Jonathan Chait's Blog, page 142

Why Tax Reform Has To Wait Until The Second Term

The New York Times' Jackie Calmes reports that the Obama administration is thinking about some kind of bipartisan tax reform:

President Obama is considering whether to push early next year for an overhaul of the income tax code to lower rates and raise revenues in what would be his first major effort to begin addressing the long-term growth of the national debt.

While administration officials cautioned on Thursday that no decisions have been made and that any debate in Congress could take years, Mr. Obama has directed his economic team and Treasury Department analysts to review options for closing loopholes and simplifying income taxes for corporations and individuals, though the study of the corporate tax system is farther along, officials said.

Here's why this is a bad idea right now.

I do like the policy goal of broadening the tax base, eliminating favorable treatment for different kinds of income, and lowering the rates. However, the administration isn't going to be able to do this before the question of the Bush tax cuts is settled. A tax reform agreement is going to be premised on being revenue neutral (all or virtually all the proceeds of eliminating loopholes and credits will go toward lower rates) and being distributionally progressive or neutral (the rich will pay an equal or greater share of the tax base.)

The problem is, neither side agrees what base to start from. Republicans are going to want to base that off the status quo, with the Bush tax cuts in effect. Indeed, that's what the Bowles-Simpson commission did -- staffers from the plan said, look, we're more progressive than the status quo!

But Democrats can't accept that, because they both plan and have the power to let the upper-income portion of the Bush tax cuts expire. Indeed, Obama has to insist on that in 2012, for both policy and political reasons. Republicans think they rolled him in 2010 and can roll him in 2012. They're going to want to keep the Bush tax cuts as a baseline.

So here's how this has to work. Obama has to stand firm on the upper-income portions of the Bush tax cuts expiring. Then he has to win reelection. Then we get to 2013, and either the upper-income portion of the Bush tax cuts -- or, more likely, the entire thing -- has expired. We're back to Clinton-era tax rates. Then Obama can make a deal to lower the rates and broaden the base.

TAX REFORM >>

Finally, A Poll On The Important Issues

PPP polls Michigan residents about their feelings toward University of Michigan football coach Rich Rodriguez. The Michigan fanbase is about equally split three ways between those who want to keep Rodriguez, fire him, or don't have an opinion.

But the cross-tabs of the poll show some interesting results. As those of us who grew up in the state would not be surprised to learn, Michigan fans are more liberal than Michigan State fans (The liberal/moderate/conservative split for Michigan fans is 37/40/24, for MSU fans it's 22/38/35.) Within the Michigan fan-base, opinion on Rodriguez is also split along ideological lines, with liberals supporting him keeping his job by a 29-point margin, and conservatives wanting to see him fired by a 17-point margin.

Opinion about Rodriguez also has a sharp racial divide. Rodriguez's favorability is positive among African-Americans (40-20) and negative among whites (15-42.) That matches up with what I've seen, which is that some of the criticisms of Rodriguez come from whites and have a racial tinge (Rodriguez plays a lot of black quarterbacks, while quarterbacks under the previous coaching regime were almost entirely white.)

Who would Michigan fans like to see replacing Rodriguez if he's fired? It's a rout:

Jim Harbaugh 64%

Les Miles 23%

Brady Hoke 3%

This tracks with my sense of the Michigan fanbase, which is that the hiring of lifetime sub-.500 San Diego State coach Brady Hoke would result in several Athletic Department buildings being burned to the ground by enraged fans.

Interestingly, fan opinion as to who to hire if Rodriguez leaves is split along generational lines. The under-30 crowd adores Les Miles, favoring him over Harbaugh 60-32. (Is it the smart, unconventional fourth-down play calling? Their slacker tolerance for atrocious time management? The grass-eating? ) Every other age group favors Harbaugh, perhaps in part because they're old enough to remember his playing days at Michigan. (For the record, I'm happy with Rodriguez but also like Harbaugh.)

 

 

Senators Are Not Very Smart

Tom Coburn is displaying a strange understanding of how the budget works:

I'd issue this challenge: anyone who thinks we oughta pay for tax cuts, oughta have to put up a list of programs that we're going to eliminate to pay for them. I put up every time when people are wanting to spend money a list of options that we can do to make it that we don't increase the very problem — hole that we're digging in.

I don't really know what to say in response.

Baucus-Bashing, Outsourced Edition

Lambasting Max Baucus is one of TNR traditions I most cherish, but it's been a while since we've indulged in it, and it's nice to see Steven Pearlstein thwack around the feckless Senate Finanxce Commitee Chairman today:

For my money, there's no better example of the failure of the Democratic leadership than the chairman of the Senate Finance Committee, Max Baucus - and, in particular, his performance on the president's deficit-reduction commission.

It's a mystery that Max was appointed to the panel in the first place, given that he had led the fight against its creation. His beef was that by establishing a mechanism that required Congress to vote up or down on an austerity plan it couldn't amend, lawmakers were turned into mere bureaucrats. More to the point, it also threatened Max's power and prerogatives as Finance Committee chairman. So when Senate Majority Leader Harry Reid chose Max for one of his three slots on the commission - bowing, as Reid always does, to Senate hierarchy and tradition - he had to know that Baucus would vote against any plan that might emerge. ...

There are two possibilities. One is that Max is so parochial that he can't get behind anything that might jeopardize his popularity with the Montana Cattlemen's Association or the Billings Chamber of Commerce. In that case, he has no business chairing a committee that handles issues of national and international significance.

The more likely possibility is that he played the rural card simply as convenient political cover for his real motive, which was to prevent any challenge to his own authority. In that case, he has revealed himself as too petty to be a serious national leader. 

Obama's Deal: It's A Floor Wax! It's A Dessert Topping!

I'm really having fun watching the conservative movement try to sort out its line on the Obama-Republican tax deal. Just watching the Wall Street Journal editorial page is dizzying fun. The Journal's immediate treaction, like that of its columnist Karl Rove, was to gloat: the president was "repudiating the heart and soul of Obamanomics as the price of giving himself a chance at a second term," and "implicitly admitted that his economic strategy has flopped."

Wow, "repudiating the heart and soul of Obamanomics" sounds like the kind of thing a Democrat might not want to support. Indeed, House Demlocrats indicated their displeasure yesterday, voting against the deal and trying to negotiate to move it further in their direction. If, indeed, this was a total repudiation of the Democratic economic agenda, they might have a point, no?

No, says the Journal today.

Republicans should hang tough because the deal in fact makes enormous concessions to the Democrats:

As for Republicans, they have already given up an enormous amount to get what is essentially the status quo on tax policy...

Republicans have risked offending tea party voters by agreeing not to offset $56 billion more in jobless benefits with spending cuts. They've also agreed to extend most of the Obama-era tax credits that do nothing for growth and merely redistribute income to Americans who already pay no income taxes.

The two percentage point cut in the payroll tax is only for one year and gives no incentive for businesses to hire because it only affects what employees pay. It is merely another demand-side Keynesian gambit to temporarily lift consumption

So it turns out to mostly consist of Keynesian stimulus. That doesn't actually sound like a repudiation of the heart and soul of Obamanomics.

Meanwhile, also on today's Journal editorial page, columnist Kimberly Strassel expresses astonishment that Obama would be in favor of some elements of the deal and against others:

The president takes absolute credit for forging this deal; he also absolutely blames Republicans for forcing it to happen. The president wants the nation to know that this is a good example of "compromise" and 'bipartisan agreement"; he also wants the nation to know that Republicans are "hostage- takers," that they cannot see beyond their "Holy Grail" of tax cuts, that their position is "wrong," and that he takes exception to the whole process.

This tax package, says the president, "is the right thing to do for our economy"—except for what Republicans demanded (most of it), which won't "be good for the economy."

Is this really so hard to wrap your head around? There were some provisions Obama wanted that provide a significant stimulative boost to the economy. In return for these, Obama had to agree to other provisions with very little stimulative kick that the Republicans insisted on because they enrich people with high incomes.

Obama's position is that the bad parts of the deal that he had to agree to are bad, but that the good parts of the deal are good, but the good outweights the bad and so the overall deal is good. It's perfectly fair to disagree with this judgment, but I don't see why it's so hard to simply understand.

Fox News Still Biased; Film At 11

Jack Shafer, unlike me, sees no problem with Fox News demanding its hosts stop using the phrase public option:

The call to refer to the program as the government option instead of the public option came from Republican pollster Frank Luntz, Media Matters and Kurtz report. But this shouldn't disqualify the new term from the Fox News stylebook. Government option is superior to public option in that it emphasizes that the government—and thus the taxpayers—will be footing the bill. As a modifier, public has many nongovernmental uses, as in public appearance, public figure, public display, public-key cryptography, public editor, public enemy, public storage, and public opinion.

But when government is used as an adjective, there is no such confusion. Does that make Fox News' semantic solution superior? I've always thought that Social Security should be renamed Government Ponzi Scheme. I'd also like the Export-Import Bank to be renamed the Government Subsidy Depot—but that's another column.

That Sammon issued a memo directing Fox News reporters to use a phrase he considers more accurate hardly constitutes "spin," as the headline to Kurtz's piece has it. If government option is spin, isn't public option spin, too?

I suppose that might be a reasonable defense in a world where news organizations scrutinize every phrase for maximal accuracy. That, however, is not the practice at Fox News, or anywhere. Standard news practice is to simply keep using terms that have come into the public discourse and gained wide usage even if it is not the most technically accurate or neutral term. If you had a left-wing news network that decided it can no longer refer to military spending as "defense" because that presumes it is never used in an aggressive way, that would be an act of bias, regardless of the philosophical merits.

GOP Committee Chair Smeared Sex Slave

Since it's "Republicans going beyond the pale of human decency" day, I thought I'd quote this grimly hilarious Josh Marshall blog item:

Rep. Ralph Hall (R) of Texas has been in the news this week because the octogenarian anti-environment crusader is taking over as chairman of the House Science and Technology Committee. But here at TPM we remember him for another proud moment: the day thirteen years ago when he slandered a teenaged sex slave into the House record on behalf of then-lobbyist Jack Abramoff. "[S]he wanted to do nude dancing," said Hall of the fifteen-year-old girl who was taken from her parents in the Phillippines and forced to perform sex acts on stage and before video cameras at a Northern Marianas sex club.

Yeah, going negative on a teenage sex slave on behalf of a corrupt lobbyist is another one of those too-heavy-handed-for-parody things.

Treating Ground Zero Workers Too Costly

I literally find this difficult to believe:

Republican senators blocked Democratic legislation on Thursday that sought to provide medical care to rescue workers and residents of New York City who became ill as a result of breathing in toxic fumes, dust and smoke from ground zero....

Republicans have been raising concerns about how to pay for the $7.4 billion measure, while Democrats, led by Senator Kirsten E. Gillibrand of New York, have argued that the nation had a moral obligation to assist those who put their lives at risk during rescue operations at ground zero.

They just demanded hundreds of billions of dollars in unpaid-for tax cuts! I realize that GOP dogma holds that tax rates have nothing at all to do with deficits. Still, you'd think that sheer political expedience would make them cooperate on health benefits for Ground Zero rescue workers.

It's as if Democrats sat around dreaming up an issue that would make the Republicans look as bad as possible:

"What if Republicans supported a bill to seize puppies from poor children and turn them into pate to be served at a yacht reception for tobacco lobbyists?"

"No, too maudlin. What if we tried to introduce a foreign policy element -- like, Republicans enacted a tax break for the bin Laden family..."

I could see a conversation like that leading to the Republican Ground Zero health care position. I can't see it as the result of any conversation that had any political operatives or non-sociopaths in the room.

CONGRESS >>

Shocker: Fox News Not Fair And Balanced

In 2009, pollster Frank Luntz was warning Republicans not to use the term "public option." That year, Fox News Washington editor Bill Sammon sent out a memo instructing his subordinates not to use the phrase:

From: Sammon, Bill


Sent: Tuesday, October 27, 2009 8:23 AM


To: 054 -FNSunday; 169 -SPECIAL REPORT; 069 -Politics; 030 -Root (FoxNews.Com); 036 -FOX.WHU; 050 -Senior Producers; 051 -Producers


Subject: friendly reminder: let's not slip back into calling it the "public option"

1)      Please use the term "government-run health insurance" or, when brevity is a concern, "government option," whenever possible.

2)      When it is necessary to use the term "public option" (which is, after all, firmly ensconced in the nation's lexicon), use the qualifier "so-called," as in "the so-called public option."

3)      Here's another way to phrase it: "The public option, which is the government-run plan."

4)      When newsmakers and sources use the term "public option" in our stories, there's not a lot we can do about it, since quotes are of course sacrosanct.

I am shocked, shocked to find partisan messaging in the Fox newsroom. Media Matters has more.

New Idea -- Let's Try: The Bush Tax Cuts!

Karl Rove today again signals that the Republican line is going to be that President Obama has adopted the Republican Party's economic agenda:

[F]ailure would imperil $400 billion in tax cuts that would be a more effective economic boost than Mr. Obama's justifiably ridiculed stimulus.

I think he's setting the stage to give Republicans credit if the economy improves and Obama wins reelection. Still, I really wonder if that's the line Republicans are going to settle on. After all, the Bush tax cuts have been in effect all along. If it was a "more effective boost" than Obama's stimulus, then why didn't it work? Is this really what they're going with? I have to think they can do better.