You should know by now that the welfare reform was a crock. Clinton was right that we were ending welfare as we know it, although it would have been more accurate to say simply “ending welfare.” It is often claimed (especially by Clinton himself) that the 1996 welfare reform law lifted many people out of poverty. That’s just not true. The booming economy lifted many people out of poverty. The 2001 recession pushed them back down into poverty. But because of welfare “reform” there was far less help available.

Paul Rosenberg provided a great graph of what was really going on. The poverty rate in the United States had little if anything to do with the 1996 welfare reform law. As the unemployment rate fell throughout the 1990s, so did poverty. Just as one would predict. What’s more, the poverty rate went down for three full years before the law was passed, much less implemented.

Rosenberg’s article is part of a series. It is well worth reading because it shows in a great detail that welfare reform did not work in absolute and relative terms in just about every way imaginable. There are some positive trends like lower teen pregnancy rates that advocates of the 1996 law use to justify it. But they all predate the law. There really is nothing good in the data. What’s more, it hasn’t even saved the government much money.

What it has done is make the social safety net far worse. As Bryce Covert in The Nation pointed out, “In fact, nearly 70 percent of poor families with children received cash assistance in 1996; in 2009, less than 30 percent did. And the families who are able to access benefits aren’t getting much. Their purchasing power is below 1996 levels, adjusting for inflation, in every state but two. They fall below 50 percent of the poverty line in every state.” It is hard to conclude anything but that conservatives got exactly what they wanted from welfare reform while liberals did not. Conservatives wanted to limit the amount of money that goes to the poor. Done! Liberals wanted to lift people out of poverty. Not even close!

But today, Dylan Matthews reported on new research that shows that welfare reform is also killing the poor. The research is not on the 1996 law. It is on an earlier Florida law where poor people were randomly placed in either traditional welfare or “welfare to work” programs. The result: people aged 30 to 70 were 16% more likely to die over a 6 year period. Like everything about our supposed efforts to reform welfare, this should not come as a surprise.

We know that the Republican Party doesn’t give a crap about the poor. And in general, they’re up front about it: they don’t often claim otherwise. But New Democrats claim to care about the poor. But their policies indicate otherwise. They brought us an end to welfare as we know it. And the welfare we now know doesn’t help the poor, it hurts them. It even kills them.

On this day back in 1792, the British naturalist and painter John Linnell was born. He is best known today for not being the guy in the band They Might Be Giants who has the same name. What I find remarkable about painters like Linnell and John Constable is that their art has been so thoroughly integrated into the popular painting repertoire that it seems generic. What once had meaning and beauty has been so beaten by a bourgeoisie aversion to modernist art that the whole movement feels more non-offensive banality than anything else.

Of course, the problem is not just history. To me, Romantic art always seems rather fake. Jane Austen lampooned what she clearly saw as the affected nature of the Romantic movement in Sense and Sensibility. I’ve never felt that Marianne’s proclamations were anything by artifice, even if she was her own biggest mark. So what I’m getting at is that even though I don’t doubt the talent of the great Romantic landscape painters, there is always something that hinders me in appreciating them the way that I can most other forms of art. And I’m not entirely sure that I’m wrong. I feel a lot more confident in my musical tastes and I’m not that fond of Romantic composers either.

Stan Laurel—the skinny half of Laurel and Hardy—was born in 1890. They were a brilliant team, although I generally find the films uneven. Still, they always make me laugh quite a lot. Here is an interview with the two of them from 1947 when they visited England. It is sweet and the film clips all look so bad:

Jack Albertson of Chico and the Man was born in 1907. I’ll probably have more to say about that this next week because Freddie Prinze’s birthday is coming up.

Katharine Graham was born in 1917. She was the publisher of the Washington Post during its glory days of Watergate. But she is perhaps best remembered for the fact that when her father retired, he gave the newspaper over to her husband. After her husband died, she took over the paper. It’s a great reminder of just how people thought in the 40s and 50s. It seems we have made some progress and Graham is part of that.

And Love Story author Erich Segal was born in 1937. Just for the record, it was not based upon Al and Tipper Gore. But Al Gore never said that. Al Gore Support Center explains:

I don’t bring this up because I’m a huge Al Gore fan. But it really bugs me that our “objective” journalists start with a narrative: Al Gore is a liar. And then they shoehorn every bit of information into that narrative. Of course, it didn’t really hurt Gore; he did, after all, win the presidency; it was just that we don’t live in a democracy. But it does hurt the media. I think the reason so many people still voted for Gore was that they figured, “I’m sure Gore is a liar, but I doubt he’s any more of a liar than Bush.” Note also: the media wasn’t particularly interested in Bush’s real lies about his time in the Air National Guard, but they were very interested in complaining that Gore said he was the real Oliver Barrett.

The great cinematographer Vilmos Zsigmond is 83 today. Joyce Carol Oates is 75. Laurie Metcalf is 58. I spent half my life thinking she was Madeleine Stowe. Go figure. Anyway, Metcalf was in the original production of Balm In Gilead where she played Darlene. Here is Metcalf doing a very funny speech from the play:

The first half of the screenwriting team Scott Alexander and Larry Karaszewski is 50. And Harold of Harold and Kumar, John Cho is 41.

The day, however, belongs to Adam Smith who was born on or about this day in 1723. He was fundamentally a moral philosopher and that’s actually a very good reason to not take him all that seriously as an economist. There were a number of philosophers thinking about economics at that time along the same lines; in particular: David Ricardo and John Locke. The real problem is not that they were overly concerned about government debt but rather that people today continue to trust them as though we haven’t learned anything over the last 250 years. In fact, it only took about 50 years for John Stuart Mill it reveal most of the problems with their thinking. But as you may have noticed, the power elites decide what they want to do first and then look for a way to justify it second.

The funny thing is that even with Smith’s failings as an economist, he never said the main thing that modern people associate with him. He is now associated with perfect markets. If you just leave markets to themselves, they will adjust into a kind of libertarian utopia. What Smith actually said is that markets left to themselves work a lot better than one would think. This is more or less the same as saying that markets kind of work. That’s a far cry from the modern mythology of perfect markets.

Regardless, he was a great and important thinker. Unfortunately, if Marx is the opium of the socialist, Smith is the opium of the capitalist. Or at least the myth of Smith is. If he were alive today to see how we’ve created such an unequal society where wealth is mandated to flow from the poor on up, I’m sure that 18th century moral philosopher would be appalled.

Happy birthday Adam Smith!

I came upon two excellent articles yesterday that attack supply side economic dogma. But before I get to that, I want to run through a small thought experiment using my friend Will. He has built a company from the ground up, Dirt Cheap Computers. Basically, it is him (along with me at times) and he builds and repairs computers and networks. Will’s tax rate really doesn’t affect how much he works. He would certainly like to keep more of the money he earns but if the government lowered his tax rate, Will wouldn’t start working more because he was suddenly making more per hour. A primary reason for this is that like most small business owners, Will is already working as much as he can. He is constrained by the number of people around who want to do business with him. He can just announce that he’s going to work 10 more hours per week, but they won’t be paid hours. He needs customers.

What this shows is that business profits depend upon demand and not supply. Will has tried supplying a cheaper and cheaper service and what he’s learned is that it doesn’t really bring in many more customers. But conservatives in the economic policy debate don’t seem to understand this basic fact that all small business owners understand. It is like they got their economic education from Field of Dreams, “If you build it, they will come.” Well, that just isn’t true. If people have no expendable income, they will not go to Disney Land. After 30 years of supply side economics—the idea that giving the rich more money will cause economic expansion—I am amazed that we continue to discuss it. Supply side economics is a lie. It doesn’t work.

Neera Tanden wrote a great article over at Democracy Journal, Burying Supply-Side Once and for All. In it she explained exactly how and why supply side economics is supposed to work and why it does not. Basically, it all comes down to Will’s demand problem. If the government wants to make small business owners like Will more successful, it should provide poor people with more money so they can buy things like computers or at least computer repairs. If all my discussions of economics confuse you, I highly recommend reading her article. It is a great primer on the subject.

The second article is by Dylan Matthews of Wonk Blog, Do Low Taxes on the Rich Leave the Middle-Class With Lower Wages? As usual with Ezra Klein’s bunch, Matthews took forever in answering the question. But the result was quite interesting. It was based upon a paper by Saez, Piketty and Stantcheva. The answer is yes, of course, but the question is why. Their theory is that supply side policies make it so.

As Tanden noted, cutting the taxes of the rich does not cause them to go out and work more. But Saez et al claim that lower taxes do cause the rich to make more. Think about it. You are the Vice President of Sales for some corporation. Your taxes are cut in half. You have a big incentive not to work more but to negotiate a better salary. Since productivity doesn’t go up because of reduced taxes, the higher salaries have to come from the other workers. The pie is no bigger, so everyone at the bottom just gets less. In practice, they don’t actually get less; historically we’ve just seen wages of those in the poorer classes stagnate while all the productivity gains go to those at the top.

When supply side economics first came into bloom almost 35 years ago, proponents called it “trickle down” economics. The idea was that if you gave the rich a lot of money, much of it would trickle down to the poorer classes. You don’t hear people talking about that anymore because that absolutely has not happened. But the whole of supply side economics has been shown to be a scam. And yet it continues. Tanden has an explanation for that:

And it only gets worse. The greater the income inequality gets, the more political power the rich get. As I note almost daily on this blog, the Democratic Party is almost as beholden to the rich as the Republican Party. But it is the Republican Party alone that holds onto the long discredited supply side dogma. And they will continue to do so. That’s why we all need to understand it and counter it wherever it shows up.

This morning, Jonathan Chait attacked the conservative movement for its delusional belief that Obamacare is going to be such a terrible thing that even liberals will soon call for its repeal. We always see an outbreak of this kind of triumphalism with each new poll that comes out that shows that most people don’t like Obamacare. Of course, those same people very much like most of the aspects of Obamacare. And I’m not certain we should be too concerned what the public thinks when 40% of them think that Obamacare has been repealed already.

Chait references an article by Ramesh Ponnuru in which he tried to convince conservatives that they might want to stop assuming Obamacare is going to be a catastrophe (at least in the short term). I quite agree with both gentlemen on this issue. What’s more, I really don’t see where the conservatives are coming from. Obamacare will primarily affect those people who do not now have health insurance. They may not like the new system, but I suspect the fact that they are getting health insurance will swamp any bad feelings they have about bureaucratic problems.

Where I disagree with Chait and Ponnuru is in their thinking about what the Republicans could offer to replace Obamacare. Ponnuru has a silly idea that we can get universal health insurance by providing catastrophic insurance plans. Chait rightly points out that this is just not going to appeal to the nation as a whole. I would go further. Catastrophic insurance, so loved by conservatives, is a terrible idea for the society. It discourages people from getting preventative healthcare, thus increasing the total cost of healthcare for the society. Conservatives talk about controlling healthcare costs, but their only idea is the magical thinking of the free market. And that hasn’t worked here or any other place that I’m aware of.

Chait doesn’t offer a plan the Republicans might propose. That isn’t his job, of course; he’s a liberal. But he notes this:

I don’t think that’s quite it. The truth is that the Republicans have backed themselves into a corner. It is not that alternative plans are hard, it is that they simply don’t exist on the right. When the Republicans decided that their very own Heritage Foundation plan (AKA Obamacare) was something straight from the rotting corpse of Stalin, they effectively gave up on any kind of “free market” approach to healthcare reform. Even Ponnuru’s idea is a marginal plan that will do far more to prevent medical bankruptcy (a good thing) than it does to provide healthcare to the citizenry.

My feeling is that over the years, there will be a lot of problems with Obamacare. But I don’t see it ever being repealed. For one thing, it would hurt doctors and hospitals in terms of their bottom lines. Within 5 years at the most, the conservative complaint against Obamacare itself will disappear. Then the conservatives will start complaining about liberal attempts to change Obamacare to include a public option. There will be no reason not to do that, but you can depend upon the Republican Party decrying that the public option is a Stalinist takeover of healthcare and trumpeting the base Obamacare policy as the very essence of the free market.

Two months ago, the Center for Budget and Policy Priorities (CBPP) released an amazing report, Mortgage Interest Deduction Is Ripe for Reform. It argues that the mortgage interest deduction is a bad way to encourage home ownership. Now, this is the kind of talk that normally makes home owners freak out. And with good reason! Although we can trust CBPP, it usually seems that whenever the government “reforms” the tax code it means that middle class people end up paying more.

The idea is a good one, however. And it could, if we the people hold our elected officials accountable, work out really well. Currently, the mortgage interest deduction is a $70 billion per year program. That’s quite a lot of money. It is more, for example, than the amount of money raised in new taxes from the Fiscal Cliff deal. Of course, no one is talking about getting rid of this homeowners’ subsidy, so we aren’t talking about saving all of the $70 billion, but there is still a lot that we could save.

There is something that most people don’t have a good grasp of: tax deductions are no different than welfare programs. There is no difference between allowing some people preferential tax rates and just handing them checks. Sure: homeowners think this deduction is God given, but it is anything but. It is a policy choice. In other countries, it is done differently. France doesn’t allow interest to be deducted at all. The Netherlands allows all interest to be deducted, but property values are added to taxable income. And in India, they limit the amount of interest.

What most surprised me is how non-egalitarian the mortgage interest deduction is. A shocking 77% of it goes to homeowners with more than $100,000 in income per year. So effectively, we are subsidizing the wealthy to buy very expensive houses. As I reported earlier today, Fred Thompson’s primary residence was worth over $3 million. And good for him! I just don’t think that it is a government interest to subsidize his rich lifestyle. This graph provides a good overview of homeowner needs and where we actually put resources:

CPBB suggests replacing the mortgage interest deduction with a mortgage interest credit. It would be better focused on the needs of homeowners. What’s more, it would actually help more people to buy homes than the current system because it would be better focused on the middle classes rather than the upper class. But since it would be helping just as many or more homeowners, the change would not hurt the construction industry. (It might hurt contractors who focus on very high end homes, but even that is not certain.)

Our tax system is a mess. It is extremely unfair in most ways. The marginal rates are just the tip of the iceberg. Reforming the mortgage interest deduction would be an excellent change in the right direct. I recommend going over and reading the whole CBPP summary proposal. There is a lot more than I’ve mentioned here.

A reverse mortgage is not necessarily a bad thing. Under the right circumstances it can really help a retiree. Basically, it is a way to sell your house while being allowed to live in it until you die. The estate of someone who gets a reverse mortgage doesn’t necessarily lose the home in the end. But for those who are the best suited to one, this is the case. One thing is certain: reverse mortgages are not so widely useful to seniors that people need to be alerted about them via national television ad campaigns.

I have my own problem with a reverse mortgage: it is yet another way of taking wealth away from the middle classes. Instead of a home being passed on to the next generation, it becomes just another bit of equity in the portfolio of a giant corporation. Now there is nothing wrong with the middle classes selling off property to obtain a better retirement. But that really isn’t what this is all about. The ads are specifically targeted at the elderly to get them to exchange wealth for consumerism, “Get this really expensive and confusing loan and go on vacation!”

Okay: corporations are evil institutions. I get that. But I’ve been really struck by who the paid spokesmen are for these things. At first, I saw Fred Thompson doing the commercials. I actually felt sorry for him. Celebrities often fall on hard times and have to do these kinds of ads to get their lives back together. And Thompson was a good candidate because he has even less charm and ability than my Uncle Don. But that wasn’t what was going with him. According to CNN Money, in 2007, Thompson’s net worth is a bit over $8 million and he had made over $9 million in income the year before. Given that $4 million of his net worth was rolled up in two homes with almost a million for a pension, I don’t think he’s been doing too bad.

Of course, Thompson is a Republican. I expect this kind of stuff from them. The purpose of life is to make as much money as possible and then to spend it ostentatiously. That’s when I started seeing Henry Winkler doing the commercials. I don’t know his politics, but he’s done a lot of work for special needs children and apparently suffers from dyslexia himself. That usually indicates a liberal. So I thought: despite all the acting and producing and kid book “writing,” surely he too much have fallen on hard time. Not so much. According to Celebrity Net Worth, Winkler has about $35 million.

These two men, with all their millions, seem to think that hawking bad financial products to vulnerable seniors is a good use of their name recognition. In Thompson’s case, it hardly matters; I already thought he was a dick and an idiot, and I think that’s a common take on the man. Winkler, on the other hand, I thought rather well of. But now I think he’s as big a dick as Thompson. And the only thing likely to change that opinion is if I learn that he’s being blackmailed.

Again, reverse mortgages are not necessarily a bad thing. But they aren’t so great that they ought to be advertised everywhere. And the fact that they are pushed so hard is all you need to know about just how great they are. My recommendations would be for Fred Thompson’s agent to get him a couple of TV roles where he plays the president—the only part he’s pretty good at. And Winkler ought to ask for a raise from Mitchell Hurwitz.

Steve Benen provided this graph that shows a fair bit of hypocrisy in how both Democrats and Republicans think about the surveillance state. But Benen is much more of a partisan than I am. His whole point of showing the graph was to push back on the “Democratic hypocrisy” narrative that is forming. He quite correctly noted that the question in 2006 was different than the question in 2013. In 2006, people were asked about an illegal program; in 2013, it is a legal program.

He’s reaching, right? We’re all very glad that Obama cares enough about the law generally to put a patina of legality on the vile surveillance practices of his administration. It at least provides for the possibility of oversight and maybe even a change of policies if only the American people actually cared about the issue. But the opposite argument could be made. This program is much bigger and it doesn’t necessarily involve communication with foreigners.

To my mind, both programs are terrible in their own ways. The Bush program was highly invasive and illegal. The Obama program is not very invasive and legal, but it is vast. What’s more, I have little doubt that the information will creep into other uses. The New York Times editorial board has been very good on this issue; however, I thought they asked some naive (but good) questions this morning:

Let’s see now. It isn’t that the program might put innocent people under suspicion; it is that it does. All the data are[1] collected for the same reason a dog licks its balls: because it can be done. I don’t think that can be stressed enough: the surveillance state does not processes so much data out of any need. It is just like video stores asking for you Social Security number: they don’t need it; they are just mindlessly collecting all of the data that they can. That’s what the NSA does. The data will be kept forever. And of course the data can be used for other purposes. As I’ve noted before: it can figure out if you are using illegal drugs and it can be used to figure out if you are having an affair. All from so called meta data.

But I’m not worried about any hypocrisy on the part of about 25% of the Democrats and Republicans. There are any number of reasons they could give for the changes in their opinions anyway. What’s more, a lot of those reasons are valid. What I’m worried about is that roughly 55% of both parties are never worried about the government snooping at what we are doing. This is a horrifying, but hardly unusual position for me to find myself in. Large swaths of Americans aren’t worried about global warming. And that’s more important than this. Large swaths are not worried about income inequality. And that’s more important than this. Even fewer care about our racist “justice” system. And that’s more important than this.

So many moral catastrophes, so little time.

[1] “Data” is technically a plural. But that isn’t why I use it as a plural. It just sounds wrong to me to do otherwise. It’s just one of my eccentricities.