okay if it's done along with broadening the base. He wants to make the R&D tax credit permanent, which is a good idea. And he wants to shift to a territorial taxation system, where corporations are taxed only on the income they earn in the United States. With proper regulation, this is a perfectly fine idea too.

Now, in practice, Romney says he wants to broaden the corporate tax base but doesn't say how, nor does he suggest any interest in the kind of rules it takes to make a territorial system work. But you never know. Those are potential negotiating points. It's not impossible that Romney's corporate tax plan could end up on the positive side of the ledger.

Rick Santorum Shining a Much-Needed Light On Movement Conservatism

| Wed Feb. 22, 2012 4:38 PM EST

One of the interesting things about the rise of Rick Santorum is that it's giving a lot of people their first up-close-and-personal look at some of the more — what to call them? — unorthodox beliefs that animate American movement conservatives. They really do believe that we liberals support prenatal testing because it's a good way of ensuring that Down's Syndrome kids are all aborted. They really do believe that widespread contraceptive use has led directly to dissolution and cultural decay. They really do believe that "freedom of worship" is a dog whistle used by President Obama to indicate his contempt for religious liberties. They really do believe that global warming is just a hoax designed to allow lefty elites to seize control of the means of production.

And they believe that Europe is a post-socialist hellhole run by Godless bureaucrats and doomed to disintegrate. For example, here is Rick Santorum peddling a common myth:

In the Netherlands, people wear different bracelets if they are elderly. And the bracelet is: ‘Do not euthanize me.’ Because they have voluntary euthanasia in the Netherlands but half of the people who are euthanized — ten percent of all deaths in the Netherlands — half of those people are enthanized involuntarily at hospitals because they are older and sick. And so elderly people in the Netherlands don’t go to the hospital. They go to another country, because they are afraid, because of budget purposes, they will not come out of that hospital if they go in there with sickness.

This Soylent Green version of life in the Netherlands attracted my attention because I ran across it a while back and took the time to look into it. I'm not going to bother digging up all the references a second time, but basically this is totally untrue. The bracelets don't exist. Euthanasia accounts for only about 2% of all deaths in the Netherlands. And Dutch safeguards are, in fact, quite effective. No system is perfect, but virtually no one in the Netherlands is euthanized without explicit, repeated requests — and the tiny number of violations of the rules are mostly technical. No one is allowed to die who doesn't want to.

But the Dutch myth persists, and Santorum is doing nothing more than repeating something that's a commonplace in movement conservative circles. Glenn Kessler, whose family is originally Dutch, provides all the facts here. Not that it will make any difference. These myths simply never die, and the movement conservative machine has already produced dozens of defenses of Santorum's statement. They want to believe in the secular annihilation of everything traditional and decent, so they're going to believe whether it's actually true or not.

People Have Surprisingly Strong Opinions About South Dakota

| Wed Feb. 22, 2012 3:36 PM EST

Ed Kilgore points me today to a quirky new PPP poll that asks people if they have favorable or unfavorable views of the various states. Hawaii gets the highest number of favorables and Illinois gets the lowest. However, if you look at the delta between favorable and unfavorable, my poor home state ranks last (27% favorable vs. 44% unfavorable). It turns out that a lot of this is driven by partisan animus:

Democrats’ favorite states include Hawaii, Massachusetts, Oregon, Washington, Vermont, Colorado, and New York, and their least favorites are led by Texas, Alabama, and Mississippi. Republicans love Alaska and Texas, and absolutely hate California, followed distantly by Illinois and Massachusetts.  So the greatest partisan gap is for California, which Democrats like 91 points more than Republicans do, followed by Texas, which is favored more by Republicans by 82 points.

Black voters dislike 10 of the 14 Southern states.

Frankly, I'm surprised so many people even have opinions at all. I mean, Hawaii, sure. Everyone loves Hawaii. But 51% of the respondents expressed an opinion about South Dakota. Who the hell has an opinion about South Dakota? Beats me. In any case, the chart below shows all 50 states ranked by the number of people who feel favorably toward it. How did your state do?

Does Money Corrupt the Political Process?

| Wed Feb. 22, 2012 3:07 PM EST

In Citizens United, the Supreme Court ruled that the only justification for limiting campaign expenditures was "corruption or the appearance of corruption." And since independent expenditures, including those from corporations and unions, don't have any kind of corrupting influence, there's no justification for limiting them.

Many of you will have two responses to this:

  • Really? That's what Citizens United said? I never heard about that.
  • Really? That's ridiculous. How can the court just unilaterally declare that unlimited money doesn't lead to corruption?

Both of these are legitimate reactions. The first because the court's handwaving on corruption got a lot less attention than all the fuss over Citizens United granting corporations free speech rights on a par with individuals. And the second because the court didn't really bother justifying its belief that independent expenditures don't corrupt the political process. It just said there wasn't enough evidence of corruption to survive strict scrutiny and left it at that. However, Rick Hasen notes that a recent case involving a Montana law that limits campaign expenditures prompted a statement from Justice Ruth Bader Ginsburg suggesting that she wants to use the case to expose this for the specious reasoning that it is:

The Montana court [] upheld a state ban on corporate campaign spending, finding that Montana's history of corruption justified the ban…Everyone expects the Supreme Court to reverse the Montana case, likely on a 5-4 vote. But the big question is how the court will do so.

…Justice Ginsburg agreed that staying the Montana ruling was the right course, because lower courts are bound to apply Supreme Court precedent even if it is wrong; it is for the Supreme Court to fix its own wrong precedents. But then she added these words in a statement for herself and Justice Stephen Breyer with respect to the stay: "Montana's experience, and experience elsewhere since this Court's decision in Citizens United…make it exceedingly difficult to maintain that independent expenditures by corporations 'do not give rise to corruption or the appearance of corruption.' A petition [to hear the case] will give the Court an opportunity to consider whether, in light of the huge sums currently deployed to buy candidates’ allegiance, Citizens United should continue to hold sway."

…The statement in Citizens United that independent spending cannot corrupt or undermine the public's confidence in the electoral process is a fiction which defies common sense. In fact, the greatest danger of super PACs is not that they will influence the outcome of elections, but that contributions to these groups will skew public policy away from the public interest and toward the interest of the new fat cats of campaign finance. The public, too, seems greatly concerned about money this election season.

It's probably unlikely that the Montana case will lead to a reversal of Citizens United. But at least it will force the court to tackle the least defensible part of its reasoning head on.

Industrial Production in Europe is Either in Freefall or It's Not

| Wed Feb. 22, 2012 1:06 PM EST

I just happened to see these two charts back-to-back this morning, so here they are in one spot. The first shows that industrial production in Europe is continuing a steep decline. The second shows that industrial orders have picked up a bit after a big fall in September. So which is more important? More informative? More predictive? Is Europe crashing or is Europe stabilizing a bit after a scary spell last year? Is the difference an artifact of a decline in exports? Exchange rate woes? Something else? As usual, it would be great if we just had another few months of data. It always is. 

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No, American Corporations are Not Being Crushed Under the IRS Jackboot

| Wed Feb. 22, 2012 11:59 AM EST

James Pethokoukis is the latest conservative to demand that Treasury Secretary Tim Geithner resign. Finally, something left and right can agree about! Lefties all hate Geithner too.

So what's his offense this time? Answer: a plan for cutting corporate income tax rates that's far too timid. Here are a few of the eight reasons this is a terrible idea:

The Obama-Geithner plan would lower the statutory corporate tax rate to 28 percent from 35 percent....So instead of having the second highest corporate tax rate in the world, the United States would probably be fourth behind Japan, France, and Belgium.... To pay for the lower tax rate, Obama would eliminate "dozens of tax loopholes and subsidies"....Obama and Geithner apparently still don’t understand how harmful corporate taxes are....Obama and Geithner apparently still don’t understand who bears the burden of corporate taxes. It’s workers....Obama and Geithner would take the top individual tax rate to 40 percent, leaving a 12 percentage-point gap with the corporate tax rate. This creates a huge incentive for tax sheltering.

Wow! That's quite a bill of particulars. But you know what's amazing? In this entire thousand-word blast Pethokoukis apparently doesn't have room to explain the distinction between statutory tax rates and effective rates. But it only takes a sentence or two, so here it is. The statutory rate is the top rate in the tax table. Right now it's 35% for corporations. The effective rate is what corporations actually pay after their accountants are done combing the tax code for deductions and loopholes. The former is one of the highest in the world. That latter has been falling for years and is now one of the lowest.

That's right! The actual federal income tax paid by corporations is one of the lowest in the world. Even if you think statutory rates are more important, surely this is germane to the conversation?

I say this as someone who's on record as favoring a complete abolition of the corporate income tax — primarily because tax receipts from corporations are so low that I'm not sure they're worth the bother anymore. Of course, I also acknowledge the need to make up the revenue elsewhere, since I don't believe the supply-side fairy will magically do this for us. This would indeed create tax sheltering issues that might be insurmountable. Or might not. But in any case, you need to make up the revenue. It won't happen automatically, no matter how often Arthur Laffer pretends it will.

UPDATE: Pethokoukis hauls out several strained studies that try to prove American corporations actually pay some of the highest taxes in the world. Sorry. The only way to do an apples-to-apples comparison is to look at corporate tax revenue as a percent of GDP and to let a neutral party apply a consistent methodology. The OECD does exactly that every year. Here's a chart showing the corporate tax burden from 1982 through 2005. The United States is a little below the middle of the pack.

And here's their latest chart. Our corporate tax burden has fallen dramatically since 2005, and if you read all the way to the end you'll now find the United States at the very bottom.

Chart of the Day: The Rise of the Machine

| Tue Feb. 21, 2012 9:51 PM EST

Ezra Klein directs our attention today to the chart on the right, from a mobile analytics company called Flurry. Their basic story is simple: the blue bars show how much of our media consumption time is spent on various platforms (TV gets 40% of our time, print gets 6% of our time, etc.), while the green bars show how much money advertisers spend on these platforms. The verdict is clear: mobile devices command 23% of our time but are getting only 1% of the advertising dollars.

Now, this data comes from a company that has a vested interest in hyping the mobile audience, so obviously you want to take it with a grain of salt. By way of comparison, Josh Marshall recently told us that TPM gets about 20% of its hits from mobile devices, and this is from an audience that's very tech savvy and very mobile-friendly. But if it's only 20% for TPM, the number for the population-at-large isn't likely to be more than 10%. Or maybe even 5%.

(Of course, there's a difference between hits and time spent. Maybe mobile users spend a lot more time per visit than web users or radio listeners. But I'd need to see some evidence for that.)

In any case, clicking through to various links, it appears that there are about 100 million smartphone users in the United States and they spend about an hour a day on various apps (that's not including phone, text, and email). Of that, about 80% of the time is spent on games and social networking. So even if the mobile market isn't quite as large as Flurry would like us to believe, it's a pretty big and growing market any way you slice it.

But now I'm curious: How much time do you spend with your mobile phone? And what do you spend that time doing?

Romney Set to Release New Tax Plan

| Tue Feb. 21, 2012 4:44 PM EST

Larry Kudlow has some news today:

Team Romney tells me there will be a bolder tax-cut plan released either at the debate tomorrow night (if Mitt gets it in) or more formally at his Detroit Economic Club speech on Friday. I’m embargoed from releasing details until tomorrow. But I can say that the new plan will be across-the-board with supply-side incentives from rate reduction, and that it will help small-business owners as well as everyone else.

Exciting! Presumably Romney has taken my criticism of his earlier plan to heart: it's just not friendly enough to the super rich. "Sure, he lowers tax rates on millionaires by 9 percentage points, and you may think that's a pretty sweet deal for the rich. But come on. Newt Gingrich would lower them by 24 percentage points. (No, that's not a typo.) Rick Perry lowers them by 20 percentage points. Herman Cain lowers them by 15 points. Frankly, Romney is hardly even trying here."

I have no doubt that "bolder" in this this context means "more tax cuts for corporations and the wealthy," so apparently Romney is going all in. Should be great stuff. I can hardly wait.

American Political Campaigns are Really Expensive

| Tue Feb. 21, 2012 3:23 PM EST

After reading half a dozen blog posts this morning about mega-billionaire Sheldon Adelson and his support of Newt Gingrich, I got curious about campaign financing laws in other countries, something I know nothing about. In Britain, it turns out, paid political advertising on television is banned (though the parties get a bit of free TV time during election seasons), party expenditures are limited to about $50 million during the year prior to an election, and individual candidates are limited to expenditures of about $10,000 each. But what about third parties, the bane of American campaigns these days? Here you go:

Individuals or groups that aim to promote or disparage electoral candidates are also subject to controls and restrictions on the campaigning that they can do. They may incur expenditure [] by holding public meetings or organizing public displays, or by issuing advertisements, circulars, or publications. They can spend up to £500 (approximately US$700) at a general election “presenting to the electors the candidate or his views, or the extent or nature of his backing or disparaging of another candidate.”

$700! Take that, plutocrats!

Roughly speaking, these limits mean that total campaign expenditures for a general election in Britain amount to $100-150 million or so (it depends a bit on exactly what you count). We have about 5x their population, so this would translate to something in the neighborhood of $500-750 million if the same rules applied here. That compares to actual expenditures of about $5 billion on federal offices during the 2008 campaign.

I don't have any real point to make here. This is just a pure information dump. Anyone with serious knowledge of British (or other) campaign law should feel free to chime in if I've gotten anything seriously wrong here.