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

Taxes and the deficit

This morning in his Monday column Paul Krugman discussed the need to raise taxes to
deal with the long run structural federal deficit.

You can read the column at Economist’s view without worrying about the Times’ pay wall.

Every time any one proposes higher taxes Larry Kudlow and the right wing noise machine shouts to the rooftops that it is a tax the rich scam and that there are not enough wealthy people to raise the necessary revenues.

But as usual with these claims maybe we should actually look at the data before we accept this meme. Since 1980 the top 5% of family’s share of national income has increased from 15% to 21% — the percent is derived from the five year moving average centered on 1980 and 2007. The last year that this data is available is 2009

Source: Bureau of the Census/Haver Analytics

If we taxed away half of this increased share of national income it would generate a sum roughly equal to 3% of GDP, or about the CBO estimate of the long run structural deficit.

Moreover, it would still leave the top 5% of families with some 15% of national income, a larger share than was ever recorded before 1993.

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Greece will not be ‘allowed’ to default until policy shores up the Irish bond market

Just look at Tracy Alloway’s imagery at FT Alphaville, and you’ll know what’s expected: an imminent Greek default. I still argue no, although European policy tactics are quite enigmatic and their next move is really anyone’s guess. Alas, here’s mine.

Assuming that Greece does not secede from the Euro area, I give you three reasons why Greece will not be allowed to default soon (at least the next 12 months, given current market conditions). I say ‘allowed’ because true to the IMF legacy, EU/Euro area officials very likely see restructuring as a ‘gift’ for good fiscal behavior.

(1) Moral hazard is an important issue in Europe, and Greece has only begun its austerity program. We’ll need confirmation that they are not on track in order to assess the timing of default, in my view.

Ironically, the EU/IMF/Euro area are sticking to the ‘exports will grow the Greek economy’ story. I say ironically because Greece was exporting a larger share of GDP before the recession, average 22.6% spanning 2005-2007, than it is now, 19.8% in 2010 (average Q1-Q3).

(2) The banking system’s not ready. Unless the Germans want to instantly recapitalize the Landesbanks this year, I’d argue that the Euro banking system remains overly exposed to mark-to-market accounting (i.e. holding the assets at fair value not wishful thinking) for all of the crappy debt that it holds on balance.

In fact, the German banks purchased 11bn 1.1bn euro in Greek sovereign bonds in January. That’s the most current data available; but I bet they’re simply moving debt out of the Greek banks and corporates and into the sovereign as the probability of default rises (see chart below).

(3) This one’s critical: policy makers must shore up Ireland and Portugal in order to avoid a quick contagion across the European banking system. They haven’t done that yet. In fact, the Finnish election results exposed the tenuous negotiation process overall.

See, the Greek yield curve is inverted – so are the Portuguese and Irish yield curves, albeit to a much lesser degree. The point is, that Portugal and Ireland are very close to the Greek brink.
(read more after the jump!)

Inversion matters. Currently a Greek 10yr bond yields 14.5% with a euro price of 59, while a 2-yr bond yields 21.4% with a euro price of 73. Bond investors are going for the cheapest bond not the highest yield (at the end of the yield curve) as a bet on a binary situation: haircut or no haircut. When a curve is inverted, it’s all about price not yield.

Portugal and Ireland are already inverted and close to the Greek brink. If Greece were to restructure without a full-fledged backstop from the Euro area governments, the Portuguese and Irish curves would swiftly turn over. And if European policy makers could stop the contagion there, then that would be a true feat….

Spain, the economic ‘line in the sand’, would be next. We saw last week how markets view the Spanish sovereign, still risky. Bond yields on the Spanish 10yr broke out of a 4-month trading band, hitting 5.55% on April 18 (latest number is 5.47%).

More on Ireland

I assure you, that it’s too early to deem the Irish sovereign as impervious to the Irish banking system’s fake asset base. The banking system is living on emergency liquidity assistance (ELA) and the ECB’s marginal refinancing operations (currently Irish banks can borrow as much as they want on a short-term basis from the ECB at the current rate, 1.25%).

By my calculations, the Central Bank of Ireland (via the ELA) and the ECB are subsidizing – I say subsidizing because market funding costs are proxied by the sovereign borrowing costs of 10% – 16% of the Irish banking system’s balance sheet. As such, profit margins are thin, and mortgage rates are running low at 3-4%. (see CBI website for plenty of data.) These funding costs are not sustainable – not to mention the Irish stress tests assume that they remain fixed at Q4 2010 levels (see exhibit 2 in Appendix C of the stress test documentation). Nonperforming loans will rise.

I leave you with this illustration of possible non-performing loans when mortgage rates rise on the following:

(A) ECB rate hikes – mortgages are tied to 12-month euribor and most Irish mortgages are variable.
(B) the dissipation of record-low bank borrowing costs (this also is another post, but the ECB has yet to release its medium-term funding program for Ireland).

Note: if/when they do default, Kash at the Street Light blog provides an overview of some technical considerations.

Rebecca Wilder

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Why Don’t Tax Havens Become Industrial Powerhouses

by Mike Kimel

Why Don’t Tax Havens Become Industrial Powerhouses

Cross-posted at the Presimetrics blog.

The other day I read somewhere (yet again) that low tax rates encourage development. Which got me to thinking about tax havens. I’ve noticed that places like the Cayman Islands, for instance, seem to be magnets for hedge funds, but rarely if ever do countries which are mainly known as tax havens become industrial or technological powerhouses. What gives?

Here’s my thought… a hedge fund can buy and sell assets in country A from anywhere in the world, provided that it knows that country A has strong property rights, infrastructure, and legal institutions. If it can take advantage of those property rights, that infrastructure, and those legal institutions without paying for them (i.e., if it can free-ride), it can increase its private profits by having others pay for some of its costs.

Of course, a manufacturing, tech, or creative firm can also increase its profits by exporting its costs onto third parties (think externalities) which would make a tax haven ideal for such firms too. And yet, except for some transfer pricing games, for the most part, tax havens simply don’t attract or internally generate such firms in large numbers. My theory – it takes something else for that. It takes actually having a sound infrastructure (legal and physical), an educated populace, and a mindset, and these are things which tend to be generated by a not extremely incompetent government.

Your thoughts?

PS. Before the inevitable mention of Hong Kong, construct a Venn diagram of a) former British colonies and b) tax havens.

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Robert Reich’s After Shock and Corey Robin’s Freedom Arguments

by Linda Beale

In earlier posts on ataxingmatter (here and here), I reviewed Robert Reich’s 2010 book, After Shock, and wrote about his suggested cures for the problems made most visible in the 2007 crash and the Great Depression that followed.

The gist of the book is summed up in the following quote:

“[L]eft to its own devices, the market concentrates wealth and income–which is
disastrous to an economy as well as to a society.” at 59

Corey Robin writes in the Nation about the same problem, Reclaiming the Politics of Freedom, The Nation, Apr. 26, 2011. But he notes that harping on the distributional inequality doesn’t resonate with voters. If the left wants to influence policies and capture the hearts of voters, he suggests, it needs to demonstrate that this distributional mayhem, which leaves everybody but the rich vulnerable, has even broader consequences that reach to the very fundamental creation myths of our society–the desire to be our own masters, to free ourselves from a tyrannical monarchy and colonial overlords who seemed to want to dictate how we could work, what we could drink, and where we could live. That is, to make what we are saying comprehensible at the “yeah, that’s what counts for me” level, we need to connect to America’s own Founding Moment. We need to “reclaim[] the politics of freedom.”

And I think he is correct. Because the problem we are facing today, with corporate lobbying and campaign contributions reinforcing the elite class’s wining and dining of politicians, is more than the dysfunction of the economy. Yes, there is too much money at the top where there is not enough ability to spend it. Yes, there is too little money at the bottom where there is no way to provide for basic needs. Yes, there is barely enough in the middle, resulting in stagnation in local businesses who don’t have enough customers to sell to and can’t afford to give credit to those who want to buy.

It is not just that banks, connected to power through their managers and shareholders, are able to speculate with other people’s money (our money!) in the international derivatives casino and then push their losses off on us. It is not just that corporate bosses rake in as much in a day as many of their workers make in an entire year of hard labor. It is not just that we can no longer talk to anybody local when there is a problem with our phone or our order from a company. It is not just that ordinary people are ignored, disregarded, almost shunned, because the elite really are only comfortable in the company of other elites. It is not just that we can’t get an appointment with a doctor unless we have (expensive) health insurance, or can’t get that crown we need on the broken tooth because it costs as much as some of us make in half a year.

No. These things are real, they affect us every day, they make us angry every day because we recognize our powerlessness to deal with the highly impersonal Big Business world that has been fostered by the four decades of reaganomics’ deregulation, privatization, tax cuts and militarization. But still, the problem goes much deeper than these things.

Our very freedom is threatened. When we are economically powerless, we are also powerless in our lives because we lose our freedom to make choices that are right for us.

  • we lose our rights to bargain with our employers (look at how Wisconsin and Ohio have treated their public employees or how WalMart treats its workers and anyone who talks unions),
  • we lose the power to improve ourselves by pulling ourselves up by the bootstraps through publicly funded education from grade school through university,
  • we are dominated in the marketplace by powerful businesses that use automated systems to turn us off, ignore our calls and letters seeking redress for a mischarge or a poorly done job,
  • we lose our jobs, are forced to accept paycuts or furloughs, when the company claims times are tought, yet we watch the same public companies to pay their CEOs millions more

Our freedom to improve ourselves, freedom to choose the kind of work we want to do, freedom to prepare for our retirement and then retire with some security about our future, freedom from worry about whether or not a catastrophic medical emergency will eat up all our savings and leave family without an adequate living–all these freedoms are being threatened today by the concentration of wealth in the hands of an elite few who thereby become emplowered to set the market terms as they choose.

The idea of the “free market” is a bill of goods sold to replace the real concepts of freedom we should be considering. Markets, of course, can only function well for the people where government constraints prevent the owners and managers from setting all the terms to suit themselves, leaving externalities of their profitmaking to be borne by the people. literally ripping them off. The sloganeers have persuaded ordinary Americans to think that the American Dream of freedom is encapsulated in that little bitty notion of a “free market” so that they will unknowingly throw away the big idea of freedom–the freedom to set one’s own course in life, in a cooperative society that works to provide those tools.

The reason we need a progressive tax policy–including at the least progressive tax rates with brackets that reach much higher into the stratosphers of the ultra rich (55% for those making $1 million or more annually) ; elimination of the capital gains preference (so that all income is taxed under the same rate structure); and an estate tax with bite (meaning a graduated rate that protects a reasonable nest egg for the next generation while serving as one method of limiting the concentration of wealth)– is to ensure the freedom of each and every one of us, from rich to poor, from newly arrived immigrant to elderly Native American.

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Medical Tourism, separating facts from fiction

by Michael Halasy Practicing Emergency Medicine PA, Health Policy Analyst, and Health Services Researcher

Medical Tourism, separating facts from fiction

One of the greatest myths that I hear on a somewhat regular basis, centers around the belief that the US must have one of the greatest health systems in the world, because everyone comes here for their care. Well, let’s examine that shall we?

As with many things, reality is a little different from the mythology.

According to the Deloitte Center for Health Solutions and, there will be roughly 561,000 inbound medical tourists to the United States by 2017….Conversely, 750,000 Americans traveled to foreign countries in 2007, and this grew to between 1.1 and 1.3 million outbound tourists in 2008. Spending on healthcare in foreign countries was estimated to be 20 billion dollars in 2008.

Estimates for growth demonstrate a consistent 35% growth in outbound medical tourism annually. Projections indicate that roughly 1.6-2.5 million Americans will travel abroad in 2012, and spending could reach 100 billion dollars. That’s right, 100 billion US dollars being spent in foreign countries for healthcare such as elective surgeries, complicated dental surgery, plastic surgery, and even coronary bypass surgery.

Where are they going?

According to survey results:

Thailand, with one hospital in Bangkok taking care of 64,000 US patients in 2006.
Latin America

Of these, India has the greatest potential for growth.

A legitimate question revolves around what reasons these patients are traveling for. Predictably, a lack of health insurance had a high correlation with travel for services. Surprisingly though, only 9% of patients who were surveyed listed price as the primary factor in their decision.

An entire industry is springing up to support this, and companies are now offering packages, and entering into arrangements with foreign hospitals.

What may or may not come as a surprise to many, is that, as the Deloitte report lists, there are many American Health Insurance companies that are entering into pilot studies sending American patients to foreign hospitals for treatment.

Some examples include:

Anthem BC/BS in Wisconsin (700 group members initially, being sent to India for treatment)

United Group in Florida (Promoting tourism to India and Thailand to 200,000 members)

BC/BS of South Carolina (Promoting tourism to Thailand)

So while there are foreign citizens who come to the US for treatment every year, it pales in comparison to the number of American citizens traveling elsewhere.

(Rdan here…One of the throw away lines about the where US Healthcare stood in the scheme of things is that Canadians come over the boarder for treatment, which is characterized as a comment on the Canadian healthcare system. No numbers are ever provided even when requested…maybe it is more complex than many are willing to deal with)

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Sixteen Men on a Dead Man’s Chest…Social Security and the Facts of Life

Guest post by Dale Coberly

Sixteen Men on a Dead Man’s Chest Yo Ho Ho
Social Security and the Facts of Life

Sen. Mark Warner (D-Va.) said on Sunday the “Gang of Six” senators is “very close” to a deal on deficit reduction, suggesting the plan would impact Social Security that most Democrats have said is off limits.
Asked by host Bob Schieffer to clarify that the group will take on Social Security, Warner said, “Part of this is just math: 16 workers for every one retiree 50 years ago, three workers for every retiree now.”

What we have learned in ten years of watching the Social Security “debate” is that when someone says “it’s just math,” he is lying. Unless, of course, a United States Senator simply doesn’t know what he is talking about.

The “16 workers for every one retiree” is one of those true facts that doesn’t mean anything… and is therefore used by liars to mean what they want it to mean.
The Senator does not read Angry Bear, but in the hope that one of his friends will try to explain it to him, I offer the following simplified model.

Update: The Atlanta Fed Macroblog from 2006 includes Dean Baker, pgl, Ken Houghton on this issue.

Imagine that the voters of America look around themselves and see a crisis where millions of people approaching retirement age have lost their savings by no fault of their own. Perhaps a Great Depression or something like that. There is no time for all these older workers to again save enough to retire on. Workers who have already reached retirement age are receiving “welfare.” But the voters don’t like the idea of a permanent “welfare establishment” as the “normal” way for workers to get through their retirement years.
So they decide to try a simple plan.. a retirement insurance system based on the idea of pay as you go. And here is how it works.. worked. Remember I said this is simplified.

Imagine that in the first year of the plan there are 40 million workers, one million in each age cohort… that is, one million aged 25, one million aged 26, … etc. up to one million aged 64. So far there are NO retirees in the system. If each worker pays a “tax” of one percent of his income, there will be enough money so that..

In the next year one million people become 65 and retire. And one million who were 24 last year become 25 and get jobs and start paying the tax. And of course each cohort moves up to the next year.

Now there are forty million workers and one million retirees, a ratio of forty workers for every one retiree . And if each worker is paying 1% of his income into the system, there will be enough money to pay-as-you-go each retiree 40% of the average income of all the workers. The 40% is called “the replacement rate.” it will be roughly enough to replace 40% of the average lifetime monthly income of each of the retirees.. adjusted for the average increase in wages over 40 years. )
The next year, another million will retire, bringing the ratio of workers to retirees to 40 to 2, or 20 to 1 (remember that every cohort moves up a year, and one million new workers enter at age 25 replacing those who retire at age 65. Now it will be necessary to raise the “tax” to 2%.

At this point the Senator Warners of the world get hysterical.. “A doubling of the tax. We’re all going to die!” And the “non partisan experts” project that if this keeps up, in only 30 years the tax will be ONE MILLION PERCENT!.
But the workers say, two percent isn’t so bad and it goes for a good cause. So they keep paying as they go.

The next year the ratio of workers to retirees becomes 40 to 3 (13 to 1). and the tax goes up to 3%. Note that we have already passed the 16 to1 ratio without even noticing it.

The next year the ratio becomes 40 to 4, or 10 to 1, and the tax goes to 4%
And the next year the ratio becomes 40 to 5, or 8 to 1. Or does it? Well, sadly, no. By this time some of the retired workers have begun to die off… so the number of retirees does not increase by the full million new retirees, but by some number like one million new retirees minus some hundred thousand older retirees who have died And while the ratio of workers to retirees will continue to decline, it won’t continue to decline at the rate it did for the first few years.
In fact, if the life expectancy of retirees is about 12 years… half of them will die by the age of 77… the ratio of workers to retirees will stabilize at around 3 to 1. ( The ratio of workers to retirees depends very much on the ratio of working years to retirement years for each worker. )

This will require a tax rate of about 12% in order to pay that replacement rate of 40% of a workers average lifetime adjusted income… or, which is the same thing, 40% of the current average income. Note that sneaky “adjusted” income. That is the secret of pay as you go. By adjusting the income of retirees to reflect the inflation and rise in real standard of living that shows up in the wages of those paying the tax, the retirees get an automatic effective “interest” on their tax… which now looks exactly like “savings.”

Meanwhile the workers are putting away 12% of their income (or 6% depending on who you think would get the boss’s share if there were no SS tax), and this is exactly what they would have had to save out of their income for a basic “if all else fails” retirement. This seemed like a good idea at the time… the people who were living then had seen what happens to “sure things on the stock market,” and they wanted a little insurance “just in case,” and they were smart enough to know they had to pay for it.

Now, what Senator Warner is so sure is going to cause the sky to fall on our heads is the prediction that we are all going to live a little longer… as much as twenty years in retirement, bringing the ratio of workers to retirees down to 2:1. Other things being equal, this would require that we save about 20% of our working income, if we are going to need about 40% of that income every month to see us through a long retirement.

Since we are making more than twice as much as our grandparents, you’d think we could afford this. But let me make it a little clearer. Suppose grandpa was making a thousand dollars a week real money and paying 120 dollars into his retirement fund, and expecting to live about 12 years after he retired. Now suppose that great great grandson will expect to live about 20 years after he retires. He will need to pay 20% to cover the expense of a longer life. But he is making twice what grandpa made. So out of his 2000 dollars per week, he needs to save 400 dollars in his retirement fund. But that leaves him “only” 1600 dollars to live on.
Compared to the 880 dollars grandpa had to live on. You can see the tragedy of this situation. Great grandchild has to get along on less than twice what his grandpa did, and all so that he can afford to live almost twice as long in retirement.

Oh the unfairness! Oh the financial ruin!

As I said, the above was a simplified explanation. The true fact is that in order to pay for their longer life expectancy, the workers would need to raise their own Social Security contribution by about forty cents per week per year… in today’s money. Eventually, two generations from now, this would amount to a 2% increase on the tax for the worker, and 2% for the employer. Out of an income that will be more than double what it is today. Leaving the worker with twice as much money “after taxes” as he has today. Plus he will get the money back, with interest, over a retirement that lasts almost twice as long as his grandparents’.

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Guest post: Massachussetts leads the way!

Guest post by Michael Halasy Practicing Emergency Medicine PA, Health Policy Analyst, and Health Services Researcher

Massachussetts leads the way

We have talked about bundled payments here, and getting rid of the antiquated and inefficient fee for service model. It looks like Massachussetts is on board suggests The Washington Post.

Blue Cross is not alone. At Partners HealthCare, the famous Boston-based medical system that dominates health care here, Massachusetts General Hospital has been conducting a Medicare experiment in which nurses are assigned to coordinate care for about 2,500 older patients with multiple ailments. The experiment, which began five years ago, so far has reduced hospital re-admissions by one-fifth and cut medical spending by 7 percent.

They will be the first to implement integrated care organizations (really, a version of ACO’s) and a new bundled payment mechanism.

With 98% of the population insured, Massachussetts saw their costs soaring, at about 15% above the national average. The markets have already begun to respond, and some, like Partners, are already ahead of the curve.

At Partners HealthCare, the famous Boston-based medical system that dominates health care here, Massachusetts General Hospital has been conducting a Medicare experiment in which nurses are assigned to coordinate care for about 2,500 older patients with multiple ailments. The experiment, which began five years ago, so far has reduced hospital re-admissions by one-fifth and cut medical spending by 7 percent.

Massachussetts was bracing for this for some time. Last year, the insurance commissioner took on the health insurance companies for raising rates too rapidly. He rejected many of them outright. This was an important political maneuver, that really set the stage for the current willingness and cooperation of the insurers, providers, and hospitals.

As he says:
“We are preparing ourselves to grapple with a certain amount of constructive disruption in the industry,” Patrick said in a lengthy interview. “It’s a journey.”
Clayton Christensen would argue that it is JUST that disruption which is so sorely needed.

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Fear-Mongering Over the US Budget Deficit

Cross-posted at The Street Light.

Absurd news today from S&P’s credit rating analysts, who have apparently been drinking liberally from the Deficit Crisis Kool-Aid:

NEW YORK (MarketWatch) — Standard & Poor’s cut its ratings outlook on the U.S. to negative from stable on Monday, lighting a fire under Washington’s deficit-reduction debate and sending stock markets sharply lower.

The rating agency effectively gave Washington a two-year deadline to enact meaningful change, just days after House Budget Committee Chairman Paul Ryan and President Barack Obama each outlined their plans for slashing debt. S&P nonetheless kept its highest rating, AAA, on the U.S.

US debt is still rated as AAA, which effectively means that S&P’s rating analysts believe there is a zero percent chance of the US government not making payments on its debt. However, this new “ratings outlook” indicates that they now believe that there’s a reasonable chance that some time within the next two years they will change their mind, and start to believe that there’s a chance — albeit a remote one — of the US government defaulting on its debts.

For perspective, the following chart shows the OECD’s forecast for the burden of debt payments in the US and the world’s other largest developed economies. Net interest payments both this year and next year will be lower than any other major OECD country with the exception of Japan.

Update: NYT offers six more reactions here. (h/t Rebecca)

Ah, but no doubt S&P is worried about what will happen to that debt burden beyond 2012. After all, there are alarming predictions that the currently large budget deficits will continue to be unduly large after 2012, even as the economy recovers.

But deficit projections are notoriously slow to catch up with the business cycle. When the economy is doing well and deficits are small, forecasters tend to look in the rearview mirror and make very rosy projections into the future. And when the economy is doing poorly and deficits are large, forecasters also tend to project doom and gloom going forward.

So let me put up this reminder about how bad, and backward-looking, medium-term deficit forecasts can be. It shows the US government budget balance as forecast by the CBO in 1993 and 1995, and compares those forecasts with what actually happened.

I don’t want to argue that the US has no long-term deficit problems. It does. And steps will need to be taken — when the economy is in good shape — to bring revenues more in line with spending. But the current fear-mongering over the US’s budget deficit is just that: fear-mongering. And today S&P played a shameful role in it.

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GW Broke with Clinton. Did Obama Break with GW?

by Mike Kimel

Update: McClatchy tackles the question here.

GW Broke with Clinton. Did Obama Break with GW?
Cross-posted at the Presimetrics blog

The following major initiatives had occurred toward the end of April 2003, about two years and three months into the GW Bush administration:

1. Marginal income tax rate cuts in 2001, 2002 and 2003.
2. Passage of No Child Left Behind Act
3. Outlays as a percentage of GDP rose.
were 18.2% in fiscal 2000, 18.2% in fiscal 2001 and 19.1% in fiscal 2002.
4. The inherited surplus became a deficit.
5. Passage of the Patriot Act.
6. Invasion of Afghanistan in response to the Sept 11 attacks. Note that by April 2003, the Taliban insurgency was already gaining strength again.
7. Abortion restrictions. Reinstatement of the Mexico City Policy. Withdrawing funding for the United Nations Population Fund. Began the push for the Partial Birth Abortion Ban (introduced in Feb. 2003 by Rick Santorum, passed in November of 2003).
8. Sarbanes Oxley.
9. Homeland Security Act.
10. Invasion of Iraq.

Whether you agree with these policies or not, its a not insubstantial list. Several, if not most of these initiatives represent big breaks with the previous administration. For instance, Clinton raised marginal tax rates, whereas GW lowered them. Federal spending / GDP fell during every single year of the Clinton administration, but would rise in most years of the Bush administration. Clinton managed to turn a deficit into a surplus, whereas GW went the other way. The Mexico City Policy which GW reinstated had been rescinded by Clinton. The Patriot Act and the Homeland Security Act don’t seem to be Clinton’s style. And while one might argue Clinton might have acted against Afghanistan following 9/11/2001, it is very, very hard to envision the subsequent invasion of Iraq had Clinton been President in 2003.

We are now about two years and three months into the Obama administration – about the same amount of time it took GW to engage in the initiatives mentioned above. So…. what are the major initiatives of the Obama administration so far, and which of them represent clear breaks with the Bush administration? (Please stick to things that actually happened or at least in which Obama invested some political capital. Something Obama might have said during his campaign, something you heard from one of your hallucinations, or something reported by Fox News may not fit into that category.)

Note – this post is a follow-up to the post entitled Why I Will Not be Voting for Obama in 2012 which appeared in the Presimetrics blog and at Angry Bear.

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