D-2 or whenever.
In his Saturday morning debt-ceiling rant Obama once again threatened our nation's seniors about Social Security:
We need to reach a compromise by Tuesday so that our country will have the ability to pay its bills on time – bills like Social Security checks, veterans’ benefits, and contracts we’ve signed with thousands of American businesses.
Via Glenn we come to this headscratcher - per local Democrats the South Carolina Governor is a liar, or a hypocrite, or something because she checked herself as "white" on her voter registration even though she is the daughter of Indian immigrants.
Here we go:
Dick Harpootlian, the Democratic Party chairman, said whether Haley listed her race as white or not doesn't matter to him. The point is, he said, that the governor has a pattern of twisting the truth.
"Haley has been appearing on television interviews where she calls herself a minority -- when it suits her," Harpootlian said. "When she registers to vote, she says she is white. She has developed a pattern of saying whatever is beneficial to her at the moment."
Well, I would never claim to be smart enough to be a Democratic chairman, but maybe someone can help me out - just what was the advantage to Ms. Haley of identifying herself as "white" on her voter registration?
And on a related topic - once you have seen the name "Harpootlian" you are unlikely to forget it. And here is is from the JOM archives of 2004, bemoaning the racial bean-counting that has overcome the Democratic Party:
"You can't go to a [Democratic National Committee] meeting and have the first act be to divide up into the caucuses: the African American caucus, the Asian American caucus, the Pacific American caucus, the lesbian and gay caucus, the Native American caucus," he said. "As a white guy from South Carolina, where's my caucus? Where's the white guys' caucus?
"That defines the problem of the Democratic Party," he added. "They've got to make folks like me welcome, and make it so I don't have to take a hard swallow every time I go to a DNC meeting."
HEAVY: OK, Ms. Haley could be a non-white Caucasian, a topic apparently addressed by the Supreme Court in 1923:
The Supreme Court in United States v. Bhagat Singh Thind (1923) decided that Asian Indians and Middle Easterners – unlike Europeans – were Caucasian, but were not white, because most laypeople did not consider them to be white people.
Or, per the 2000 census, she could have been Asian. Wow, I can't say "Who Cares?!?" quick enough.
Demonstrating yet again that there is nothing as powerful as an idea whose time is coming, we are now swept by a wave of posts celebrating the Trillion Dollar coin as a solution to our debt ceiling woes. There's (pocket) change we can believe in!
We are having a debt-ceiling crisis because Congress has given the president contradictory commands; it has ordered the president to spend money, and it has forbidden him to borrow enough money to obey its orders.
Are there other ways for the president to raise money besides borrowing?
Sovereign governments such as the United States can print new money. However, there's a statutory limit to the amount of paper currency that can be in circulation at any one time.
Ironically, there's no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.
I suggest that[ Treasury Secretary Geithner] immediately mint 50 ten-pound liberty-head coins, each of them denominated at $100 billion, and temporarily store them in the Treasury Secretary's office. Then the Treasury Secretary can take them up one at a time to the Federal Reserve Bank of New York in a special armored train as required.
Think how much money the federal government could make from the movie rights alone...
10 craziest things about the debt-ceiling crisis
...10.) We can ‘mint” our way out of this mess. This is an idea that’s bouncing around some of the blogs. The basic idea is right: The Treasury doesn’t actually need to borrow any money at all to pay our bills. Why not? Because we live in a world of fiat currencies, in which the Treasury can unilaterally create money out of thin air. Read Joe Firestone’s explanation.
Instead of borrowing the money, we could use seigniorage to create it.
So, the idea to get around the debt ceiling is for the Treasury to mint a one-ounce, $1 trillion palladium coin and deposit it in the Treasury’s bank, the Fed. (Under the law, the monetary value of any coin has no relation to its metallic value.) The Fed would credit $1 trillion to the Treasury, which could use it to pay our creditors.
It’s a brilliant and creative idea in theory, but in practice it would be almost as devastating to the full faith and credit of the United States as a default would be.
If this gimmick were used only once in an emergency, that’d be one thing. But once the government got the idea that this sort of alchemy is an option, it would use it all the time. Inflation — perhaps hyperinflation — would result from overuse of the alchemy/seigniorage option. Don’t go there.
Wel, hmm. First of all, we are only using the idea once, this time. It will be someone else who uses it a second time.
Secondly, as an astute commenter noted at Brad Delong's post, if the size were manageable the Fed could simply sell some if its own Treasury holding to offset the seignorage impact. The net result would be as if the Fed had sold bonds to finance the Treasury (which is naughty), but the immediate impact need not be inflationary, depending on the size of the coinage. I happen to think that the notion of a $50 billion coin to carry Treasury through a week or two of Congressional wrangling might just fly.
I was saying last night (before the crowd hooted me down) that if the Treasury Secretary is staring at a dwindling cash balace and has to choose between not paying Medicaid, not paying the military, not paying the Veterans Administration, not paying the Coast Guard, not paying the Border Patrol, not paying food inspectors, not paying the NIH, or issuing a $50 Billion coin, well, none of the choices are appealing, but the special coin might not be the most unappealing.
As a bonus wrinkle, it would be worth knowing just how quickly this ploy would be reported - the Mint reports annually, but I presume Treasury and Fed balances are reported on a more timely basis. That said, if Geithner could slip a few high value coins into the mix in early August and only report it in early September on some Treasury report covering August activity, well, the debt deal would probably have been wrapped up by then.
FWIW, net seignorage profit in 2010 was a mere $388 million as reported by the Mint, so we are talking about a notable change in practice here.
DO REMEMBER: The idea that the US might simply spin the printing presses to satisfy foreign bondholders is hardly news, as this Eerily Prescient post from a year ago illustrates. Striking coins updates the metaphor.
LEFT UNADDRESSED: How might the coins be presented to the Fed? Should Tim Geithner dress up as a stage magician and pull the magic coin from an unsuspecting taxpayer's ear? Or maybe the coins can be delivered by Rodeo Clowns. Tough call, given the seriousness of the enterprise.
One more for the global warming skeptics:
NASA satellite data from the years 2000 through 2011 show the Earth's atmosphere is allowing far more heat to be released into space than alarmist computer models have predicted, reports a new study in the peer-reviewed science journal Remote Sensing. The study indicates far less future global warming will occur than United Nations computer models have predicted, and supports prior studies indicating increases in atmospheric carbon dioxide trap far less heat than alarmists have claimed.
Study co-author Dr. Roy Spencer, a principal research scientist at the University of Alabama in Huntsville and U.S. Science Team Leader for the Advanced Microwave Scanning Radiometer flying on NASA's Aqua satellite, reports that real-world data from NASA's Terra satellite contradict multiple assumptions fed into alarmist computer models.
"The satellite observations suggest there is much more energy lost to space during and after warming than the climate models show," Spencer said in a July 26 University of Alabama press release. "There is a huge discrepancy between the data and the forecasts that is especially big over the oceans."
What does it mean?
The new findings are extremely important and should dramatically alter the global warming debate.
That implies that we are havng a debate, rather than a duel of theologies.
Political maven Keith Hennesey backs the Boehner bill as both viable and not so bad on the merits:
First I’ll flag what I like about the substance of the bill.
It also tees up House and Senate floor votes on the Balanced Budget Amendment, but that is not my priority. A BBA would take years to enact, and we cannot wait that long to fix the underlying math problem.
I support the Boehner bill for the following reasons:
If I could strengthen the Boehner bill further, my top priority would be to increase the depth and breadth of spending cuts, and especially get savings from the Big 3 entitlement programs. In the process reform world my priority would be the “Cap” portion of “Cut, Cap, and Balance.” I strongly support the 20% of GDP spending cap in that bill.
But I don’t have a viable strategy to enact such an improved bill, and, as best I can tell, neither do those conservatives who oppose the Boehner bill. I think it is a mistake to oppose a bill that improves on current law if you don’t have both a better policy and a strategy to achieve it.
First let’s establish that “Fight harder” and “Communicate your message better” are cheers rather than strategies. Cut, Cap, and Balance is a good policy, it is not a strategy. If you disagree with what Speaker Boehner is doing, present another strategic option, which is more than just a policy or a cheer.
The Boehner bill is expected to reach a vote this afternoon.
NBC's First Read highlights the Democrats collapse strategic withdrawal bold advance in a new direction:
*** In retreat: In this debt debate, who’s up one day can quickly go down the next -- and vice versa. That’s why, after we wrote yesterday that House Speaker John Boehner was boxed in, he now appears likely to get his legislation through the House today (he turned things around the old fashioned way; he willed it). But when you take a step back from the hour-by-hour movements in this debate, it’s obvious how much ground the White House and Democrats have conceded. First, they retreated on their push for a clean debt-ceiling raise. Then they retreated on the size of the spending cuts (now both sides say the cuts must equal or exceed the eventual debt-limit hike). Then they backed away from insisting that tax revenues be included in the final package (both the Boehner and Reid plans exclude them). And now it seems that their final line in the sand is insisting that the debt ceiling must -- in one step -- be raised beyond 2012, versus Boehner’s two-step approach, which would guarantee another debt showdown early next year.
*** Another line in the sand, and another retreat? Yesterday afternoon, the entire Dem Senate caucus -- the 51 Democrats and two Dem-leaning independents -- signed a letter to Boehner saying they’d oppose his legislation if it gets to their chamber. “A short-term extension like the one in your bill would put America at risk, along with every family and business in it,” the letter states. “Your approach would force us once again to face the threat of default in five or six short months. Every day, another expert warns us that your short-term approach could be nearly as disastrous as a default and would lead to a downgrade in our credit rating.” But will Democrats once again blink? Bottom line: It looks like they’ve gotten their clocks cleaned in these negotiations, and Republicans are once again counting on Democrats to retreat. The one thing that could bail out Democrats: that the GOP doesn't know when to declare victory and walk away from the blackjack table.
If we get to Friday and the Senate has yet to pass its own bill, one more concession becomes inevitable.
And the NY Times wonders whether this would be happening if Obama were President:
President on Sidelines in Critical Battle Over Debt Ceiling
Obama and his advisers are studying the polls and conjuring a strategy to present the Boehner bill as not only a big Obama win, but exactly what he sought from the outset. Mickey has provided a draft.
My goodness, we are on the downhill side of the last week before the faux debt ceiling deadline. What's next?
In my current fantasy, John Boehner is a genius. He will pass his bill in the House by the skin of his teeth and with no time (or votes) to spare. And that's a good thing!
Unless Reid and the Senate Dem can quickly rally, the Boehner bill will be the only game in town and there will be only seconds left on the clock. Can the Senate Dems find the time and the will to pass some other bill, with Boehner publicly fretting that he barely had the votes for his own creation and can't promise Reid any Republican help in the House? Or does Reid send the Boehner bill to the Senate floor and let scared Democrats ally with Republicans to pass it? I bet the latter.
At which point Obama has a bill on his desk which he has threatened to veto. But there is even less time on the clock (unless Obama wants to contradict his own rhetoric and admit that Geithner has found an extra week), granny's Social Security checks hang in the balance (unless Obama wants to contradict his own rhetoric and announce his sudden discovery of the trust fund), and Boehner has barely corralled the Republican kamicrazies to get this far. Geez, what's a poor President to do?
OK, this may all unravel. But Boehner might be a mastermind.
The Times reports on the likely "real" deadline in the debt-ceiling talks and implicitly smacks The One:
U.S. May Have Way to Cover Bills After Deadline, for Week
WASHINGTON — It turns out the federal government is sitting on some extra cash.
Thanks to an inflow of tax payments and maneuvering by the Treasury Department, the government can probably continue to pay all of its bills for several days after Aug. 2, providing potentially critical breathing room for Congress to raise the debt ceiling, according to estimates by several Wall Street banks and a Washington research organization.
The consensus is that the government will not run short of money until Aug. 10, when it would be unable to cut millions of Social Security checks without borrowing more money.
President Obama has described Aug. 2 as a “hard deadline” for Congress to increase the maximum amount that the government is allowed to borrow.
“We have to do it by next Tuesday, Aug. 2, or else we won’t be able to pay all of our bills,” Mr. Obama told the nation in his speech on Monday night.
Jay Carney, the White House spokesman, restated that position on Tuesday.
“That’s not a guess. That’s not a political opinion,” Mr. Carney said. “It is the judgment of career analysts at the Treasury Department. We give up our borrowing authority without action by Congress. And the result of that risks default for the United States for the first time in our history.”
That description, however, conflates two distinct events.
As previously noted, the real deadline seems to be August 9 or 10. As best I can tell with my searches,the Times has still not addressed Obama's fear-mongering about Social Security checks on August 2. Have they, too, forgotten about the trust fund? And don't Upper West Siders have moms and grannies, too? Surely even reliable liberals are worried that granny might not get her check.
The Times treatment of the Social Security angle is almost puzzling. Social Security is an iconic Democratic program with plenty of statutory funding room provided by the trust fund. It would take a wilfull President and Treasury Secretary to fail to get those checks out, and I am sure that if this were a Republican President holding granny hostage, the Times would be screaming about his (her?) defiance of the Social Security legal framework and clear Congressional intent.
But since its Obama, holding granny hostage is nothing to mention. What is it with Obama and grannies, anyway?
Back in Norway the defense counsel for accused mass murderer Anders Behring Breivik suggests the obvious: per the AP, he believes his client is "likely insane".
But here is a wrinkle:
Defense counsel Geir Lippestad said Breivik took drugs to "to be strong, to be efficient, to keep him awake" during the 90-minute attack at the camp. It is too early to say if Breivik will use an insanity defense, he said.
Steve Sailer, having leafed through the Breivik manifesto, notes that some of the drugs in question were body-building steroids.
As to an insanity defense, Law and Order has not brought me up to speed on the criteriain Norway. However, it is obvious from the manifesto that Breivik understood that he was committing a variety of crimes. He expected to be captured, tried and reviled (actually, he expected to wake up in a hospital bed riddled with bullets if he survived his capture, which was regrettably painless in the event.) By that standard, he should be sane enough to be tried by the Law and Order team or The Closer.
I paraphrase a bit, but House Majority Leader Eric Cantor (the Republican bad cop in the debt ceiling drama) has exhorted House conservatives to hold their noses and embrace the least-stinky alternative:
In the closed-door meeting Tuesday, Cantor praised Boehner’s leadership and acknowledged that “the debt-limit vote sucks.” But he told lawmakers they had only three choices: allow the country to default on Aug. 2, pass a Senate bill that Boehner has denounced as “full of gimmicks” and a “blank check” for President Obama or support the GOP leadership and “call the president’s bluff.”
Cantor “said to stop grumbling and whining and to come together as conservatives and rally behind the speaker and call the president’s bluff,” the Republican with knowledge of his remarks said.
Let's go. Sailing through the current phony debt ceiling deadline, checking daily Treasury cash balances, and experimenting with default is not small "c" conservative.
Even Jackie Calmes of the Times admits that Obama's backpedaling and failure to deliver himself precipitated the collapse of the Boehner-Obama grand bargain. Her piece is titled "A ‘Unique Opportunity’ on the Debt Ceiling, Lost", but the question is, by whom?
Ms. Calmes begins with ritualistic denunciations of Republican intransigence meant to reassure her base:
Mr. Obama and Mr. Boehner tentatively agreed to raise $800 billion in revenues after 2013 by overhauling the tax code and getting significant future savings from Medicare, Medicaid and Social Security — the entitlement programs whose growth as the population ages is driving long-term projections of unsustainable debt. While Republicans rebelled at the idea of tax increases, the package’s total spending cuts exceeded new revenues by more than three to one.
Those rebellious Republicans! But eventually she gets to the gory details about Obama's backpedaling already covered by Keith Hennesey:
A full picture of the shelved compromise shows how close the two leaders were and how far each was willing to go in confronting their parties’ sacred cows — Mr. Obama on entitlement spending and Mr. Boehner on taxes. On paper about $59 billion in spending cuts separated them, a relative pittance in terms of projected spending for the decade. Most of that difference was over Medicaid; Mr. Boehner wanted $40 billion more in cuts than Mr. Obama.
But taxes were the rub: Mr. Boehner has said he quit when Mr. Obama insisted on $400 billion more in revenues above the $800 billion they had agreed to.
The $800 billion roughly reflected savings if the Bush-era tax cuts for high incomes are not extended after 2012, though the deal was not explicit about that, given potential Republican opposition. Rather, it called for Congress to overhaul the tax code to eliminate or reduce popular breaks for corporations and individuals, and to use the new revenues mostly to lower tax rates — leaving the $800 billion for deficit reduction.
Mr. Obama sought $400 billion more after the so-called Gang of Six senators, including three of the Senate’s most conservative Republicans, proposed a debt-reduction plan calling for more new revenues than Mr. Obama and Mr. Boehner had been discussing — leaving the president more vulnerable to rebellion from within his own party.
So here in reality, Obama backed away from an $800 tax hike to which Boehner had (no doubt reluctantly) agreed. Where is the bashing of those rebellious Democrats and their feckless leader?
As a substitute for comic strips the Times includes graphic analysis like this - the spending cuts on, for example, other health programs including Medicare, was presented as $110 billion from Obama and $150 billion from Boehner with $40 billion in dispute. Is that a little or a lot in the context of al the health care spending on the table (put another way, is that a 1% cut or a 30% cut)? Off the top of my head, I have no idea.
But when it comes to "revenue", the Times loses interest in differences and suddenly focuses on totals. We learn that Obama wants $36.648 trillion in total tax revenue over the next ten years but Boehner is holding out for a mere $36.232 trillion. Geez, a dispute over $400 billion suddenly looks like a rounding error.
That would be the case for health care spending as well if the Times wanted to present it that way. This 2010 report projects (p. 19) total Federal spending on Medicaid of $3.65 trillion over the next ten years; with that baseline, Obama was proposing a cut to $3.54 trillion and Boehner was holding out for $3.50 trillion - what was the problem?
I'm only guessing, but I suspect the Times wanted to trivialize the tax dispute. $1.2 trillion in new taxes looks like a 50% increase over the $800 billion Obama had already accepted; evidently that is not an acceptable manner of presentation at the Times.
LET THE ADULTS TAKE OVER: David Brooks stings the White House with this assessment:
Alas, the dream of a Grand Bargain died Friday evening for three reasons.
First, it was always going to be difficult to round up the necessary Congressional votes. Republicans didn’t want the tax increases. Democrats didn’t want the entitlement cuts.
Second, the White House negotiating process was inadequate. Neither the president nor the House speaker ever wrote down and released their negotiating positions. Everything was mysterious, shifting and slippery. One day the president was agreeing to an $800 billion revenue increase; the next day he was asking for $400 billion more. Spending cuts that seemed to be part of the package suddenly seemed hollow. Negotiating partners disappeared.
It was phenomenally hard to figure out exactly who was offering what. Democrats in Congress were kept in the dark and were understandably suspicious. It was all a recipe for misunderstandings, hurt feelings and collapse.
Third, the president lost his cool. Obama never should have gone in front of the cameras just minutes after the talks faltered Friday evening. His appearance was suffused with that “I’m the only mature person in Washington” condescension that drives everybody else crazy. Obama lectured the leaders of the House and Senate in the sort of patronizing tone that a junior high principal might use with immature delinquents. He talked about unreturned phone calls and being left at the altar, personalizing the issue like a spurned prom date.
But Obama's absence signals Hope and Change:
The atmosphere has changed. It now seems more likely that we will get a deal. It just won’t be as significant as we Grand Bargainers originally wanted.
John Boehner and Harry Reid will continue to verbally abuse each other. But there’s a script to their taunts. Nobody’s feelings are hurt. The old pros are perfectly capable of exchanging clichéd volleys in the morning and then going off and negotiating with each other in the afternoon.
Furthermore, the negotiating process has changed. On Monday, both Boehner and Reid produced proposals. The main points were written down and available for all to see. Each side not only represented its own views, it sent signals about where future agreements could be found.
SUCCESS IS NOT AN OPTION: At TNR, Jonathan Chait is gloomy about the plan and the persuasive powers of The One:
I'm not really sure what Obama was trying to accomplish in his speech. I thought he would try to find some kind of lowest common denominator between the Reid and Boehner plans that would stand a chance of passing Congress. He didn't. Instead he appealed once again to the Grand Bargain. If Obama thinks Congress will pass something like that, he's nuts. The Senate might, but the House never, ever would.
The most rational explanation for Obama's speech is that he's positioning himself for failure. He's explaining his position so that when Congress fails to lift the debt ceiling, Americans will blame the Republicans and not him. Maybe in the meantime some small deal can arise. But I expect a week from now we'll be bracing for disaster.
Wow. Well, if Obama vetoes a bipartisan Congressional deal, it will be a disaster. A disaster compounded by the presence of flying pigs.
Obama goes live any minute now.
POST GAME: Shorter Obama - I have a plan and the Republicans have a plan, so let's compromise and do it my way. I don't think Obama won converts with this speech. (As to his point that this is no way to run the greatest country in the world, welcome to the club - lots of us have been thinking that for two and a half years.)
Obama threatened granny's Social Security check in passing but did not dwell on it. I guess his idea is to pose as a grand hero when Geithner finally discovers the Trust Fund and the checks go out on time.
I thought Boehner did well in response. And passing a small bill that carries us to January ought to be veto-proof. Time will tell!
Obama will harangue the nation tonight in yet another attempt to sway the public on the debt ceiling fight.
The Times highlights the competing House and Senate plans:
The president’s decision to intervene comes after House Republican leaders pushed for a vote Wednesday on a two-step plan that would allow the federal debt limit to immediately be raised by about $1 trillion and tie a second increase next year to the ability of a new joint Congressional committee to produce more deficit reduction.
Even though the Democrats insist they are winning this debate they don't quite seem to believe that another such victory will help them in electon year. Consequently, Senate Majority Leader Reid has reached for the dry ice:
But top Senate Democrats called the proposal a “non-starter” and said they would advance their own plan to reduce the deficit by $2.7 trillion and raise the debt ceiling until after next year’s elections, saying it met the conditions that Republicans had laid down during the ongoing debt fight.
And how does it meet those conditions?
The plan assembled by Mr. Reid quickly received the president’s endorsement. Over the next ten years, it would cut $1.2 trillion from federal agency budgets and wring some savings from recurring programs such agriculture subsidies. The proposal also counts about $1 trillion in savings from winding down combat operations in Iraq and Afghanistan – a point likely to encounter resistance from Republicans who brand such savings as gimmicks.
So Reid will promise to save $1 trillion by not re-invading Iraq or Afghanistan. Geez, why not promise not to send a man to the moon and save another half trillion? (Oh, I know - the CBO does't have a manned moon mission in the baseline...).
Obama will bring his Golden Voice to bear and no doubt enjoy the same success he has had every other time he gets on and whines about some damn thing or other.
However I am very curious to see whether Obama continues to threaten granny's Social Security checks. And of course, we will monitor his media enablers to see whether his attempt at hostage-taking is questioned.
Whatever financial market crisis Boehner and Obama may have been worried about over the weekend has not materialized. At this writing the Dow is down 34, the S&P 500 is down 2, and the NASDAQ is flat.
Meanwhile, back in DC Boehner prepares to call Obama's bluff by sending a new bill to the Senate with some spending cuts ad a short term debt ceiling extension But will such a bill find enough Republican support?
And in the Senate the still-relevant Majority Leader Reid plans to call the Republicans' bluff (quoting Yglesias) by giving them the revenue-free spending cuts only bill they claim they want. That'll show 'em! Well, Yglesias argues that since the Republicans' not-so-hidden agenda is entitlement reform, which Reid carefully sidesteps, Republicans can't say yes. Of course, Reid will need to go on record with dramatic non-entitlement cuts, and where will he find the votes? The suspense would be mounting if anyone cared.
Mark Bittman of the Times has a simple notion to improve the American diet - tax bad foods and subsidize good ones.
He's a lib so some of the rhetoric is daft, but he does seem to grasp the issues:
Yet the food industry appears incapable of marketing healthier foods. And whether its leaders are confused or just stalling doesn’t matter, because the fixes are not really their problem. Their mission is not public health but profit, so they’ll continue to sell the health-damaging food that’s most profitable, until the market or another force skews things otherwise. That “other force” should be the federal government, fulfilling its role as an agent of the public good and establishing a bold national fix.
Well, the food industry is entirely capable of marketing healthier foods - believe it or not, people seem to prefer sweeter, saltier and fattier foods. One might make an anaolgy to seat belts and air bags - manufacturers were entirely capable of making them, but gauged that consumers would balk at the price.
As to the notion that the "other force" should be the Feds, well, normally I favor smaller government and consumer sovereignty. However, I am not a fanatic about it, and there are times when the sovereign, having demonstrated unfitness for office, forfeits the crown.
Rather than subsidizing the production of unhealthful foods, we should turn the tables and tax things like soda, French fries, doughnuts and hyperprocessed snacks. The resulting income should be earmarked for a program that encourages a sound diet for Americans by making healthy food more affordable and widely available.
The average American consumes 44.7 gallons of soft drinks annually. (Although that includes diet sodas, it does not include noncarbonated sweetened beverages, which add up to at least 17 gallons a person per year.) Sweetened drinks could be taxed at 2 cents per ounce, so a six-pack of Pepsi would cost $1.44 more than it does now. An equivalent tax on fries might be 50 cents per serving; a quarter extra for a doughnut. (We have experts who can figure out how “bad” a food should be to qualify, and what the rate should be; right now they’re busy calculating ethanol subsidies. Diet sodas would not be taxed.)
Simply put: taxes would reduce consumption of unhealthful foods and generate billions of dollars annually. That money could be used to subsidize the purchase of staple foods like seasonal greens, vegetables, whole grains, dried legumes and fruit.
We could sell those staples cheap — let’s say for 50 cents a pound — and almost everywhere: drugstores, street corners, convenience stores, bodegas, supermarkets, liquor stores, even schools, libraries and other community centers.
He knows such a tax would be regressive but figures the subsidies would offset that.
Mr. Bittman finishes with a full lib fantasy:
Other ideas: We could convert refrigerated soda machines to vending machines that dispense grapes and carrots, as has already been done in Japan and Iowa. We could provide recipes, cooking lessons, even cookware for those who can’t afford it. Television public-service announcements could promote healthier eating. (Currently, 86 percent of food ads now seen by children are for foods high in sugar, fat or sodium.)
Money could be returned to communities for local spending on gyms, pools, jogging and bike trails; and for other activities at food distribution centers; for Meals on Wheels in those towns with a large elderly population, or for Head Start for those with more children; for supermarkets and farmers’ markets where needed. And more.
As long as these are unionized government jobs, Dems will be thrilled. Meanwhile, back in reality, the WSJ was fascinating on the technical challenges of vending machines and fresh fruit. And there is that pesky consumer again:
But even if vending machine companies have ironed out the technical issues involved in selling fruits and vegetables, they can have a hard time convincing people to buy the healthy stuff. In 2007, Spencer Cox, president of Vending Services Inc., started stocking a box of carrots, celery sticks and broccoli (with a tub of light ranch dressing) in the refrigerated machine at a telecommunications company. The human resources manager had requested it.
..."It went over like a turd in a punch bowl," says Mr. Cox, whose company has about 450 vending machines in the Des Moines area. About 80% of the new products went unsold and had to be thrown away. "The truth is, people ask for this, but just because they ask for this doesn't mean they're going to buy it."
I await the decision of the Obama Administration to supplement "Let's Move" with "Let's Tax and Subsidize". The core of the idea would be good, but they would deliver a mess.
ERRATA: Back in a post about the link between sugar and cancer I predicted that Coca-Cola today is what cigarettes were in the 50's. And football, too - vast cultural shifts await!
BUT WHAT IS BAD? Salt gets a passing mention in the Bittman piece (Hungary may tax it) and in my own post, but the science is at best ambiguous. For my money, I would focus on the potassium/sodium ratio.
The phone hacking scandal in Britain envelops Piers Morgan, currenty of CNN and formerly of Fleet Street:
James Hipwell, a former journalist at The Daily Mirror, a tabloid edited by Mr. Morgan until 2004, now says that phone hacking was “endemic” at the paper. “Piers was extremely hands-on as an editor,” Mr. Hipwell, 45, told the British newspaper The Independent in an interview published Saturday. “I can’t say 100 percent that he knew about it. But it was inconceivable he didn’t.”
So it is not 100 percent certain that Piers Morgan knew, but "inconceivable" that he didn't. I don't think that word means what he thinks it means.
In any case, as Megan McArdle notes, if it doesn't help take down Fox its not a story.
Keith Hennesey is excellent on the Obama-Boehner rupture. In brief, the Gang of Six came out with a proposal to the left of Obama; Obama judged he had political cover to move left, so he insisted on more taxes with Boehner.
Boehner was going to have trouble agreeing to any taxes; to agree to more taxes this week than he and Obama had discussed last week would be political suicide. Of course, one might argue that for Obama to ask for less than the Gang of Six would be politically difficult for him, but he is the one eager to make the big deal.
So now since Obama can't even deliver himself, Boehner intends to deal directly with the Senate leadership and Obama is on the outside searching for relevance. Interesting.
Via the HuffPo we learn that two different Wall Street groups (Barclays ad Nomura) studying Treasury cash flows have concluded that the real, real, really real debt ceiling deadline is August 9. Or 10.
Anyway, the sky won't fall on August 3rd, which may be a mixed blessing if (Heaven help us) we reach that point. The "No Big Deal" crowd on the right will point to the ascendant sky as vindication. The "This Time Its Serious" crowd will explain that this time, its serious. And eventually, they will be right.
Now the AP is reporting that at least 80 were killed in the camp shootings and another 7 died in the Oslo bomb blast. An ethnic Norwegian is the prime suspect.
A METHOD TO HIS MADNESS: Why would this nutjob target a youth camp? This CNN profile includes a possible clue:
Another post in Breivik's name in October 2009 advises "Hans", described as the founder of Document.no, to "develop an alternative to the violent extreme Norwegian Marxist organisations Blitz, SOS Rasisme and Rod Ungdom" -- all left-wing movements in Norway.
"The conservatives dare not openly express their viewpoints in public because they know that the extreme Marxists will trump them. We cannot accept the fact that the Labour Party is subsidising these violent "Stoltenberg jugend", who are systematically terrorising the politically conservative," the post reads.
He is making a reference to the youth movement of Prime Minister Jens Stoltenberg, who heads the Labour Party.
Norway is an almost universally peaceful nation, with law abiding citizens. Exceptions can be found but always by special interest groups, such as the immigrant youth violence mentioned earlier. Also, far left wing protestors have attempted to disrupt high-level meetings, such as a NATO ministerial meeting in 2007 in which police had to respond with tear gas. Strikes, protests, and other labor actions are generally announced through the media ahead of time and are usually of limited duration.
To get from that to gunning down eighty kids is crazy, obviously, but he does seem to have thought that left-wing groups were violent.
There is nothing as powerful as an idea whose time is coming. And when that idea springs from the brow of Mickey Kaus well, stand back.
A month ago, Mickey tackled the debt ceiling debate with the notion that a "cuts only" deal made sense:
Opponents of bloated government don’t trust politicians to make cuts if extra revenues are in the offing. Neither, sensibly, do many voters. But if you make dramatic cuts, demonstrate you’ve sweated out the fat–and there’s still a deficit, you’ve got a shot at getting a tax increase through. Cuts First! You could start with the Department of Education’s Office of Civil Rights.
In any case. it’s inane to argue that every step on the road to deficit reduction has to be a balance of cuts and tax increases. That’s like saying you can’t take a piss unless you’re taking a drink.
And today, Jonathan Chait of TNR climbs aboard:
An all-cuts deal sounds bad, but it contains some real advantages. It clearly positions Obama in the center, and assuages centrist fears that he's a big government liberal (fears I don't share, but the political power of which I concede.) It makes a large step toward medium-term fiscal correction without taking the choices off the table. Having taken a large step, voters in 2012 will decide the next one -- higher taxes on the rich, or deep cuts to Medicare and Medicaid? That's a good set-up for Obama. If he think he can "take the deficit issue off the table," then he's also taking off the table the priority contrast that offers the strongest basis for his reelection. And he ensures the discussion moves off of priorities and onto the state of the economy, which is a discussion he's likely to lose.
Meanwhile, a scuffle has broken out amongst angst-ridden progressives - is Obama "MiddleMan" or "The Conceder-in-Chief"? Tough call. FWIW, here at JOM he has been nicknamed "JEF" for Jug-Eared uhh, fellow.
ITS NOT JUST SCHADENFREUDE: OK, its fun watching progs gnash their teeth over the antics of The One. But their unhappiness with Obama is also relevant for 2012.
In 2008 conservatives couldn't get excited about supporting McCain, so they got excited about opposing Obama. A similar dynamic will play out on the left in 2012 as they engage in a hate-fest against whomever the Reps nominate. The Bush-bashing and Palin-smashing will seem calm, objective ad dispassionate by comparison, and this will be true even if Republicans nominate Lincoln and Eisenhower.
THE HITS KEEP COMING: Nancy Pelosi gets on board the "Cuts Only" Express.
Terror in Oslo. ABC News notes the usual suspects:
At least one of two explosions that rocked a Norwegian government building in Oslo today was result of a massive vehicle bomb, according to U.S. government sources on the scene.
Earlier this month, a Norwegian prosecutor filed terrorism charges against an Iraqi-born cleric who had allegedly threatened the lives of Norwegian politicians. Mullah Krekar, the founder of the Kurdish Islamist group Ansar al-Islam, said in a news conference in 2010 that if he was deported from Norway he would be killed and, therefore, Norwegian politicians deserved the same fate, according to an AP report. The Norwegian government had considered deporting Krekar because he was seen as a national security threat.
Prior to the Iraq War, then-Secretary of State Colin Powell said Ansar al-Islam was the "sinister nexus between Iraq and the al Qaeda terrorist network."
It seems like only a year ago that Norway announced three arrests in connection with an international terror plot:
WASHINGTON — Three men who were arrested in Norway and Germany on Thursday on suspicion of terrorism were “one node” in the global terror network that plotted the foiled attack against the New York subway and planned to blow up a shopping center in Manchester, England, European and American counterterrorism officials said.
The three Muslim immigrants to Norway — a Uighur from China, an Iraqi Kurd and an Uzbek — had ties to operatives of Al Qaeda in the tribal areas of Pakistan. Also linked to those operatives were Najibullah Zazi, who tried to organize the subway attack, and men arrested in Britain in April 2009 in the Manchester plot.
The separate terrorist cells in the three countries were “three parallel efforts or undertakings that all trace their lineage back to Pakistan,” said a senior American intelligence official. The plotters all had ties to Saleh al-Somali, a Qaeda leader who was killed by a C.I.A. drone strike in Pakistan last year, the official said.
Is there any chance this is an incident of internal domestic terror, somewhat like the Oklahoma City bombing? I suppose there is always a chance, but this 2010 study based on Tweed data of 11,245 European terror incidents covering 190 to 2004 tells me that Norway has had three such incidents in that time frame.
The deus ex machina has arrived to solve the Euro sovereign debt quagmire, and the news is good - the Euro leaders have not yet run out of other people's money:
BRUSSELS — European leaders on Thursday were drawing up a new rescue plan for Greece that may push the country into default on some debt for a short period, but which would also give Europe’s bailout fund vast new powers to shore up struggling economies.
"Vast". As in "Avast, mateys!"? Never mind.
According to the draft declaration, euro zone leaders gathered in Brussels are set to agree on a series of measures to lighten the burden on Greece, Ireland and Portugal — all of which have been forced to seek international aid. Such an agreement would mark a significant shift of direction and a recognition that the mountain of debt hanging over those countries threatens to stifle any prospect of recovery for their economies.
More significantly, the euro zone leaders were also being asked to give wide-ranging new powers to the region’s bailout fund, the European Financial Stability Facility [background], by allowing it to buy government bonds on the secondary market and to help recapitalize banks where necessary. That would effectively turn the E.F.S.F. into a prototype European monetary fund.
Under the proposals in the draft document, the E.F.S.F. would even be able to help shore up countries that had not requested a bailout.
If the proposals are adopted it would mark a big turnaround for Germany, which rejected such ideas only months ago. It would also signal a new willingness to come to terms with the scale of the euro zone’s debt crisis by taking a big step toward common economic structures .
There has long been a question of the German taxpayer's willingness to underwrite the Mediterranean lifestyle. Apparently Ms. Merkel has finally seen the charitable heart beating deep in the German breast, or something. It also appears that this agreement is far too profound to be trusted to legislators:
Diplomats said that going forward with the proposals would require a change in the E.F.S.F. rules which would require ratification by national parliaments.
Well, if the European markets are happy, I'm happy. Sufficient unto the day...
Obama is back to scaring granny again, this time in an interview with some local news outlets:
When asked if people can expect their Social Security checks in August, he told the station it is not guaranteed.
"I am going to do everything in my power to make sure they do. My interest here is not scaring people. I want everyone to understand the consequences. If you don't have money you have to make very difficult choices. The fact of the matter is if you don't raise the debt ceiling then we have more obligations - 70 million checks have to be sent out - and all of those have to be covered."
"All of those have to be covered", and someone has to figure out just what the law is for deciding which ones don't get covered if we reach that point. Will Obama figure out his job description and discover the Social Security Trust Fund before August 2? The suspense mounts!
Consumers in the U.S. are increasingly using credit cards to pay for basic necessities as income gains fail to keep pace with rising food and fuel prices.
The dollar volume of purchases charged grew 10.7 percent in June from a year ago, while the number of transactions rose 6.8 percent, according to First Data Corp.’s SpendTrend report issued this month. The difference probably represents the increasing cost of gasoline, said Silvio Tavares, senior vice president at First Data, the largest credit card processor.
“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” said Tavares, who’s based in Atlanta. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.”
To which I say, hmm. There are many, many credit cards offering bonus cash back rewards for any spending done at supermarkets and gas stations. Now, these cards have been around for a while, but just to extrapolate from my personal experience, I would guess that consumer interest in saving a few pennies per purchase has risen substantially in the last couple of years. Which suggests that the time series data showing increased usage may simply reflect aggressive card marketing and savvy, recession-savvy consumers.
Apparently the Fed and the Treasury are doing a bit of pre-planning against the day when the Treasury might be issuing rubber checks:
Charles Plosser, president of the Philadelphia Federal Reserve Bank, said the U.S. central bank has for the past few months been working closely with Treasury, ironing out what to do if the world's biggest economy runs out of cash on August 2.
"We are in contingency planning mode," Plosser told Reuters in an interview at the regional central bank's headquarters in Philadelphia. "We are all engaged. ... It's a very active process."
One aspect of the Fed's contingency planning is purely operational: the Fed is developing procedures about how the Treasury would notify it on which checks would get cleared and which wouldn't, Plosser said.
The Fed effectively acts as the Treasury's bank -- it clears the government's checks to everyone from social security recipients to government workers.
"We are developing processes and procedures by which the Treasury communicates to us what we are going to do," Plosser said, adding that the task was manageable. "How the Fed is going to go about clearing government checks. Which ones are going to be good? Which ones are not going to be good?"
"There are a lot of people working on what we would do and how we would do it," he said.
Obama himself raised the question of Social Security checks (somewhat implausibly) back when he was trying to hold granny hostage to the debt ceiling talks.
My understanding is that the Social Security Administration has first dibs on payroll tax receipts; further, the Social Security Trust Fund bonds, intended to cover a shortfall in payroll tax receipts, are already counted in the debt ceiling, so the debt ceiling is not breached if the Treasury funds a Trust Fund redemption by selling an equal amount of new notes to the public.
Consequently, the statutory authority and intent of the law seem clear - the resurces ought to be available and Social Security checks should be honored. If our tax cheat of a Treasury Secretary can't figure out how to accomplish that, fire him.
It was just last week that Obama showcased his poker skills with his exhortation to House Majority Leader Eric Cantor - "Don't call my bluff". The point of contention - whether the President would accept a short term boost in the debt ceiling in order to stave off an August debacle and buy more time for more posturing talks.
And now the White House has signaled that a short term hike could be OK, if it is in the context of finalizing a grand deal. Loose the hounds!
This morning Politico drops the other shoe:
Short-term debt hike discussed
By: Carrie Budoff Brown and Jake Sherman
July 20, 2011 01:57 PM EDT
House Republican leaders have begun discussing a short-term debt ceiling hike that would be coupled with immediate spending cuts of a greater magnitude, according to several aides.
The White House also signaled Wednesday that President Barack Obama would support a short-term extension of a few days, but only if Democrats and Republicans reach agreement on a broader deficit-cutting deal and need more time to move it through Congress.
It has been clear for a while (cf Krauthammer) that House Speaker Boehner and Eric Cantor could change the dynamic of the debt ceiling talks simply by passing a short term debt ceiling hike coupled with spending cuts agreed to in the Biden talks. And with his bluff called, Obama will sign it. Time to serve him some peas.
WELL, YES... All we are saying is, give peas a chance. Let's add that James Capretta gets results - after highlighting the flaws of the Gang of Six process, he adds this:
What conservatives should be doing is seizing the initiative in the House. They should move immediately to pass a small debt-limit increase, on the order of $500 billion, coupled with a reasonable set of spending cuts, including caps on discretionary spending. They should then send that to the Senate as the starting point for discussions. Doing this now would increase Speaker Boehner’s leverage immensely, as he would become the only person in the room who had shown by his actions that he doesn’t want a default. Moreover, at this late stage, there’s a very real chance it would become the vehicle for getting past August 2.
I don't see the downside.
The WaPo reports on the debt ceiling kabuki:
White House signals openness to short-term debt extension if tied to ‘larger deal’
President Obama would consider a short-term measure aimed at raising the nation’s debt ceiling and avoiding a default by Aug. 2 if Congress agrees to a larger, long-term deficit-reduction and debt-ceiling deal and needs “a few days” to finalize the legislation, his spokesman said Wednesday.
Oh for heaven's sake - is Obama really going to hold the economy hostage if Congress can't deliver him a bit of legacy by early August? If the Gang of Six claims they need a three month extension while they search for votes in the House (Good luck!) will Obama veto it? Please. Obama will sign anythig that reaches his desk, and smile and say thank you. Then the press will hail his leadership.
Bachmann Says Migraines Won’t Be a Problem if She’s Elected President
She won't get headaches, she'll give them.
OLD NEWS: This is poignant, coming as it does from the MSM:
As Mrs. Bachmann has gained traction on the campaign trail, she is increasingly finding herself under scrutiny.
As any righty would be.
Megan McArdle ponders the growing, ongoing Euro-debacle and warns that she is "having a hard time seeing how any of this ends well".
Hmm - I have a hard time seeing any of this ending. Italy has had problems with its tax collections and public finance for my adult lifetime (their demographic challenge is a relatively new wrinkle, since that has only emerged in the last few decades.) And Greece? Tom Friedman delivers (yet another) howler, in a column with a title that is both question and answer:
Can Greeks Become Germans?
...It will take a cultural revolution. And that can happen only if Greece’s two major parties come together, hold hands, and collectively force through a radical change in the governing culture from the top down. Without that, Greece will never be able to pay back its loans.
Is that all it will take? Then the suspense is over, because it won't be happening.
Germany was a pre-eminent industrial power before Kaiser Wilhelm and Hitler, and rebuilt to become one again afterwards. Following WWII the Allies had some issues about the wisdom of allowing Germany to re-industrialize but none doubted their ablity to do so. Recent Greek history is much less reassuring.
So what happens? High Euro-drama ending with a can kicked down the road would be my guess. This is the Neverending Story... until it ends, of course.
The Gang of Six have proposed a grand budget compromise. They claim that CBO would score it as a tax cut, which means it includes massive tax hikes:
So how can this plan claim to be a “balanced approach” (which means higher revenues), yet also claim to be a $1.5 trillion tax cut?
This probably means they are using a CBO baseline that assumes the AMT continues as written today and that the current Bush rates expire. Last August, the CBO said those policies would amount to a $4.8 trillion tax hike. Which means the the Gang of Six plan probably raises taxes by about $3+ trillion over current rates.
The Times covers a bit of prosecutorial misconduct on the Casey Anthony trial:
MIAMI — Assertions by the prosecution that Casey Anthony conducted extensive computer searches on the word “chloroform” were based on inaccurate data, a software designer who testified at the trial said Monday.
The designer, John Bradley, said Ms. Anthony had visited what the prosecution said was a crucial Web site only once, not 84 times, as prosecutors had asserted. He came to that conclusion after redesigning his software, and immediately alerted prosecutors and the police about the mistake, he said.
The finding of 84 visits was used repeatedly during the trial to suggest that Ms. Anthony had planned to murder her 2-year-old daughter, Caylee, who was found dead in 2008. Ms. Anthony, who could have faced the death penalty, was acquitted of the killing on July 5.
But before we get too far down on the prosecutors, let's have an "out of the mouths of babes" sidebar:
Casey Anthony from a teen's point of view: 'Personally, I trusted the jury's decision'
The prosecutors firmly believed that the murder was premeditated. The evidence they used to support this were the searches made on the computer for chloroform.
The prosecution said it was searched 84 times. But this was after a second test by a brand new program. The original test said that on that day, MySpace was visited 84 times yet in the prosecution’s second test, MySpace wasn’t even mentioned.
Is it a coincidence that they were visited the exact number of times or did the prosecution make a mistake?
Evidently the young author is a shrewd judge of computer forensics. My *guess* is that the defense presented a rebuttal witness or scored points on cross-examination and the Times failed to mention that. CNN mentioned MySpace here:
Kevin Stenger, a forensic computer analyst and head of the Orange County Sheriff’s computer crimes unit, used computer programs Net Analysis and Cache Back to recover deleted Internet search histories from the unallocated space portion of the Anthony family’s HP desktop computer. Stenger testified that results obtained from the Net Analysis and Cache Back programs differed in some details. For example, Net Analysis indicated 84 visits to a MySpace website on one day, while Cache Back made no reference to that number. Stenger conceded that figure of 84 MySpace searches may actually be sequential (each visit given the next sequential number after the last search on a previous occasion) rather than indicating 84 searches on a single day. He identified a Google search for “how to make chloraform [sic]” on March 21, 2008.
The Times covers Diana Nyad's latest epic attempt to swim from Cuba to Key West. If successful (IF!) she will be the first person to cover the 103 miles without a shark cage.
Here is the SI coverage of her failed attempt in 1978. And I read this Times profile back in 1978, just before the Cuba attempt. This story about swimmer's delirium stayed with me through the years (and, by weird coincidence, I was mentioning it just last week):
Greg Richards of The American Thinker seizes on an eye-catching bit of rhetoric from Obama's Friday presser:
Something remarkable occurred in President Obama's press conference on Friday (July 15). It was so astonishing that I was not sure I had heard right, and had to wait until the press conference transcript was posted on the White House website to be sure. But there it is in the sixth paragraph. Here is the quote in full:
Now, what that would require would be some shared sacrifice and a balanced approach that says we're going to make significant cuts in domestic spending. And I have already said I am willing to take down domestic spending to the lowest percentage of our overall economy since Dwight Eisenhower. [Emphasis added.]
I, at least, have never heard this before, but "before" is not really important; President Obama has said itnow. Republican negotiators, the Tea Party, indeed the country must hold him to it. This is the entire game, the entire problem, in spending and therefore the debt ceiling question.
Well, we haven't heard exactly this before, but I don't think the President was trying to make news (and where is TOTUS when you need him/it?).
Just like any family, we have to live within our means to make room for things we absolutely need.
That’s why I’ve called for a freeze on annual domestic spending over the next five years – a freeze that would cut the deficit by more than $400 billion over the next decade, bringing this kind of spending to its lowest share of our economy since Dwight Eisenhower was President. Just to be clear, that’s lower than it was under the past three administrations, and lower than it was under Ronald Reagan.
But focusing on "domestic spending" sidesteps the philospohy espoused by Willie Sutton - since it excludes interest, entitlements and defense, it is not where the money is. Here is the Times coverage from last February:
The president has proposed a five-year freeze of such spending, through 2015, which the administration estimates would save $400 billion in the next 10 years.
Decades of budget history would suggest, however, that neither party can sustain the levels of cuts they are proposing for nonsecurity discretionary spending, which while just over a tenth of the federal budget covers most government programs, like air traffic control, national parks and cancer research.
Typically, such spending has grown faster than inflation, but not nearly as fast as that for much bigger items whose costs are driving projections of a dangerously mounting debt — the military, the entitlement programs Medicare, Medicaid and Social Security, and interest on that debt.
In an article pondering the relative merits of spending cuts verus tax hikes for dealing with budget deficits, the Times presents an unexpected answer:
The key point of contention is whether the government should pay any part of its debts by raising revenue, or solely by spending less.
Industrialized nations have almost always adopted a combination of the two to cut debt, according to an International Monetary Fund survey last year. The fund, which examined 30 instances dating to the 1980s, found that nations on average closed half the gap with tax increases and half with spending cuts.
Both approaches cause immediate economic pain, but the dominant school of economic theory predicts that tax increases should be somewhat less painful to the nation’s economy. A $100 spending cut reduces economic activity by $100, while an equivalent tax hike will be paid partly from savings, so that spending is reduced by a smaller amount.
Recent studies, however, have found the opposite: Countries that rely primarily on spending cuts tend to experience less economic pain in the short term. Moreover, in some cases, the cuts seem to spur faster growth.
The monetary fund study reported that a 1 percent fiscal consolidation achieved primarily through tax increases reduced economic activity by 1.3 percent over two years, while an identical consolidation driven primarily by spending cuts reduced activity by 0.3 percent.
I have followed their link and can't find that conclusion. But that doesn't mean it's not there! Assistance is welcome.
Let's also note that both spending cuts and tax hikes are contractionary, at least per this study. One might hope that growth was the goal; I know the Times has an award-winning economist (and former Enron advisor) on the payroll who thinks so.
HMMM: This seems to be the study in question - it is Chapter 3 of the IMF October 2010 World Economic Outlook:
Will It Hurt? Macroeconomic Effects Of Fiscal Consolidation
...The following main results emerge from the analysis:
• Spending-based adjustments are less contractionary than tax-based adjustments.
In the case of tax-based programs, the effect of a fiscal consolidation of 1 percent of GDP on GDP is –1.3 percent after two years (Figure 3.5). In the case of spending-based programs, the effect is –0.3 percent after two years, and is not statistically significant.24 Similarly, while deficit cuts that rely on tax hikes raise the unemployment rate by about 0.6 percentage point, spending-based deficit cuts raise the unemployment rate only by about 0.2 percentage point (see Figure 3.5). However, as will be shown below, a key reason the costs of spending-based deficit cuts are relatively small is that they typically benefit from a large dose of monetary stimulus, as well as an expansion in exports.
The main authors of this chapter are Daniel Leigh (team leader), Pete Devries, Charles Freedman, Jaime Guajardo, Douglas Laxton, and Andrea Pescatori, with support from Murad Omoev, Min Kyu Song, and Jessie Yang.
I don't think that spending-based cuts can prompt the Fed to open the floodgates any wider, so this result may not be highly relevant to the US situation. Of course, one also wonders how it would apply to Euro-based countries, where the ECB is operating separately from any one country.
WASHINGTON — With talks on a big budget deal at a stalemate, Congressional leaders turned Friday to negotiating a fallback plan for raising the debt limit as President Obama and House Republicans intensified their efforts to win over public opinion for the long battle ahead.
and here is paragraph four:
Mr. Obama signaled that he would support the fallback plan, proposed by Senator Mitch McConnell of Kentucky, the Republican minority leader, which would allow for the debt limit to be raised and defer the bigger budget fight.
So per the Times, "Big Deal" Obama is now prepared to call his own bluff and sign a lesser bill. Eventually, they cite his specific phrasing:
Mr. Obama gave the plan his back-handed blessing as a last-gasp option for avoiding a government default. “It is constructive to say that if Washington operates as usual and can’t get anything done, let’s at least avert Armageddon,” he said.
"Averting Armageddon" may not be as powerful a slogan as "Hope and Change", but it works for me.
PILING ON: Paul Ryan is being used to explain to House Repubicans that Armageddon is not an option.
Erick Erickson at RedState explains that now is the time for House Republicans to stand up and be counted.
Megan McArdle explains that now is the time for them to stand down and avoid a default debacle.
Politico discusses some of the ideas floating around the House:
With the Aug. 2 deadline rapidly approaching, Republicans expect to spend the second meeting telling their leaders what they’d like to see pass alongside the debt-limit hike.
A plan to cut spending, put caps on future expenditures and pass a constitutional amendment to balance the budget is certain to come up, lawmakers said. Also on the unofficial agenda of lawmakers are several bills to force the president to prioritize payments if Congress doesn’t raise the debt ceiling.
In fact, the Cut, Cap and Balance Act is one that’s gaining steam on Capitol Hill. McConnell, who has become the subject of ire from the right in recent days, expressed support for the plan Thursday. His support could increase the likelihood that his legislation is coupled with the cut, cap and balance idea — or something like it — to attract enough support to avert an early-August catastrophe. GOP lawmakers hoped their leadership would put pressure on the president to bring along Democrats to pass their balanced-budget amendment. In its current form, most Democrats say they won’t vote for the legislation because it sets a supermajority threshold to raise taxes.
Somewhere I saw the suggestion that the House should pass the $1.5 trillion in spending cuts identifed in the Biden talks, raise the debt ceiling by a similar amount, and pass the chalice to the Senate. That would certainly carry us past the August deadline, and Senate Democrats could decide whether to hold the economy hostage or take the small deal; Obama could then be presented with the same decision.
Or, in Krauthammer's version, the House could pass a $500 billion increase with $500 billion in cuts - he claims that would carry us for five months. I do like this:
President Obama is demanding a big long-term budget deal. He won’t sign anything less, he warns, asking, “If not now, when?”
How about last December, when he ignored his own debt commission’s recommendations? How about February, when he presented a budget that increases debt by $10 trillion over the next decade? How about April, when he sought a debt-ceiling increase with zero debt reduction attached?
A foolish consistency is not our current President's hobgoblin.
David Brooks explains that too much of our health care budget is devoted to extending by a few months the lives of the desperately ill. Too be fair, he calls for a dramatic shift in cultural attitudes rather than government sponsored death panels. However, I can't resist the cheap shot and there is always the risk that today's cultural attitude is tomorrow's law.
This fiscal crisis is about many things, but one of them is our inability to face death — our willingness to spend our nation into bankruptcy to extend life for a few more sickly months.
The fiscal crisis is driven largely by health care costs. We have the illusion that in spending so much on health care we are radically improving the quality of our lives. We have the illusion that through advances in medical research we are in the process of eradicating deadly diseases. We have the barely suppressed hope that someday all this spending and innovation will produce something close to immortality.
But that’s not actually what we are buying. As Daniel Callahan and Sherwin B. Nuland point out in an essay in The New Republic called “The Quagmire,” our health care spending and innovation are not leading us toward a limitless extension of a good life.
S. Jay Olshansky, one of the leading experts on aging, argues that life expectancy is now leveling off. “We have arrived at a moment,” Callahan and Nuland conclude, “where we are making little headway in defeating various kinds of diseases. Instead, our main achievements today consist of devising ways to marginally extend the lives of the very sick.”
Others disagree with this pessimistic view of medical progress. But that phrase, “marginally extend the lives of the very sick,” should ring in the ears. Many of our budget problems spring from our quest to do that.
The fiscal implications are all around. A large share of our health care spending is devoted to ill patients in the last phases of life. This sort of spending is growing fast. Americans spent $91 billion caring for Alzheimer’s patients in 2005. By 2015, according to Callahan and Nuland, the cost of Alzheimer’s will rise to $189 billion and by 2050 it is projected to rise to $1 trillion annually — double what Medicare costs right now.
Obviously, we are never going to cut off Alzheimer’s patients and leave them out on a hillside. We are never coercively going to give up on the old and ailing. But it is hard to see us reducing health care inflation seriously unless people and their families are willing to do what Clendinen is doing — confront death and their obligations to the living.
The question is, just how obvious is it that we will never cut off Alzheimer's patients? And if eighty percent of people are pulling the plug on granny, will they continue to provide Medicare coverage for the twenty percent that hold out? That is money that could be spent on childhood nutrition programs or lifesaving medical research, just for example.
My stray thoughts:
1. Republicans have clearly found their bad cop; why has no Congressional Dem emerged to pound the table and battle for the left? Is placing Obama in that role shrewd politics, in a casting-against-type sort of way? Maybe - it saves Obama having to explain why, as notional leader of the Democrats, he can't simply command compliance from Pelosi, Reid et al.
2. Is anyone surprised that the talks are seemingly on the verge of collapse? Both sides need to show their respective bases they were ready and willing to fight fight fight for the right (or left). Once that point has been established, the voices of reason will be allowed to prevail. For Republicans, that means Boehner and McConnell; for Dems, Obama right now is both the bad cop and the would-be voice of reason. That is a bit awkward - Obama is very convincing in his peeved and petulant mode, but no one wants to watch that for long.
If I were a House Republican, I would do two things:
First, I protect grandma from Obama by banging out a bill emphasizing that the whole point of the Social Security Trust Fund is to give the Soc Sec Administration statutory room to borrow to make payments.
The debt ceiling is on total government debt, which includes both debt held by the public and Soc Sec trust fund bonds; when trust fund bonds are redeemed to make payments and the Treasury sells notes to the public to raise the cash to make those payment, net debt does not increase and the debt ceiling is not an obstacle. However, as an administrative matter, there seem to be technical timing glitches as to the receipt and investment of payroll taxes, the issuance of new public debt, and the redemption of trust fund bonds. One marvels that the Tax Cheat can't solve this, but the House can clarify the various rules to make sure granny gets paid.
Secondly, I would pass a nearly-clean debt limit increase, merely requiring the President to submit a budget plan that CBO can actually score. Then we can resume this scuffle in three or six months.
BONUS THOUGHT: Experimenting with a debt ceiling drama and possible Treasury default is not exactly small "c" conservative. Yes, there may be ways for a debacle to be avoided, but history does not provide a roadmap here.
The Voguer-in-Chief strikes a pose denouncing posturing. But can anyone figure this out?
So Cantor suggested a possible short-term extension in order to avoid default, with another vote next year.
The president -- frustrated -- said there would be no short term extensions. It would be bad for the economy, and resolving the deficit issue certainly won't be easier next year in the throes of the political season, he said.
If we can't do this now, we won't be able to do it next year, he said.
“This process is confirming what the American people think is the worst about Washington," the president said. "Everyone is more interested in posturing, political position and protecting their base than in solving problems.”
There needs to be a long-term debt extension, the president argued.
"This may bring my presidency down, but I will not yield on this,” he said.
Then he stood up.
"Enough is enough,” the president insisted. “We have to be willing to compromise. It shouldn't be about positioning and politics, and I'll see you all tomorrow."
Then he left the room.
Just what is it that is going to bring down his Presidency? I don't see how a short term clean debt ceiling extension could do that; presumably, he means the economic chaos likely to ensue after a debt default will bring down his Presidency.
So after threatening (implausibly) to throw Grandma off the train by holding up Social Security checks despite the clear intent of the Social Security Trust Fund, Obama is now holding the US economy hostage to his desire for a long term deal that lets him duck this problemduring an election year. Very dramatic, but where is our Mediator-in-Chief?
Tear out the front page - Team Obama has discovered that the problems in the Arab world are so complicated that even a speech or two can't solve them:
President Obama has failed to live up to the expectations he created in the Arab world, according to a new poll released by IBOPE Zogby International and the Arab American Institute Foundation. The poll also noted that most Arab countries view the U.S. less favorably today than they did during the last year of the Bush administration.
When President Bush left office, 9 percent of Egyptians had a favorable attitude towards the United States. After Barack Obama was elected, that number jumped to 30 percent. But today, only 5 percent of Egyptians surveyed said they have a favorable opinion of the United States and its president. Similar figures in Morocco, Jordan, and the United Arab Emirates illustrate that the initial optimism in the region has been eclipsed by a widespread sense of disappointment.
“President Obama did not create the problems, but he created the expectation that the problems would be solved,” said James Zogby, president of the Arab American Institute.
...But figures from six Arab nations tell the same story: People in the Arab world are frustrated by the lack of follow-up. “You get credit for trying after 100 days, but after two years you don’t get credit for trying; you get credit for producing, and the production isn’t there,” Zogby said.
“I’m not faulting the president. He didn’t get a magic wand when he took office,” Zogby said. “Instead, he got a shovel to get out of a deep hole. Every one of the issues that he's inherited has been more difficult than he or anyone else expected.”
The Palestinian problem is intractable? Who knew?!? Oppressive regimes across the region are out of touch with their own people? Who could have seen that coming?
Another expert explains that this is simply reality overtaking the Obama fantasy:
Aaron David Miller, a public policy scholar at the Woodrow Wilson Center, said that the results reflect a fundamental “clash of interests” between the United States and countries in the region, calling the results “a very old story, which Zogby has simply brought up to date.”
“The fact is that there is a huge disconnect between what we believe is the right approach in the region and what many of the people who live there believe is the right approach,” Miller said.
“The bottom line is that Arabs expect a fundamental change in policy, but that change will not be forthcoming. And therefore the story of the United States in this region is going to continue to be difficult, to say the least.”