Kevin Drum - 2012

Today's Football Question

| Sun Nov. 25, 2012 3:59 PM EST

I don't watch much pro football, so I hope everyone will excuse my ignorance here. But I turn on pro games every once in a while, and as near as I can tell, the new normal is that if a team is way ahead then the network just gives up on the game and switches coverage to a different and supposedly better game. Is this really true? Or am I imagining things? 

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Black Friday Black Cat Blogging - 23 November 2012

| Fri Nov. 23, 2012 9:25 PM EST

I'm so embarrassed. I forgot about catblogging today. But better late than never, right? So here's Domino, eyes as wide as saucers for some reason or another, staring at something from the cat dimension that none of us mere humans can see. I think she's probably just thankful that she doesn't have to go out shopping today.

Today's Crazy Idea: Let's Get Rid of Tax Brackets for the Rich!

| Fri Nov. 23, 2012 1:46 PM EST

A few days ago I wrote a post about rich people who didn't understand how marginal tax rates worked, and therefore thought that under President Obama's plan they'd suddenly face a big hike in their tax bill as soon as they passed Obama's magic $250,000 threshold. Today I extend an abject apology to these people. That may not be how the tax code works now, but apparently it's not crazy to think that negotiators in Washington are discussing exactly that:

One possible change would tax the entire salary earned by those making more than a certain level — $400,000 or so — at the top rate of 35 percent rather than allowing them to pay lower rates before they reach the target, as is the standard formula....“Would you consider that a tax rate increase?” asked one aide familiar with the idea. “It would not impact the top marginal rate, and no one would have an effective rate over 35 percent.” But, he added, taxes would rise for the rich. He, like other aides, spoke on condition of anonymity because Congressional leaders want negotiations to be kept quiet.

A Democrat familiar with the proposal called it plausible, but said its future would depend on an official scoring of how much revenue it would raise. White House and Congressional aides “are looking at lots of creative options,” the Democrat said.

I'll make several observations here. First, it's crazy. Under this plan, when you crossed the magic threshold from $399,000 to $401,000, you'd suddenly owe about $30,000 in extra taxes. You really would have an incentive not to make more money if you were near that cutoff point. The dumb urban legend would become fact.

Second, it's a gift for the super rich at the expense of the merely ordinarily rich. It would have a big effect on someone making $400,000, but only a tiny effect on someone making, say, $10 million a year, since their effective tax rate would stay at 35%, instead of going up to 39.6% for the vast bulk of their earned income. This implies that Republicans are willing to throw the ordinarily rich under the bus in order to save the super rich.

Third, the Times article suggests something similar was part of the tax code "in the late 1980s." Really? I didn't know that. But if that's the case, I assume it didn't last long because, you know, it's crazy. Why would anyone think it's a good idea to resurrect this brain-dead idea?

My Annual Black Friday Post

| Fri Nov. 23, 2012 7:08 AM EST

According to the retail industry, "Black Friday" is the day when retail profits for the year go from red to black. Are you skeptical that this is really the origin of the term? You should be. After all, the term Black ___day, in other contexts, has always signified something terrible, like a stock market crash or the start of the Blitz. Is it reasonable to think that retailers deliberately chose this phrase to memorialize their biggest day of the year?

Not really. But to get the real story, we'll have to trace its origins back in time. Here's a 1985 article from the Philadelphia Inquirer:

[Irwin] Greenberg, a 30-year veteran of the retail trade, says it is a Philadelphia expression. "It surely can't be a merchant's expression," he said. A spot check of retailers from across the country suggests that Greenberg might be on to something.

"I've never heard it before," laughed Carol Sanger, a spokeswoman for Federated Department Stores in Cincinnati…"I have no idea what it means," said Bill Dombrowski, director of media relations for Carter Hawley Hale Stores Inc. in Los Angeles…From the National Retail Merchants Association, the industry's trade association in New York, came this terse statement: "Black Friday is not an accepted term in the retail industry…"

Hmm. So as recently as 1985 it wasn't in common use nationwide. It was only in common use in Philadelphia. But why? If we go back to 1975, the New York Times informs us that it has something to do with the Army-Navy game. The gist of the story is that crowds used to pour into Philadelphia on the Friday after Thanksgiving to shop, they'd stay over to watch the game on Saturday, and then go home. It was the huge crowds that gave the day its bleak name.

If we go back yet another decade we can find a Philly reference as early as 1966. An advertisement that year in the American Philatelist from a stamp shop in Philadelphia starts out: "'Black Friday' is the name which the Philadelphia Police Department has given to the Friday following Thanksgiving Day. It is not a term of endearment to them. 'Black Friday' officially opens the Christmas shopping season in center city, and it usually brings massive traffic jams and over-crowded sidewalks as the downtown stores are mobbed from opening to closing."

But it goes back further than that. A couple of years ago I got an email from a Philadelphia reader who recalled the warnings he got from the older women at Wanamaker's department store when he worked there in 1971:

They warned me to be prepared for the hoards of obnoxious brats and their demanding parents that would alight from the banks of elevators onto the eighth floor toy department, all racing to see the latest toys on their way to visit Santa. The feeling of impending doom sticks with me to this day. The experienced old ladies that had worked there for years called it "Black Friday."

"For years." But how many years? Ben Zimmer collects some evidence that the term was already in common use by 1961 (common enough that Philly merchants were trying to change the term to "Big Friday"), and passes along an interview with Joseph Barrett, who recounted his role in popularizing the expression when he worked as a reporter in Philadelphia:

In 1959, the old Evening Bulletin assigned me to police administration, working out of City Hall. Nathan Kleger was the police reporter who covered Center City for the Bulletin. In the early 1960s, Kleger and I put together a front-page story for Thanksgiving and we appropriated the police term "Black Friday" to describe the terrible traffic conditions. Center City merchants complained loudly to Police Commissioner Albert N. Brown that drawing attention to traffic deterred customers from coming downtown. I was worried that maybe Kleger and I had made a mistake in using such a term, so I went to Chief Inspector Albert Trimmer to get him to verify it.

So all the evidence points in one direction. The term originated in Philadelphia in the 50s or earlier and wasn't in common use in the rest of the country until decades later. And it did indeed refer to something unpleasant: the gigantic Army-Navy-post-Thanksgiving day crowds and traffic jams, which both retail workers and police officers dreaded. The retail industry originally loathed the term, and the whole "red to black" fairy tale was tacked on sometime in the 80s by an overcaffeinated flack trying to put lipstick on a pig that had gotten a little too embarrassing for America's shopkeepers. The first reference that I've found to this usage was in 1982, and by the early 90s it had become the official story.

And today everyone believes it, which is a pretty good demonstration of the power of corporate PR. But now you know the real story behind Black Friday.

Thanksgiving Cat Blogging - 22 November 2012

| Thu Nov. 22, 2012 11:23 AM EST

Happy Thanksgiving from everyone in the Drum household! May all your dreams of turkey come true today.

The Federal Deficit Is Shrinking Already, But That's Not Really a Good Thing

| Wed Nov. 21, 2012 4:31 PM EST

So how's the federal deficit doing? Last month the Treasury Department figured that the FY2012 deficit would clock in at about $1.1 trillion, or 7 percent of GDP. That's down considerably from three years ago, when the deficit peaked at a hair over 10 percent of GDP.

Jed Graham, using the three-year change as a benchmark, says this is the biggest peacetime drop in 75 years:

Believe it or not, the federal deficit has fallen faster over the past three years than it has in any such stretch since demobilization from World War II....If U.S. history offers any guide, we are already testing the speed limits of a fiscal consolidation that doesn't risk backfiring. That's why the best way to address the fiscal cliff likely is to postpone it.

....Other occasions when the federal deficit contracted by much more than 1 percentage point a year have coincided with recession. Some examples include 1937, 1960 and 1969.

This three-year window feels a little like cherry-picking to me. I'm not sure it has any special value aside from the fact that it happens to give us a comparison with the peak deficit year of 2009, therefore making this year's decline look especially steep. Still, there's no question that no matter what window you look at, the deficit is shrinking at a pretty rapid pace, as the chart on the right shows. And Graham is right: this means that the government "already has its foot on the brakes" at a time when our recovery from the Great Recession is still pretty fragile. Braking even harder isn't a great idea right now.

There's nothing wrong with negotiating over long-term deficit reduction, but that's all we should be negotiating over: long-term reduction. Over the next year or two, there's really no reason we should be shrinking the deficit at all.

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Obamacare Still a Bargaining Chip in Fiscal Cliff Talks

| Wed Nov. 21, 2012 2:17 PM EST

In an op-ed today, House Speaker John Boehner said that Obamacare needs to be on the table during negotiations over the fiscal cliff:

The president’s health care law adds a massive, expensive, unworkable government program at a time when our national debt already exceeds the size of our country’s entire economy. We can’t afford it, and we can’t afford to leave it intact. That’s why I’ve been clear that the law has to stay on the table as both parties discuss ways to solve our nation’s massive debt challenge.

Democrats aren't very happy about this, but honestly, it's the same thing Boehner has been saying for the past couple of weeks. Here he is two days after the election:

It’s pretty clear that the President was re-elected, Obamacare is the law of the land. I think there are parts of the health care law that are going to be very difficult to implement and very expensive and at a time when we’re trying to find a way to create a path toward a balanced budget, everything has to be on the table....There are certainly maybe parts of it that we believe need to be changed — we may do that, no decisions at this point.

So what's the point of all this? Greg Sargent suggests that Boehner knows he's going to have to compromise on taxes sometime soon, and this is a way of building up some much-needed cred with the conservative base before that grim day comes to pass:

In that context, this latest could be another sop to the Tea Party — reassurance to the Tea Partyers who are soon going to be asked to accept some very uncomfortable compromises on the fiscal cliff that, don’t worry, really, seriously, the GOP leadership still has Obamacare in the crosshairs! But Dems see a serious side to this. One Dem I spoke to worried that the mere fact that Boehner still has to throw sops like this to the Tea Party wing means he feels more beholden to them than Dems had hoped — which wouldn’t bode well for the talks.

I guess I'd take this as fairly ordinary jockeying for position during a difficult negotiation. Boehner knows he doesn't have a lot of leverage, and threatening Obamacare—which Democrats care about a lot—is a good pressure point. It's just one more bargaining chip he can use to limit the damage on the tax side of things. Keeping it on the front burner is probably just smart politics.

A World Without Software Patents Would Be a Perfectly Good World

| Wed Nov. 21, 2012 1:35 PM EST

The head of the patent office had some advice for critics of software patents yesterday: "Give it a rest already." Basically, he made a case that software patents are a positive force because they spur innovation. Tim Lee is unimpressed:

This argument ducks the central question in the software patent debate: do patents, in fact, provide a net incentive for innovation in the software industry? Many entrepreneurs say that just the opposite is true: that the disincentive to innovation created by the threat of patent litigation dwarfs any positive incentive effects created by the ability for a firm to get patents of its own.

Empirical evidence backs this up. For example, in a 2008 book, the researchers James Bessen and Michael Meurer found that for nonchemical patents, the costs of patent litigation began to exceed the benefits of holding patents in the 1990s. Software and business patents were particularly prone to litigation.

More recent research has estimated that litigation by patent trolls costs the economy at least $29 billion per year, and that figure may be as high as $83 billion.

I don't know if these numbers are correct, but I'd add another argument to the mix: We already know what would probably happen if software patents didn't exist. That's because, for the most part, they didn't exist until the early 70s, and thanks to fights between the courts and the patent office, they didn't become common until the late 80s. And yet, the era from the 50s through the 80s was about as dynamic and innovative as you could possibly imagine. Lack of patents simply doesn't seem to have had the slightest effect on the growth of the software industry.

The world is different today, of course. But I see little evidence that software patents are any more necessary now than they were during the adolescence of the computer industry. Rather than spurs to genuine innovation, they've evolved into little more than virtual armaments that big companies use to fight virtual wars with each other. And virtual wars are no better for economic growth than real ones. Honestly, it's long past time for software patents to be put out of their misery and for software companies to focus their attention on inventing new stuff, not wasting countless man-hours of time building defensive patent portfolios with no real-world value aside from providing protection against other companies who are building their own defensive patent portfolios for the same reason. This particular arms race got out of hand a long time ago.

Greek Debt Still Unsustainable; Eurozone Leaders Still Refuse to Admit It

| Wed Nov. 21, 2012 11:41 AM EST

This week brought yet more talks on Greek debt and yet more denying of reality. The Greeks are mad, the Germans are tired, and everyone knows something has to give.  The Guardian summarizes:

Why the talks failed

While finance ministers were arguing last night, Reuters got their hands on a document prepared for the meeting. It showed that Greece's debts can only be cut to a sustainable level if eurozone countries accept losses on their loans to Athens, provide additional financing or force private creditors into selling Greek debt at a discount.

....It said that either member states accept "capital losses or budgetary implications", or push back the target date for Greece's debts to fall to 120% of GDP by two years, to 2022. Eurozone countries are not, yet, prepared to accept the first option, while the second option is unacceptable to the IMF. Thus deadlock.

That's about the state of things. Greece's debt is flatly unsustainable, and the technocrats know it—when they're writing for private consumption, anyway. At some point, eurozone leaders are either going to essentially forgive all of Greece's debt or else Greece will leave the euro.

Writing off Greece's debt is actually doable because Greece is a fairly small country. But everyone is afraid that if they do it, then Spain, Portugal, and Ireland will all want the same treatment. And that's not doable. Thus the impasse.

For now, anyway. In a few days everyone will figure out yet another can-kicking exercise, and the immediate crisis will be averted for another year or so. Unless some other country blows up in the meantime, of course.

Benghazi and the Fox News Effect

| Wed Nov. 21, 2012 2:51 AM EST

Why has the shameful witch hunt against Susan Rice continued to gain traction even though there is literally not a shred of evidence that she did anything wrong? I'd say this Pew poll tells us all we need to know. The only segment of the country that really cares about the sham Benghazi scandal is Republicans, and the reason Republicans are riled up about it is because of Fox News. How far down the rabbit hole have they gone with their 24/7 hysteria? A friend who follows their coverage closely emailed a few days ago to tell me what it's like these days: "Listening to Fox on this is like watching a Fellini movie."

And while we're on the subject: as they've started to lose traction on their more outré conspiracy theories (Obama watched the attack in real time, he ordered military troops not to intervene, he was blackmailing David Petraeus, etc.), Republicans have been reduced to blustering about their outrage that the intelligence community's explanation of what happened in Benghazi has changed over time. There's nothing especially scandalous about this, of course, since that's pretty much what you'd expect to happen as they got more information. It's not really clear why the mainstream media is paying any attention to this unusually lame complaint.

But my friend points out something that really can't be emphasized enough: in fact, their explanations haven't really changed all that much. "They still think protests against the video were part of this in various ways; they still don't think al Qaeda or even meaningfully 'al Qaeda-linked' groups were involved, although perhaps an individual or two; and they still think this wasn't 'pre-planned' to any significant degree. I'd say those initial talking points have held up remarkably well." Given the usual fog surrounding events like this, I think that's right. See Joe Klein for more on this.