Today, the WonkBlog staff went full tilt against the crazies on the right. First, our favorite nerd Ezra Klein took on crazies in Congress who claim that “tax reform” will solve all our problems. It’s sad that we even have to talk about this—that Klein even has to write an article. Their claim is that by lowering margin tax rates but eliminating deductions the free market will not be distorted and so will spontaneously jump into high gear and employ all the long-term unemployed. Really, that’s what they’re saying.

Klein talks about this with a few economists. Larry Summers seems to be fairly keen on tax reform for other reasons, but doesn’t think it will stimulate the economy. Bruce Bartlett, an apostate Republican, is more to the point, “I am not familiar with any tax reform that raised growth, here or anywhere else.” On the other hand, Alan Auerbach suggests that a different kind of tax reform—a regressive value-added tax, which no is suggesting—could stimulate the economy.

This last idea really bugs me. For the last three decades, we’ve seen big increases in GDP. And yet the middle class has seen almost no improvement in their living standard. Why do we continue to think that increased GDP alone is a good thing. The truth is that our GDP could go down but if it went along with more equality, it would improve the live of the middle class.

Regardless of this, all the Republican crowing about reforming the tax code is just that: crowing. It isn’t going to get us anywhere.

Social Security Tax Reform

The biggest problem with Social Security is that the crazies on the right want to destroy it for no good reason. And they won’t even talk about sensible changes to improve the program. Shockingly, Dylan Matthews wrote an article today about my favorite topic: the Social Security tax cap, How to Sort Out Social Security’s Finances While Making it More Generous. It seems that Senator Mark Begich of Alaska is proposing that we get rid of the cap, increase benefits for the wealthy (a great trade off), and fix the cost of living adjustments.

I don’t have much to say about this other than: more!

I know what you’re thinking, “What’s the point of reading another blog post when soon there will be no more Twinkies and we will all starve?” I hear you. But I have good news! It is very possible that Twinkies will live on, coming out the same factories, albeit, under a different name. And maybe for a higher price. But hell, what price is too high for a Twinkie?

As you must know, Hostess is going out of business. This is a big deal. Hostess currently employs 18,000 workers. But this is a typical story with a typical storyline. Of what I’ve read Dean Baker has the best analysis, No Cupcake: Workers Turn Down Bad Deal from Hostess.

There are two narratives: conservative and liberal. The conservative narrative is that the greedy unions would not take one for the team and so brought down yet another Great American Business. This is not true at all. As Baker points out, the unions had very good reasons for turning down the deal. (Although it was only one of the unions who actually did so.)

The liberal narrative is incomplete but mostly true: Ripplewood Holdings, a private equity company, took over Hostess in 2009, saddled it with debt and let it flounder. This is the process that Matt Taibbi laid out in his Rolling Stone cover article. And this one was pretty much by the numbers.

But Dean Baker argues that the biggest problem is that before and after the takeover, Hostess was badly managed. They did not change their products to move with the times. What’s more, they kept a very limited product line. This was all bound to happen.

Peter Frase over at Jacobin points out another problem, Hostess and the Limits of the Private Welfare State. The truth is that our country’s lack of a single-payer healthcare system, stable pensions, and limited unemployment make it far harder for both workers and companies. There is no doubt about that.

I am a great fan of junk foods. So I’m sorry to see Hostess go, even apart from the economic effects. Just the same, it might have been a good idea if they had worked to break into the Oroweat bread market. I’m sure there will soon be companies popping up to fill the junk food vacuum. And there is even hope that some of Hostess’ existing factories will continue to pump out cream filled snack cakes—even if they are called Tweenies or Twankies and Wankers. I’d eat a product called Wankers, if only as a toast to the Hostess management.

If you are as old as I, then you remember The Rumble in the Jungle. This was a boxing match between Muhammad Ali and George Foreman, the heavyweight champion at that time. This is documented in the excellent film, When We Were Kings. It is an amazing story. Ali was an aging boxer who was neither as big nor as strong as Foreman. It looked like Foreman would tear Ali apart. But it didn’t turn out that way. Ali—apparently spontaneously during the fight—invented what he later called “rope-a-dope”: a technique where he allowed Foreman to exhaust himself throwing mostly impotent punches. Ali knocked out Foreman in the eighth round.

What I find remarkable about this is not that Ali was a great fighter and still is a brilliant man. It is George Foreman. The gregarious man we know today seems totally different than the shy boxer in 1974. Defeat can do that to a man—make him better. Or it can not.

A few years ago, I saw a book about Muhammad Ali that contained an introduction by George Foreman. In it, Foreman talked about their fight in what was then Zaire. He talked about how Ali had outboxed him. But then he said something that shocked me: he said knowing what he now knows, if they could go back and have that fight, Ali would still figure out some way to beat him.

I don’t think that is necessarily true, but the statement shows two things. First, it shows that Foreman is a graceful man. Second, it shows that Foreman is a man who accepted his defeat. Not only did he admit that Ali beat him because he was better at that moment; he admitted that Ali was in a fundamental sense his better.

Contrast this with Romney’s recent conference call. Don’t even think about all that garbage about giving presents to poor people. Nowhere in that talk does he admit error. He did admit that Obama ran a great campaign, but he was quick to add that his campaing was good too. (All evidence to the contrary, not that it would have necessarily mattered.) The main thing is that Romney can’t admit the most fundamental reason for his loss: the people did not like the message. And the truth is, if all the people had voted, the popular vote would have been a blow out just like the electoral college actually was: 55% to 45%.

I understand that it’s only been a week. George Foreman was probably pretty bitter a week after the fight. But somehow, I don’t see Mitt Romney ever making it to the high road. I suspect that he will hold a grudge toward Obama (and the Democratic Party) for the rest of his life. We’ll see in the coming years, because I have a bad feeling that after perhaps a year of not seeing him, he’ll become a Fox News regular.

On last night’s The Daily Show, Al Madrigal talked to Third Way, the folks who want to stop partisan gridlock. This brought to mind something that has especially been bugging me this last month and a half of election coverage: the fetishization of bipartisanship. I hear it from liberals and conservatives alike. Everybody loves bipartisanship! But I don’t.

There is a reason that Democrats and Republicans (under normal circumstances) don’t get together on policy: they disagree. I want my elected officials to fight for what I believe in. For example, I think that the poorer classes have paid more than enough these last three odd decades. I think the “grand bargain” should be the rich paying higher taxes and the rich feeling good that we don’t raise their taxes back up to 91%. That’s my grand bargain. I don’t think that the rich giving up what Digby calls their tip money in exchange for raising the retirement age to 70 is any kind of “grand bargain.” I don’t want compromise or “bipartisan consensus” on this matter.

Of course, there is another matter here. For the last four years (and longer to a lesser extent), Republicans have tried to block policy when they were given exactly what they had always wanted. We saw this in the debt ceiling debate (How you feeling about that now guys?) and with healthcare reform. In this case, something really should be done. But this is not about the two sides coming together. The Democrats have come toward the Republicans time and time and time again. And the Republicans have moved further away time and time and time again. Calls for bipartisan consensus just obscure this fact.

As we see in Al Madrigal’s segment, it is often worse when legislatures get things done than when they are stuck in gridlock. And everyone knows this when it is a fact. It is only in airy theory that bipartisan consensus sounds so good. Who’s up for a good ol’ repeal of Rode v. Wade?

Afterword

Just for the record, I currently think it would be good to create two more marginal tax rates. For the rate above $250k up to $500k: 40%. For $500k up to $1m: 45%. And for income over $1 million: %50. And as usual, bring the Social Security tax cap way up: $250k or higher. We would have surpluses as far as the eye can see.