Kevin Drum - 2012

No Deal Yet

| Mon Dec. 31, 2012 2:51 PM EST

Obama on TV: no deal yet.

I will concede—grudgingly—that if Ezra Klein is right about the current state of the talks, things might not be quite as bad as I suggested in my earlier post. Here's Ezra:

Here are the details, as multiple sources close to the talks have described them to me: The top tax rate rises to 39.6 percent for individuals making more than $400,000 and families making more than $450,000. Capital gains and dividends will be taxed at 20 percent with the same income thresholds. The Personal Exemption Phaseout (PEP) is set at $250,000 and the itemized deduction limitation (Pease) kicks in at $300,000. The AMT is patched permanently. The estate tax would exempt estates up to $10 million and tax them at 40 percent above that.

The various business tax credits — R&D, wind, etc — would be extended through 2013, as would unemployment insurance. The stimulus tax credits — namely, the expansions of the Earned Income Tax Credit, the Child Tax Credit, and the college credit — would be extended for five years, which is hugely important to the White House. The scheduled cuts to doctors in Medicare would be averted through spending offsets that neither side considers injurious. The treatment of the sequester is still up in the air, as the president is refusing to offset it unless revenues are part of the mix.

Like many of us, I shall now go watch some football and wait for the parameters of an actual deal to be announced.

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Fiscal Cliff Talks Now Entering La-La-Land Stage

| Mon Dec. 31, 2012 2:05 PM EST

I have deliberately ignored the fiscal cliff machinations over the past few days. It's a holiday weekend, after all, and the rumors and reports of rumors barely seemed worth acknowledging anyway.

But the 11th hour is now upon us, so where are we? As near as I can tell, we're in la-la-land. A grand bargain has been off the table ever since John Boehner fell on his face when his own colleagues wouldn't support his "Plan B" proposal, so now we're looking at a non-grand bargain. Supposedly, this will just be a small deal that keeps middle-class income taxes from rising but not much else.

So what's the latest gossip? Well, over the weekend Republicans briefly tried to insist that Social Security be cut (via adoption of chained CPI), but then backed down immediately when it became clear that they'd actually have to take ownership of the idea, rather than pretending that it was a Democratic demand and they were merely acquiescing to it. As usual, when it comes to entitlement cuts, Republicans like to talk a big game, but are unwilling to make actual proposals that they can be held accountable for.

So now what? Supposedly, Republicans are now suggesting a deal in which taxes go up for those making over $450,000, rather than those making over $250,000. This is ridiculous. Not only would it raise only a tiny sum, but it won't even have much impact on the rich unless it's also accompanied by increases in the capital gains, dividends, and estate taxes, all of which Republicans are fighting. At the same time, taxes on the working class would go up because Republicans are insisting on the expiration of the payroll tax cut and the stimulus tax cuts. In return for this absurdly wealth-tilted deal, Democrats would get....something. It's not really clear what. Perhaps a one-year delay of the sequestration spending cuts. But since those cuts affect both defense spending and domestic spending, that's something Republicans want as much as Democrats. Ditto for the AMT patch and the doc fix, which are basically nonpartisan. Brian Beutler wraps things up pretty well:

In a tremendous irony, Republican requests for lower tax rates, a high estate tax threshold, and a permanent AMT fix — combined with Democratic requests to delay the sequester, include a “doc fix” for Medicare physicians, and extend emergency unemployment benefits — have left the parties negotiating toward a plan that would result in no net deficit reduction over 10 years on a current-policy baseline, according to Senate Majority Whip Dick Durbin.

This is nuts. I suppose the details could end up looking better than I think, but honestly, based on what I'm seeing so far, Democrats would be crazy to agree to this. At the very least, we need a clean tax increase on high-income Americans. If the only way to get that is to let tax rates go up tomorrow, and then negotiate from there, then that's what they should do. It's time to stop the serial cave-ins to the tax jihadists in the Republican Party.

A Quick Look at U.S. Healthcare Costs for the Elderly

| Mon Dec. 31, 2012 1:27 PM EST

Austin Frakt has a chart up today showing that healthcare costs for the elderly are fantastically higher in the United States than they are in other similar countries. However, the vagueness of his note that the chart "is, apparently, from a year 2005 study," immediately set off my spidey sense. The link goes to a news article about an engineering professor who created the chart based on data "drawn from a 2005 study done by Boston University economist Lawrence Kotlikoff and his colleagues."

Kotlikoff's data might well be right, but it's worth at least a little bit of skepticism. A study published in Health Affairs using data through 2004 says that per capita healthcare spending for those 65+ is about $15,000, which suggests that a decent point estimate for those exactly age 65 is around $10,000 or so. Likewise, the estimate for those 85+ is $25,000, which suggests that a good point estimate for those exactly age 85 is perhaps $20,000 or so.

Using these two numbers, I drew a new line for the United States onto the chart in Austin's post. It's the dashed line below, and although it's still a lot higher than the other four countries, it's not quite as scary looking. If anyone knows of a more authoritative international comparison by age cohort, I'd be happy to post it. In the meantime, I suspect that U.S. spending levels are just in the normal scary range—which we already knew—not the mega-scary range suggested in the original chart.

UPDATE: Judging from the comments to Austin's post, this chart is bogus. Aside from the fact that costs at the high end might be overstated, it includes only public spending, which is very low in the U.S. for those under 65. So the spike at age 65 is artificial. Also, several countries are omitted, making the United States look more extreme than it actually is.

For Republicans, It's All About the Rich, the Very Rich, and the Super-Rich

| Sun Dec. 30, 2012 1:44 PM EST

Here's what the fiscal cliff negotiations have come down to:

Senate negotiators labored over the weekend on a last-ditch plan to avert the “fiscal cliff,” struggling to resolve key differences over how many wealthy households should face higher income taxes in the new year and how to tax inherited estates.

....Negotiators were trying to resolve a dispute over the estate tax, a critical issue for Republicans who have dubbed it the “death tax” and argue that it punishes people who build successful businesses and family farms.

In an agreement brokered between McConnell and the White House in 2010, estates worth more than $5 million are exempted and taxed above that amount at 35 percent. Republicans want to maintain that structure, while Democrats want to drop the exemption to $3.5 million and raise the rate on larger estates to 45 percent.

Do you know how many people leave estates valued at more than $3.5 million? Something like 0.01 percent, give or take a bit. This is a tax that's a huge deal for the super-rich, but completely irrelevant for nearly everyone else, including the merely ordinary rich. And needless to say, all the talk about small businesses and family farms is just a pretense. Virtually no family farms are affected, and the ones that are have extremely generous rules for dealing with estate taxes.

President Obama has Republicans dead to rights on this. "They say that their biggest priority is making sure that we deal with the deficit in a serious way," he said on Meet the Press this morning, "but the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected. That seems to be their only overriding, unifying theme." Quite so.

More Guns, Fewer Deaths? Not So Fast.

| Sat Dec. 29, 2012 1:17 PM EST

Doug Mataconis writes about California's drop in gun-related injuries over the past decade despite the fact that gun sales have nearly doubled during that time:

There are several reasons that gun related deaths an injuries have fallen, of course, not the least of them being a nationwide drop in violent crime....Nonetheless, the fact that a significant increase in gun ownership has not led to an increase in gun injuries or deaths would seem to undercut one of the primary arguments of advocates of gun control. Contrary to their assertions, it would appear that allowing law abiding Americans to own guns doesn’t lead to an increase in violence after all.

That just doesn't follow. As Doug mentions, violent crime has fallen dramatically over the past couple of decades. Without controlling for that drop, you simply can't draw any conclusions at all about the role that guns play.

As an analogy, traffic deaths in California have declined by a third since 2002 despite the fact that the number of registered vehicles has gone up by about a third. Does this mean that more cars and trucks don't lead to an increase in vehicle deaths? Of course not. Fatalities are down because of airbags, antilock brakes, higher seat belt use, improved ER technology, and so forth. If you controlled for all that, you'd likely find that more vehicles do indeed lead to more highway fatalities. But you'd have to do the math to know for sure. Until then, you really can't conclude anything at all.

Friday Cat Blogging - 28 December 2012

| Fri Dec. 28, 2012 3:58 PM EST

Here it is: your final bit of catblogging before we start our Cats & Quilts series in 2013. Marian got me a fisheye lens attachment for my iPhone for Christmas, so last night I experimented taking some distorted iPhone pictures of Domino that could be turned into a Christmas ornament image of her very own next year. (In fact, this is actually a two-iPhone picture, since Marian provided the lighting via the flashlight app on her phone.)

Unfortunately, Domino looks more scary than cute. I think we'll have to try again outdoors where the light is better. Hopefully we'll manage to come up with something good by next December.

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The Year in Wonkitude

| Fri Dec. 28, 2012 3:32 PM EST

Ezra Klein and the Wonkblog crew handed out their second annual Wonky awards today, "where we recognize outstanding achievements — and spectacular disasters — in policy wonkery." It's a surprisingly good list! By that, of course, I mean that I mostly agree with their picks, which is the way that most of us define "good," right?

But I do have one big nit to pick: Grover Norquist as Wonk of the Year. Not because Norquist isn't important. He obviously is. Not because he isn't smart. And not because tax fights don't deserve to be highlighted. I'm perplexed because Norquist isn't a wonk. He's got one simple message that he's been hammering away at for decades: taxes should be as low as possible. That's it. No speeches, no white papers, no Greek letter economics. Just an exercise of raw power in the service of low taxes. That makes him a player, but it doesn't make him a wonk.

That aside, it's a pretty interesting list. It's worth a read.

Starbucks CEO Should Leave His Baristas Alone

| Fri Dec. 28, 2012 2:31 PM EST

Paul Krugman, like a lot of liberals, is annoyed with Howard Schultz, the CEO of Starbucks:

By all accounts, he’s a good guy, with genuinely generous instincts. But in his message to employees, urging them to write “come together” on coffee cups, he gets the nature of the fiscal cliff completely wrong. In fact, he gets it wrong in two fundamental ways.....First of all, the fiscal cliff is NOT A DEBT PROBLEM. In fact, it’s the opposite.

....And then, on top of that, he has the politics all wrong, in the characteristic centrist way: he makes it sound as if the problem was one of symmetric partisanship, with both sides refusing to compromise. The reality is that Obama has moved a huge way both in offering to exempt more high-earner income from tax hikes and in offering to cut Social Security benefits; meanwhile, the GOP not only won’t agree to any kind of tax hike at all, it also has yet to make any specific offer of any kind.

I'm curious about something: Am I the only one who's annoyed not just at Schultz's confusion, but at the fact that he's asking his employees to endorse an explicitly political message? It's one thing to sell coffee in cups with a message already printed on them: that obviously doesn't suggest any kind of personal recommendation. But writing the message yourself? That's a whole different thing.

Sure, "come together" is pretty anodyne. But it's a political message nonetheless. If Schultz wants to use his own money and his own soapbox to broadcast misinformation, that's his right. But he should leave his employees out of it.

Warrantless Wiretapping Approved Yet Again, This Time With Barely a Fight

| Fri Dec. 28, 2012 1:49 PM EST

I didn't watch yesterday's Senate debate over the reauthorization of the 2008 FISA Amendments, but my Twitter feed suggested that it was a grim affair. A few senators tried to introduce amendments that would have provided a tiny bit of oversight of the NSA's warrantless wiretapping program—remember that?—but they were basically shouted down by my homestate senator, Dianne Feinstein, and the program was quickly reauthorized with essentially no public oversight at all. Glenn Greenwald is quite reasonably angry:

It's hard to put into words just how extreme was Feinstein's day-long fear-mongering tirade. "I've never seen a Congressional member argue so strongly against Executive Branch oversight as Sen. Feinstein did today re the FISA law," said Micah Zenko of the Council on Foreign Relations. Referring to Feinstein's alternating denials and justifications for warrantless eavesdropping on Americans, the ACLU's Jameel Jaffer observed: "This FISA debate reminds of the torture debate circa 2004: We don't torture! And anyway, we have to torture, we don't have any choice."

....Here we find yet again a defining attribute of the Obama legacy: the transformation of what was until recently a symbol of right-wing radicalism — warrantless eavesdropping — into meekly accepted bipartisan consensus. But it's not just the policies that are so transformed but the mentality and rhetoric that accompanies them: anyone who stands in the way of the US Government's demands for unaccountable, secret power is helping the Terrorists. "The administration has decided the program should be classified", decreed Feinstein, and that is that.

The worst part of all this is that nobody cares. None of our three major daily newspapers made this front-page news. Virtually none of the blogs I read highlighted it. Even my Twitter feed only mentioned it sporadically.

And of course, that includes me. I didn't write about it either. Glenn thinks that liberals have largely given up criticizing this stuff because we now have a Democratic president in the White House rather than George W. Bush, and I suppose that's part of it. But a bigger part, I think, is simply that it's all become so institutionalized. Back in 2004 and 2006, we were outraged because this was all so new. Today, after fighting and losing, it's just part of our brave new world, along with 3-ounce bottles on airplanes, unreviewable no-fly lists, and cops who demand to know what you're up to if you start taking pictures in public places.

As a country, we're now divided into two parts: those who aggressively support things like warrantless wiretapping because they're consumed with fear, and those who don't but have given up trying to fight about it. There's hardly anyone left still willing to tilt at this particular windmill. It's sad as hell.

UPDATE: Here's a straight news account of yesterday's Senate debate from Wired. Our own Adam Serwer has more coverage here, including the obvious question about opposition to the oversight amendments: "But if the program is constitutional, and the oversight is effective, what is there to be afraid of?"

Why Has the Crime Decline in Los Angeles Slowed Down?

| Fri Dec. 28, 2012 1:10 PM EST

The LA Times reports that serious crime was down in Los Angeles this year, but it didn't decline as much as it has in the past:

Overall, crime declined by about 2% in Los Angeles, fueled by drops in many serious crimes including robbery, assault and auto thefts, according to preliminary numbers collected by the Los Angeles Police Department. The decline was smaller than in previous years because of jumps in lower-level crimes such as thefts from vehicles and personal thefts.

...."The fact that Los Angeles has continued to decline, especially when several factors haven't been as good as they could be — it's remarkable, frankly," said Charis Kubrin, a criminologist at UC Irvine. "I'm puzzled."....The Police Department's ability to battle crime, she said, deserved much of the credit, but could not on its own account for the trend. Sociologists and criminologists say other likely factors include strict sentencing laws that, until recently, increased the number of people in prison; demographic shifts; and sociological influences.

....The decade of falling crime in Los Angeles — which continued during California's deep recession — has forced many researchers and law enforcement officials to rethink the once commonly held belief that crime was linked inextricably to the economy.

Lots of people think it makes sense that crime should go up when the economy goes down, but that's never really been consistently true. So it's no big surprise that crime has stayed low during our current economic downturn. As for the police department's ability to battle crime, that does deserve some of the credit. But violent crime in Los Angeles peaked more than 20 years ago, long before LA changed its policing tactics.

A big part of the answer to this mystery is almost certainly lead. Los Angeles is the car capital of the world, and lead emissions from cars rose dramatically after World War II, poisoning small children in ways that lowered both IQ and impulse control. When those kids grew up, more of them turned to violent crime. Then, in the mid-70s, unleaded gasoline took over and we slowly stopped poisoning our children. When those kids grew up in the early 90s and beyond, fewer of them turned to violent crime. This happened not just in LA, but all over the world.

But lead was almost completely removed from gasoline by 1990, and the kids from that era were fully grown by about 2010. We did nothing further in the 90s and aughts to clean up the remaining lead in our environment (mainly from old paint and lead-impregnated soil), and this means that the dramatic crime drops we've seen over the past couple of decades are now leveling out.

The good news is that this is permanent. We're no longer artificially turning our kids into monsters, so the current generation of teens and 20-somethings simply aren't as violent as they were 30 years ago. The bad news is that this was largely an accident—we initially reduced lead emissions as an unintentional byproduct of combating smog via catalytic converters—and we've never seriously tackled lead cleanup beyond that. Improved policing practices will likely keep crime rates at their current low levels, but we could do more if we wanted to. A serious effort to clean up more lead today would produced better, smarter, less violent kids 20 years from now.

If you want to read more about this, check out the latest issue of Mother Jones, which has a long article of mine on the cover about exactly this topic. It'll be online in the near future, and I'll have more to say about it then.