Relevant and even prescient commentary on news, politics and the economy.


Marvel character Revanche
Hmmmm…guess not.


A reader was wondering about our loyal following of “conservative” commenters. That neo-conservatism was not conservativism was suggested in comments to a post on PNAC (Bruce Webb) by a reader objecting to the perceived characterization.

Link to interview on NPR with author Sam Tanenhaus. In his latest book, The Death of Conservatism, an expansion on his January article in The New Republic…. (changed to link as embed was slowing things down by report)
This is an interesting interview. It is not tongue in cheek. Ultimately I am not either, but…

1. So the role of government as a positive force is old fashioned conservatism, but government is carefully watched and to be kept small.

2. Concern for the ordinary citizens’ welfare is allowed and actually encouraged. (Is this in opposition to corporate welfare?).

For comments, remember we need names to call each other that accurately reflect thoughtful consideration, which exclude gross generalities.. (PS. Comments still slightly moderated.)  Links encouraged before posting.

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$295 Million Would Buy A Lot of T-Shirts

Ken Houghton notes that the first thing anyone learns from Pietra Rivoli’s The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade is how pernicious the U.S. subsidy of its cotton industry is.* Now the WTO has discovered the obvious:

American goods will face [$294.7] million in annual sanctions as a result of the United States’ failure to eliminate illegal subsidies to domestic cotton growers, the World Trade Organization ruled Monday.

The NYT attempts to spin this as a loss for the complainants:

The result was disappointing for Brazil, which has won a series of rulings against the United States over the last seven years. The Latin American country had sought to target American goods and drug patents for $2.5 billion worth of economic retaliation.

But gets to the order-of-magnitude-other-way-part a few paragraphs later:

Washington had argued that the award should not exceed $30 million.

So no one is happy, but it’s a start:

“The subsidies paid by the United States to its 25,000 cotton farmers exceed the entire gross national income of virtually every cotton-exporting country in West and Central Africa,” Mr. McGivern said. “Despite several rounds of litigation and ministerial-level negotiations, this issue remains unresolved.”

The cotton case was the first agricultural case started by a developing country in the group’s history.

The issue of generic drugs and trade is dealt with in this Health Affairs piece (of which maybe more later).

Meanwhile, those interested in a certain absurd claim previous dealt with by Susan of Texas (see here and here, for instance) and others, check out this press release from Health Affairs from last week. Good thing those countries don’t have a system that supports pharmaceutical innovation and investment better than the U.S. one.

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Clean Coal and Cap and Trade

Robert Waldmann

Joe Strawman argues that the solution to global warming is clean coal technology and in particular sequestering C02 from exhaust from coal fired power plants. Therefore cap and trade is a bad policy, because technology will solve anything soon.

In fact, if “clean coal” is not a contradiction in terms, the case for cap and trade (or a carbon tax) starting right now, is vastly strengthened as I argue after the jump.

A small tax on carbon or cap and trade with caps so high that rights to emit carbon are cheap will have a large quick effect on C02 emissions. Electric power companies have coal fired plants and natural gas fired plants, because natural gas fired plants are cheaper and coal is cheaper. The plants working all the time are coal fired. The natural gas fired plants work only during hours of peak demand.

A modest tax on carbon or fairly cheap carbon emission rights will cause power companies to switch this order of use so natural gas fired plants work all the time and coal fired plants work only during hours of peak demand.

The question is whether this will reduce C02 emissions or just delay them a few years. Natural gas supplies are limited. I guess that a few years of burning natural gas for electricity with reduce them to the point that the price will rise to whatever level required to make burning natural gas for electricity not competitive (even given cap and trade). My belief is that, since natural gas is very useful for home heating and making plastic and fertilizer, it won’t be used to make electricity for very long.

However, if clean coal technology is possible, delaying coal burning is almost as good as preventing it forever. Clean coal technology is definitely not installed now. If, indeed, it will be installed in a few years, it is critically important to discourage the burning of coal now — to encourage the use of stop gap measures to put off the burning until coal can be burned cleanly.

Thus if one believes that clean coal technology is feasible and just around the corner then one should rationally be more enthusiastic about cap and trade than if one doesn’t.

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NYT: As Big Banks Repay Bailout Money, U.S. Sees a Profit

by Bruce Webb

Big Banks Repay: 15% interest earned

The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times.

These early returns are by no means a full accounting of the huge financial rescue undertaken by the federal government last year to stabilize teetering banks and other companies.

The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.

But the mere hint of bailout profits for the nearly year-old Troubled Asset Relief Program has been received as a welcome surprise. It has also spurred hopes that the government could soon get out of the banking business

People who are wringing their hands at Barovksy’s $37 trillion dollar in guarantees outstanding figure need to get a grip. Much of that money has not been extended and at this stage probably won’t be, and much that has is backed by assets with real if undeterminable value. (The notion that something has exactly the value of its current price in the market is just a byproduct of EMH magical thinking). More:

American taxpayers could still collect additional profits on their investments in two other big banks that have repaid their preferred stock but not their warrants: JPMorgan Chase and Capital One. They are expected to yield over $3.1 billion in gains for the Treasury in the next month or so, although the full tally will depend on how much they will pay to buy back their warrants.

And the government is owed about $6.2 billion in interest payments from banks that have not yet repaid their federal money.

But all the profits taxpayers have won could still be wiped out by two deeply troubled institutions. Both Citigroup and Bank of America are still holding mortgages and other loans that were once worth billions of dollars but whose revised values are uncertain. If they prove “toxic” because they cannot attract buyers, they could leave large holes in the banks’ balance sheets.

Neither bank is ready to repay its bailout money anytime soon, even though the banks’ stock prices have surged in the last month, leaving the government sitting on paper profits of about $18 billion between them.

Given that just about a third of our record budget deficit is the direct result of outlays from TARP, the fact that we are getting much of that money back with double digit interest should, but probably won’t, give some of those bailout/stimulus/Obama haters a little pause.

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two op-ed pieces on healthcare reform…Krauthammer and Kinsley

by reader Aunt Deb

On Friday, Aug. 28, the Washington Post printed two op-ed pieces on healthcare reform; “Obamacare: The Only Exit Strategy, by Charles Krauthammer and “Change We’d Rather Do Without” by Michael Kinsley. Neither piece discussed real details of either the existing funding and delivery system for health care or the possible ways this system might be changed to achieve better coverage and cost control. Mr. Krauthammer’s piece continued to promote himself as the neocon Cassandra, foreseeing no good end no matter what is done; seemingly, any reform undertaken will lead to “the liberals” givng “you end-of-life counseling.” This is silly stuff. The Post should be as ashamed of having printed it as Krauthammer should be of having written it.

As the presumably liberal or leftist counterpart to Mr. Krauthammer’s rightist neoconservative paranoia about all things Obama, Michael Kinsley lays the blame for resistance to health care reform on immature voters. Even as he points out that the rightwing claque (of which Mr. K is a proud member) will inevitably generate and promote falsehoods about any Democratic health care legislation, saying “there will always be a Betsy McCaughy”, he fails to describe these players’ role in killing the previous reform efforts. McCaughey lied then and she’s lying now. Kinsley does note that Republicans suffered no political repercussions from their successful smearing of the Clinton-Magaziner effort to reform health care, even though we find ourselves now in worse straits in terms of ever-increasing costs and decreasing coverage.

Mr. Kinsley is bemused by “the voters’ true feelings – misinformed, perhaps but sincere”; he’s puzzled that they voted for change but now they don’t want it. I’ve attended several healthcare forums in the past two months and I’m quite certain that those people who were there to oppose healthcare reform did not vote for Mr. Obama. I sat near the woman who stood up at Mike Castle’s town meeting and screamed “Obama is a Kenyon and I want my country back” while waving her birth certificate and American flag. This woman and the 150 or so teaparty coalition members who filled that meeting never wanted anything to do with the sort of change those who voted for Obama hoped for. And contrary to Mr. Kinsley’s claim, these are not people who feel patriotism is synonymous with pooh-poohing their country’s institutions. The people I’ve listened to and met at these events are intensely patriotic; they voice their pride in their flag, their military, their Constitution, their history, and the values they believe underwrote those institutions and should continue to sustain them.

By treating today’s attacks on healthcare reform as something new and unexpected, Mr. Kinsley shows how deeply he refuses to understand American political reality. Republican resistance to Democratic-initiated health care reform is a feature, not a bug. Limbaugh, Dobbs, Beck, the Fox News stable, oldies but never outies like Gingrich, Liddy, Rove, McCaughey, are always attacking “the liberals”, “lefties”, “feminazis”, “peaceniks”. How hard is it to fashion an attack on health care reform when the basic premise is that Democrats aka “the liberals” are elitists who sneer at the immature and misinformed voters who believe in the family values that made America great?

Republicans are now ostensibly out of power within the political structure. This gives their calls for bipartisan legislation the force of the underdog asking for fairness. Rightwing media magnifies the polarization between decent patriotic Americans—those who want to protect and sustain the status quo–and the indecent, unpatriotic Americans: those people who can see nothing wrong with ‘socialized medicine’ and ‘government control’. The premise of rightwing talkshows and media is simple: Everything that is wrong with the country is the fault of liberalism and liberals. Republican politicians can position themselves as the voices of moderation and they do so, over and over again, even while rightwing megaphones like McCaughey and Krauthammer pitch phony stories to their constituents about the details of the Democrats’ proposals for reform.

Mr. Kinsley says “we all thought that Hillary Clinton’s big mistake in the 1990’s was too much detail.” No, we all did not think that then, nor do we all now feel an abstract discontent with our healthcare system that quickly changes to acceptance of the status quo when asked to approve of even moderate but geniune change, as Kinsley tries to claim. The effects of our malfuntioning healthcare system are not abstract and, as Kinsley himself acknowledges, more and more Americans are suffering from them as a consequence of the previous failures to enact reform. Rising costs are a major danger to the system’s continuation, yet Kinsley gives no detail about total health care expenditures and the differences in rate of premium and out-of-pocket increases between private, employer-sponsored insurance and the federal Medicare system. There are huge problems facing all of us and the anguish and anger people are expressing at these problems and the proposals to fix them are not explained by caricature and dismissal.

In an essay ostensibly pondering why healthcare reform never seems to happen here, Mr. Kinsley presents no real reasons why it should. Indeed, although he raises the spectre of Betsy McCaughey’s objections to “promising sub-clauses”, he never bothers to refute them. Is it because these attacks were and are silly and misinformed, like the voters who believe them? Spending time and type describing voters as ignorant and in thrall to one-sided presentations without providing supporting details of that one-sidedness only perpetuates ignorance and hardens counterproductive stereotypes.

We may indeed by unable to enact much-needed healthcare reform once again. This will be, in my opinon, due in large part to the willful failure of public voices such as Mr. Kinsley’s who, while blithely admonishing voters for showing a distressing tendency to voice “their opinions on subjects they haven’t bothered to learn anything about” apparently feel no compunction about doing the same thing themselves.
by reader Aunt Deb

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Most* Americans want to soak the rich

Robert Waldmann

Polling results are absolutely clear. Now and for the decades a clear majority of US residents support taking from the rich and … well it doesn’t much matter what. Republicans often argue that this or that would be “class warfare” leading to the guess that they might have some reason to believe that class warfare is unpopular. There is no evidence to support that view.

The data which prove my claims come after the jump.

First look at polling report on taxes.

Search for taxes and look at people for and or against soaking the rich. Only one listed poll — the Gallup poll — has asked directly about this.

Gallup Poll. April 6-9, 2009. N=1,027 adults nationwide. MoE ± 3.


“As I read off some different groups, please tell me if you think they are paying their fair share in federal taxes, paying too much, or paying too little. How about [see below]?”

Fair Share Too Much Too Little Unsure
% % % %


“Upper-income people”
4/6-9/09 23 13 60 3
4/6-9/08 24 9 63 4
4/2-5/07 21 9 66 4
4/10-13/06 21 8 67 4
4/4-7/05 22 7 68 3
4/5-8/04 24 9 63 4
4/03 24 10 63 3
4/99 19 10 66 5
4/96 19 9 68 4
4/94 20 10 68 2
3/93 16 5 77 2
3/92 16 4 77 3

4/6-9/09 18 8 67 6
4/6-9/08 15 6 73 6
4/2-5/07 19 5 71 5
4/10-13/06 18 5 70 7
4/4-7/05 21 4 69 6
4/5-8/04 19 5 69 7

OK now soaking the rich to pay for health care reform. Here there is lots of polling
and search for “tax”. I’m trying to get everything relevant.

NBC News Poll conducted by the polling organizations of Peter Hart (D) and Bill McInturff (R). Aug. 15-17, 2009. N=805 adults nationwide. MoE ± 3.5 (for all adults).


“Now I am going to tell you more about the health care plan that President Obama supports and please tell me whether you would favor or oppose it. The plan requires that health insurance companies cover people with pre-existing medical conditions. It also requires all but the smallest employers to provide health coverage for their employees, or pay a percentage of their payroll to help fund coverage for the uninsured. Families and individuals with lower- and middle-incomes would receive tax credits to help them afford insurance coverage. Some of the funding for this plan would come from raising taxes on wealthier Americans. Do you favor or oppose this plan?”
Favor Oppose Depends
(vol.) Unsure
% % % %

53 43 2 2

56 38 3 3

Quinnipiac University Poll. July 27-Aug. 3, 2009. N=2,409 registered voters nationwide. MoE ± 2 (for all adults).


“To extend health insurance coverage to most Americans over the next decade, would you support or oppose imposing an extra tax on individuals who earn more than 350,000 dollars and couples who earn more than 1 million dollars a year?”


Support Oppose Unsure
% % %

7/27 – 8/3/09
61 36 2

Time Poll conducted by Abt SRBI. July 27-28, 2009. N=1,002 adults nationwide. MoE ± 3 (for all adults).


“Raises income taxes on people earning more than 280 thousand dollars a year to help pay for providing health care to most Americans, even those who cannot afford it now.”

57 40 4

CBS News/New York Times Poll. July 24-28, 2009. N=1,050 adults nationwide. MoE ± 3 (for all adults).


“In order to help pay for health care reform, would you favor or oppose increasing taxes on Americans with high incomes?”

Favor Oppose Unsure
% % %
7/24-28/09 65 32 3

NBC News/Wall Street Journal Poll conducted by the polling organizations of Peter Hart (D) and Bill McInturff (R). July 24-27, 2009. N=1,011 adults nationwide. MoE ± 3.1 (for all adults).


“Let me read you a couple of proposals made by President Obama. For each one, please tell me whether you approve or disapprove of this action. … Using government funds to expand health insurance coverage, and raising taxes on wealthier Americans to pay for it.”

Approve Disapprove Unsure
% % %

50 44 6

56 37 7


“Experts currently estimate that this proposed health care plan will cost one trillion dollars over the next decade. I am going to read you some proposals for how the plan could be funded. After I read each statement, please tell me whether that proposal is acceptable or not acceptable. . . .” Half sample (Form B), MoE ± 4.4

Acceptable Not
Acceptable Unsure
% % %


“Raise taxes for families with incomes more than one million dollars per year.”

68 29 3

“Raise taxes for families with incomes more than three hundred and fifty thousand dollars a year.”

56 39 5

Pew Research Center poll. July 22-26, 2009. N=1,506 adults nationwide. MoE ± 3.


“And thinking about some ways to pay for changes to the health care system: Would you favor or oppose [see below]?”

Favor Oppose Unsure
% % %


“Raising taxes on families with incomes of more than $350,000 and individuals earning more than $280,000”

63 32 5

off topic but very relevant to attitudes towards class war. Most Americans can chose to fight the classes above them or the classes below them (Bill Gates and the homeless have fewer options). Polls consistently always and invariably show strong support for soaking the rich. How about the poor ? Do most Americans think we are already giving to poor too much ? Look at this

Kaiser Family Foundation Kaiser Health Tracking Poll. Aug. 4-11, 2009. N=1,203 adults nationwide. MoE ± 3 (for all adults).


“Now I’m going to read you some different ways to increase the number of Americans covered by health insurance. As I read each one, please tell me whether you would favor it or oppose it. Here’s the (first/next) one: [See below.] Do you favor or oppose this?”


“Expanding state government programs for low-income people, such as Medicaid and the State Children’s Health Insurance Program” N=603 (Form B)

80 17 4

74 23 3

75 22 3

77 20 2

I don’t see how the people of the USA could make it clearer. Concerning health care they want to take more from the rich and give more to the poor.

Now reforming social security. Generally, there was overwhelming opposition to any change in social security. There was one exception to this rule. A majority wanted to raise or eliminate the FICA ceiling. Once again (as always) most Americans wanted to soak the rich.

CBS News/New York Times Poll. June 10-15, 2005. N=1,111 adults nationwide. MoE ± 3 (for all adults).


“Currently, people pay Social Security taxes only on the first $90,000 of their annual income. If it were necessary to keep the Social Security program paying benefits as it does now, would you favor or oppose increasing the amount of income that is subject to Social Security taxes?”


Favor Oppose Unsure
% % %
6/10-15/05 63 30 7

CBS News Poll. May 20-24, 2005. N=1,150 adults nationwide. MoE ± 3 (for all adults).


“How should the Social Security system pay its benefits? Should it pay out money to retired people based only on how much they contributed, or should it take some of the contributions of better-off people and give them to poorer people?”


tions Only Give More
To Poor Both (vol.) Unsure
% % % %
5/20-24/05 46 43 3 8
2/24-28/05 47 43 2 8


“Currently, people pay Social Security taxes only on the first $90,000 of their income. Would you favor or oppose raising the amount of income that is subject to Social Security taxes?”


Favor Oppose Unsure
% % %
5/20-24/05 62 31 7
2/24-28/05 61 31 8


“Would you favor or oppose limiting the rate of growth of future Social Security benefits for people with incomes of $100,000 or more?”


Favor Oppose Unsure
% % %
5/20-24/05 50 40 10


“Would you favor or oppose limiting the rate of growth of future Social Security benefits for people with incomes of $50,000 to $100,000?”


Favor Oppose Unsure
% % %
5/20-24/05 35 55 10

NBC News/Wall Street Journal Poll conducted by the polling organizations of Peter Hart (D) and Bill McInturff (R). May 12-16, 2005. N=1,005 adults nationwide. MoE ± 3.1 (for all adults).


“If there is a time in the future when Social Security benefits must be reduced, which approach would you favor? Approach A: Reduce benefits by an equal percentage across the board for all workers to maintain Social Security as a program where your benefits depend on what you paid in the system. Approach B: Reduce benefits by a higher percentage for workers earning more than twenty-five thousand dollars, while making no change for workers who make less than this so that those with the most need receive the most benefits.”

Approach A Approach B Unsure
% % %
5/12-16/05 40 50 10

“I’m going to mention changes some leaders have proposed for Social Security. Please tell me if you support or oppose each one. . . .”

Support Oppose Unsure
% % %


“Increasing the Social Security tax rate”

ABC News/Washington Post Poll. March 10-13, 2005. N=1,001 adults nationwide. MoE ± 3 (for all adults). Fieldwork by TNS.


“Collecting Social Security taxes on all the money a worker earns, rather than taxing only up to the first $90,000 of annual income”

56 40 4

As always a majority of US residents support raising taxes on the rich.

*terminology: when I write “most” I mean more than half. The word is often used equivocally to mean more than half when one must prove the claim and then to mean “approximately all” when one draws implications.

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Health Care Reform Hard Ball

Robert Waldmann

is a bit irritated with [many] US senior citizens. They want to keep the hands of the government off their medicare.* I don’t want to think what would happen if the government meddled with their social security pensions. Most US senior citizens are acting as egoistical hypocrites.

I would like to offer them a deal — let’s not change the laws governing US federal government financing of health care at all. Just say no to any change in the law.

I’ll explain the deal and why selfish seniors citizens would prefer ambitious health care reform after the jump.

update: the word “many” was added in response to a comment by Coberly. The unqualified assertion that senior citizens want to keep government hands off their medicare was an attempt at humor. I am sure that the vast majority of US senior citizens accept the fact that the medicare administration is part of the federal government (the few exceptions are authentic, not an urban myth, and a cause for reflection).

My actual thoughts on US senior citizens begin with the word “most”. The qualifier “acting as” is important. I did not speculate as to whether most are selfish or hypocritical, I just noted that they would act as they are acting if they were.

Thanks to Coberly for pointing out my error of omission (the word many) and the failure of my attempt at humor. I apologize to Coberly for the tone of my replies to his comments. I didn’t reread my post but assumed I remembered what I wrote.

Congress, being another bunch of hypocrites, forces the CBO to believe its promises of huge tax increases and spending cuts next year. This means that every year they need to pass a bill that says “no not this year next year.” One such bill is the annual alternative minimum tax fix. The other is the annual adjustment to medicare compensation rates.

Under current law, medicare compensation scales would be cut by very roughly IIRC 20%. The cuts hit next year and are relevant to deficit forecasts. Every year the cuts are put off one year so they don’t bother anyone. Those who don’t consider medicare a government program certainly don’t know that congress re-meddles with it every year. Now it is standard practice to adjust the compensation every year so no one notices the issue. It would be totally unreasonably and unlike Democrats to hold the standard yearly change in the law hostage.

Democrats in congress (I think Pelosi plus a majority of the conference committee) can present our nations senior citizens with a choice. Health care reform or nothing. With health care reform, the only thing that will change for senior citizens is they lose their beloved prescription drug doughnut hole. With no change, their doctor will suddenly be paid much less to care for them, unless he or she refuses to let the federal government take advantage of him or her.

The slogan “you can keep everything you have if health care is reformed” is good the slogan “you can keep everything you have if and only if health care is reformed” is better.

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President’s Proposals would Produce Lower Deficits than Continuing Current Policies

by Bruce Webb

That is the subtitle of the new Center for Budget and Policy Priorities (CBPP) analysis of the Aug 25th CBO and OMB Reports on projected budget deficits that is being injected into the health care debate as a reason for non-action. The CBPP analysis can be read here: New OMB and CBO Reports Show Continuing Current Policies Would Produce Large Deficits. The authors’ introduction:

On August 25, both the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) released updated budget projections. Some observers, comparing OMB’s estimate of the deficit over the next ten years under the President’s proposed policies ($9.1 trillion) to CBO’s “baseline” estimate of the deficit under current law ($7.1 trillion), jumped to the conclusion that the President proposes to increase the deficit dramatically. In fact, the opposite is true. The President’s proposals would produce significantly lower deficits over the next ten years than continuing current policies.
This and other confusions have occurred because both the OMB and CBO reports are chock-full of numbers that are hard for even seasoned budget-watchers — and almost impossible for ordinary citizens — to interpret. This brief analysis explains what some of the numbers mean, how CBO’s official baseline must be adjusted to show what CBO’s estimate of deficits would be if it assumed current policies are continued, and why even that adjusted baseline should not be compared with OMB’s estimate of deficits under the President’s policies.

The whole document is five pages long and should be read in full. But one lesson to take away is that you cannot directly compare CBO and OMB numbers, the former being bound by current law and the latter by current and proposed policy, two different things. To see the explanations from CBO and OMB try these links:
Orszag Press Release Mid-Session Review
OMB Mid-Session Review Mid-Session Review Web-Page with link to PDF of full report.
CBO Director’s Blog Comparing CBO’s and OMB’s Projections of the Federal Budget Deficit with link to PDF.
A table below the fold .

Kevin Drum who pointed me to this has an annotated version of this table at MJ: where he totals the bottom line to get $10.556 trillion which is actually $574 billion below the figure CBPP comes up for an adjusted CBO number.

So before people jump to conclusions about how these new OMB and CBO numbers show Obama is breaking the bank be sure you know whether you are dealing with apples and oranges both with the initial and revised numbers.

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