In the Supreme Court case Maryland v. King, Justice Scalia is a hero. This is the case where the Court found that we really aren’t innocent until proven guilty. Anything that the police want to do with someone arrested is just fine as far as the majority is concerned. In recent years, it has seemed that Scalia acted more like a talk radio host than a Supreme Court justice. But in this case, he wrote a very forceful and compelling dissent.

It all started in the hearing. Katherine Winfree was arguing for the state. She said, “Since 2009, when Maryland began to collect DNA samples from arestees charged with violent crimes and burglary, there have been 225 matches, 75 prosecutions, and 42 convictions, including that of Respondent King.” To which Scalia responded, “Well, that’s really good. I’ll bet you, if you conducted a lot of unreasonable searches and seizures, you’d get more convictions too.” There was laughter and then he finished, “That proves absolutely nothing.”

Glenn Greenwald tweeted the following poster

The issue is a tad bit more complicated than Scalia would indicate. Unfortunately, it is far far far more complicated than Kennedy, writing for the majority, would indicate. Basically, Kennedy claims that the DNA is only used to identify the person arrested. Clearly, that was not the argument that Maryland was making. It was just a cheap way for the majority to rule in Maryland’s favor. Emily Bazelon over at Slate provides a good example. We do not allow the government to search the houses of arrested thieves on the suspicion that they may have stolen other things that they may find there. So it wouldn’t have be easy for the majority to find that Maryland had a similar right just because it was DNA and not a home search. And that’s why we got this ridiculous notion that the DNA search is okay because it allows the state to ID the arrestee.

Scalia shot down this idea with such ease that the majority should have been embarrassed. Bazelon explains:

The problem from my standpoint, is that the court has ruled incorrectly on this kind of stuff for so long that it is hard to say how the court ought to rule now. Basically, the court has carved out so many exceptions over the years that the Constitution itself is pretty much irrelevant to the issue. Why are the police allowed to do suspicionless searches at DUI check points? The Supreme Court came up with some mindless idea of “special needs.” But even further back, finger prints are not simply used for identification. All of this stuff is simply meant to make the job of policing easier. And given the huge rise in the incarceration of nonviolent “felons,” I don’t think we ought to be doing that. It reminds me of the film Demolition Man where Alfredo tells Spartan that he doesn’t even know what the police did in his day before all people had tracking devices implanted in them. Spartan says, “We worked for a living. This fascist crap makes me want to puke.”

In this case, I side with Scalia’s “originalist” interpretation of the Constitution. But it shows just how useless the idea of the original intent of the Constitution is in such matters. There are (depending upon how you define it) one to three other judges who might be called “originalist.” And all of them voted against Scalia. A better argument is the practical liberal one: according to one recent study, one-third of all 23 year-olds have been arrested. So the majority is effectively claiming that it is okay to allow DNA testing of a vast fraction of the population. (Note: the Maryland law only applies to some crimes, but the majority opinion provides no such limit.)

It is hard to look at America and not think that while we are making very small strides in some areas (a deeply flawed policy to provide health insurance to a lot more people), we are making very big strides in the opposite direction in other areas. The way we deal with social control is totally unacceptable: building (more and more private) prisons and locking up more and more people for breaking laws that earlier generations would have thought inconceivable. It was once thought that charging 30% interest on a loan would put you in the 7th level of hell. Now we consider such people the very best our society creates. Meanwhile, ingesting forbidden plant material can put you in prison for the rest of your life.

I’m at least glad that on this very specific case, Scalia is on the side of right.

Yesterday, I happened to hear David Brooks on NPR. He was asked about the huge NSA surveillance program. He said, “I’m somewhat bothered by the secrecy, but I don’t feel it’s intrusive. Basically, they’re running huge amounts of metadata through an algorithm. That feels less intrusive to me than the average TSA search at the airport. And so I don’t think it’s particularly intrusive. It is supervised by the court. It has some congressional supervision.” Okay, it’s Brooks. What’s the big deal?

Well, that morning, the Wall Street Journal editorial page wrote, “We bow to no one in our desire to limit government power, but data-mining is less intrusive on individuals than routine airport security.” I think it is interesting that Brooks is brought on NPR as a “reasonable” Republican and he just spouts the WSJ editors. Brooks is not supposed to be just some random politician; he’s supposed to be an independent thinker. But let’s leave that aside.

Jonathan Chait wrote a good article yesterday, Conservative Freedom Lovers: You’re Doing It Wrong, in which he showed the cognitive dissonance in the conservative movement regarding issues of freedom. For example, noted that Jack Welch is a-okay with the NSA spying, even as he claimed that Obama was secretly manipulating the Jobs Report for his own nefarious purposes.

Or consider Roger Vinson, who was one of the lower court judges who struck down Obamacare. He claimed that if the government could force people to get health insurance, it could force them to do anything. So he’s a big believer in freedom. Or at least certain kinds of freedom. As Chait noted, “Judge Vinson has reentered the news for having approved the National Security Agency’s program of collecting all of the phone records in America.”

This is an issue I talk about a lot: the tyranny of libraries. I first noticed this with libertarians. They argued that taxes to pay for libraries were as awful as taxes to pay for the military. The situation is far, far worse with conservatives. They argue that taxes that go to the military and spying only make us more free whereas libraries are some kind of communist plot. This puts history on its head. Autocrats do not rule by the force of their public libraries. They rule by the force of their military and secret police.

A common complaint of conservatives is that the Founding Fathers did not believe in a large government like we have. That’s true. I don’t think it means anything, of course. The world has changed dramatically and larger governments are a necessity. Regardless, the parts of government that the Founding Fathers most feared were the parts that conservatives proudly embrace.

Dean Baker often makes the point that on the economy, conservatives don’t want small government, they just want big government for the wealthy. It’s clearly bigger than that. In every possible way, conservatives want a big government to make sure that those with wealth, power, and prestige will continue to have it. As usual with conservatives, they don’t suffer from cognitive dissonance if you understand what their real goals are. And those goals are shared by “moderate” David Brooks and the extreme and shrill WSJ editorial page.

Let me coin a term: the Josh Barro Phenomenon. It is a special form of conservative affirmative action where just by being something other than a stupid troll, a conservative can be held in high esteem among liberals. And Barro has received more than his fair share of compliments by us on the left. For example, I haven’t written that much more about Dean Baker than I have Josh Barro, even though in terms of policy ideas Baker is many quantum states beyond Barro.

This afternoon, Barro tried to make the case that he’s a real Republican that just wants to clean up the party, How Republicans Made Both Parties Stupid On Fixing Infrastructure. But what he actually did was show that he’s a real Republican—full stop. The article starts with him defending Chris Christie’s decision to kill the new Hudson River tunnel for mass transit—an expansion that is badly needed.

Barro tries to sound very Serious by arguing that the project is “overly expensive.” But that is always always always the reasoning for a politician to kill a project. No one ever says, “I’m killing this very popular tunnel because I hate public transit.” (Christie has no problem spending money on expanding the New Jersey Turnpike.) Instead, politicians say, “I’d love to support this very popular tunnel, but I just can’t because it is too expensive.” Or whatever. So all Barro’s “reasonable” arguments about wasteful spending just allow people like Christie political cover when they make entirely ideological decisions.

Also in his sights is Obamacare, which he calls a “Rube Goldberg mess.” And he’s right! But why is it is Rube Golberg mess? Because people like Josh Barro required it! Last year, he was arguing that it was best if the Supreme Court upheld Obamacare—not because he liked it, but because it might lead to a single payer health insurance system. You know: a non-Rube Goldberg mess.

I’m really tired of all of this. Conservative obstruction causes supposedly liberal legislation to be ridiculously complicated and inefficient. Then “reasonable” Republicans like Josh Barro complain about the legislation being complicated and inefficient. It doesn’t matter that he is attacking the Republicans for their intransigence. He is still helping the modern Republican Party to ruin good legislation coming and then complain about the damage they caused afterward.

When you get right down to it, Josh Barro is a middling writer who uses most of his intellect to make conservative ideas sound palatable. Just like the less aggressive “reformers,” he believes in the conservative ideology. He just thinks that the Republicans could do a better job of getting their own way. And he’s right! But he shouldn’t be getting compliments from liberals about being a more effective advocate for vile conservative policy ideas.

Update (5 June 2013 7:53 pm>)

Josh Barro tweeted:

I’m honored he would even read me. However, I don’t see his problem. He is providing cover for the same conservative politicians that he claims to want to reform. I don’t see how I’m wrong about that. The question of infrastructure is one of compromise. Pork is often a necessary part of that. One can always find a reason to be against a policy.

But I do feel a little bad about calling him a “middling” writer. It was a rhetorical flourish. Not that it was his problem with the article.

I guess Wonk Blog is trying to brandish it conservative credentials. This morning, Jim Tankersley wrote one the lamest economic articles I’ve read in weeks, The Era of ‘Uncertainty’ May Be Over. Will a Growth Boom Begin? It seems designed to give the austerity folks cover. It argues that all the signs indicate that “confidence” is increasing, and if the economy improves it must be that the conservatives were right all along! Most likely, as usual, the causation works the other way around: the improving economy has increased confidence. But that hardly matters, there are so many things wrong with what is effectively an austerity apologia.

The basis of the article is the daily news-based Economic Policy Uncertainty. It looks at what people are writing in newspapers and determines if times are more or less uncertain. Do people really believe that “uncertainty” is keeping the economy down? “It’s a persistent [thought] among Republican lawmakers and business leaders of all stripes.” While I know this is an ideological belief among Republicans, this just isn’t true of business leaders. Survey after survey has found that a small percentage of businessmen think regulatory uncertainty is holding their businesses back. Consumer demand is a much bigger deal. And understandably so: no one is ever certain what the future will bring; business owners are used to this; the silly idea that businesses need “certainty” is just made up by conservative politicians. (Note: “economic certainty” is just another phrase for “demand.”) By “business leaders” Tankersley means, “People who write for conservative business magazines.” In other words: who cares?

Similarly, the article uses the Stanford-University of Chicago monthly economic policy index to show that “uncertainty” is down to the—Wait for it!—2011 level right before the Republicans caused the Debt Ceiling crisis. The stark downward fall in “uncertainty seems to be nothing more than a seasonal effect: it goes down at the beginning of every year. But it isn’t even clear what the index means. It was markedly lower at the end of 2009. What exactly has happened to make things less uncertain now? I would argue that things are more uncertain now than then: the Republicans are continuing to push another Debt Ceiling showdown. But in 2010, no one thought a major American political party was crazy to do that. Now we know better.

Tankersley also puts up a graph of “consumer confidence.” It is up. But this is a measure of how people feel about the economy; it doesn’t work the other way around. And that is the heart of what’s wrong with the whole article. Everyone knew that as the economy improves, people will feel more confident. But the whole argument that “confidence” would lead to growth was about businesses not individuals. First, individuals don’t have a lot of money to spend; that’s why we’re in a liquidity trap. Second, the austerity philosophy is part of supply side economics, the idea that if you build it the customers will come. So consumer confidence is irrelevant to the argument.

The article ends by quoting Alberto Alesina of all people. He was the lead author of the hugely influential paper, “Large changes in fiscal policy: taxes versus spending.” Mike Konczal wrote an article explaining some of the history of this paper that was both shoddy and wrong, It’s Alberto Alesina’s World and We’re All Just Unemployed in It. Just like with Reinhart-Rogoff, Alesina’s work depended upon a (hopefully unintentional) deceptive use of data. When the appropriate data were used, the argument fell apart.

But Tankersley quotes Alesina as saying that he is very optimistic about all of this “confidence.” The implication is that if the economy does improve, then he was right. But he wasn’t. As we all know, eventually the economy will recovery, even if policy makers do all the wrong things. The question is whether the economy would recover better under one policy rather than another. Alesina’s theory has been tried throughout Europe and to a lesser degree in the United States. And we know the answer: the theory made the economy worse than it would have been and people are still suffering as a result. It is journalistic malpractice to turn reality on its head and give Alesina cover for being so disastrously wrong.

What is wrong with Wonk Blog these days?!

I have been working on a longer argument against the New Democratic movement. The standard explanation of how the Democratic Party has changed over the last several decades is wrong I think. The narrative says that the party became too liberal in the 1960s. I don’t think this is correct, but it is true that the Democrats lost their working class moorings. They seemed to misunderstand who was their actual base. But for whatever the reason, the narrative claims, much of the white middle class turned against the party as seen in the lost elections of Carter, Mondale, and Dukakis. And in steps New Democrat Bill Clinton who saved the party!

But the data don’t really support this narrative. It’s true that southern white males did turn against the Democratic Party, and that’s unfortunate. But that’s about all that happened. The reason that the Democrats went on a 12 year losing streak was just bad economic luck, as you can see in the following graph of the unemployment rate that I made. (My first ever using the FRED system!)

In 1980 when Carter was running for re-election, the unemployment rate was increasing because the Federal Reserve put us into recession to fight inflation. That is why Carter lost, although the third party candidacy of John Anderson didn’t help. Note also that for the first two years of Reagan’s administration, the unemployment rate continued up to almost 11%. And then, the Federal Reserve eased the money supply and it (with an assist from Reagan’s deficit spending) created “Morning in America.”

During the 1984 campaign, the unemployment rate was still pretty high (7%), but it had already fallen over 3 percentage points, and was continuing down. According to political scientists who look at this stuff, that is what matters: the trend. It wasn’t Morning in America because things were great; it was Morning in America because things were getting better—the times were hopeful. And so Reagan won re-election easily.

The exact same dynamic was at work when Bush Sr ran. But the run was at its end. By the second year of his term, unemployment stopped dropping and started climbing. Remember after the Gulf War? Bush had an approval rating of 89%. And then he lost the election because unemployment was rising. But just like with Carter, a third party campaign didn’t help.

It is my contention that Bill Clinton did not become president because he was a new kind of Democrat. As it was, the opposition painted him as a radical anyway, and the mainstream press obligingly followed along. I still fail to see what the New Democrats Clinton and Obama think they get out of their conservative policies. They couldn’t be attacked any worse. If the individual mandate is “socialism” then what is single payer? Doubleplussocialism? But more to the point, these elections were for the Democrats to lose, just as the Reagan-Bush elections were theirs to lose. Being more liberal would not have hurt these men in their elections and might have helped them. Certainly being more liberal would have helped Al Gore.

David Frum has announced that he going to discontinue his blog at The Daily Beast at least through the summer for personal reasons—among others, his father’s recent death from metastatic lung cancer. But in signing off, he presented “five essential tasks” that conservative reformers must commence before they can make progress.

There is a distinct cognitive dissonance in the article. He wrote, “As Ross Douthat has perceptively observed, the cause of conservative reform has gained increasing coherence and force since the 2012 election.” And that “every day in 2013 we seem to see a new green shoot emerging from once-frozen soil.” Given how fundamental these five essential tasks are, I can only see his claims of “coherence and force” and “green shoot emerging” as sugarcoating the very real problems that he sees not just with the conservative movement but with its would-be reformers.

His first task is most revealing:

In the past, I’ve been extremely critical of David Frum—especially regarding just how “reasonable” he is. But this paragraph shows that at least in the abstract: he gets it. And what he is talking about here is the critical problem with conservatives in general and the reformers in particular. They never look at a problem and think, “What is the best solution?” A good example of this is the Heritage Foundation’s idea of the individual mandate, which is now codified in Obamacare. That was working backwards. First come the limits and then comes the policy solution. And what they came up with is a policy that is far more invasive and problematic for individuals than straight up government insurance would have been. No one would have come up with that solution if they didn’t start with the idea that the insurance and medical industries mustn’t lose any profits.

The argument against liberals that they want to throw money at every problem is not wholly without merit. And 40 years ago, it had a good deal more merit. But those ideas were in general straightforward efforts to solve problems. And often their ideas of throwing money at a problem cost far less than the conservative ideas. For example, it is cheaper to improve various forms of opportunity than it is to continue to build more and more prisons. What’s very clear is that the liberal approach to problems—especially coming from liberal reformers—is not working backwards.

This of course is the classic problem, “When the only tool you have is a hammer, every problem looks like a nail.” This is usually applied to foreign policy. But in terms of economic policy, it is not much of an exaggeration to say that every problem has become a justification for a tax cut. That’s how Romney’s big idea for economic growth was to give rich people more money. No one thinks the answer to the question of poor people is to make the rich richer. At least it isn’t if you are actually trying to answer the question. If you are trying to justify another tax break, it is another matter.

Frum’s second task is a bit of a muddle:

Most of this is entirely correct. But what is that about the conservative project at its best? Surely he is not talking about Eisenhower. Since the modern conservative movement gained power 35 years ago,[1] the floor beneath the American middle class has at best stayed the same. I’m curious how Frum justifies saying that the conservative movement has done anything but change the country from one where productivity growth was broadly shared to one where almost all, and in many cases even more than all went to the rich. When he says that he’s worried about people doing the bidding of the oligarchy without payment, does he mean that it is okay for him to do it because he is being paid?

Other than that bit of confusion, he is highlighting a huge problem in our society. But he’s only implying what it ought to mean to the would-be conservative reformers. I guess he is afraid to come right out and say that if we don’t deal with income inequality—And fast!—we won’t have a democracy to reform. But other than Bruce Bartlett, none of the reformers seems at all interested in this kind of stuff. In fact, they mostly think it is hippy nonsense that should be left to Occupy Wall Street.

Frum’s third task deals with climate change:

This is interesting, coming from a man who has long tried to claim the “reasonable” middle ground while in fact being a global warming denialist. And I’m unclear what those “conservative insights” might be. After all, the Democrats have accepted the great conservative idea of a carbon tax. And this caused—What a surprise!—the conservatives to claim that their own plan was “cap and tax” and that global warming isn’t happening anyway. As Frum himself wrote in 2009, “Everything important about global warming remains disputed”! (Note: the original article on CNN will not display, so you will have to accept the secondhand Get Energy Smart Now article.)

Next up is Frum’s fourth task where he seems clueless of his fellow conservative “reformers”:

The reformers, as I noted this morning, are offering universal health coverage. They are in the business of providing plausible-sounding schemes that will allow conservative politicians cover to just repeal Obamacare and replace it with nothing—or at least something much worse.

Frum’s final task is for conservative reformers to tone down the anti-Obama rhetoric and to push back on the scandal mania:

That’s the one place where I think the supposed conservative reformers have been okay. They generally try to seem reasonable and so they don’t go to extremes about this kind of stuff. Just the same, late last year, Frum himself was (in his quiet but insistent way) pushing the Benghazi scandal.

That gets to another aspect of the conservative “reform” movement. I don’t think they care any less for the extreme policies of the Republican Party generally. But they are all smart and they are very much aware just how bad it looks when a Republican politician gets on television and screams about that Kenyan Socialist in the White House. Frum may well be right that the reform movement is coming along. But thus far, all we see are careful words in support of the same vile policies. I do hope that Frum’s time off will help to heal himself and the rest of his family. But I don’t know the man, so my wish is the same as it is for any fellow human being in his situation. But in a much more meaningful way, I hope that his time off allows him to rethink reform and get rid of the excessive amount of dissonance in his positions.

[1] Carter was actually the beginning of the conservative economic agenda. Yes, it was Reagan that really put it in gear. But the ideological movement started with Carter. See Winner-Take-All Politics.

The Committee for a Responsible Federal Budget (CRFB) is not one of my favorite groups. But they are a smart and reasonably honest group. They’ve created an interactive tool that allows the user to change the benefits and revenues for Social Security. It is way cool and a whole lot of fun. But it is also Chicken Little style propaganda.

When you start the app, the title reads, “Social Security remains insolvent. The trust fund will run out in 2033 at which point all beneficiaries will face a sudden 23% benefit cut.” As regular readers ought to know, Social Security is not a big problem.

What they’ve written there is true, but it could be put in a more neutral way, “Social Security will be able to pay full benefits for the next 20 years; at that time, it will only be able to pay 77% of the benefit level at that time; we usually overstate the problem.”

Using the App

Overall, the app is really great. But even without playing with it, it provides a lot of useful information. For example, how much of the shortfall would Chained-CPI eliminate? Only 21%. And if we provide a fix for retirees who live a long time, this number drops to 16%. The app also allows you to increase benefits. I would prefer to have more flexibility than the program allows, but it is still pretty useful.

Reduce Benefits

On the benefit side, the app allows you to slow the growth at which initial benefit is calculated. Unless you apply this to half or more of retirees, this saves almost nothing. For example, if you apply it to only the upper class (top 20% of earners), it saves 3%. I’m not for reducing benefits regardless.

Social Security is actually a pretty stingy program as it is. You can also increase the retirement age. I really don’t understand the mentality of people who call for this. It seems like a way for people in pleasant high paying jobs who don’t ever want to retire to make people in back-breaking jobs do the same. Bad idea.

And as I said, you can apply Chained-CPI. I went with increasing benefits by using the CPI-E that better reflects the cost of living increases experienced by older Americans. That cost me 15%.

There are a couple of Disability reforms proposed. Two of them are pretty stupid: put further limits on the program (saves 4%) and force people out of disability at 62 (saves 5%). I did go along with 5% savings from reductions in fraud and over-payment. But I immediately lost the 5% by providing a guaranteed minimum benefit of 125% of the poverty level. You could also offer an old-age bump, but that only makes sense if you are doing Chained-CPI. And you could restore college benefits for kids up to the age of 22. I don’t think that’s a bad idea, but I didn’t do it.

There are three other benefit reductions. It’s shocking but 12% can be saved by basing the initial benefits on 38 rather than the current 35 years. Bad idea. Surprisingly, 8% is saved by phasing out benefits for people in the top 1% of income earners. I know the argument against this: if Social Security isn’t universal, it will become vulnerable. I don’t accept that. Social Security is safe because old people vote. Period. So I’ll go for that one, but I’m not wedded to it. The app also allows you to cut survivor benefits. Another bad idea.

Increase Revenue

Finally, we get to my favorite part: revenues. As you all should know by now, I’m a big proponent of raising the payroll tax cap. Right now, people only pay it on the first $114,000 of earnings. Raising it would produce a lot of revenue. Eliminating the cap altogether has two problems. First, there is the vulnerability problem. I don’t think it is real. Second, there is the tax avoidance problem: rich people would figure out ways to make all of their incomes capital gains or some other such scheme. That’s a real problem and so I think Social Security reform must be done in a larger context of tax reform. (By that I mean real tax reform and not a euphemism for “reducing taxes on the rich.”)

They offer three choices: eliminate the cap and increase benefits on high income earners; raise the cap to include 90% of all income (it is 84% now, which is lower than it used to be); or add a 3% surcharge on all income made above the current cap. All of these ideas are above the savings gotten from the other cuts and revenue increases: 77%, 32%, and 24%. I went with the full repeal of the cap.

All of these choices put me at, “Social Security remains insolvent. The trust fund will run out in 2061 at which point all beneficiaries will face a sudden 15% benefit cut.” I’m not finished, but I want to note that the trustees’ report normally assumes a very slow increase in economic growth. So even though I’ve only pushed the program out to 85% of benefits in 50 years, that’s probably enough. But I’ll go ahead and finish.

There are other ways to increase revenue. One is to force new state and local employees who are not in the program to start paying into and getting benefits out. I think that’s a good idea and it will save 9%. Currently, people pay their payroll taxes on income before 401(k) contributions, but they are paid on income after things like insurance. We could throw the insurance in with the 401(k). I don’t think that’s a great idea, but I’m willing to do it for a savings of 9%. Again: I’m not wedded to it. And we could fully tax Social Security income. I don’t want to do that.

Finally, we could invest in the stock market. That’s a bad idea. But note, if we did something like Bush’s “carve out” to allow people to invest part of their Social Security in the market, it would hurt the program’s finances.

My final score: “Social Security remains insolvent. The trust fund will run out in 2076 at which point all beneficiaries will face a sudden 16% benefit cut.” I’m fine with that. It doesn’t make sense to think about this stuff too far into the future; 63 years is good enough.

Afterword

I went back to the app to see what it said if I got rid of the 75 year shortfall. It reported, “Social Security will be solvent over the next 75 years, but 54% of the gap between spending and revenue remains in the 75th year, meaning the program is not yet sustainable.”

So even when you do what the program asks, the CRFB still wants to scare you. In order to be congratulated, you must reduce the 75 year shortfall by over 200%. Removing the payroll tax cap and reducing COLA to “CPI minus 1%” only gets you to 169%. So CRFB is only happy if you savage Social Security.

Image by Dorothea Lange (in the public domain).

Mike Konczal is a very good economics writer who I regularly read. This morning, he was at Wonk Blog talking about, The Tax Break State. In it, he went over the main tax breaks that the federal government gives to individuals. For example, people don’t think of it as a tax break, but when a business gives health insurance to an employee, he is getting a tax break. Under normal circumstances, the worker would just get extra pay with which he would buy health insurance. That extra payment would have then been taxed. Thus, the exemption of taxes on this benefit is a tax break. And it’s big too: about one-third larger than the mortgage interest deduction.

There is one really import aspect of these programs: they are a form of welfare. There is no ultimate difference between allowing people not to pay taxes on their mortgage interest and giving people a check for purchasing a house. And this isn’t some liberal theory. This is exactly the argument made by conservative economist Milton Friedman. I think we need to remember this. There is such a stigma to programs like SNAP (food stamps), but none whatsoever to programs like the mortgage interest deduction. But they are both government handouts and the “respectable” one costs a whole lot more.

And that brings me to the problem I have with Konczal’s article. In order to show how the different kinds of tax expenditures (generally speaking, deductions) benefit different groups, he provided the following graph:

For clarity, he presents the three types of expenditures as percentages. I’m afraid that this gives the impression that we are devoting far more money on the poor than to other income brackets. Here’s a graph from the Congressional Budget Office that shows the relative size of these categories (click to expand):

So the exclusions (50%) and deductions (30%) are by far the biggest share: 80%. The preferred tax rates are around 11%. And the tax credits are just 9%. But this understates the preferred tax rates. Capital gains are not taxed at death, so really the categories would be more appropriately: 75-16-9.

The take away from this is something I’ve been ranting about for years: welfare for the poor is cheap. All it seems we get in the mainstream is discussion of all the poor spending their whole lives in Paul Ryan’s hammock. And when it comes to tax expenditures, all of the conservative media are now and forever in a tizzy over the fact that 47% of Americans pay not federal income taxes. But on the expenditure side of this, we are doing very little for the poor and it would hurt us very little to do quite a lot more.

Afterword

Two quick things. First, Konczal’s overall point is the same as mine. Second, the reason that the poor get the expenditures they do is that there has been a trend away from direct payments like welfare checks to tax expenditures like the EITC and CTC.

Last night, Will sent me a link to an article and asked, “Would you like to explain this to your readers?” The article was from Thursday in Forbes, Rate Shock: In California, Obamacare To Increase Individual Health Insurance Premiums By 64-146%. After reading just a couple of paragraphs, I knew that it was a conservative hit job. Forbes is not exactly a liberal magazine. But I read on.

Finally, I came to the main point of the story. In a subheading, “Obamacare to double individual-market premiums,” it explained that a 25 year old male would pay more for healthcare on the Obamacare exchanges than he does now. That’s when I scrolled up to see who the author was: our good friend, the unethical conservative apologist Avik Roy. As you may know, Roy’s game is to talk quietly and sound reasonable while he spews out deception and lies. And since everyone is used to the more bombastic styles of people like Erick Erickson, all the centrists pat Roy on the head and say, “Who’s a good conservative?! You’re a good conservative! Yes you are!“

Avik Roy’s example of a 25-year-old was telling. First, why did he pick that age? Surely there are more reasonable ages to pick. Our big healthcare problem is not that 25-year-olds can’t get insurance or that they are paying too much for it. What’s more, Roy must at least be well into his 30s, if not 40. But we know why Roy picked a young man, don’t we? He did it because that is how he could make his point.

Yesterday, Aaron Carroll published an article on The Incidental Economist, There Are Real Differences Between Us. At the time, I was baffled. He made an argument where he admitted that the purpose of Obamacare was not to keep insurance cheap for young people. He wrote:

So I’ll state this for the record: I think that some young, healthy people are getting the shaft right now. Not all, because some can still get on their parents’ plans. Some can still buy catastrophic insurance if they want. Some will get Medicaid. Some will get subsidies. But if you’re a young, healthy 28 year old male who makes 400% of the poverty line, and you currently have really cheap insurance, it’s likely your rates are going up.

OK? I freely admit that my goal in health care reform was not to protect the status quo for young, healthy males. That’s wasn’t my goal for reform.

When I first read that, I thought he was attacking a straw man. Surely no one was making that argument! How wrong I was. After reading Roy’s article I knew that this was the new conservative attack on Obamacare: a tiny fraction of the population will see their rates go up! The horror!

Note: Congress could do something about this. You can’t start a big new program like Obamacare without having to deal with problems. But of course, the House Republicans won’t tinker with Obamacare at all. It is repeal or nothing. Anyone up for a thirty-eighth repeal vote?!

This morning, Ezra Klein hit back on Avik Roy in a big way. He noted that Roy’s comparison was false. “That’s not just comparing apples to oranges. It’s comparing apples to oranges that the fruit guy may not even let you buy.” You see, those great rates for 25-year-olds are not available to all. Fully 25% of those who apply are either refused coverage at all or are offered it at a higher price. What’s more, unless this young man makes a lot of money (in which case he would almost certainly get healthcare through his employer) the coverage with Obamacare would be better than the cheap plan that Roy compares.

What’s really annoying about Roy’s new article is that just a couple of months ago, he was pushing the idea that Obamacare wasn’t that bad and that we could fix it to make it more like the Swiss system. Of course, he was disingenuous (or just ignorant) about the Swiss system, but at the time a lot of moderates applauded him as (God save me!) a reasonable Republican. And now he’s back to: “Obamacare will make us all go broke!” He ends his article with a stunning display of hypocrisy:

So, to summarize: Supporters of Obamacare justified passage of the law because one insurer in California raised rates on some people by as much as 39 percent. But Obamacare itself more than doubles the cost of insurance on the individual market. I can understand why Democrats in California would want to mislead the public on this point. But journalists have a professional responsibility to check out the facts for themselves.

Reality is almost exactly the opposite of what he wrote. In general, California rates will be lower. For some reasonably well-off 25-year-olds, prices will go up. Journalists indeed do have a responsibility to check out the facts for themselves. And that means more than cherry picking a couple of examples that prove your case and ignoring the overall picture.

Afterword

I mean it: Avik Roy really is trying to kill me.

I just got around to reading Mark Blyth’s Austerity: the History of a Dangerous Idea. It is something of a revelation because it puts the modern economic debate into historical perspective. He starts way back at John Locke and his fear of the tyrannical state. Then he moves on to Hume and Smith who built on his ideas. John Stuart Mill managed to find the problem with where these guys were going in the land of fairies and elves known as libertarianism. But no one really paid much attention to Mill as the story unfolds.

All along the course of this thinking that leads to the modern proponents of austerity, there are a lot of good ideas. And many of the fears are justified. A good example is the Freiburg liberals in Germany during the 1920s. They claimed that the economic problems were based upon the fact that the legal system was corrupted by the use of private economic power. This has long been one of the linchpins of my argument against libertarianism and other forms of free market fundamentalism.

But as much as I get the thinkers who brought us to today, I still scratch my head over how the austerians can continue to think that the economy is driven from the wealthy on down. If there are not consumers with money it absolutely doesn’t matter how much or how cheaply stuff can be produced. The economy is driven by demand. It’s also interesting that these same people talk about the power of the government, but don’t seem concerned about private economic power. They also have a kind of “control economy” philosophy where instead of the government in control (as is the case in communism), it is the “job creators” who are in control. Any reasonable observer would be concerned about public and private power.

Blyth shows in sometimes exhausting detail that austerity is not only morally wrong but that it simply doesn’t work as it claims to. Although he maintains a fairly objective tone throughout the book, he comes out swinging in the conclusion:

In the last part of the book, he predicts the way forward. He thinks we are going to get higher taxes on the rich and that the recent Fiscal Cliff deal is just the beginning:

He continues to explain why it is right to tax the rich:

That’s an argument that I’ve long been making. We have had a governing infrastructure that rewarded the rich exclusively over the past 35 years. While we’ve enacted laws that have made the rich richer, we have also asked them to pay less and less in taxes. It is time to reverse that. Raising taxes on the rich is not a question of class warfare. It is a question of class survival. And truly, the rich should understand that better than anyone.

I’m going to have to read Austerity: the History of a Dangerous Idea a second time to get clear on all the economic movements. A lot of the material was brand new to me. But even with the one go, I learned a lot. Plus it was a pleasant read. At his best, Blyth is an amusing and breezy writer. And for anyone who wants to know how we got to such dysfunctional economic policy, it is a must read.

Last weekend, Jamie Malanowski wrote an amazing OpEd over at the New York Times, Misplaced Honor. I didn’t know this, but 10 United States Army bases are named after Confederate generals. Look, I don’t have it out for the south. In fact, I have almost nothing but fond memories of my time in the south. But all the Confederate flag waving and related activities have got to stop. We can all admit that the Civil War was a tragedy and that most people were innocent of anything other than being caught up in an unfortunate event. What we can’t do is pretend that the south had cause to leave the Union. The people of the Confederacy were traitors. At that is above all true of the generals.

As Malanowki wrote, “Would we have a Fort Rommel? A Camp Cornwallis?” Of course not! And that is not to say that Rommel and Cornwallis weren’t anything but noble men. But even if you don’t wish to say, as I do, that Robert E. Lee was in fact a traitor,[1] we do not name military bases for people who fought against us in war. There are ways to honor men like Lee without naming our bases after them.

And we are not just talking about men who deserve respect like Lee. Bases are also named after vile men. Henry Benning, for example, wasn’t a reluctant warrior; he actively pushed for succession, demagoguing fears that Lincoln would push to abolish slavery. John B. Gordon was an early head of the Ku Klux Klan in Georgia. And George Pickett was even accused of war crimes, although in the Obama-style “look forward” philosophy of the time, he was never tried.

It is an outrage that we have military based named after these men. It is now 150 years since the Civil War. We need to stop trying to sooth ruffled feathers over our most destructive war, which was waged against us for the most vile of reasons. Imagine what it says to our African American soldiers that they should be stationed at a base named after one of the founders of the Ku Klux Klan. It seems to me that we should be far more concerned about their feelings than those of white southerners who think that the Union was wrong to have stopped their rebellion.

The only way to get past the Civil War is for all of us to admit that the right side was the Union side. We are now all Americans. The Confederacy was never a real nation. The Civil War was a great tragedy, but some good things came out of it. And we should all be proud of that. As Americans.

[1] For the record, I admire Lee. I think he is one of the great tragic heroes of our nation. But taking up arms against the United States is an act of treason. And because of Lee’s brilliance, unthinkable extra men died. If he had headed the Union army as Lincoln wished, the war probably would have been over much sooner and there would have been far less loss of life.