Kevin Drum

Republicans Are Cutting Taxes on the Rich and Raising Them on the Poor

| Fri Feb. 13, 2015 1:52 PM EST

Shaila Dewan surveys the tax policies of actual Republicans who are governing actual states:

A number of Republican-led states are considering tax changes that, in many cases, would have the effect of cutting taxes on the rich and raising them on the poor.

Conservatives are known for hating taxes but particularly hate income taxes, which they say have a greater dampening effect on growth. Of the 10 or so Republican governors who have proposed tax increases, virtually all have called for increases in consumption taxes, which hit the poor and middle class harder than the rich.

Favorite targets for the new taxes include gasoline, e-cigarettes, and goods and services in general (Governor Paul LePage of Maine would like to start taxing movie tickets and haircuts). At the same time, some of those governors — most notably Mr. LePage, Nikki Haley of South Carolina and John Kasich of Ohio — have proposed significant cuts to their state income tax. In an effort to relieve some of the added pressure, Mr. LePage’s plan includes a tax break for the lowest-income families.

This gets back to what I was talking about a couple of days ago. Contrary to what Republican reformicons are proposing, Republicans on the ground continue to focus most of their attention on cutting taxes on the rich. Or, in a pinch, if they have to raise revenue, they're raising it from the poor and middle class. This is despite the well-known fact that virtually all of the income gains in recent years have gone to the well-off.

There are ways to make consumption taxes progressive. It's not impossible. The problem is that Republicans simply don't want to. Their goal is, and always has been, to reduce taxes on the wealthy. Any other tax agenda just isn't on the table.

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Republicans Are Shooting Themselves in the Foot Over Net Neutrality

| Fri Feb. 13, 2015 12:35 PM EST

I've written before about the GOP's peculiarly uncompromising stance on net neutrality. At its core, net neutrality has always been a battle between two huge industry groups and therefore never really presented an obvious reason for Republicans to feel strongly about one side or the other. But they've taken sides anyway, energetically supporting the anti-neutrality broadband industry against the pro-neutrality tech industry. Today an LA Times article dives more deeply into the problems this is causing:

As tech firms and cable companies prepare for a fight that each says will shape the future of the Internet, Silicon Valley executives and activists are growing increasingly irritated by the feeling that the GOP is not on their side. Republican leaders have struggled to explain to their nascent allies in the Bay Area why they are working so hard to undermine a plan endorsed by the Obama administration to keep a level playing field in Internet innovation.

....The fight comes at a time when Republicans had been making gains in Silicon Valley, a constituency of well-heeled donors and coveted millennial-generation voters who have generally been loyal to Democrats....Republicans have hoped to seize on recent Democratic policy moves that riled tech companies, including a push for strict anti-piracy rules and the Obama administration's continued backing of National Security Agency surveillance of Internet users.

But the hot issue in Silicon Valley now is net neutrality. And on that issue, the GOP and the tech industry are mostly out of step...."It is close to a litmus test," said Paul Sieminski, a Republican who is the general counsel to Automattic, the company that operates Web-making tool "It's such a fundamental issue for the Internet," said Sieminski, who has been active in fighting for net neutrality. "I guess it is a proxy on where a candidate may stand on a lot of issues related to the Internet."

The obvious and cynical explanation for the Republican view is that President Obama is for net neutrality, so they're against it. The more principled view is that they hate regulation so much that they don't care what it costs them to oppose net neutrality. It's regulation, so they're against it.

Neither one truly makes sense to me, and I suppose their real motivation is a combination of both. Most Republicans probably started out moderately skeptical of net neutrality because it represented a new layer of regulation, and then gradually adopted an ever more inflexible opposition as it became clear that Obama and the Democratic Party were staking out the pro-neutrality space. Eventually it became a hot button issue, and now the die is cast.

But it's sure hard to see what it buys them. It's already eroding any chance they had of appealing to the growing tech industry, which is going to be even more firmly in the Democratic camp after this. And while the support of the broadband industry is nice, it's not big enough to tip the fundraising scales more than a few milligrams in either direction.

All in all, it's an odd fight. It remains unclear to me why Republicans have chosen this particular hill to die on.

Republicans and Democrats Are Both in Favor of Approval to Fight ISIS

| Fri Feb. 13, 2015 11:44 AM EST

So what does the public think of President Obama's request for an authorization to use military force against ISIS? According to a new NBC/Marist poll, they're basically in favor:

Greg Sargent has a partisan breakdown, and approval of the AUMF is surprisingly bipartisan: 60 percent of Democrats approve and 52 percent of Republicans approve. So I imagine this is going to pass before long, probably without too many major changes.

The poll has some other responses that are a bit odd. Only 45 percent of the respondents have much confidence in President Obama's strategy, but 66 percent think we're going to be able to defeat ISIS anyway. Is this a triumph of partisanship over actual belief, or the other way around? Or just the usual incoherence you get in practically every poll about everything?

In any case, it will be interesting to see what line Fox News and the rest of the right-wing punditocracy take on this, and whether this affects future poll results. I wouldn't be surprised if there's a much bigger partisan split on this question a couple of weeks from now.

The Kansas Economy Sucks, So Let's Do a Little Gay Bashing to Distract Everyone

| Thu Feb. 12, 2015 6:55 PM EST

Michael Hiltzik reports on Kansas governor Sam Brownback's move this week to revive the culture wars:

Brownback's latest stunt is to abolish state employees' protections against job discrimination based on sexual orientation. In an executive order Tuesday, Brownback reversed a 2007 order by his Democratic predecessor, Kathleen Sebelius, that had brought state anti-discrimination policies in line with most of corporate America and 31 other states.

....Possibly, Brownback is hoping to deflect attention from the disastrous condition of the Kansas state budget, which has been hollowed out by Brownback's extremely aggressive tax-cutting. Income tax receipts continue to fall below Brownback's rolling projections -- the latest estimates show them coming in 2% below forecast made just last November.

....The economic suffering that Brownback's policies have imposed on Kansans is bad enough; to add to the pain by removing protections against workplace harassment over sexual orientation is a new low.

As Hiltzik points out, there's no special reason for Brownback to do this now. The anti-discrimination policy has been in place for eight years, and Brownback apparently felt no particular angst about it during his entire first term.

But things are different now. When he was first elected, Brownback promised that his planned tax cuts on the rich would supercharge the Kansas economy and bring about prosperity for all. That turned out to be disastrously wrong, and now he's slashing spending on education and the poor to make up for the catastrophe he unleashed. This is understandably unpopular, so what better way to distract the rubes than to engage in a bit of gay bashing? That'll get everyone riled up, and maybe they won't even notice just how much worse off they are than they used to be. It's a time-honored strategy.

We Put Way Too Many People in Prison

| Thu Feb. 12, 2015 3:11 PM EST

Earlier this morning I mentioned the Brennan Center's new report on the decline in crime over the past two decades, and one of its prime focuses is on incarceration. One of the authors of the report explains at 538 what they found. Basically, it turns out that locking up more people does have a deterrent effect, but that effect plummets when you start locking up people at huge rates—as we've done:

It’s because of these elevated levels that we’re likely to see diminishing returns. If we assume — fairly! — that the criminal justice system tends to incarcerate the worst offenders first, it becomes clear why. Once the worst offenders are in prison, each additional prisoner will yield less benefit in the form of reduced crime. Increased incarceration — and its incapacitation effect — loses its bite.

....And diminishing returns are what we saw. Crime rates dropped as incarceration rates rose, for a time, but incarceration’s effect on crime weakened as more people were imprisoned. An increase in incarceration was responsible for something like 5 percent of the decrease in crime in the 1990s, when its levels were lower, but has played no meaningful role since. If I were speaking to a fellow economist, I’d say the incarceration elasticity of crime is not distinguishable from zero. At a cocktail party, I’d say that crime no longer responds to changes in incarceration.

That sounds about right to me. The 5 percent number might be debatable, but the basic idea that we went way overboard on incarceration is hard to argue with. It was pretty reasonable to believe that incarceration rates were too low in the 60s and early 70s, and that tougher sentencing laws would help deter crime. So we passed tougher laws and built more prisons. But by the end of the 80s, we'd almost certainly gone as far as we needed to. Locking up ever more people just wasn't having much of an effect. But we did it anyway. We didn't just double prison capacity, we doubled it again and then built even more after that. I'd say it's almost a dead certainty that the last doubling was simply wasted money that had no effect on crime rates at all.

It's also worth noting that this is an inherently hard subject to study. After all, crime rates did skyrocket during the 70s and 80s. And if you have twice as much crime, then you're likely to lock up twice as many people. Needless to say, that doesn't necessarily mean that higher incarceration rates had an effect on anything. It was the other way around: higher crime led to higher incarceration rates. That's perfectly natural, but it makes it hard to then work backwards and try to estimate the effect in the other direction.

There's a Labor Dispute at West Coast Ports, But No One Will Say What It's About

| Thu Feb. 12, 2015 2:29 PM EST

West Coast port operators are shutting down for a few days because "they don't want to pay overtime to workers who, they allege, have deliberately slowed operations to the point of causing a massive bottleneck." This is part of an increasingly rancorous labor dispute, but as usual, we really have no idea what the dispute is about:

Dockworkers are among the best paid blue-collar workers in the country, earning between $26 and $41 an hour, depending on experience and skill.

Union spokesman Craig Merrilees has said the two sides are very close to a deal, but has declined to say what is tying up the talks....According to employers, a major hurdle is a union demand that both sides have the ability to unilaterally remove local arbitrators at the end of a labor contract....Employers say that if such a change is made, alleged union slowdown tactics would become constant, because the union could "fire judges who rule against them."

The union said Wednesday that employers are "grossly" mischaracterizing its current bargaining position. "It seems to us that the employers are trying to sabotage negotiations," union President McEllrath said.

This is pretty normal, and it's one of the things that makes it hard to unilaterally support either side in labor disputes like this. We already know that dockworkers are very well paid, and that's apparently not a bone of contention. But what's the deal with the arbitrators? Who has the better of the argument? There's no telling.

The public probably doesn't care much about this unless it eventually gets nasty enough that it affects the ability of stores to keep stuff in stock. So maybe public opinion doesn't matter. But to the extent it does, it sure seems like unions would have a better chance of getting public support if they were more forthcoming about exactly what it is they're holding out for.

(Or maybe not. One of the big problems with the huge decline in union density over the past few decades is that the public no longer has much of a stake in supporting unions. In the past, there was some sense of solidarity. If one union negotiated a healthy raise, it increased the odds of everyone else getting a healthy raise too. But not anymore. If the dockworkers do well, they're just the last of the lucky bastards with good union jobs. The rest of us get nothing from it except maybe higher prices for the goods and services we buy. It's hard to see a way out of this dynamic.)

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Lead and Crime: The Brennan Center Weighs In

| Thu Feb. 12, 2015 1:08 PM EST

The Brennan Center has released a lengthy report examining the reasons for the big crime decline of the 90s and aughts, and one section highlights the work of Jessica Reyes and others linking crime levels to gasoline lead emissions:

Reyes, and other researchers, have found that lead is connected to aggressive behavior and behavioral problems because it affects brain development of children....Reyes found that the decrease in lead caused a remarkable 56 percent of the decrease in violent crime in the 1990s....This theory had been previously suggested by another economist, Rick Nevin, in 1999. He illustrated a similarity in the trends between violent crime and gasoline lead 23 years prior.

....In December 2013, an NAS roundtable discussed the lead theory. There was an extended discussion in which most participants seemed to concur that the 56 percent drop in crime attributed to lead by Reyes was likely too large. Most experts seem to believe that lead played some role, but maybe not as high as the finding presented by Reyes. More research is needed to establish lead’s precise role in the crime decline.

....The authors do not draw a conclusion on this theory because they could not secure complete state-by-state data on this variable level for 1980 to 2013, as needed for the regression....Based on current research and expert reactions, it is possible that lead played some role in the 1990s drop in violent crime but perhaps not as large as that found by Reyes. Further, lead’s effect on the crime drop likely waned in the 2000s.

Now, you might think I'd be annoyed that lead was the 13th out of 13 theories they looked at, and that they downplayed the likelihood of a significant role for lead. In fact, I'm thrilled. This is one of the first reports I've seen that gives lead a substantial section of its own, and the authors clearly take the idea seriously. The fact that they want more research before committing themselves further is perfectly reasonable. It's a new theory that needs more research from people not already committed to it one way or the other.

A couple of notes, though. First, if the authors are only willing to draw conclusions if they can get complete state-by-state data on lead emissions, then they're stacking the deck. That data simply isn't available, just as it's not available for most things in a reliable way. Additionally, since people move in and out of states, even perfect data would be incomplete. This shouldn't be an excuse for not analyzing the data that does exist, especially since it exists at local, state, national, and international levels.

It's also worth noting something that I feel like I have to say again and again: state-level regressions aren't the only evidence in favor of the lead-crime theory. In fact, regressions in general aren't the only evidence available. There are also prospective studies and brain imaging studies that point in the same direction. Nobody should make the mistake of thinking that if only we had better data and could run cleaner regressions we'd get closer to the truth. What we really need at this point are tests of very specific hypotheses of the lead-crime theory. If, for example, a detailed cohort-level study failed to show age-specific effects of lead on crime, that would be a big blow to the overall theory. That would be a useful study—though, as usual, it would probably be very difficult to carry out properly because the raw data is unlikely to exist in detailed and reliable form.

I'd also note that although the authors are correct that the role of lead waned in the 2000s, it probably wasn't until the late 2000s. Lead likely played a significant role in crime declines up to about 2008 or so, when the last cohort of children born in 1986 turned 22. Changes in crime rates since then are most likely due to other factors.

(Changes in incarceration rates, however, lag crime rates, and will probably be affected by the end of leaded gasoline for another decade or two. And in other countries, which banned lead in the 90s or the early aughts, the effect on crime rates will probably continue to be felt for another decade at least.)

Outfits like the Brennan Center are fundamentally interested in things like incarceration, poverty, and policing, and it's only natural that these are the things they spend the most time discussing. Thus, the mere fact that they gave lead any attention at all is good news. It means people are taking the idea seriously, and eventually that might lead to the further research they'd like to see.

As always, if you want to read the complete argument in favor of the lead-crime hypothesis, it's right here at Mother Jones in my 2013 piece, "America's Real Criminal Element." Just click for the whole story.

Russia, Ukraine Reach Cease-Fire Deal—For a Few Days, Anyway

| Thu Feb. 12, 2015 12:15 PM EST

After a marathon session, we now have another cease-fire in the Russian war against Ukraine:

The cease-fire is scheduled to begin at midnight on Saturday, but the 13-point compact appeared fragile, with crucial issues like the truce line left unresolved. Over all, there seemed to be no guarantee that the problems that marred the cease-fire agreement reached here in September had been ironed out.

The very fact that it took more than 16 hours of intensive negotiations to reach an agreement, and that the leaders announced the accord in three separate news conferences, seemed to highlight a certain lack of unity.

....“Despite all the difficulties of the negotiating process, we managed to agree on the main things,” Mr. Putin said. Those issues included the withdrawal of heavy weaponry, a promise for constitutional change, and “special status” for the breakaway regions of Donetsk and Luhansk, he said....The deal calls for heavy artillery to be withdrawn at least about 15 miles from each side, and the biggest missiles even farther. The withdrawal is scheduled to start two days after the cease-fire and to be completed within two weeks.

Needless to say, this doesn't sound all that promising, especially that business about "special status" for Donetsk and Luhansk. However, the talks produced at least one concrete accomplishment:

The White House has said it will await the outcome of the cease-fire bid before making a decision on whether to send arms to Ukraine’s military — a move strongly opposed by Moscow.

Ukraine also got something out of the deal: the IMF announced a $17.5 billion loan to Ukraine, which will keep them from going bankrupt. The Guardian notes that the talks nearly broke down before Thursday's announcement:

The negotiations appeared extremely tense and highly combustible with simmering hostility between Putin on the one hand and Merkel and Poroshenko on the other. At various points during the night, the talks looked close to collapse, with Poroshenko leaving the negotiating table and talking of being confronted with “unacceptable conditions”.

Overall, it looks to me like Russia got more out of this deal than either Ukraine or Europe. A lot depends on whether Russia really withdraws its heavy artillery and keeps it withdrawn. Like everyone else, I have my doubts. This seems more like a chance for Russia to regroup and set conditions on the ground than it does a real agreement. We'll see.

By Age 40, Your Income Is Probably as Good as It's Going to Get

| Wed Feb. 11, 2015 7:33 PM EST

By age 40 you're done. That's the conclusion of a report from the New York Fed that looks at lifetime earnings from age 25 through retirement. The charts on the right tell the story.

The top chart shows average earnings by age. It's a little hard to immediately see how dramatic the income peak is since the y-axis shows the log of earnings, but if you do the arithmetic it demonstrates that, on average, by age 40 you're within about $1,000 of your peak earnings. You'll get inflation adjustments after that, but for the bulk of us, that's it. Real earnings pretty much plateau after age 40.

The bottom chart illustrates this in a different way. The yellow rectangle shows earnings growth for the bottom 80 percent. The blue line is for ages 25-35, and there's a fair amount of earnings growth except at the very bottom. The red line is for ages 35-45, and it's pretty close to zero. There's virtually no earnings growth for anyone. And the green line is for ages 45-55. It's actually negative. If you put the latter two age groups together, the report concludes that "average earnings growth from ages 35 to 55 is zero."

Now, outside the yellow box we have the top 20 percent: the well off and the rich. Those folks show a lot of earnings growth when they're young, but they also show fairly healthy growth between ages 35-45.

And the top 1 percent? That's on the very far right, and as you can see, they show earnings growth at every age level.

None of this will come as much of a surprise to anyone, but I thought it was interesting to see it in black and white, so to speak. If you're planning to make your fortune, you'd better do it by age 40. With only a few exceptions—and those exceptions are mostly for people already making a lot of money—you're done by then. Your income just isn't likely to ever go up much after that.

(Via Wonkblog's Danielle Paquette.)

Is Republican Concern About Middle-Class Wage Stagnation Just a Big Con?

| Wed Feb. 11, 2015 5:10 PM EST

Over the past few weeks, Republicans have become oddly troubled about the state of the American economy. It's not just that recovery from the Great Recession has been slow. Their big concern is that income inequality is growing. Middle-class wages are stagnating. GDP growth is benefiting corporations and the rich, but no one else. The economy is becoming fundamentally unfair for the average joe.

This is certainly a sharp U-turn for a party that's traditionally been more concerned with cutting regulations on businesses and lowering taxes on the rich. Why the sudden unease with the fact that the rich are doing so well?

The cynical side of me says the answer is simple: Republicans don't really care about the growing unfairness of the economy any more than they ever have. They've just decided to attack Democrats on their strongest point, not their weakest. This was a favorite tactic of Karl Rove's, and over the past decade or two it's become a fairly conventional strategy. If Hillary Clinton thinks she can make hay by pointing out how the well the rich are doing at the expense of everyone else—well, let's just defuse that right from the start by agreeing with her. Thomas Edsall puts it like this:

The danger for Democrats is that they will lose ownership of the issues of stagnation, opportunity and fairness. But they also face what may be a deeper problem: What happens when their candidates are not the only ones who can harness the emotional power that stems from the anger many Americans feel as they helplessly watch the geyser of wealth shooting to the top?

The less cynical view is that the Republican Party is finally responding to the views of the "reformicons," a loose group of youngish thinkers who have urged the GOP to adopt a more populist, family-friendly economic agenda. This, goes the story, is pushing Republicans in a more centrist direction, and is responsible for their increasing attention to issues of economic fairness. As Edsall says, they have to move to the center if they want to win in 2016. However, Yuval Levin, one of the most prominent of the reformicons, says this is just flatly wrong:

A lot of [Edsall's] confusion would be resolved if he considered the possibility that we are actually trying to drag the party to the right, not the center—on the tax question that is his focus, and on the other issues we have taken up.

....Edsall’s treatment of the tax question as the one on which the reformers have stepped furthest from traditional conservative arguments is a good illustration of his failure to see this dynamic....The kind of proposals that “reform conservatives” tend to call for, and the sort that Lee and Marco Rubio have advanced in Congress, consist of the same basic components as most of the successful conservative tax reforms of the last three decades....[However,] it does emphasize the business tax code in pursuit of growth more....It does emphasize marginal rate reductions less....It does deliver more of its tax relief through payroll-tax cuts....It does prominently feature the over-taxation of parents among the distortions it seeks to correct.

....This approach to tax reform is precisely an application of longstanding conservative principles and goals to contemporary circumstances....So on taxes, the question between some reform conservatives and some other conservatives is how best to move Republicans to the right....At its core, at least as I see it, “reform conservatism” is just applied conservatism. In many areas of policy, we’re trying to move Republicans from merely saying no to the left, or worse yet saying “yes, but a little less,” to showing what the right would do instead.

I remain unsure what to think of this argument. In one sense, it just seems opportunistic. Reformicons have so far made little headway with a Republican Party that's been relentlessly moving to the right, so now they're trying to insist that their agenda is more conservative than even the tea party agenda. Honest. You just have to squint at it in the right way.

But in another sense, I buy Levin's pitch. Most of the reformicons really are trying to shrink the size of government and lower the overall tax take. The fact that their proposals are perhaps more likely to get adopted in the real world makes them, in a practical sense, more conservative than a firebrand who just wants to scream about taxes with no real chance of ever getting a conservative tax plan passed.

That said, I still think Levin underestimates some of the differences here. The reformicons, he admits, do emphasize marginal rate reductions less than traditional conservatives. But this is not just some minor point of tactics. Ever since Reagan, lowering marginal rates on the rich has been one of the two or three unshakeable Holy Grails of the conservative movement. You see this over and over again when Republicans actively oppose tax cuts if they don't include a rate cut at the top. They don't want to reduce payroll taxes. They don't want to increase child tax credits. What they want is to cut tax rates on the rich. The evidence on this point could hardly be more crystal clear.

Overall, then, I'd say Edsall has the better of this argument, and he's right to be a bit befuddled. The reformicons may say that their agenda is both more populist and more conservative than traditional Republicanism, but that's a hard argument to swallow. And when it comes to issues other than taxes, the problems get even worse. Reformicons mostly want to accept the welfare state but transform it into something more efficient. That's not a message that the modern Republican Party is open to. Ditto on social issues, where reformicons tend to simply stay quiet. But in real life, politicians don't get to stay quiet. They either toe the line on social issues or else they're drummed out of the movement.

The bottom line remains the same as it's always been. To the extent that reformicons are successful, it's because they aren't really reformers. To the extent that they're true reformers, they aren't successful. Maybe that will change in the future. But not yet.