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Goolsbee Hammers McCain on Fiscal Policy While Holtz-Eakin Ducks

Don Pedro reports:

I spent my lunch hour at the Urban Institute today, listening to Obama econ advisor Austan Goolsbee debate McCain econ advisor Doug Holtz-Eakin on the candidates’ tax plans … He framed his presentation by saying that there were three problems with the Bush tax program:
1. It was fiscally irresponsible, creating a huge sea of red ink.
2. It was sold using budget gimmickry.
3. It was massively tilted toward the rich.
On all three points, he showed that the McCain program is worse. In his words, it would create deficits that are twice as big and is twice as regressive. One of his strongest points was when he said (paraphrasing), if we take McCain at his word and accept that he’s going to implement all the tax cuts he’s calling for AND his promise to balance the budget by 2013, the only possible conclusion is that he will have to cut Social Security and Medicare by 60%, all but dismantling the programs. He also highlighted the fact that the headline analysis by the TPC, which is based on Holtz-Eakin’s representation of McCain’s proposals, doesn’t even include another $2.8 trillion of lost revenue (over four years) for the policies that McCain has in his stump speech. During the Q&A, Holtz-Eakin objected to this figure, until Goolsbee showed him that it appears in an addendum table (R4) to the TPC analysis. Goolsbee practically begged the assembled crowd of policy geeks and journalists to call out the campaign on the complete insanity of the McCain proposals. He said (paraphrasing again) that if the ludicrous McCain proposals are accepted as a serious plan, no one will offer a meaningful campaign tax proposal ever again.

So what was the rebuttal to this devastating critique:

Holtz-Eakin said, well, “Taxes aren’t everything” (actual quote, at a debate on tax policy) and talked up McCain’s proposals on the environment and renewable energy. Rather than make any attempt to rebut Goolsbee’s takedown, he argued that reducing taxes increases growth and that the spending side needs to be considered as well. Of course it was pointed out that there is no evidence that tax cuts financed by deficits do anything for growth, and that McCain hasn’t identified any major spending cuts beyond some pocket change from earmarks and vague “entitlement reform.” Somehow, Holtz-Eakin managed to get away without offering any counter to Goolsbee’s critique.

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Worth a listen

hat tip reader coberly

Fresh Air from WHYY

IraqIn Iraq, Tactical Theory Put Into Practice

Lt. Col. John Nagl wrote the textbook on counterinsurgency — literally. Nagl was part of the team that drafted a U.S. Army field manual on counterinsurgency. Having completed his tour in Iraq, Nagl talks about how military theory was put into practice in the region.
Web Extra: Read an Excerpt

PoetrySoldier-Poet Brian Turner, Framing War In Verse

For soldier Brian Turner, words have the impact of bullets. His poems provide a first- person account of war; The New York Times praised their “attention to both the terrors and the beauty he found among Iraq’s ruins.”
Web Extra: Read Brian Turner’s Poetry

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Taxpayer subsidies for roads etc. vs. public transport

reader Laurie sends this great comment (lifted cactus style):

My sister-in-law ***************************(director of a system in the US). Here’s the Q I sent her:

How do taxpayer subsidies for private transportation (roads etc)
compare to subsidies for public?

Here’s her answer:
Good question. Local roads and highways get much more than transit; the question is how much more.

It’s a hard question to answer because most funds that go toward local streets and roads are not fully accounted for; they are buried in City budgets, whereas public transit funds are fully accounted for and transparent. Also, highway funds are usually allocated to the state and sometimes are used for local freeway maintenance or for local roads or even for some transit. Consequently, it is often hard to even account for all the subsidies that go toward local streets and roads and highways.

However, when you think about all subsidies that go toward local streets and roads, it’s not hard to see. Even private funds pay for roads that go places like shopping centers. And municipal bonds that pay for the city hall also pay for the new parking lot and the road leading up to it. Or the water treatment plant and the access roads. Or any other public or private buiding.

It’s very rare that municipal bonds pay for transit but it does happen–we recently passed prop 1b which included transit capital funds. But even there, 70% went to streets and 30% went to transit.

Update: Identification made more anonymous

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Tax Policy Center calls McCain campaign out for cheating.

by Robert

Brad DeLong has a hot tip from Jason Furman

I quote a bit of Brad’s quote of Furman

Today, the Tax Policy Center released a new analysis of the McCain and Obama tax plans, which provides a comparison between what each of the candidates says on taxes (their actual plans) and what their campaign advisors claim. It finds that the true cost [over 10 years] of Senator McCain’s tax proposals is $2.8 trillion larger than what his advisors have acknowledged. And most of that $2.8 trillion is the cost of yet more tax cuts for corporations and the wealthy. The plan still offers very little for ordinary Americans.

I think the key bit of the tax policy center report is (emphasis mine)

In several important ways, the candidates’ speeches and web sites differ from the plans as we’ve outlined them above, and, in several cases, descriptions of proposals provided by campaign advisors strike us as implausible. Senator McCain has said repeatedly that he would repeal the
individual AMT, allow businesses to expense all investments in equipment immediately, double the deduction for dependents, and give individuals the option to pay tax under a simplified alternative tax system. The campaign advisers say that the AMT will be patched but not eliminated except under the simplified alternative system, that only short-lived investments (for which expensing is not worth much) would qualify for immediate deduction, that the larger deduction for dependents would phase in slowly (and never equal twice the current-law deduction), and that the simplified alternative tax system would be revenue neutral. The last assertion is particularly questionable: few taxpayers will choose to pay an alternative tax if it does not reduce their tax bill, so an optional alternative is only revenue neutral if almost nobody elects it, which is probably not what the candidate has in mind. We estimated the cost of Senator McCain’s plan as described on the stump, assuming that all the provisions are fully effective immediately and that the optional alternative tax system is similar to the one proposed by the Republican Study Committee. Under those assumptions, the revenue loss attributable to the Senator’s plan increases to almost $7 trillion over the 10-year budget window.

I think that Len Burman Surachai Khitatrakun Greg Leiserson Jeff Rohaly Eric Toder
Bob Williams are heroes. I also think that this line about how an alternative tax option would be revenue neutral help provoked them into calling the McCain campaign out. That is not just a lie, it is an insult to their intelligence.

Below their thoughts on what Obama really has in mind.

Senator Obama’s proposal to exempt seniors with income below $50,000 from income tax but continue full taxation starting at $50,001 also strikes us as impractical and undesirable. Any actual legislation would have some kind of phaseout to avoid a “cliff” at $50,000. Also, Senator Obama has spoken often about subjecting high-income taxpayers to additional taxes to help shore up Social Security, although his campaign advisers insist that there is no specific proposal. We estimated the cost of Senator Obama’s proposals assuming all of the provisions are fully effective immediately, that the seniors’ exemption would phase out over a $10,000 income range, and that the Social Security proposal would impose a 2 percent income tax surtax on adjusted gross incomes over $250,000 and a 2 percent payroll tax paid by employers on employees’ earnings above that threshold. Under those assumptions, the Senator’s proposals would reduce revenues by $2.4 trillion over 10 years, or about $367 billion less than the proposals as described by his campaign advisers.

I really have no idea what Obama’s advisers “insist” that there is no such plan. I think a tax increase on the very rich dedicated to the social security trust fund would be very popular. I certainly love it and have bitterly criticized the TPC for leaving it out of their earlier analysis. I note that the Obama campaign has talked about a tax from 2 to 4% so the amount raised could be much more than $ 367 billion over ten years. I guessed that it was designed to roughly balance the making work pay tax cut (still might be at the higher level) here (search for Waldmann).

Also recall the appalling L.A. Times article which claimed that Obama’s numbers don’t add up (and barely mentioned the fact that McCain refuses to release numbers and that his mumblings aren’t in the ball park … or the solar system). At the time Kevin Drum noted that, according Peter Nicholas of the the LA Times Obama was only a few tens of billions short of adding up counting the expiry of the Bush cuts for families with income over $200,000 and the end of the Iraq war (Nicholas actually said that Obama was vague about how fast he proposed getting out of Iraq). The math: Nicholas claims $130 billion/year of spending increases (mostly health care reform) and $ 80 billion/year in tax cuts vs $100 billion in letting Bush’s tax cuts for those making over $200,000 lapse and maybe $ 90 billion/year saved by leaving Iraq. Oh with at least $30 billion/year with the donut plan, Obama’s proposals are revenue neutral. I guessed so at the time in a comment on Drum’s post.

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Enemy combatants are here

by rdan

The federal Appeals Court in Richmond, Virginia, ruled 5-4 on July 15 that Bush had the right, while prosecuting the “war on terror,” to hold Qatari citizen (and Peoria, Illinois, resident) Ali al-Marri indefinitely as an “enemy combatant.”

“A citizen, no less than an alien, can be an enemy combatant,” administration lawyer David B. Salmons told the Appeals Court in oral arguments on Feb. 1, 2007, adding that the courts cannot interfere with the President’s wartime judgments on such matters.

Salmons insisted that Bush is not interested in using this power too broadly, but argued that the judgment on whom is deemed an “enemy combatant” must solely be at the discretion of President Bush. [NYT, Feb. 2, 2007]

Did we miss something in the press and the election campaign? What is your stance?

WAPO reports on another aspect and example of reporting suspected activities:

Also included in the 46 pages of documents, obtained by the Maryland chapter of the American Civil Liberties Union through a Freedom of Information Act lawsuit, is an account of an activist’s name being entered into a federally funded database designed to share information among state, local and federal law-enforcement agencies on terrorist and drug trafficking suspects.

ACLU attorney David Rocah said state police violated federal laws prohibiting departments that receive federal funds from maintaining databases with information about political activities and affiliations.

The activist was identified as Max Obuszewski. His “primary crime” was entered into the database as “terrorism – anti govern(ment).” His “secondary crime” was listed as “terrorism – anti-war protestors.” The database is known as the Washington-Baltimore High Intensity Drug Trafficking Area, or HIDTA

Still, information about the protesters and their activities was sent to seven agencies, including the National Security Agency and an unnamed military intelligence official.

“Americans have the right to peaceably assemble with others of a like mind and speak out about what they believe in,” Mr. Rocah said. “For state agencies to spend hundreds of hours entering information about lawful and peaceful political activities into a criminal database is beyond unconscionable.

As mentioned in comments, the issue is the quote of the government lawyer supporting the case, and reveals intent and expectation to me. The decision was made on narrower ground but the supporting comment has not been removed.

Then we still have the expanding TLO training of first responders looking for terrorists and suspicious activity in training in Colorado as a beginning of new Homeland Security efforts.

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Robert Samuelson Thinks the Economy is Doing Just Great

The reason some of us note that Robert Samuelson is not a relative of Paul Samuelson has to do with his tendency to write this kind of nonsense:

The specter of depression stalks America.

I have heard lots of talk about whether we are in a recession but none of what I have seen says we are reliving the 1930’s. This opening is akin to seeing a friend involved in a bad car accident and saying – “see you’re not dead, so cheer up”. Samuelson continues:

In June, unemployment was 5.5 percent, slightly below the average since 1960 of 5.8 percent … As yet, the present economic slowdown does not even approach the harshest post-World War II slump. The back-to-back recessions of 1980 and 1981-82 (as dated by the National Bureau of Economic Research) constituted, for most people, one prolonged downturn. Unemployment peaked at 10.8 percent in late 1982.

Oh good grief. At the risk of repeating myself, no one is saying that 2008 is as bad as 1982. OK, my friend neither died in the car accident nor he was paralyzed for life – just several broken bones – so Samuelson would tell him to cheer up and walk it off. And this average unemployment rate over the past 50 years or whatever is the standard GOP talking point whenever economists note that the employment to population ratio has declined. It is nice to see that Samuelson would rather rehash discredited GOP spin than inform his readers. Then again, Samuelson has to include this:

The paradoxical thing about today’s economy is its strength. No kidding. Consider all the hand grenades lobbed at it. Higher oil prices. The housing implosion. Large layoffs in affected industries: autos, airlines, construction, mortgage banking. The “credit squeeze” triggered by losses on “subprime” mortgages. Despite all that, the economy hasn’t collapsed. It’s merely weakened. Output in the first quarter of 2008 was actually 2.5 percent higher than a year earlier.

It is true that growth rates were decent for 2007QII and 2007QIII but that followed weak growth rates for the previous three quarters and was followed by weak growth rates for the next two quarters. But hey – as long as Robert Samuelson can cherry pick some spin for the GOP, we should all be very happy. So stop your whining!

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Money = Wind, Bush and Fox News?

By: Divorced one like Bush

Yes, you read that correctly. The right is reporting there is money to be found in wind. Sacrilege in their church of oil. In an article, May 17, 2008 we learn about a Bush administration report on wind.

A little back ground first:

With major government investments in wind in the 1970s, the U.S. was poised to be a dominant player in what was clearly going to be one of the biggest job-creating industries of the next 100 years. As late as the mid 1980s, we had over 85 percent of the world’s global installed capacity, and U.S. companies possessed the most critical knowledge about how to develop wind farms cost-effectively.
President Reagan cut the renewable energy budget more than 80 percent after he took office, and eliminated the wind investment tax credit in 1986.

Since the turn of this century, wind has been growing explosively. From 2000 to 2007, the industry increased fivefold in size. Last year, $36 billion in wind investments were made around the world, with $9 billion invested in U.S.-based projects. In 10 years, it is expected to nearly quadruple in size.

In fact, because the new wind turbines are tall, and don’t interfere significantly with grazing or farming, they have become popular in the central U.S., where the wind resource is best in the country. Some ranchers make half a million dollars a year by leasing only a fraction of their land for turbines.

From 2004 to 2007, the company’s wind turbine production has grown 500 percent, and the division brought GE revenues exceeding $4 billion in 2007.

While the multi-decade drop in wind prices has stalled temporarily, prices for the competition have gone up the smokestack. New nuclear plants, for instance, have tripled in price. Analysis for the California Public Utility Commission puts the cost of power from new nuclear plants at 15 cents per kWh. It also puts the cost of coal (without carbon capture and storage) at more than 10 cents/kWh. That’s a major reason why, since 2000, Europe has added 47 GW of new wind energy, but only 9.6 GW of coal and a mere 1.2 GW of nuclear.

The report:

…the recent Department of Energy report, called “20% Wind Energy by 2030.” With improved efficiency and a decrease in capital cost, the report found that wind power should cost 6 to 8.5 cents/kWh, unsubsidized, even including the cost of transmission to access existing power lines. And the cost of integrating the power into the U.S. grid would be under 0.5 cents per kWh. This effort would only add about 50 cents per month per household, or under 2 cents a day.

The study notes that “few realize that electricity generation accounts for nearly half of all water withdrawals in the nation.” By 2030, wind would be cutting water consumption by 450 billion gallons a year, of which 150 billion gallons a year would be saved in the arid Western states, where water is relatively scarce — and poised to get even scarcer thanks to climate change. And on top of that, we get half a million jobs, of which nearly a third are high-wage workers directly employed in the industry.

So, this is what could be. Being that we are a “global economy”, our companies need to be able to compete, correct? Here is the competition environment:

By 2020, many European wind farms will be generating electricity at 2¢ per kilowatt-hour, making it cheaper than all other sources of electricity.

Wind-generating capacity worldwide is growing at over 30% per year and has jumped from less than 5,000 megawatts in 1995 to 39,000 megawatts in 2003—an increase of nearly eight-fold. The fossil fuel with the highest growth rate—natural gas—grew at just over 2% annually during the same period. Oil grew at less than 2% annually, and coal at less than 1%. Nuclear generating capacity expanded by 2% annually.

One would think that an industry growing at 30% would be far more inviting to the “free market” entrepreneur than one growing at 2%. But, that is not where we are seeing money flow. No, we felt it was wiser to spend it creating a democracy in an oil rich country. Then again, in 8 years of neocon election policy and 50 plus 1 strategy, we have not seen any major news organization go after the 49% not being ideologically serviced. Think that might have something to do with the policies we vote for?

But, back to the environment to be competing in:

With wind-generated electricity, the principal production cost is the capital outlay for initial construction. Since wind is a free fuel, the only ongoing cost is for maintenance.
Many countries in Europe are pushing hard to bring in more wind power. Here are a few examples.

The United Kingdom is requiring an investment of over $12 billion in off-shore wind farms that should satisfy the residential electricity needs of 10 million of the country’s 60 million people.
Tiny Denmark, which led Europe into the wind era with the development of its own wind resources, now gets an impressive 20 percent of its electricity from wind.
Germany overtook the United States in terms of wind-based generating capacity in 1997. Now Spain is close to overtaking the United States as well.

As to investments being made, it is just as we are seeing in beer:

Regulatory issues do not appear to have deterred energy companies from making US acquisitions. Energias de Portugal paid nearly $3 billion to acquire Horizon Wind Energy from the Goldman Sachs Group. The purchase doubled the amount of wind power operations in the Portuguese company’s portfolio. German utility E.On has agreed to acquire the North American assets of Irish wind power company Airtricity Inc. for $1.4 billion. Acciona Energia has acquired the wind farm development rights of EcoEnergy, a company based in Illinois. Spanish energy giant Iberdrola has acquired Oregon wind development company PPM Energy, as well as Community Energy of Pennsylvania, and more recently US wind farm companies Greenlight Energy and Orion Energy.

But get this, Fox News titles their article: Denmark Points Way in Alternative Energy Sources
Fancy that. Fox News says we can learn from the foreigners.

…most of the Western world was subjected to an Arab-led oil embargo. The crisis forced Denmark, which was 99-percent dependent on foreign oil at the time, to develop an alternative-energy policy.
In the 30 years since, Denmark has worked tirelessly to develop new technology and new policies.
Twenty percent of Denmark’s energy needs are now met by electricity generated by wind turbines, and the proportion is steadily increasing. Thanks to advances in technology and turbine design, the cost ofwind power has been reduced by 75 percent since 1970, when the programs began.
The Danish attitude toward energy conservation means “people don’t have as many appliances, or gizmos,” said Griswold, a frequent visitor to Denmark. “Also, there are stringent requirements for insulation when building new homes. Every individual mandate like that means the nation uses less energy.”
A major part of that success is the Danish commitment to and attitude toward its energy policies, Griswold said.

“After the [1973-74 oil] embargo, Denmark had the attitude that they were going to become less dependent on the outside world and more self-sufficient,” he said. “And upon making this commitment, they’ve gained benefits, including lower national debt, cleaner air and less dependency on other countries.”

Let me repeat the important part of that last sentence: “And upon making this commitment, they’ve gained benefits, including lower national debt, cleaner air and less dependency on other countries.”

One final point Fox News wants us to learn: “Danes would say, ‘Thank goodness we have a government that plans so well that we are only minimally impacted.'” he said. “The average Dane isn’t terribly conscious of being in an energy-saving environment because it’s so natural to [him or her].”

Now there is a message I would have never expected Fox News to promote.

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Iraq War: McCain’s Pre Hoc Ergo Propter Hoc "Logic"

Did I get the title wrong – isn’t this Post Hoc Ergo Propter Hoc:

The Post Hoc fallacy derives its name from the Latin phrase “Post hoc, ergo propter hoc.” This has been traditionally interpreted as “After this, therefore because of this.” This fallacy is committed when it is concluded that one event causes another simply because the proposed cause occurred before the proposed effect. More formally, the fallacy involves concluding that A causes or caused B because A occurs before B and there is not sufficient evidence to actually warrant such a claim. It is evident in many cases that the mere fact that A occurs before B in no way indicates a causal relationship.

The good folks at Talking Points Memo are having fun with this:

Republican presidential candidate John McCain says Democrat Barack Obama is wrong about the Iraq war. But Obama’s campaign says McCain was wrong about the war’s timeline during a nationally televised interview Tuesday. Asked about Obama’s contention that a Sunni revolt against al-Qaida combined with the addition of thousands of U.S. combat troops that were sent to Iraq contributed to the improved security situation there, McCain scoffed. “I don’t know how you respond to something that is such a false depiction of what actually happened,” McCain told “CBS Evening News,” adding that Col. Sean MacFarland was contacted by a major Sunni sheik. “Because of the surge we were able to go out and protect that sheik and others. And it began the Anbar awakening,” McCain said, referring to the U.S.-backed revolt of Sunni sheiks against al-Qaida in Anbar province. “I mean, that’s just a matter of history.” The problem with McCain’s statement — as Obama’s campaign quickly noted — was that the awakening got under way before President Bush announced in January 2007 his decision to flood Iraq with tens of thousands of additional U.S. troops to help combat violence.

So what if the Anbar Awakening occurred before The Surge? Couldn’t the subsequent surge still have been the cause of this Sunni revolt against Al Qaida under this Pre Hoc Ergo Propter Hoc fuzzy logic being employed by John McCain? After all – under similar fuzzy logic, more defense spending and less tax revenues is the recipe to reduce the deficit!

Update: (rdan here:

Robert sends this link to the youtube video. CBS has the whole interview uncut on the web (I don’t know when they
put it up — that is before or after Olberman called them on editing)

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