Jonathan Chait's Blog, page 121

Why You Can't Reform The Corporate Income Tax

The corporate income tax has high statutory rates but, with its vast loopholes and exceptions, low effective rates. In theory, reforming it shouldn't be hard. Every dollar of closed loopholes means another dollar of lower rates, so the winners should equal the losers. In practice, it's extremely tricky. Suppose you redefine companies with low rates as "companies with lots of lobbying clout" and companies with high rates as "companies with little lobbying clout." That may not be a perfect description, but it's a reasonable approximation. So then reforming the corporate income tax means transferring money away from companies with lots of political clout toward those with less political clout.

Anybody see why this might be hard? Right.

David Leonhardt has an excellent column about the barriers to reform, including this key nugget:

Economists have long pleaded for an overhaul of the corporate tax code, and both President Obama and Republicans now say they favor one, too. But it won’t be easy. Companies that use loopholes to avoid taxes don’t mind the current system, of course, and they have more than a few lobbyists at their disposal.

The official position of the Business Roundtable, one of the most important corporate lobbying groups, is telling. The Roundtable says it supports corporate tax reform. But it actually favors only a reduction in the tax rate. The group refuses to say whether it also favors a reduction of loopholes.

The Business Roundtable is the moderate business lobby. If they won't support corporate tax reform, it has zero chance.

Mitt Romney's Self-Diagnosis

Mitt Romney confesses his weakness. He's too frank:

"The challenge that you have coming from the private sector as I did [in 2008] is when someone asks you a question, you answer it.





.... [T]he challenge I had last time [2008 campaign] was I answered every question, and sometimes, you need to say: you know, let me quickly answer that question and then get on to what's really important."

I really don't think that's the problem.

The Individual Mandate's Creator Speaks

Ezra Klein interviews the person who came up with the individual mandate:

Tell me about your involvement in the development of the individual mandate.

I was involved in developing a plan for the George H.W. Bush administration. I wasn't a member of the administration, but part of a team of academics who believe the administration needed good proposals to look at. We did it because we were concerned about the specter of single payer insurance, which isn't market-oriented, and we didn't think was a good idea. One feature was the individual mandate. The purpose of it was to round up the stragglers who wouldn’t be brought in by subsidies. We weren’t focused on bringing in high risks, which is what they're focused on now. We published the plan in Health Affairs in 1991. The Heritage Foundation was working on something similar at the time.

Yadda yadda yadda. Short answer: He's a socialist who disdains the Constitution and set out to strange the last vestiges of freedom in America.

Right-Wing Paranoia And Egypt

The right's reaction to the demonstrations in Egypt has been fascinating to watch. It's certainly true that history is replete with examples of liberal revolutions that proceeded to take a decidedly illiberal turn. Even those of us thrilling at the sight of the peaceful, universalistic, cross-secular march in Egypt can fear about the potential for a well-organized Islamist minority to seize control of the government after Mubarak falls. (Rich Lowry and Jonah Goldberg have sensible columns emphasizing opposite points, the former focusing on the potential for failure, and the latter the potential for progress.) But what's fascinating is the emergence of a strain of paranoid anti-Islamism that lumps together Iran, Mohammed ElBaradei, and the Obama administration. Here is Hudson Institute fellow Anne Bayefsky writing for Fox News:

In the name of democratic reform, Mohammed El Baradei is doing his best to appear as the annointed one to succeed Egyptian President Hosni Mubarek, should the government fall. In reality, El Baradei has more in common with Iranian demagogue Mahmoud Ahmadinejad than anything remotely resembling democracy. He is the former Director-General of the International Atomic Energy Agency (IAEA), where his primary legacy was running interference for Iran and ensuring that Iran is now on the verge of acquiring nuclear weapons. ...

If ElBaradei were ever to become president of Egypt, not only would he have helped Iran acquire nuclear weapons, he would undoubtedly turn around and lead the charge for an Egyptian nuclear weapon.

And here's a Glenn Beck rant along similar lines:

What immediately grabs you is Beck's comical technique of drawing a flame on various countries on the map, then declaring those countries to be "on fire," and then assuming that any other geographically contiguous country will likewise catch fire. (Thank goodness we have the Bering Straight to douse the flames before they leap over to Alaska.) But perhaps more telling is Beck's reference to the peaceful demonstrators as "rioters," and his dark warnings about their motives and "progressivist" impulses. Beck is not expressing a fear that a moderate, internationalist technocrat like El Baradei will be shoved aside. He is afraid precisely that he'll gain power.

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Angry Fox Geezer Syndrome

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A Frum Forum writer notes an interesting trend: People who find their parents are watching Fox News and losing their minds. To wit:

Over the past couple of years, I’ve been keeping track of a trend among friends around my age (late thirties to mid-forties). Eight of us (so far) share something in common besides our conservatism: a deep frustration over how our parents have become impossible to take on the subject of politics. Without fail, it turns out that our folks have all been sitting at home watching Fox News Channel all day – especially Glenn Beck’s program.

Used to be I would call my mom and get updated on news from the neighborhood, her garden, the grandchildren, hometown gossip, and so forth. I’ve always been interested in politics, but never had the occasion to talk about them with her. She just doesn’t care.

Or didn’t. I don’t know when it happened, exactly, but she began peppering our conversation with red-hot remarks about President Obama. I would try to engage her, but unless I shared her particular judgment, and her outrage, she apparently thought that I was a dupe or a RINO. Finally I asked my father privately why Mom, who as far as I know never before had a political thought, was so worked up about Obama all the time.

“She’s been like that ever since she started watching Glenn Beck,” Dad said.

A few months later, she roped him into watching Beck, which had the same effect. Even though we’re all conservatives, I found myself having to steer our phone conversations away from politics and current events. It wasn’t that I disagreed with their opinions – though I often did – but rather that I found the vehemence with which they expressed those opinions to be so off-putting.

To add some heft to this anecdotal take, Fox News has the oldest audience of any news network -- the average Fox News viewer is 65 years old! 

Meanwhile, Conor Friedersdorf argues that liberals who wish their side had its own Fox News are misguided:

The left has its own malign influences on public discourse. Some are rich and successful. It no more makes sense for liberals to envy the right it's talk radio hosts than it makes sense for the right to envy the left for Al Sharpton, Jeremiah Wright, or Michael Moore, which isn't to say these people are perfect analogues – they're certainly they're less influential among liberals than Limbaugh is among conservatives, and it would be wrong to draw a false equivalence. But these figures were successful in gathering followers and driving stories. In the realm of politics, the pathologies that came as part of the package still resulted in a net loss.

The antidote for Fox News isn't Keith Olbermann. It's Jon Stewart. It isn't a new left-leaning host who turns Glenn Beck-style destructive absurdity to different ideological ends – it's someone who effectively demonstrates the absudity of blowhards. 

It seems to be that Friedersdorf is commiting the classic fallacy of conflating the good with the useful. He argues -- indeed, he very nearly assumes -- that intellectual vitality goes hand in hand with political effectiveness. I could not disagree more.

A world in which there was a powerful medium to spread Democratic party propaganda -- a la Fox News and talk radio -- would be less pleasant in many respects. And it's certainly not a project I'd like to be part of. But it would almost certainly be a world in which public policy tilted further left than the current one. Moreover, Friedersdorf raises the specter of liberals having to choice under a party line like the right's Conintern. I think the more likely outcome is that a lot of what we think of as "the left" would simply become part of the center. That would be better, too. (I have more thoughts on this dilemma in my 2007 article on the netroots, which is the closest thing to the progressive attempt to mirror Fox News.)

Basically, the optimal number of Fox News-like propaganda outlets is zero. But I suspect the next most optimal number is two, not one.

 

Huckabee Opposes Middle East Peace

Mike Huckabee has a peace deal for the Palestinians -- nothing:

JERUSALEM (AP) — Potential 2012 U.S. presidential candidate Mike Huckabee said Tuesday that if Palestinians want an independent state, they should seek it from Arabs — not Israel.

The evangelical minister and Fox News host said Jews should be allowed to settle anywhere throughout the biblical Land of Israel — an area that includes the West Bank and east Jerusalem.

He called the demand on Israel to give up land for peace an "unrealistic, unworkable and unreachable goal."

Note that not even the Likud government opposes a Palestinian state in principle. If Huckabee sets the pace for defining what constitutes "pro-Israel" in the 2012 GOP primary, we could be in for a race to the bottom.

Romney Non-Death Watch?

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There's a mini-boom in smart guys trying to explain why Mitt Romney might not be dead after all. Josh Green says the Huntsman campaign will rescue, or at least not hurt, Romney:

The cognoscenti seem to agree that a Jon Huntsman run for the 2012 GOP nomination would hurt Mitt Romney because it would split Mormon votes, fundraising, etc. But wouldn't it also help Romney in the one area where he is most vulnerable, the perception that he's too liberal and untrustworthy because he enacted a health care plan nearly identical to Obama's? Just as you never want to be the last guy picked for your grade-school kickball team, GOP presidential hopefuls never want to be "the guy closest to Obama." From the perspective of a Republican primary voter, Hunstman would seem to me to be the worse of the two, and that couldn't help but take some heat off of Romney. Picture the first Republican debate with all the candidates stretched across a stage. Someone dings Romney on health care. With Huntsman on stage, he could piously say to the audience that at least he neverworked for Obama.

Josh says at the outset he's not sure he believes this, and I think he should trust that instinct. When you're defending yourself in politics, you're losing. If Charlie Rangel wanted to run for president, would he be better off if Bernie Madoff were also running, so he would look honest by comparison? No, you want to avoid anything that raises the question of your loyalty to the party. Arguing that you're less traitorous than some other, marginal figure is not a helpful strategy.

Meanwhile, Ben Smith argues:

During last year's debate, Romney struggled to distinguish the Massachusetts plan, which his spokesman called his "signature" accomplishment as governor -- with its exchange, mandates, and subsidies -- from a federal plan that shared its policy pedigree and had obviously been constructed along the same lines.

One of Romney's weak arguments was that the Massachusetts plan was fundamentally different, as a matter of policy, because it had been enacted on a state rather than federal level. The argument got little traction and Romney, after an effort in the Spring of 2010 to explain his record, simply fell silent.

Romney's argument is now much stronger. Because the main objection to ObamaCare, as its critics call it, is no longer a matter of policy nuance. Now critics primarily make the case that it's an unconstitutional expansion of specifically federal power. And on that turf, the similar structure of the plans doesn't matter. Romney enacted his at a state level, and states have -- conservatives argue -- more power to regulate the insurance industry, as they do with car insurance. 

Well, this assumes that the Republican objection to the Affordable Care Act hinges upon the legal arguments being mustered against it. That seems like a pretty shaky assumption to me. Republicans don't think the PPACA is a decent policy that just happens to violate the Constitution. They think it's an abomination, and the legal challenge is simply one tool they're using to attack it. Romney can say that his Massachusetts plan comports with the GOP's legal argument, but I'd rather be advising the candidate who gets to ridicule that distinction than be advising the one who has to make it.

&c

-- Abbas Milani asks Egyptians and observers to remember the lessons of the Iranian Revolution.

-- Jonathan Bernstein asks: "What does the Kochs' money buy?"

-- How today's health care decision was borrowed from the Family Research Council.

Health Care Ruling: We Are Dealing With Clowns

The person to read here is Jonathan Cohn. The really striking thing about the ruling, as Jon explains, is not just that it bends over backwards to fit the law to the conservative agenda but that it bungles basic facts:

[A]t first glance, two things leap out at me.

Defenders of the Affordable Care Act (myself among them) argue that the power to impose the mandate lies in two parts of the Constitution: the power to levy taxes and the power to regulate interstate commerce. Vinson rejects the tax argument and, in explaining his rationale, suggests that even the two judges who upheld the mandate agreed with him on this. But this is incorrect. Judge George Steeh, the federal judge from Michigan, declared that the tax argument was "without merit." 

The other striking thing about Vinson's ruling is his reasoning on interstate commerce--and its apparent ignorance of policy reality. Vinson says the mandate is unconstitutional because, in effect, the link between insurance status and interstate commerce is too weak:

"...the mere status of being without health insurance, in and of itself, has absolutely no impact whatsoever on interstate commerce (not "slight," "trivial," or "indirect," but no impact whatsoever) -- at least not any more so than the status of being without any particular good or service. [Emphasis in original]"

Again, this is just wrong, as anybody who understands the health care market will tell you. From my January article on the case...

Read the rest.

Basically, this seems to be no different than if the Wall Street Journal editorial page was asked to rule on the constitutionality. You get a highly tendentious screed resting upon simple factual inaccuracies, only this one is passed off as law rather than some right-wing polemic.