J. Bradford DeLong's Blog, page 384

Live from the Orange-Haired Baboon Cage: David Corn: Top ...

Live from the Orange-Haired Baboon Cage: David Corn: Top Republican Lawyer: No One���s Asking to Be on Trump���s Legal Team: "Ted Olson turned down a chance to represent the president. He says none of his colleagues have asked for a referral...

...I asked Olson about being recruited for Trump���s squad. He rolled his eyes, suggesting that this was never going to happen and that it was not just a matter of conflicts.... So this didn���t get too far? I queried. Olson shrugged in an I���m-not-getting-into-details way. ���Who knows how these trial balloons happen?��� he said, in a manner that definitely suggested he knows how they happen. He then joked, ���Joe [diGenova] lasted longer. At least two days.���

So is Trump going to have trouble finding attorneys? Olson shrugged again. ���Let me ask this a different way,��� I said. ���In the last few days has any lawyer come up to you and said, ���I���m willing to work for Trump?'���

Without hesitation, Olson said, ���No.��� Not at all? ���Not at all.��� Washington, I noted, is full of Republican lawyers who generally do not mind being in the middle of headline-generating scandals and earning a bit of notice. Olson laughed: ���That���s right.��� And not one of them had contacted him to say he or she was willing to sign up? ���No,��� he repeated. Trump seems to believe he���s a hot ticket for DC���s top legal talent. The word on the street is different. ..

Professor DeLong Says Tax Bill Has 70% Chance of Passing | Bloomberg Daybreak Asia 2017-12-01

Professor DeLong Says Tax Bill Has 70% Chance of Passing | Bloomberg Daybreak Asia 2017-12-01

Professor DeLong Says Tax Bill Has 70% Chance of Passing: From 2017-12-01: Not a transcript but much more what I wish I had said���that is, heavily edited and revised to increase clarity, decrease stupidity, and file a little bit of the ragged stream-of-consciousness rough edges off.

Nevertheless, holds up very nicely, no? (BTW, this is my angry face):

There are still many potential stumbling blocks in the way of the high-end tax cut bill currently inching its way through the senate. The current issue is the so-called "trigger"���the provision of the bill that would eliminate the tax cuts if the federal deficit turned out to come in high. Apparently the trigger has failed the so-called "Byrd Bath" as the Parliamentarian removes pieces of the bill that do not qualify for the special un-filibusterable Reconciliation process. The "trigger" has been removed from the bill. The bill's proponents are frantically trying to figure things on the floor���frantically trying to come up with a substitute that would be acceptable both to the small number of members of the Republican congress who are more deficit hawkish and also to the larger number of members in the Republican caucus who are more supply-side optimistic���or, I would say, "crazy".

I think the bill still has a 70% chance of passing. Certainly the stock market here in the United States appears to be fixing its odds at about a 70% chance of passing.

I, however, would like to step back and take a broader view. What is even crazier than Republican legislators believing this particular high-end tax cut will effectively pay for itself is the fact that we have arrived at this point at all. There are some 12 Democratic senators would gladly sign on to a corporate tax cut that broadened the base and lowered the rates. They would gladly sign on���provided they could be convinced that this was not just another shift in the income distribution from the non-rich toward the rich and that it would significantly strengthen the economy. And that test could be passed: I and many other economists not indentured to various Republican political masters see lots of opportunity to broaden the base, lower the rates, and strengthen the economy via real tax reform.

Yet, rather than take that path, McConnell and Ryan are moving forward with this Republican only thing that truly is down to the wire.

And as they get down to the wire, the potential benefits to the economy as a whole are evaporating. All that is left is a shift in the income distribution away from the non-rich to the rich. And even that is badly drafted: it is starting to look like incentives are going to be further disrupted and distorted so that there may not be growth benefits but rather growth harm to the economy as a whole.

The expensing provision���the provision by which companies get to deduct their investment expenditures from their tax base���expires. And it expires after five years. That means that McConnell and Ryan and Trump are trying to give corporations a big incentive to crowd a whole bunch of their investment spending in the five-year near future while that window is open. Then, after the window closes, they have an incentive to cut back on investment spending. That could well produce a small boom and then a small bust in the economy: stronger investment from 2018-2022, and then weaker investment starting in 2023. That go-stop is unproductive, and a good way to weaken the economy.

Republicans say that when the time comes around for expensing to expire, they will simply renew it. But that would require they maintain control of all three potential blockers���House, Senate, and Presidency. And if we have learned any lessons from ObamaCare and the Bush II tax cuts for the rich, it is that bills passed through Reconciliation along party-line votes are very unstable as policies.

Yet there are at least 12 Democrats in the senate in line to support corporate tax reform that would genuinely broaden the base, lower the rates, and provide a significant plus to the economy as a whole. Yes, such a deal would have gotten less money to the superrich who are now the key financial support base of the American economy���perhaps half as much money. But that money would be much more stable. And the chances of Republicans being able to run in 2020 on the basis of good economic stewardship would be noticeably higher.

As it is���the Joint Committee on Taxation's report is now out, and we are talking about real GDP growth over the next decade of only 0.08%. And that is for how much is produced in the United States. For how much flows in income to Americans, it is at best a zer, more likely a small negative as a bunch of the tax cut goes to foreign investors from day 1.

I am flummoxed.

At is not as though this issue appeared by surprise. It is not as though they had to put a critical proposal today in a month without any staff preparation on options, alternatives, benefits, and costs. They had years to prepare. Yet these idiots really do seem to have done their homework in the bus on the way to the school.

A recession? Probably not. There is a significant minus to GDP growth coming in five years from the expiration of expensing. There is the risk that each time you load on the national debt a little more you increase potential financial instability. That does add a little bit to recessionary dangers. But interest rates are still extremely low . Slower growth rather than any serious risk of a session follow from this.

Should-Read: I agree with Joe Weisenthal. Certainly I did...

Should-Read: I agree with Joe Weisenthal. Certainly I did not have incomprehensible optimism back in 2009/2010. And to the extent I was hopeful, the hope drained away quickly with every talk I had with Obama Administration or European technocrats describing what they were facing. Someday I hope Christie Romer will write up her impressions of the Federal Reserve's Jackson Hole Conference���kind of a Masque of the Red Death situation in terms of being clueless as to what was about to go down. The financiers and policymakers were happy because a Great Depression had been avoided and because ultra-low interest rates had boosted asset values and made them close to whole. But...: Joe Weisenthal: On Twitter: "Every time I see a version of this chart (this time from Deutsche Bank's Torsten Slok) I'm blown away by what seems (in retrospect) to be incomprehensible optimism back in 2009/2010...

Should-Read: Thomas Piketty: Brahmin Left vs. Merchant Ri...

Should-Read: Thomas Piketty: Brahmin Left vs. Merchant Right: Rising Inequality and the Changing Structure of Political Conflict (Evidence from France, Britain and the US, 1948-2017): "Using post-electoral surveys from France, Britain and the US...

...a striking long-run evolution in the structure of political cleavages. In the 1950s-1960s, the vote for left-wing (socialist-labour-democratic) parties was associated with lower education and lower income voters. It has gradually become associated with higher education voters, giving rise to a ���multiple-elite��� party system in the 2000s-2010s: high-education elites now vote for the ���left���, while high-income/high-wealth elites still vote for the ���right��� (though less and less so).

I argue that this can contribute to explaining rising inequality and the lack of democratic response to it, as well as the rise of ���populism���.

I also discuss the origins of this evolution (rise of globalization/migration cleavage, and/or educational expansion per se) as well as future prospects: ���multiple-elite��� stabilization; complete realignment of the party system along a ���globalists��� (high-education, high-income) vs ���nativists��� (low-education, low-income) cleavage; return to class-based redistributive conflict (either from an internationalist or nativist perspective). Two main lessons emerge. First, with multi-dimensional inequality, multiple political equilibria and bifurcations can occur. Next, without a strong egalitarian-internationalist platform, it is difficult to unite low-education, low-income voters from all origins within the same party...

Should-Read: Very nice from the extremely sharp Kevin Dru...

Should-Read: Very nice from the extremely sharp Kevin Drum. Note this well: for neither National Review nor the Atlantic Monthly is informing their readers a mission-critical task: Kevin Drum: National Review Still Has a Race Problem: "The Atlantic recently hired... Kevin Williamson... [who] believes abortion is murder and... any woman who gets an abortion should be executed...

...This is typical of Williamson: he���s happy to say out loud things that plenty of other conservatives believe but are too smart to admit.... Williamson also[:]

East St. Louis, Ill. ��� "Hey, hey craaaaaacka! Cracka! White devil! F*** you, white devil!" The guy looks remarkably like Snoop Dogg: skinny enough for a Vogue advertisement, lean-faced with a wry expression, long braids. He glances slyly from side to side, making sure his audience is taking all this in, before raising his palms to his clavicles, elbows akimbo, in the universal gesture of primate territorial challenge. Luckily for me, he���s more like a three-fifths-scale Snoop Dogg, a few inches shy of four feet high, probably about nine years old, and his mom���I assume she���s his mom���is looking at me with an expression that is a complex blend of embarrassment, pity, and amusement, as though to say: "Kids say the darnedest things, do they not, white devil?",...

Describing a black boy as a ���primate��� is not a good look.... But here���s the thing. Williamson���s piece wasn���t about race. It was a fairly routine takedown of Democratic governor Pat Quinn.... It���s not even a very ideological takedown... alleged corruption in infrastructure spending. If Quinn had an R after his name, I could see myself writing almost exactly the same piece. What leapt out at me, then, is this: what is this paragraph even doing in Williamson���s story, let alone acting as the lede?... It literally has nothing to do with anything in the rest of the piece. To me, this says more about the editorial process at National Review than anything else....

Well, I don���t know. [a] Do they simply have no one on staff who noticed this? [b] Did they notice but give in to Williamson���s demand to keep it? [c] Did they actively like it because they knew it would appeal to their readers? [d] Was the first draft even worse and this is actually the toned-down version?

I bet two thousand dollars on [c], Kevin...

Should-Read: Paul Krugman: Globalization: What Did We Mis...

Should-Read: Paul Krugman: Globalization: What Did We Miss?: "Anyone who worked on the political economy of trade policy knew that fights over tariffs look very much as if they come out of a specific-factors world...

...labor and capital within a given industry are generally on the same side in trade policy disputes, not on opposite sides as they would be if they were thinking about the broad factoral distribution of income. It should have been obvious that the general politics of globalization would reflect that same reality. That is, never mind the question of how trade affects the blue-collar/white-collar wage gap, or the aggregate Gini coefficient; the politics of globalization were likely to be much more influenced by the experience of individual sectors that gained or lost from shifting trade flows...

Should-Read: Nicholas Gruen: The middleware of democracy....

Should-Read: Nicholas Gruen: The middleware of democracy. Or from knowledge to wisdom: or at least knowledge 2.0: "Simon Heffer���s High Minds presents us with a portrait of the mid-Victorians in which they consciously set about building... ours... liberal democratic world...

...To do so they recognised the need for all sorts of public goods... education and health... an honest public service chosen on merit... civic virtue... a stirring and a sobering story reflecting��an age which I think had a more balanced understanding of��the necessary ecology of public and private goods each reinforcing each other in building the Good Life. Today... our contemporary vision is profoundly skewed toward private good and private endeavour.... As Heffer makes clear, this Victorian quest was not just economic. It was a political project.... They knew that democracy was coming, so��they needed to get The People a decent education before they used their vote to wreck the place....

The Victorians rightly spent a lot of��their time worrying about the tyranny of the majority and so championed things like the independence of��the judiciary. We also have various lower levels of independence for institutions like statutory authorities, the central bank, the bureaucracy and and so on.... The class basis of democratic capitalism���in which the middle class and its preoccupation with respectability defended various abstract principles like ministerial responsibility���is being broken down by the bread and circuses of vox pop democracy and the politico/infotainment complex....

When��I was doing the Government 2.0 Taskforce��I was wondering���as were many people���how can we get a Wikipedia of government.... In figuring out how the world ���is��� or even ���will be��� we have made some good progress in the last decade or so with

Wikipedia and similar informational goods on the net
Prediction markets
The Good Judgement project.

But while all of these new things help discipline the process by which we aggregate and judge views���including, crucially, sorting good from bad views���the��fact remains that these things only measure good judgement regarding predictions of the way the world is or��will work out not how it should be or work out. That���s what YourView��was built to try to do, and it seems to do a reasonable job of it.... YourView is currently largely in mothballs and not being promoted by its owners any more. They���ve promoted it pretty vigorously for a good while now, seeking ��support from media companies, philanthropy and various educational and intelligence organisations but so far without sufficient success to ensure viability. So next time you hear someone banging on about how data isn���t information and information isn���t knowledge and knowledge isn���t wisdom and all that stuff, ask them if they know about YourView and if they���re helping it try to scale the solution to that rather large problem...

Should-Read: And I am still looking for somebody with a s...

Should-Read: And I am still looking for somebody with a stronger stomach than I to tell me how Bob Barro (and, I presume, Mike Boskin) lowered their estimates of the real GDP boost from the tax cut bill from 7% last December to 0.4% today: Paul Krugman: Tax Cuts and Wages Redux: "After Republicans rammed through their big tax cut, there were a rash of stories about corporations using the tax break to give their workers bonuses...

...Have the media learned nothing from the Carrier debacle?... Anyway, now we have enough information to start assessing the real impact of the tax cut. No, it isn���t going into wages; you should never have expected that in the short run anyway.... We aren���t... seeing the kind of response that would raise wages in the long run.... The theory of the case... as told by people like Kevin Hassett or the Tax Foundation, was... an investment boom... big inflows of capital, [which if there would]... should be lifting the dollar. In reality, the dollar is weaker.... The early data... are consistent with the view that corporate profits include a large component of monopoly rents. In that story, if you give corporations a big tax cut, they don���t invest more, compete for workers, or any of that stuff. They just take the money and run...

Weekend Reading: M. Tullius Cicero to C. Pomponius Atticus, October 1, 54 BC: 4.XVII: On "Western Civilization"���Oxfordians Are too Stupid and Uncivilized to Be Worth Enslaving

Weekend Reading: I am flashing to C. Julius Caesar sending British academics who talk about the glories of "western civilization" to the Spanish coal mines or to the gladiator schools: "The result of the British war is a source of anxiety.... There isn't a pennyweight of silver in that island, nor any hope of booty except from slaves, among whom I don't suppose you can expect any instructed in literature or music..." (ex quibus nullos puto te litteris aut musicis eruditos exspectare).

TO ATTICUS (ABROAD): ROME, 1 OCTOBER, 54 BC : "You think I imagine that I write more rarely to you than I used to do from having forgotten my regular habit and purpose...

...but the fact is that, perceiving your locality and journeys to be equally uncertain, I have never entrusted a letter to anyone���either for Epirus, or Athens, or Asia, or anywhere else���unless he was going expressly to you. For my letters are not of the sort to make their non-delivery a matter of indifference; they contain so many confidential secrets that I do not as a rule trust them even to an amanuensis, for fear of some jest leaking out in some direction or another.>The consuls are in a blaze of infamy because Gaius Memmius, one of the candidates, read out in the senate a compact which he and his fellow candidate, Domitius Calvinus, had made with the consuls���that both were to forfeit to the consuls 40 sestertia apiece (in case they were themselves elected consuls) if they did not produce (a) three augurs to depose that they had been present at the passing of a lex curiata, which, in fact, had not been passed; and (b) two consulars to depose to having helped to draft a decree for furnishing the consular provinces, though there had not even been a meeting of the senate at all. As this compact was alleged not to have been a mere verbal one, but to have been drawn up with the sums to be paid duly entered, formal orders for payment, and written attestations of many persons, it was, on the suggestion of Pompey, produced by Memmius, but with the names obliterated.

It has made no difference to Appius���he had no character to lose! To the other consul it was a real knock-down blow, and he is, I assure you, a ruined man.

Memmius, however, having thus dissolved the coalition, has lost all chance of election, and is by this time in a worse position than ever, because we are now informed that his revelation is strongly disapproved of by Caesar. Our friend Messalla and his fellow candidate, Domitius Calvinus, have been very liberal to the people. Nothing can exceed their popularity. They are certain to be consuls. But the senate has passed a decree that a "trial with closed doors" should be held before the elections in respect to each of the candidates severally by the panels already allotted to them all.

The candidates are in a great fright. But certain jurors���among them Opimius, Veiento, and Rantius���appealed to the tribunes to prevent their being called upon to act as jurors without an order of the people. [Note] The business goes on. The comitia are postponed by a decree of the senate till such time as the law for the "trial with closed doors " is carried. The day for passing the law arrived. Terentius vetoed it. The consuls, having all along conducted this business in a half-hearted kind of way, referred the matter back to the senate. Hereupon-Bedlam! my voice being heard with the rest.

"Aren't you wise enough to keep quiet, after all?" you will say. Forgive me: I can hardly restrain myself. But, nevertheless, was there ever such a farce? The senate had voted that the elections should not be held till the law was passed: that, in case of a tribunician veto, the whole question should be referred to them afresh. The law is introduced in a perfunctory manner: is vetoed, to the great relief of the proposers: the matter is referred to the senate. Upon that the senate voted that it was for the interest of the state that the elections should be held at the earliest possible time!

Scaurus, who had been acquitted a few days before, after a most elaborate speech from me on his behalf���when all the days >Up to the 29th of September (On which I write this) had one after the other been rendered impossible for the comitia by notices of ill omens put in by Scaevola���paid the people what they expected at his own house, tribe by tribe. But all the same, though his liberality was more generous, it was not so acceptable as that of the two mentioned above, who had got the start of him. I could have wished to see your face when you read this; for I am certain you entertain some hope that these transactions will occupy a great many weeks!

But there is to be a meeting of the senate today, that is, the 1st of October���for day is already breaking. There no one will speak his mind except Antius and Favonius, for Cato is ill. Don't be afraid about me: nevertheless, I make no promises.

Is there anything else you want to know? Anything? Yes, the trials, I think. Drusus and Scaurus are believed not to have been guilty. Three candidates are thought likely to be prosecuted: Domitius Calvinus by Memmius, Messalla by Q. Pompeius Rufus, Scaurus [Note] by Triarius or by L. Caesar. "What will you be able to say for them?" quoth you. May I die if I know! In those books certainly, of which you speak so highly, I find no suggestion.

Now for the rest.

From my brother's letter I gather surprising indications of Caesar's affection for me, and they have been confirmed by a very cordial letter from Caesar himself. The result of the British war is a source of anxiety. For it is ascertained that the approaches to the island are protected by astonishing masses of cliff. Moreover, it is now known that there isn't a pennyweight of silver in that island, nor any hope of booty except from slaves, among whom I don't suppose you can expect any instructed in literature or music.

Paullus has almost brought his basilica in the forum to the roof, using the same columns as were in the ancient building: the part for which he gave out a contract he is building on the most magnificent scale. Need I say more? Nothing could be more gratifying or more to his glory than such a monument.

Accordingly, the friends of Caesar���I mean myself and Oppius, though you burst with anger���have thought nothing of 60,000 sestertia for that monument, which you used to speak of in such high terms, in order to enlarge the forum and extend it right up to the Hall of Liberty. The claims of private owners could not be satisfied for less. We will make it a most glorious affair. For in the Campus Martius we are about to erect voting places for the comitia tributa, of marble and covered, and to surround them with a lofty colonnade a mile in circumference: at the same time the Villa Publica will also be connected with these erections.

You will say: "What good will this monument do me?" But why should I trouble myself about that? I have told you all the news at Rome: for I don't suppose you want to know about the lustrum, of which there is now no hope, or about the trials which are being held under the (Cincian) law.

Puto te existimare me nunc oblitum consuetudinis et instituti mei rarius ad te scribere quam solebam; sed quoniam loca et itinera tua nihil habere certi video, neque in Epirum neque Athenas neque in Asiam cuiquam nisi ad te ipsum proficiscenti dedi litteras. Neque enim [eae] sunt epistulae nostrae quae si perlatae non sint nihil ea res nos offensura sit; quae tantum habent mysteriorum ut eas ne librariis quidem fere committamus, lepidum quo excidat.

Consules flagrant infamia quod C. Memmius candidatus pactionem in senatu recitavit quam ipse [et] suus competitor Domitius cum consulibus fecisset uti ambo HS quadragena consulibus darent, si essent ipsi consules facti, nisi tris augures dedissent qui se adfuisse dicerent cum lex curiata ferretur quae lata non esset, et duo consularis qui se dicerent in ornandis provinciis consularibus scribendo adfuisse, cum omnino ne senatus quidem fuisset. Haec pactio non verbis sed nominibus et perscriptionibus multorum tabulis cum esse facta diceretur, prolata a Memmio est nominibus inductis auctore Pompeio.

Hic Appius erat idem. Nihil sane iacturae. Corruerat alter et plane inquam iacebat.

Memmius autem dirempta coitione invito Calvino plane refrixerat et eo magis nunc totus iacet quod iam intellegebamus enuntiationem illam Memmi valde Caesari displicere. Messalla noster et eius Domitius competitor liberalis in populo valde fuit. Nihil gratius. Certi erant Consules. At senatus decrevit ut tacitum iudicium ante comitia fieret ab iis consiliis quae erant [ex] omnibus sortita in singulos candidatos.

Magnus timor candidatorum. sed quidam iudices, in his Opimius, Veiento, Rantius, tribunos pl. appellarunt, ne iniussu populi iudicarent. res cedit; comitia dilata ex senatus consulto dum lex de tacito iudicio ferretur. venit legi dies. Terentius intercessit. consules qui illud levi bracchio egissent rem ad senatum detulerunt. Hic abdera non tacente me.

Dices tamen tu non quiescis? Ignosce, vix possum. Verum tamen quid tam ridiculum? Senatus decreverat ne prius comitia haberentur quam lex lata esset; si qui intercessisset, res integra referretur. coepta ferri leviter, intercessum non invitis, res ad senatum. de ea re ita censuerunt comitia primo quoque tempore haberi esse e re publica.

Scaurus qui erat paucis diebus illis absolutus, cum ego ���patrem��� eius ornatissime defendissem, obnuntiationibus per Scaevolam interpositis singulis diebus usque ad pr. Kal. Octobr. (quo ego haec die scripsi), sublatis populo tributim domi suae satis fecerat. sed tamen etsi uberior liberalitas huius, gratior esse videbatur eorum qui occuparant. Cuperem vultum videre tuum cum haec legeres; nam profecto spem habes nullam haec negotia multarum nundinarum fore.

Sed senatus hodie fuerat futurus, id est Kal. Octobribus; iam enim luciscit. Ibi loquetur praeter Antium et Favonium libere nemo; nam Cato aegrotat. de me nihil timueris, sed tamen promitto nihil.

Quid quaeris aliud? Iudicia, credo. Drusus, Scaurus non fecisse videntur. Tres candidati fore rei putabantur, Domitius a Memmio, Messalla a Q. Pompeio Rufo, Scaurus a Triario aut a L. Caesare. Quid poteris inquies pro iis dicere? Ne vivam [si] scio; in illis quidem tribus libris quos tu dilaudas nihil reperio.

Cognosce cetera.

Ex fratris litteris incredibilia de Caesaris in me amore cognovi, eaque sunt ipsius Caesaris uberrimis litteris confirmata. Britannici belli exitus exspectatur; constat enim aditus insulae esse muratos mirificis molibus. Etiam illud iam cognitum est neque argenti scripulum esse ullum in illa insula neque ullam spem praedae nisi ex mancipiis; ex quibus nullos puto te litteris aut musicis eruditos exspectare.

Paulus in medio foro basilicam iam paene texerat isdem antiquis columnis, illam autem quam locavit facit magnificentissimam. Quid quaeris? Nihil gratius illo monumento, nihil gloriosius.

Itaque Caesaris amici, me dico et Oppium, dirumparis licet, [in] monumentum illud quod tu tollere laudibus solebas, ut forum laxaremus et usque ad atrium Libertatis explicaremus, contempsimus sexcenties HS; cum privatis non poterat transigi minore pecunia. Efficiemus rem gloriosissimam; Nam in Campo Martio saepta tributis comitiis marmorea sumus et tecta facturi eaque cingemus excelsa porticu, ut mille passuum conficiatur. Simul adiungetur huic operi villa etiam publica.

Dices quid mihi hoc monumentum proderit? Ad quid id laboramus res Romanas: non enim te puto de lustro quod iam desperatum est, aut de iudiciis quae lege Coctia fiant quaerere.

Should-Read: Is it really the case that America's biggest...

Should-Read: Is it really the case that America's biggest problem today is that the bulk of relatively poor and less educated older whites���especially males, especially southern and rural���are easily grifted and not too good at understanding what is really going on in the world around them? I mean: politics as Facebook- and Fox News-enabled gigantic 419 scam? Seems likely: Amitabh Chandra: Hillbilly Elegy: