It’s not as big a deal as health care, but it’s good to learn that the package of budget provisions approved for the “reconciliation” voting process includes Barack Obama’s plans to cut out the pointless subsidies to private student lenders. This is a no-brainer of a concept that will make a big difference to a lot of people.

But not only had Republicans decided to stand lockstep behind crony capitalism and higher taxes, but Ben Nelson (D-NE) was also against it apparently because one of the firms that benefits from the corruption is located in Nebraska. Consequently, the outlook for getting 60 votes was bleak. But as a reconciliation measure, the votes should be there. And as an application of reconciliation this should be relatively straightforward as deficit reduction has always been understood as the core purpose of reconciliation.

The orthodox conservative position at this point, it seems to me, is that waterboarding is not torture. Nor is having someone dangle from his shackled arms in a manner so painful as to prevent sleep for a period of days. What’s more, these non-torturous “harsh techniques” are highly effective at gathering intelligence. But if that’s true, and these are legal and effective means of securing reliable information, why are we doing so little of it?

After all, people doing organized crime investigations face a lot of challenges in terms of getting information from people. Maybe cops should do routine undercover drug buys, build a case against low level dealers, and then waterboard the guys they’ve arrested and move further up the food chain. Maybe waterboarding and “stress positions” should become routine treatment for battlefield detainees in Iraq and Afghanistan. Why not?

Well I would say because it’s wrong. And also because it’s very unlikely to work. And also because this is the mentality that gave us Abu Ghraib and abuses at Bagram and all kinds of other horrible problems throughout the system. But if you take the view that these “enhanced techniques” aren’t illegal torture, and that “enhanced techniques” are highly effective, and that systematized approval of torture doesn’t inevitably lead to abuse, then why not?

What with Emmanuel Saez winning prestigious awards and all, I thought the world might like to know about some of his policy-relevant research. Thus, a consideration of “The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review” with Joel Slemrod and Seth Giertz. The paper is substantially concerned with methodological issues many of which are over my head, so I’ll leave that aside. But they reach the following conclusions.

First, they report that there’s little support for the idea that increases in marginal tax rates harm the economy but reducing people’s incentives to work. Studies, in other words, show low levels of labor supply elasticity with respect to marginal tax rates. But they observe that other forms of economic distortion are possible. And you can get a comprehensive look at them by looking at the comprehensive elasticity of taxable income.

In the US context, there seems to be a fair amount of such elasticity. And the elasticity is concentrated among taxpayers who itemize their deductions, and especially among high-income taxpayers. In part this reflects people shifting their income in time (for example, people filling out 1992 tax forms in early 1993 responded to Bill Clinton’s election in apparent anticipation of higher taxes in the near future by shifting income into 1992) and in part it reflects deduction-seeking behavior. It also seems to be the case that in countries where fewer deductions are available (Canada, for example) elasticity is lower.

The upshot of this is mostly that this entire line of inquiry is not quite as promising for policy analysis as it once appeared (“One attraction of the ETI concept—that it is a sufficient statistic for welfare analysis and therefore one need not inquire into the anatomy of behavioral response—has proven to be overstated”) since the consequences of a change in ETI for welfare is going to depend on where the money goes.

One fairly clear policy implication of this for the modern-day American context, however, is that if you’re trying to raise some extra revenue from wealthy taxpayers it’s probably better to do that by curbing deductions than by raising rates. Among other things, curbing deductions will make it easier to raise rates in an efficient manner down the road. Similarly, there seems to be a fair chance that growth could be boosted significantly by a broad tax reform that eliminates loopholes and lowers rates.

The pseudonymous “Henry Clay” writes about the problems of Flint, Michigan where the population has shrunk to just above half its 1965 size, putting large burdens on a city government to provide services to semi-populated areas:

Flint is composed of 75 neighborhoods encompassing 34 square miles. The cost to the city of policing, removing refuse, and maintaining streets and public land in vast and often empty neighborhoods is substantial, siphoning off precious tax revenue that could go toward more productive ends.

No doubt, abandoned neighborhoods in parts of Wilmington, Newark, Detroit, Rochester, Cleveland, New Haven, Hartford, and Baltimore are a similar drain on resources.

He proposes that we need better policies to manage city shrinkage. As far as Flint is concerned, I think that’s correct. We could use some way to move people around, so that the population is re-compacted and the outskirts of the city put to some other use (urban agriculture?) instead of having lots of people live on blocks that are half-full of vacant buildings.

But we should be careful about generalizing this too much. Baltimore is a troubled city in many ways. And its population has shrunk considerably from off its peak. But Baltimore is embedded in a very different geographic context. Maryland is a wealthy state, and the Baltimore metropolitan area has been growing at a decent clip. The city is close to other large cities such as Washington and Philadelphia, and it’s located in the densely populated northeast corridor.

Which is to say that if conditions were better in Baltimore—if the crime rate were lower, or the school system produced better results—that people would probably gladly occupy the vacant space. Plenty of people live near Baltimore and, recession aside, there are plenty of jobs in the general vicinity of Baltimore. Indeed, over the past few years population in Baltimore has already been ticking up. Flint, by contrast, is embedded in a state and a broader region that are plagued with economic problems. It’s very likely that in the short term the whole state of Michigan will be losing population and that many of the state’s jobs will vanish. So even if you did make conditions in Flint better, you probably couldn’t see much in the way of net population growth.

To me, those different circumstances imply very different policies. Flint needs help executing a plan of managed shrinkage to turn it from a city of 200,000 to a city of 100,000 thousand without being full of rotting, vacant structures. Baltimore needs help executing a plan to build better transportation links between Baltimore neighborhoods and the rest of the region, and to improving policing and schools, so as to rebuild its population to something closer to its historical levels.

Maybe this business about Jay Bybee feeling bad about what he’s done in terms of putting in place a brutal system of torture is even accurate. If he really does feel remorse, it seems like the appropriate course of action would be for him to resign from the federal bench and go public with everything he knows about the situation.

And if he doesn’t want to do that, congress should impeach and remove him. If his own friends won’t bother to deny that what he did was wrong, then what’s the case for not removing him?