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April 18, 2005

Web Clippings--20050418

Web Clippings--20050418

What I would write about if time were infinite:

http://www.harrisinteractive.com/harris_poll/index.asp?PID=557: President's Job Ratings Fall to Lowest Point of His Presidency. Social Security seen as the top issue to address by U.S. adults. The last month has not been a good one for President Bush and the Republicans. Most people have opposed the President's proposals for reforming Social Security and most were unhappy with the positions taken by Republicans in the Terri Schiavo case. The result is that the president's job ratings have fallen to 44 percent positive, 56 percent negative, the worst numbers of his presidency, and a drop from 48 percent positive, 51 percent negative in February (and 50% positive, 49% negative last November). This is one of the results of a new Harris Poll of 1,010 U.S. adults surveyed by telephone by Harris Interactive® between April 5 and 10, 2005.... While Secretary of State Condoleezza Rice is not nearly as popular as her predecessor, Colin Powell, she is the only cabinet member currently enjoying positive ratings – by 54 to 39 percent...

http://www.washingtonmonthly.com/archives/individual/2005_04/006142.php: HEALTHCARE IN AMERICA.... This paper includes some survey data about how satisfied people are with their country's healthcare system (see Exhibit 1). The United States rates pretty low on this scale (14th out of 17 countries), but it turns out the survey includes something even more interesting: separate satisfaction ratings for the poor and the elderly (see Exhibit 3). It takes a bit of interpolation to extract all the numbers, but that's not hard to do. So with that in mind, here are the percentages of Americans who say they are "fairly or very satisfied" with their own health system: Poor: 45% Elderly: 61% Everyone else: 34%. This is pretty remarkable. First, the elderly in America, who are covered by a state-run national healthcare system (Medicare and Medicaid) are way more satisfied with their healthcare than everyone else. As it happens, the elderly in other countries also tend to report higher satisfaction levels than other people, but usually by just a few percentage points. In America, where the elderly are covered by a national system and others aren't, the elderly are more satisfied by a whopping 27 percentage points. Second, even the poor are more satisfied with their healthcare than the rest of us. The poor generally rely on a combination of Medicaid, emergency rooms, and free clinics for their healthcare, a system that's hard to beat for sheer inefficiency and appalling service. But even at that, the rest of us, who are mostly covered by employer-provided health insurance, are less satisfied than the poor....

http://ezraklein.typepad.com/blog/2005/04/keep_the_govern.html: Kevin does some digging and finds that the poor and the elderly -- the two groups that rely primarily on government-run program for their health care -- are way more satisfied than the rest of us. He finds this confusing, puzzling even. I think it's somewhat explained by an anecdote from The Choice. The authors are walking through an airport with John Breaux when an old woman runs up to him and says: "Senator, don't you dare let the government get its hands on my Medicare!" Without missing a beat, Breaux replies: "Don't worry madam, I won't." I think that about explains it. We've so fully demonized government-run health care that we won't even believe it can work when it already is. The totality of propaganda's triumph over not just the facts, but our subjective interpretation of the facts (i.e, how satisfied we are with our health care) is truly stunning. Ugh...

http://www.thecarpetbaggerreport.com/archives/3988.html: Martinez's Schiavo memo — the fallout. I was more or less prepared to move past the subject altogether, but Roll Call had an item today on Sen. Mel Martinez (R-Fla.) and the now-infamous Terri “great political issue” Schiavo memo. Most of the piece dealt with the fact that Martinez is facing some pressure from campaign advisors who are urging the freshman senator to make sweeping staff changes in the wake of the controversy. But the more interesting point dealt with just how isolated the Darling incident really was. Martinez's press secretary, Kerry Feehery, continues to insist that that Schiavo memo was written “unilaterally” by one aide. However, a Republican source close to the situation said the claim is “preposterous.” The source told [Roll Call] that he knows “for certain” that two other senior Martinez staffers helped Darling write the memo and circulate it to other Republican Senators. “Those three were really working it,” the source said. This seems far more realistic, in light of everything that's been reported, and suggests Martinez couldn't have handled this fiasco much worse. Indeed, his staff scapegoating never really made a lot of sense — a senator's point man on a national controversy prepared talking points and gave them to the lawmaker, who in turn shared them with another lawmaker. Several Senate offices later confirmed they received copies as well. And yet, Martinez insists Darling was some rogue memo-writer, writing up talking points without input or collaboration, and that no one but Darling even read the memo in advance? Moreover, the fact that a “Republican source close to the situation” is talking to Roll Call about this suggests there's some lingering anger towards Martinez for his role in making this mess happen. All, it appears, is not yet forgiven on the GOP side of the aisle....

http://economistsview.blogspot.com/2005/04/krugman-no-good-monetary-policy.html: Krugman: No Good Monetary Policy Options in a Hard Landing. I've been asking how the Fed should respond in a hard landing in recent posts and the first part of my answer to what the Fed should do in a hard landing is here. In his most recent column, Paul Krugman asks the same question: "In the 1970's soaring prices of oil and other commodities led to stagflation - a combination of high inflation and high unemployment, which left no good policy options.... We shouldn't overstate the case: we're not back to the economic misery of the 1970's. But the fact that we're already experiencing mild stagflation means that there will be no good options if something else goes wrong...." Thus, in a hard landing, Krugman says “there will be no good options.” But the Fed will need to do something. What should the Fed do in a hard landing? Raise rates? Lower rates? I believe a recession will put the brakes on inflation, and if underlying real factors are the cause of inflation, aggregate demand policy isn't an effective tool for overcoming such shocks. Thus, I would lower rates in response to a slowdown if that were possible...

http://news.ft.com/cms/s/8ed600c4-afe1-11d9-ab98-00000e2511c8,_i_rssPage=80fdaff6-cbe5-11d7-81c6-0820abe49a01.html: Global equities slide on growth and earnings fears. By Neil Dennis. Fears of slowing economic growth and first-quarter earnings falling shy of forecasts, drove global stocks sharply lower on Monday, with technology stocks and carmakers among the worst hit. In Asian trade, Tokyo's Nikkei 225 Average tumbled 3.8 per cent to 10,938.44, with steelmakers and consumer electronics groups leading the way lower on fears that exports to China may suffer from a slowdown there. Elsewhere in the region, Taiwan's Taiex index fell 2.9 per cent as chipmakers lost ground, and Seoul's Kospi shed 2.4 per cent. In Europe, as in Asia, stocks were taking the lead from Wall Street's performance last week, as the major US stock indicators ended at lows for the year. The Dow Jones Industrial Average shed 3.6 per cent over last week to end Friday at 10,087.51, falling a further 0.4 per cent to 10,052.56 in opening trade on Monday...

http://www.latimes.com/news/nationworld/nation/la-na-bolton16apr16,0,3939442.story?coll=la-home-nation: Republican Sen. Chuck Hagel of Nebraska signaled Friday that his support for the nomination of John R. Bolton as U.N. ambassador was wavering after new reports that Bolton ordered an intelligence analyst removed from his job. The analyst, a State Department employee who now works on Hagel's Senate staff, is the third intelligence analyst reported to have been threatened or intimidated by Bolton, who has served since 2001 as undersecretary of State for arms control and international security...

http://inteldump.powerblogs.com/posts/1113839905.shtml: Judging Gitmo Richard Serrano reports in the L.A. Times on a new report published by the Pentagon which is intended to rebut some of the criticism aimed at the 3-year-old U.S. military detention facility. In general, the criticism has taken on 3 tacks: 1) the facility there is unlawful as a matter of U.S. and international law; 2) the interrogators at Gitmo have committed myriad acts of abuse; and 3) Gitmo is undermining the war on terrorism by producing a lot of useless information and by inflaming Arab (and global) sentiment against the U.S. Mr. Serrano reports that the Pentagon wants to change at least one of these impressions — and argue that Gitmo has produced results: "The new report appears to buttress the military's claim that it should be allowed to run Camp Delta without outside intervention because the camp has become "the single best repository of Al Qaeda information." The declassified summary cites more than 4,000 interrogation reports and says that some indicated Al Qaeda operatives were pursuing chemical, biological and nuclear weapons. The summary does not elaborate on what that information is or how close the terrorist organization might be to getting such weapons..."

http://nationaljournal.com/: Stan Collender: April 15th is not just about income taxes; it is also an important deadline for the federal budget. This is the statutory deadline for the House and Senate to agree to the conference report on the congressional budget resolution. It is, therefore, the date by which the vast majority of big budget decisions are supposed to be made. The weeks after April 15 are for implementing the decisions the budget resolution embodies. That's not the case this year. Both houses of Congress have passed their own budget resolutions and negotiations between the two on a compromise version are continuing. But as it is currently being discussed, the fiscal 2006 budget resolution conference report is far more likely to be an agreement to disagree than a series of decisions the House and Senate are committed to abiding by for the rest of the year. And even that will be the case only if the House and Senate actually agree on something. Weeks after the negotiations began, even a fig-leaf deal is proving to be elusive.

http://www.markarkleiman.com/archives/microeconomics_and_policy_analysis_/2005/04/matt_yglesias_paris_hilton_the_spirit_of_76_and_section_6166_of_the_internal_revenue_code.php: Matt Yglesias is entirely right to prefer inheritance taxes to estate taxes. Conceptually, an inheritance tax puts the focus on the recipient of money he or she didn't earn, rather than on the decedent, who having faced one inevitability arguably shouldn't be faced with another. "Paris Hilton" or no, there's a strong, and perhaps politically potent, argument to be made that it's just plain wrong for people to be taxed on the money they earn but not on the money that's given to them. Practically, an inheritance tax has two big advantages: It encourages breaking up huge fortunes, thus reducing the problem of hereditary plutocracy, and it treats those who inherit as part of large families equitably compared to those who inherit equal amounts as part of small families. But Matt is wrong, it seems to me, to scoff at the small business/family farm issue. An economist may view ownership of an enterprise as merely a form of wealth like any other, but someone whose family has owned the local hardware store or newspaper for four generations may have an attachment to the business, and the people who work in it, that isn't at all the same thing as just being rich. That attachment may even have some social value. But Matt is even more wrong to argue about whether it's all right for the estate tax to orce the breakup of family businesses and farms, when in fact it does no such thing. As Stuart Levine explains, Section 6166 of the Internal Revenue Code allows estate taxes on closely-held businesses to be spread out over fourteen years at very generous rates of interest: currently under 3%, which is much lower than the rate on student loans, for example. So the "family business" question is a mere red herring, which a better-trained newshound than Matt would not have allowed to lead him away from the trail. The repeal of the estate tax, unless it's replaced by an inheritance tax, is a profoundly anti-democratic and anti-meritocratic move, taking us one step closer to reproducing the regime of inherited status against which the generation of 1776 fought and won a revolution. Being wealthy and important because of your ancestors is European; making it on your own is American...

http://www.latimes.com/news/printedition/front/la-na-bush16apr16,1,6276858.story?coll=la-headlines-frontpage&ctrack=2&cset=true: President Bush came to Ohio on Friday to highlight a state retirement savings system that he said showed that Americans would be better off handling their own old-age investments through personal accounts than relying on traditional Social Security. But that state's version of personal accounts has attracted few takers among the people eligible — Ohio's 750,000 public employees. And records show that the most widely chosen version of the state-offered accounts has racked up a five-year earning record of 1.86%, about the same return that the president says Social Security produces. "Boy, does he have a hard sell ahead of him in using Ohio as his example," said Keith Brainard, research director of the National Assn. of State Retirement Directors, which represents virtually all of the nation's public employee pension plans...

http://www.washingtonpost.com/ac2/wp-dyn/A57535-2005Apr15?language=printer: Jonathan Weisman: In the same week that the House voted to permanently repeal the estate tax, 44 House Republicans broke with their leaders to demand that as much as $20 billion in Medicaid savings be stricken from the budget. The twin moves raise new questions about Congress's willingness to tackle the budget deficit. And they came just as the World Bank and the International Monetary Fund are to convene their annual meetings this weekend. The Bush administration was to use the meetings to tell the world's finance ministers and central bankers that Washington is serious about its red ink. "There was a lot of talk at the beginning of this year that the switch to big-budget conservatism was finally over," said Maya MacGuineas, executive director of the Committee for a Responsible Federal Budget. "But it looks like Congress may not have the stomach."..

http://angrybear.blogspot.com/2005/04/health-care-in-us-and-world-part-ii.html: Health Care in The U.S. And The World, Part II: What do we spend the money on?. In Part I of this series, I showed that the US spends a lot more money on health care – now over 50% more as a percent of GDP than France and the other industrialized nations. Additionally, the U.S. is the only country in my data for which less than half of health care spending is publicly financed, with the balance coming primarily from employers and out-of-pocket. But what do we spend the extra 5% of GDP? It's apparently not doctors. While the number of doctors in the US has increased steadily, we still rank low in terms of doctors per capita...

http://ideas.repec.org/a/bla/kyklos/v51y1998i3p379-97.html: Who Benefits from Progress? Tabarrok, Alexander Cowen, Tyler: Progress is better for some consumers than for others. The authors analyze the factors governing how much a consumer gains from progress, defined as price declines and the introduction of new and improved products, and they show how these factors vary systematically across consumer groups. Recent economic developments have brought increasing disagreement about the performance of the American and European economies. Economists typically try to account for these dual and contrasting perspectives by citing the increasing gap between the wages of skilled and unskilled labor. The authors examine differential consumer gains as another factor which may account for the contrasting perspectives...

http://www.washingtonmonthly.com/archives/individual/2005_04/006140.php: THE BOY WHO CRIED MARTIN WOLF....I'm enjoying Martin Wolf's Why Globalization Works, and I recommend that all good Americans read the book. Most Democrats and Republicans will find much to agree or disagree with because Wolf's policy preferences don't map well to the American political scene: he's an old-school British liberal internationalist.... Let me cherry-pick this part of the book: "Nineteenth-century nationalism coincided with a resurgence, in the last three decades of that century, of pre-modern imperialistic and protectionist ideas. The aim of countries became to create a protected sphere of their own. From the point of view of promoting prosperity, these shifts were an error. This is particularly true of the late nineteenth-century scramble for new empires in Africa. But, worse than that, the emergence of protectionism and imperialism changes the calculus of international relations: suddenly, being small and weak begins to look rather a bad choice, because one might be locked out of opportunities for peaceful exchange and prosperity. In a protectionist world, countries will try to become parts of trading blocs or create empires. Imperialism and protectionism are, for this reason, self-fulfilling prophecies--they create the dog-eat-dog world their proponents believe justifies them. It is for this reason that, in recreating the liberal world order, the Americans, led by Franklin Delano Roosevelt's long-serving secretary of state Cordell Hull, placed great weight on the principle of non-discrimination, alongside that of liberalization. This was an attempt to leave behind the world of hostile trading blocs. It is an understanding that the United States now seems to have lost."...

http://battlepanda.blogspot.com/2005/04/why-are-our-intro-to-econ-classes.html: But this conversation haunted me. How is it possible for a guy like RJ to, for all intents and purposes, not believe in economics? He certainly is intelligent, and more importantly intellectually curious. He was even curious enough about economics at one point to take an intro to Econ class at college. Amherst College, which is among the best schools in this country, if I may say so myself. Yet despite the fact that he's a bright guy ready and willing to learn more about economics in one of the country's elite institutions, the class did not nurture his nascent interest. In fact, this introduction turned him against the whole subject so decisively that his has closed his mind. Yet I really shouldn't have been so surprised, I took the same class and it wasn't so very long ago when I was every bit as skeptical about the science of economics as RJ, if not quite as virulently so. The ironic thing is, this class, Econ 11, was tailored precisely to function as a freestanding introductions to economics...

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2005/04/the_equity_prem.html: One of the nicest puzzles in economics is the equity premium puzzle (pdf). This is that economic theory says that shares should out-perform bonds by less than half a percentage point a year, whilst in fact they've out-performed by 4.6 per cent a year in the US since 1900. There have been lots of attempts to explain this. Some say its because investors are irrational and under-estimate the long-term safety of equities. Others say  the US simply got lucky (pdf), and that true returns on all equities are in fact much lower than US data suggests. And others say that it's because we are creatures of habit (pdf), and so fear even small falls in their spending. All good efforts. But now there's another theory - women don't fancy blokes who take risks. This should create a high excess return on equities, simply by increasing the penalty attached to risk-seeking behaviour. Even this guy didn't think of that one...

http://ezraklein.typepad.com/blog/2005/04/always_low_wage.html: Always Low Wages. Always. Saying Wal-Mart is antiunion is slightly less shocking than calling Tom DeLay unethical, or noting that I have an elbow*. Nothing could be better known. But I think most are confused, like I was for a long time, over how Wal-Mart can actually stop the unions. So one day, I called up an organizer buddy of mine and asked. The answer was so simple that it barely qualified as an answer at all. If workers unionize, or threaten to unionize, or feint at unionizing, or think about unionizing, or see a union hall on their way to work one day, Wal-Mart shuts down the store...

http://ezraklein.typepad.com/blog/2005/04/the_meansbased_.html: The Means-Based President. While reading some post-mortems of the just passed Screw The Poor Bankruptcy Bill, I came across this sneaky little stat: "With 90% of bankruptcies attributable to job loss, divorce or excessive medical bills, it is clear that better economic policies, social services and affordable healthcare is the way to reduce bankruptcy," said Rep. Lynn Woolsey (D-Petaluma). Most of us already knew that about half of bankruptcies are precipitated by crushing medical emergency, though I'd no idea such innocuous and understandable trials as job loss and divorce made up for the rest. But isn't it weird that the answer to bankruptcy from medical bills and job loss was to make it, well, harder to declare bankruptcy? If the Bush administration had wanted to end bankruptcies, they could have offered federal reinsurance for catastrophic medical costs. You would've ended half the bankruptcies right there...

http://www.tompaine.com/articles/the_late_great_income_tax.php?dateid=20050415: The cornerstone of the U.S. system is the taxation of income and estates. Income is the broadest conceivable base for taxation, permitting the lowest possible rate for a given amount of revenue. (Estate taxation is an indirect means of taxing income that has never been taxed.) The high point of income tax reform was the base-broadening achieved under the Tax Reform Act of 1986. Since then, of course we have seen backsliding, in the form of a blizzard of new deductions, credits and exclusions. As we speak, the Estate and Gift Tax is under assault in Congress. The most infamous of the post-'86 reforms is the increasing favor afforded to income received by the wealthiest Americans—capital gains and dividends. Legislation to this effect was signed by Bill Clinton in 1997, and later by George W. Bush, seemingly once a month. This trend marks the evolution of the income tax into a wage tax, shifting, as John Edwards says, the federal tax burden from wealth to work. Even so, the income tax is still progressive, just not as much as it used to be. The average effective rate of the tax is 8.6 percent, according to the Brookings/Urban Institute Tax Policy Center but the rates vary enormously by income class.... the bottom 40 percent of the population, the average rate of the individual income tax is negative—taxpayers get more back from refundable credits than they pay in. For the middle 20 percent, the rate is just 3.3 percent, and for the fourth quintile it's 6.3 percent. Pity the poor Republicans—it's the top quintile that pays 86 percent of the income tax (at an average rate of 12.2 percent of income)...

http://www.economist.com/research/articlesBySubject/PrinterFriendly.cfm?Story_ID=3861190&subjectID=348918: The flat-tax revolution. Fine in theory, but it will never happen. Oh really? THE more complicated a country's tax system becomes, the easier it is for governments to make it more complicated still, in an accelerating process of proliferating insanity—until, perhaps, a limit of madness is reached and a spasm of radical simplification is demanded. In 2005, many of the world's rich countries seem far along this curve. The United States, which last simplified its tax code in 1986, and which spent the next two decades feverishly unsimplifying it, may soon be coming to a point of renewed fiscal catharsis. Other rich countries, with a tolerance for tax-code sclerosis even greater than America's, may not be so far behind. Revenue must be raised, of course. But is there no realistic alternative to tax codes which, as they discharge that sad but necessary function, squander resources on an epic scale and grind the spirit of the helpless taxpayer as well? The answer is yes: there is indeed an alternative, and experience is proving that it is an eminently realistic one. The experiment started in a small way in 1994, when Estonia became the first country in Europe to introduce a “flat tax” on personal and corporate income. Income is taxed at a single uniform rate of 26%: no schedule of rates, no deductions. The economy has flourished. Others followed: first, Latvia and Lithuania, Estonia's Baltic neighbours; later Russia (with a rate of 13% on personal income), then Slovakia (19% on personal and corporate income). One of Poland's centre-right opposition parties is campaigning for a similar code (with a rate of 15%). So far eight countries have followed Estonia's example (see article). An old idea that for decades elicited the response, “Fine in theory, just not practical in the real world,” seems to be working as well in practice as it does on the blackboard....

http://www.marxists.org/archive/lenin/works/1918/may/18b.htm: V. I. Lenin, "Report To The All-Russia Congress Of Representatives Of Financial Departments Of Soviets," May 18, 1918: The country's financial situation is critical, The problem of transforming the country on socialist lines offers many difficulties that al times appear insurmountable, but no matter how arduous the work that at every step meets with the resistance of the petty-bourgeoisie, the profiteers and propertied classes, I think we shall have to carry it out.... We must effect sound financial reforms at all costs, and we must remember that any radical reforms will he doomed to failure unless our financial policy is successful.... The second task confronting us is the correct organisation of a progressive income and property tax. You know that all socialists are against indirect taxation because the only correct tax from the socialist point of view is the progressive income and property tax.... We assume that we shall have to go over to the monthly collection of the income tax. The section of the population receiving its income from the state treasury is increasing, and measures must be taken to collect the income tax from these people by stopping it out of their wages. All income and earnings, without exception, must be subject to income tax; the work of the printing press that has so far been practiced may be justified as a temporary measure, but it must give place to a progressive income and property tax that is collected at very frequent intervals...

http://www.washingtonmonthly.com/archives/individual/2005_04/006143.php: REVIEWING THE ECONOMIST....John Holbo reviews the Economist: "Every major story has either the 'there are dark clouds on the horizon but there's a silver lining' structure; or 'it looks like a golden age, but there are dark clouds of the horizon' structure. It's comforting to know that, however bad it gets, there will always only be those two major stories...." He's right, but it's actually worse than he thinks. Business speakers (and others, I assume) learn early that the proper structure for a presentation is "bad news first, then good." The idea is that you want your audience to leave the room filled with determination and optimism. The Economist does the same thing. But here's the catch: what counts as good news and what counts as bad? In a business presentation, that's pretty easy (revenues down = bad, new product launching soon = good). For the Economist, though, good news is whatever ideological position they prefer. So while it may look like they publish two different kinds of stores, they actually publish only one: bad news followed by good. If you want to know the editorial line on any particular issue, just read the second half of a story dedicated to it. That's where you'll find it...

Posted by DeLong at April 18, 2005 10:20 PM