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

It’s Only the Bottom of the Second: Fearful of Losing My Bet with Lance

Greg Sargent, whose Gatekeeper Job at Kaplan Prep Daily makes him somewhat important in determining the results of elections, cast a pale over my good mood about my dinner bet with Lance Mannion this morning:*

Having trouble getting outraged with Romney campaign sending out only good parts of Det[roit] News endorsement. Seems like par for course.

Romney is still dealing with Newton Leroy, the Gold Bug, and the Spreading Guy. Which means the big money on his side is still somewhat diffuse, what with Sheldon Adelson still considering wasting more money Stimulus Spending on The Never-Ending Book Tour and Foster “put an aspirin between your knees; I’ve never heard of doggie-style” Freiss still supporting, and supported by, Beelzebub in a Sweater Vest. Not to mention whoever (other than himself) is spending money to keep Mr. My-Son-Might-Be-the-Vice-Presidential-candidate-and-all-I-got-was-this-racist-newsletter in front of the CNN cameras.

Short version of the above: It’s a long time before the election. If the Supposedly Liberal Gatekeepers are already becoming inured to Romney’s, er, Selective Amnesia—what humans would call “lying”—it’s going to be a Very Long Summer and Fall.

Probably from Grace, voluntarily.

*All right, he sent it out last night. But Twitter is potentially asynchronous, and I only read it this morning. Before then, it was alive in another reality, like that bloody, overused, misinterpreted-as-if-it-were-an-economic-model of a cat.

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2012 = 2006?

It’s not just that you make a mistake; it’s that you cling desperately to that mistake and let it define you.

Katrina revealed George W. Bush’s basic incompetence in a way that 9/11, Afghanistan, and Iraq had not. So he was weak going into the 2006 midterms. There were going to be losses. No one who wasn’t being paid to say otherwise thought there were not going to be some losses.

And you have to assume that some people thought those losses would be smaller: they got rid of “Brownie,” made a lot of noise about “Katrina and Rita,” put Hayley Barbour on television as often as they could, talking about how Mississippi was rebuilt.

Damage control.

The problem was that one failure got people to look at other failures. And the sacrifices didn’t come from there.



After the 2006 election, Donald Rumsfeld resigned. There were rumors it might happen before then, but it didn’t.

A few weeks ago, going into the Wisconsin recall elections, there were rumors that Tim Geithner would resign.

That’s not going to be true now. So Barack Obama is going to go into a re-election campaign running what John Hempton astutely described as “the cravenly pro-finance Obama administration.”

Not pro-economy: that would involve employment and GDP growth, neither of which has been happening for so long that Sensible Centrist Brad DeLong is sounding more and more and more like me.

The center isn’t holding. Every pictures tells the same story.





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Mandate Up

Mandate Up by The Bell offers some advice to his readers on the mood of the country:

Their Promised Approach to Governance Didn’t Work Out So Well for the Last Guys

During one of their debates, Nevada Tea Party Senatorial candidate Sharon Angle famously told Majority Leader Harry Reid to “Man up!” meaning he needed to toughen up in the face of adversity and take responsibility for his actions and their consequences. As it turned out, Reid apparently manned up sufficiently to become one of the relatively few Democrats avoiding rejection by voters last Tuesday.
Republicans, the big winners in this election, were quick to see their victory as a justification to mandate up. Their victory moved Representative John Boehner of Ohio, the likely next Speaker of the House, to tears of relief because he believed his Party now could save the American Dream. “I think that it’s a mandate for Washington to reduce the size of government and continue our fight for smaller, less costly and more accountable government,” he told reporters.

John Boehner and Mitch McConnell believe they have
been given a mandate to undo Obamacare and Obama

Boehner also believes Republicans have a mandate to repeal healthcare reform as passed by Democrats, calling it a “monstrosity” that “will kill jobs in America, ruin the best healthcare system in the world, and bankrupt our country.”
Senator Mitch McConnell of Kentucky, who will remain Minority Leader because candidates like Angle did not prevail, was even more belligerent. He argued Republican lawmakers should vote to repeal healthcare reform, over and over if necessary. Then McConnell took it a step further, maintaining that merely opposing Obama’s policies was insufficient.
Republicans top goal for the next two years should be doing anything and everything possible to deny the President a second term. McConnell reasons the only way for Republicans to undo everything is “to put someone in the White House who won’t veto any of these things.”
For his part, Obama was chastened by the “shellacking” his Party suffered but unapologetic about his agenda, although he conceded he was so eager about what needed to be done he had forgotten how he promised to do it (i.e. outreach to Republicans and greater civility/bipartisanship). “I do believe there is [still] hope for civility,” he avowed.
Boehner and McConnell flatly stated they would accept Obama’s help only as far as it coincided with their mission.
They say the size of their victory demonstrates the American publicly has roundly rejected Democratic progressivism and this rejection cuts across all demographics and ideologies except for the extreme loony Left. Election results and exit polls tell a different story, however.
For starters, one might assume – given the extent to which Republicans used Obama as a proxy against Democratic contenders – that Democrats who voted with the President would suffer the worst loses while those who distanced themselves and voted against him would do better. In fact, of the thirty-three House Democrats running for re-election who voted against healthcare reform, two-thirds were defeated. About the same was true among the forty-two who voted against Cap and Trade. In comparison, only two Senate Demorats who voted for both the stimulus and healthcare reform lost.
CNN exit polls reject the oft-insisted conservative claim that this election was a referendum against Obamacare. Only seventeen percent of voters considered healthcare reform their top issue and more half voted for Democrats. Likewise, only thirty-seven percent said their vote meant “expressing opposition to Obama.” Even given continuing high unemployment and slow recovery, in the sixteen Democratic-represented Congressional districts hardest hit by the economy, only one flipped Republican.
There is no question that Republicans received a loud and clear mandate from a cadre of energized conservative voters. However, far from representing all Americans, this group was both whiter and, especially, more elderly than the population as a whole. Republicans continued to lose eighteen to twenty-nine year olds by seventeen points. As Harold Meyerson of the Washington Post observed, “There was absolutely a Republican wave on Tuesday, but it looks more like the wave of the past than the wave of the future.”
Republicans won with this cadre and Independent voters, who broke for the GOP in 2010 by about the same margin they went for Obama and Democrats in 2008. They were sending a mandate too but one less about ideological preference and more about results.
The Washington Post’s David Broder explains, “There will be a temptation to interpret the Democrats’ loss of their House majority and of at least six Senate seats as a rejection of Obama’s first-term agenda . . . American voters are not that flighty or unsettled . . . The biggest problem by far was the economy . . . The worst mistake would be for [Obama] to abandon or reject his own agenda for government.”
Broder’s conservative colleague Charles Krauthammer disagreed, arguing the rejection was so complete that neither Obama nor any future Democratic can or would wish to govern from a progressive philosophy ever again. However, he concurred on this key point – “Republicans [should not] over-interpret their Tuesday mandate. They received none.”
Some pundits argue Obama’s fatal mistake was in overreaching while others maintain he was not nearly aggressive enough. Actually, Obama’s mistake was overestimating how long Americans would be patient over a sluggish economy from which the middle class had failed to benefit long before the recession. Republicans benefited as the only available alternative. They are also next in line for the boot if they fail to deliver. Moreover, nothing suggests voters have grown more patient.
To this end, Republicans must focus on economic growth and creating jobs in the private sector. They must press for reforms but be willing to compromise on details. While attempting to repeal healthcare reform is a gesture owed to their most ardent constituents, they must present viable conservative alternatives to its most unpopular components. This is not my policy prescription but that of Karl Rove, writing in the Wall Street Journal.
Boehner and McConnell may choose not to heed these admonitions. They may insist they have a mandate that represents the broad will of the American People. They may insist this election represented a permanent seismic shift to the ideological right by this country. They may insist compromise is a dirty word and only total repeal is sufficient. They may insist voters have seen the error of their ways and will patiently wait two years or more for them to build the majorities and power bases necessary to do things the right way. They may insist they only way they will not be successful is if the defeated Party is obstructionist.
Of course, they insisted in the run-up to this election that these are exactly the same mistakes made by the Democratic leadership after 2008. As chief of the defeated, Obama noted in his press conference, “Ultimately, I’ll be judged as President as to the bottom line, results.” The same is true for Boehner, McConnell, and the rest of the Republicans swept into office last week.
It is time for them to quit mandating up and start manning up. They have the acting tough part down pat. Now it is time to work on the taking responsibility part. Otherwise, it will quickly become clear nobody was listening to the American People this election.

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Current fiscal deficit hawks…oops!

Projected growth in spending on the federal government’s big health and retirement programs–Medicare, Medicaid, and Social Security–dominates the long-run budget outlook. If current policies continue, that spending is likely to grow significantly faster than the economy as a whole over the next few decades. By 2040, the Congressional Budget Office (CBO) projects those outlays will rise to about 17 percent of gross domestic product (GDP)– more than double their current share.
CBO report ready for hawking in year 2000.

Was this before or after our deficit hawks started crowing in year 2000?

(a figure virtually identical to current estimates…oops…2010)

Hat tip Simon Johnson in It’s hard to take the fiscal hawks seriously.

Perhaps if we dismiss the current hawks we could actually address the issue of deficits.

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Tax expenditures, tax cuts, and IOUs (bonds)

We have seen the argument from some commission participants (Peterson for one) that Social Security is too expensive for those who need it and pay for it because it is an ‘entitlement’. We also have read from some Congress members (Senators Kyl and McConnel) that tax cut extensions of the Bush presidency are not deficit producing and need not be part of pay go.

The Fiscal Times has an article on considerations being undertaken by the Commission for Deficit Reduction. (H/t coberly).

The main theme in this article is that the “tax expenditures” home mortgage deduction and health insurance premium deductions are actually government spending (I assume in relation to the deficit) and thereby letting these taxpayers keep their money is bad. (Because these are “tax expenditures” and not “tax cuts”?)

I see a pattern here unfolding in this series of electioneering statements. Maybe politicians can put it altogether for us before the elections so we know who should pay and who should not in a less confusing way.

Quote is below the fold, bolding is mine:

As the 18-member bipartisan panel met in public for the fifth time, it was becoming clear that the tax system is under its microscope and there are many ideas under review for the long term. The commission’s success has always hinged on whether its leaders could muster support among Republicans for changes to the tax system, and agree to major spending cuts and changes in Social Security, Medicare and other entitlement programs that dominate the budget. So far, the GOP members are still at the table.

The most obvious target is recovering the huge amounts of revenue lost to federal tax loopholes known as “tax expenditures,” which include the home mortgage interest deduction and tax-free health premiums for employees. Proponents of rolling back these breaks say they are essentially government spending via the tax code. But health care premiums and mortgage deductions have long histories and are considered untouchable by some.

Erskine Bowles, one of the commission’s co-chairmen, pointed out that these loopholes cost the Treasury as much as $1.3 trillion per year, which is larger than total tax revenue. Bowles, citing an op-ed by Reagan White House economist Martin Feldstein, suggested that tax expenditures must be part of any serious attempt to limit spending.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, told the commission that the current system of tax expenditures is “one of the most detrimental things to the country.” But she also pointed out that they would be among the more difficult programs to touch.

Senate Budget Committee chairman Kent Conrad, D-N.D., who leads the commission’s working group on taxes, said that he has become convinced that more comprehensive tax reform is necessary to update a system that was built for an era in which the United States did not face global competition. “My own conclusion from this [working group review] is that we really have a tax system that is badly outdated,” he said. “It no longer relates to a world that we are in today.”

In addition to massive lost revenue through tax expenditures, the Treasury loses another $340 billion or so each year in taxes that people owe but simply do not pay, Conrad pointed out. “These are things that require a focus in our work.”

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