Grand Bargain? "Aim High" Mr President

Robert Reich:

I hope the President starts negotiations over a “grand bargain” for deficit reduction by aiming high. After all, he won the election. And if the past four years has proven anything it’s that the White House should not begin with a compromise.

Assuming the goal is $4 trillion of deficit reduction over the next decade (that’s the consensus of the Simpson-Bowles commission, the Congressional Budget Office, and most independent analysts), here’s what the President should propose:

First, raise taxes on the rich – and by more than the highest marginal rate under Bill Clinton or even a 30 percent (so-called Buffett Rule) minimum rate on millionaires. Remember: America’s top earners are now wealthier than they’ve ever been, and they’re taking home a larger share of total income and wealth than top earners have received in over 80 years.

"The Sham of Simpson Bowles"

Illinois Congressional Representative Jan Shakowsky:

Erskine Bowles and former Senator Alan Simpson deserve some kind of medal for creating the widely held perception that their plan for reducing the deficit and debt is anything other than a bad proposal.

It has been nearly two years since the commission they chaired, which I served on, finished its work. The duo’s proposal has attained almost mythical status in Washington as the epitome of what a “grand bargain” should look like.

But everyone look again. They will discover that it is far less than meets the eye.

Have Simpson-Bowles’ champions read it? Given any real scrutiny, this plan falls far short of being a serious, workable or reasonable proposal – from either an economic or political analysis.

In one of its few specific points, for example, Simpson-Bowles mandates a top individual tax rate of 29 percent “or less.” Much like the vague Romney proposals, the Simpson-Bowles plan would make up the shortfall by eliminating tax loopholes, suggesting options such as having employees pay taxes on their health benefits. Not only is this likely to increase costs to middle-income families, it could threaten coverage altogether. The proposal for corporate tax reform would eliminate taxes on profits earned overseas, rewarding companies that move jobs offshore.

Don't blow it!

Krugman:

(T)he Democrats now look like the natural party of government. Bush had already established a reputation for being unable to get anything right in the actual business of governing; all that was supposedly left was political prowess, and now that’s gone too. And even the news media have, I think, begun to notice that we aren’t the “center-right” country of fantasy, we’re a diverse nation, ethnically and otherwise, in which a lot of liberal ideas have become perfectly mainstream.

Still, hubris and all that: this newly effective coalition could be shattered if taken for granted. And you know what could really produce the kind of dispirited base that was supposed to doom Obama in 2012? A sellout on key Democratic values as part of a Grand Bargain. If, say, Obama raises the retirement age in return for vague promises on revenue (promises that would be betrayed at the first opportunity); if he appoints a deficit scold to a major economic post; it could all fall apart.

"What Romney Lost"

Garry Wills at NYRB:

What happens to those who lose a presidential campaign? Some can do it with heads rightly held high, and go on to give valuable service to the nation. We were reminded of this just two weeks before the recent election, when George McGovern died. Though he underwent a humiliating defeat by Richard Nixon forty years before, he was a man of integrity, some of whose ideas were continued by people who worked in his 1972 campaign, like Bill and Hillary Clinton, veterans of his Texas office that year. McGovern was re-elected to the Senate after his presidential loss, where he performed important services...

What public service do we expect from Mitt Romney? He will no doubt return to augmenting his vast and hidden wealth, with no more pesky questions about where around the world it is stashed, or what taxes (if any) he paid, carefully sheltered from the rules his fellow citizens follow...

What vestige of a backbone is Romney left with? Things he was once proud of —health-care guarantees, opposition to noxious emissions, support of gay rights and women’s rights, he had the shamelessness to treat as matters of shame all through his years-long crawl to the Republican nomination.

Deficits - Don't believe the "Mediscare" hype. The issue is systemic healthcare costs, which are driven by private markets.

Ezra Klein:

From the Congressional Budget Office’s hot new white paper, “Options for Deficit Reduction“:

That’s all of the federal government’s spending in three graphs. The top graph is health care, including Medicare, Medicaid and the Affordable Care Act. The middle graph is Social Security. And then there’s literally everything else: Defense, education, infrastructure, food safety, R&D, farm subsidies, the FBI, etc.

What these three charts tell you is simple: It’s all about health care. Spending on Social Security is expected to rise, but not particularly quickly. Spending on everything else is actually falling. It’s health care that contains most all of our future deficit problems. And the situation is even worse than it looks on this graph: Private health spending is racing upwards even faster than public health spending, so the problem the federal government is showing in its budget projections is mirrored on the budgets of every family and business that purchases health insurance...

Got that?  Private health care costs are inflating faster than government health care spending.  Which means it's not a "Medicare" problem.  The issue we need to attack is getting systemic health care costs under control. When you hear anyone blame Medicare as the root of our budget problems or their target in "getting health care costs under control", they are either selling you their ideology or their ignorance.  The prevalence of this nonsense is a key to understanding why as a nation our health care spending per capita is about twice as much as the high-quality universal systems such as France and Canada, with no better outcomes to show for it.

The failure of the "war on religion" demagogy

Ed Kilgore at Washington Monthly on the Catholic vote and the failure of the Church hierarchy's hysterics and demagogy:

A dog that definitely did not bark on November 7th was the once-very-intense Republican effort to “wedge” Catholic voters with claims the Obama administration was waging a “war on religion,” notably via the allegedly insufficient exemptions it offered to a contraception coverage mandate created by Obamacare. Obama won Catholics by a 50-48 vote, almost exactly his margin among voters generally, and continuing Catholic voters’ very close similarity to the electorate as a whole. The failure of the “war on religion” effort is all the more remarkable since it received tactic (and in some cases overt) support from the Catholic hierarchy, particularly via the U.S. Conference of Catholic Bishops’ “Fortnight for Freedom” campaign during the spring, aimed at mobilizing the faithful against the contraception mandate.
In a thoughtful piece for the National Catholic Reporter on Election Eve, Maryland parish priest Fr. Peter Daly examined the failure of the “Fortnight for Freedom,” and basically schooled the bishops:

Our Catholic bishops started out leading a political parade in the spring. But when they looked behind them in the fall, they discovered that almost nobody was following. What happened?

A few groups got in line. The Knights of Columbus were very active. EWTN had several programs devoted to Fortnight. There were some rallies around the country. A lot of money was spent on pamphlets and videos. There was an opening Mass in Baltimore and a closing Mass in Washington, D.C. But there was hardly any talk about it in the pews. The average Catholic hardly even noticed a Fortnight for Freedom was happening.

Why didn’t this movement catch fire? Four reasons, I think.

The GOPers have gone mad

A year old quote via the politically orphaned old-school conservative Bruce Bartlett, but so off-the-wall and obviously concocted it serves as a worthwhile reminder of just how crazy - literally crazy and/or profoundly cynical to the point of caring not one whit for this country, not to mention "the truth" - that the GOP has become.  This garbage, from one of actually-existing conservatism's alleged "intellectuals," is analytically sociopathic at best, coming from a former leader of Congress who obviously knows better:

On Nov. 21, Newt Gingrich, who is leading the race for the Republican presidential nomination in some polls, attacked the Congressional Budget Office. In a speech in New Hampshire, Mr. Gingrich said the C.B.O. "is a reactionary socialist institution which does not believe in economic growth, does not believe in innovation and does not believe in data that it has not internally generated."

If the GOP gains even greater power, this country is headed for a cliff. Not the much-touted fiscal cliff, but a "cliff" off of which intellectual integrity and common decency are in freefall and simply no longer part of our political equation. My contempt for grifters like Gingrich - who populate the GOP in large numbers - is boundless. 

“I’ve never—old as I am—seen a politician lie as much"

American Prospect's "Ringside Seat":

Looked at from a certain angle, Mitt Romney’s presidential campaign has been a grand experiment in whether it's possible to lie your way to the White House. Sure, all politicians stretch the truth like Play-Doh. They dissemble. They exaggerate. They tell the occasional out-and-out whopper. Traditionally, though, politicians tend to stick with truthiness, in the Colbert sense. Until now, there’s never been a presidential campaign built almost solely on a foundation of lies. Romney’s people have made no bones about it; his pollster, Neil Newhouse, told media at the Republican National Convention, "We're not going to let our campaign be dictated by fact-checkers." Strangely, that might have been the single most honest statement to come out of the campaign.

Romney has lied about Obama raising taxes on the middle class. He’s invented an overseas “apology tour." He’s sworn up and down that the president cut $500 billion from Medicare. He's claims that under Obama, the federal government will control half of all American industry. He's falsely asserted, over and over again, that the president has dismantled Clinton’s welfare work reforms. He’s tried to turn the auto bailout into a case of Obama “bankrupting” the car companies. The list goes on—so long that blogger Steve Benen has assembled no fewer than 917 examples of “Mitt’s mendacity.” And when he's called out, he doubles down. The great mystery, of course, is why—why, running against a fairly unpopular president with a fairly lousy economy in a politically divided country, would the challenger choose to abandon truth in such wholesale fashion? Only Mitt's God, or his shrink, can probably answer that question. 

The Long Con: Mail-Order Conservatism - "Mitt Romney is a liar..."

Great piece by Rick Perlstein @The Baffler:

Mitt Romney is a liar. Of course, in some sense, all politicians, even all human beings, are liars. Romney’s lying went so over-the-top extravagant by this summer, though, that the New York Times editorial board did something probably unprecedented in their polite gray precincts: they used the L-word itself. “Mr. Romney’s entire campaign rests on a foundation of short, utterly false sound bites,” they editorialized. He repeats them “so often that millions of Americans believe them to be the truth.” “It is hard to challenge these lies with a well-reasoned-but- overlong speech,” they concluded; and how. Romney’s lying, in fact, was so richly variegated that it can serve as a sort of grammar of mendacity.

Some Romney lies posit absences where there are obviously presences: his claim, for instance, that “President Obama doesn’t have a plan” to create jobs. Other Romney fabrications assert presences where there are absences. A clever bit of video editing can make it seem like Romney was enthusiastically received before the NAACP, when, in fact, he had been booed. There are lies, damned lies, statistics—like his assertion that his tax cut proposal won’t have any effect on the federal budget, which the Tax Policy Center called “not mathematically possible.” That frank dismissal vaulted the candidate into another category of lie, an attempt to bend time itself: Romney responded by calling that group “biased”; last year, he called them “objective.”

There are outsourced lies, like this one from deep in my files: in 2007, Ann Romney told the right-wing site Newsmax.com that her husband had “always personally been prolife,” though Mitt had said in his 1994 Senate race, “I believe that abortion should be safe and legal in this country.” And then Ann admitted a few sentence later, “They say he flip-flopped on abortion. Well, you know what? He did change his mind.”

And then there’s the most delicious kind of lie of them all, the kind that hoists the teller on his own petard as soon as a faintly curious auditor consults the record for occasions on which he’s said the opposite. Here the dossier of Mittdacity overfloweth. In 2012, for example, he said he took no more federal money for the Salt Lake City Olympic Games than previous games had taken; a decade earlier, however, he called the $410 million in federal money he bagged “a huge increase over anything ever done before.”

"They can't handle the truth!"

Andrew Rosenthal at NYT:

In a brazen example of putting ideology ahead of reality, Senate Republicans seem to have pressured the Congressional Research Service to withdraw a report debunking conservative economic orthodoxy. Cutting tax rates at the top appears “to have little or no relation to the size of the economic pie,” the report said. “However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.” So charging the rich lower tax rates doesn’t promote economic growth; it merely increases economic inequality.

The CRS is a highly respected, independent agency that prepares reports for members of Congress and routinely issues findings that disappoint or even irritate their clients, who usually just grin and bear it, or at least bear it. But Congressional Republicans seem to think that the CRS should function like Pravda.

Remember, when "Morning Joe" et. al. blame Medicare for out-of-control costs, you are listening to people spreading ignorance

CBPP:

Cutting Medicare and Medicaid is a sure path to INCREASING the percentage of GDP the county spends on health care.  Most of the discussion about "entitlements" burdening our economy are based on utter disinformation or near-total ignorance.  Replacing Medicare with vouchers - or even raising the eligibility age - will explode health care costs.  Not just out-of-pocket for seniors, but in aggregate.

The "cure" of cutting Medicare and Medicaid can only mean one of two things - exploding health care costs as private insurers pick up market share and hospitals are burdened with the uninsured flooding emergency rooms, or people simply going without essential health care. 

There is definitely a need to control health care inflation in relation to our overall economy, but privatization via vouchers or raising the Medicare age take us in exactly the wrong direction, as the chart shows. Medicare and Medicaid do the best job of cost-control, compared to private insurance.

The Professor takes on "The Blackmail Caucus" (& the idiocy of the De Moines Register)

Krugman @ NYT:

If President Obama is re-elected, health care coverage will expand dramatically, taxes on the wealthy will go up and Wall Street will face tougher regulation. If Mitt Romney wins instead, health coverage will shrink substantially, taxes on the wealthy will fall to levels not seen in 80 years and financial regulation will be rolled back.

Given the starkness of this difference, you might have expected to see people from both sides of the political divide urging voters to cast their ballots based on the issues. Lately, however, I’ve seen a growing number of Romney supporters making a quite different argument. Vote for Mr. Romney, they say, because if he loses, Republicans will destroy the economy. 

O.K., they don’t quite put it that way. The argument is phrased in terms of “partisan gridlock,” as if both parties were equally extreme. But they aren’t. This is, in reality, all about appeasing the hard men of the Republican Party. 

Taxing the top

Robert Reich on taxing "job creators":

The rich are far richer than they used to be, while most of the rest of us are poorer. The latest data show the top 1 percent garnering 93 percent of all the gains from the recovery so far. But median family income is 8 percent lower than it was in 2000, adjusted for inflation.

The gap has been widening for three decades. Since 1980 the top 1 percent has doubled its share of the nation’s total income—from 10 percent to 20 percent. The share of the top one-tenth of 1 percent has tripled. The share of the top-most one-one hundredth of 1 percent—16,000 families—has quadrupled. The richest 400 Americans now have more wealth than the bottom 150 million of us put together.

Meanwhile, the tax rates paid by the wealthy have dropped precipitously. Before 1981 the top marginal tax rate was never lower than 70 percent. Under President Dwight Eisenhower it was 93 percent. Even after taking all the deductions and tax credits available to them, the rich paid around 54 percent.

Income Inequality - the Second Gilded Age

Brad DeLong at SFGate:

A third of a century ago, all of us economists confidently predicted that America would remain and even become more of a middle-class society. The wealth inequality of the 1870-1929 Gilded Age, we would have said, was a peculiar result of the first age of industrialization. Transformations in technology, public investments in education, a progressive tax system, a safety net and the continued decline in discrimination on the basis of race and sex had made late-20th century America a much more equal place than early-20th century America and would make early-21st century America even more equal - even more of a middle-class society - still.

We were wrong.

America is at least as unequal as, and might be more unequal than, it was back at the beginning of the 20th century when Republicans, such as President Theodore Roosevelt of New York condemned the power wielded by "malefactors of great wealth," and Democrats such as perennial losing presidential candidate William Jennings Bryan of Nebraska denounced shadowy conspiracies that had somehow manipulated the financial system to rob the typical family of its proper share in America's prosperity.

Four major factors have driven rising inequality over the past 35 years:
Waning progressivity of our tax system: We no longer tax the rich a significantly greater share of their income than we tax the middle class. The idea behind the cut in relative tax rates on the rich was that it would release blocked entrepreneurial energy and trigger a burst of more rapid economic growth.

It did not: Economic growth overall has been slower since President Ronald Reagan began waves of tax cuts for the rich.

Hope vs. "Nope"

Professor Krugman:

Mr. Obama may not be as bold as we’d like, but he isn’t actively misleading voters the way Mr. Romney is. Furthermore, if we ask what Mr. Romney would probably do in practice, including sharp cuts in programs that aid the less well-off and the imposition of hard-money orthodoxy on the Federal Reserve, it looks like a program that might well derail the recovery and send us back into recession.

And you should never forget the broader policy context. Mr. Obama may not have an exciting economic plan, but, if he is re-elected, he will get to implement a health reform that is the biggest improvement in America’s safety net since Medicare. Mr. Romney doesn’t have an economic plan at all, but he is determined not just to repeal Obamacare but to impose savage cuts in Medicaid. So never mind all those bullet points. Think instead about the 45 million Americans who either will or won’t receive essential health care, depending on who wins on Nov. 6.

Romney's Debate BS Meter - 24 Myths in 41 Minutes

Igor Volsky @ Think Progress:

1) “Syria is Iran’s only ally in the Arab world. It’s their route to the sea.” Romney has his geography wrong. Syria doesn’t share a border with Iran and Iran has 1,500 miles of coastline leading to the Arabian Sea. It is also able to reach the Mediterranean via the Suez Canal.

2) “And what I’m afraid of is we’ve watched over the past year or so [in Syria], first the president saying, well we’ll let the U.N. deal with it…. Then it went to the Russians and said, let’s see if you can do something.” While Russia and China have vetoed multiple resolutions at the U.N. Security Council on Syria, the United States has also been working through the Friends of Syria group and other allies in the region. Obama’s approach “would essentially give U.S. nods of approval to arms transfers from Arab nations to some Syrian opposition fighters.”

3) “Former chief of the — Joint Chiefs of Staff said that — Admiral Mullen said that our debt is the biggest national security threat we face. This — we have weakened our economy. We need a strong economy. We need to have as well a strong military.” If Romney is worried about the national debt, why does he want to increase military spending from 3.5 percent of GDP to 4 percent? This amounts to a $2.1 trillion increase over a ten year period that the military says it does not need and Romney has no plan to pay for it.

4) “[W]hen — when the students took to the streets in Tehran and the people there protested, the Green Revolution occurred, for the president to be silent I thought was an enormous mistake.” Obama spoke out about the Revolution on June 15, 2009, just two days after post-election demonstrations began in Iran, condemning the Iranian government’s hard-handed crackdown on Iranian activists. He then reiterated his comments a day later in another press conference. Iranian activists have agreed with Obama’s approach.

5) “And when it comes to our economy here at home, I know what it takes to create 12 million new jobs and rising take-home pay.” The Washington Post’s in-house fact checker tore Romney’s claim that he will create 12 million jobs to shreds. The Post wrote that the “‘new math’” in Romney’s plan “doesn’t add up.” In awarding the claim four Pinocchios — the most untrue possible rating, the Post expressed incredulity at the fact Romney would personally stand behind such a flawed, baseless claim.

6) “[W]e are going to have North American energy independence. We’re going to do it by taking full advantage of oil, coal, gas, nuclear and our renewables.” Romney would actually eliminate the fuel efficiency standards that are moving the United States towards energy independence, even though his campaign plan relies on these rules to meet his goals.

Although Mitt Romney is as credible as a used-car salesman, there's at least one thing that we know is at stake Nov. 6

Mitt Romney has proven himself the "Etch-a-Sketch" candidate on any and every issue, but James Suroweicki @ The New Yorker explains at least one thing we can count on if this slippery character manages to hedge and edge his way into the White House:

Mitt Romney can be a hard man to pin down. But there is one thing that he’s been clear about: if he becomes President, he will repeal Obamacare. That simple promise, more than any other that Romney has made, illuminates what is most at stake in this year’s election. The campaigns may spend most of their time talking about taxes and jobs. But health care is where the election’s outcome will have the most immediate and powerful impact on how Americans live. 

Is Chinese currency manipulation still a major problem?

Professor Krugman, a former "renminbi hawk":

In 2010 an undervalued renminbi was a significant drag on advanced economies, including the United States. Since then, however, two big things have happened: relatively high inflation in China, and some appreciation of the renminbi against the dollar. As a result, the real exchange rate of China against the United States (based on consumer prices), has appreciated significantly:

At the same time. China’s surplus has come way down:

So this is an odd time to be making confrontation over China’s currency a centerpiece of your economic policy — unless, of course, it’s just bluster aimed at making voters think you’re tough.

Romney's only problem isn't math

Geography fail at final debate - Glen Kessler, WaPo "Factchecker":

Mitt Romney repeated his contention that Syria is Iran’s route to the sea. This is a puzzling claim, considering that Syria shares no border with Iran — Iraq and Turkey are in the way — and that Iran has about 1,500 miles of coastline along the Persian Gulf and Gulf of Oman, leading to the Arabian Sea.

Do tax cuts for the rich turn them into "job creators"?

Economists Laura D'Andrea Tyson & Owen Zidar, @ New York Times, have done the research:

The centerpiece of Mitt Romney’s tax plan is an across-the-board 20 percent cut in marginal tax rates. This cut, along with a few other tax changes Mr. Romney has endorsed – such as repeal of the estate tax and the alternative minimum tax – would reduce federal tax revenue from personal income and payroll taxes by an estimated $3.6 trillion to $3.8 trillion over 10 years.

The total is closer to $5 trillion when Mr. Romney’s proposed cut in the corporate income tax rate to 25 percent is included. About two-thirds of this amount would go to taxpayers making $200,000 a year or more – about 5 percent of all taxpayers.

Extending the Bush tax cuts for high-income earners, as Mr. Romney proposes, adds another trillion in lost revenue and increases the share of the benefits going to the top 5 percent. Even if the cost of the Romney tax cuts for the top 5 percent is covered by base-broadening measures, as Mr. Romney promises – but as President Obama and many others assert is mathematically impossible – does it make sense to devote trillions of dollars to lowering income taxes for the top 5 percent? Is this an effective way to create jobs?

Mr. Romney appears to think so. His plan rests on the assertion that lower taxes for high-income taxpayers will increase economic activity and employment – that lower taxes for job creators create jobs and will do so quickly. This assertion, while superficially convincing and ideologically compelling, is not supported by the evidence.