Sunday, April 24, 2011

Jesus was a Socialist?

I don't actually believe that, because I don't think Jesus cared much about political philosophy. He was, after all, the Son of God and not of this world. Or he wasn't. That point is largely irrelevant to the point I'm trying to make. A large swath of the American public do believe Jesus was the Son of God and yet are diametrically opposed to his teachings. 

It's an extreme example of cognitive dissonance to believe that a man who taught that we should sell all we have and give it to the poor would not support a system of government that also provided for the poor. I've yet to hear a rational argument proving that this is the case apart from a whole lot of hand waving about personal responsibility, individual freedom, and government inefficiency. 

Jesus' teachings boil down to just two things: 

You shall love the Lord your god with all your heart and with all your soul and with all your strength and will all your mind, and your neighbor as yourself. - Luke 10:27

So love God with all your heart/soul/strength/mind. And love your neighbor as much as you love yourself. 

Why then would Christians advocate for government that does not provide for basic needs of their neighbors (fellow citizens)? There is little in the new testament that could remotely be construed as Christian support for capitalism and individual rights over socialism and collective rights, and yet much of the religious right has chosen the former. 

On this Easter, the holiest of Christian holidays, I'd encourage you to reflect on Christ's teachings and what that means for your beliefs about how to treat your fellow man. That treatment can be just as easily individual treatment as much as it can be societal treatment. Social programs which protect the vulnerable, the poor, the sick, the needy, the old, and the young are not something to revile, but something to embrace and work toward improving so that the inefficiencies can be minimized while the benefits are maximized. There is certainly room for improvement, but the alternative, no protections for those people, is not an option in a just and righteous modern society. 


Friday, April 22, 2011

Protect Mother Earth with ... Taxes?

It's Earth Day TM so what better day to talk about externalities?

Externalities in economic terms are costs or benefits that reside outside the direct costs or benefits of a transaction between two parties. In other words, an externality is not reflected in the transaction price.

There are positive externalities and negative externalities.

Positive externalities provide a spillover of benefit to a community.  For example, if you pay a landscaper to beautify your front yard, your neighbors may see an increase in property values despite not having been a party to the transaction between you and your landscaper.

Negative externalities provide a spillover of harm or cost to a community. For example, tobacco use can lead to 2nd hand smoke and uncovered medical expenses absorbed by a community.

One way economists have advocated for accounting for these externalities is through the tax code. Taxes on alcohol and tobacco are higher, because of the negative externalities associated with these purchases. These kinds of taxes for negative externalities are often criticized by opponents as being a sign of the pervasiveness of "The Nanny State" - an over-controlling government intent on dictating the behavior of its citizens. When, in fact, it is an appropriate method for trying to ensure that the transaction costs reflect the true costs.

Conversely, tax credits are offered on hybrid cars, because they reduce energy use and pollution. Funny how these kinds of incentives don't receive nearly as much criticism even though it alters the transaction costs and reduces tax revenue (increasing the deficit). It is still a "Nanny State" at work, but to the benefit of the consumer.

How is this related to Earth Day TM ?

Well, arguably the biggest negative externalities are associated with the environmental pollution that results from transactions - consumption of goods and services:
  • Pollutants from burning fossil fuels. 
  • Chemicals spilled into our waterways.
  • Waste materials from manufacturing.
  • Disposal of replaced items (e.g., old computers, cell phones)
  • Air quality from traffic congestion.
All of these and many others represent negative externalities that can be mitigated through environmental regulation or changes to the tax code.

This is where the idea of Cap & Trade legislation comes into play.  A government sets a cap on how much of a pollutant may be released into the atmosphere and companies would bid for credits under this cap. Revenue from this auction would go toward government revenue. A company who wants to pollute more than they have credits for can buy (or trade) for credits from a company that is not using all of its credits. This is a market based solution to pollution control, and yet there is resistance to this kind of approach. There are a fair number of arguments both from the extreme right and extreme left when it comes to this proposed solution.The left doesn't think it will have a serious effect on pollution (i.e., governments will set the caps too high to make a difference) while the right thinks it's an unnecessary imposition on business transaction costs.

Yep, you got that right. "Free market" advocates argue against a Cap & Trade solution, because it requires purchasers to pay for the full costs of the product they buy.  So much for an efficient market - one where prices reflect true value.

So enjoy your Earth Day TM and please do something for the environment that you normally wouldn't. Me? I'm working in the dark.

Wednesday, April 20, 2011

A Note to Birthers

Get over it.  

President Obama is American and eligible to be President of the United States.
  • His mother was an American citizen. 
  • She gave birth to him in a hospital in Honolulu, Hawaii in 1961. 
  • A legal birth certificate was issued. 
  • He lived in the U.S. continuously for more than 14 years prior to seeking election.
  • He was over 35 years of age when he first sought office.

Ergo, he meets the constitutional criteria required to be President of the United States.

So all you birthers can go to hell for your stupidity, your ignorance, and your hatred of our democratically elected leader. Bunch of freedom-hating assholes. Go fuck yourselves.


Tuesday, April 19, 2011

Faith Restored

So Paul Ryan's budget plan is designed to reduce expenditure largely by:

A) privatizing Medicare - turning it into a voucher system where the elderly can take their vouchers and go buy private insurance.

B) turning Medicaid into block grants to states (they're supposed to spend that block grant on healthcare for the poor, but conceivably they could spend it on anything they wanted).

It's also designed to reduce revenues by:

C) cutting taxes on the wealthy.

Yes, you read that right. Supposedly the solution to our national debt crisis is to completely gut the healthcare protections for the poor and elderly while giving additional tax cuts to the wealthy (down to 25% from the current top marginal rate of 35%).

Ryan claims that cutting taxes on the wealthy will increase revenue, which is a canard I've addressed previously. If you want to create jobs, you should focus on reducing the costs to businesses to hire new workers, not reduce the tax burden of people who make most of their money through investments. (I address jobs, because this is always the argument from the right - lower taxes spurs economic growth).

Ryan's tax plan isn't overly troubling to me, because he claims that the tax rates will be reduced across the board by closing common loopholes to make the tax plan changes revenue neutral. I think a complete tax code reform is long past due. As GOP presidential maybe-hopeful Mitch Daniels has been purported to have said, "It's time to have a tax code that looks like it was designed on purpose." This was originally attributed to Bill Simon, but anyway. It's a great idea. A simplified tax code could, indeed, have lower tax rates and increase revenue by having far fewer loopholes. The trouble is that to actually get to revenue neutral on Ryan's plan you'd have to do some things we don't have any hope of doing to the tax code - like eliminating the mortgage interest deduction and taxing capital gains as income. Doubt either of those things will happen anytime soon.

Ryan's healthcare plan is terrifying to me. First of all, how on earth can anyone expect senior citizens (those who use the health care system more than any other age group) to get reasonable rates for health insurance on the open market? That's unpossible!

And how many states do we really trust to use their block grants to provide health care to their poor when we can't currently trust states to provide health care for their poor when there are strings attached to the funding? It's just not going to happen. No way, no how.

So why is this blog post entitled, "Faith Restored"? Mainly because a recent McClatchy-Marist poll found that the American people know better and aren't going to fall for Ryan's abysmal budget plan as the solution to our problems.

64% of Americans approve of an increase on taxes for people making over $250,000/year.

80% of Americans oppose cutting Medicare and Medicaid  to reduce the deficit.

31% of Americans think the country is heading in the right direction (down from 41% since January).

Paul Ryan's debt reduction plan is a joke. But the bigger joke is how much positive press he got over it. Fortunately, the American people appear immune to the nonsense and still support realistic solutions to our problems.

Saturday, April 16, 2011

The Unoccupied Middle

According to Gallup polling, conservatives outnumber liberals in the United States by more than 2:1. At least as of 2010 figures in which 42% of Americans self-identify as conservative ideologically and 20% self-identify as liberals. An additional 35% self-identify as moderate. It's really this middle ground that determines elections if they're motivated to vote. But this also represents the most conservative our country has been since Gallup began this polling in 1992. 

Rather than get into why this has happened, I'd rather think about what this means.

Republicans appear empowered after their 2010 midterm election win, which gave them control of the House of Representatives and a number of Governorships. In just a few short months since their swearing in in January 2011 they've accomplished a remarkable amount, at least on paper. Virtually none of their legislative actions have a hope of passing the Senate or being signed into law by the president, but they've had much more success at the state level where they've severely hampered worker's rights in Wisconsin and other places. 

I'm sure they'd argue this is what the voters sent them to Washington (and state capitols) to do. I'm sure some voters would agree with them. Where I think they'll run into trouble is that many other voters did not. 

But the GOP appears to be rushing headlong toward a more conservative position. The expected passage of Paul Ryan's budget plan for 2011, which would cut taxes for the wealthy and corporations while turning Medicare into a voucher system, is a conservative's wet dream.

Add to that recent polling that has Donald Trump handily leading the pack of potential 2012 GOP presidential nominees with 23% of likely Republican voters saying that they will not vote for anyone who is not a birther, it's pretty clear the that GOP has shifted hard right. 

Very hard right. 

This is an opportunity for President Obama and the Democrats. All they need to do to be successful in 2012 and beyond is to step into that middle ground that's been nearly completely abandoned by Republicans. 

President Obama has begun his move in this direction by both going along with the extension of the Bush tax cuts, which while it did not raise taxes for the wealthy, it also kept taxes lower for the rest of us. His own $4 Trillion deficit reduction plan, which he announced this week is also much more moderate than that proposed by Ryan. In the case of Obama's budget proposal, he's got both conservatives and liberals upset, which suggests it got it just right. 

The GOP has proven themselves adept at controlling the message (remember the death panels and other nonsense about health care reform), but they're going to have a hard time spinning their recent actions into something moderates will buy into. The longer the Tea Party and Birthers dominate the polling for the GOP nominee for president, the harder right the electable Republican hopefuls will need to shift. And the harder time they'll have beating a president who is stepping in behind them into the big empty middle ...

A middle devoid of Republicans, but not devoid of voters. 

Six months ago I thought Obama was extremely vulnerable for re-election. The longer things go on like this and the further right the GOP pushes things, the easier time he'll have winning 4 more years. 

Wednesday, April 13, 2011

The Debt is Coming, The Debt is Coming!

Okay, I'll play.

We've known for ages that the National Debt was an albatross around the necks of our future solvency. And as should be expected in our attention deficit afflicted political system, the unpopular choices have been kicked down the road time and again.

Let's start our story in 1993 when President Bill Clinton and Congress passed the Omnibus Budget Reconciliation Act of 1993. Built into the act was a mandate to balance the federal budget over a number of years.This passed without a single Republican vote. Let me repeat that. Without a single Republican vote.

By the year 1998 this had been achieved. We had a budget surplus for the first time in 30 years. The economy was humming and our house was in order.

By 2004 we were running record deficits. In the middle of a boom period. Record deficits.

What the hell happened?

9/11 happened and then we went to war. Military spending skyrocketed. Then the Bush tax cuts happened and tax revenue plummeted. Between the increased costs of the wars and the decreased revenue, we ended up in pretty deep deficits.

The typical rule of thumb has been "surpluses in good times, deficits in bad times" ... this, of course, makes perfect sense. When the economy is going well there's less demand for support services and the tax revenue received can be saved for a rainy day. During bad times that surplus can be tapped into to make up for lost tax revenue through the economic decline. It's a perfectly reasonable and sustainable approach to government spending.

And that's largely what we did as a nation until relatively recently. There was no reason - zero - for not running a continued surplus or at least only a minor deficit from 2002-2007. Usually, when our country has gone to war, taxes have been raised to pay for the fight. An unpopular war is one that voters rise up against, because their tax dollars are not being put to good use. We didn't have that reaction to Afghanistan and then Iraq, because it didn't feel like we were paying for it ... but we were ... and our children will since it was all added to the National Debt.

Then things went in the shitter. In 2007 the bottom fell out of the housing boom. In retrospect it looks almost inevitable, but at the time a lot of supposedly smart people got caught with their pants down.

Our record deficits we were running during the boom from 2004-2007 became astronomical in the "Great Recession" of 2008-2010. Why? Well, again, it's pretty simple.

1. More people need support services during bad times.
2. Tax revenues declined as they always do during a recession.
3. We're still at war.

Now we have an astronomical deficit and a rapidly increasing National Debt, which will quickly become unsupportable.

We're caught in a really hard place. We're supposed to spend our way out of a recession - the government making up for the slack demand in the economy until the private sector recovers and can get the economy going again on its own. Pretty simple math, really.

But now nobody in Washington has the spine to add more stimulus to our moribund recovery.

Instead, inexplicably, deficit hawks have begun targeting budget cuts to reduce the deficit. In a show of complete idiocy, the GOP threatened to shut down the federal government over $30B in federal spending. To put it in perspective, $30B represents a 1.8% reduction of the 2011 budget deficit (and less than 1% of the 2011 budget) This is just a couple months after the Republicans passed (and Obama signed) an $858B 2 year tax cut extension. So here's the math. If those tax revenues had been applied to the 2011 budget, we could have reduced the deficit by ~25%. Yep. The GOP wanted to shut the government down over 1.8%, but fought hard against 25%.

So now we've established that the GOP isn't serious about cutting the deficit. But neither are Democrats. At least not in the ways that are necessary to make this really happen.

This isn't the time to focus on deficits anyway - our economy isn't even out of the ditch yet - but if we were to focus on deficits, the solutions are surprisingly simple. But they are deeply unpopular.

Long term health of our government's budget will require raising taxes, reforming entitlement programs, and deeply cutting military spending. But who really wants to do any of that? Other than people who are sincerely committed to reducing the Federal Debt?

Oh wait. President Obama just released his 12 year plan to reduce the federal debt by ... raising taxes, reforming entitlement programs, and deeply cutting military spending. Well done, Mr. President. I can't wait to watch the inevitable Republican backlash to your reasonable approach to this contentious issue.