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Guest Blogging
Just a reminder: Kash and I are looking for guest-bloggers from 12/20 to 1/7 (I'll be blogging through the end of the year, then taking a week off. Kash is off for 2.5 weeks.) Happily, we have one great guest so far (the much anticipated unveiling will come at the end of this week), but we could use one or two more. If you're interested, click here.
AB
It's Your Children's Money. Quick! Keep Taking It!
Here's the new fiscal responsibility plan: cut the deficit in half by 2009. Maybe. There's a major caveat:
In an interview Friday, Joel Kaplan, deputy director of the White House budget office, said Bush would halve the deficit "by pursuing very aggressively his pro-growth economic policies, and by leading the Congress toward overall policies of fiscal restraint. And if the Congress adheres to those two programs, we'll be successful in halving the deficit from its '04 peak within that time period."
I'm pretty sure the Republican Congress is in on the tax cut side. They're still working on the spending restraint, however (via Atrios).
Seeing this made me want to track down some old Bush quotes about his budget and tax plans. Here's a nice excerpt from the 2000 campaign website:
Cut Taxes Responsibly: Governor Bush’s $460 billion tax cut over five years will contribute to raising the standard of living for all Americans. His budget uses only about a quarter of the surplus for tax cuts, reserves all Social Security funds for Social Security only, and still leaves extra money for debt reduction, defense, education, and other priorities.
Of course, you have to visit the Internet Wayback Machine to find that promise. For some reason, it's no longer part of the official site.
Also while wandering the Web for quotes from 2000, I found this from an 11/1/2000 CNN piece:
"We've got a surplus in Washington, D.C.," [Bush] said. "Let me tell you what I think a surplus means. It means the government has got more money than it needs. That's why it's called a surplus."When you have a surplus, it means our people are overtaxed, that your government is overcharging you. I propose responsible priorities for our surplus -- a balanced budget and a fiscally responsible plan."
But that was then.
AB
P.S. I'm pretty sure that when the administration says (first quote, above) "pursuing very aggressively his pro-growth economic policies" they mean more tax cuts. Yes, tax cuts are stimulative in the short run, but when did Conservatives morph into Keynesians? Must have been some time in early 2001.
Good News
The latest news is that Saddam Hussein may have been captured. Clearly, that would be unambiguously good news. But it leads me to wonder whether the opposition is driven by pro-Saddam loyalty or anti-American sentiment. If the former, then things could take a turn for the better; if the latter, then we're likely to keep seeing more of the same. Either way, it is -- at the least -- an important symbolic victory.
AB
Yet Another Miserable Failure
From today’s Washington Post:
KIRKUSH, Iraq, Dec. 12 -- More than half the men in the first unit to be trained for the new Iraqi army have abandoned their jobs because of low pay, inadequate training, faulty equipment, ethnic tensions and other concerns, leaving the nascent 1st Battalion dramatically understaffed just days before it is scheduled to leave training camp for its first assignment, Iraqi, U.S. and other coalition officials say.Kash
How Do You Decide on a New Constitution?
It’s not easy. Just take a look at what the EU is going through this weekend as they try to write their first Europe-wide constitution. The biggest issue is how much representation in the Council of Ministers to give to each country. They have to be careful to set it up right, or they could end up with a system that’s not very representative… maybe even one that allows a minority of population to control policy-making, or even elect the EU’s leaders…
Kash
Into the Breach Again I Go...
Fight it... Fight it... No... Can’t... Resist... Must... Bring up... Trade... Again...
It's not my fault. Blame Brad DeLong. He put up a provocative post yesterday about this week’s Economist piece (subscription required) on white collar jobs in the US being outsourced to places like India. DeLong’s point is that The Economist goofed. He says:
The fact that trade balances--that dollars paid to Indian call-center workers show up as demand for American exports or as funding for investments in America*--means that the Economist is doing a bad thing when it talks about "job loss" rather than "job shift." Bad Economist! Go lie down now!! No biscuit for you!!!Needless to say, Brad’s post has generated a storm of comments, many of which are intelligent, articulate, and almost all of which I’ve enjoyed reading. Numerous commenters raised the issue of the job losses that the IT sector in the US has experienced over the past 2 or 3 years. There are dozens of comments along this line, but I’ll reproduce one particularly persuasive comment by a contributor named Camille Roy to give you the flavor:
Dear Mr DeLong,I am completely sympathetic to the feelings and fears behind these types of comments. It is true that jobs have dramatically disappeared in Silicon Valley. And it is truly awful for those who lost jobs, or can’t find jobs.
Love your blog, but this is bogus. In fact the stream of consciousness in this thread, in so far as it characterizes these out sourced jobs as low-skill jobs we may be better off without, is bogus. (The ivory tower mentality reflects poorly on your profession.) I am speaking from the line of fire, as a silicon valley software engineer with over a decade of advanced lab experience in the best companies in the valley. I know what's going on and it is ugly. The wages dropping like a stone etc, etc. I know the companies around here are sending work off-shore as fast as they can and I know that there are very few replacement jobs. Job losses here are around 300K and there is nothing on the horizon for these highly trained unemployed.
Suppose, just suppose, that these whatchamacallit "call center" operations did not go offshore, instead, they were completely automated.Kash
I mean suppose these call center jobs were lost to software, not to workers in India, with exactly the same effects on American call center workers. (If it is going to make you happy, assume that the conputers hosting that software is located in US; but that won't make helluva difference, I can tell you.)
What would you say to that?
More importantly, what would you do about it?
Uncompetitive and Unmonitored
Josh Marshall has a lovely follow up to Kash's earlier post on the likely impact of the administration reducing competition for reconstruction contracts in Iraq (illustrative example of this effect: importing gasoline from Kuwait costs $2.64/gallon). Here's the news from Marshall:
When Congress voted the $87 billion for military expenditures and reconstruction in Iraq they were keen to create an office of Inspector General at the Coalition Provisional Authority (CPA) to watch out for all manner of waste, fraud, abuse, price gouging and various other shenanigans.Now it seems that Paul Wolfowitz has gutted that provision. ...
I still try to picture Wolfowitz as a misguided idealogue, but damn it if he doesn't make it tough to see him as anything other than a naked shill for war profiteers.
AB
UPDATE: Wolfowitz must have been anticipating this morning's NYT, which alleges more attempted profiteering:
Kellogg, Brown & Root, also submitted a proposal for cafeteria services that seemed to be inflated by $67 million, the officials said. The Pentagon rejected that proposal, they said.The problems involving Halliburton, where Vice President Dick Cheney was chief executive, were described in a preliminary report by auditors, the officials said. The Pentagon contracts were awarded without competitive bidding and have a potential value of $15.6 billion; recent estimates by the Army have put the current value of the Halliburton contracts at about $5 billion.
The solution to inflated bids? More competition? No. Less auditors!
Medicare, continued
Reader and commenter Greg refers me to this important story on Medicare in the Boston Globe. It's an oped by two professors, Jacob S. Hacker, assistant professor of political science at Yale and Theodore R. Marmor, professor at Yale School of Management. There's a lot of good stuff in the piece, some of which I've touched on already, but there's one little piece that I hadn't heard about until now:
In a relatively unnoticed provision that wasn't in either the original House or Senate legislation, the bill creates a new standard for Medicare "insolvency." It would define the program as insolvent whenever, in two consecutive years, more than 45 percent of its spending comes from general income tax revenues (not incidentally, the most progressive source of Medicare financing) rather than payroll taxes and premiums. When this ceiling is hit, which is likely to happen sometime in the next decade, the law will require the president to propose spending cuts and tax increases within the program.
What this provision means is that if premiums do not cover 55% of the costs of
