Friday, August 31, 2012

Paul Ryan is Lying, Like Always

As my readers know, I have been bashing Paul Ryan for about a year now. I find just about everything he has promoted to be tendentious at best, but more usually mendacious.

This time however, I don't have to go back and do a line by line take down of his most recent contribution to our public debate. Ezra Klein has done that for us, along with Dylan Mathews.

From Mathews piece we get:

The True:
Obama cut Medicare
Obama didn't solve the housing crisis

The False:
A GM plant in Ryan's district shut down on Obama's watch
The stimulus was the biggest expenditure in US history
The affordable care act increases taxes on millions of small businesses
The stimulus was full of fraud
The Affordable Care Act was a government takeover
Obama doesn't have a debt plan

The Misleading:
Obama didn't support the Bowles-Simpson report
Obama caused the debt downgrade
Obama added more to the deficit than any other President

Ezra Klein then says, "after rereading Ryan’s speech, I went back to Sarah Palin’s 2008 convention address. Perhaps, I thought, this is how these speeches always are. But Palin’s criticisms, agree or disagree, held up."

 Followed by,:

Quite simply, the Romney campaign isn’t adhering to the minimum standards required for a real policy conversation. Even if you bend over backward to be generous to them — as the Tax Policy Center did when they granted the Romney campaign a slew of essentially impossible premises in order to evaluate their tax plan — you often find yourself forced into the same conclusion: This doesn’t add up, this doesn’t have enough details to be evaluated, or this isn’t true.
I don’t like that conclusion. It doesn’t look “fair” when you say that. We’ve been conditioned to want to give both sides relatively equal praise and blame, and the fact of the matter is, I would like to give both sides relatively equal praise and blame. I’d personally feel better if our coverage didn’t look so lopsided. But first the campaigns have to be relatively equal. So far in this campaign, you can look fair, or you can be fair, but you can’t be both.

This should have been obvious as soon as Paul Ryan was picked for VP, if not sooner. It is obvious from anything more than a cursory glance that the world view espoused in any of his documents is detached from any kind of a grounding in empirical reality or recent research (sure, the tax recommendations follow Feldstein's groundbreaking 1980s paper on the subject, but computer analysis of the effects of taxes have come a very long way since then and show many of those initial conclusions to be based on standard Keynesian multipliers and the effect of recessions on revenue). It is an expression of how they wish the world would be and the kind of opponents they wished they had, not the world of actual soil, water, and air or their flesh and blood opponents. This election comes down to one party dealing with some kind of ivory-tower reality composed of Platonic forms and another party trying to deal with the dirt and grime of the everyday, though that party shows the flabbiness that comes from their ideas not going through the tempering fire of critique and competition. But at least those weak, flabby ideas are composed of more than ether and faerie-dust. We need to have a real conversation to get through our current problems, and the current political dynamic is preventing that from happening.

Thursday, August 30, 2012

Democrats as the Party of Austerity

A rather interesting post over at Crooked Timber argues that the Democratic Party has become the party of austerity and that the Republicans have become the wild, irresponsible kids. This is leading to a reversal of electoral fortunes, where before the Republicans were the mature party of sober thought and hence largely lost elections they have now become drug pushers handing out samples of addictive tax cuts at every opportunity (my words, not the linked post) while the Democrats are the sober minded party trying to deal with our problems in a balanced sustainable way, and are suffering the electoral consequence for simply not giving away things without paying for them.

An Economist Article on Obama I Really Didn't Like

The Economist remains my favorite news magazine. However, sometimes their need to cater to their main audience of wealthy business owners overwhelms their common sense.

This article really rubbed me the wrong way (an earlier article on the origins of money that gave outsize attention to the 19th century economist Menger and none to Graeber and little to the multiple other accounts of the origins of money did as well). Its main thesis I find fair, Obama really does need to make a case for his vision of the next four years rather than just pointing out that it could have been worse. However, since this is a British magazine I feel they should at least acknowledge the comparative international picture, the US is doing better than every other comparable economy (China, while large, is still undergoing catch up growth so isn't directly comparable, even they have seen substantial slowdown). It is hard to think this doesn't have something to do with Obama's leadership, though I grant it is about as convincing to the American electorate as a whole as an endorsement from my pet cat would be.

I have a few major problems. First, I disagree that American standing in the Muslim world is as low as it was under George Bush. They asked us to bomb a Muslim nation for Chrissakes, I couldn't imagine the Arab League endorsing another military adventure by the United States under the Bush administration. There certainly remains a lot of room for improvement, but our influence is certainly stronger than it has been in a long time; although newer regimes will inevitably be more difficult to work with than the older, authoritarian regimes were.

I also object to Paul Ryan being called a fount of bold ideas. To quote Ezra Klein, "it's much more courageous to propose taxes on the rich and powerful than spending cuts on the poor and disabled." There is nothing bold about Paul Ryan's ideas, they amount to buck passing to the states or to private charities and families (and for private charities and families there is a lot of research on the third world that shows these institutions are vastly less efficient than state sponsored programs, it's not a bold, untried area, these are well known and understood features of third world stagnation, though those specializing in developed economies are rarely even superficially conversant with this literature) along with a bunch of hand waving regarding the details. Just because the man is personally compelling doesn't mean his ideas are.

I also just have to say I hate the term radical center. As has been repeated ad nauseum, health care reform is basically RomneyCare, it was a right wing idea that was meant to counter left wing health care reform proposals. Given this, what other policies exactly will remain in the radical center once Obama endorses them? Wouldn't they then become labeled left wing socialist policies, which has so far been the result of Obama endorsing much anything? I found the ending two paragraphs entirely bone-headed, since Bill Clinton the Democrats have entirely endorsed pro-business objectives and the idea that economic growth and making the market work for individuals is essential to our nation. What radical center is there left to embrace that they don't already? Just because they refuse to endorse empirically unsupported notions regarding taxation of high incomes or unregulated finance doesn't mean they are anti-business. And pointing out the fact that individual merit tends to be a second order consideration in the success of business relative to structural factors is simply being realistic, even if it offends business people who like to stroke each others egos.

Wednesday, August 29, 2012

Rice's Speech at the RNC

I'm just really not liking her speech at all. Reminding me of everything that was wrong with the Bush administration's foreign policy. Also reminding me of how I felt that she reoriented State to support the military too much rather than being a separate track.

Whatever happened to Colin Powell? He was a real Secretary of State that really understood diplomacy's role. Rice always bought into the militarism too much, and it is really coming out in this speech.

Update: I felt the need to add that I liked the speech much more once she moved off foreign affairs. However, I feel that the Bush administration's emphasis on unconstrained, unilateral action was one of the biggest disasters for US policy, not just foreign policy, of the post-war period and seriously undermined our former advantage in using multilateral institutions to leverage our interests without high expenditure.

I also feel that the attitude expressed towards China was juvenile, at best (not that I feel the Democratic positions is any better). The trade bit really galled me, we are one of the most open of the large trading nations, China one of the most closed. It's rather easy for China to engage in trade treaties that improve on its current, very poor, trade openness. It is much more difficult for us to do the same, what remains to be ironed out for us are very difficult international areas, like intellectual property law, or are narrow trade barriers involving very powerful sectors either here in the US or in our potential treaty partner.

Of course, like most convention speeches the trade bit was really meaningless posturing, what really grated on me was that it came after a long section of the speech that reeked strongly of unilateralist thinking.

Stark Choices vs. Real Choices

Reading over this Economist piece on how inscrutable Romney's real views are and how his stated ideas have transformed since he was Governor of Massachusetts has made me reflect on how we're not having a real discussion of the problems facing this country (while this article inspired these thoughts, the rest of this post doesn't draw from the article much). Basically, I see the GOP mostly denying the inevitability of various challenges and the Democratic party's proposals showing the sloppiness that comes from their ideas not having any competing ideas that address the underlying challenge.

This is most obvious with climate change. The science is growing increasingly undeniable yet our political system refuses to grapple with it. The GOP largely denies that we should take action, while Democratic ideas are not exactly inspired.

But why should they be? Those ideas aren't going through the kind of competitive process that results in good ideas, instead all we have is two partisan sides shouting at each other about the reality of the problem, rather than about how we can address it. The big problem here is that there are many different approaches we could be taking, there is more than enough room for two parties to distinguish themselves from each other by proposing competing solutions. It is frustrating that we're not having this discussion.

The next major point is on how to deal with the inevitable growth of the state that comes with a shifting dependency ratio. I phrase the growing spending this way intentionally, there is no plausible way the state will not grow with shifting demographics.* The GOP mission to shrink the size of the state is denialism at its worst. This is unfortunate, our shifting demographics are going to put great strain on our political institutions, our economy, and on our communities. How we deal with this shift will play a significant part in deciding how economically successful our country is, how we can maintain our international leadership, and what kind of society we want to live in. Buck passing, by simply shifting responsibility to the states or community organizations through vouchers that don't keep up with inflation is just a way of ignoring an inconvenient reality. We need to accept the inevitability of the fiscal shift, though acknowledging this shift is potentially transient as demographics shift again in 20-30 years, then get on with the hard work of deciding how we want to deal with this as a nation. I find weak proposals on one side and outright denialism on the other a rather poor way forward.

The last is that taxes have to rise. This is separate from the size of the state since taxes have to rise even if expenditure is cut. There is a really good debate to be had here over which taxes will rise how much and how they will be distributed. But that is not the debate we're having. Both sides want to cut taxes, for only most people on the left vs. everyone on the right, but this is just fantasy. In this case both sides are in denialism, but the simple arithmetic says there is a conversation here we're going to have to have even though nobody wants to have it.

At the end of this little piece I find myself thinking that politics should be a lot more like an uncomfortable family conversation around the dinner table than it is now.

*I am exaggerating only slightly. Canada and Australia will likely be able maintain the size of their state at roughly the size of ours without radical changes (Japan likely will as well, but its economic challenges don't make it a very appealing model). The key difference here is lower military spending, state spending likely only has to increase a few percent to be sustainable, it would be possible to shrink the American security state (not just military but domestic security, such as the prison system, as well) to pay for inevitable increases in social spending thus keeping overall expenditure near current levels (I expect Canada's and Australia's to increase, but their model is more successful at controlling health care costs and other social expenditures than our system, and Australia has lower spending than we do, though social expenditure is higher in both). I find this scenario rather more implausible than I find the scenario of a small growth in total state expenditure.

Progressives Actually Do Have a Deficit Reduction Plan

Haven't finished reading it yet, so this post is not meant to be an endorsement of the plan in any way. However, it is a common right wing talking point that there is no plan from the left to get America's fiscal house in order. That is just plain false.

Short form, it achieves $6.8 trillion in deficit reduction by cuts to the military, raising taxes on the top of the income distribution (including several new brackets), ending preferential treatment for capital gains, and simplifying the tax code by eliminating many corporate tax expenditures. It also contains substantial stimulus measures.

So agree or disagree with it, there is a plan.

Here is the 1 page summary.

Here is the executive summary.

Also, as Ezra Klein stated about their 2011 budget proposal, "it's much more courageous to propose taxes on the rich and powerful than spending cuts on the poor and disabled."

Friday, August 24, 2012

The Reality of Taxes in America

Andrea Louise Campbell has a great article taking a comparative look at taxes in the United States.

The bottom line is that "the reality of U.S. fiscal policy: compared with its counterparts among the advanced nations, the United States' tax system collects little revenue, poorly redistributes that money across the population, and is mind-bogglingly complex."

An example of this complexity is that "to get another sense of the difference between the United States and other developed countries, consider the subsidization of the cost of raising children. Many advanced-country governments calculate and send allowances to families with children. In the United States, however, households with children must navigate and administer a complex system of tax breaks themselves, such the Child Tax Credit and the Earned Income Tax Credit. And if they file their returns incorrectly, the IRS may fine them."

Furthermore, for the tax system as a whole "the share of taxes paid by each income group essentially resembles the share of income that it receives, which would not be the case in a more progressive system. According to the Institute on Taxation and Economic Policy, a fiscal think tank, in 2011, the lowest fifth of earners received 3.4 percent of total income and paid 2.1 percent of total taxes, the middle fifth received 11.4 percent of income and paid 10.3 percent of taxes, and the top one percent received 21 percent of income and paid 21.6 percent of taxes. "

What do we get for it? "In Europe, regressive taxes are matched with highly redistributive states. In the United States, mildly progressive taxes are matched with a not very redistributive state. As a result, the United States experiences greater inequality than most other advanced nations, with the tax-and-transfer system doing little to alleviate it."

And what does the research say about the consequences? Generally, that the US fiscal state is inefficiently small. "Slemrod and Bakija found little correlation across the OECD countries between taxes as a percentage of the economy and the size of the economy itself, as measured by per capita GDP. Nor, according to their research, is there a high correlation between taxes as a percentage of GDP and the annual rate of economic growth." "There is little evidence that tax rates affect the participation of either middle- or high-income individuals in the work force. And despite higher taxes, higher earners ultimately did not spend much less during the 1990s, since the total income of the top one percent during that decade rose..." "past experience suggests that a tax hike today would not severely damage the economy, and productivity might even rise with the security and investments that government spending can provide."

We face some real decisions over the next few years in this country, and it would be best if we understood the consequences of these decisions. Unfortunately, it seems to me that mythology dominates the tax discussion at the expense of research and reality. I encourage you to read the whole article, it is sobering considering the state of US political debate.

Thursday, August 23, 2012

Shared Sacrifice, for the Other Half

I was a little shocked that Paul Ryan was selected for VP. But it does open up wonderful opportunities for articles such as this at the Washington Post. It was fairly obvious from a read through of Ryan's Roadmap in the first place, but a more detailed look at it is worth having.

It does need to be noted that given Ryan's assumptions expressed in the Roadmap having to do with the impact of assistance on individual work ethic and the positive impacts resulting from making real costs felt by an individual, these shifts in spending are fully consistent with Ryan believing his budget not only helps the country but also the poor themselves by reducing dependency and increasing incentives for hard work. I also happen to think that even a passing familiarity with the empirical data on government spending, the impacts of aid, distributional impacts, entrepreneurship, or any other related subject would reveal these assumptions as barking mad. But being barking mad is not inconsistent with thinking you are acting in the best interests of the people whose program's you are cutting.

Tuesday, August 21, 2012

Something Everyone Should Read on the Recent Study on Medicare

I've been seeing some misreporting on a recent Medicare study floating around right wing opinion pieces. I first encountered it in this op-ed by Robert Samuelson. The basic contention is that the left is incorrect in their critiques of the Medicare Advantage program and that competition does in fact reduce health care costs. However, the study's author takes exception to this and wrote an article in response:

Hey Republicans! Stop Misusing my Medicare Study!

I have no particular comments to make about this. I just think everyone needs to be aware of the misuse of research and outright lies being made. There is very little evidence that the private market can provide medical care more effectively, cheaply, or efficiently than the public sector so it is no surprise that advocates of this approach find it necessary to misrepresent and lie. More attention needs to be paid to the refutations of this abuse of scholarly research and I'm glad David Cutler takes the time to do so.