Wednesday, January 30, 2013

Smart Librarians Saved The Timbuktu Manuscripts

It appears that many of the ancient manuscripts of Timbuktu were given to families who would take care of them, so they wouldn't be available for Islamists in Mali to destroy as they left the city. As a result, the people trying to destroy the library ended up not destroying very much. Apparently 28,000 of the 30,000 manuscripts were moved to safety.

These manuscripts are the records of a highly developed African civilization in the middle of the last millennium. There's a tendency to see Africa as a backwards Dark Continent where everything has remained primitive to this day. The records of Timbuktu challenge this view and stand against racist views about the abilities of Africans to build a flourishing and sophisticated society. It would be a tragedy if they were destroyed, and human memory of the details of this civilization was lost. I hope the endangerment of the manuscripts will get more scholars to visit Timbuktu and digitize them. 

There's more information on this at the Timbuktu Manuscripts Project page.

Monday, January 28, 2013

Filibuster Reform Demographics Are Good

I've copied Chris Bowers' awesome chart of the Senators who supported and opposed the talking filibuster, listed by seniority. Unsurprisingly to anyone who follows the debate, seniority is correlated with opposition to reform. So this issue may play out a lot like gay marriage, with support for reform growing stronger with time, as we get more young people who support it and fewer old people who oppose it. The fact that young Senators consistently support reform is also a sign that persuasive momentum is going the right way.

I'd hope for something much bigger than the talking filibuster, which doesn't seem to me that likely to make big changes. Really what I'd like to see, rather than passing anything great or small right away, is that we could get a 50-vote Senate by 2017. If we can win the presidency and overcome our problems with House districts to win the chamber because of a rising economy, and steal a few of the many Republican Senate seats at risk that year, Democrats could pass a lot of amazing legislation. There's some hope for having 60 seats at that point, but even if we do, the left-wing possibilities just get better if it's a 50-vote Senate. We've gotten rid of pointlessly destructive moderates like Nelson and Lieberman, but if we don't even need Manchin or any of the oil-staters, serious climate change legislation becomes a major possibility. It's time to dream big.

One tangential note about this chart -- it shows how fresh the Democratic caucus is. The majority of them have taken their seats in 2007 or later. We've got only three people who have been in the Senate since the 70s. Sherrod Brown's class just won their first re-election campaigns, and they're already halfway up the seniority ladder.

"Very Important And Difficult Work"

Ezra has a list of five interesting things in the new bipartisan immigration reform framework.  This one is number 2, and I liked it:

“Individuals who have been working without legal status in the United States agricultural industry have been performing very important and difficult work to maintain America’s food supply while earning subsistence wages. Due to the utmost importance in our nation maintaining the safety of its food supply, agricultural workers who commit to the long term stability of our nation’s agricultural industries will be treated differently than the rest of the undocumented population.”

Now, I don't know what exactly 'treated differently' means, and it'd be great to help all the dishwashers and janitors too. And there aren't details yet because it's just a framework, and who knows if anything can pass the House. But if the recognition of the importance of agricultural labor is a sign that things will get better for farmworkers, that's wonderful.

Behold, The Power of (Donkey) Cheese!

Congratulations to the new Australian Open champion Novak Djokovic, last seen buying the entire world's supply of donkey cheese.

Clearly this is the food of champions.

Well ... That Was Quick!

In the grand tradition of Senate gangs, a gang of eight has emerged from behind closed doors with some sort of preliminary framework quasi-agreement relating to immigration. Some assorted thoughts.
  • Everybody hang on to your butts. This is the opening salvo in what will almost certainly be a long and arduous negotiation between lots of competing political and interest group currents. Don't get too excited. After all, various gangs have emerged with agreements on budget issues, carbon pricing, and all sorts of other goodies over the past four years, but very little has come of it.
  • Whiplash. John McCain (R-AZ) in 2004 -- comprehensive reform! In 2006 -- build the danged fence! 2013 -- comprehensive reform! Meanwhile, junior Senator Jeff Flake (R-AZ), who was the most conservative House member -- was a part of these negotiations? Elsewhere, Governor Jan Brewer (R-AZ) is accepting Obamacare dollars to subsidize health care coverage for poor people? When do I get to meet Bizarro George & Bizarro Jerry?
  • The useful kind of bipartisanship. There are four ways you can build a bipartisan coalition.
    • Left-in coalition. aka all Democrats and a handful of Republicans. The biggest examples of this sort of bipartisanship are the stimulus bill and Dodd-Frank.
    • Center-out coalition. The classic Georgetown cocktail party sort of bipartisanship. Max Baucus & Chuck Grassley hammer out a deal with a couple of their centrist buddies--people like Mark Warner--liberals decry the deal as a sellout, conservatives complain that it doesn't show any principles, the op-ed pages of the Washington Post write glowing editorials about bipartisanship and the era of Tip O'Neill & Ronald Reagan having drinks together and "making tough choices", and everyone pats themselves on the back before going home.
    • Strange bedfellows coalition. A collection of outsidery folks, say, someone like Ron Wyden (D-OR) and former Senator Bob Bennet (R-UT), who sometimes come up with a "cleaner" legislative solution to a problem, but which may not create as many clear concrete winners (or too many losers) and is therefore less favored. Usually these coalitions fail to pass anything, but if they're lucky they have a positive influence on the bill that finally does pass.
    • Right-in coalition. aka all Republicans and a handful of Democrats. We saw a lot of this in the Bush era, mostly around taxes, but also things like the Energy Policy Act or the bankruptcy bill.

      Note that because Republicans are on average more conservative than Democrats are liberal, there is an asymmetry here. Right-in coalitions produce very conservative policy, while left-in coalitions produce center-left policy.
    The eight Senators negotiating this not-yet-a-bill--Bob Menendez (D-NJ), Dick Durbin (D-IL), Chuck Schumer (D-NY), and Michael Bennett (D-CO) for the Dems, Marco Rubio (R-FL), John McCain (R-AZ), Lindsay Graham (R-SC), and Jeff Flake (R-AZ) for the Republicans--make up something closer to a left-in coalition than anything else. Durbin & Menendez are quite liberal; Schumer is at the dead center of the Democratic coalition and in the left half on non-tax & financial services issues; leaving Michael Bennett  as the only moderate. On the GOP sideMcCain has been hard to pin down, but now seems to be settling in as a moderate Republican -- not as moderate as he was in 2000, but someone you can negotiate with. Rubio is quite conservative, but has always been a wet on immigration issues. Lindsay Graham continues to be all over the place but he clearly loves being part of these sorts of negotiations. The only real oddity is Jeff Flake, who's incredibly conservative. I have no idea why he would be willing to put his name on something that had the phrase "path to citizenship" in it, unless Arizona Republicans have simply decided they're going to reverse course on how they deal with the large Latino community in the state.
  • That sound you heard out of South Carolina ... was anyone with a political pulse calling their campaign manager and biggest fundraisers, asking if they could start raising money for a Senate race before Lindsay Graham announces his retirement.
  • Ours is a government of men (and not enough women!), not of parliamentary procedures. This drives home one of the points I've been making lately, that the specific rule changes in filibuster reform are almost less important than whether or not Senators decide to stop adhering to the norm of "it takes sixty votes to get anything done around here" and maximalist obstruction by the minority party. It's possible that this sort of agreement is a sign of things to come, but it's too early to tell.
  • It's not clear how much the Senate matters. The real veto point remains House. What sort of immigration bill can get through the lower chamber? And what are the mechanics for passing it? If Boehner simply lets the bill pass with a minimum of Republican votes, you can probably get something pretty good. But if there's some sort of unwritten Hastert rule, or otherwise an attempt to corral lots of Republicans into voting for "comprehensive immigration reform", then things get tricky.

Thursday, January 24, 2013

Tax Capital Gains Like Income, Because Sometimes You Want Demand

The standard story on why long-term capital gains taxes are often lower than income taxes is that we want to encourage investment. I'm not really sure why we care so much about this.

Sometimes the problem with the economy is that there isn't enough investment. Other times the problem is that there isn't enough demand. But whatever the problem may be at the time, our policies are set up to encourage investment and discourage consumption at all times.

There are many reasons why very rich people throw more money at financial products than yachts -- one of which is that one can only enjoy so many luxury goods. But I don't see that favorable tax treatment of investment income needs to always be another reason.

On The Filibuster Reform That Isn't, Really.

I'll have some thoughts on the specific deal that Harry Reid announced today, but for now I'm just going to republish something I emailed to TPM when they asked for readers' thoughts on filibuster reform. Long-time readers are familiar with the arguments I make (see especially here, and also here, here, and here), but I think repeating them at this moment, and placing them in the context of a bipartisan deal when people might have expected reforms that produced a more partisan Senate is useful.

In general my reaction here is to "wait and see". Effectively ending the filibuster on nominations is useful. But the agreement on the motion to proceed is almost entirely pointless. The only real question now is whether the Republican minority will continue to use all tools available to stall action at all times, or if political defeats have tempered their enthusiasm for being the party of obstruction.

I have plenty of empathy for the Democratic CoS who wants to go big on filibuster reform, but I also have some sympathy for Harry Reid's predicament.

The bottom line is that the Senate is not and has basically never been a rules-driven body. It's a norms-driven body. If every Senator, or the minority leadership, attempted to use the rules to their maximum advantage at all times, nothing would ever, ever, ever get done. Between filibustering, objections to unanimous consent requests, forcing bills to be read allowed on the Senate floor, and so forth, any given Senator or group of Senators can act as an incredibly effective spanner in the works. So the only real rule of the Senate is something like "don't be a jerk too often", and social norms among Senators prevent anyone from getting too far out of line.

Over the past four years we've seen this break down, primarily as the Republican leadership has become more and more interested in stalling action on almost everything.

Jeff Merkley recognizes that the problem here is that norms have broken down, but rules haven't changed to catch up. You can see it in his quotes in TPM piece on the filibuster. His reaction is to change the rules to weaken the minority's power to stall action. But it wouldn't eliminate their power entirely. Even if Merkley got everything on his wish list, Mitch McConnell would still have plenty of ways to gum up the works. It would still be a norms-driven body. The rules would do a better job of reacting to current norms, but ultimately getting something done would still require some level of acquiescence on the part of the minority. Unless Senators are really prepared to turn the Senate into the House and shut out the minority entirely -- and I'm almost certain there aren't 50 votes for that -- they're constrained at some level by the minority's tolerance for being partially shut out. So even though he's not in the room, Mitch McConnell is effectively part of the negotiations  If Democrats go to far, he can threaten to just detonate everything. There's clearly some risk for McConnell in such a course of action, but it's definitely a credible threat. (Note that Harry Reid made similar threats when Republicans were considering the original nuclear option in 2005.)

So if McConnell has quasi-veto power over filibuster reforms, what can be done? Well, a lot depends on whether you think the Merkley/Udall reforms would actually produce a 50-vote Senate. I think they would, but there are smart people who study this stuff for a living, like Jonathan Bernstein, think it would still be a 60-vote Senate. Bernstein thinks that the talking filibuster rule would make it harder for a rogue Senator to run a 1-person or even 3-5 person filibuster, but that a determined minority leader could still credibly threaten to tie things up and outlast the majority. I think all you'd have to do is force a talking filibuster once, wait it out, and then everyone would realize that the only reason for a talking filibuster is to let your members engage in a "primal scream" for their primary voters. But people disagree.

If you buy Bernstein's argument that Merkley/Udall would still mean that it takes 60 votes to get big things done (though perhaps it gets easier to get small stuff done 50), then there's not _that_ much difference between Levin/McCain and Merkley/Udall, other than the giant giveaway to offer the minority two non-germane amendments to every bill. At that point, the main goal of the reformers should be to minimize the amount of floor time the minority can eat up by forcing 60-vote tests, take what you can get, and move on.

Like I said, I'm not sure I buy Bernstein's argument, and I think at some level I feel like filibuster reform ought to be used as a way to punish Senate Republicans for their irresponsible, unprecedented behavior. But hey, McConnell has managed to lead Senate Republicans from 49 seats in 2007 to 45 seats in 2013; Obama won reelection; and the ACA & Dodd-Frank will both remain law and be implemented by a Democratic White House. Perhaps they're already getting what they deserve.

Friday, January 18, 2013

Guns And The 30-Second Attack Ad

As with "Shipping Jobs Overseas", gun control is one of the few opportunities for a generally left-leaning coalition to launch hard-hitting attack ads. While the NRA furthers its decent into self-parody, the Campaign to Stop Gun Violence can run ads that basically claim Congressman X wants to see schoolchildren die. As with all effective attack ads, it combines a bastardized form of the policy argument with gut-wrenching emotional stuff

 While the Assault-Weapons Ban may be one of the least effective of Obama's proposals, it seems to be the one with the most salience in the public consciousness. Most people don't like the "black guns" that are the targets of the AWB. They constitute around 1-2% of the stock of American firearms, though a higher percentage of sales. It's still not clear how poorly the banning of specific guns will play in places where Democrats have some modest hope of competing for House seats in 2013, but the general issue of "gun violence" is something that favors the Blue Team in a way that's something beyond technocratic discussions of education & health care reform.

The Long-Form Life

Adam Brault quit Twitter for a month and lived to tell about it. Social media has a lot of value, but I think one of the important things Brault observes is that it's even worse than email in terms of exposing yourself to constant interruptions that you derive some enjoyment from, but the fact that there are constant interruptions is a detriment to your mental and emotional well-being in other ways.

Lent is coming up in about a month, so I will be going on my Internet & Social Media fast in a few weeks. Because Neil is traveling, I won't be able to just close Tweetdeck & Google Reader for six weeks. But I'm definitely going to be cutting back on internet content consumption and "compartmentalizing it" until early April.

In a similar vein, if you write for a living, I strongly encourage you to write at least one article per week on pen and paper. Losing access to easy editing forces you to think differently, and, in my untrained experience, produce higher quality writing.

Thursday, January 17, 2013

Fiscal Cliff Raises taxes on Yetis, Satyrs, Centaurs, & other Imaginary Beasts

I dare the Wall Street Journal to find a living, breathing
single mother of two children who consistently ears $260,000
of which $35,000 is in investment income.
There is plenty to mock in the Wall Street Journal's profile of some hypothetical households that will see tax increases. For starters, all of these households are now suffering from something well beyond #firstworldproblems. Second, a huge chunk of the tax increase on the fake single mom and fake single can be chalked up to the lapse of the payroll tax holiday, which was opposed primarily by Republicans.

But perhaps the most laughable part of these scenarios is that all of these households realize a substantial portion of their income through taxable investment income. In other words, they have stocks that issued dividends, or they sold stock, in fairly substantial amounts. If this hypothetical single mother got a 5% ROI on their portfolio, it would imply her taxable investment assets--that's outside the 401k, IRA, and possibly college savings plans--were in the $700,000. This single mom isn't just in the top 2% of earned income, she's also got a net worth well in excess of $1 million.

According to Evan Roberts, the Current Population Survey turns up one "single-mother" household with income in this range and 2 children in their annual sampling. They represent less than 0.5% of all single mothers, and fewer than .01% of all households. Now, it's unclear whether or not the CPS is using the tighter definition of "single-mother" households to mean single parents who have never married, but at best that would triple or perhaps quintuple the number of high earning single moms. Given the WSJ's insistence on including an absurdly large amount of investment income in their hypotheticals, it's quite possible that there are zero households that come close to matching these characteristics. They might as well be reporting on how the tax changes will affect Elvis Presley, JFK, and Sasquatch as they hang out somewhere on the dark side of the moon.

Why Do Gun Safety Measures Push People Towards Impeachment Rage?

Bloomberg's Jared Keller graciously did me the favor of pointing me towards Topsy Analytics, which I used to examine how angry people have been about President Obama over the last month. As you can see, there's a tremendous spike in impeachment mentions as we approached today's announcement gun safety proposals. The tenfold jump in impeachment mentions is not matched by a similar jump in overall mentions of the President, which merely tripled on the day of the press conference.

This is really just astounding to me. There are roughly 4 million NRA members, and tens of millions of gun owners in America. A few thousand tweets, then, is something like 1 in 1,000 NRA members (who are more conservative than the typical gun owner) and 1 in 10,000 gun owners. Still, there's no similar level of impeachment outcry when the President proposes raising taxes, or supports gay marriage, or grants some form of citizenship or relief to illegal immigrants.

So what is it that makes guns so special? Why are the most zealous defenders of gun ownership so much more zealous than the most zealous defenders of gay rights, to the point of demanding the impeachment of a President who proposes a series of measures to reduce gun violence, none of which confiscate existing firearms nor impede the ability of law-abiding citizens to acquire more firearms?

Saturday, January 12, 2013

Beauty Pageants Are No Good

Apparently they crowned a new Miss America. Which makes this a good time to mention how much beauty pageants creep me out.

These things seem to be tests of how well women can perform femininity, with men ranking them on their ability to do so. That is not in any way a legitimate measure of how awesome women are, and it's a distraction from the actual ways of being awesome. The sooner we're done with this nonsense, and the more we encourage admiration of the women who have made advances in socially beneficial fields like science, teaching, and public administration, the better off we'll be.

Tuesday, January 8, 2013

Trillion-Dollar Platinum Coins: Change We Can Believe In

The platinum coin option has emerged as a way of addressing short-term problems involving the debt ceiling, but it also intrigues me as a structural change to American policy. It would put the capacity for quick monetary expansion into the hands of a democratically elected leader. There's a risk that the leader would use this power badly and cause trouble, but quickly removing leaders who do bad things is what democracy is for.

Instead, our system puts the power into the hands of an independent central bank, which can make mistakes for a long time while blame falls on democratically elected leaders. I'm getting less sure about the case for central bank independence. Obviously, moving monetary policy to the president through platinum coins is pretty weird, but I'm starting to think things might be better if Presidents could just print some money through less colorful means when they needed to. If people are going to blame Presidents for deflationary spirals with high unemployment, Presidents might as well be given something to do about it.

Making these monetary tools specifically inflationary ones strikes me as pretty nice, because inflation has its benefits. Will Wilkinson describes what I think: "commentators with technocratic leanings I think find it especially frustrating that a higher rate of inflation, which would erode the value of the debt and also boost growth and, thereby, revenue, is not on the democratic negotiating table. The fancy of a $1 trillion platinum coin is so tantalising in part because it puts a monetary option in play." On top of that, it's a monetary option with good distributive consequences -- inflation hurts those who have money, does nothing to those without money, and improves the situation of debtors.

Unfortunately, Will follows this with comparison of the platinum coin to fascism, apparently because it's the executive branch doing something big, and then the remark that "We'd be better served, however, if the commentariat would rein in its id, stop its idle chatter about exotic, coin-based, presidential monetary policy, and begin seriously to consider the more probable but less glittering eventuality of a Greek-style default." But I don't know how you get a Greek-style default if you can make a lot of your own currency, which the Greeks can't do because they signed that power over to the ECB. Giving more inflationary power to the President is a way to not be Greece, and be a country with something like 5% unemployment and 5% inflation instead. 

Monday, January 7, 2013

Barney Frank Eyes Payroll Tax Threshold Change to Hit CFBNARs

Former Congressman Barney Frank (D-MA), who seems to want to take the interim Senate appointment should John Kerry become Secretary of State, is making noises about raising the income threshold where Social Security taxes stop. It's a pretty good way to put Social Security's solvency on stronger footing, and there's a strong case that doing so is a good way to adjust for the way economic reality has changed in the past 30 years.

Let's do a quick recap. Social Security is paid for through payroll taxes. For every $1 of wages or salary, $0.062 is withheld as social security, so the worker only sees $0.938 today (though they'll get paid back, in essence, through Social Security wages when they retire). But, this only applies to the first $110,000 or so in income, though that threshold is adjusted every year for inflation. Historically, the payroll tax cap has meant that about 90% of income is subject to social security taxes, but the explosion in inequality over the past generation means that the tax covers only about 84% of income. Taxing the first $200,000 or so in income would get us back to the historical 90% threshold while still mostly preserving the "you get out what you get in" nature of Social Security, which is a big reason for the program's political stability.

I'm still not clear what the state of the economy is right now--private sector employment has largely recovered, and we're even seeing the tiniest hints of wage growth, but the employment/population ratio is still in the shitter--but if we're going to increase taxes, this seems to be a workable way to do it, and would hit primary the cash-flow-but-not-asset-rich who made out like bandits in fiscal cliff negotiations. But changing payroll tax rates and thresholds is fairly straightforward. Also, pleasantly not result in a hideous increase in tax compliance costs and annoyances, like, say, the Pease Limit.

Sunday, January 6, 2013


I'm happy to see Obama move forward with the Chuck Hagel nomination. I've talked to some people who would rather have seen him nominate a Democrat, and I guess that would've been nice. But Hagel's substantive views on issues related to running the Defense Department seem to be more or less in line with Democratic priorities. If there's a place I'd like to see a Republican who's genuinely interested in spending cuts, it's at the head of the Defense Department. Hagel also distinguished himself as an early Republican critic of the Iraq War (though he did vote for the initial Iraq War resolution).

As far as Middle East policy goes, Hagel's controversial remarks on Israel seem basically sensible: "The Jewish lobby intimidates a lot of people up here," Hagel said, but "I'm a United States senator. I'm not an Israeli senator." I guess I'd call the relevant group the "Israel lobby" (or really, the "anti-Palestinian lobby") rather than the "Jewish lobby", because many Jews don't support it and many non-Jews do, sometimes for eschatological Christian reasons. But he's right that this group an intimidating presence in DC, and his willingness to look at the US-Israel relationship in an independent way is a good thing, not a bad one. If the Hagel nomination is the fruit of Netanyahu's attempts to undermine Obama during the election, it's a sweet result indeed.

As for the thing where Hagel criticized a Clinton ambassadorial nominee for being "openly, aggressively gay", my hope and expectation is that he's moved forward from his old prejudices. He says he has, and the HRC accepts it. I'm hoping he gets thoroughly examined on these issues in his confirmation hearings and thoughtfully repudiates his past views.

In new Senator news, I'm happy to see Heidi Heitkamp weighing in on the right side: Senator Heidi Heitkamp, a North Dakota Democrat, said the way Hagel had been targeted was not fair. "He hasn't had a chance to speak for himself," she said on ABC's "This Week. "Why all the pre-judging, I don't know." I'm optimistic that despite being a red-state Democrat, she'll help progressives when she can rather than being another Ben Nelson.

[Update]: If you want to read Dave Weigel making a lot of similar points, you can!

Friday, January 4, 2013

It's Easier To Get Forgiveness Than To Ask For Platinum

Kevin Drum thinks the courts won't permit the minting of the trillion-dollar debt-ceiling-avoiding platinum coin.  He reasons that they'll take the purpose of the coin law seriously -- it was only intended for commemorative coins, and rule against anyone who tries to use it for fiscal or monetary purposes.

I really don't know how these things work out legally. Maybe that's how it goes. But we've got to keep in mind the political context in which these decisions will be made.  Suppose Obama plays a reasonable-looking game on the debt ceiling and mints the coin to deal with the debt ceiling, while the House refuses to negotiate with the president (whatever Boehner means by that).  With debt ceiling armageddon about to hit, the coin is minted.

Then it goes to the courts. Are they willing to throw the US into default by ruling that Obama has exceeded his authority? And what is even supposed to happen after the US is in default and can't issue more debt, after having illegally issued debt? I don't even know what you do with the post-coin debt -- is the US required to honor it? In any event, there's going to be strong pressures on the legal system to go along with what Obama did, because the alternative is to create a totally bizarre situation that nobody knows how to deal with.

Thursday, January 3, 2013

Going Platinum Again

I'm very happy to see both Yglesias and Krugman discussing the platinum coin option, which would allow President Obama to deal with the debt ceiling without making unnecessary concessions to Boehner and the House Republicans.

If you missed it last time around, the short story is that there's a law allowing the Treasury Secretary to mint platinum coins of arbitrary denominations. Nobody thought of using it to generate trillions of dollars of new money when they passed it -- it was simply supposed to be for commemorative coins. But it gives Obama (through Geithner) the power to order the minting of a trillion-dollar coin. Deposit it at the Federal Reserve, and you're a trillion dollars further below the debt ceiling. Frankly, I'm curious to see if we could take advantage of the current economic environment with its deflationary pressures to mint a few trillion dollars worth of coins and take a big bite out of the national debt, blowing the minds of Pete Peterson and the Fix the Debt people.

Merkley-Udall Reforms

Via Weigel, here's the set of reforms that Merkley and Udall are proposing, and for which they say they've got 51 votes, 48 of which (I think) are publicly declared. While I'm not sure the talking filibuster is all it's cracked up to be, everything here looks to be somewhere between neutral and helpful. I really like the idea of expediting nominations, but I thought the real sticking point there was the anonymous holds rather than the 30 hours of post-cloture debate. 
Eliminate the Filibuster on Motions to Proceed: Clears a path to debate by making motions to proceed not subject to a filibuster, but providing two hours of debate.   
Require a Talking Filibuster: Forces Senators who filibuster to actually speak on the floor, greatly increasing public accountability and requiring time and energy if the minority wants to use this tool to obstruct the Senate. 
Expedite Nominations: Reduces post-cloture debate on nominations from 30 hours to 2 hours, except for Supreme Court Justices (for whom the current 30 hours would remain intact). 
Eliminate the Filibuster on Motions to Establish a Conference Committee: Reduces the steps to establish a conference committee from three motions to one, and limits debate the consolidated motion to 2 hours.
Whatever happens with filibuster reform this time, I hope that it paves the way to more substantial reforms in the future -- perhaps in time for us to push through truly awesome left-wing legislation in 2017. 

Wednesday, January 2, 2013

First World Problems: Calculating Taxes Just Got Harder for the 2%

I'm going to coin a new phrase today: the "cash-flow-but-not-asset rich". These are people like the mystery professor who lives in Chicago, earns $455,000 per year, and yet feel like they're not saving as much money as they should, because they feel they "have" to live in a big house in an popular metropolis, send their kids to private school, drive a Lexus and replace it every four years instead of a Subaru and replace it every eight, etc. They're saving appropriately for retirement, but there's not that much money left at the end of each month. Theirs is a world of problems so far beyond first world problems it's hard to express.

The CFBNARs are largely big winners from the fiscal cliff deal. Had Barack Obama gotten his way, these folks would have seen their taxes go up from 35% to 39.6% starting at $125,000 for individuals and $250,000 in income for married couples. Instead those thresholds will be set at $450,000 for married couples and $400,000 (note: this revives the "marriage penalty" which will surely be resolved by setting the married couple threshold at $800,000 rather than the individual threshold at $225,000 when the time comes). However, not everything is coming up roses for the CFBNARs. Negotiators revived the Personal Exemption phase out starting at $250,000 and the Pease limit at $300,000.

The Personal Exemption Phaseout is mostly straightforward. The first $3,800 of adjusted gross income is exempt from taxation. Starting at $250,000, that amount will decline until it reaches zero, so that high earners will owe another $1,330 in taxes.

The Pease limit, however, is a total clusterfuck. Most high income households have lots of deductions -- high property taxes, business expenses of various stripes, mortgage interest, possibly some investment interest, etc. The Pease limit starts shrinking your deductible based on how much you earn above $300,000. For every $1.00 of income you earn above that threshold, your deductions are reduced by $0.03 ... but it only applies to certain deductions -- non-business interest, charitable giving, and state & local taxes, mostly. You can't just take the bottom line of your Schedule A and calculate the impact of the Pease limit. On top of everything else, the Pease limit doesn't apply to the Alternative Minimum Tax. It's a mess, and for people like me who wish the tax system were simpler so that America didn't spend a significant chunk of GDP (somewhere between 1% and 3%, depending on who you believe) on tax preparation, it's an abomination. Everyone should find the needless complexity of this system offensive. If we simply capped deductions at a percentage of AGI, without making specific allowances for this or that, we'd be much better off.

The good news here is that the IRS and Congress are fairly responsive to the plaintive cries of the CFBNARs--not quite as responsive as they are to the financial sector, but still fairly responsive--so perhaps this will change.

Tax Policy and Baselines

If you've been following the fiscal cliff negotiations, you probably know that the bill that just passed the House raises by about $650 billion taxes relative to 2012 policy, or cuts taxes by about $3.9 trillion relative to current law, plus or minus $100 billion. That's a 10-year cost, meaning that annually the change is $60 billion or about 0.5% of GDP (I think ...) . The end result is that households earning more than $450,000 will see their income tax rates rise to the rates we saw under Bill Clinton. Some of tax cuts oriented towards low-income households will stick around, at least for another year or two or five, but others, such as the payroll tax holiday, will expire.

In 2000, Al Gore's campaign proposed a
series of tax credits, aimed primarily at
low-income earners, college tuition, and
child care/care for elderly relatives. A
compromise between those propsals and
a GOP Congress might produce something
similar to our current tax rates.
Rather than using current law or current policy as the baseline, a more useful way to compare the fiscal cliff deal is to compare to Al Gore's 2000 campaign proposals. As a candidate, the then-Vice President proposed a grab bag of tax cuts and credits, including additional relief of the "marriage penalty", credits for child/elderly relative care, college tuition, an expansion of the EITC, and so forth. Most of these credits phased out somewhere between $80,000 and $120,000 in income, or roughly $100,000 and $150,000 in today's dollars.

Had Florida been allowed to complete its recount and Gore emerged victorious, he would have faced a Republican house and a 50-50 Senate. Even if Jim Jeffords defected again, we would have had budget negotiations between a Democratic President, a very conservative House minority, and a Senate that had more moderates from both parties than the current one (John Voinovich, Lincoln Chafee, Ben Nelson, Jon Breaux, Zell Miller etc.). It's easy to imagine such negotiations producing effective tax rates fairly close to what is now in place -- overall tax rates might be slightly higher, and taxes on the upper-upper middle class and cash-flow-but-not-asset rich might be at their Clinton-era levels -- but the basic shape isn't that far off what might have been.