One of the big criticisms of Paul Ryan's budget plan is that he's eager to specify how much he'd lower tax rates, but not so eager to explain which loopholes and deductions he'd close in order to keep everything revenue neutral. He just casually fobs that off on the Ways and Means Committee. Philip Klein wishes that his fellow conservative were more forthcoming:
I think it's a fair criticism of Rep. Paul Ryan and Mitt Romney that the tax reform in their budget plans does not specify the loopholes that they plan to close to offset their planned rate reductions. I've taken issue with this and have urged Republicans to be more open about what type of favored deductions they'd get rid of, which have become cows as sacred as entitlements. This is something that Jon Huntsman deserves credit for doing in his presidential campaign — he vowed to eliminate every deduction, even popular ones on employer-based health insurance, mortgage interest and charitable giving.
Here's why this is so important. Ryan's proposed tax cuts are above and beyond the Bush tax cuts, which he wants to make permanent. According to the Tax Policy Center, this means that Ryan's plan would cost an additional $400 billion in revenue in 2015. So to stay revenue neutral, he needs to eliminate deductions and tax credits worth about $400 billion. The technical name for all these deductions and credits is "tax expenditures," and the table below, compiled from a recent report of the Joint Committee on Taxation, shows their estimates for the total value of tax expenditures in 2015:
Do you see how hard this is? The big ticket items are things like taxing healthcare and pension benefits; the mortgage interest deduction; the Earned Income Tax Credit; the charitable contribution deduction; various state tax deductions; and exclusions for Medicare and Social Security benefits. Needless to say, those are going to be eliminated over a whole bunch of dead bodies. Other big ticket items include tax breaks on dividends, capital gains, inheritances, and offshore income, and all of those would be eliminated only over Paul Ryan's dead body. There's not a single thing in this entire table that wouldn't be a stupendous political lift, and the prospect of eliminating not just one of them, but $400 billion worth of them, is very slim indeed.
That's why it's important for Ryan to put his money where his mouth is. You can't plausibly claim that your tax cuts will be revenue neutral if that claim depends on a whole bunch of tax increases that are all but impossible politically. At the very least, you need to set out a marker so that everyone can judge just how palatable your preferred menu of increases is, and whether any of Ryan's fellow Republicans are willing to face up to the political backlash of supporting it.
We already know they love the rate cut part of Ryan's plan. Now it's time to see if they're willing to stand up and be counted on the tax increase part that goes along with it.
Alex Tabarrok posts a chart today showing that heavily urbanized states tend to be richer than less urbanized states. The correlation is impressive, but Ryan Avent asks us to focus on just the right hand part of the chart, which shows only the most urbanized states:
In the rich, productive bunch, we have California, Connecticut, the District of Columbia, Maryland, New Jersey, New York, Washington, and, just hanging below the line, Massachusetts. Sitting well below the line we have places like Arizona, Florida, Nevada, and Texas. It's striking how dispersed wealth is at the high urbanisation end relative to the low urbanisation end; the gap between similarly urbanised states like Connecticut and Florida is enormous.
What accounts for this? Ryan has a couple of ideas, but as it turns out, the Credit Suisse report that this chart is taken from addresses this very question in the context of different countries. Why do some highly urbanized countries lie so far below the trend line?
A clue lies with the most disproportionate distribution of income for any particular geographical groups of countries in our sample....Government policy to improve income distribution and social mobility appears to be as essentential an ingredient to ensure successful patterns of urbanization, and its associated improvements in living standards, as sufficient infrastructure investment and city planning.
Maybe something similar is true of U.S. states. States that promote social mobility, discourage excessive income inequality, and are willing to invest in broad-based infrastructure, do well. Those that don't, don't.
The benefits of free trade and NAFTA far outweigh the costs
Economists have emphasized the benefits of free trade for a long time, reflecting the field's belief in the importance of specialization, comparative advantage, and gains from trade. Indeed, these results are similar to other surveys that show economists strongly supporting free trade.
So why do pundits and voters lag economists in supporting free trade? In his excellent book The Myth of the Rational Voter, Bryan Caplan provides evidence that people suffer from a handful of systematic biases that influence their beliefs, and three of these can help explain why voters are skeptical of trade: anti-market bias, anti-foreign bias, and pessimism bias.
....As is reflected in the comments by some of the panelists trade will create winners and losers, which may also explain some opposition to trade. But economists on the left and the right still struggle the understand the level of opposition to trade....
OK, hold it right there. How much more do you need to know? Free trade may be good on an aggregate basis, but it does indeed create winners and losers. And I think economists pretty universally agree that workers without college degrees are always net losers from expanded trade. Given that two-thirds of Americans don't have college degrees, and that promises to help workers displaced by trade agreements are generally worthless, why is it any surprise that most Americans aren't very keen on trade agreements?
I see that fellow Orange Countian Rick Warren — he of Saddleback megachurch and Purpose Driven Life fame — is in the news again. He was on ABC's This Week yesterday, and Jake Tapper asked him what he thought about President Obama's suggestion that God tells us to care for those less fortunate than ourselves:
Well certainly the Bible says we are to care about the poor....But there's a fundamental question on the meaning of "fairness." Does fairness mean everybody makes the same amount of money? Or does fairness mean everybody gets the opportunity to make the same amount of money? I do not believe in wealth redistribution, I believe in wealth creation.
The only way to get people out of poverty is J-O-B-S. Create jobs. To create wealth, not to subsidize wealth. When you subsidize people, you create the dependency. You — you rob them of dignity.
You know, there's nothing really wrong with a Republican politician saying this. Or a Democratic politician, for that matter. My first preference for helping the poor is indeed to make sure they have decent jobs. Unfortunately, I haven't yet met anyone who has a brilliant plan for making the economy boom on such a sustained basis that jobs are always available for everyone.
But I'm a blogger, not a minister. And while I might not be an expert on the Bible, I've read enough to know that Jesus sure didn't seem to think that helping the poor robbed them of dignity. Can someone help me out here? What part of the gospels do you think Warren is referring to?
Over at the Plum Line, Jonathan Bernstein riffs off a White House infographic on judicial appointments to remind us that although the Senate has been pretty obstructionist when it comes to confirming judges, it's also the case that Obama hasn't exactly been a house afire when it comes to nominating judges in the first place. Point taken! But when I clicked the link to take a look at the White House's latest graphic wizardry, I was surprised to learn that one of Obama's Supreme Court nominees was the first ever with a disability to win confirmation. I had no idea. But Google, as always, is my friend, and after first coming up dry on Elena Kagan, I discovered that Sonia Sotomayor has diabetes.
Did I already know this? Maybe. My memory is so bad that I couldn't tell you whether I once knew this and have forgotten, or whether I had never heard this before. In any case, I guess I've added two new bits of knowledge to my brain pan today: (1) Sonia Sotomayor has diabetes, and (2) diabetes is considered a disability. Live and learn.
A good article in the Times about the terrible state of Texas schools — followed by a truly awful comment thread, in which many readers rush to blame, you guessed it, teachers’ unions.
Folks, this isn’t an article about New York, where three-quarters of public-sector workers are unionized. It’s about Texas, where only one in five public workers belongs to a union. Blaming unions for the problems of Texas is like, well, blaming Jews for the problems of Japan: there aren’t enough of them to matter.
Actually, it's worse than that. If these guys are to be believed — and they're trying to make look unions look as bad as possible, so I suppose they are — the unionization rate of Texas teachers is 1.8%. Don't any of the folks commenting on this piece remember the boomlet last year in articles comparing California to Texas, all of them claiming that the "Texas miracle" was largely due to its red-blooded, non-unionized workforce?
If you want to have problems with teachers unions, go ahead. They're hardly above criticism. But our educational system isn't any better in states with weak or nonexistent teachers unions. In a lot of cases, it's worse.
The Washington Post has a front-page story today about the dramatic rise in justifiable homicides in Florida since they passed the nation's first Stand Your Ground law in 2005. In the first half of the decade Florida averaged 12 per year; in the second half of the decade it tripled to 36 per year. "It’s almost like we now have to prove a negative," said Steven Jansen, an official with a national association of prosecuting attorneys, "that a person was not acting in self-defense, often on the basis of only one witness, the shooter."
But mostly I was amused by this juxtaposition in the piece, which I think was unintentional:
Florida has been at the forefront of expanding gun rights for decades, ever since an NRA lobbyist named Marion Hammer, the NRA’s first female president, became a force in the state capitol in Tallahassee.
....In Florida, where looters appeared in the wake of Hurricane Ivan in 2004, Hammer launched her drive for the new law based on the case of James Workman, a 77-year-old Pensacola man who fatally shot an intruder who entered the trailer Workman was living in after the storm damaged his house....Hammer told legislators her bill would protect citizens who simply defended themselves: “You can’t expect a victim to wait before taking action to protect herself and say, ‘Excuse me, Mr. Criminal, did you drag me into this alley to rape and kill me, or do you just want to beat me up and steal my purse?’ ”
....Asked about the Martin case last week, former governor Jeb Bush, initially an enthusiastic backer of the legislation, said, “Stand your ground means stand your ground. It doesn’t mean chase after somebody who’s turned their back.”
Hammer sees no cause to refine or backtrack. Neither she nor NRA officials responded to requests for comment, but Hammer told the Palm Beach Post that officials should not be “stampeded by emotionalism. . . . This law is not about one incident. There is absolutely nothing wrong with the law.”
So when it's time to pass pro-gun laws, emotionalism over a single incident is the order of the day. But when those laws go awry, we need to put on our Spock ears and soberly weigh all the facts and evidence in the cold light of day. That's good to know.
A couple of days ago Rachel Maddow highlighted an outrageous abuse of power from Michigan Republicans. Normally, it takes several months for new state laws to take effect, but a two-thirds "immediate effect" vote can cause laws to take effect right away. Lately, however, Republicans have been jamming through every law this way without bothering to actually get a two-thirds majority. They pass the bill, then do a voice vote on immediate effect and quickly announce that it's been approved. Voila. The bill is law as soon as the governor signs it.
When I first heard this, my BS meter tingled pretty hard. Maddow characterized her story as a scoop, but that made no sense. I mean, Michigan still has a Democratic Party. If this were a huge abuse of power, they'd be yelling about it, right? So what's really going on?
Well, Democrats are yelling about it. They've filed suit to halt the practice and demand roll call votes on immediate effect. But that was just recently, and Republicans have been doing this for over a year. Why weren't Democrats screaming about this a year ago?
I'm not sure what's really going on here, and what we really need is for some longtime Michigan reporter to weigh in. None of them seem to have done that yet, though, so here's a crack at figuring this out. It's not definitive by any stretch, and it's long. Sorry about that. But here goes.
Over the years, as majority control shifted back and forth, both political parties in the state House have ordered immediate effect for legislation without recording a roll call vote. Because immediate effect requires a two-thirds vote majority the practice has often frustrated efforts by the minority party to slow down legislation they oppose.
Hmmm. Let's keep going back in time. Here's the Michigan Citizen last May, back when Michigan Republicans passed a controversial emergency manager bill. It suggests that Democrats opposed immediate effect, but didn't really oppose it all that hard:
“When their own rules say they have a chance, they didn’t try hard enough,” said Henry Teusch, a member of Hood Research....House Democrats say, however, they didn’t have a chance against the Republican-led House and Senate.
....According to House legislators, there is no written rule mandating a roll call vote on immediate effect of bills. The Speaker chairing the session can “gavel through” immediate effect, ignoring a roll call vote. “We yelled against immediate effect and the Republicans put it through,” said Rep. Harvey Santana, District 10. “House rule is the decision of the Speaker to grant or give the vote ... if you control the gavel you control the outcome.”
....Earlier this year, Rep. [John] Olumba recorded his vote against Public Act 4, the Emergency Manager law, in the House Journal. He also opposed the immediate effect of the EM law and requested a roll call vote. Although Democrats voted "no" on PA4, they did not at that time support Olumba's roll call request nor his suggestion to place their "no" vote in the House Journal. They were saving their lack of political might to oppose an issue that would, so far, affect Black cities and school districts.
This makes it sound increasingly like this really is a tradition and Democrats simply didn't object to it very strongly. But wait! Here are a couple of articles from 2007. (From ProQuest, so no links.) The first is a Detroit News piece about a difficult tax bill that passed only because of a deal that required several Democrats and Republicans in swing districts to vote for it:
And then there's Sen. Glenn Anderson of Westland, one of two Senate Democrats voting against both tax proposals — the other was Dennis Olshove of Warren. Republicans insisted he vote to give the service tax immediate effect — a motion separate from the actual tax increase itself. That took 90 extra minutes early Monday.
Anderson, who said he genuinely opposes tax increases because his constituents loath them, finally voted immediate effect for the tax, but only after Republican Sen. Roger Kahn of Saginaw had done the same. Both are in Senate districts where the split between political parties is narrow and an unpopular vote on a big issue could be costly — "vulnerable for vulnerable," he said Tuesday of his vote strategy.
In this case there was no quick gaveling of the question. Several legislators had to be arm-twisted into voting for immediate effect. Here's another Detroit News piece about Democratic efforts to move up their primary date:
With a dozen members absent on an unusual Monday session day — the first work day after the Thanksgiving holiday and deer-hunting break — the House could muster just 61 votes to give the bill immediate effect. That's 13 votes shy of the two-thirds majority needed...."I think we'll get that (immediate effect) when the bill comes back to us again from the Senate," said House Speaker Andy Dillon, D-Redford Township, who decided over the weekend to hold Monday's vote.
Again, no quick gaveling of the immediate effect vote.
So what's the story here? If I had to guess, I'd say that gaveling through immediate effect is hardly unprecedented, and Democrats obviously didn't scream very loudly about this when the emergency manager law was passed last year. At the same time, it's also not automatic. Big, controversial bills often require a roll call vote for immediate effect, but Michigan Republicans, imbued with tea party spirit, have decided to ignore this and use it for every bill they pass.
So in some sense this is similar to Republican abuse of the filibuster in the U.S. Senate. It's not outrageous in the sense that Republicans are doing something unprecedented and anti-democratic. It's outrageous in the sense that they're playing Calvinball: breaking a norm of governance by taking a tradition that was used occasionally in the past and turning it into a routine part of party politics. That's something they're pretty good at.
UPDATE:Here's another take from Eric Baerren of Michigan Liberal, a blog about politics "from a vaguely leftish point of view." If I'm reading him correctly, he says that (a) "immediate effect" is nothing new; (b) Democrats used it a lot in the previous session; (c) but that was because they negotiated compromise bills with Republicans and actually had two-thirds majorities to gavel them through. Also this:
There isn't much that can be done about the laws passed last year, when the House Democrats should have complained loudly and bitterly about the misuse of Immediate Effect. They didn't, and there's not much to be done about it since the official record makes it look like a proper tally was taken. Now, however, they're doing the right thing and pressing for actual vote tallies, which is what I frankly thought this was all about in the first place (Democrats denied the right to roll call votes, not some new and breathless conspiracy).
If this is correct, then gaveling through approval of immediate effect is no new thing, but roll call votes have always been taken if the minority party demands it. That's not happening this time, and that's what Democrats are complaining about.
Has this been done before? Yes. Violating the clear terms of the Constitution has become commonplace in the Michigan House of Representatives. The big difference now is that since the Senate follows the Constitution, there was always one chamber where immediate effect votes would be counted and extremely divisive bills would not earn immediate effect in the Senate.
Today, Michigan Republicans have a 2/3rds majority in the Senate as well as a simple majority in the House. Therefore, House procedure has a real impact on important issues.
The LA Times reports today that gasoline prices have hit nearly $4 lately but consumers aren't really getting all that exercised about it. They suggest several reasons for this: the increase hasn't been as steep as it was in 2008; prices aren't all that high when you adjust for inflation; and people have more fuel-efficient cars these days, so they're using less gas. Also this:
"I think we all have adjusted," said Lara Clayton of Los Alamitos as she spent nearly $60 recently to fill up her 2008 Lincoln Town Car at a Seal Beach 76 station. "We just don't drive as much and we are careful to combine errands."....Having already seen prices cross the $4 barrier, motorists are less likely to become outraged when they see it happen again, said Michael Sivak, who heads the University of Michigan's Transportation Research Institute.
One very well-established observation is that although oil price increases were often associated with economic recessions, oil price decreases did not bring about corresponding economic booms....An oil price increase that just reverses a recent price decrease does not seem to have the same economic effects as a price move that establishes new highs....When oil prices are making new highs, we expect slower growth.
Rising oil prices on their own don't cause huge amounts of economic distress. It's only when they break through a previous high and keep on going that we get a substantial reaction. This suggests that there's a fair amount of psychology going on here, not just a pure macroeconomic response to the higher cost of energy inputs.
So what does this tell us? I think that Hamilton is talking about inflation-adjusted highs here, and our previous high (all grades/all formulations) was $4.16 in July 2008. That's equivalent to a price of $4.35 today. Right now we're at $3.99. This suggests (maybe!) that consumer reaction will continue to be "meh" unless the price of gas hits $4.35 and keeps right on going. Until then, it's just another routine headache.
Today's theme was supposed to be catblogging done entirely from an iPad, a task that seems like it ought to be fairly straightforward but decidedly isn't. And I almost did it! But there were a few minor quality control issues last night related to both Photoshop and MoJo web access, and I didn't quite have time to iron them out this morning. So this is old-school catblogging done on my old-school desktop computer. But next week for sure!