There hasn’t been much news recently—at least on the national level. I think this is because everyone is waiting around to see just what the Republicans do to fuck everything up. The Republicans work as the equivalent of Iago in politics. Or perhaps a better analogy would be Worm from Rounders. He fucks everything up, but he doesn’t have a reason for it. It is just how he rolls. That seems to be the case with the Republicans and the government shutdown and Debt Ceiling crisis.

This morning, Jonathan Strong at National Review provided us with the goods, Revealed: The House GOP’s Debt-Ceiling Plan. And it is quite a “plan.” Basically, it is just a conservative wish list. The Debt Ceiling bill that the House Republicans are cooking up says, “We’ll raise the Debt Ceiling, and all you have to give us is everything we’ve ever wanted.” Well, that’s not exactly true. They aren’t asking for the death penalty for women using birth control and anyone caught having “unnatural” sex. But otherwise, it is all in there.

They want Obamacare delayed for the exact period of time they will limit the Debt Ceiling. But wait, there’s more! They want the Keystone Pipeline green lighted, more oil drilling offshore, and an end to EPA carbon regulations. They want an end to net neutrality. They want tort reform. Not satisfied? There’s more! They want to cut the child tax credit. They want to means test Medicare. They what the REINS Act which would politicizes all scientific judgments in regulations. But don’t answer yet, because there is so much more! They want to gut Dodd-Frank. They want entitlement “reform” (i.e. cuts). They want the Ryan budget plan!

That’s all just for raising the Debt Ceiling for one year. Actually, that’s only about half of it. Click on over if you want to see the whole list. The main thing about it is that it isn’t just a bargaining ploy. Although it is best to start a negotiation with high demands, this list goes way beyond that. It says, “We’re not serious about this negotiation.” Of course, that was clear from the start. In the 2011 Debt Ceiling fight, at least it was about the budget. The Republicans were saying, “We’ll only allow the government to borrow more if they stop borrowing so much.” It was bullshit even then, but it made a certain amount of sense. In this case, Boehner has been saying he will only allow more borrowing if Obamacare is killed, even though the program pays for itself.

So why not throw in net neutrality?! Why not force through the Keystone Pipeline? Why not lower taxes (which makes the budget shortfall even worse)? It doesn’t have to make sense. In fact, it is not even supposed to make sense. It is a power play, pure and simple. The House Republicans are saying, “We don’t care about the United States and so we are willing to destroy it if we don’t get our way.” This battle should have been fought a long time ago. The Republicans should have been called on their bullshit. Now there is going to be real damage, but giving into the Republicans now will only put off a much more damaging fight later on.

We are coming up on the one year anniversary of the last presidential election and so we are at least getting a bit of clarity on some of the political shenanigans that took place during that consequential event. Earlier this month, two researches Rajiv Sethi and David Rothschild presented a paper that looks at a very strange bit of electioneering, Trading Strategies and Market Microstructure: Evidence from a Prediction Market. It has to do with the use of the political betting market Intrade to push the narrative, that counter to all available data, Mitt Romney was actually doing really well in his race against President Obama.

I wrote about this at the time, Republicans Gaming Intrade. About two weeks before the election, all the polling outfits and gaming markets gave Obama at least a 65% chance of winning re-election. But Intrade was and had been an outlier. It gave Obama only a 55% chance of winning. As I wrote at the time, Intrade got more coverage than any other “predictive” source other than Nate Silver’s Five Thirty Eight blog. Thus, betting big money on Romney at Intrade was a good political move because it would get a lot of media attention.

The whole thing became a minor scandal when a single trader made an $18,000 bet that sent the market way out of balance. I reported on it, suggesting that it was very much like a scam that conservative publishers worked on New York bookstores to get their books on the New York Times bestseller list, thus getting undeserved attention and greater sales nationwide. This got a response from Intrade Exchange Operations Manager Carl Wolfenden, who said that it was just a statistical anomaly and that it wasn’t a single bettor.

I accepted his statement, although right before the election, I revisited the subject noting that Intrade continued to be way out of balance with other betting markets. Now it looks like Wolfenden was just covering for the company. Sethi and Rothschild found that a single person bet between $4 and $7 million on Romney at Intrade during the two weeks leading up to the election. What’s more, this represented one-third of all the money that was bet on Romney during that time.

It is possible, of course, that the bettor could just have thought that Romney was a great bet. But that doesn’t make any sense. The bettor could have made a whole lot more money if he bet at one of the other markets where Romney was an even better deal. In addition to this, at the time, Nate Silver noted that if you really thought Romney was going to win, you could make a whole lot more money investing in coal, that would have gone way up in price had Romney won.

It is certain that Intrade knew what was happening. One-third of all the action on Romney was from a single bettor and they knew that Romney was way over valued on their market! I’m more certain than ever that Wolfenden was involved in a deliberate disinformation campaign. Intrade and the other markets should be illegal. It is wrong that people who want to bet on their favorite football team can’t, but millionaires who want to bet on presidential elections can. And given intrade’s complicity in an obvious effort to game the election, it is particularly villainous. But despite this, I’m sure that in 2016, the mainstream press will again be pushing Intrade as a source of real value in the political horse race.

H/T: Josh Voorhees

Ah, the education of young people: there is nothing quite so edifying! I love watching as the light of understand burst into their brains destroying the dark ignorance that they had previously mistook for wisdom. And that is especially true when the young person is brilliant, because their dark ignorance was especially elaborate. It is nice to watch it burn. That stuff is notoriously flammable.

Last Friday, Matt Yglesias wrote, Ooops! Foreign Trade Has Immiserated US Workers After All. As he explains, the standard economic argument for “creative destruction” is while some workers will lose their jobs, workers overall will get better jobs with increased access to cheap goods. So the world is flat and we should get out on the streets with Thomas Friedman to tell the world that it is a Good Thing.

Now look: I understand. Yglesias is being a bit ironic because (I assume) he always thought this idea was largely bullshit. But he is very much the kind of “free market” liberal who does believe this kind of nonsense. The problem is that Yglesias’ opinions are based on idealized policy. But we don’t get idealized policy in the real world. In fact, we generally get something like the opposite of idealized policy in the real world.

Yglesias’ insight is based upon a paper by Michael Elsby, Bart Hobijn, and Aysegul Sahin, The Decline of the US Labor Share (pdf). It is beyond my pay grade, but there are a number of reasons that make the economic system behave in ways that are suboptimal. Just on the simplest level, the world is not flat. All the good paying manufacturing jobs get shipped overseas because workers in America are put in direct competition with workers in Asia. But these workers don’t see reduced medical costs because doctors are protected from competition. So it isn’t even a question of workers versus business; it is question of rich versus poor. If a policy is good for the rich, the government enacts it; if it is bad for the rich, they don’t.

Of course, there are plenty of ways in which government policy puts business interests ahead of that of workers. The point is that intellectuals like Matt Yglesias gravitate by default toward idealized systems. It reminds me of a recent article where Dean Baker caught himself being against Elizabeth Warren’s idea of giving students the same loan rates that the Federal Reserve gives to banks. At first, Baker was against the idea because it has many problems. But then he realized, “Somehow sound economics are only important in discussions of policies that are intended to help the poor or middle class.”

That’s the problem. It is easy to assume the best when we are talking about policies that help the rich. The obviousness of the current situation is clear to Yglesias, “Now go to a rust belt town with this finding, and people are going to say: “That’s news?! What the heck is wrong with you economists?!?!” But when it came to seeing things this obvious way that wouldn’t help the interest of the rich, we had to have a major study. If there had been such an obvious explanation that helped business interests, it would have been accepted until a major study disproved it.

I don’t mean to make Matt Yglesias out to be a bad guy here. He isn’t a bad guy. But he is part of a press system that has defined the hip and cool position to be the one that tells unpleasant truth to the weak. There’s nothing hip or cool about that. Telling the powerful what they want to hear already has a job title, “Political hack.”

When I was a little boy, my family was on food stamps. My father, however, would tell you this is a lie. He would say that our family was never on any welfare program—most especially food stamps. And technically, he’d be right. The government never gave us food stamps that we could exchange for food at markets. Yet we were on food stamps. In fact, I don’t think it is an exaggeration to say that we were far more dependent on food stamps than any family that has ever used the program to supplement their budget for food.

All the time that I was in grammar school, my parents owned a 7-11 store. And it was located in a fairly poor area. It wasn’t that poor, because we lived there too. But there was a lot of low-income housing and so there were a lot of people in the area who received food stamps. And they spent some of those food stamps at our store. I would estimate that at least 5% of our total revenue came in the form of food stamps.

This is a critical aspect of the economics of such programs for the poor. There is a reason that the modern food stamp program—Supplemental Nutritional Assistance Program (SNAP)—is bundled with the Farm Bill: allowing people to buy more food is good for the people who grow the food, who distribute the food, who sell the food. What’s more, most of the Farm Bill is not direct cash payments to farmers; most of it involves things like price floors that make food more expensive than it would be in a free market. The idea always was that if the government was going to make food prices artificially high, it should offset the effect on the poor by providing subsidies (i.e. food stamps).

The House Republicans who decided to gut SNAP, of course, do not understand this. It reminds me of another recent conservative “scandal.” I’m sure you remember Mitt Romney’s famous words about the 47% of people who do not pay any federal income taxes. On Fox News, this was presented as, “Shouldn’t everyone do at least a little to support the government?!” But they never talked about the reason that the poor weren’t paying any federal income taxes: Republican tax policy. Because of their constant efforts to lower the taxes of the rich, they couldn’t help but also lower the taxes of the poor—many to the point where they paid none at all. I wrote about this in some depth almost exactly a year ago, Republicans Abuse Poor Coming & Going. So they use the poor to justify lowering taxes on the rich and once that’s done, they scapegoat the poor for not paying taxes.

In the same way, the Republicans conveniently forget about part of the justification for food stamps. So now they want to eliminate them while keeping the higher prices institutionalized. Once again: a government program that gives money to the rich is made less poisonous by giving a small fraction of that money to the poor. Once the program for the rich is institutionalized, they want to kill the program for the poor. It could be that the Republicans just don’t know the history of these programs. But I suspect it is more that they simply want to hurt the poor and help the rich.

Helping the poor necessarily helps the middle class and rich. The poor have to spend any money we give to them so it really does work its way through the economy. When I was a kid, I saw very clearly that the food stamp program helped my middle class family. And the legislators who originally started the food stamp program understood how it helped the (now) mostly rich farmers. But it doesn’t work the other way. Giving money to the rich is an extremely poor way of distributing money throughout the economy. Given how inefficient it is, you really have to hate the poorer classes to favor farm subsidies over food stamps.

I will admit that there are some conservative commentators that are not completely loony. Examples are: Josh Barro, Ross Douthat, David Frum. Another is Norm Ornstein. I just saw him on Up with Steve Kornacki. And he said something that I hear from these kinds of conservatives all the time. The panelists were talking about the supposed New New Left movement that Peter Beinart has been pushing. One thing that Beinart reported was that young people are the only group who prefer socialism to capitalism. It was on that point that Ornstein had to bring out his “Reasonable Republican” talking points.

Ornstein said, “There’s an opening for someone who’s a little more libertarian. While you get a narrow plurality of millennials saying they prefer socialism, there’s an antipathy toward government there in a lot of ways.” I’ve heard this same kind of thing so often that it is becoming funny. Let’s just start with it on the broadest of terms. The millennial generation is not interested in socialism out of any ideological commitment to a revolution of the worker. Their interest in it is simply a populist desire for a system that works better for themselves. Whenever conservatives are faced with a real populist movement, their response is always the same: libertarianism! I think this comes from the fact that that right wing pseudo-populists have always been bought off with libertarian platitudes. But that isn’t going to happen with the millennials because they are actual populists who have actual economic needs.

Americans always claim to dislike government. But that’s just the same as our dissatisfaction with the phone company: we wish it were better but that doesn’t mean we want to stop having telephone service. What’s more, younger Americans don’t generally think that the government is bad by nature; they think that government is run badly. This is why they didn’t vote for Mitt Romney, even though he ran explicitly as a technocratic libertarian. They knew that he would just be another slash and burn conservative.

And that gets to the great conservative propaganda campaign. When Republicans get into power, they do two things: rack up huge amounts of government debt and provide as bad of service as possible. Thomas Frank discusses this in depth in The Wrecking Crew. It gives Republicans two big advantages. First, it allows them to make their ridiculous arguments like, “Government is not the solution to our problem; government is the problem.” Because they do everything they can to make sure that government is the problem. Then, the debts they create are used to stop Democrats from enacting good policies while they are in power.

Notice that while Bush Jr was creating huge new giveaways for the pharmaceutical industry, there was very little complaint from the supposed small government aficionados. It was only when a Democratic president wanted to help troubled homeowners with their mortgages that government debt became a problem. Admittedly, Norm Ornstein is not playing this game. But he is more than happy to benefit from it! He wants people to think that government is bad so that they will go along with his libertarian ideas about how to run the society. This is the fundamental problem with the old school conservatives: they still believe the same things as the crazies.

Ronald Reagan almost had it right. It wasn’t nine terrifying words, it was eleven: “I’m from the Republican controlled government and I’m here to help.”

Colin Gordon over at the Center for Economic and Policy Research annotated this great graph of the income share of the top one percent (from data by Emmanuel Saez). He says that the events are meant to be “representative rather than exhaustive.” Of course, the pattern is clear, “The share of the top one percent rose during eras of tax cutting, light financial regulation (or deregulation), and labor weakness. And inequality narrowed when policy pushed in the opposite direction.”

This pushes back against one of the most annoying aspects of economic reporting in this country. We are constantly told that there is nothing the government can do about inequality and associated problems. Supposedly, the current system is just the outcome of a globalized economy and the only way we could fix it would be to have a command economy that would hurt everyone. But of course this isn’t the case at all. Inequality went down during much of the last century because of government policy—especially policies that allowed workers to organize. And the huge increase in inequality over the last 35 years has been the outcome of government policies that have harmed worker organizing ability and lowered taxes on the rich.

The greatest victory of the rich over the past 30 years has been to get the public intellectual class to believe that the smartest thing is to solemnly shake their heads and claim that there just aren’t any easy answers. We’ve seen that throughout this economic crisis where the important pundits (e.g. Thomas Friedman) have claimed that there is nothing we can do but grind our way back. The fact that World War II showed the way out of the Great Depression seems to have been erased from memory. And we are left with the low inflation and high unemployment answer to the economic downturn that just so happens to be exactly what is best for the rich.

(Click image to enlarge.)

On this day in 1907, Supreme Court Justice Lewis Powell was born. He is a good object lesson in how political the conservative judicial movement has become. Richard Nixon nominated him, even though he was a Democrat. He was considered a moderate at the time, but today, he would probably be more liberal than everyone on the court other than Justice Ginsburg. The liberals on the court have become moderates and the conservatives have become neanderthals.

The actor Adam West is 85 day. People mostly know him as the title character in the TV series Batman. The show really works compared to very serious superhero movies of today. It was ridiculous and it relished that fact. Of course, West is quite a good actor with a very long resume. But in recent years, he’s shown himself to have a really great sense of humor in shows like Futurama and Family Guy where he is a regular. At this point, I don’t think there is an American actor more beloved than he is. Here is a collection of bits from the 1966 Batman:

The actor Jeremy Irons is 65 today. To celebrate his retirement, I present to you his wonderful performance in one of Samuel Beckett’s best short plays, Ohio Impromptu:

Other birthdays: columnist Mike Royko (1932); Beatles’ manager Brian Epstein (1934); Righteous Brother Bill Medley (73); songwriter Paul Williams (73); singer Twiggy is 64; and comedian Jimmy Fallon is 39.

The day, however, belongs to the great novelist William Golding who was born on this day in 1911. He is best known for his bestseller Lord of the Flies, which is unquestionably a great novel. But I think people trivialize the novel when they see it as being about children and socialization. The book is really about our natural instincts as adults. What takes place on that island is what goes on every day between the nations of the world. It also goes on in a less drastic form between individuals. Think about the primal scream therapy session that is Fox News. That is all about taking sides and proclaiming that we are the good, true, and noble ones and they are the bad, invalid, and debased ones—the barbarians at the gate. As we see in the book, anyone can be drawn into the hysteria of killing the weak—or even the very best of who we are, as in the murder of Simon. Our only hope is to not allow demagogues to control us, but my experience in life is that we are addicted to the rush these evil leaders provide. And sadly, there is no navy officer to save us.

Golding wrote a number of other novels as well. But with Lord of the Flies as his first, you can imagine. As a result, I haven’t gone out of my way to read him. However, I did read his third novel, Pincher Martin. Although it is a fine, even great, novel, it made me long for the light hearted content of Lord of the Flies. The book is kind of like Simon’s hallucinations of the Lord of the Flies, but with a character you really dislike. But that shouldn’t stop you from reading him. After all, how many times can you reread Pride and Prejudice?

Happy birthday William Golding!

The Urban Institute recently put out a video on the big Romney line that 47% of Americans don’t pay any federal income taxes. The video itself is okay, but more important, it provides some really great information that is worth stressing. What’s more, it gets to a problem with the way that Americans think about how the government taxes and spends. It is absolutely not the case that the rich are taxed to take care of the poor. In general, everyone is taxed for benefits that go overwhelmingly to the rich.

It rightly points out that while higher income earners pay more in taxes, they also get more from the government. There is a strong tendency for Americans to think that government only helps people through direct cash payments. This is absurd. It means that families receiving $100 in food stamps are getting government help but banks getting billions of dollars in free loans are not. This confusion is exactly what the power elite want, of course. But it is deadly to the society and ends up giving us terrible policy. For example, over the last 20 years, it has become harder and harder for individuals to file for bankruptcy. But during that same time, it has become easier and easier for corporations to file for bankruptcy. That only makes sense in a society in which we define welfare as only something that goes to poor people.

The video then goes on to discuss three issues related to Romney’s fact. (Note: it is an old conservative talking point, but Romney is the one who made it famous.) The first issue is that the 47% number is only this high because the economy is doing so poorly. That’s important to remember in light of recent reporting (pdf) that 95% of the income gains since 2009 have gone to the top 1% of earners. In 2008 and 2009, an even higher percentage of people paid no federal income taxes. But before the crisis, the number was lower—only 38% in 2007. It is estimated to be 43% this year and 34% in 2022.

The second issue is one that I’ve talked about a lot here: federal income taxes are just one form of taxes. It is like saying, “99% of Americans pay no luxury tax!” This is deliberately misleading, implying that the poor pay no taxes. No mention is made of payroll taxes for example, because that wouldn’t make the argument that the poor are freeloaders. For example, a person making $20,000 per year pays a payroll tax rate of 7.65% while a person making $50 million per year pays a payroll tax rate of less than 0.02%. That’s our tax code too, but we never hear conservatives ranting about it.

The third issue is the most important part of the video. It divides up the 43% (this year’s value) to show who they are. Of these, 29 percentage points (67%) work. They pay the payroll tax, but they simply don’t make enough money to owe federal income taxes. The remaining 14 percentage points (33%) pay neither federal income nor payroll taxes. Of these, 10 percentage points (23%) are retired and too poor to pay federal income taxes. Almost all the rest (3 percentage points or 7%) are just too poor to pay anything. That leaves us with 1 percentage point (2%) who are either rich (all income is capital gains) or they own businesses that are failing or are going bankrupt because of medical bills.

So the whole idea that there are 53% who are “makers” and 47% who are “takers” is just ridiculous. But conservatives and liberals alike accept this framing of our society. Of course, no one sees themselves as a taker. I’ve talked to a number of people who are on SSI who are very conservative and do not think that they are takers. It is always his “welfare” and my “government program that I paid into!” That’s fine if conservatives want to think this way. But as liberals, we need to fight against accepting conservative frames for policy debates. And when it comes to this issue, I don’t think that most liberals even realize that it is a conservative frame.

As I’ve shown in the past, when you look at all taxes paid, our system is barely progressive:

Even though the rich of this country get enormous direct support from the government, the bigger benefits are implicit. For example, the implicit insurance of “too big to fail” banks is estimated to be worth $60 billion per year. That is roughly the same amount the government spends feeding the poor. Similarly, the rich disproportionately benefit from the stable domestic and international infrastructure. In fact, I think the rich are fools to think that they would like a “libertarian utopia.” The truth is that such a thing would be far less stable and that would hurt, if not eventually destroy, their wealth. Regardless, the rich do very well by our system and are not over taxed. It is an outrage that we blame our underfunded government on the fact that the poor aren’t being taxed enough. It is even worse that those who most want to cut the taxes of the rich simultaneously call for raising the taxes of the poor.

Steve Benen called Jeb Bush to task for all the politicking he has been doing with some offensive characters, apparently in his pursuit of the Republican nomination for president in 2016. It got me thinking, “Would the country really vote in a third Bush as president?” There seems to be a bit of a contradiction to the whole idea. I’m sure that most people would not have a problem with it on its surface. After all, Jeb Bush is an individual; he really shouldn’t be judged based upon his father and brother. That idea is fundamental to who we are as a society. Just the same, if he did become president, there would be no denying that the Bush family was a dynasty in a way that the Adamses and the Kennedys were not.

Regardless, I’m not at all clear that people would vote for him in large numbers. Although I think it is wrong, people see George Sr as a mediocre president—riding on the coat tails of the great Reagan. And George Jr is still seen as a total disaster. That would be a heavy lift. In addition to that, there is something that binds all of these Bush men together. None of them are particularly ideological at their core. That doesn’t mean that they aren’t the worst kinds of demagogues, of course. Just think back on Sr’s Willie Horton ad or Jr’s push poll, “Would you be more or less likely to vote for John McCain…if you knew he had fathered an illegitimate black child?” But what really binds them together is what they do care about: corporate power—especially of the fossil fuels industry.

Benen complained about Jeb Bush’s recent fundraising for Ken Cuccinelli and Paul LePage. But I disagree with him here:

I’m not sure what is this “ridiculous wing of the GOP” to which he is referring. I’m only partially facetious here. Bush and the other “thoughtful, forward-thinking mainstream conservatives” are in no fundamental way different from the “ridiculous” conservatives. It is all a matter of style. As Benen himself noted previously: Jeb Bush doesn’t actually know much about immigration and education reform. On both issues, he is simply shilling for corporate interests.

The example of education “reform” is telling. He may claim that it is all about giving poor children the same access to good schools as rich children. But he isn’t. He is opposed to doing anything about our disgraceful policy of tying educational resources to local tax collection. He just happens to be for a policy that (1) gives rich parents money to pay toward private schools they would send their children to anyway; and (2) undercuts the power of teachers’ unions. Just because he doesn’t say that his primary aim is destorying teachers’ unions and giving poor children bad educations doesn’t mean he is a “thoughtful, forward-thinking mainstream conservative.” It just means that he is a more capable and urbane politician.

The example of abortion is even more telling. He claims that he is not an extremist. But it is hard to take that as anything but a strategic position. He’s pushed mandatory counseling for women seeking abortions—as though they are children who don’t know what they are doing. He is against abortion is all cases except for rape, incest, and life of the mother. As I’ve argued, that is not the reasonable position and it indicates a hatred of women—especially independent women. What’s more, this position on abortion means that he thinks that not only is a fertilized egg a full human being, he thinks it is a full citizen with equal rights to that of the host woman. He is also against the use of government funds for stem cell research. It is true that he’s never called giving birth to a rapist’s child turning a “lemon situation into lemonade.” And he’s never claimed that some rapes are legitimate and others aren’t. But when it comes to policy preferences, Jeb Bush is no different than Sharron Angle and Todd Akin.

There are some people in the Republican Party who don’t actually care about social issues. But I don’t see any of them with much in terms of power. Even the great “libertarian” icons Rand and Ron Paul are social conservatives. It isn’t that many of the elites care about the social issues. But they understand perfectly well that they would not have a base if they didn’t have people voting for them because of the social issues. Jeb Bush will only be able to further enrich his wealthy friends by giving the social conservative base their restrictive laws—or at least rhetoric. It costs him nothing. If his daughter ever needed an abortion, he could just fly her to France. Where Bush differs from someone like Todd Akin is that Akin actually believes the social conservative claptrap. But the fact that Jeb Bush lies to get elected doesn’t make him any less ridiculous. It just makes him far more dangerous.