Over at Wonkblog, Dylan Matthews has a long post titled “Why do people hate deficits?” It’s a good summary that runs through all the various reasons people give for thinking that deficits are bad.

But it doesn’t actually answer the question, at least not as I take it. Dylan’s list provides us with two things: (a) technical reasons that some economists dislike big, persistent deficits, and (b) talking points used by politicians who are railing against the deficit and need to toss out some plausible sounding arguments. What we’d really like to know is why so many ordinary people dislike deficits. Here are a few possibilities:

• They listen to politicians and pundits railing against the deficit and simply assume that deficits must therefore be bad. After all, everyone says they are.
• They don’t really care about deficits, they just hate welfare spending. Opposing the deficit is a convenient proxy.
• They think that countries are like households, and getting in debt inevitably means an endless, grinding stuggle to pay the bills.
• Liberals have done an abysmal job of explaining why deficits are good during periods of high unemployment, so ordinary citizens have no reason to think deficits are anything other than bad.

I imagine all of these things play a role, but I’d place a lot of weight on the last one. Sure, some of the reasons to dislike deficits are dumb and some are downright dishonest. But that’s just the nature of political discourse. A movement that can’t fight back against slippery arguments had better steel itself to lose lots of battles.

Like it or not, the truth is that deficit hawkery is a pretty obvious default position to have unless someone gives you a really compelling reason to believe otherwise. So if we’re unhappy that the public is too hawkish about the deficit, we have only ourselves to blame.

Tim Lee has an interesting piece at Ars Technica today about a new (?) study that attempts to figure out how rigorous the patent office is at approving patents. Long story short, the authors take the uncorrected approval rate, and then adjust it for various factors to get a true idea of just how many patent applications are approved. The headline result is that the patent office got steadily more selective during the Bush administration, and then suddenly reversed course in 2009 and started approving way more applications.

But something else caught my eye. The basic chart is on the right. The bottom line is the raw uncorrected approval rate. The lines above it each correct for a different factor until finally you reach the purple line at the top, which tells us the real rate of patent approvals. If this line is correct, the Patent Office approved about 99.5 percent of all patent applications in 2001.

So, um, what’s the deal with that? Can it really be true that virtually every single patent application that year eventually got approved?

Jackie Calmes writes today about President Obama’s big problem with Republicans:

In the past, when he has stayed aloof from legislative action, Republicans and others have accused him of a lack of leadership; when he has gotten involved, they have complained that they could not support any bill so closely identified with Mr. Obama without risking the contempt of conservative voters. Representative Chris Van Hollen, Democrat of Maryland, called this predicament Mr. Obama’s “Catch-22.”

….Other than the stimulus experience in early 2009, the moment that most captured that polarization for the White House occurred a year later. In early 2010 Republican senators, including the minority leader, Senator Mitch McConnell of Kentucky, demanded that Mr. Obama endorse bipartisan legislation to create a deficit-reduction commission. But when he finally did so, they voted against the bill, killing it.

Well, that’s what the opposition does: it opposes. If Obama is spending too much, you scream about the deficit. If he cuts spending, you scream that he’s endangering the safety of the country. If he refuses to reform Medicare, you scream that entitlements are out of control. If he cuts Medicare spending, you run campaign ads screaming that he’s sacrificing Granny on the altar of Obamacare. If he raises taxes, you scream that he’s engaged in class warfare. If he lowers taxes, you scream that he’s draining the Social Security trust fund.

In other words, any port in a storm. Opposition parties routinely use whatever arguments are at hand. This is hypocritical, of course, but no one cares about hypocrisy unless it’s the other guys engaging in it. When your guys do it, you beaver away figuring out clever reasons why this episode isn’t really at all like that previous episode. Everyone does this.

It’s still pretty annoying, though, isn’t it?

Speaking at a fundraiser last Thursday, Barack Obama called California attorney general Kamala Harris “by far the best-looking attorney general in the country.” On Friday, after taking considerable heat for this, he apologized. That pretty much closed out the issue for me. It was a modest mistake, quickly corrected.

But how much difference does this kind of thing make, anyway? Today, the Name It, Change It campaign released a survey conducted earlier this year on exactly this subject. In the survey, Jane Smith and Dan Jones are pitted against each other in a race for Congress. Both have similar backgrounds, and after reading their bios the survey respondents prefer Jane slightly, 49-48.

Then they read a second story. In one version of the story, there’s no physical description of either candidate, and Jane’s lead stays pretty much the same. In a second version, there’s a neutral description of Jane’s appearance. Suddenly she’s 5 points behind Dan. In a third version, there’s a positive description of her appearance. Now she’s 13 points behind Dan. A fourth version that contains a negative description has about the same effect.

In other words, any description hurts Jane. And any non-neutral description, even a positive one, just kills her. This is why even a complimentary comment like Obama’s is both inappropriate and damaging in a professional setting. It primes people to think of a woman’s appearance, and that’s apparently enough to keep them from thinking about her actual qualifications. You will be unsurprised to learn that this effect is strongest among men. The full report is here. (Via ThinkProgress.)

Speaking of Margaret Thatcher, it’s safe to say that I’m hardly her biggest fan. But not her biggest critic either. She was on the right side of the Cold War; she was on the right side of de-nationalization; and she was on the right side of keeping out of the euro. But regardless of whether you love her or hate her, I think Michael Tomasky makes an astute point comparing her political legacy to Ronald Reagan’s:

The other difference between Thatcher and Reagan is that the Tories haven’t gone mad and made Thatcher look like a milquetoast moderate. In this sense her legacy has been more durable than Reagan’s. She re-centered British politics to a place where it’s more or less stayed, while today’s American right has completely left Reagan in the dust.

He’s right: today’s Conservative Party would be reasonably recognizable to Thatcher. She could run for the party leadership tomorrow and have a good chance of winning it. But today’s Republican Party wouldn’t elect Reagan dogcatcher, let alone president. Despite the endless hagiography of Reagan from conservatives, the plain truth is that if he were reincarnated today, Ted Cruz would denounce him as a socialist and the tea party would disown him.

For Britain’s conservatives, Margaret Thatcher was a corrective. Once the corrective had been applied, their policies more-or-less stabilized. But for American conservatives, Ronald Reagan was just a start. They’ve kept moving farther right ever since.

Why is this? Discuss.

Over at The Corner, Andrew Johnson writes what’s become an almost obligatory nutpicking post whenever someone famous dies:

While many mourn the loss of the Iron Lady, liberals have been quick to celebrate her passing….

This is followed by a grand total of six tweets, one of which refers to a piece written a year ago and another of which isn’t even nasty. Frankly, I think Thatcher would be pretty disappointed if this is all the venom she inspires these days.

Anyway, two thoughts. First, I’m sure the outraged right will show all the proper decorum when Jimmy Carter dies. Certainly none of them will so much as tweet a suggestion that the world is well rid of this meddlesome, Israel-hating diplomatic rogue, will they?

Second, what’s the problem here? When a polarizing figure dies, why shouldn’t the reaction be polarized too? The British, bless their hearts, have a tradition of being a bit more bluntly truthful in their obituaries than us Americans, and I’m all for it. Margaret Thatcher led a very public, very contentious life, and was never one to clutch her pearls when she was attacked—and if she could take the abuse while she lived, I think her supporters can take it after she’s died. This doesn’t mean that literally anything goes—George Galloway’s “Tramp the dirt down” is typically over the top—but it does mean that if yesterday you thought her legacy was a terrible one, there’s no good reason not to say so today. And no reason to be too scrupulously polite about it, either.

Thatcher loved a good fight, and she always, always, always gave as good as she got. Let’s not pretend otherwise.

This is from the Wall Street Journal today:

Michael Feroli, chief U.S. economist for J.P. Morgan, estimates that since the recession, the worker flight to the Social Security Disability Insurance program accounts for as much as a quarter of the puzzling drop in participation rates, a labor exodus with far-reaching economic consequences.

Is this true? I don’t know: as I type this, I haven’t looked at the numbers yet. So let’s look!

In 1985, the Social Security Administration forecast that 7.6 million workers would be receiving disability payments in 2009. The actual number turned out to be 7.8 million. So that’s our baseline: we started out 183,000 higher than forecast.

The original forecast for 2012 was 8.5 million. The actual number turned out to be 9.4 million. That’s a difference of 885,000. Subtract the baseline number, and the unexpected spike since the recession has been 702,000 workers.

Since 2009, about 3 million workers have exited the labor force. It’s not entirely clear that we can call this “puzzling,” since the labor force participation rate peaked in 2000 and has been dropping ever since. Still, the participation rate did spike downward even more steeply than usual following the recession, and 700,000 is about a quarter of 3 million. So Feroli’s contention is plausible: the upward spike in disability awards might account for about a quarter of the post-recession downward spike in labor participation.

That’s not a sure thing, since he might have the causality backward. It’s equally likely that other factors forced the labor participation rate downward, and workers who found themselves with little prospect of ever getting a job were more aggressive about applying for disability coverage. In fact, I find that explanation more likely. Nonetheless, I promised myself I’d post the results of this crude analysis regardless of what they showed, so here they are.

For more, see my post this weekend about the rise in disability payments, which has become a huge topic of discussion ever since that Planet Money story a few weeks ago. Nickel summary: it’s true that disability awards have spiked upward a bit since the recession, but generally speaking, the increase in disability recipients since 2000 has nothing to do with massive waves of cheating or indolence. The vast majority of the growth was predicted way back in 1995 using simple demographic projections, and we’ve followed the predicted path ever since. There’s really only a very small story here.

Here’s Alana Semuels of the LA Times on the state of work today:

The envelope factory where Lisa Weber works is hot and noisy. A fan she brought from home helps her keep cool as she maneuvers around whirring equipment to make her quota: 750 envelopes an hour, up from 500 a few years ago. There’s no resting: Between the video cameras and the constant threat of layoffs, Weber knows she must always be on her toes.

….In 2010, National Envelope was acquired by the private equity firm Gores Group of Los Angeles, which drew on the standard playbook for such takeovers: Close inefficient plants, cut staffing and demand more from remaining employees. The company has fewer than 2,500 employees now, half the number it had in 2001.

….“Generally, the business had been run the same way since its inception,” said Tim Meyer, a Gores Group executive. “It became clear that as the market began to soften, what was in place was not a sustainable business model….Sometimes you have to make dramatic changes to save the jobs that you can,” he said.

Maybe so. After all, National Envelope had filed for bankruptcy before it was acquired. If Gores Group ends up making only a modest profit from its acquisition, then maybe we’ll just shrug our collective shoulders and write off National Envelope as yet another victim of globalization.

But on the more likely chance that Gores Group is in this in order to make not a modest profit, but a killing, it basically represents yet another example of the redistribution of wealth upward in the United States: Cut staff, slash benefits, work everyone harder, and generate huge returns for the rich investors who fund Gores Group.

And here’s part 2 of this series of stories about the state of work today:

Employers are using technology to read emails and monitor keystrokes, measure which employees spend the most time on social networking websites and track their movements inside and outside the office. They can see who works fastest and who talks the most on the phone. They can monitor how much time people spend talking to co-workers — and how much time they spend in the bathroom.

….For companies, the reward is financial. Unified Grocers, which supplies food to grocery chains including Vons and Gelson’s, trimmed its payroll 25% from 2002 to 2012 — but managed to increase sales 36%, according to regulatory filings.

….Companies learned a lesson during the recession, [Rod Van Bebber, senior vice president of operations] said: If there are fewer people and the same amount of work, employees will find a way to get it done. If everyone does a little more, that can mean “one less employee you have to hire,” Van Bebber said. “That’s one less health and welfare package.”

Unfortunately, van Bebber is right: a lot of companies did learn this lesson during the recession. “We’re just like human machines,” forklift driver Phil Richards said about the change in working conditions over the past few years.

Welcome back to the 19th century, my friends. For more, check out “All Work and No Pay: The Great Speedup,” from our July 2011 issue.

The LA Times reports today that the superintendent of Yellowstone Park, in a last ditch effort to deal with budget cuts caused by the sequester, decided to delay snowplowing for two weeks, a savings of about $400,000. Local businesses, afraid that this would hurt the tourist trade, decided to band together and pay for the snowplows themselves. But they aren’t happy about it:

It’s not that residents don’t want to reduce the deficit. Washington needs “to grow the economy, not the government,” said Jay Linderman, who owns an Italian restaurant on Cody’s main drag and grudgingly gave $200 to pay for plowing. What rankles locals is the indiscriminate nature of the sequester, which cut programs across the board without weighing individual merits.

But therein lies the perennial rub: Cuts that are welcomed in the abstract are not always appreciated when they hit home. And everything the government does, however small, touches somebody. “You pay your taxes to get certain services,” said Bruce Eldredge, executive director of the Buffalo Bill Historical Center, a world-class museum in the center of town, which delivered a $10,000 check to the chamber. “We would, I think, probably argue as a community that we pay our federal taxes to make sure the park is open at a specific time.”

This is, obviously, the problem of government in a nutshell: everyone wants spending to be cut, but no one wants spending to be cut on them. They want it to be cut on other people.

In particular—and please excuse the wild guess here—I imagine that most people who have a serious jones for cutting federal spending are really only interested in cutting spending on poor people. Cutting other services just isn’t what they signed up for. It’s the Obamaphones and the food stamps that are wasteful, not the Yellowstone snowplows and small town air traffic controllers. This is why I’ve always been a little surprised that when the sequester was originally negotiated, Republicans agreed to exempt (or treat specially) a whole bunch of mandatory means-tested programs, including unemployment benefits, student loans, community health centers, EITC and other refundable tax credits, CHIP, disability, school lunches, TANF (traditional “welfare”), Pell grants, Medicaid, and SNAP (food stamps). Those are the programs that their base really wants to see cut, but for some reason Republicans agreed to mostly leave them untouched.

Anyway, reading this Yellowstone story reminded me that I’ve never seen a good account of how Obama managed to bamboozle Republicans into agreeing to this. Does anybody know of one?

The richer you are, the more the home mortgage deduction helps you. Partly this is because you can only take the mortgage interest deduction if you forego the $12,000 standard deduction (for a married couple filing jointly), and that’s a much bigger deal for working class families than wealthier familes. It’s also because as your income goes up, you’re likely to have both a bigger mortgage and a higher tax rate. For example:

• A family of modest income might pay $8,000 in mortgage interest. Unless they have a bunch of other itemized deductions—and they probably don’t—they’re better off just taking the standard deduction. The mortgage interest deduction provides them with zero benefit.
• An average family might pay $12,000 in interest on their mortgage, with other deductions increasing that to $18,000 or so. Compared to the standard deduction, their net benefit is $6,000 at a 20 percent tax rate, or $1,200.
• A wealthier family might pay $40,000 in interest. Since other deductions most likely offset the standard deduction, their benefit is $40,000 on a 30 percent tax rate, or $12,000.

The chart on the right, courtesy of CBPP, shows the results. Two-thirds of American families have incomes under $75,000, and their total benefit from the mortgage interest deduction is $8 billion. The one-third of families above that receive a benefit of $60 billion.

In other words, families with incomes over $75,000 receive 88 percent of the benefits from the home mortgage deduction. What’s worse, the mortgage interest deduction, as currently structured, doesn’t even appear to increase homeownership rates, its supposed reason for existence in the first place.

So what to do? Various reform commissions have recommended replacing the mortgage interest deduction with a tax credit instead. Instead of taking a deduction from your gross income, you’d simply subtract a flat percentage of your interest payments from your tax bill (up to a certain cap). You’d get it regardless of whether you took the standard deduction, and everyone would get the same percentage.

Depending on how this was set up, it would not only provide more help for average families, but it would also increase tax revenue and help reduce the deficit down the road. For example, the Tax Policy Center estimates that a 15 percent non-refundable credit would raise $197 billion over ten years if it were phased in gradually over the first five years.

CBPP also likes the idea of simply giving the tax credit to the lender, instead of the borrower, who would then pass it through to the homeowner in the form of a lower interest rate. That would indeed be easier on everyone. And although CBPP doesn’t say this, I suspect part of its appeal is that a credit to the lender might be politically easier to phase out completely in the future.

If you want to learn more, the CBPP report has much more detail.

UPDATE: A reader emails to add another tidbit to think about:

One key factor you don’t mention is that it’s largely a regional thing — the vast majority of the deductions go to homeowners in New York City, Los Angeles and the Bay Area. In those three places, the deduction is actually a pretty big deal because houses are so expensive….That’s part of the reason it’s such a political challenge — our political elite largely lives in expensive cities where a lot of people actually do get the deduction.