Not sure what's going on
The Washington Post: Greenspan No 'Major Evidence' of Growth; Reiterates Concern Over the Threat of Deflation
The NYT: Greenspan Sees Possible Turnaround in U.S. Economy
AB
Tuesday, June 03, 2003
Monday, June 02, 2003
Transcript Wanted
So Al Franken, Molly Ivins, and Bill O'Reilly walk into a bar appeared together on CSPAN2 over the weekend. Yes, it does sound like the start of a good joke, but it really happened--and by all accounts it was amusing to watch O'Reilly without his mute button handy. Unfortunately, I missed it, and I can't find a transcript anywhere. If you come across one, please email me.
AB
UPDATE: It's definitely on this coming Sunday at 5:30 p.m. Eastern. Thanks, readers.
Whither WMD?
Since I'm citing Orwell of late, here's this from Josh Marshall:
My God, when they say down the memory hole, they ain't kiddin! There now seems to be a secret competition -- perhaps it was announced and I just didn't hear it -- for the Iraq-hawk who can come up with the most ingenious, Orwellian, up-is-down rewriting of the history of the year- long lead-up to the Iraq war. To this point, the strongest entries are those whispers out of the Pentagon, arguing that it was Colin Powell and the State Department who made them make such a big to-do about weapons of mass destruction. [more...]
AB
Sunday, June 01, 2003
Liberalism and Growth
Recently, I said I would try to make the case that liberalism causes growth. Certainly, correlations suggest that this is the case. For instance, income is substantially higher in Blue states than Red states. The inability of the Soviet Union to match the productive output of the United States is another example. A more remote example was the lack of growth in Western Europe prior to the Reformation. I've even heard the case made that the reason China and the Middle East failed to capitalize on their respective technological leads over Europe going into the second millennium is that those countries never had similar reformations. China remained a dictatorship and the Middle East remained largely theocratic, preventing the emergence of capitalism.
In a recent book, The Free-Market Innovation Machine, widely respected (i.e., neither known as left nor right, just a really smart guy) economist William Baumol makes the case that over the long run, the important feature of capitalism is not that it leads to static efficiency, meaning supply equals demands and labor and resources are directed to their most productive uses. While those are important, the key distinguishing feature of capitalism is that it forces firms to compete on the dimension of innovation. Firms that innovate more consistently and prolifically outperform; those that are innovative laggards vanish by the wayside. Innovation has positive externalities, is fecund, and leads to economic growth. Ideas and knowledge fuel innovation and, in turn, education and an open society fuel ideas and knowledge.
This is where the connection between liberalism and wealth lies. A society that, for example, burns and bans books, will not be innovatively prolific. George Orwell, writing as Emmanuel Goldstein, expresses it well; Goldstein is describing the slowdown in innovation that accompanied the rise of The Party:
Science and technology were developing [before The Party took over] at a prodigious speed, and it seemed natural to assume that they would go on developing. This failed to happened, partly because of the impoverishment caused by a long series of wars and revolutions, partly because scientific and technical progress depended on the empirical habit of thought, which could not survive in a strictly regimented society. [p. 193 of the 2003 edition]
Liberal societies are less regimented; within liberal societies, cities are generally the least regimented areas, which I hypothesize explains the Blue-Red income and wealth gap. The causal chain is that the receptiveness to new ideas that accompanies liberalism leads to the production of more ideas, leading to more innovation, leading to more growth.
AB
P.S. In another recent book,
The Rise of the Creative Class, Economist Richard Florida of Carnegie Mellon argues that "scientists, engineers, architects, educators, writers, artists, and entertainers" constitute a creative class (about 30% of the population) that generates most of society's new ideas. This class is drawn to cities, he argues, precisely because cities are most open to new ideas. Florida's arguments are generally strong, but unfortunately, I thought the writing was a bit burdensome. On the other hand, I wholeheartedly recommend Baumol's book to anyone interested in Capitalism, innovation, and growth.
Friday, May 30, 2003
More on Priorities
Earlier, in reference to the exclusion of some lower-middle class familes from the increased child tax credit, I said that "I'm sure we'll hear that this was an inadvertent slip (right now, the House is blaming the Senate's $350b "limit"), but inadvertent slips tell a lot about the priorities of those making the slips." Now, cranky but generally correct physicist Robert Park gives us another telling example of what's included and what's excluded:
GAS GUZZLERS: TAX BILL INCLUDES A BREAK FOR MONSTER SUVs.
Language in yesterday's tax deal making the cost of heavy pickup trucks fully tax deductible immediately for small businesses will also apply to humongous luxury SUVs weighing more than 6000 lbs. Meanwhile, a low-income child credit provision that would have benefitted many low-income working families was dropped to stay within the $350B limit. As a House Ways and Means Committee spokesman explained, "adjustments had to be made."
Park's weekly newsletter is great, read the whole thing. I guess that we can always drill in ANWR to counteract the SUV subsidy embodied in the tax credit. As for the poor, let them eat cake.
AB
What he Said
Former president Bill Clinton, speaking at the John F. Kennedy Library, said he "can't find anybody with a straight face" to defend the tax package, whose advocates "compromise the future of our country." Of the Republicans, Clinton said: "When ideological people find themselves in a hole, they ask for a bigger shovel."
AB
Thursday, May 29, 2003
Moderately Positive Outlook?
CNN has a story, "Mañana economics: Economists keep saying the sun will come out tomorrow ... and tomorrow ... and tomorrow." Here's the outlook:
GDP actually grew just 2.4 percent in 2002. When surveyed at the start of 2002, forecasters predicted 3.5 percent growth in 2003. Lately, they've cut their forecast for the year to 2.2 percent. Now, they're expecting 3.6 percent GDP growth in 2004.
The improved projections are attributed to the tax cuts (which are in fact somewhat stimulative, though that stimulus may come at the expense of long run investment, as government borrowing to finance deficits pushes interest rates up and crowds out private investment), low interest rates (which have done a lot to keep consumer spending up--mortgages and cars--but haven't similarly stimulated business investment), the falling dollar (good for exporters; bad for domestic firms that buy a lot of inputs from abroad), rising consumer confidence, and a rising stock market.
2.2% growth is basically ok, closer to recession than to boom, but basically neither. It would take growth rates somewhat above 3% to reverse the unemployment increases that we've seen over the last two years.
But not all the news is rosy: using the administration's own numbers (from the CEA), the tax plan is projected to destroy jobs from 2005-2007. Why? Well it's billed as creating 700,000 new jobs in total, while creating 1.4 million in 2003-2004 alone. So to total up to 700,000, that many jobs have to vanish after 2004! That's rather convenient, given the election cycle.
And some of the news is outrageous:
A last-minute revision by House and Senate leaders in the tax bill that President Bush signed today will prevent millions of minimum-wage families from receiving the increased child credit that is in the measure, say Congressional officials and outside groups.
The $400 checks that these families will not get were a big part selling this plan, a way to avoid the "sellout to the wealthy" label. The group that does not benefit includes those making $10,500 to $26,625, meaning that many of these families, likely the majority, do in fact earn enough to pay income taxes, and therefore would benefit from the child credit even if it is not fully refundable (it isn't).
I'm sure we'll hear that this was an inadvertent slip (right now, the House is blaming the Senate's $350b "limit"), but inadvertent slips tell a lot about the priorities of those making the slips.
AB
UPDATE: The numbers about job growth and loss before and after 2003-2004 in the CNN story are based on a mistake Max Sawicky made, where that mistake basically amounts to believing the president's Council of Economic Advisors February 2003 report. You see, crazy Max thought that by a "creating a job", the CEA meant "one person working for one year who would not be working under the baseline scenario for that year", when it turns out that the CEA meant something different. Max explains the details here. I suppose the WSJ editorial page can just blame it on Clinton for confusing us all about what "is" means. I should emphasize that even under the CEA's interpretations, it remains very front-loaded, meaning the majority of job gains--such as they are--accrue bye the end of 2004.
X-posted at It's the Economy.
Wednesday, May 28, 2003
Another Red vs. Blue Post: Does Blueness Cause High Income?
Earlier I showed that, on balance, the Blue states (Gore) subsidize the Red states (Bush). For every dollar that a Red state pays in taxes, they get back an average of $1.12; on the other had, for every dollar a Blue state pays in taxes, they get back an average of only $.87. That's a -13% rate of return! And Bush said that the 2% rate of return on Social Security is bad! (See the postscript). Observing this disparity, I said this in passing:
"Factually, this [subsidy of Red states by Blue ones] doesn't bother me. The Blue states are generally wealthier than the Red states, and this is a natural consequence of progressive taxes."
But this leads naturally to an interesting question: Does liberalism cause higher income? Or does high income cause people to be more liberal? Or is there some third variable--education is a natural candidate--that causes both higher income and more liberal attitudes?
First, the facts: raw income-by-state data are available here, and population data are here. You can see them conveniently combined into one table here. Here are the highlights:
# States
(Includes
D.C.)Total Income Total Population Average Median Household Income Red 30 $5,628,131,171,397 140,626,203 $40,021.92 Blue 21 $6,501,454,021,776 140,795,703 $46,176.51 National 51 $12,129,585,193,173 281,421,906 $43,101.07
Clearly, while the population of the Blue states roughly equals that of the Red states, the Blue states earn nearly $900 billion (7% of GDP) more than the Red states. This means that because the tax system, even after factoring in all possible deductions and shelters, is moderately progressive, the Blue/Democratic states pay no less than 7% more of the nation's tax bill than do Red/Republican states.
What's the point of all this? In a future post, I'll make some grand generalizations about progressive societies, the Dark Ages, and the connections between liberalism and wealth creation. I may even make the case that liberalism does in fact cause wealth. In the meantime, I offer this you this quip to use when debating Republicans who complain about the dire need for more tax cuts: It's our money, we can promote the common weal by giving it away via a progressive tax system if we want to. If you don't like it, lower the average Blue state tax bill by $3,000 and raise the average Red state tax bill by $3,000. I think that's a great answer to some moron saying "move to Cuba".
AB
P.S. An exact Bush quote, from an October 2000 debate between Bush and Gore: "I want to get a better rate of return for your own money than the paltry 2 percent that the current Social Security trust gets today." In that debate, Bush made the same point in slightly varying ways a number of times (Entire transcript here).
P.P.S. Note to math geeks: yes, I used median income as the average, because that's what I found easiest on the census.gov page. In general, the median of the income distribution is below the average, so take this as a back, or perhaps two sides, of the napkin post. "Average Median Household Income" is computed as SUM(median incomes*populations)/SUM(populations), separately for Red and Blue states.
Monday, May 26, 2003
Ingenious Republicans
My last post made me think about how clever the Republicans are. That 5% tax rate on dividend and capital gains income for lower income families is tactically brilliant. First, it makes a great sound byte:
Intrepid Reporter: Senator X, isn't the new tax bill you just voted for a big give away to the wealthy?Second, it's close to free: since the large majority of the people to whom the 5% rate will apply don't have any dividend or stock income, the actual cost of this 5% provision is probably quite low (the costly part is lowering the rate on the wealthy from 35% to 15%). Third, insofar as the 5% rate does in fact apply to some people, who are they? Seniors! What's so special about seniors? Well, of course we love each and every one of them. But in politics, what they are really known for is voting in large numbers. It's a trifecta!Senator X: Not at all, my young friend. In fact, while we did cut the rate for the wealthy to 15%, we cut the rate on poor and middle income families down to 5%.Thats one-third as much.
Intrepid Reporter: Isn't that essentially meaningless, given that only a handful of poor and middle income familes earn any income at all from dividends and capital gains. Virtually all of their disposable income is spent on day care, the mortgage, health care, maybe college savings. How many families with children making $41k have, outside of retirement accounts, more than $1,000 in stocks, Senator?Intrepid Reporter: Oh, neat. I'll write that up.
AB
Clarification
In reference to my posts here and then here, a few people emailed to make the point that seniors with income of $41,000 could very plausibly have dividend and capital gains income totaling $1,000 per year. I comletely agree. However, the numbers in the right panel of the NYT's figure, titled "Married, two children under 17", are not relevant for seniors.
For seniors, the more relevant number is the $211 in the middle panel. This total savings of $211 is very close to just the savings due to reducing the tax rate on $1,000 of dividend and capital gains income from 28% to 5%! What does that mean? Well without the $1,000 assumption, Deloitte and Touche--and thus the NYT--would have had to report a benefit of roughly zero for the "Single, no children" category. (If the stock income tax rate for this bracket is only being cut from 28% to 15%, then the savings for singles without stock income would be $81).
AB
Sunday, May 25, 2003
I'm a Little Worried...
...about Kevin Drum, aka CalPundit, who seems uncharacteristically out of sorts today. What's bringing him down? A laundry list of things gone bad, and he doesn't even mention "massive deficits as far as the eye can see" or inane new abortion restrictions. Things would probably not seem so grim to him if there were a chance of the Democrats recapturing the House (no way), the Senate (a longshot), or the White House (?).
Still, it's important to keep in mind that there are still 18 month before the election, and that in 1991 with 18 months until E-day, Bush the Elder looked invincible. There was even a hilarious Saturday Night Live skit from 1991 that featured the Democratic contenders each trying to get the other to accept the nomination (and the presumed crushing that was to ensue). Weren't the Democratic candidates referred to as "The Seven Dwarves" or something like that? I vaguely recall that Clinton was polling in the low single digits in the spring of 1991 as well, and we know how that turned out. I guess my point is that anything can happen, possibly even the Democrats winning control of one of the elected branches of government in 2004.
AB
Friday, May 23, 2003
How Silly is the Times?
In my last post, I mentioned that the NYT story has a graphic showing the savings for various income leves, incuding for a family making $41,000 in household income per year. The tax savings in that graphic assumed that the $41,000 in income family had $500/year each in dividend and capital gain income--an assumption I called "patently absurd". Let's see the absurdity in action. Remember that we are talking only about stocks held outside of retirement accounts. What does it take to make $500 in dividend income?
Consider Coca-Cola, a company famous for it's dividend yield ("The Motley Fool" calls it "The National Bank of Coke"). Coke is paying out $.88/share in dividends this year, meaning you need to own 568 shares of Coke (KO) to get $500 in dividends. At the current price of $37/share, that's $21,022 worth of stock in Coke held outside of retirement accounts. How many families making $41,000 do you know with that level of stock holdings. Some, to be sure, but it's very unusual.
What does it take to make $500 per year in capital gains? Let's assume the market appreciates at 10%/year (you may have heard that the historical rate of return on the S&P and Nasdaq are around 11%, which they are, but thats including dividends, so let's say 10%). To make $500/year in capital gains, a family must on average year in and year out sell a bit over $5,000 worth of stock. Does that sound like anyone in that income range that you know?
AB
More Wall Street Journal (and the NYT)
As it turns out if you want actual information, non-distorted even, about the likely-to-pass tax cut proposal, you have to go to the Wall Street Journal. All of the following are on Page 1, above the fold:
- Bush's Tax Cut: Victory--at a Cost
- Bill marked by gimmicks marches past glitches, toward passage
- How a $350 billion price tag could balloon as high as $810 billion
- Much of what bill gives will be taken by strapped states, cities
- Meanwhile, rising deficits force Congress to move toward raising U.S. debt ceiling
- Sunset provisions overshadow dividend tax cut
You wouldn't get all this from, for instance, the NYT. There, if you go to the national section you can at least find one story with this subheading: "A hard look at various elements of the $318 billion tax bill shows a plan that could lose $800 billion in tax revenues over 10 years." But continuing with it's slanted coverage, consider this graphic (click to enlarge):
What's wrong with this? I looked at it and I thought, "Hey, at least this works out ok for middle income families with income around $41,000, particularly if they have kids". Then I thought, "But of course the marriage credits have a two year sunset", and then I thought "Hey, what's this about 'Assumes' and 'capital gains of:' and 'dividend income of:' and then putting in $500 for each."
That's patently absurd. Families making $41,000 per year do not--outside of tax-sheltered retirement accounts--have remotely near this amount of capital gains and dividend income. If the NYT wants to make stuff up (or hire Deloitte and Touche to do so), why not just assume they get all of their income from stocks? How does this fiction affect the numbers? Well there's $1000 of fictional stock-based income that will be taxed at 15% instead of 28%, which means the savings for the $41,000 family are overstated by $130--an 11% over statement of the benefit. Similarly, though I'm less certain on this point, $30,000 per year in stock income for families in the $530,000k and over bracket seems on the low side. So this assumption understates the top-end benefits of this tax plan. One more thing: where's the row for "Annual Household Income of $18,000"?
AB
UPDATE: The NYT assumption may be more biased than I thought. From the NRO: "Lower-bracket taxpayers will pay a 5 percent rate [on capital gains and dividend income] for the 2003-2007 period and zero percent in 2008". This mean that part of the savings come from the fictional $1000 in stock income being taxed at 5% instead of 28%, meaning the fake savings would be $230 (tax on $1000 is $50 instead of $280) instead of $130, if the NYT used the new 5% rate. 5%, or 50%, it doesn't matter what the rate is, since the dividend income for that bracket is way, way, below $1000. Based on a CNN story that I can't find anymore, only 28% of filers indicated some dividend income and 63% of those made more than $100k per year in income.
Thanks to MB (of Wampum)
For coming up with the It's Still the Economy Team Blog idea. Thursday, in Salon, Joe Conason had this to say:
An excellent blog aptly named "It's Still the Economy, Stupid" provides graphic illustrations of how the GOP "jobs" tax cut will be maldistributed -- and the record number of jobs Bush has lost so far.
I believe the first graphic ("maldistributed") he refers to is by yours truly, here (and here); the second one Conason cites ("jobs Bush has lost so far") is here, by MB.
AB
Thursday, May 22, 2003
Dammit
Blogger is really doing a number on my hit count. Even on my T1 line at work, over the last three days, my odds of successfully opening my blog are around 33%. Same goes for trying to open Atrios. Maybe it's the Amazon links? That last part was a joke, but I commented them out and now it seems to be working much better.
AB
UPDATE: From status.blogger.com:
Thursday, May 22, 2003BlogSpot has been especially sluggish recently and we are working hard to improve the situation. We sincerely apologize that the problem has taken longer to resolve than expected and for the frustration of having poor performance from the servers.
posted by Jason Goldman | 6:41 PM
Teasers on the Front Page of [even the conservative] Wall Street Journal
- P.1: Congress Nears Deal to Cut Taxes by $350 Billion: In Bush Victory, Accord Reduces Rates on Dividends; Top-Bracket Relief Survives
- P. A2: Congress is at risk of passing the Great Tax Shelter Act
- P. A4: Bush is losing on the tax issue with Americans
- P. C1: The bill may let some rich investers avoid almost all levies
Here's a nice highlight from the A2 story:
"...a rich investor might, for instance, borrow money and deduct interest payments...then use the money to buy shares of stock on which he would earn a tax-free dividend paid from profits that have never been taxed. Bottom line: The profits are never taxed, not even once, and the economy gets no new capital or savings because the investor borrows the money that he used to buy the shares."
From the WSJ/NBC poll on A4, Bush's overall approval is at 62%; 64% think there are better ways than a tax cut to increase economic growth (7% unsure); by a 55-36 margin, money to help pay for health care beats out tax cuts; and 53% said the 2001 Bush Tax Cut had no real effect on U.S. economic performance, with 15% saying they hurt and 25% saying they helped. Also, Lieberman, Kerry, and Gephart are all 20+% behind Bush in 2004 election polls, though a generic Democrat is only behind 47% to 32%.
From the C1 story:
"I guarantee it produces very, very low [tax] rates", possibly even zero says Ronald Pearlman, a tax-law professor at Georgetown.
As Warren Buffet points out, the government can't create a free lunch. Since spending, including discretionary spending, is increasing under Republican Control of the White House, the House, and the Senate, if someone pays less, then someone else has to pay more. We know who will pay less. Guess who will pay more?
AB
P.S. As these stories make clear, there is another reason that the cost of tax cut will be over $350b. I'm guessing that the costs of cutting the dividend tax to 15% were computed as (35%-15%)*($Dividend Income), while totally ignoring the substitution effect: people with the means to do so will shift money in ways to minimize their tax bills, increasing the cost of the tax cut.
X-Posted at It's Still the Economy.
Crazy Headlines
No, it's not a bit from Jay Leno, it's today's NYT: "$318 Billion Deal Is Set in Congress for Cutting Taxes". From the story [emphases mine]:
- The measure would reduce the tax rate on capital gains and dividends to 15 percent for most taxpayers for five years, and then reinstate the higher existing rates in 2008. Republicans have said they hope to extend the tax cut before it expires.
- Once it was clear that Mr. Voinovich was a swing vote on the bill, he was invited into the meeting with the vice president and asked pointedly what it would take to get his vote. The senator's spokesman, Scott Milburn, said Mr. Voinovich told the negotiators that he would support the bill only if its final cost was no more than $350 billion over 10 years, including the aid to states and other tax credits.
- Mr. Thomas had until recently bitterly criticized such sunset proposals as gimmicky, and he had also said he was adamantly opposed to assistance to state governments who, he said, had caused their own financial problems. [AB note: I agree with Thomas on that last point]
- "In the long run, the bill will not cost $350 billion or $550 billion, but it will really cost a trillion dollars or more," said Representative Charles B. Rangel of New York, the ranking Democrat on the Ways and Means Committee. "And all of it is borrowed money which increases the national debt."
- Mr. Grassley, among the most genial members of Congress, has said all year that he was not as concerned about the particular aspects of tax legislation this year as he was over finding a package that could get 50 votes.
Now, due respect to the reporters, David Rosenbaum and David Firestone, who write the story, not the headline. But for anyone at the Times to title this story with the phrase "$318 Billion", when every paragraph implicitly or explicitly says that the true cost is way above that? Just because the reporters don't write the headline shouldn't mean that Karl Rove gets to.
And what the hell kind of logic is Grassley applying? The details don't matter? If it's a freaking stimulus, then nothing but the details matter. Here are some details Grassley could think about: Is it in fact stimulative, Chuck? What will massive deficits do to future tax rates? What happens when the Baby Boomers retire? Will debt service crowd out future investment? F it, who cares. Will it get 50 votes? That's what is important. Thank God Grassley is so damn genial.
There appear to be some progressive elements in the package, though the story neither says how they got there nor gives much detail. The child credit--largely progressive because it's a lump sum--has a two year sunset, though:
The package would also put into effect this year lower tax rates for middle- and upper-income taxpayers that were not scheduled to become effective until 2006. For the next two years, it would give a tax break to married couples, and increase the tax credit for children to $1,000 per child from $600 for all but the wealthiest families....Beginning in about six weeks, less money would be withheld from workers' paychecks to reflect the lower tax rates, and checks worth $400 per child would be mailed to 25 million families.
I went to CNN for more details. I didn't find any new details on the plan there, but I did get a chuckle:
"If they stay within the 350, I'm fine," Voinovich said. "I appreciate the fact that they've been trying to honor my concerns and make me an honest man."
I'm going with Matt Yglesias' assessment on Voinovich.
In another post, Yglesias takes exception to the NYT's assessment that this is a "substantial political victory" for Bush, contending instead that it's a "total surrender to Senator Voinovich". I disagree. Come next year, Bush can either say "thankfully we were able to push this plan through and enact some dividend and capital gains tax cuts" if the economy is strong, or he can say "if we had been able to pass my larger tax cut, then the economy would be better right now." And who will refute that? The New York Times? Don't bet your lunch money.
AB
P.S. Matt's got another instance of misleading-at-best phrasing from today's NYT. Much more of this and I'll start reminiscing about the good old Jayson Blair days.
Wednesday, May 21, 2003
More Sid and Hannity
Salon's David Talbot interviews Sidney Blumenthal. Earlier, I remarked with some surprise that Hannity gave Sid a fair and balanced hearing on his show. (Contrast this to the SCLM's treatment of late--see the Daily Howler, 5/18, 5/19, 5/20, and 5/21). In any event, here's Sidney recounting his time on Hannity's show:
The rest of the interview is pretty good too.TALBOT: Why did you decide to go on Hannity's show? A lot of liberals boycott Fox because they feel they're just used as chum for the sharks.
BLUMENTHAL: Hannity's is the second biggest radio show after Limbaugh and he's the second biggest cable TV pundit after O'Reilly; I hadn't paid a lot of attention to him before. But I was glad to go toe to toe. I didn't find him mean-spirited. He tried to ask slanted questions that pushed me back on my heels, but I felt fine firing back -- and he let me speak. In fact he just asked me to go on his TV show this week.
AB
Regressive Tax Cuts
I found some numbers at ArgMax that are taken from a Brookings report on the distribution of savings from the Senate's version of the tax cut, and figured I'd make a nice picture (click to enlarge):
The picture somewhat exaggerates the top-heaviness of the benefits because the bins widen as you move right. Still, it's quite regressive: for example, the $75k-$100k group has roughly double the income that the $40k-$50k group has but their tax savings ($1,597) are 3.6 times larger. This is what happens when you finance dividend tax cuts by shaving cuts for married couples and small businesses.
AB
UPDATE: This is a great example of why you should be suspicious when the administration continually and virtually exclusively talks about the "average benefit"--which is around $1000 for this proposal. In this instance, anybody making less than $75,000 per year doesn't come close to getting the average benefit.
Latest Missive from Nigeria
This one contained a small math error (maybe they should join Stephen Moore's Club for Growth) that presents me with an opportunity to make an extra $3 million:
Regarding the allocation of money you describe, which I quote here:(1) 18% for you as the account ownerIt appears that 10% of the money is not allocated, can I have it?
(2) 62% for I and my colleagues
(3) 10% will be set aside to defray all incidental
This is my first time answering one of these, I'm curious to see what they say.
AB
UPDATE: I'll give them points for politeness and a prompt reply: the missing 10% goes to charity (click here for the full response--names and numbers deleted to protect the stupid).
Tuesday, May 20, 2003
Slow Loading
Mine, and many other BlogSpot blogs seem to be loading slowly, if at all. I find that it's more reliable to load Angry Bear with the "www" typed in than without, though either way should work. For other BlogSpot blogs, if using the "www" doesn't work, then trying without seems to help--and vice-versa.
AB
In Honor of Fleischer's Retirement
A link via Ted Barlow, who has been particularly good since his return, to a set of quotes from Ari Fleischer and former Iraqi Information Minister, Mohammed Saeed al-Sahaf. I challenge you to get more than half right. (Quotes compiled by The Antic Muse).
AB
More from Buffet
I generally trust people a bit more when they are advocating something that will cost them money, because I can infer that they are making an argument about what they think is right. Most strong advocates of the dividend tax cut are wealthy and stand to disproportionately benefit (here's a nice example using the Bush cabinet). Similarly, it makes sense for the non-wealthy to oppose it because the lost revenue will, either now or in the future, likely come out of their pockets when general tax rates and fees are raised. What's more interesing is when the wealthy oppose the dividend tax cut (or previously, the estate tax elimination). So it's imporant when a wealthy person, who is also one of the most successful businessmen in the past 30 years (paralleled only by Gates and Welch), pipes up against the cut. This from CNN:
Through his 31 percent ownership of [Berkshire Hathaway], Buffett said he would receive an additional $310 million in income that would reduce his tax rate from about 30 percent to 3 percent, while his office secretary would still have a tax rate of about 30 percent."The 3 percent overall federal tax rate I would pay -- if a Berkshire dividend were to be tax free -- seems a bit light," Buffett wrote.
Instead of the Senate's tax cut plan, Buffett proposed that it provide tax reductions to those who need and will spend the money in the form of a Social Security tax "holiday" or a tax rebate to lower-income people.
AB
P.S. NEW AB contest: who will be the first Righty to say, "if Buffet wants to pay more in taxes, he's free to give it to the government, just don't make me do it too". As wealthy as Buffet is, acting alone, he couldn't make more than a small dent in the budget deficit.
UPDATE: We have a winner: Matt Stoller identifies Grover Norquist on 5/5/03 as saying,
"If the president's tax relief plan really is unjust, then Mr. Buffett should be ready and willing to sign a Pledge to his shareholders at Berkshire Hathaway and to every American he harangues that he won't accept that relief once it becomes law".Matt S. blogged about this way back on 5/10/03, but if I get more quotes, I'll add them to the list...Stephen Moore? Grover also made this stupid statement, "Buffett is so fabulously wealthy he doesn't remember that half of Americans are stockholders and all will benefit from the president's plan"--actually, it's not really stupid, but rather intentionally disingenous. Over half of Americans do have stock, but the vast majority of those hold their stock in 401k's, Roths, and Traditional IRAs, and so get nothing from the dividend tax cut.
Monday, May 19, 2003
Sid and Hannity
I Just heard about ten minutes of Sidney Blumenthal on Sean Hannity's radio show, and now I have to give credit where it's due...to Sean Hannity! First, for booking Blumenthal, and second for, in my judgment, giving Blumenthal plenty of time, not interrupting excessively, admitting when Blumenthal had a point, and overall giving a very fair hearing with mostly even-handed give and take.
That said, I got tired of sitting in my car and went inside, so I didn't hear it all. But the part I did hear was, dare I say, fair and balanced.
AB
P.S. Read Blumenthal's book.
UPDATE: Contrast my assessment of Hannity to CNN's Judy Woodruff interviewing Blumenthal last night (transcript here; analysis here).
Hey, There are Books and Links to Your Right
First anger. Yes, tomorrow is the long anticipated TCW-day; get the inside story from a Clinton Administration insider, Sidney Blumenthal. The story some call "The Story the Press Doesn't Want You to Know".
Then insight. Read The Gifts of Athena, a book on the history of technology and the evolution of the knowledge economy. The author, esteemed Economic Historian Joel Mokyr, traces the origins of and explanations for the dramatic acceleration in the production, diffusion, and implementation of new knowledge over the last 200 years. I just got this today, so I can't directly attest to the quality. But his previous book, The Lever of Riches, was a great look at innovation and technological progress in Europe. Mokyr is an economist by training and at heart, but he's a great writer who uses the economic way of thinking (but, in his books, without formal economics) to bring new insights into the history of knowledge and technology.
Then fear. Orwell's classic 1984 was re-released about two weeks ago, with a new forward (Thomas Pynchon) and afterward (Erich Fromm). If, like me, you haven't read this since high school, it might be time to for a re-reading. For those inclined to slippery slope paranoia, think PATRIOT Act (and the contemplated PATRIOT II), and then read James Wolcott's piece in the current issue of Vanity Fair (not online).
AB
The Economic News Sucks Today
Look for a rate cut if all this stuff keeps happening. Note to Republicans: I mean "look for an interest rate cut", not another "tax rate cut". This on top of already bad news on jobs and bankruptcies.
AB
Sunday, May 18, 2003
Bill Gates: Evil Businessman or Philanthropist Extraordinaire?
Mac Diva has an ongoing dialog on this topic with one of her frequent readers, Jim, as well as some other bloggers. First, a little side note about the blogsphere: I believe techies are distinctly more libertarian than the general public and also distinctly more anti-Microsoft (this observation comes, e.g., from years of reading the comments to ZDNet stories about Gates and MS, which is usually referred to therein as "M$"). And blog-readers are disproportionately techie, giving them a libertarian and anti-MS twist. Keep that in mind if you follow this issue.
The story so far is that Jeanne d'arc of Body and Soul referred to a Salon story that had some good things to say about MS and got her inbox filled with anti-Gates emails. The whole issue came up because Gates' father came out against repeal of the estate tax, along with Soros, Buffet, and a few other super-rich poeple. Buffet recently also came out against the current Bush tax cut.
Mac Diva's reader, Jim, came up with a four point critique [slightly abridged]:
- ...he was well known for not giving much of anything until the Justice Department got on Microsoft's case.
- ...he gives rather less proportionate to his wealth than others in his circumstances often do.
- ...he very often gives in such a way that it benefits his business, giving software or money towards computer instruction in school and things like that.
- Four, and perhaps most important, is also the point I'm not positive on, as I'm not a tax expert. But as I understand it, changes in the tax code over the past decade or so, made to encourage giving, allow one to deduct the full current market value of stock given, while the income from that stock is valued at the purchase price. This bypasses capital gains. Since Gates' Microsoft stock was originally purchased for approximately $50,000, and is now worth billions, the value of each dollar's worth of stock is essentially nil. This, and correct me if I'm wrong, would mean that if he donates Microsoft stock worth a million, he lists as income the purchase price of that stock -- this would be what, $50? Yet on the deductions side of his return, he takes a deduction of $1 million, which in a high tax bracket is worth $250,000 or more. Sounds to me like a nearly quarter of a million dollar profit for "giving" to charity.
Mac Diva does a good job on the first three points: 1) yes, he did give before DOJ's started watching MS. It's true that giving went up as DOJ's cases progressed, but the first case came up in 1993, when MS was huge, but not yet a titan. So the three were simultaneous: increased federal scrutiny, increasing wealth, and increasing giving. There may be some confusion because the Bill & Melinda Gates Foundation was created in 2000, but it was an amalgamation of pre-existing charities and foundations paid for by Gates. 2) On the relative size of gifts, The Gates Foundation currently has $32 billion in assets, which puts the value of Gates' contributions in the ballpark of 25-40% of his wealth, depending on MS's stock price (and I recall something about his children getting $10m each when he dies, and the rest to charity; here's one link). This is, I believe, far above the typical level of giving for the wealthy (perhaps comparable with Carnegie, Sloan, and the Annenbergs).
On point (3) the reader and Mac Diva are correct that in-kind technology gifts involve benefits to MS and by extension to Gates. But Bill Gates is very savvy and presumably factors in such benefits when deciding how much to give. That is, he might well be indifferent between giving schools $800 million in cash or $1 billion in technology. As long as the schools were going to spend at least $1 billion on technology (Word, Windows, Wintel PCs, networks,...) anyway, and don't have a strong intrinsic preference for Macs or Linux, then the schools are better off. Now the schools have their entire budget to spend on non-tech stuff. If they took the $800m cash and spent it on $1b worth of non-MS IT then they would have $200m less to spend on all other goods.
On to point (4), the one I was asked to talk about. I'm not sure what Jim means by the phrase "the income from that stock is valued at the purchase price". The income tax owed on long run (held over 2 years) capital gains is 20%*(sale price - purchase price). When stock is donated, the giver is allowed deduct the market price of the stock at the time of the gift from income. If a stock is never sold, capital gains taxes are not paid. Suppose Gates had $50 thousand in 1985 stock that is now worth $40 billion: if he sold it then he'd owe roughly $8b in taxes (capital gains are taxed at 20%, for now). If he gives the stock directly to a charity, then he pays no taxes. In order to avoid paying those taxes, however, he had to give $40b away to charity, which seems reasonable to me.
The one question this raises in my mind is something I'll refer to my friends at A Taxing Blog. Capital gains are taxed at 20% while income is taxed at 36% [in Gates' bracket]. Suppose Gates has equal amounts of income in a year from capital gains and from regular income. If he donates all his regular income to charity and then sells the stock, at the end of the day, the money he doesn't give away is taxed at 20%. But if he donates the stock to charity and keeps the regular income then the money he keeps after charitable giving is taxed at 36%. Either way, charities get the same amount, and Gates has the same pre-tax income, but in the former case, he pays substantially less in taxes. Is this correct?
Nothing in this post is a statement about MS's business practices (e.g., see this article); the point I am making is that, whether obtained by hook or by crook, Gates gives away a lot of money. This is true both in absolute and relative terms. And yes, there are tax benefits to Gates from these gifts, but not enough to offset the value of the gifts. Referring back to the question posed in the title, the answer is either "both" if you dislike MS, or "Businessman and Philanthropist Extraordinaire" if you like MS. Either way, the Philanthropist label seems deserved and will be even more so if at his death he gives all but $10m per child to charity.
AB
Blogging in the TImes
I've seen a few bloggers linking to the NYT story, "Dating a Blogger, Reading All About It", which is mostly focused on personal blogs. Also today, the NYT has another story, "As Google Goes, So Goes the Nation", that talks a bit about blogging.
Dave Winer, whose blog archives go back to 1994, in a post that I agree with entirely, has this to say:
PS: The Times piece, like the Register piece, makes a lot of derogatory and condescending statements about bloggers. An example -- "the Web is a tool that enables people who have a life to benefit from the efforts of those who don't." This kind of writing is unbecoming a paper of the stature of the Times, and probably reflects a bias, perhaps even a conflict of interest, on the part of the author of the article and the editorial staff at the Times. This is not the first time this has happened. I've written about this publicly many times. The editors of the Times have yet to respond.
The sentiment expressed by the Times reporter is very similar to what I found in a clip from the transcript of a recent PBS story on Blogs, which I talked about here. In the PBS story, they had an executive producer from MSNBC of all places, talking about how the real value-add in blogging is the editorial function that MSNBC provides.
IndeedTM.
AB
Saturday, May 17, 2003
Red vs. Blue, Revisited
Atrios correctly pointed out that I should have weighted the data in computing the average net receipts from or payments to the federal government for the two categories of states. Because the data in the Tax Foundation Report reports "[Federal] Expenditures per Dollar of Taxes", simply averaging the numbers by state is misleading. Here's an example of the issue:
| An Example of why Weighting Matters | ||||
| Expenditures per Dollar of Taxes | Total Tax Revenue | Total Federal Expenditures (=Exp. Per Dollar * Total Tax Revenue) | ||
| Blue | Blue-1 | $1.05 | $50 million | $52.5 million |
| Blue-2 | $.80 | $2 million | $1.6 million | |
| Red | Red-1 | $.97 | $30 million | $29.1 million |
| Red-2 | $1.20 | $4 million | $4.8 million | |
So, with two states in each category, the simple average for the Blue States is (1.05+.80)/2=$.93, which looks like a bad deal. The simple average for the Red States is $2.17/2=$1.09, a great deal. Blue States get screwed and Red States do well! But this doesn't account for the fact that the Blue State that is a net beneficiary (Blue 1) is much larger than the Blue State that loses out (because Blue 1 pays $50m in taxes; Blue 2 only pays $2m). As Atrios points out, the correct approach is, separately for Red and Blue states, to compute Total Federal Expenditures and Total Taxes Paid and then divide the former by the latter. In this example, this calculation shows that Blue States get back $1.04 per $1.00 paid in taxes, while the Red States break even--a complete reversal of the earlier conclusion. Now Blue States benefit more than Red States, which is the correct conclusion (in this hypothetical example).
In any event, I did the correct analysis for Red and Blue states, and came up with the following picture (click to enlarge):
So the basic point remains true: the states that rail most against the federal government also get back more from the federal government than they pay. Factually, this doesn't bother me. The Blue states are generally more wealthy than the Red States, and this picture is a natural consequence of progressive taxes. The part that bothers me is hearing Ted Stevens (his state gets back over $1.50 per dollar paid in taxes), or Trent Lott ($1.78), or Bill Frist ($1.20) whine about government and taxation without acknowledging this basic point, and their role in contributing to it (see Lott in action here). Dick Armey, on the other hand, may have a point: Texas gets back $.92 per dollar paid in taxes.
If you're interested, more data and details are available here.
AB
UPDATE: Uggabugga has more, including fancy maps.
UPDATE: Red vs. Blue Income Numbers here; a brief argument for why liberalism causes economic growth here.
Friday, May 16, 2003
Media Handlers
An it would be amusing if it weren't disturbing story in the NYT today on how the White House stages events and lighting and backdrops to market the president. For example,
- "...On Tuesday, at a speech promoting his economic plan in Indianapolis, White House aides went so far as to ask people in the crowd behind Mr. Bush to take off their ties, WISH-TV in Indianapolis reported, so they would look more like the ordinary folk the president said would benefit from his tax cut." [emphasis mine].
- "...For a speech that Mr. Bush delivered last summer at Mount Rushmore, the White House positioned the best platform for television crews off to one side, not head on as other White Houses have done, so that the cameras caught Mr. Bush in profile, his face perfectly aligned with the four presidents carved in stone."
- "...Mr. Sforza and his aides had choreographed every aspect of the [Abraham Lincoln] event, even down to the members of the Lincoln crew arrayed in coordinated shirt colors over Mr. Bush's right shoulder and the "Mission Accomplished" banner placed to perfectly capture the president and the celebratory two words in a single shot."
It's worth a read. On a more substantive level, is it just me or is there a barely detectible shifting in the tone of the press, toward a more skeptical tone regarding Bush's policies and proclamations? Not so much in what's being reported (e.g., no "missing year" stories), but rather in the way it's being said--the tone in an increasing number of stories seems more questioning. From 1999-recently, my most common reaction to a story covering Bush was, "Did Rove write this?", and I'm getting that less of late. I can't quite put my finger on it, but I'll keep looking for examples. If Somerby is correct, the press aren't right wing or anti-democrat, just lazy and mindless. So when a few start leaning in one direction, the rest follow (it's not exactly that they all plagiarize each other, but the end result is largely the same).
AB
I talked about a related subject here, where I speculated "...after the flow comes the ebb. Will conservative news/commentary go the way of Reality TV and Millionaire? I don't know, but MSNBC is doing its best to drive the format into the ground (of course, for MSNBC's programming choices to actually affect viewer tastes, somebody would presumably actually have to be watching MSNBC--call me an optimist)."
Thursday, May 15, 2003
Red vs. Blue
Atrios points out that Red states are stealing from blue states. So I went to the full report Atrios cites, added some color-coding, and made some graphs. While the subsidies are much larger in the Red states (those that in principle dislike government subsidizing anything), they are not quite as bad as I thought. I suspect the explanation is that our system is designed to favor smaller states by giving them disproportionate representation in the Senate (two per state) and the Electoral College (1 per member of Congress, so a three vote minimum). Still, the citizens of conservative states don't seem particularly opposed to federal largesse (It's always fun to listen to Ted Stevens of Alaska--a top beneficiary--rant and rave against the govenment).
It looks like there's something funny in the graphs because you might expect that everything has to average out to one. My guess is that they are using income taxes paid by each state and transfers made to each state. Since the government has other sources of revenue (e.g., tariffs), it can pay out more than it collects in taxes. Overall, a small majority of Blue states get less than $1.00 returned back per dollar put in, while the vast majority (27/31) of Red states break even or better. (Click on each image to get the full size version).
AB
UPDATE: Commenter Ross raises the obvious (to him, not me): "Do you think the discrepency between revenues and spending/ transfers to the states may represent deficit?" To which I answer, of course! Although the deficit wasn't at today's level in 2001, this is surely the biggest part of the explanation.
UPDATE: Oops, Gore won Oregon. Luckily, since Oregon is dollar for dollar even, it doesn't really change the basic point.
UPDATE: Atrios points out correctly that these are per-capita figures and that population-weighting could change the picture (see the comments for that and for my response). He or she is right, but the most populous blue states tend to be net payees to the other states (and also tend to be blue), so they will still be net losers. How much so? Atrios did the work that I didn't do:
"So, I went to the raw data on all of that and wastedBy my earlier logic, Atrios should have come up with a bigger gap than I did, but he didn't. It may be accounted for by me excluding DC (a huge per capita beneficiary), while Atrios may have counted DC as blue; Atrios probably also correctly counted Oregon as blue. Maybe I'll look into it over the weekend.too manya few minutes punching it in. In total, "blue" states get 94 cents for every dollar they send to the Feds, and "red" states get $1.08."
Food for thought: does all of this mean that we should lower taxes in Blue states and lower spending in Red states?
UPDATE: Red vs. Blue Income Numbers here; a brief argument for why liberalism causes economic growth here.
The 'L' Word
Tapper is good today in Salon, and his theme segues nicely with Somerby here and here.
AB
Stephen Moore
CalPundit made a great catch, noting that Stephen Moore, president of the Club for Growth (a lobbying group devoted to Supply Side policies--Moore is on CNN, Fox, ..., writes opinion pieces that appear in major newspapers, and gets quoted fairly often) can't do simple math. This likely explains his devotion to Supply Side Economics. National Review Online, which published the faulty piece, has since changed the math, without noting the error.
This made me wonder whether Moore has a Ph.D.--he doesn't. But I did find something that explains a bit about Dick Armey:
Mr. Moore served as a Senior Economist at the Joint Economic Committee under Chairman Dick Armey of Texas. There, he advised Mr. Armey on budget, tax, and competitiveness issues. He was also an architect of the Armey flat tax proposal now before Congress.
I'm not sure if this means that Armey's misguidedness caused him to hire Moore, or whether hiring Moore caused Armey to become misguided--though I suspect it's the former. Incidentally, Moore has an MA in Economics from George Mason University. Typically, though not always, people get masters in Economics as a sort of consolation prize when they can't pass the qualifying exams at the end of the first or second year (Economics is a bit unusual in that very few people enter terminal Masters in Economics programs, because that degree just doesn't do much for you, so few schools offer them. Instead, you get a Masters by entering a Ph.D. program and then dropping out along the way).
AB
I Didn't Think this Would Make it Through the Senate
From the NYT, among others: "Republicans Woo Moderates on Tax Cut". It looks like the Republicans have 50 votes in the Senate, with Dick Cheney holding the tie-breaking 51st, for an amendment to replace the Grassley-proposed and Senate Finance Committee approved version of the dividend tax cut. Zell Miller voted for the tax cut (as I predicted here), and Democrat Ben Nelson of Nebraska (Red State) also will vote 'aye'. Voinovich gave in to pressure and agreed to vote yes, stating "[this plan] gets the biggest bang for the buck that we can possibly get" (rather Panglossian).
Technically, Voinovich did not reverse course as the plan comes in at $350b. Of course it only achieved that number via the dishonest accounting of sunset provisions: 1/2 of dividend income is excluded from taxation in 2004, followed by 100% of dividend income from 2005-2007, at which point the exclusion will in principle sunset (so the 10-year cost of the tax cut uses the assumption that dividends will be taxed from 2008 onward). Still, this plan will cost much more in lost revenues than Grassley's. How did they add this cut and still keep under $350b?
The more robust dividend plan shaves tax cuts for married couples and small businesses to make room for more dividend breaks in the bill, which cuts taxes $350 billion over the coming decade [according to Sen. Don Nickles (R-Ok)].Fantastic!
Olympia Snow held her ground ("My position hasn't changed"). And the story didn't say, but it looks like Chafee and Collins also stood firm (48 Democrats + Jeffords + Chafee + Collins + Snow - Miller - Nelson = 50).
AB
X-Posted at ISTES.
UPDATE: Via A Taxing Blog, this Brookings Institute analysis of three tax cut options--$726b, $550b, and $350b ("Our overarching conclusion is that the Administration, House, and Senate Finance Committee proposals are seriously flawed and are strikingly removed from the economy's current and long-term problems"). It's good, if very slightly wonky.
More Jayson Blair
Eric Boehlert of Salon has a story devoted to the race angle. One quote from Jim Dwyer, "a Pulitzer Prize-winning reporter at the Times" struck me as interesting:
..."I've worked at six newspapers and seen alcoholic shipwrecks and drug shipwrecks, and people who've fallen apart through nervous breakdowns, and they're all brought back and given a second chance. I've seen it happen to people of every race".Also, I now have to add Mike Barnicle and Jeff Jacoby to the list of errant reporters who were not affirmative action hires. Jacoby amusingly copied an old Ann Landers piece on What Happened to the Founding Fathers? without attribution and as the product of his own research--this was a story that previously made the email and AM radio circuits. And many of the details of the purloined stories are false--as I said before, it's easiest to catch the unskilled plagiarizers.
AB
The 25th Ammendment...
...can be read here. Basically, the President gets to comeback when he says he's ready, and it takes a majority of the cabinet to initiate a Congressional vote to prevent the President's return. Should that occur, it takes a 2/3 majority of both houses to prevent the President from returning to office when he feels like it. It was passed by Congress July 6, 1965 and ratified February 10, 1967. I don't know much of the history behind this, but presumably in the wake of JFK's assassination there were concerns about preserving stability should the President be incapacitated.
The amendment also says that should a Congressional vote be required, Congress must meet and vote within 21 days (23 days if out of session), leading me to wonder what would happen if a group of legislators opposed to the President's reinstatement blocked a quorum by simply hiding out in Canada or Mexico? [Note to West Wing writers: with Sorkin and the show's director now gone, you may be in need of script ideas for next season. This one is for sale].
AB
P.S. This is in relation to tonight's episode of The West Wing, not some real-world event.
Wednesday, May 14, 2003
Jayson Blair Update
The Washington Post has a opinion piece on Jayson Blair, by Terry Neal. Apparently, I should have included Ruth Shalit in my list of noted plagiarizers who were not beneficiaries of any affirmative action programs. I like Neal's take on why Blair, and other plagiarizers, do so well (until they are caught):
...Here's my theory: Freed from the normal constraints of truth and veracity, "journalists" such as Blair, Shalit, Barnicle, Smith and Glass shine above their counterparts. They're promoted ahead of the pack because their stories, sneakily cloaked as journalism, read better than everyone else's stories. In a profession fueled by competition, their careers are propelled along because of, rather than in spite of, their transgressions...To suggest somehow that Blair is unique in being coddled by upper management is pure buffoonery."
AB
No to Tax Cuts Debt Increases
Matt Stoller has what I think is a pretty good suggestion. And it's much more accurate than, for example, calling the "estate tax" the "death tax" (only a small proportion of those who die are subject to estate taxes).
AB
Tuesday, May 13, 2003
The Battle is Won
No, sadly not the War on Terrorism, just AB's battle against the Axis of Frustration (Blogger, Templates, HTML) and its weapons of extreme annoyance: style sheets, screen resolution, table width and placement, TR and TD, valign,....
Unless I'm crazy, Angry Bear is now viewable without horizontal scrolling in resolutions from 800x600 to at least 1280x1024. In 1024x768 or higher resolution, you can see all of Angry Bear. In 800x600, you should see the left hand panel and the blog text, though you have to scroll right to see the archives (look soon for a button on the bottom of the left panel that says "Archives" and takes you to the top of the right panel Done!). All three resolutions have been tested in both IE and Opera. In Opera, the title doesn't show up for some reason, just a big orange rectangle (my next project), but other than that, Done! everything is fine in both. Comments now work in both Opera and IE, on PCs and Macs, though I had to take out some of the extras like bullet list and font formatting.
Normal posting should resume tomorrow.
AB
UPDATE: There were a few more skirmishes, but they are done now, as reflected by the above striken-through text.
Affirmative Action
CalPundit has a post that largely echoes a conversation I had last night on the subject of whether Affirmative Action leads to promotion and hiring of less qualified people. I said, "sure, you can find instances of it, but you can find instances of hirings of unqualified people for a variety of reasons". The variety of reasons I had in mind is reflected in the aphorism, "it's not what you know, it's who you know", and in the phrase "old boys network", and in the practice of legacy admissions and so forth. Because of slavery and Jim Crow, Black Americans have only had a bit less than 40 years to develop legacies and old boys networks and connections, which is a bit less than the 400 or so years white Americans have had. So I said that, on balance, affirmative action is a reasonable counter-balance. If you looked closely enough, I am sure that for every Jayson Blair out there, you could find an instance where affirmative action lead to a minority being hired instead of the boss's imbecilic nephew.
And for the love of God, somebody please tell me what color Doris Kearns, Steven Ambrose, John Lott, Stephen Glass, Jan Hendrik Schon, and Michael Bellesiles are? I don't know Bellisiles' race, but I'm pretty sure the answer on the others is...[pause for some suspense]...white.
And finally, if you are going to argue against affirmative action on the basis of a meritocratic argument, then be consistent and argue against repealing the estate tax (and then using the funds to improve public schools, or for inner city vouchers, or something that levels the playing field).
AB
Browser Stats
For all of you using Netscape v X.x, I assume you are doing so out of some sort of MS protest, or love of the concept of Mozilla. In practice, Mozilla worked out rather poorly; I say, use Opera. When pages let me use it, it's really the best browser around, in my humble non-techie (but just techie enough to know what Mozilla and Opera are) opinion. In any event, it appears tha Blogger will only let me optimize for one broweser, so based on usage, it's gotta be MSIE, until I figure out how to make the page more robust. I feel a post about network externalities coming on.
AB
62% Microsoft Internet Explorer 6
18% Netscape 5
8% Microsoft Internet Explorer 5.5
5% Microsoft Internet Explorer 5
2% Microsoft Internet Explorer 5.01
0% Opera 7.03
0% iCab 5
0% Netscape 4.77
0% Netscape 4.78
0% Opera 7.1
0% Konqueror 5
0% Netscape 4.76
0% Netscape 4.79
0% Netscape 4.61
0% Opera 7.02
0% Opera 6.04
0% Microsoft Internet Explorer 4.01
0% Netscape 4.7
0% Microsoft Internet Explorer 4.5
0% Netscape 4.73
Monday, May 12, 2003
Hey, Angry Bear, Why are you so Angry?
Generally, I'm not, but right now I can't get this #!@!#@! blog to fit into the correct width. So tomorrow (when I have broadband access) I have to redo the template. Until then it looks like you have use the horizontal scroll bar. Just to really make me angry, when I post the template into my HTML editor, it looks fine. When I have blogger publish the page and then I view the source and paste that into my HTML editor, it becomes too wide.
AB
UPDATE: And, as you can see below, someone keeps posting that there's no text box in the comments, but when I click on "comment" (in both IE and Opera, but I haven't tried Netscape), it works fine...Please email me angrybearblog@yahoo.com and describe the problem and your browser and I'll work on the issue. And if you can see the text box in the comments, could you indicate that by leaving a comment to this post? Thanks.
Sunday, May 11, 2003
Wax On
Via Martin Stabe, a link to another Waxman ProductionTM, this one a report on how much Bush and members of his cabinet stand to gain if the Dividend tax is repealed, from which I extracted this table (click here for a larger graph):
For those still unclear on the concept, add a line saying "you" with "Estimated Dividends and Capital Gains" ranging from 0 to $400 and "Estimated Tax Savings" ranging from $0-$100. Remember, only dividend income held outside of IRAs counts because IRAs are tax-sheltered. If the Grassley $500 exclusion were instead adopted, all the cabinet members would save about $150, though Spencer Abraham and Ann Venemen might get somewhat less. The $500 plan puts the benefits to the Bush cabinet roughly on par with the benefits for the "you" category (where "you" means anyone making less than a few hundred thousand dollars a year). That must be why it appears unlikely to emerge from the conference committee.
AB
Evolution
I've gone from "Adorable Little Rodent" to "Maurading Marsupial" on N.Z. Bear's blogsphere rating system (To see it, go there, hit CTRL-f and then type "angry bear")! Sure, it's a little bit biased due to my participation in ISTE because whenever I post there and refer back to Angry Bear, it counts as an inbound link to Angry Bear (but only for as long as the link is on the front page, I think). At the same time, there are a lot of genuine new linkers as well. Now if I could get readers to use the comments more often. In honor of the return of Ted "Reciprocity" Barlow, the new linkers that I spotted are:
- http://pla.blogspot.com
- http://coldspringshops.blogspot.com
- http://skepticalnotion.blogspot.com
- http://www.digitalmediatree.com/dratfink/
- http://www.refference.blogspot.com
- http://www.poor-attitude.org/mt/
- http://www.notfrisco2.com/webzine/Joel/
- http://www.stoutdem.com/
- http://www.blogstudio.com/dystopia/
- http://towncrier.blogspot.com/
- http://stabe.blogspot.com
AB
UPDATE: And I made number 9 on Technorati's current "Top 100 Interesting Newcomers" list. This list doesn't count links, as NZ Bear's does, but rather uses a model that compares new links to existing links so that a blog with a low number of cumulative links but a high number of new links gets a big score (This doesn't imply that NZ Bear's algorithm is wrong, just that he's measuring something different). As David from Technorati explains,
What the ranking algorithms described above does is make it progressively harder to move up in ranking as the number of current inbound blogs increases. This effectively negates the power law that Clay describes, and gives us a way of measuring apples to apples.Basically, the idea is that for a relatively obscure blogger who has, say, 40 people currently linking to his blog, getting 4 or 5 new blogs linking to him can have the same effect as a a-list blogger getting 40 or 50 new links.
Intuitively, we know that this is right - After all, it's very easy for Doc Searls to get 20 new links to him - he has such a large readership. But for a smaller blogger to get a bunch of new links, he must have posted something really interesting that day.
The Times Scandal
7,238 words ripping into the former Times reporter Jayson Blair for pulling the wool over their eyes for five years. Now, if they would just take a look back to 1999 and 2000, especially Frank Bruni. But I guess that overt servility and sycophancy don't violate journalistic ethics.
AB
A Little Perspective
The president pushed so hard to pass at least $550b in tax cats that Democrats will surely claim victory when the tax cut likely comes in at $350b (down from an original proposal of $726b). When they do, keep in mind that that even at $350b, it will be the third largest in history, on top of the largest in history in 2001.
Also, as the NYT story explains, even a bill that only costs $350b will only hit that number via the disengenuous practice of built in sunsets. For example, if you're worried about paying estate taxes, be sure to die on or before 12/31/2010, as that's when the estate tax repeal expires. (2010 and 2011 will provide a great test of the extent to which economic incentives to affect behavior). Building the 2010 sunsets into the 2001 tax cut allowed the Bush administration to cite only 9 years of costs as the "10-year cost of the tax cut". (I don't have the link on hand, but Somerby's got a bunch of incomparable posts on this subject). Look for more of the same from the conference committee as the final bill takes shape.
And did I say that Grassley's $500 dividend income exclusion proposal was pretty reasonable? (Yes, I did, in a post called "Credit Where it's Due"). Now, as further proof that I was right and it is a reasonable proposal, there's the fact that Republicans found a tax cut they don't love:
The bill that came out of the Finance Committee would exclude from taxes each year the first $500 in dividends an investor receives and exclude part of dividends above $500 -- 10 percent through 2007 and 20 percent thereafter.This is too paltry to affect the economy or the stock market and would be of little help to the wealthy investors in the Republican camp. So Republican senators say they will try to expand the exclusion in amendments on the Senate floor. If they do not succeed next week, it is unlikely they will fare better when the bill comes out of conference.
The message appears to be that any tax cut has to be big and really skewed upwards or forget it
AB
Saturday, May 10, 2003
Angry Bear is Now Fully Justified!
I should leave it at that, but I'm actually referring to the slightly new look of Angry Bear, including fully justified text and a new right-hand sidebar where someday I may start asking you to buy stuff or give me money.
If you visited late Friday night or early Saturday morning, you may have seen some weird stuff, but it seems to be under control now.
AB
Friday, May 09, 2003
More on the Distribution of Benefits
Just for comparison, the following chart shows the average benefit for the bottom 80%, the median benefit for the bottom 80%, and the benefit for the top 1%, under Bush's plan and under Grassley's plan. As you can see, Grassley's plan isn't progressive, per se, but compared to Bush's proposal, it's a plan Eugene Debs could endorse. (click here for a larger, more legible, graph).
Note how I had to add the labels indicating the savings for the median tax payer in the bottom 80%--without the labels, you can't even see it.
AB
UPDATE: I should clarify that the $2.50 median figure is a best guess that is much more likely to be zero. All other numbers are real--derived from the Waxman report, the CNN report on Grassley, and some algebra. How did I get $2.50? For the first time ever, in 2001 the number of stock holders exceeded the number of non-stock holders. So a bit more than half of the U.S. population now owns stocks, meaning that 40-something percent do not own stocks and therefore do not receive dividend income at all and thus have a (direct) benefit of zero from a dividend tax cut. The median of the 0% to 80% range is the 40th percentile of the overall income distribution. If stock ownership increased one-to-one with income, then the median benefit would be zero. But then I figured that some (but a distinct minority) of the 40th percentile (income of $33,314) might hold a few shares of the biggies, ATT, Coke, GE, and the like, so I guessed that dividend income would average out to about $2.50 (averaging a bunch of zeroes, and a few numbers in the hundreds of dollars and then multiplying by the 20% tax rate for that bracket).
More on the Dividend Tax Cut
The picture first appeared in Henry Waxman's study of Bush's proposed dividend tax cut, then appeared on gorilla-a-gogo, which Off the Cuff then linked and copied, which CalPundit then also posted ,with attribution. If you still haven't seen it, here it is (for those unclear on the regressive concept, I've identified which bar applies to you, unless you make over $374k per year):
This graph is a great example of why I was earlier able to state with confidence that "[Grassley's] proposal is not Bush's plan; it's just the best he [Bush] can get without Snowe, Voinovich, Collins, and Chafee (Zell Miller can only sell out once). Were Bush's plan implemented, I assure you it would be regressive."
How would things look under Grassley's plan? The rich would get to exclude $500 of dividend income, which would otherwise be taxed at 38.6% (2003 rate), for a savings of $193; the bottom 80% would get an average saving identical to that in Waxman's graph, $29.50. Even that figure overstates the benefit--the $29.50 stems from a relatively small number of upper middle class (70-80%) getting a benefit well above $29.50 and the majority of the middle and lower class getting 0. Seriously, would it be so hard to identify the mean and the median benefit of the various tax programs? In this case, the median benefit to those in the bottom 80% would be the benefit to the person in the 40th percentile, which I suspect would be very close to zero--maybe $2.50 in tax savings.
Whenever the average of X is well above the median of X, you know that the distribution of X is skewed upward. Suppose you and ten friends are in a room and that the average income in the room is $50k, which is also the median (half make more than $50k, half make less). Now take your wealthiest friend and replace him with Bill Gates, who makes $1 billion per year. The average income becomes $104.5 million, but the median remains unchanged at $50 thousand. More to come.
AB
P.S. Why all the emphasis on attribution? See the previous post.
Plagiarism
Since the topic is making the rounds in the blogsphere (Kieran Healy here; CalPundit here; Invisible Adjunct here; Yglesias here), I'll toss in my two cents. Cent one: there are a lot of genuinely funny stories going around about students suddenly elevating their prose to Dostoyevskian levels, or their mathematical analysis to the level of Nash. The implication is that plagiarizers are all stupid and sure to get caught by clever professors.
Here's my story. I had a student whose previous short paper was on internet shopping, and a shallow treatment at that. Internet shopping was actually a fine topic, given that the course was on the Economics of Innovation--shopping on the web was, at the time, indeed an innovation. The final paper that the student submitted, only a few paragraphs into it, went into text along the lines of "Let N denote the number of firms, and assume that there is a mass of consumers of [Lebesgue] measure one." Later, the paper referenced Subgame Perfect Nash Equilibria and the like. Clearly, it was plagiarized. I gave the student an F, after threatening going to the dean and pursuing expulsion.
Cent two: It's always important to think about sample selection. As professors, we only observe the bad plagiarizers. There are likely rather clever (but presumably lazy) students who are skilled plagiarizers. When plagiarism is done well, professors don't know that it's occuring. So the various amusing stories are not representative of the average instance of plagiarism, but simply a random sampling from poorly executed plagiarism.
Yes, plagiarism is very bad, and I do not think expulsion is too severe a punishment for plagiarism. For a handful of students, college and knowledge are intrinsically exciting; for such students, grades are probably not even necessary. For the remainder, the degree and the transcript are certificates indicating the student's capability for learning. (So the cynical, but on balance true, answer to the eternal question, "when and how will I use this in real life?" is "Never. But if you can figure this material out, you can figure out other complicated things. Getting an A in my class will be credible evidence of your ability to do so").
In addition to being stealing, plagiarism adds noise to this signal, benefitting poor but unethical students at the expense of hardworking and/or brilliant students. My advice to students is "don't do it", because if you are dumb enough to need to do it, then you probably won't get away with it. My tip to faculty is that you aren't catching as much of it as you think you are.
AB
Thursday, May 08, 2003
Liberal Media in Action
CNN Headline (from the front page): Alleged Chinese double agent indicted. Nowhere in the story did it mention that the spy in question, Katrina Leung, is a major Republican contributor; the word "Republican" is not even in the story. You have to go to the story, then notice the sidebar where there's a link titled "Lieberman seeks investigation of accused spy's finances"--still no mention of Republicans. Follow that link to read this phrase:
Katrina Leung, accused of being a Chinese double agent, was also a political fund raiser for the Republicans.
Don't ask me what to think about agents of the Chinese government trying to influence US politicians, just ask the Weekly Standard, The National Review, David Horowitz, World Net Daily, and so on. I expect these sources will quickly leap to excoriate any Republicans who received funds from or with the aid of an [alleged] Chinese Spy. After all, Million Dollar Bill "no vice but my own shall go unpunished" Bennett didn't get any special treatment or kindness from these pure souls, did he?
AB
UPDATE: Josh Marshall has a lot more on this. I noticed the surely inadvertent ommission at CNN; Josh observes that "And yet the reports of the charges filed against her today both at ABC News and CNN, give this [Leung's Republican connections and fundraising] no mention whatsoever. Not a one."
How was this for great timing?
The dollar continues to fall against the Euro, likely due to some nefarious plan by the French to decrease the US trade deficit. On a personal note, it looks like I picked the ideal time in 2003 to visit Europe:
AB
Credit Where it's Due
In this instance, to Sen. Charles Grassley (R-Iowa) who, given that a $350b tax cut is a fait accompli, actually came up with a pretty reasonable proposal on dividend taxes:
Bush says his proposal to eliminate dividend taxes would boost stock prices and create jobs [on this point, see my earlier post]. Committee Chairman Charles Grassley, an Iowa Republican, negotiated with key Republican moderates to develop a compromise that would fit elements of Bush's original $726 billion, 10-year plan into a $350 billion total approved by the Senate.The compromise bill would exempt the first $500 of dividend income from taxes, which Grassley said would eliminate such taxes for 86 percent of dividend-receiving taxpayers. An additional 10 percent of dividend income above $500 also would be excluded from taxes, with that rising to 20 percent in 2008 through 2012.
Only the pretty well off will have non-sheltered (i.e., non-IRA) dividend income over $500, so those who pay any dividend taxes under this plan will mostly be people in the 34% and 37.6% 2004 brackets, meaning that even with a 20% exclusion they will pay a net tax rate on dividend income of 27%-30%. The rest of the dividend-receiving population will pay much less, zero or nearly zero. Insofar as there are some benefits to not taxing dividends, this strikes me as a reasonable way to reduce the distortion. Nevertheless, this is still a bigger tax cut for the wealthy, to the extent that they derive a greater percentage of their income from dividends than do the less wealthy (they'll be paying 30% on income that they previously payed around 35% on).
Also note that this proposal is not Bush's plan; it's just the best he can get without Snowe, Voinovich, Collins, and Chafee (Zell Miller can only sell out once). Were Bush's plan implemented, I assure you it would be regressive.
AB
Well Worth Reading...
...and then buying. Salon has excerpts from Sidney Blumenthal new book, The Clinton Wars. Of course, why buy the cow when you can get the milk for free? (just kidding, I think). Now, if I could just figure out how to get the kickbacks from Amazon for the thousands of click-through sales this post will surely generate.
AB
Wednesday, May 07, 2003
The Search for WMJ
Many times over the last few years, current events brought a scene from the Simpsons to mind:
It's not exactly parallel, but the latest bit of specious reasoning is that Iraq had WMD and the will to use them against U.S. troops. Fortunately, to hide them from Blix and the UN inspectors, they buried them so deeply that they couldn't get to them, which is why we can't find any WMD.Homer, reporting on the results of Springfield's attempt to rid the town of bears: "There's not a single bear in sight--the 'Bear Patrol' is working like a charm"
"That's specious reasoning," Lisa retorts.
"Thanks, honey," Homer says to her, adoringly.
"According to your logic," she says, picking up a stone from their lawn, "this rock keeps tigers away".
"Hmmm. How does it work?"
"It doesn't."
"How so?" Homer asks further.
"It's just a rock," she says.
"But I don't see a tiger, anywhere."
"Lisa," concludes Homer, while pulling out his wallet, "I want to buy your rock."
For a more directly on point application of this parable, see this discussion of the effectiveness of the PATRIOT act (from the site where google found the Simpson's scene that I was looking for).
AB
P.S. That's not a typo in the title, the 'J' is for "Justification".
UPDATE: For a somewhat different take on missing WMD, be sure to read yesterday's commentary by Nick Kristof in the NYT, Missing in Action: Truth.
Tuesday, May 06, 2003
More Buffet
As reported by Matt Stoller at ISTE, Warren Buffet recently came out strongly against the Bush tax cuts, going so far as to say "I don't think enough of it [federal revenue] comes from people like me and too much comes from people who work in our shoe factories."
Is Buffet just some rich old guy with outdated opinions? Consider his track record. In the late 1990s tech boom, Buffet took a lot of heat from Berkshire shareholders over his refusal to involve Berkshire Hathaway in the tech boom. From 2000 onward, he had many grateful shareholders. Buffet also has long argued for the expensing of stock options, arguing that burying those expenses allows companies to inflate earnings and that the options are granted disproportionately to top management. While not the same as the fraud at Enron, not expensing options is similar in spirit and in effect to more nefarious methods of inflating earnings. Also, Buffet's salary is only $100,000k per year, though he stands to make substantially (i.e., hundres of millions) more if the company he operates, Berkshire Hathaway, does well--and to lose equally large amounts if his company does poorly. The point: the man knows business, and unlike another recent newsmaker, he practices what he preaches.
AB
UPDATE: In 2002 Buffet's pay was $296K . Extremely modest by CEO standards.
UPDATE 2: Matt Stoller has much more on Buffet at ISTE.
New Links
Just added: It's Still the Economy and A Taxing Blog. The former is a team blog devoted to the economy, currently with me, Matt Stoller, and MB of Wampum as contributors, but look for that group to expand.
The latter is also a team blog, with the motto, "A Tax Policy Blog -- for tax profs, policy wonks, and other shameless tax nerds." Personally, I think that they are being overly narrow in describing their target audience. I think it's of interest to anyone concerned about fiscal policy. Assuming for the moment that the Democrats automatically lose on foreign policy, the key battleground in 2004 will be the economy, meaning fiscal policy: whether we try to stimulate the economy via more tax cuts, more spending, constant spending without tax cuts but with a reduction or elimination of the deficit; should we cut capital gains or dividend taxes? Repeal or extend the Bush tax cuts? What to do about prescription drug coverage, universal health care, controlling medical spending; what is the appropriate level of spending in R&D, education, and other forms of national infrastructure? All of these issues interact directly with tax policy, so I suggest a more ambitious catchphrase for the Taxing Blog: "Economic News and Analysis for Everybody, written by shameless tax nerds".
AB
Life in the Land of Programming Executives
So I'm a bit late on this one, but in the wake of hiring noted Jackass Michael Weiner/Savage, MSNBC now has added Peggy Noonan (visit TBogg or Pandagon for amusing Noonan stories). It's somewhat amusing to watch programming decisions, because there really is an obvious herd mentality. The "Reality TV" wave launched by Survivor is a prime example (pop quiz: how many of you knew that Survivor is still around?) When Friends first became popular, I could picture programmers and writers sitting in a room saying "You know what would be great?"..."if we had eight friends and they were just like these six but better looking". Remember when ER begat Chicago Hope and a few more knockoffs? Remember the horrible game show wave sparked by Who Wants to be a Millionaire? I'm no student of TV history, but I think it took a British dominatrix to rid the nation of that plague. Funniest Home Videos are another example.
The point is that in the TV business, there really does seem to be an instinctive urge to copy whatever is popular, and copy it until everybody is sick of it: one creative idea pops up, all the networks copy it to death, then everyone hates it. It must be TV's version of the Hotelling Model, or some bastardized version of the Median Voter Theorem. (Both models show how competition can in some instances drive all rivals to the same place).
What does all this have to do with MSNBC hiring noted Jackass Michael Weiner, crackpot Peggy Noonan, and other shining lights of the right wing? Well it occurs to me that possibly, just possibly, this is simply another programming wave, sparked in this case by Fox News' dramatic rise. But if other programming waves are a good indicator, after the flow comes the ebb. Will conservative news/commentary go the way of Reality TV and Millionaire? I don't know, but MSNBC is doing its best to drive the format into the ground (of course, for MSNBC's programming choices to actually affect viewer tastes, somebody would presumably actually have to be watching MSNBC--call me an optimist).
AB
Note the Angry Bear Milestone! No, not surpassing 10,000 hits. This is the first link to the Drudge Report.
Monday, May 05, 2003
Must be time for more tax cuts
CNN/Money has a special feature up, Jobless in America. I'll have comments after I have time to read it (the day job is getting in the way), but in the meantime, here's some titles of the stories in the feature:
For now, I'll point out that the 6% number does not count discouraged workers--the unemployment rate is the number of active job searchers divided by (# active job searchers + # of employed people).
More importantly, I'll also point out that tax cuts really do not benefit the unemployed. Sure, they may be stimulative and someday create growth and thus more jobs, but over the next few weeks and even the next few years, that effect is trivial. The long run benefits of tax cuts must be weighed against the costs of higher deficits and the concomitant expectations of future inflation. While any possible trickle down benefits of a tax cut accrue at some unknown point in the future, the recessionary effects of expectations of future deficits occur now.
AB
X-Posted at It's the Economy
More Liberal Media
The NYT managed to put out a 26 paragraph story on the rise and fall of Ashleigh Banfield without ever mentioning noted jackass, Michael Weiner (a.k.a. Michael Savage), and his asinine "mind-slut" comments. The NYT did attribute the fall to a number of factors other than her saying "It [War on Iraq coverage] wasn't journalism [because] getting access does not mean you're getting the story. It just means you're getting one more arm or leg of the story." I think Savage is relevant to the Banfield story because it demonstrates the regard Banfield was held in by top management--long before she made statements critical of the network.
AB
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