Kevin Drum - November 2012

Should Obama Call the Republican Bluff on Taxes?

| Mon Nov. 19, 2012 12:20 PM EST

President Obama wants to let the Bush tax cuts for the rich expire, which would allow top marginal tax rates to increase from 35 percent to 39.6 percent. Andrew Sullivan isn't sure this is a hill for Obama to die on:

My overall view is that the most important thing is to increase revenues, not rates necessarily. I can understand why Obama wants to get the top rate back to Clinton levels — and it would require much deeper inroads against deductions than the GOP has previously accepted. But [] I'd give on this if I were Obama — in order to see if the GOP could come up with removal of tax deductions for those earning over $250,000 that would bring in the same amount of revenue. If they don't want a rate increase, ask them how to get the same amount of money from the same group of people by ending deductions. Call their bluff — and show you are not wedded to redistribution that could even theoretically impede growth and entrepreneurialism.

I concede that this would be interesting. Mitt Romney spent an entire campaign insisting that he could close enough loopholes and deductions to make up for his proposed 7 percent rate cut on the wealthy. Democrats scoffed, but Republicans all insisted that Romney's plan was eminently feasible and that details would be forthcoming during tax negotiations after the election. Well, the election is over, tax negotiations have started, and their goal is considerably easier since they only have to make up for the 4.6 percent rate cut that keeping the high-end Bush tax cuts entails.

There are two upsides to working with Republicans on this. First, Obama gets to look sweetly reasonable. You want to close deductions instead of letting the higher rates expire? Let's reason together, my friends. Show me your plan.

Second, I think a big part of Obama's strategy here is to break the Grover Norquist stranglehold—and the Norquist blood oath isn't about never voting for a rate increase, it's about never voting for a net revenue increase, no matter how you get there. Obama wants Republicans on record voting for something that breaks that oath, and closing a bunch of deductions works as well as a rate increase.

If I were part of the Republican leadership, though, I wouldn't take the deal. Their problem is the mirror image. First, if they're going to break the oath, it doesn't matter how they do it. Closing deductions doesn't buy them anything. Second, closing a bunch of deductions is something that will be forgotten very quickly, leaving a low top rate in place that will be an easy target for Democrats who want to soak the rich even further. Frankly, Republicans would be better off just agreeing to the higher top rates now, leaving them an easier job of protecting the rich in the next round of tax reform.

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Mitt Romney Is Now Officially the Most Hated Man in America

| Mon Nov. 19, 2012 11:21 AM EST

To start off this short week, I'd like to add my voice to the many on the left who are endlessly amused at how thoroughly Mitt Romney is being thrown under the bus by the right for the heinous crime of....saying nothing more than what most of them have believed for a long time. He thinks Obama won by promising lots of goodies to poor people and minorities, and unless I've misunderstood several decades worth of conservative complaints, that's a pretty mainstream view on the right. "We are reaching the tipping point where the majority of Americans are recipients of government programs," said uber-mainstream conservative George Will earlier this year. "The tactic of the Democratic Party is to run up the dependency ratio in this country until you get 50-60 percent of Americans dependent on the government [...] at which point they figure the party of government will always win." A few weeks after Will made his comment, Mother Jones released the infamous 47 percent video, which prompted Ron Brownstein to write:

Far from a gaffe, Romney’s remarks reflected both a long-standing belief among conservatives that the nation faces a “tipping point” in which growing dependency will create an insurmountable electoral majority for big government — and Democratic candidates. Rep. Paul Ryan of Wisconsin, Romney’s running mate, has delivered similar arguments for years. “We risk hitting [a] tipping point in our society where we have more takers than makers,” he said recently. “President Obama’s policies are feverishly putting more people into the column of being takers than makers ... being more dependent.”

The conservative Heritage Foundation, in the latest edition of its “Index of Dependence on Government” likewise concluded earlier this year: “Perhaps the greatest danger is that the swelling ranks of Americans who enjoy government services and benefits for which they pay few or no taxes will lead to a spreading sense of entitlement that is simply incompatible with self-government.”

Conservatives believe that liberals are intent on creating a welfare state that saps initiative, leads to moral decay, makes voters more dependent on government, and helps cement the Democratic Party's hold on power. They've been saying this forever. But when Mitt Romney says it in slightly blunter terms than we're used to, they practically barrel over each other running for the exits.

Poor Mitt. Conservatives never liked him in the first place, so he tried hard to say all the things they wanted him to say. But once he lost, he was an instant pariah. He was saying the stuff they wanted him to say during a campaign, not realizing that the rules had changed. Once the campaign was over, that exact same stuff was a rather too blunt admission of what conservatives believe. He was betraying the cause, not helping it. The price he'll pay is a banishment from the conservative movement even more thorough than George Bush's. Conservatives are not kind to their losers.

The 2012 Election is Finally Over! So Who Won the Forecasting Contest?

| Sun Nov. 18, 2012 5:01 PM EST

Ron Barber won the AZ-2 House race today, and with that I believe the 2012 election is over. Final results:

  • President: Obama 332, Romney 206
  • House: 201 D, 234 R
  • Senate: 55 D/I, 45 R

So how did Sam Wang, our resident expert do? Answer: pretty well. A month before the election, he called the presidential race dead on and missed the Senate race by only one seat. His House prediction was off by 16 seats, but in fairness, he was in the middle of incorporating redistricting/incumbency effects when I asked him for his forecast on October 6, and he warned me that this might change things. His later forecast was considerably more accurate.

Still, the rules were best forecast a month ahead of the election. So who won? Here are all the commenters who got the presidential split correct:

Jeff Gauvin

  • President: Obama 332, Romney 206
  • House: 215 D, 220 R
  • Senate: 52 D/I, 48 R

Ziggy

  • President: Obama 332, Romney 206
  • House: 215 D, 220 R
  • Senate: 54 D/I, 46 R

Jason Broccardo

  • President: Obama 332, Romney 206
  • House: 215 D, 220 R
  • Senate: 56 D/I, 44 R

jharp

  • President: Obama 332, Romney 206
  • House: 215 D, 220 R
  • Senate: 55 D/I, 45 R

Oddly, all four predicted an identical House split, so the winner is jharp, who got the Senate split dead on. However, there's an honorable mention co-winner too:

Kadzimiel

  • President: Obama 303, Romney 235
  • House: 202 D, 233 R
  • Senate: 55 D/I, 45 R

Kadzimiel was almost dead-on for both the House and Senate, and missed the presidential split only by Florida, which was a genuine nail-biter that could have gone either way.

So that's that. The 2012 election is in the books. Kadzimiel and jharp are co-winners of the forecasting contest, and if you guys will send me your email addresses I'll try to persuade the powers-that-be to sign you up for a free MoJo subscription for 2013. Congratulations!

Worst. Advice. Ever.

| Sun Nov. 18, 2012 11:37 AM EST

Over the past couple of weeks, a lot of people have had a lot of advice for the Republican Party. Compromise more. Compromise less. Appeal to Hispanics. Stick to conservative fundamentals. Nominate better candidates. Improve your ground game. Etc. Some of this advice is good, and some of it is probably not so good.

But I'd like to congratulate Charlotte Allen for possibly the worst advice ever offered to a party in defeat. This is truly — um, hold on. Sorry. Revise and extend. What I meant was that this is the best advice ever offered to a party in defeat. I totally think she's onto something here. Republicans should absolutely do this.

Quote of the Day: The Bizarre Semiotics of Benghazi

| Fri Nov. 16, 2012 9:11 PM EST

From a "senior U.S. official," commenting on talking points from the intelligence community that blamed the Benghazi attacks on extremists:

The controversy this word choice caused came as a surprise.

That's a nicely understated way of putting it. In a normal world, of course, this word wouldn't cause any controversy. It's a perfectly good word. But in a world where, um, political extremists are desperate to gin up a scandal, it's taken on an almost surreal quality.

Today's Benghazi news revolves around David Petraeus's appearance before Congress this morning. Most of the descriptions of his testimony have come from Democratic members of Congress, and they've emphasized that Petraeus signed off on the talking points that were given to Susan Rice before she taped her TV interviews a few days after the attacks. Why haven't we heard more from Republicans about this? I assume it's because Petraeus didn't really help their coverup narrative much. However, Dave Weigel points out that Peter King has talked to reporters, and to his credit, was skeptical of Petraeus's testimony that he had called it a "terrorist" attack from the start:

King said Petraeus had briefed the House committee on Sept. 14, and he did not recall Petraeus being so positive at that time that it was a terrorist attack. "He thought all along that he made it clear there was terrorist involvement," King said. "That was not my recollection."

Later, King talked to CNN about the final interagency talking points that used the word extremist rather than al-Qaeda terrorist:

Q: Did [Petraeus] give you the impression that he was upset it was taken out?

KING: No.

Q: You said the CIA said “OK” to the revised report —

KING: No, well, they said in that, after it goes through the process, they OK’d it to go. Yeah, they said “Okay for it to go.”

King still insists, along with everyone in Fox-land, that we need to get to the bottom of who changed the word. This is stupefyingly dumb, since everyone knows this is exactly the kind of thing that happens when talking points go through a bureaucratic approval process. Still, if Congress wants to dig into this, I guess that's fine. In fact, I should make clear that although the scandal/coverup narrative is, if anything, getting even more ridiculous over time, there are plenty of legitimate questions for Congress to address. For example:

  • Why did the talking points end up referring to extremists rather than terrorists? (It's dumb, but if they want to interrogate the interagency process, I guess that's fine.)
  • Why did it take so long to figure out what happened in Benghazi?
  • Should the attacks have been anticipated?
  • Who was responsible for the response to the attacks? What went wrong? Were troops available that weren't used?
  • Was security in Benghazi inadequate based on what we knew before the attacks?

This is all perfectly reasonable stuff for Congress to investigate. It's not likely to uncover any kind of deep scandal, but if it's done seriously it might help us avert attacks like this in the future, or respond to them better when they do occur.

Friday Cat Blogging - 16 November 2012

| Fri Nov. 16, 2012 3:05 PM EST

Hey look! Domino is up on the fence today. She used to follow Inkblot up there whenever he got the urge to explore, but I think this is the first time she's done it since he died. I guess she's finally feeling a little more independent.

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Benghazi Scandalmongering Takes a Hit Today

| Fri Nov. 16, 2012 2:23 PM EST

David Petraeus, late of the CIA, testified today before the Senate. Just by doing this, he batted down one of the dumber conspiracy theories surrounding Benghazi, namely that the expose of his affair with Paula Broadwell—or the coverup of his affair prior to the election, depending on which account you read—was somehow designed to prevent him from testifying before Congress. As it turns out, Congress can subpoena anyone it wants, so this was moronic from the start. And in the event, Petraeus was happy to testify voluntarily and no one tried to stop him.

So now let's move on to conspiracy theory #2: The Obama administration knew what really happened in Benghazi, but sent Susan Rice out to the Sunday talk shows to lie about it. How did that turn out?

Lawmakers said Petraeus testified that the CIA's draft talking points written in response to the assault on the diplomat post in Benghazi that killed four Americans referred to it as a terrorist attack. But Petraeus told the lawmakers that reference was removed from the final version, although he wasn't sure which federal agency took out the reference.

Democrats said Petraeus made it clear the change was not made for political reasons during President Barack Obama's re-election campaign. "The general was adamant there was no politicization of the process, no White House interference or political agenda," said Rep. Adam Schiff, D-Calif. "He completely debunked that idea."

....Petraeus testified that the CIA draft written in response to the raid referred to militant groups Ansar al-Shariah and al-Qaida in the Islamic Maghreb but those names were replaced with the word "extremist" in the final draft....Sen. Mark Udall, D-Colo., said Petraeus explained that the CIA's draft points were sent to other intelligence agencies and to some federal agencies for review. Udall said Petraeus told them the final document was put in front of all the senior agency leaders, including Petraeus, and everyone signed off on it. "The assessment that was publicly shared in unclassified talking points went through a process of editing," Udall said. "The extremist description was put in because in an unclassified document you want to be careful who you identify as being involved."

....Schiff said Petraeus said Rice's comments in the television interviews "reflected the best intelligence at the time that could be released publicly."

So that's where we are. The interagency process removed the word "terrorist" and, for security reasons, replaced "Ansar al-Shariah" with "extremists." There was no political pressure to do this, and everyone signed off on the final draft. So that's what Susan Rice got: a brief set of talking points that said there had been protests in Benghazi inspired by those in Cairo, which had subsequently evolved into an assault on the consulate by "extremists." And that's what she said on TV.

The part about the protests turned out to be wrong. And Ansar al-Shariah was eventually firmly identified. But on September 15, four days after the attacks, this was what the intelligence community believed.

If that's your scandal, you have a pretty low bar for scandals.

Mark Begich's Gigantic Tax Increase on the Rich

| Fri Nov. 16, 2012 1:02 PM EST

Dylan Matthews writes today about a proposal from Sen. Mark Begich to fix Social Security's finances:

The Begich bill would lift the current payroll tax cap, which exempts wages in excess of a certain amount ($110,100 this year) from the tax....According to the Congressional Research Service, a change like that would almost entirely wipe out the program's long-run actuarial imbalance. Specifically, it would eliminate 95 percent of the shortfall.

....But Begich's bill doesn't just increase taxes for high earners....

Dylan breezes by this a little quickly for my taste. Lifting the payroll cap is an idea that comes up a lot, but it's worth acknowledging what it really means. If you're a high earner—let's say $500,000 per year—you currently pay 12.4 percent of $110,100 in payroll taxes. That's $13,652, or 2.7 percent of your income. Under Begich's proposal, you'd pay the full 12.4 percent on all your income.

That's a total tax increase and a marginal tax increase of 9.7 percentage points. That's huge. It's four times the increase we'd get from letting the high-end Bush tax cuts expire and double the marginal increase.

That would, obviously, be a massive political battle. But what's worse from my perspective is that it imposes this huge tax increase for one tiny purpose: saving Social Security. That's crazy. We shouldn't waste a big tax increase like this just to save Social Security, especially when there are lots of better ways of doing this that would require far less pain. Raising the payroll tax cap a bit to get it back to its historic level (covering 90% of income, or maybe a bit more) is a perfectly good idea. Eliminating the payroll tax cap is an idea that I don't think even liberals ought to be happy about.

Five Think Tanks Attack the Deficit

| Fri Nov. 16, 2012 12:33 PM EST

The deficit hounds at the Pete Peterson foundation asked a bunch of think tanks to come up with their own deficit plans, and the results are sort of interesting at a 100,000 foot level. Here are their projected spending levels 25 years from now:

Of the right-wing think tanks, the Heritage Foundation is in fantasyland. They want to reduce spending to 18 percent of GDP, which is just flatly not going to happen. Social Security will not be cut by a fifth from current levels, and domestic spending will not go down to 3 percent of GDP. They're clearly not even bothering to put forth a reality-based proposal.

AAF is slightly better at 19 percent of GDP, and they have an interesting VAT-like tax proposal that actually has the potential to increase economic growth and produce more revenue than our current system. And although they cut Social Security spending compared to promised future levels, at least they don't pretend that we can actually cut it from current levels.

Of the lefty think tanks, BPC and EPI are too aggressive for my taste. I don't think there's any question that federal spending is going to increase over its historic levels (typically around 19-20 percent of GDP) by 2037. Healthcare costs are going to keep rising even if we do a great job of controlling them, and we have to face up to that. Nonetheless, I'd like to at least have a goal of keeping spending in the low 20s.

So sign me up for CAP's vision. Their plan includes some small cuts in future benefit growth for Social Security, domestic spending at a more achievable 5 percent of GDP, and healthcare at 7 percent of GDP. That last will be tough to meet, but it's a worthwhile goal. And their overall spending target is a bit under 23 percent of GDP. That strikes me as about right. It's reality-based, but still makes a serious effort to keep spending under control.

There are more details at the link, but sometimes it's worthwhile to get a big-picture view of what everyone is proposing. This is a useful chart in that regard.

The Enthusiasm Gap Revisited

| Fri Nov. 16, 2012 10:51 AM EST

Here's a pretty interesting chart from Seth Masket showing how much voter turnout changed between 2008 and 2012. Some of the outliers are obvious: Arizona and Alaska went down because they didn't have candidates on the ticket this year. New York and New Jersey went down because of Hurricane Sandy. California is a mystery.

What's more interesting, though, is the pattern. I'm just eyeballing this, but it looks like there really was an enthusiasm gap. Obviously three big Obama states were way below their 2008 levels. Beyond that, though lots of states at or below the red line were also Obama states in 2008 (Ohio, Pennsylvania, Oregon, Vermont, etc.). Conversely, lots of states above the red line were McCain states (South Carolina, Idaho, Texas, Georgia, etc.). There are plenty of exceptions, so I might be off base here, but my quick read of this data is that if state-by-state turnout had stayed at 2008 levels, Obama would have won the popular vote by nearly as much as he did four years ago. I imagine it would be easy for someone with the raw data to stick it in a spreadsheet and find out for sure.