Minor Thoughts from me to you

You may have seen charts floating around that supposedly show that we could pay for the Social Security shortfall by simply rolling back the Bush tax cuts “for the rich”. Megan McCardle has seen those charts too and she explains why they’re misleading and wrong.

The CBPP gets its figure by taking present values of the Bush upper income tax cuts extended over 75 years, and comparing them to the present value of the Social Security shortfall. For those who haven't taken finance classes, present values are sort of like compound interest, in reverse. Instead of adding up the future gains from interest rates, you discount future cash flows by a discount rate.

… Because it discounts future dollars, often quite heavily, cash flows which happen beyond 10-20 years out virtually disappear.

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This is good news.

Mr. Frank, Rep. Ron Paul (R., Texas) and others will make the bill's language public Thursday. It would be the first bill of its kind ever introduced in Congress, the release said.

"The legislation would limit the federal government's role in marijuana enforcement to cross-border or inter-state smuggling, allowing people to legally grow, use or sell marijuana in states where it is legal," the release said.

"This is not a legalization bill," a spokesman for Mr. Frank said.

More than a dozen states have laws that allow the sale of marijuana for medical use, but the practice isn't legal under federal law, and federal authorities have raided marijuana dispensaries.

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I was thinking today of just how racist and reactionary the Tea Party really is. Why, when you think about it, this is an amazingly "whites only club". Just look at this off the top of my head list of people they've supported recently.

• Senator Marco Rubio
• Governor Bobby Jindal
• Governor Nikki Haley
• Congressman Allen West
• Presidential Candidate Herman Cain
• Senate Candidate Ted Cruz
• Former Congressman Van Tran

Yessiree Bob, in the Tea Party we definitely have a group of people who can't stand the site of people who don't look just like them.

The Munchkin Wrangler had a great rant recently.

You know what I can’t stand to hear about anymore? That we Americans are addicted to oil. It’s a smarmy term that tries to couch an economic and environmental argument in pathological terms.

I’m not addicted to oil. I’m addicted to being able to drive into town on my own schedule. I’m addicted to being able to haul home a week’s worth of groceries with two little kids in tow without having to wait for the fucking bus with eighty pounds of filled plastic bags in my hands. (That’s disregarding the fact that I live out in the sticks, and the nearest bus stop is four miles away, which is one hell of a hike with the aforementioned two little kids and week’s worth of groceries.)

...

Until then, shut the fuck up about my addiction to oil. It does nobody any good to try and debate economic and logistical necessities while using terminology to imply people who disagree with your view are mentally ill.

On a related note, I get frustrated whenever I hear someone say that buying oil is bad for the U.S. economy. For instance:

That’s money taken out of our economy and sent to foreign nations, and it will continue to drain the life from our economy for as long as we fail to stop the bleeding.

Really? That money is just taken out of our economy? And we get nothing from it? And it "drains the life from our economy"? Foreign oil is the vampire that's sucking our economy dry? Really?

I get quite a lot out of foreign oil. For instance, the ability to drive to work every day. I don't know about you, but that does quite a lot for my personal economy. I get to have plastics that keep my food fresh and uncontaminated—keeping me healthy. I get to have UPS delivery trucks that bring me products—saving me multiple trips to the store each week.

I’ll tell you what: I get far more benefits from foreign oil than I pay in costs. The cost of foreign oil is dirt cheap. Far from draining the life from our economy, oil pumps life into our economy each and every day.

The Tax Foundation crunches the numbers to see if it’s true that “the economic downturn, President Bush's tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years.”

1) Tax revenues have fluctuated largely with the economy, dropping precipitously in the aftermath of the 2008 recession, but are projected to remain close to historical norms with or without expiration of the Bush tax cuts in 2012.

2) Entitlement spending has roughly doubled in the last 40 years as a percentage of GDP and is projected to remain there through 2021, pushing total spending well above any historical precedent. Thus, the CBO projects deficits as far as the eye can see.

Should we blame Bush (or rather, all that happened during his presidency) for this? In a sense, yes, but not for the reason the CBPP would have us believe; the role of Bush-era policies in the projected deficits is mainly on the spending side of the equation, not the tax side.

We have a spending problem, not a revenue problem.

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Everyone thinks that we needed to bail out the failing U.S. banks lest they collapse and, in their collapse, take down both the U.S. economy and the international economy, plunging the world into a new Great Depression and (potentially) a new Dark Age.

As it turns out, maybe not. Ásgeir Jónsson explains that Iceland allowed their banks to collapse for the simple reason that they couldn’t afford to bail them out and no one else was interested in taking on the job. Today, Iceland’s economy is growing and Iceland’s banks are healthy once again.

Three years ago, Iceland forced its over-leveraged financial sector into a painful debt restructuring instead of bailing out its banks. The government had no other choice: Icelandic banks' assets totalled roughly 1,000% of GDP, and in the world's smallest currency area, no less. The central bank could not take on the role of lender of last resort without igniting a currency crisis.

Critics dubbed this response disastrous, and Iceland served as the cautionary tale of an "Icarus economy" whose banks had grown too big to save.

I remember this. I distinctly remember being in a doctor’s office, reading an article about the Icelandic economy, the massive levels of money in the banks, and the complete inability of the government to deal with the looming crisis. The tone of the article (probably in either Time or Newsweek) was apocalyptic.

Instead, we see now that Iceland and its banks both recovered. The medicine of bankruptcy didn’t taste good but it worked.

It is becoming clearer by the day that too many of Europe's banking crises were initially misdiagnosed as liquidity, rather than solvency, problems. For some countries, most notably Ireland, the policies prescribed for that misdiagnosis have transformed banking crises into sovereign-debt crises.

Europe's bailout path has only diverted ever-more resources to failing enterprises, postponing and deepening the problem. Iceland's restructuring was both painful and costly for the population, but the government did not throw good money after bad, and the taxpayers were spared a nationalization of private debts. Is it any wonder that forward-looking financial markets are now betting on the Icelandic recovery?

It’s hard not to think that we’d be in a better place if we’d done the same thing.

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Alan Reynolds is great in explaining the income tax facts of life. Higher tax rates on the rich do not bring in nearly as much revenue as lower tax rates. It’s important to emphasize that tax rates are not the same as tax revenues. Higher rates do not automatically bring higher revenues. In fact, historically, the opposite has happened.

Moreover—and this is what Mr. Reich and his friends always fail to mention—the individual income tax actually brought in less revenue when the highest tax rate was 70% to 91% than it did when the highest tax rate was 28%.

As the nearby chart shows, however, those super-high tax rates at all income levels brought in revenue of only 7.7% of GDP, according to U.S. budget historical data.

President John F. Kennedy's across-the-board tax cuts reduced the lowest and highest tax rates to 14% and 70% respectively after 1964, yet revenues (after excluding the 5%-10% surtaxes of 1969-70) rose to 8% of GDP. President Reagan's across-the-board tax cuts further reduced the lowest and highest tax rates to 11% and 50%, yet revenues rose again to 8.3% of GDP. The 1986 tax reform slashed the top tax rate to 28%, yet revenues dipped trivially to 8.1% of GDP.

The rest of the article is chock full of interesting facts on the link between tax rates and tax revenue.

I don’t think it can be repeated nearly often enough: if you want the rich to pay a lot of taxes, you should probably keep their rates low. Ignore what Warren Buffet says in favor of watching what Warren Buffet does. If you raise his tax rates, he’ll probably just shift his money and income around, so that his effective rate of taxation remains nearly the same.

(And, if he really wants to pay more in taxes, he can cut a check to the IRS anytime he wants to.

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America, we had it good. We may have had to suffer through Bill Clinton's problems with women but at least we didn't have to suffer through Silvio Berlusconi, the man the hapless Italians have as Prime Minister.

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William Voegeli takes on the idea that “it’s absurd to cut spending because we tax the wealthiest Americans less today than we did in 1955”.

First he illustrates that today’s rich pay more in taxes than the rich of 1955 did. (They pay more in real dollar terms, even if they do pay less in percentage terms.) Then he cuts to the core of the moral argument.

If the principle is that the rich should pay higher taxes because they can more easily bear the rates, then we should keep raising tax rates until the rich can no longer bear them—until, that is, they're no longer rich. One need not be rich to find this prospect disquieting. A government that can take whatever it wants strikes a lot of people as unfair, and unfree.

He also points out that (many) blue states are net federal taxpayers while (many) red states are net federal tax recipients because “states with wealthier residents pay higher federal taxes per capita thanks to the progressive structure of the income tax”. If you don’t like the idea of states subsidizing each others’ residents, you need to scale back (or eliminate) the progressivity of the federal income tax.

I like this welfare reform idea too.

Buckley would confine eligibility for [Federal] welfare state programs to Americans living in states whose median income was below the national average. Because Buckley thought it was economically and politically debilitating to "turn the skies black with criss-crossing dollars," his reform would ground a lot of those dollars. Federal welfare expenditures would shrink, as the number of people eligible for them was limited, and prosperous states would pay for their own welfare programs without the transit and administrative fees of sending them on to Washington and then back to the states.

This reform would do much to take power away from Washington, D.C.

Only the poorest states would receive moneys from Washington. The more well to do states would spend their own money on welfare programs. Of course, they do that today too. But right now, that money goes through Washington (in the form of federal income taxes), where policitians get to attach rules and conditions to it, before sending it back to the states (as Medicaid payments or transportation funds or something else). If this reform were implemented, policitians would have many fewer opportunities to meddle and states would have a much greater freedom of action. That’s what I call a win-win scenario.

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I was disappointed to see that state Representative Robin Vos is undoing one of the good reforms that Governor Doyle put into place.

In the bad old days, Milwaukee police officers had cut a sweet deal that allowed them to keep collecting paychecks and benefits when they were fired by the police chief until a final ruling on the dismissal was made by the Milwaukee Police and Fire Commission.

That meant, of course, that it was in the best interest of a fired officer - even a guilty one - to challenge and delay a dismissal as long as possible. Keep those paychecks rolling in, pardner.

And it was like that for a quarter of a century, under a law that treated Milwaukee cops differently from those in the rest of the state. When they were fired, Milwaukee police officers appealed - 96 percent of the time. And they collected salaries and benefits during that appeal time - appeal time that was dragged out. For the 26 years that the law was in effect, the appeal time for police officers in Milwaukee was double that of fired firefighter dismissals.

Back in October 2004 that cushy deal blew up, after off-duty Milwaukee police officers viciously beat Frank Jude Jr. at a house party, and three fired officers collected more than $500,000 in pay while awaiting trial. The Legislature cut off the continued pay for police accused of felonies and Class A and B misdemeanors, and in 2009 extended the cutoff of salaries and benefits for all fired officers.

That did not mean that officers who were mistakenly fired were without recourse: if they appealed their dismissals and won they were entitled to back pay - in a lump sum. That has been the standard for the past three years. It is a fair standard.

So why, early in the morning last week, did Vos and the Joint Finance Committee move to reinstate the 2008 law that would keep officers fired for things other than felonies or Class A and B misdemeanors on the payroll during the appeals process? In 2006, we noted that over the years the City of Milwaukee had paid out more than $2.5 million to officers who were ultimately fired.

Bad move, Representative Vos. It's wasteful and it assumes the wrong that: that police are blameless, that complaints are generally baseless, and that police need to be protected against the general public. Those assumptions aren't always right and acting as those they were is a good route to making sure that the police and the public view each other with hostility and distrust.

Michael Totten is one of the most intrepid reporters that you've never heard of. He (mostly) travels alone, he stays independent, he talks to the people on the street and he reports exactly what he sees and hears. He's seemingly unafraid of Islamic radicals or anyone else.

The Road to Fatima Gate is his first book.

The Road to Fatima Gate is a first-person narrative account of revolution, terrorism, and war during history's violent return to Lebanon after fifteen years of quiet. Michael J. Totten's version of events in one of the most volatile countries in the world's most volatile region is one part war correspondence, one part memoir, and one part road movie.

He sets up camp in a tent city built in downtown Beirut by anti-Syrian dissidents, is bullied and menaced by Hezbollah's supposedly friendly "media relations" department, crouches under fire on the Lebanese-Israeli border during the six-week war in 2006, witnesses an Israeli ground invasion from behind a line of Merkava tanks, sneaks into Hezbollah's post-war rubblescape without authorization, and is attacked in Beirut by militiamen who enforce obedience to the "resistance" at the point of a gun.

The Near East Report interviewed Michael Totten about his book and about Fatima Gate.

Sol Stern wrote a review for the City Journal.

And Peter Robinson, from the Hoover Institute, did a video interview with Michael Totten about the book.

I think the book is worth a read.

I'm with Jonah.

Meanwhile, while Bernard-Henri is scandalized that a mere chambermaid can get a “great” man like Strauss-Kahn in trouble with the law merely by credibly accusing him of sexual assault, I am proud to live in a country where a housekeeper can get a world leader pulled off a plane bound for Paris.

The U.S. may not always live up to its ideals but it's always a rousing sight when it does.

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This is a great profile of the SEALs by a former SEAL. I have an absolutely incredible respect for these men.

What kind of man makes it through Hell Week? That's hard to say. But I do know — generally — who won't make it. There are a dozen types that fail: the weight-lifting meatheads who think that the size of their biceps is an indication of their strength, the kids covered in tattoos announcing to the world how tough they are, the preening leaders who don't want to get dirty, and the look-at-me former athletes who have always been told they are stars but have never have been pushed beyond the envelope of their talent to the core of their character. In short, those who fail are the ones who focus on show. The vicious beauty of Hell Week is that you either survive or fail, you endure or you quit, you do—or you do not.

Some men who seemed impossibly weak at the beginning of SEAL training—men who puked on runs and had trouble with pull-ups—made it. Some men who were skinny and short and whose teeth chattered just looking at the ocean also made it. Some men who were visibly afraid, sometimes to the point of shaking, made it too.

Almost all the men who survived possessed one common quality. Even in great pain, faced with the test of their lives, they had the ability to step outside of their own pain, put aside their own fear and ask: How can I help the guy next to me? They had more than the "fist" of courage and physical strength. They also had a heart large enough to think about others, to dedicate themselves to a higher purpose.

SEALs are capable of great violence, but that's not what makes them truly special. Given two weeks of training and a bunch of rifles, any reasonably fit group of 16 athletes (the size of a SEAL platoon) can be trained to do harm. What distinguishes SEALs is that they can be thoughtful, disciplined and proportional in the use of force.

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A few days ago, tens of thousands of Mexicans in scores of Mexican cities participated in public protests against the War on Drugs and the use of the Mexican army as anti-drug warriors. The violence that has accompanied the Mexican government’s attempts to defeat the drug dealers during the past several years has claimed perhaps as many as 40,000 lives. Some cities, especially Ciudad Juarez, across the river from El Paso, Texas, have become virtual battlefields.

All of this would be sufficiently dreadful if it had accompanied legitimate efforts to suppress real criminals. But although the drug dealers have committed murders, robberies, and other genuine crimes, to be sure, the foundation of this entire “war” is the U.S. government’s attempts to suppress actions — possessing, buying, and selling certain substances — that violate no one’s natural rights. Not to mince words, the War on Drugs is completely evil, from alpha to omega. No one who believes in human liberty can coherently support it. That its prosecution should have resulted in death and human suffering on such a vast scale constitutes an indictment of every person who has conducted or supported this wicked undertaking from its outset.

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Victor Davis Hanson elucidates why conservatives oppose the "non-war" that President Obama is "not fighting" in Libya.

2) Approval: To start a third war in the Middle East, the president should have first gone to Congress, especially since he and Vice President Biden have compiled an entire corpus of past speeches, some quite incendiary, equating presidential military intervention without congressional approval with illegality to the point of an impeachable offense (cf. Biden’s warning to Bush over a possible Iran strike). And why boast of U.N. and Arab League approval but not seek the sanction of the U.S. Congress?

3) Consistency: Why is meddling okay in Libya but was not okay in Iran when dissidents there were likewise making headway? Is there any rationale that determines our response to unrest in Egypt, Tunisia, Syria, Iran, the Gulf, or Libya? It seems we are making it up ad hoc, always in reaction to the perceived pulse of popular demonstrations — always a hit-and-miss, day-late-dollar-short proposition.

4) Aims and Objectives: Fact: We are now and then bombing Libyan ground targets in order to enhance the chances of rebel success in removing or killing Qaddafi. Fiction: We are not offering ground support but only establishing a no-fly zone, and have no desire to force by military means Qaddafi to leave. Questions: Is our aim, then, a reformed Qaddafi? A permanently revolutionary landscape? A partitioned, bisected nation? What is the model? Afghanistan? Mogadishu? The 12-year no-fly-zone in Iraq? A Mubarak-like forced exile? Who are the rebels? Westernized reformers? Muslim Brotherhood types? A mix? Who knows? Who cares?

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Jeremy Shown does his part to "explain to the kids" what Governor Walker's education cuts are and how students will be affected by them.

The student/teacher ratio here in Wisconsin is about 15 students for every teacher.  I suspect your class may have more than 15 students because this ratio probably includes teachers who specialize in small groups of students that need extra help.  Regardless, a ratio of 15 is right at the national average.  A political ad that is running on TV here in Green Bay alleges that the Governor's cuts to education could increase class size to "35 to 40 kids in a class."  Again, this sound like it is intended to scare people into opposing the governor.  It's too bad that so many people will be convinced by an accusation that is almost certainly untrue.

Worth a read and something I agree with.

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I thought clear cutting the forests was a Republican idea. And, yet, this is what I saw in Herb Kohl's latest email newsletter:

It also reiterates the need to increase our use of energy that will never run out. Wisconsin has many great natural resources, but deposits of oil, natural gas and coal are not among them. While there is no doubt that we need these energy sources to fuel our economy, a dollar spent on oil drilling or coal mining undoubtedly benefits other states and other countries. But a dollar spent on renewable energy can support new jobs for Wisconsin.

We don’t have oil, but we do have forest resources that can be turned into biomass for our power plants, and one day into fuel for our cars and trucks.

Because clearly, cutting down Wisconsin's forests is the path to sustainability, prosperity, and responsible environmentalism.

Also, what's with the idea that Wisconsin is made worse off by sending money to other states for oil or coal? I'm currently paying $3.89/gallon for gasoline. If increased drilling in California, Louisiana, and Texas means that I'm buying gas $2.50/gallon or $1.25/gallon, I'm going to be a lot better off. That price cut will save me money on commuting, on buying packages online, on food (reduced shipping costs for supermarkets), and even on my new kitchen. (We had to pay for a fuel surcharge for getting our new refrigerator delivered, may have to pay one for getting new kitchen cabinets delivered, and may have to pay one to the guy installing our kitchen cabinets.)

Multiply my savings by all 5 million residents in the state of Wisconsin and it begins to appear that Senator Kohl is pretty wrong about the idea that money spent drilling or coal mining only benefits other states. It'd have a pretty large benefit to Wisconsin too.

Is Senator Kohl just not that bright?

Many people opposed the Wisconsin "union busting" bill because it was (so they believed) aimed solely at depriving the state Democrats of funding.

Question: using the same reasoning, do you oppose President Obama's planned executive order? Or is it only wrong when Republicans do it?

(Note: I still disagree with that characterization of Governor Walker's budget repair bill. But I'm interested in the thinking of those that disagree with me.)

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This is a terrific program to cut.

Because, despite all the good intentions behind Head Start, the program is not working. It is failing to make any significant difference in the educational advancement of low-income children.

And that’s not based on a study from a partisan group or an ideological think tank. That’s the conclusion drawn by a 2010 study conducted by the Department of Health and Human Services, which reported that “by the end of 1st grade, there were few significant differences between the Head Start group as a whole and the control group as a whole for either cohort.”

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The grand total of the combined net worth of every single one of America's billionaires is roughly $1.3 trillion. It does indeed sound like a "ton of cash" until one considers that the 2011 deficit alone is $1.6 trillion. So, if the government were to simply confiscate the entire net worth of all of America's billionaires, we'd still be $300 billion short of making up this year’s deficit.

That's before we even get to dealing with the long-term debt of $14 trillion, which if you're keeping score at home, is between 10 to 14 times the entire net worth of all of the country's billionaires, combined. That includes the all-powerful Koch brothers ($40 billion between them), the all-powerful George Soros ($14.5 billion), all the Walton family (of the Wal-Mart fortune), Steve Jobs, Oprah (at a paltry $2.7 billion), the Google Founders, Michael Bloomberg, and the Mars family (of the candy bar empire).

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