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

Authors Mike Kimel and Michael Kanell in US News and World Report

Authors Mike Kimel and Michael Kanell use data to turn some commonly held assumptions on their head in interview The ‘Conservative’ Reagan and Other Political Myths Dispelled with reporter Zach Miner.

In their book Presimetrics: What the Facts Tell Us About How the Presidents Measure Up on the Issues We Care About, Kimel, who has built statistical software used by the military and NASA, and Kanell, who covers economics for the Atlanta Journal-Constitution, use hard data to quantify and assess presidential performance on a variety of issues. Focusing on the presidencies from Dwight Eisenhower to George W. Bush, and drawing on data from various government sources, they compare and rank presidential performance on issues such as taxes and healthcare. Kimel recently spoke to U.S. News about the merits of using data to assess presidents and why Ronald Reagan might not be as conservative as the public believes.

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Taxes & Small Business

This is from the Wall Street Journal.

The Obama administration has targeted small business with laser-like focus, pushing a $30 billion small-business lending fund in Congress and, later this week, rolling out a tax break allowing businesses to deduct 100% of qualified capital investments.

But the chief economist at the National Federation of Independent Businesses said today that small business doesn’t need more tax relief. Instead, he said, Washington should aim its firepower at consumers so they begin spending money and creating demand for the products and services small companies provide.

“If you give a small business guy $20,000 he’ll say, ‘I could buy a new delivery truck but I have nobody to deliver to,’” said William Dunkelberg, chief economist for NFIB.

Rather than aim more tax relief at business, Dunkelberg said Washington should extend the Bush-era tax cuts for everyone – including those making above $250,000.

“History shows that letting Washington have the money and spend it is very ineffective,” he said.

The administration’s latest idea, which would allow businesses to temporarily deduct 100% of “qualified” capital investments, can help “on the margin,” Dunkelberg said. With capital-spending by small business at a 35-year low, some firms will naturally take advantage of a temporary tax incentive to replace products. But Dunkelberg said he thinks most small businesses will hold on to their cash until more certain economic times

The best way to help, he said, is to “finally address the most important person in the economy – the consumer.”

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Reading List for the Serious Student of Social Security

by Bruce Webb

Want to make the move from wanking to wonking on Social Security finance and policy? Consider the following list.

First read an Annual Report, you don’t need to understand every number but you do need some grounding in the terms and concepts. 2010 Trustees Report

Then fill out your knowledge with this really excellent explanation from current SSA Chief Actuary Steve Goss The Future Financial Status of the Social Security Program

Now for a little something from supporters of traditional Social Security Baker and Weisbrot (1999): Social Security: the Phony Crisis

Read the comprehensive case AGAINST traditional Social Security Cato Journal (Fall 1983): Social Security: Continuing Crisis or Real Reform (pay particular attention to Butler and Germanis’s “Leninist Strategy”)

For some real heavy lifting advanced students can read through the following sections of the Analytical Perspectives on the Budget (OMBs official explanation of the President’s Budget). Ch. 11 Budget Concepts and Budget Process (pdf) (note in particular the Glossary starting on pg. 131). The following will give a good guide to the rest Analytical Perspectives: List of Tables and Charts. The LOT starts on page vii and gives you a guide to chapter titles including Ch. 5 Long Term Budget Outlook, Ch. 6 Federal Borrowing and Debt, and Ch 27 Trust Funds and Federal Funds.

Then you can cross check OMB with the latest versions of these two annual documents from CBO: Long Term Budget Outlook (via CBO Director’s blog) and CBO’s Long-Term Projections for
Social Security: 2009 Update
(2010 version is late this year).

Then to pull all this together with the current policy debate you can read the long version of CBO’s Social Security Policy Options. If you are short on time you can just read the Summary version, but the long version gives a very comprehensive explanation of Social Security overall, and taken with the Goss article above really fills out the picture.

And I would be remiss if I didn’t add this link from The real meat starts about half way through Historical Background and Development of Social Security

No not all of this is the most thrilling read ever. On the other hand not a word of any of it is filtered through me. Heck that should make it worth it right there! Call it ‘Social Security Sans Webb’. Snark aside, those who work their way through even most of this will be heads and shoulders above 99% of commenters out there. And everyone feel free to make additions to the list in comments.

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Taxes, Deficits and Elections

by Linda Beale
crossposted with Ataxingmatter

Taxes, Deficits and Elections

As we near the fall elections amid a “tea party” surge of anti-government (and hence anti-tax) sentiment, I cannot help but worry about my country. The tea party activists are apparently primarily decently educated, middle-class citizens. They have supported extremist candidates in a number of states, and they have evidenced some worrisome tendencies that smack of racism or at least ad hominem attacks irrelevant to questions of good governance (questioning Obama’s faith, which should be irrelevant to national office; his birth certificate, which demonstrates their own credulity; his patriotism, which smacks of smug arrogance mingled with racism and greed; his economics, calling him a socialist for doing much less than we have traditionally deemed appropriate to help the vulnerable in this country). It is that last thing–the tea partiers’ entrenched distaste for community spiritedness, helping the vulnerable, and using socio-economic tools to ensure a more just and egalitarian society that is the most disturbing. It is as though the decades of Reaganomics have inured many Americans to comprehension of their fellow Americans’ suffering, and have created a wall of isolation based on greed and misunderstanding of how government benefits the wealthy that leads middle-class people to vote against their own interest in support of the continued hegemony of the rich.

Obama and the Democrats, of course, are not immune to suasion in the face of potential election losses. So as the GOP party of “no” continues its push to provide tax cuts for the wealthy or bust, and the tea partiers continue their push to paint all of the effort that has been necessary to combat the terrible mess that the Bush regime left the country in as Obama’s problem rather than a predictable result of the lousy economic policies followed by the GOP “believers” in market fundamentalism and greed-is-good philosophy, it is not such a surprise that the Democrats are adopting GOP-favored tax policies that benefit big corporations and the wealthy to the detriment of the fisc.

Case in point– Obama has come out for an expensing deduction for big corporations. This is essentially a huge multi-billion tax write-off, even if temporary. It would cost about $200 billion upfront, though after taking otherwise allowable depreciation into account, there’d be a net cost of $30 billion (plus the fact of acceleration of losses to the fisc). See Jackie Calmes, Obama to Propose Tax Write-Off for Business, NY Times, Sept 6, 2010.

The problems with expensing are multiple. Investments are made that would have been made anyway, but the government acts as a partner in the cost without getting any benefit from the partnership. INvestments are made that are unnecessary and do nothing to increase hiring, since the investments are merely an acceleration of investments that would be made in the future. And once a temporary provision is in place–even if the REAL intent was that it be a temporary stimulus–there will be inordinate lobbying and pressure to make it permanent. That will be especially the case for an expensing program, since it has long been one of the goals of right-wing economic theorists arguing for low corporate taxes and for the notion that capital should be favored. (Of course, it is especially the case that gimmicks like the GOP sunsetting provisions for the Bush-era tax laws create long-term problems, since in that case it was acknowledged by the creators of the provisions that they wanted them to be permanent but were enacting them with a sunset to limit the perception of deficit creation though not the reality of it.)

Meanwhile, Peter Orszag (former Obama White House Management and Budget Director) has an idea for compromise on the GOP “keep all the Bush tax cuts forever” and DEM “let the tax rates increase on the very wealthy but keep the cuts for everybody else” battle over whether or not to enact new tax cuts given the end of the temporary Bush provisions on December 31, 2010. See Orszag, One Nation, Two Deficits, NY Times, Sept. 6, 2010. Orszag’s idea is to pass a new temporary bill sunsetting the laws in 2012, and then don’t pass any more tax cuts–let them die altogether. As a compromise, it has something going for it, in that the temporary enactment of new cuts would act (a little) as economic stimulus and the permanent end of all of the tax cuts wipes the slate clean of a messy set of tax changes that never made any sense in the first place. As stimulus, it is not as good as spending federal money on needed public and human capital projects, but it is much better than giving more permanent tax breaks to big business and the wealthy.

Of course, the problem with this is similar to the problem with the proposed temporary expensing rule–the GOP will always fight to make the temporary tax cut into a permanent one, and will always cast their side as against a tax increase in spite of the fact that the law ends the break at a specific time, and so they are actually arguing for deficit increases to pay for big tax cuts to the wealthy and big corporations. If the Dems lose Congressional seats in the fall elections, the GOP would be even more likely to push through more deficit-increasing tax cuts, while still arguing against deficits to justify privatization or cutbacks in Social Security and Medicare. Their hypocritical inconsistency on this hasn’t bothered them yet, so no reason to expect a change in the future.

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Whatever happened to the Guns or Butter premise

by Run

Whatever happened to the Guns or Butter premise?

Naomi Freundlich at Maggie Mahar’s Health Beat Blog discusses the passage of the $26 billion state aid package and why it does not go far enough in securing healthcare for those who qualify for Medicaid. Passage of $26 billion State Aid Package Is Merely a Stop-Gap Measure For Medicaid Woes.

To get this past the Senate, the bill was stripped of $12 billion Food Stamp Program and closed loopholes in incentives which encourage employers to move jobs overseas to make it revenue neutral. While it is good to see Congress start to close loop holes for companies and individuals who utilize them to their own benefit and not for what they were intended, you have to wonder what were they thinking when it came to the food stamp program. In the midst of a mediocre job creation economy with no end in the near term, the millionaire Senate balances the budget on the backs of the poor who depend upon Food Stamps . . . 41 million citizens in 2010 . . . to get Senator’s Snowe and Collin’s votes. The kicker here is the Senate playing Education off against healthcare and food stamps. Education, healthcare, or food ???

Even with the adjustments, the always neatly groomed, with the Edwards haircut, and nattily dressed John Boehner calls it a pay off to Union bosses and liberal special interests. Ohio did register its uninsured numbers at 13.9% of the population which many would probably qualify for Medicaid if unemployed long enough. Then there is Joe Barton of Texas complaining about the extension also. Yep that is Texas, the number 1 amongst all of the states with the highest number of uninsured at 26.9%. Hey at > than 1 in 4 residents without healthcare what could John really say other than:

“There is no emergency!”

Maybe there is no emergency for Rep. John Barton who is covered by the congressional healthcare plan and maybe we can blame the number of uninsured in Texas on illegal and legal Hispanic immigrants? Wonder what was he thinking?

“80 percent of those the Gallup organization or the Census Bureau would count as uninsured are actually U.S. citizens. “If we took all the immigrants out of Texas—legal and illegal—we would still have the highest uninsured rate in the country,”

says Eva DeLuna, a budget analyst at the Center for Public Policy Priorities (CPPP), an Austin-based think tank. Texans are Mostly Likely

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Why ‘Nothing’ is STILL the 2nd Best Plan for Social Security: and Why YOUR Plan Probably Sucks

by Bruce Webb

A curious feature of the battle over Social Security is that it is almost always a battle of adjectives and adverbs and not numbers, In particular almost everyone agrees that ‘Nothing’ is not a plan, People are not always clear on the consequences of ‘Nothing’ whether that be ‘massive’ benefit cuts or ‘devastating’ program cuts or just the Invisible Bond Vigilantes burning down our fiscal house but everyone just assumes its going to be bad. Real bad. Horribly really bad. Because only morons don’t understand that Something has to be done: benefit cuts or retirement age changes or cap increases or means testing but Something!!

Well call me Moron. Or maybe Guy That Has Read the Report and Wonders What the Shouting is About. Maybe that still adds up to Moron, but can we at least start with official numbers and methodology?

The 2010 Report of the Trustees of Social Security was released on August 5th, a little over four months late from the normal release date of Mar. 31. Is that late release important? Well no, there is probably a back story but in light of the actual reporting it is not of much significance, because the bottom line is as follows:

For the short range (2010-2019), the Trustees measure financial adequacy by comparing projected assets at the beginning of each year to projected program cost for that year under the intermediate set of assumptions. A trust fund ratio of 100 percent or more — that is, assets at the beginning of each year at least equal to projected cost for the year — is a good indication of a trust fund’s ability to cover most short-term contingencies. The projected trust fund ratios for OASI alone, and for OASI and DI combined, under the intermediate assumptions exceed 100 percent throughout the short-range period and therefore OASI and OASDI satisfy the Trustees’ short-term test of financial adequacy. However

We’ll get back to that ‘however’ but the fact is that Social Security passes the ten year test for solvency, the same ten year test used by OMB and CBO and Congress to measure just about every other aspect of federal spending. So if the issue isn’t solvency of Social Security itself maybe it is the projected damage to the overall deficit. Well no, under the rules that govern Social Security any year in which Trust Fund balances are positive scores as equally positive for deficit calculations and if we examine the appropriate table Table IV.A3.—Operations of the Combined OASI and DI Trust Funds, Calendar Years 2005-19 we can see that the combined Trust Funds are scheduled to increase from $2.6 trillion to $3.3 trillion in 2015 (the target date for the Obama Deficit Commission) to $3.9 trillion in 2019 and the end of the projection period. Now opinions vary on whether we are in imminent risk of attack by the Invisible Bond Banshees, but offhand you wouldn’t think a ten year surplus of $1.3 trillion was actual banshee bait, so you can’t explain this away as deficit hysteria, using the standard window for judging these matters Social Security is doing just fine. So why are conservatives demanding that we impose cost controls NOW, NOW, NOW while progressives are countering with RAISE THE CAP. A LOT. YESTERDAY. Well unfortunately the answer is easy. The former crowed is studiously ignoring the numbers and most of the latter never actually looked at them to start with. Because once you engage with the numbers you too will see why ‘Nothing’ is a perfectly fine plan for Social Security is the short run while our plan (natch) is perfect for the medium to long term. Which no doubt sounds like pure arrogance on our part. Well maybe, but it is informed arrogance, and I’ll try to share some of that information under the fold.

So we have a situation where combined OASDI satisfies the Trustees test for ‘Short Term Actuarial Balance’ and is projected to have a ten year surplus of $1.3 trillion so clearly we can exhale a little, the sky is not falling, not if you use official numbers, and whatever threat there may be is somewhere over that ten year horizon. Which brings us to our first important dividing point. Is a $3.9 trillion 2019 Trust Fund Balance in real terms an asset? Or a liability? Is it a fund we can draw on, or a debt we have to redeem? And the answer to all four questions is “Yes”. Which ones you would emphasize depends on where you sit.

(Okay first thing out of the box. The Special Treasuries that make up the Social Security Trust Funds are real as real, there is nothing phony about them, and if you think different YOU are the moron. Or a liar. Or worse. See you in comments because all the arguments to the contrary are just Cato and AEI bullshit. Full stop.)

Having settled that point for the moment, we can see that the projected $3.9 trillion in the 2019 Trust Fund is an asset from the prospective of current and future retirees, but a liability from the perspective of current workers and taxpayers (not the same thing), and that there is some substantial overlap. But not total overlap because the asset has been built up from one income stream, that of FICA payroll taxes while the payback has to come from another, that of income tax or borrowing from the public and the incidence of those taxes all inequally. For example returns on capital are not subject to FICA and so contributed nothing to the build up but are exposed to income tax and so are liable for some of the payback. Which fact frankly is the source of much of the tension here. And ultimately will raise the question of whether this whole kerfluffle is really about solvency? Or servicing costs? For the moment I want to keep the focus on solvency.

Okay so we have established that by official measures Social Security meets the ten year solvency test so problems on that front if any are somewhere over that horizon. To find out how large that problem might be we need to consult the following table from the 2010 Report. It shows the outlook for OASI (Old Age/Survivors) and DI (Disability) separately and combined into OASDI over a probability range from uniformly optimistic (Low Cost) to uniformly pessimistic (High Cost) economic and demographic projections. Since it is unlikely that all of the relevant variables would move in the same way there is a certain artificiality to Low Cost and High Cost but the Trustees have supplied reasonable tools to measure that uncertainty and we can be reliably certain that the probable outcome will be somewhere in the confidence interval. Those who want to check the analysis can be my guest: 2010 Report: Sec VI.D and E. In the meanwhile we will be looking at these numbers:
Having seen that the Trustees test for short term actuarial balance is measured over ten years, we can see here that the test for long term balance is seventy five years, supplemented since 2003 with another test over the infinite horizon. And under Intermediate Cost (i.e. median) assumptions the actuarial deficit for combined OASDI is 1.92% of payroll. Meaning that an immediate boost in payroll tax of that amount would deliver us to 2084 having been able to pay 100% of scheduled benefits and with a full one year reserve in the Trust Fund. But there are a lot of ‘ifs’ buried in that two decimal point precision, because the actual spread runs from +0.59% to -5.26% of payroll, meaning there is some chance that Social Security left alone would actually be OVER funded going forward with a larger chance of it being even more underfunded than that 1.92% suggests. Gosh darn it, who knew that the future was actually unknowable? So what if we reel it back a bit and look only 50 years out. Hmm a narrower range of +0.55% to -4.00% but still kind of wide. 25 years out? +1.12% to -1.86%.

So what does this blizzard of numbers tell us? Well a number of things. For one thing even under our most optimistic set of assumptions there is a dropoff after 25 years as Social Security drops from a 1.12% of payroll surplus down to 0.55%. That is Boomers do exist and will exert maximum impact on the system in the 2030s as trailing edge 1964’s hit 67 in 2031. Nothing short of product roll-out of Soylent Green is going to forestall that. On the other hand there is a measurable chance that Social Security left unchanged would STILL dodge that bullet and allow full payout of benefits with a small margin to spare, so there is no reason to over react and by the way no reason at all to pay attention to infinite future numbers. Already at 25 years we are look at a +/- 1.35%, subscribing to a package of benefit cuts/tax increases of 3.5% (the infinite future IC gap) being frankly nutty in light of the probability spread.

Adding all of this up is ‘Nothing’ the perfect plan? Well no, there is a better than even chance that the demographic realities of the 2030s and early 2040s demand that ‘Something’ be done. But what that ‘Something’ is depends on how you frame that demand. If the real problem is an inability to deliver full benefits then the answer is to put in place plans to bolster the system if and when. On the other hand if the perceived problem is the DEMAND for full benefits to crowd out other spending priorities then the answer is to find some way to mitigate the shock of Trust Fund depletion and subsequent reset of benefits if and when.

Which brings us to the crux. It seems the main concern of the Catfood Commission is that greedy geezers will demand full benefits no matter what and that the answer is to start transitioning retirees from eating the occasional steak to homemade Beef Stroganoff to Hamburger Helper to Fancy Feast to Kibble so that there is no trouble once the Trust Fund goes to exhaustion, the solution to being electrocuted on the Third Rail of American Politics is just to drain the juice out slowly. Because clearly their concern is not benefit cuts at Depletion as such, I don’t see any plans which aim to deliver some intermediate result BETTER than that you get from ‘Nothing’, all their ‘Somethings’ require retiree give backs over the status quo. Which is why I say that ‘Nothing’ is STILL a better plan than the choices we are being offered, and that is true even if we are thrown some scraps of ‘People Food’ in the form of cap increases, in the end kibble with a little chum salmon on top is still dog and cat food (Alaskan natives keep the chinook/King and coho/Silver for themselves and unless pressed feed the chum/Dog to, well the dogs).

Many progressives out there believe that the answer to Social Security ‘crisis’ is simple enough even a Moran (sic) like me should grasp it-just raise the cap. Which ignores a couple of realities. One there is ZERO chance that you will get any change in the cap that doesn’t come with giveaway’s on the benefit side. Zero, zip, nada. You need four Republican votes from the Deficit Commission for ANY deal and you can bet anything you like that they will extract something. If only because they have no real interest in fixing Social Security in any meaningful way, they don’t want it to be seen as a successful government program delivering real benefits to workers, that doesn’t serve their agenda even the tiniest bit, the right answer to any Social Security offer coming out of this Commission is 99.9% likely to be “No Deal!”, no matter how attractive the bait on the hook. Under the current environment the best plan on the policy table is the tried and true plan: ‘Nothing’.

Which leaves careful readers two objections. “Bruce you said ‘Nothing’ was only the ‘2nd Best Plan’ . And what about that ‘However’ from the Trustees you said we would get back to”. Okay you got me. While ‘Nothing’ is better than almost all the likely ‘Somethings’ out there even the 25 year OASDI numbers suggest a bias towards some action to action even if it doesn’t have to be tomorrow. And if we break out OASI and DI we can see why the Trustees appended that ‘However’. Back to the 2010 Report.

However, the DI Trust Fund fails the Trustees’ short-term test of financial adequacy. Its trust fund ratio is projected to fall below the 100 percent level by the beginning of 2013. After 2013, the DI trust fund ratio continues to decline until the trust fund is exhausted in 2018.

Ouch. DI is currently bleeding and badly, in fact if we consult Table IV.B4 again we can see that its 25 year actuarial deficit is 0.30% and in fact accounts for ALL of the combined 25 year gap of 0.25% plus some. While ‘Nothing’ is a perfectly defensible plan for Old Age/Survivors it just won’t do for Disability, there we need a ‘Something’ and if anything we need it yesterday. Which brings us to a curious fact, there is a near perfect alignment betweeen the 25 year actuarial gap for combined OASDI and DI and the 75 year gap for DI in isolation: 0.25%, 0.30%, 0.30%. Meaning we can install a 75 year fix for DI which will also give us a 25 year fix for combined OASDI. Gosh if only someone had run some numbers and got us a ‘Something’ we can believe in. Paging Mr. Coberly (with assists by Arne and me).

Northwest Plan for a Real Social Security Fix

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Approving Military Equipment Procurement.

by reader Ilsm

Approving Military Equipment Procurement

The Defense Acquisition Board is there to prevent the issues identified in the annual GAO Assessments of Selected Weapons Programs, 09-326SP and 10-388SP. The Board does not insist on product knowledge about what it is committing US funds for, nor manage the approval process through which a program manager has to pass to get into the next evolution of weapon system development, production or fielding.

This is because the board is largely political, exists to satisfy the military industrial complex demand for profit, and is challenged by the acquisition processes arcane complexity, lack of standards in engineering /managing products, and the reliance on advisory and assistance contractors in the program management offices whose work is beyond the capabilities of government managers to understand. The DoD acquisition system is failed.

If the program manager developing a weapon system does not have adequate product knowledge the system should be kept in study and not advanced to do engineering or manufacturing. The Defense Acquisition Board in most cases where commitments are overrunning approved start of the next engineering or production phase with inadequate product knowledge.

The GAO assessments are spot on and identify underlying causes of overruns, poor performance and schedule delays as false or at best inadequate product knowledge. The DAB is supposed to insist on product knowledge. They are not doing the job.

The first and earliest product knowledge is “technology knowledge” the DAB ignores the lack of connection between the “need” (fantasies to fight WW II again, developed in JCS and/or service ops tanks, a marketing process called mission area analysis in the Air Force-can address in comments) for the stuff. If they do not get the usefulness of new technology right, it makes no difference if they can design a capability that has no use.

There is a second aspect of technology knowledge and that is, can the new science be produced, operated and supported, this issue is ignored and even if needed the new technology has no chance to be manufactured and deliver a reliable capability.
The second product knowledge is “design knowledge”. Assuming there is technology knowledge engineers are then challenged to develop performance specifications which can be designed to deliver the capability applying the technology knowledge. This is more than challenging for the current acquisition system and its industry suppliers. This requires “item development specifications” rooted in the technology, related to performing in a war environment, in a breakdown of the product from the whole system down to the nuts and bolts.

With good technology knowledge this is daunting; with the usual technology knowledge this is an exercise in waste. The norm is to send systems into production with inadequate technology and design knowledge. This is why it takes twice as long to get the F-22 through tests and why the F-35 Lightning cannot meet any of its design test schedule. Just two of 96 examples GAO saw in Mar 2009. The result is specifications reflecting no design knowledge go on contract.

The final and most important is “production knowledge” which consists of knowing that the good design can be produced, with economic yields, and good quality so they equipment can be operated and supported in use with a predictable operations and maintenance budget to deliver the capability and keep it over large logistics tail ready for use in a war. The DAB ignores poor production knowledge more consistently than the others.

At this point about 10% of the life cycle cost of the capability is spent, here is where throwing good money after bad comes into play and here the DAB authorizes the program manager to produce and deliver a system which needs immediate and continuing redesign, modifications and too much costly logistics support.

Faulty product knowledge delivers cost overruns, schedule delays and poor performing systems that required too much logistics to keep running. GAO catches these but their results are not front page news.

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Feasible Stimulus Politics ?

Robert Waldmann

Obama proposes an additional $ 50 billion for infrastructure. He ignored my proposal to mail a $ 500 check to every US family this month. The proposal is better policy than my proposal. If implemented it wouldn’t help Democrats in November, since it would start next year.

My guess is the plan is to have Republicans block the bill, scream about the deficit and insist on extending tax cuts for the rich. I think Rich vs non-rich is much better politics and that the vast majority who don’t know they already got a tax cut in the ARRA (stimulus) would notice a check in the mail.

At least the Obama administration is seeking a fight. Until recently, they were embracing the idea of a payroll tax holiday. This is also fine policy, but it is a Republican proposal.

The article by SHERYL GAY STOLBERG notes that Rahm Emanuel won another battle “The idea for an infrastructure initiative, and in particular an infrastructure bank to leverage public money for private investment, is one that the White House chief of staff, Rahm Emanuel, has been promoting for some time within the West Wing.” He is promoting himself not the President. Just one more reason to fire him.

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Be afraid on Labor Day

by Dan Crawford (Rdan)

Business Insider offers one sort of opinion by Mike Shedlock… what I can gather from the short article are the implications that outsourcing over the globe is a consequence of unions, that we should be more like Louisiana, and there is no economic literature on labor to offer some alternative explanations. And serves notice to public employee unions of what is next…you privileged workers are next after we finish off what is left of the private unions. Really nice offering.

Now this particular effort might reflect some lack of understanding on the unions part, but absolves any decision by Cessna management for stupid decisions it appears. Be afraid is the message.

Here’s the deal. The Hises and the union in general appear ready willing and able to “hurt the whole Wichita economy” if they do not get what they want.

I have to ask “How stupid is that?”

The answer is “tremendously stupid”.

It is far better to have a good paying job and no job security than no job at all and no prospects of a job. That’s what it boils down to, and like it or not, that is the economic reality.

I do not know what salaries are, but a 10 year contract with only a 4.2% pay cut does not strike me as a bad deal. Those who think otherwise need to compare it to the alternative: seeing all the jobs go to Louisiana, Mississippi, or outside the country.

By the way, wouldn’t residents of Louisiana and Mississippi be very grateful for those job, regardless of what the salary was? I think so. So the bottom line is this mess, is the unions would be to blame and only the unions to blame if Cessna moves elsewhere. The union will also be responsible for wrecking the entire local economy if it happens.

Take the contract and run! It’s for 10 years! Because …. You Don’t Know What You’ve Lost Till Its Gone, Then It’s Too Late. In this case, it will be gone forever.

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