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Alyssa

Overheard With Stephen Colbert at the FEC

By Alyssa Rosenberg on May 13, 2011 at 8:14 pm

At Stephen Colbert’s stop at the Federal Election Commission today, I had the same problem that I usually have at rock concerts, which is that I’m short and have trouble hearing over ambient noise, so I mostly got a look at people in bear masks, and head scarves, and I’m With Coco t-shirts, carrying their copies of I Am America and waving Sanity/Fear frisbees. Fortunately, we have tall interns at the Center for American Progress, and one of them was kind enough to shoot video of Colbert’s speech for me:

Colbert’s speech was pretty standard “Citizens United rules!” parody. It was the kind of crowd that showed up at 4 in the afternoon on Friday because they named their cat Stephen, or because they have a panda suit around for occasions like this, or because DC offices are starting to slouch towards summer hours and why not, right? The best joke in the crowd was probably the person near me who deadpanned “This isn’t the Ron Paul rally?” only to be met with a reply of “This isn’t the Lou Dobbs show.” It was fine, but going on the president’s house and affirming before the nation that he’s a mockery is a stronger comedic speaking of truth to power than asking people to show up and give you money.

Economy

Michigan Approves Bill That Cuts Corporate Taxes By $1.7 Billion, Raises Taxes On Low-Income Families

By Pat Garofalo on May 13, 2011 at 8:00 pm

Gov. Rick Snyder (R-MI)

Conservatives in several states, as we’ve been documenting, have moved in recent months to reduce their state corporate taxes at the same time that they’ve proposed raising taxes on low-income families and cutting services upon which their most vulnerable citizens depend. Last week, Gov. Rick Scott (R-FL) lost his fight to eliminate Florida’s corporate income tax, in the highest-profile defeat the corporate tax-cutters have suffered yet.

However, Gov. Rick Snyder (R-MI) has been far more successful in getting his tax package through. Yesterday, in fact, the Michigan legislature approved Snyder’s plan, with some slight modifications, by narrow margins in both the state House and state Senate:

For months, Governor Rick Snyder has been trying desperately to enact massive business tax cuts paid for with new taxes on pension income and the elimination of the Earned Income Tax Credit (EITC). Unfortunately, a modified version of Snyder’s plan passed both houses of the state legislature yesterday and is now on its way to the Governor’s desk, where it will soon be signed into law…In the end, the most notable change to occur in the Senate was the reintroduction of the EITC, set at a level equal to 6 percent of the federal credit. Given that Michigan’s current EITC is equal to 20 percent of the federal credit, this change will still result in a steep tax hike on low-income families.

This amounts to an 86 percent cut in the state’s corporate income tax, exempting nearly 100,000 businesses from paying any corporate income tax at all, combined with a two-thirds reduction in the state’s Earned Income Tax Credit (which goes to benefit low-income families). (Snyder originally wanted to eliminate the state’s EITC entirely.) As state Sen. Rebekah Warren (D) said, the plan represents a “significant tax shift” from business to those “who are the least among us.”

Adding insult to injury, there’s little guarantee that Snyder’s corporate tax cut will lead to job creation. Snyder himself confessed that “I can’t guarantee results.” State Sen. Jack Brandenburg (R) added that “there’s no guarantee that the tax cuts for businesses will generate a lot more jobs.” “The results are likely to be very disappointing,” said Timothy Bartik, senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan.

Health

The Essential Contradiction In Mitt Romney’s Health Care Proposal

By Igor Volsky on May 13, 2011 at 7:10 pm

In yesterday’s Power Point presentation, Mitt Romney argued that each state should have the right to develop its own health care plan and promised to “restore to the states the responsibility and the resources to care for their own poor, their own uninsured, and their own chronically ill.” “States of course will experiment and learn from one another and they’ll have flexibility to deal with the uninsured in the way they think is best,” he said.

But he also introduced the idea of allowing insurers to sell policies across state line, a concept that would allow companies to circumvent state consumer protections and regulations and essentially undermine state powers. As Aaron Carroll explains:

His Massachusetts plan would fail completely if residents of that state could purchase plans from other states, according to other regulations. If New York wants to set community ratings (as should be their right by Gov. Romney’s former argument), then allowing healthy people to buy policies from Texas where no such regulations exist (as should be their right by Gov. Romney’s latter argument), causes New York to fail.

Letting people buy policies across state lines means that states will be regulated by other states – likely the ones with the least restrictions – instead of the federal government. But they won’t be “laboratories” or have real power.

In other words, it’s the same thing that happened after a pair of Supreme Court decisions deregulated the banking industry: credit card companies relocated to states with no interest rate caps and charged what they wanted to borrowers in states with interest rate limits. That’s why all of your credit cards are from Delaware or South Dakota and why companies have used pricing practices that local laws prohibit.

Health

Santorum’s Instant Flip-Flop On ‘Mediscare’

By Igor Volsky on May 13, 2011 at 6:20 pm

ThinkProgress filed this report from Nashua, New Hampshire.

On Tuesday, 42 freshmen Republican members of Congress — who were largely elected by misrepresenting the Affordable Care Act and its effects on the Medicare program — sent a letter urging President Obama to abandon so-called “Mediscare” tactics against Rep. Paul Ryan’s (R-WI) budget. “We ask that you stand above partisanship, condemn these disingenuous attacks and work with Congress to reform spending on entitlement programs,” reads the letter. Democrats have argued that Ryan’s budget would essentially end the program for future retirees, who would be forced to purchase coverage from private insurers.

Last night, speaking to the Nashua Republican City Committee in Nashua, New Hampshire, potential presidential candidate Rick Santorum (R-PA) took the ‘Mediscare’ argument a step further, sarcastically mocking Democrats for claiming that Ryan’s plan would kill Medicare before mischaracterizing the Affordable Care Act as a “government takeover”:

- SANTORUM SAYS DEMOCRATS SCARE SENIORS: “Listen to their response to Paul Ryan’s budget. ‘Oh! Seniors! Seniors! Vouchers! Oh my goodness! Seniors are going to be thrown out on the streets, they’re not going to be able to get health care! All we’re talking about is instead of a government-run health care system, giving seniors the right to go out and buy insurance by themselves.”

- SANTORUM SCARES SENIORS: “Oh no, we can’t trust seniors. No, no we can’t do that. We have to have Obamacare. Why? Because we can’t trust people to go out and provide for their own health care. We have to have the government tell you what health care you have, what insurance, what markets, everything. Very prescriptive.”

Watch it:

In reality, while the Ryan plan would end the traditional Medicare program for future seniors beginning in 2022 and provide them with “premium support” that would not keep up with health care costs, the Congressional Budget Office (CBO) predicts that far from the government “telling” Americans what they must do, most families will continue receiving their coverage from their employers while the uninsured will have a choice of regulated insurers from the state-based exchanges.

As Paul Krugman notes in today’s column, unlike the GOP, “the Democrats aren’t engaging in scare tactics, they’re simply telling the truth. Policy details aside, the G.O.P.’s rigid anti-tax position also makes it, necessarily, the enemy of the senior-oriented programs that account for much of federal spending.”

Yglesias

Endgame

By Matthew Yglesias on May 13, 2011 at 6:15 pm

It seems no one has told you yet:

— By the same token, if Pharma developed drugs the way Boeing develops airplanes there’s only be nine kinds of medicine.

— Shakespeare or Batman.

— The future of policy analysis.

— I like Gandhi’s glasses.

— Yes, when you drastically cut federal health care spending disabled children suffer.

— Not only does health care spending do relatively little to improve health, but health status has relatively little little impact on health spending.

— Supersized humans.

Feeling nostalgic today so it’s Local H, “Back In The Day”.

Politics

Ron Paul: ‘Why Not?’ Abolish FEMA, Government Should Not ‘Take Care Of Us When We Do Dumb Things’

By Tanya Somanader on May 13, 2011 at 6:00 pm

This morning, Libertarian hero Rep. Ron Paul (R-TX) announced that he will join the motley GOP presidential field, marking his third run for the office. Offering further insight into his presidential sensibility, Paul told CNN host Wolf Blitzer today that he would do away with the Federal Emergency Management Agency (FEMA), even at a time of unprecedented need.

Viewing the agency as unconstitutional, Paul questioned why federal funds should pay to protect citizens from natural disasters and concluded, “It’s a moral hazard to say that government is always going to take care of us when we do dumb things“:

BLITZER: On the whole issue of FEMA, the Federal Emergency Management Agency, do you want to see that agency ended?

PAUL: Well, if you want to live in a free society, if you want to pay attention to the constitution, why not? I think it’s bad economics. I think it’s bad morality. And it’s bad constitutional law. Why should people like myself, who had, not too long ago, a house on the Gulf Coast and it’s – it’s expensive there and it’s risky and it’s dangerous. Why should somebody from the central part of the United States rebuild my house? Why shouldn’t I have to buy my own insurance and protect about the potential dangers? I mean it’s – it’s a moral hazard to say that government is always going to take care of us when we do dumb things. I’m trying to get people to not to dumb things. Besides, it’s not authorized in the constitution.

BLITZER: And if there’s a disaster, like flooding or – or an earthquake or Hurricane Katrina, what’s wrong with asking fellow Americans to help their – their – their fellow citizens?

PAUL: Nothing. And I think Americans are very, very generous and they have traditionally. The big problem is Americans are getting poor and they’re not able to voluntarily come to the rescue.But to coerce people, to ask them to help, that is fine and dandy. But when you bankrupt our country and nobody has a job and then they say, well, FEMA needs to bail out everybody, then all we’re doing is compounding our problems.

Watch it:

Paul’s brand of morality is particularly callous given the numerous natural disasters destroying Americans’ homes and livelihoods across the country right now, from floods to tornadoes to wildfire fires. Gov. Nathan Deal (R-GA) requested FEMA to respond to the devastating tornadoes that tore across the southern states, leaving at least 290 dead. Gov. Haley Barbour (R-MS) is telling Mississippians that are victims of disaster-level flooding to register with FEMA to receive federal aid.

After wildfires tore across Paul’s own state of Texas, Gov. Rick Perry (R-TX) pleaded for even more FEMA aid. Perry said that “the ‘severity and magnitude‘ of the fires was so great that FEMA should direct other federal agencies to step in and help run the fire-fighting effort in those counties.”

But apparently to Paul, Texans people are “dumb” and thus undeserving of assistance because they happen to be in the path of a natural disaster.

Security

CNN ‘Resident’ Psychiatrist: ‘We Have Spent $5 Trillion In The Past Decade Because Of Our Fear About 9/11′

By Ben Armbruster on May 13, 2011 at 5:30 pm

Since Osama bin Laden’s death, news reports have pointed to various analyses showing that the United States has spent trillions of dollars fighting wars and swelling the nation’s security apparatus because of the former al Qaeda leader. And on top of that, Bloomberg reported yesterday that the American taxpayer will be footing the bill for some time to come. Last night on CNN, psychiatrist Dr. Gail Saltz, whom host Eliot Spitzer called “our resident expert in all matters psychological,” identified a contributing factor to this enormous debt:

SALTZ: I would also say that we have to turn this around and think about how fear, which — I mean, they are afraid and that’s causing them to do some irrational things, but fear has also caused us to do some irrational things. So we were made very afraid about the terrorists, but if you think about the number people who died in 9/11, it is much smaller, say, than the number of people all the time in car accidents, in heart disease, in cancer. But we have spent $5 trillion in the past decade because of our fear about 9/11. Now that’s not a very rational thing to do.

Saltz also addressed the common proclivity for Americans to portray the struggle against al Qaeda as a “war” along with using the accompanying rhetoric. “Loud statements of, ‘We’re going to come get you and we’re going to humiliate you’ essentially only serve to form group dynamics to be tighter,” she said, adding that by disallowing al Qaida terrorists to engage in a “war” doesn’t leave them with a whole lot to do:

SALTZ: Essentially sitting in your safe house drinking tea and not having adventures is very boring. And that seems to be what makes terrorists disperse. To be honest, that is what makes them leave the group.

Watch it:

Yglesias

Eliminate Shortages Of Empty Space On Highways By Charging People For Occupying Space

By Matthew Yglesias on May 13, 2011 at 5:29 pm

Imagine a country where the government had a program to give people coffee on their way to work in the morning. The coffee costs $0, and the government also runs a much smaller program in select metro areas to partially defray the cost of orange juice. Would we be surprised to learn that this led to coffee shortages? To long lines for coffee? Of course not. Every once in a while Ben & Jerry’s does a “free ice cream cone day” and everyone understands that this, too, leads to long lines.

Meanwhile, here’s a New York Times article about the possible economic benefits of advanced data mining technologies:

But the biggest single consumer benefit, the study says, is going to come from time and fuel savings from location-based services — tapping into real-time traffic and weather data — that help drivers avoid congestion and suggest alternative routes. The location tracking, McKinsey says, will work either from drivers’ mobile phones or GPS systems in cars.

I wish everyone good luck with this. By the fundamental cause of traffic congestion is not mysterious. No highway is congested at 3 AM. That’s because very few people want to be on any highway at 3 AM. Something like 8:45 AM is different. There are lots of highways in America such that lots of people would like to be on them at 8:45 AM. At the same time, people also like to have money. If you charge people money for the right to occupy space on an in-demand highway, then there is some price such that the number of people who want to pay the price is low enough as to be consistent with a free flow of traffic. This will generate consumer surplus for fee-payers, and generate a substantial revenue stream for the government.

Politics

Sixth Circuit Gives The Thumbs Up To Federal Judge Who Belongs To Whites-Only Country Club

By Ian Millhiser on May 13, 2011 at 5:00 pm

Sixth Circuit Chief Judge Alice Batchelder

The Code of Conduct for United States Judges unambiguously states that “[a] judge should not hold membership in any organization that practices invidious discrimination on the basis of race, sex, religion, or national origin.” Nevertheless, a sharply divided Judicial Council of the Sixth U.S. Circuit Court of Appeals voted 10-8 to permit a federal bankruptcy judge to remain a member of a country club that has no women or African Americans as full-fledged members:

The Judicial Council, made up of circuit and district judges in the four-state 6th District, voted 10-8 last month to dismiss the complaint. The memorandum written by Chief Judge Alice Batchelder spends little time discussing the merits of the contention that the Belle Meade County Club discriminates, instead focusing on Paine’s unsuccessful campaign to diversify the club.

“The record clearly supports (the) finding that the judge complained of engaged in long and sincere efforts to integrate the club in question. In the majority’s view, those efforts preclude a finding that he has engaged in misconduct,” she wrote.

An opinion by Circuit Judge Eric Clay, one of four separate written dissents, calls the club’s discrimination blatant, the court’s investigation amateurish and the majority’s interpretation of the code strained. Cole pointed to a section of the conduct code that calls for a judge to resign from a club if it fails to end its discriminatory practices within two years.

Setting aside the obvious blight on the judiciary’s reputation for fairness caused by a judge’s membership in a segregated club, there is no way to square the majority’s decision with the plain language of the law. The Code of Conduct’s official commentary provides that a judge must resign “in all events within two years of the judge’s first learning of” a club’s discriminatory practices, but the bankruptcy judge in this case remained a member through fifteen years of unsuccessful efforts to diversify the club.

Moreover, Chief Judge Batchelder is hardly suited to issue pronouncements on judicial ethics in light of her own questionable relationship with her ethical obligations as a judge. Batchelder serves on the board of a notorious oil-industry funded “junkets for judges” organization that provides expense-paid trips to western resorts where the judges are instructed on how to decide cases by industry representatives, and she has repeatedly refused to resign from this board despite an opinion from the federal judiciary’s ethics committee saying that federal judges have an ethical duty not to serve on it.

Batchelder also refused to recuse from a case where the Ohio Republican Party sought to prevent as many as 200,000 registered voters from having their votes counted, even though her husband — the current GOP Speaker of the Ohio House — had an obvious interest in the case as a GOP candidate for reelection.

Disclosure: The author of this post clerked for one of the dissenting judges in this case from 2007-08.

Update

Some commenters said they were confused about which judge belonged to the segregated country club. Judge Paine belongs to the club. Judge Batchelder wrote the opinion saying that Paine is permitted to remain a member of the club.

Yglesias

New Research On “Structural” Unemployment

By Matthew Yglesias on May 13, 2011 at 4:44 pm

The summer of 2010 saw the release of some anomalous job opening data that led many people to opine that mass unemployment in the United States was largely a structural issue incapable of being remedied through demand-stimulation. This argument has never made any real sense. Minneapolis Fed President Narayana Kocherlakota calculated that absent structural factors unemployment would be around 6.5 percent rather than at 9.6 percent and said “it is hard to see how the Fed can do much to cure this problem.” The natural response has always been that the Fed should increase aggregate demand to reduce the unemployment rate by 1.5-2 percentage points. But now the data on which those analyses was based has been released and Mike Konczal shows that the revisions imply that structural unemployment estimates based on it were far too high.

We also have a new IMF working paper (PDF) from Jinzhu Chen, Prakash Kannan, Prakash Loungani and Bharat Trehan which estimates that structural unemployment accounts for a small share of total unemployment but a much larger slice of the long-term unemployment problem:

We provide cross-country evidence on the relative importance of cyclical and structural factors in explaining unemployment, including the sharp rise in U.S. long-term unemployment during the Great Recession of 2007-09. About 75% of the forecast error variance of unemployment is accounted for by cyclical factors—real GDP changes (Okun‘s Law), monetary and fiscal policies, and the uncertainty effects emphasized by Bloom (2009). Structural factors, which we measure using the dispersion of industry-level stock returns, account for the remaining 25 percent. For U.S. long-term unemployment the split between cyclical and structural factors is closer to 60-40, including during the Great Recession.

In neither case is complacency the right issue. It makes perfect sense to hypothesize that a large share of the long-term unemployed are being frozen out of employability for various reasons and even as we ought to be increasing aggregate demand we also ought to be responding to the special challenges posed by the long-term unemployed. That probably means something on housing and relocation, something in terms of retirement/disability policy for older folks, and a lot in terms of training and active labor market policies for younger people.

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