Bob Somerby says he "cringed a bit" when Maryland governor Martin O'Malley went to town on Mitt Romney's Swiss bank account during last Sunday's chat shows. But he cringed even more yesterday when he heard Ed Schultz frame the issue like this in a question to O'Malley: "What do you think? Is it unpatriotic to have money overseas after getting the fruits of the land here in America and being successful?"

Like Bob, I'd just as soon not hear liberals questioning other people's patriotism. Last refuge of scoundrels and all that. But politically speaking, there's a bigger sin here: it's just dumb. When you say "Swiss bank account," nobody's thoughts turn naturally to patriotism or its lack. It doesn't even compute. The problem everyone associates with Swiss bank accounts is much simpler: they're for rich people trying to hide dodgy money from the tax man in dodgy ways.

Stick with what works, Ed! Romney is rich. Romney puts his money in tax havens. What's he hiding? That's the ticket.

But wait. Should we cringe at that too? I guess we high-minded types might. But in the real world of politics this really doesn't seem very cringeworthy. Hell, Republicans went after Romney's personal finances during the primaries. They knew exactly what they were letting themselves in for when they nominated the guy. It would be a pretty lame campaign that decided it was too pious to take advantage of a meatball like this sailing right over the plate.

In any case, I guess I'm really more interested in Romney's $102 million IRA. Granted, that doesn't have the immediate resonance of "Swiss bank account," but it raises some excellent, Bain-related-tax-dodginess questions. Nicholas Shaxson explains:

Mysteries also arise when one looks at Romney’s individual retirement account at Bain Capital. When Romney was there, from 1984 to 1999, taxpayers were allowed to put just $2,000 per year into an I.R.A., and $30,000 annually into a different kind of plan he may have used. Given these annual contribution ceilings, how can his I.R.A. possibly contain up to $102 million, as his financial disclosures now suggest?

Shaxson suggests a couple of different ways this could have happened, neither of them likely to make Romney look good. But Romney better come up with something to explain how this happened. I doubt very much that the Obama campaign — or its not-so-pious super PAC — is going to let this meatball sail by either without taking a great big cut at it.

You should probably be sitting down before you read this. Ready?

Congressional Republicans, who once promised to "repeal and replace" President Obama's healthcare law, for now have all but given up pushing alternatives to the sweeping legislation the president signed in 2010.

....As the House prepares to take its 33rd vote to repeal all or part of the Affordable Care Act, senior Republicans say they will not try to move a replacement plan until 2013 at the earliest....At the same time, GOP lawmakers are rejecting the notion that any replacement legislation should expand health coverage as much as the current law.

....Republican lawmakers say they have been clear about their broad principles for healthcare, including controlling costs, giving patients more choices and limiting government involvement....But Republican leaders have not brought any of these proposals to a vote.

That has shielded the party's ideas from close scrutiny by independent analysts, a politically risky process that could highlight legislation's costs and its impact on consumers and others. Such scrutiny proved embarrassing for House Republicans in 2009, when they proposed a detailed alternative to the healthcare legislation that Democrats were developing at the time.

The nonpartisan Congressional Budget Office concluded the GOP proposal would have left more than 50 million Americans without health insurance and reduced costs for healthy people while raising them for the sick. Similar study of the House Republicans' 2011 budget plan indicated that a proposal to make Medicare beneficiaries shop for commercial insurance with a government voucher would leave seniors paying thousands of dollars more for their healthcare.

Who could have known that "repeal and replace" was just a scam? It's shocking. Likewise, who could have known that even the vague Republican guidelines for healthcare reform don't actually do much of anything to reform healthcare once they're put into a form concrete enough to score?

But do voters care? I doubt it: this is one of those things that everyone already accepts without ever talking about it. Your average Joe, to the extent he even knows anything about this at all, understands perfectly well that "repeal and replace" is just political schtick, and all that's going to happen if Republicans win is repeal. For the conservative base, of course, that's fine. And for the broad middle it's just something to shrug their shoulders at. Thanks to crappy marketing from Democrats, those folks in the middle probably don't think Obamacare really benefits them in the first place, and thanks to brilliant marketing from Republicans they probably do think it will raise their taxes. Yay politics!

Andrew Stuttaford is unhappy about the state of the U.S. tax code:

And then there’s capital gains (due to rise, of course, courtesy of Mr. Obama), and still not adjusted for inflation, a deliberate anomaly that means the taxpayer pays real taxes on unreal “gains”. Even the amount of the best-known capital gains tax exemption (on the sale of a primary residence) of $500,000 for a couple, $250,000 for a single person, hasn’t been changed since 1997. That won’t matter for most, for now, but give inflation QE and time: The IRS is waiting.

That's pretty sad. I wonder how he feels about indexing the minimum wage to inflation? In any case, speaking for myself, I'd be willing to level the playing field by adjusting capital gains taxes to inflation just as soon as we level the playing field by increasing the capital gains rate from its current 15% to the rate charged on ordinary income. Oddly, though, rich people seem uninterested in making such a bargain. Inflation and all, I guess they must think the current setup is a fairly sweet deal.

David Brooks has returned from Aspen, where he heard a presentation from Harvard political scientist Robert Putnam. According to Putnam, there's a growing gap in the way the rich and poor raise their kids:

Over the past decades, college-educated parents have quadrupled the amount of time they spend reading “Goodnight Moon,” talking to their kids about their day and cheering them on from the sidelines.....A generation ago, working-class parents spent slightly more time with their kids than college-educated parents. Now college-educated parents spend an hour more every day. This attention gap is largest in the first three years of life when it is most important.

Over the last 40 years upper-income parents have increased the amount they spend on their kids’ enrichment activities, like tutoring and extra curriculars, by $5,300 a year....In 1972, kids from the bottom quartile of earners participated in roughly the same number of activities as kids from the top quartile. Today, it’s a chasm. Richer kids are roughly twice as likely to play after-school sports. They are more than twice as likely to be the captains of their sports teams. They are much more likely to do nonsporting activities, like theater, yearbook and scouting. They are much more likely to attend religious services.

It's not 100% clear from Brooks's column, but it sounds as if the problem here isn't that working class families are doing any less than before. The growing gap is caused by the fact that affluent families are doing much, much more. This is similar to the trend of growing income inequality in America: the problem isn't that the working class is making less money than they used to, the problem is that their incomes have been sluggish while incomes of the well-to-do have skyrocketed.

This makes me skeptical of Brooks's favored explanation for the parenting gap: the growing number of single parents in America. This is, he says, primarily a working/middle class phenomenon, and single parents simply don't have the time or money to raise their kids properly. I'm willing to buy the idea that growing single parenthood is a problem, but still, if that were really the cause of the gap then I'd expect to see kids in poorer families doing worse on an absolute scale. But I don't know of any evidence on that score, and Brooks doesn't provide any. In fact, the one piece of evidence he mentions is school test scores, and he very cagily writes of poorer kids only that "Their test scores are lagging." Technically, that's true: poorer kids have always done worse than affluent kids, and they continue to do worse today. But that doesn't mean their test scores have gone down. On the contrary: whether you measure by income level (kids who qualify for free lunches) or by performance level (the bottom decile of test scores), poor kids have improved their scores over the past four decades. That's true for white kids, black kids, and Hispanic kids. It's true for boys and girls. It's true for public school kids and private school kids. On the NAEP test, the supposed "gold standard" of national testing, children of all kinds have improved or, at worst, stayed steady, on every possible metric since the early 70s.

What else can you say about poor and working class neighborhoods over the past 40 years? Well, crime is way down. Drug use is down. Those are positive social indicators. So I'm a little puzzled when Putnam says of working class kids that "virtually all our major social institutions have failed them — family, friends, church, school and community." I won't pretend that our major social institutions are doing a great job with poorer children, but I don't quite see the cataclysmic failure that he does. What I do see is growing income inequality that allows affluent parents to do far, far more for their kids than they could even a few decades ago. That may be a problem, but it's a very different kind of problem than the one Brooks usually talks about.

A few days ago, the clue in one of my daily crossword puzzles was "#4 name in Senate seniority." Hmmm. Five letters. Hatch? He seems like he's been around long enough that he might be #4. But the last two letters were IN. Maybe Levin? He also seemed like a decent candidate. But no: I was right the first time. I was just stuck in a rut thinking of only last names. The answer was Orrin.

Today, Bob Somerby highlights a peculiar statement from our #4 man in the Senate. He was on Fox last night chatting about the individual mandate and whether it was a penalty or a tax:

Now they're trying to say, “Well, it's just really a penalty.” Unfortunately for them, the chief justice and the majority of the members of the Supreme Court held that it is a tax. And therefore, that means that, well, if you talk about a tax, that means about 77 percent of people earning less than $120,000 a year are going to have to pay it. And by the way, 10 percent of the people earning less than $23,000 a year, the poverty level, have to pay that tax as well. It's going to be a devastating thing for those not earning a lot of money in our society.

WTF? I can't even fathom what he's talking about here. Does anyone know? I'm almost afraid to ask, because the answer always turns out to be some kind of meme circulating in Rush/Fox/tea party land that I've been blissfully unaware of, but curiosity has gotten the better of me. Who makes up this vast crowd that's supposedly going to feel the icy grip of the IRS when the mandate goes into effect?

UPDATE: I think we have an answer. It comes from a piece written by Keith Hennessey at Real Clear Politics a few days ago. Hennessey quotes a CBO report projecting that in 2016 there will be 3.9 million people who will be both uninsured and have to pay the tax:

CBO says that under this law in 2016 there will be 400,000 people below the poverty line who will be uninsured and pay the tax....There will, in 2016, be three million people with incomes less than $59,000 (singles) or $120,000 (families of four) who will be uninsured and have to pay the tax. These three million people are not rich, they will be uninsured, and they will be required to pay higher taxes.

400,000 is 10% of 3.9 million, and three million is 77% of 3.9 million. So the correct talking point is that of the people paying the penalty, 10% will be under the poverty level and 77% will be middle class. Hatch just bollixed it up. Thanks to Gadolphus and JohnBroughton for clearing this up in comments.

Betsey Stevenson and Justin Wolfers note that the Fed has consistently undershot its inflation target lately. Monetary policy today only makes sense if the Fed not only doesn't care about unemployment at all, but also, for some reason, is hellbent on getting inflation under its 2% target. Matt Yglesias is contempuous: "Ben Bernanke has brought us the lowest inflation of any Federal Reserve Chairman of the postwar period. You may call it prolonged mass unemployment, but he may see it as a huge success." Atrios goes even further:

I do wish more people who are maybe a bit more respectable than I am would start using moral language to describe the reprehensible actions of Bernanke and pals. There's no possible analysis of the welfare tradeoffs of these policies which leads to any other conclusion than "mass unemployment is a small price to pay for keeping the rich fat and happy, or even fatter and happier."

Time to end our failed experiment in "independent" central banking.

I don't really disagree with any of this except for one thing: what makes anybody think that monetary policy would be any different if the Fed weren't independent? It's not clear to me that Tim Geithner would run things much differently, and it's sure as hell not the case that Congress would suddenly get religion and ease up on monetary policy.

The problem, I think, isn't Fed independence. It's the mindset of the entire financial elite in the developed world. Until that changes, it hardly matters who runs the Fed.

Ezra Klein points out today that presidential polling has been unusually stable this year: Neither Romney nor Obama has managed to open up a lead of more than a couple of points over the past 12 months:

This is a good moment for my typical polling disclaimer: At this point in 1980, Jimmy Carter was ahead in the polls. At this point in 1988, Michael Dukakis was ahead in the polls. At this point in 1992, George H. W. Bush was ahead in the polls. In other words: Who cares what the polls say in July?

But it’s not a disclaimer I fully believe. Permanent campaigns, mass media and bitterly divided parties has, I suspect, encouraged many voters to form a preference earlier than was true in past elections. Or, as Balz and Cohen put it, "the lack of movement underscores intense polarization—about nine in 10 Republicans back Romney, and a similar proportion of Democrats support Obama—and a relatively small percentage of voters say there is a 'good chance' that they could change their minds before November.”

When I was growing up, one of the big deals in political science was the steady deterioration of party loyalty: People simply didn't vote the party line the way they had in the past, which made presidential campaigns more volatile. That trend continued for a long time, but seems to have plateaued around 2000 or so, when we famously became a 50-50 nation and party cues apparently began to reassert themselves. It might be more accurate to say that most voters have ideological loyalties these days, rather than party loyalties per se, but I'm not sure that's much more than a semantic difference in the end. There just aren't many independents left who genuinely switch their party loyalties from election to election. 

Will this 50-50 split persist? A lot of smart people say that demographic trends are steadily moving in favor of Democrats, and they make a good case. The young have turned sharply against Republicans over the past decade, and brand loyalty means their anti-Republican voting behavior is likely to persist over their entire lives. A lot of that was driven by George Bush and the Iraq war and might therefore be expected to lighten up now, but new cohorts of the young continue to be repelled by the GOP's anti-gay animus. And the steadily growing nonwhite vote is getting, if anything, even more loyal to the Democratic Party than it was in the past, thanks to Republican immigration stands driven by the tea party. 

And yet, real-world events belie these trends. Republicans continue to be just as competitive in national elections as ever. It's easy, of course, to chalk this up to events: 9/11 moved the electorate in a pro-Republican direction, while continuing economic stagnation has more recently moved them in an anti-incumbent—and therefore anti-Democratic—direction. But either the demographic argument is wrong, or else it's been continuing apace, a growing tide held back by chance events. If the latter is true, Democrats should very soon start blowing Republicans out of the water in a very regular and very spectacular kind of way.

That sounds great, but I confess that I don't see much sign of it. What am I missing?

Here's an interesting pair of charts from the latest release of the Pew Economic Mobility Project. It compares income and wealth between generations at roughly age 45 (though there's a bit of statistical massaging involved to make the ages similar), and the results are shown below. Income — which includes cash transfers like Social Security and welfare payments, but not non-cash payments like food stamps — has risen for every income level. Wealth, however, hasn't. Despite making more money than their parents, the bottom three income quintiles have all amassed less wealth. Only the top two income quintiles have done better. The data goes through 2009, so there's probably a little bit of an artifact from the housing bust, but not a huge one. All figures are adjusted for inflation.

I'm not quite sure what conclusions to draw from this. For now, just consider it an interesting piece of raw data.

Conservatives are mad at Chief Justice John Roberts for voting to uphold Obamacare. But two liberal justices, Stephen Breyer and Elena Kagan, joined Roberts in ruling that Congress went too far when it threatened to remove all Medicaid funding from any state that didn't accept Obamacare's new Medicaid expansion. Congress can nudge the states, said Roberts, but it can't command them, and the threat of losing all Medicaid funding amounted to "gun to the head."

So should liberals be just as mad at Breyer and Kagan as conservatives are at Roberts? Scott Lemieux says no: Roberts was the swing vote that meant the difference between keeping or killing the entire Affordable Care Act, while Kagan and Breyer were just two bonus votes on a small subset of the law. There was already a 5-4 majority for Roberts's view, so Kagan and Breyer didn't affect the outcome.

But there might be more to this. Lemieux spells it out:

There was a unique strategic element to this case that gave a powerful reason for Kagan and Breyer to join Roberts. Roberts's belated decision to uphold most of the ACA, first of all, probably compelled Kagan and Breyer to show some cross-ideological comity to encourage him to stay in the fold. Admittedly, we cannot know for certain what effect the strategic votes of Kagan and Breyer had on Roberts. (I hope that the Supreme Court leakers will find some time to tell us whether Breyer and Kagan changed their votes after conference.) Given that it's unlikely that there was explicit horse-trading involved, it may always be unknowable. But this is where the first point becomes crucial. Liberals had nothing to lose by joining Roberts on this one issue, so they had no reason not to try to cement his belated switch.

This is all completely speculative, of course, but my gut feeling agrees with Lemieux. Whether the horsetrading was explicit or not, something about this whole case smells of logrolling: Maybe Roberts really did feel that it was unwise to overturn ACA based on a new and fairly tenuous doctrine, but I can't help but wonder if he also tried to convince some of the other conservative justices that there was a deal to be made with the liberals: namely keeping Obamacare alive in return for a strong ruling (7-2, maybe even 8-1) that placed some real constraints on Congress's Commerce Clause powers. In the end, he didn't get that. None of the conservatives signed on to a larger deal, and all Roberts got was a 7-2 ruling on the Medicaid issue.

Needless to say, I have no idea if this is what happened, and I'll admit that the sense of genuine anger coming from the conservative leakers doesn't really fit this theory. Their anger is more consistent with the notion that Roberts's switch came out of the blue and was motivated by cowardice or politics or fear. 

On the other hand, the fact that the leakers are so obviously angry means that we're getting a pretty one-sided story from them (i.e., Roberts betrayed us even though we tried hard to make him see reason, and that's all there is to it). Isn't there somebody somewhere who has any contacts with the liberal side of the court and can get their side of the story? If we're going to hear anything at all, it would be nice to hear from more than just the embittered Kennedy/Scalia wing.

Dan Amira makes a point today about President Obama's new tax proposal, and I'm trying to figure out if I think it's mostly a pedantic complaint or one with real substance. You be the judge.

Basically, every news outlet in the country is reporting that Obama wants to extend the Bush tax cuts for those making under $250,000 per year. In fact, even Obama himself describes his own plan that way. But it's not true.

What Obama is actually proposing is to retain the Bush rates on all income under $250,000. If you're a middle-class wage slave, this applies to all your income. If you're a Wall Street lawyer pulling down half a million per year, it applies to half your income. Everyone would have lower taxes than they did in the 90s. The table on the right shows how this would work. (The tax brackets are approximate and apply to married couples filing jointly.)

So the question is: what's the best way to describe this? The Obama way ("keep the tax cuts for anyone making less than $250,000") is more populist and a lot easier to understand. The technically correct way is more complicated, but it reduces the alleged class warfare angle a bit. Obama isn't taking away all the tax cuts the rich got from Bush, just some of them.

So which is better? More populist or more centrist-y? Decisions, decisions.....