Political MoJo

Bizarre Arguments Against the Estate Tax

| Mon Jun. 5, 2006 9:05 PM EDT

Brad DeLong wants to know if there are any "serious" economists willing to argue that repealing the estate tax, as Republicans in Congress are trying to do, is actually a good thing. Apparently Ed Prescott believes it. But his Wall Street Journal piece is pretty silly. First, we're told that the estate tax—which currently only hits estates worth over $4 million—is somehow unfair:

What is fair, for example, about telling someone that he will be unable to distribute his hard-earned money, which has already been taxed once, to his heirs as he sees fit?
Er, okay. The idea that the estate tax amounts to "double taxation" and therefore is somehow unfair is baffling. For starters, plenty of income subject to the estate tax includes capital gains which have never been taxed. But even if the estate tax does amount to "double taxation," so what? Plenty of "hard-earned" money is subject to double taxation. I, for one, paid income taxes last year and then the other day went out for dinner and bought a burrito, which was subject to a sales tax. If that's not double taxation I don't know what is; somehow, people manage. Next up is the argument that the estate tax doesn't amount to that much money anyway, so why bother with it:
Besides, even if estate taxes were not inefficient and could be construed as fair, they would still do little to address the budget deficit. In 2003, net estate taxes accounted for $20.7 billion, a drop in the bucket of an $11 trillion economy. Clearly, we are not going to balance the budget by grave robbing.
Of course. If a single tax increase can't eliminate the deficit all by itself, it's not worth doing. Nonsense. The Center on Budget and Policy Priorities has already calculated that repealing the estate tax after 2010 will cost the federal government $1 trillion between 2012 and 2021. That's a lot of money. Robert Ball, the Social Security Commissioner under Kennedy, has estimated that if the estate tax was kept at its (already-reduced) 2009 rates, it could, for instance, be dedicated to funding Social Security and be used to close up to half of that program's actuarial imbalance (which is almost certainly overstated anyway, but you get the point…) Useful? Of course. I understand why billionaires who couldn't care less about the state of the country's finances want to see the estate tax repealed, but it's baffling why actual economists who should know better would get on board.

UPDATE: For those so inclined, here's a good paper on the estate tax. Actual facts and stuff.

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U.S. said to be providing clandestine support to Somalian warlords

| Sun Jun. 4, 2006 10:29 PM EDT

According to The Herald, Scotland's independent daily newspaper, American security officials are providing clandestine support to the Somalian warlords who mutilated American soldiers in 1993. The American operation, which is in breach of the United Nations' arms embargo on Somalia, is controlled, according to The Herald, through the U.S. Embassy in Kenya and through Washington's Combined Joint Task Force in Djibouti, on Somalia's northern border.

The article goes on to describe Somalia as having a weak transitional government; indeed, it is ruled by a group of competing warlords. The American response to this chaos, according to the article, is to turn to warlords as allies in the so-called war on terror.

In its latest edition, Africa Confidential, a London-based intelligence newsletter, reports that "CIA staff certainly helped to organise the [Somali warlord] Alliance, with, we hear, the involvement of at least one National Intelligence Support Group....If what is happening now in Somalia was happening in Latin America, it would be a new Iran-Contra scandal."

According to The Herald, the U.S./Somalian warlord alliance has not resulted in the capture of any terrorists. The report states that arms have arrived from the United Arab Emerates, Ethiopia and Yemen.

Man who made up yellow ribbon story invited to White House as an Iraq expert

| Fri Jun. 2, 2006 9:38 PM EDT

Many of you will recall that, a few weeks ago, there was a "news report" released stating that Iran had passed a law that would require Jews to wear yellow ribbons and othe ron-Muslims to wear various ribbons or badges. After the story made the rounds of blogs and message boards, it was revealed that it was a fabrication of Amir Taheri, who started the rumor in an op-ed piece in a Canadian newspaper.

The upshot? Taheri was invited to the White House as an "expert" to give his opinions to George W. Bush on Iraq. According to White House Press Secretary Tony Snow, the group held an "interesting discussion that touched upon cultural issues, on political issues, on the state of affairs in Iraq." Snow stressed that the experts gave Bush "honest opinions."

Is Bush Right about Pensions?

| Fri Jun. 2, 2006 2:58 PM EDT

Robert Reich says that George Bush is doing the right thing by demanding laws that would require companies to "fully fund their pension obligations to employees," something that corporations have opposed. Call me cranky, but I have a hard time believing that Bush would ever stand up to corporations to do something that would benefit workers and future retirees, so I'd like to see the fine print here. Surely there's a catch, no?

For background on the pension crisis in the United States, Roger Lowenstein wrote a terrific piece for the New York Times Magazine last year describing how companies have managed to skirt accounting rules and underfund their pension obligations, which means that unless something changes, a lot of companies are going to have to welch on pension promises made decades ago.

Attack on the Estate Tax

| Thu Jun. 1, 2006 6:50 PM EDT

A link that's sort of buried in Kevin Drum's (very good) post on the estate tax is worth dredging up and highlighting. According to a recent report by Public Citizen and United for a Fair Economy, the campaign to repeal the estate tax has been largely financed over the past ten years by some 18 families worth $185.5 billion. The families have spent $490 million on lobbying efforts, and stand to gain some $72 billion from a permanent repeal, which is currently being considered by the Senate. Clever way to invest, I'd say.

Anyway, about a year ago I looked at the actual campaign to repeal the estate tax, which has always been short on facts and long on emotional appeals. Indeed, it's not even clear that facts—such as the idea that only a handful of small businesses and millionaires pay the tax, or the fact that repealing it would cost the treasury a staggering $1 trillion over the next decade—play much of a role in this debate. There are modest ways to reform the estate tax, such that, as Kevin says, "the Paris Hiltons of the world would still end up paying no more on their inheritances than most middle-class workers pay on their ordinary income." The people behind the repeal, of course, would rather pay nothing at all, and are certainly willing to spend the money to get there.

Chavez' Heating Program

| Thu Jun. 1, 2006 5:55 PM EDT

William Fisher examines Hugo Chavez' program to sell discounted heating oil to poor communities in the United States. On the merits, it's hard to tell whether this program is a good idea or not—arguably Chavez could make better use of that money by spending it on poor communities in Venezuela—but it is true that all the sniping at Chavez from various corners of this country is, as Fisher puts it, "petty." Whatever one might think of Chavez—hero of the oppressed or crazed authoritarian, take your pick (or both)—he's in no sense a real security threat to the United States.

It's also worth pointing out that if Republicans and others disapprove of Chavez trying to win friends and influence people by selling heating oil to the poor, they could always stop him by reversing the cruel and gratuitous budget cuts that have been leveled at LIHEAP, the federal low-income heating assistance program, over the past five years. Just a thought.

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Bush's Mixed Record on HIV/AIDS

| Thu Jun. 1, 2006 3:49 PM EDT

Heather Hurlburt has a good post on the state of funding for international programs to combat AIDS/HIV. Apparently global spending has risen from $1.6 billion in 2001 to $8.3 billion in 2005, but that will need to climb further—to $20 billion in 2008—in order to provide AIDS "prevention, treatment, and care to everyone who needs it."

There are some things to take issue with though. Hurlburt wants to give the Bush administration, along with various "religious groups" credit for boosting AIDS funding. Yes, and it's hard to understate the effects of that. But some of these groups have also done a good deal of harm on this front. Everyone should read Helen Epstein's investigation into the fight against AIDS in Uganda—a country often touted as a success story. Religious conservatives in the U.S. have fought to suppress funding for contraceptives there, and have pushed abstinence-only education—which doesn't work—over programs that have proved to be successful, such as Uganda's "zero grazing" campaign. People are dying because of it.

Meanwhile, the Bush administration has refused to link HIV/AIDS prevention programs with existing reproductive rights networks around the world, even though many public health experts believe that doing so would make these prevention programs much more effective. Antiabortion groups, of course, oppose any such link because they fear it would mean that the U.S. was funding abortion providers, however indirectly. And then there's this:

Critics of the administration say the so-called "gag rule" it imposed on even mentioning abortion in the context of US-funded reproductive-health programs has confused private groups on the limits for using US funding. They say a provision that at least one-third of American AIDS prevention funding be spent on abstinence-only programs has added to the confusion to a point where some successful AIDS prevention programs have decided to turn down US funds.
The "global gag rule"—which Bush reinstated on his first day in office, and which has consigned millions of women to misery or death—obviously has had a lot of horrible effects, but this is an under-mentioned one, I think. So yes, a good deal of praise is in order for the administration's efforts on AIDS. But that certainly doesn't excuse the things that deserve criticism.

Rice's Offer to Iran Is No Breakthrough

| Thu Jun. 1, 2006 3:38 PM EDT

The press is heralding Condoleezza Rice's offer of direct talks with Iran as a signal of a new, more moderate, US approach to the standoff between the two nations, but there is little in her words to suggest any real change in Bush administration policy. What Rice actually said was: "[A]s soon as Iran fully and verifiably suspends its enrichment and reprocessing activities, the United States will come to the table."

More on Haditha

| Thu Jun. 1, 2006 2:37 PM EDT

Gary Farber has a roundup of coverage of the (alleged) Haditha massacre, including reports that some officers may have lied about the incident to their superiors. This Los Angeles Times story, meanwhile, is one of the better newspaper attempts I've seen to try and reconstruct what actually went on that day. Both are worth reading.

Department of Homeland Security snubs Statue of Liberty

| Thu Jun. 1, 2006 2:17 PM EDT

Flying over Manhattan and seeing the Statue of Liberty has always been a thrill for me. It is difficult to think of New York--or for that matter, the United States--without thinking of the beautiful Lady Liberty. Unless, of course, you are the Department of Homeland Security. According to DHS, New York has no national icons or monuments, which is why DHS funding was cut for the city.

New York City funding was cut by 40%, from $207.5 million to $124.4 million. In addition to dismissing the Statue of Liberty as a monument or icon, DHS similarly dismissed the United Nations Building, the Empire State Building, and the city's library and major museums. Oh, and the New York Stock Exchange.

Senator Hillary Rodham Clinton has asked DHS secretary Michael Chertoff to explain how the agency arrived at the conclusion that New York had no notable icons or monuments. I can't wait to hear his reply.