Wouldn't starving the beast just make it angry enough to consume disproportionately more than it should?

The Economist's Democracy in America blog has an interesting post about a column in The Fiscal Times by Bruce Bartlett, a former Jack Kemp staffer, advisor in the Reagan Administration, and Treasury official under Bush 41.

In talking about Reagan and Bush 43, the The Economist's blog writes:

"...both administrations revved up spending at the same time they were cutting taxes, in the political equivalent of an overweight person who rewards himself with an extra helping of ice cream because he has just purchased a membership in a gym."

The Bartlett column also provides empirical evidence contradicting its counterpoint, that raising taxes results in uncharacteristic increases in government spending:

"By this logic, the tax increase enacted in 1993, which raised the top federal income tax rate to 39.6 percent from 31 percent, should have caused a massive increase in the federal budget deficit. In fact, it did not. Spending was 22.1 percent of GDP in 1992 and it fell every year of the Clinton administration, to 21.4 percent of GDP in 1993, 21 percent in 1994, 20.6 percent in 1995, 20.2 percent in 1996, 19.5 percent in 1997, 19.1 percent in 1998, 18.5 percent in 1999, and 18.2 percent in 2000."

When a staunch Reaganite involved in its fiscal policy is jumping the ship on the economic theory they so dearly espoused, why are today's Republicans still hanging on dearly hoping against hope that they might be proven right this time against all evidence otherwise?

Washington Post: Five myths about cutting the deficit

Here’s one passage about #4 that is food for thought to people that think tax cuts can solve any problem with the deficit:

“Budget discipline works only when it is imposed on both sides of the ledger. In 1990 and 1993, the last time we faced a serious fiscal crunch, Congress did just that, slashing spending and raising taxes. In contrast, in 1981 and 2001, massive tax cuts did not lead to reduced spending, despite the hopes of those who espouse the "starve the beast" theory of fiscal reform.

Instead, the tax cuts were accompanied by big increases in spending, thus boosting the deficit from both sides. The logic is clear: If some politicians reward their constituents through tax cuts, other politicians will see no reason that they can't reward their own constituents through more spending. It is only when fiscal discipline is comprehensive and coordinated that it works and endures.”

The five myths about cutting the deficit are:
1. The United States is on the verge of a fiscal crisis.
2. The deficit commissions should propose reforms that are politically viable.
3. Social Security has a surplus, so it shouldn't be cut.
4. We can balance the budget without raising taxes.
5. A new short-term stimulus would be fiscally irresponsible.

Read the whole article to find out why the five myths are actually myths.

The REAL Reason the party of Reagan cannot accept the science of climate change

Former Republican Congressman Sherwood Boehlert wrote an interesting op-ed in today's Washington Post about why the Republican Party is eschewing science for political reasons.

I am sympathetic to the author's position that verifiable scientific facts must not be questioned and the only political angle must be the solutions to address them. However, I disagree with him that the climate change skepticism is purely political, especially when we know evangelical fundamentalism is much more rampant in the United States compared to other developed countries. What has happened is the fundamentalism has infected right-wing politics, to the point where we have this joker potentially in line to chair the House Energy Committee, all the while believing that there isn't enough carbon on earth and once stating in a committee hearing:

"...the earth will end only when God declares it's time to be over. Man will not destroy this earth. This earth will not be destroyed by a flood.... I appreciate having panelists here who are men of faith, and we can get into the theological discourse of that position, but I do believe God's word is infallible, unchanging, perfect. Today we have about 388 parts per million in the atmosphere. I think in the age of dinosaurs, when we had the most flora and fauna, we were probably at 4,000 parts per million. There is a theological debate that this is a carbon-starved planet — not too much carbon. And the cost of a cap-and-trade on the poor is now being discovered."

"There's an App for That" (Trademark Apple Inc.)

Apparently the US Government has a number of apps for the average citizen and one even for international audiences to learn about the US.

International Herald Tribune: Obama Op-Ed Today

President Obama pens an op-ed today in the International Herald Tribune directed at the European reader. Also, did you know the International Herald Tribune is really just the Global Edition of the New York Times?

Boldy going where no one has gone before?

Antimatter Breakthrough Could Lead to Starships, Says Scientist News & Opinion PCMag.com

That ugly baby is really quite breathtaking.

Sometimes you just have to call the baby ugly rather than make people wonder if you were just being nice by saying it’s breathtaking.

Likewise, Matt Miller talks about our incessant need for reassurance and Nicholas Kristoff talks about how us turning into a banana republic is insulting to banana republics. What is striking about Kristoff’s column is he is typically a foreign affairs columnist that focuses on third world issues more than American politics. That is why this particular paragraph gave me chills to read:

“I’m appalled by our growing wealth gaps because in my travels I see what happens in dysfunctional countries where the rich just don’t care about those below the decks. The result is nations without a social fabric or sense of national unity. Huge concentrations of wealth corrode the soul of any nation.”

Hey America, your progressive income tax rates are really breathtaking.

So I wasn't the only person that knew this was true!

Posted on Kaiser Health News and then Ezra Klein's blog at The Washington Post, which is where I first saw it.

"The Shroud of the Dark Side has fallen"

I've stated in the past about how Steven Pearlstein's column has become a must-read for me because of its pragmatic, fact-based perspective. A couple of key passages from today's column that are right on the money (pun intended):

"Republicans like to pretend that their real concern is for job creation, citing the fact that about half of all business profits now flow through partnerships and small corporations that are taxed at personal rates. ... Very few of those businesses earn more than $250,000 in profit, and those that do tend to be very successful hedge funds and law firms that are flush with cash and unlikely to be dissuaded from hiring extra employees or make new investments because of a 4 percentage-point change in the marginal tax. Because most hiring and investment can be done with pre-tax dollars, ... the tax rate is largely irrelevant to those decisions."

"...if Republicans were truly interested in reducing the deficit while stimulating private-sector job creation, they would have jumped to embrace the idea floated last week by Sen. Mark Warner, the centrist Democrat from Virginia: let high-end tax rates return to where they were during the Clinton years and use the $65 billion in additional income over the next two years for tax breaks for businesses that increase investments or hire new employees. After that, the extra revenue would go toward deficit reduction."

{Emphasis mine in both passages}

Pearlstein concludes by saying that no Republicans have taken up Mark Warner on his compromise proposal. So much for the much bally-hooed bipartisanship.

"The Shroud of the Dark Side has fallen. Begun, the Clone War has..."

That money could be going to your state Governor...

NYC Subway comes up with an alternative to the plan scrapped by Gov. Chris Christie. Looks like you should think long-term instead of short-term political posturing Governor. I doubt New York City Transit would be willing to share as much of the revenue with New Jersey as the state would have raised if it continued construction on the THE Tunnel in the first place.

On the flip side, I wouldn't mind this proposal as it would give me a direct line from a nearby point in New Jersey straight to CitiField. Of course, as a New York Mets fan, Gov. Christie may have been thinking the same thing.

FiveThirtyEight: Tim Pawlenty is the Republican Party's Gregg Jefferies

I really didn't understand the point Nate Silver was making in his blog post until the very last paragraph:

"Indeed, Mr. Palwenty is in danger of becoming the Gregg Jefferies of politics: the perpetual prospect who never blossoms into more than a league-average politician."

As I life-long Mets fan, I always hoped the hype around Gregg Jefferies would help him overcome his error at third base in the 2nd inning of Game 7 of the 1988 NLCS against the Los Angeles Dodgers. Unfortunately that never happened. Which seems to be what Mr. Silver is implying about Gov. Pawlenty.

"You Make The Call" (Part Deux)

I blogged earlier today about The New York Times' budget deficit calculator. Ezra Klein of The Washington Post has post today about that New York Times calculator and three other calculators: one at the Center for a Responsible Federal Budget, one for the budget overall at Center for Economic and Policy Research, and another one specifically for healthcare at the Center for Economic and Policy Research.

Enjoy playing with the online money gadgets!

"You Make The Call!"

Many of you that watched Monday Night Football in the 1980's might remember "IBM Presents, You May The Call", where they would show a play, give you some choices on the correct call, go to an IBM commercial, and then come back to show you the right answer. It was usually shown between the 1st and 2nd quarters of the game and when I was a pre-teen, it was usually the indicator of bedtime.

Well, The New York Times has a nifty little interactive tool to balance the Federal Budget. It is definitely worth checking out to see how you would go about balancing the budget.

"That's the way it is."

Ted Koppel gives a great history lesson about TV news in an op-ed piece in The Washington Post. It's sad that, like so many other things, this innocent age of journalism is not likely to return in our lifetimes, if it does return at all.

“...who in many cases were frankly pretty average...”

Morgan Stanley CEO James Gorman tells it like it really is:

“There are a fair number of the senior folks who actually believe they are uniquely qualified on all issues relating to finance,” Gorman said [Monday] at a conference in New York. “As we saw, it’s just not true.”

Gorman, speaking at the Securities Industry and Financial Markets Association conference, said some individuals “who in many cases were frankly pretty average” made as much as 10 times that of people in other industries during the financial crisis.

It is sad but so true that not only were individuals in these positions making that much more than peers in other industries, they accounted for a large percentage of the salaries at their own firms as well. Adding insult to injury, when the market nearly collapsed, the ensuing layoffs were not people at these levels but rather the lower level clerks and assistants that made a fraction of these "heroes" (as Gorman called them.) That is the greatest shame of all.



Personal Disclaimer: I am currently employed in a consulting assignment at Morgan Stanley. The opinions expressed above and on this blog overall are solely my own, unless I explicitly state that it is someone else's opinion, such as when I quote a columnist or another blog.

Dog Bites Man; Man Bites Dog

The "Dog Bites Man" story: China, Brazil, and India are the best places for investors.

The "Man Bites Dog" story: Washington Post columnist Charles Krauthammer writes positively about something that involves President Obama, specifically the cost of his trip to India and why it was justified.

Huffington Post: George Bush Book 'Decision Points' Lifted Passages From Advisers' Books

I guess 'plagiarism' is another word we can add to the list of words Dubya doesn't know or can't pronounce (like 'nuclear'). Now, before people go off the deep end complaining about how Huffington Post is just a partisan lefty liberal site that never liked Bush, skip the main article and go straight to the slideshow of examples at the bottom that indicate the quote and page number from Bush's memoir and the corresponding quote and source of the original author.

National Nursing News | Nurses Can Help Patients Navigate New Health Insurance Laws

Great article explaining changes resulting from the Affordable Care Act.

Stories of high-speed rail's death have been greatly exaggerated...

A blog post at NYTimes.com yesterday talks about the likely incoming House Transportation Committee Chairman, Rep. John Mica (R-FL). Unlike other Republicans, he's not interested in killing high-speed rail outright but rather redirecting its funding elsewhere.

I still think the Regional Hubs identified by the White House make sense and the incoming Wisconsin Governor does need to think twice about whether or not it makes business sense to sever the link between Chicago and Minneapolis that will run through his state. It's likely to generate quite a bit of revenue and I still stand behind my initial assessment that it's nothing more than political posturing for an election and not an actually policy decision that will be made.

Or at least I hope so, because I'd really like to arrive in Milwaukee one day in a train station that looks like the rendering of the proposed Milwaukee station pictured above.

Bipartisanship? Easier said than done. Easier dismissed than done too.

Joe Scarborough had a column in Politico earlier this week about bipartisanship. The column itself contained much recycled verbiage from the final chapter of his most recent book. In fact, I even cited this incident in my review of the book on Amazon.com. It still is a lesson in how a determined person with a curious mind can overcome the most opinionated of obstacles.

Which brings us to something that happened on Wednesday in Chicago. After a contentious Senate race that was determined by less than 2% of the votes, the Republican Senator-elect Mark Kirk and the Democratic runner-up Alexi Giannoulias decided to meet up for drinks. I'm sure this will soon be followed by the "Merlot Summit" between President Obama and the presumptive Speaker-to-be John Boehner.

The only issue is politicians have to work together and do so much less begrudgingly than people think. They are in it to get re-elected and if pandering to hate-mongering is the way to do it, so be it. However, that is not in their nature. The conventional wisdom is it's not in human nature either. But I'm starting to question that conventional wisdom when, after e-mailing the Scarborough column to a close friend of polar opposite political leanings, I received the following reply:

"Read it, don't agree with it. When a side wins it won't be wise to let their 'enemies' off the hook."

This reply came from someone I know pretty well and someone I know well enough to know that this individual did not feel the same way after the 2006 and 2008 election results. Where have our politics gone when common sense advice is dismissed by common sense people solely because it requires them to suspend their own political opinions long enough to listen to someone else's point-of-view?

Be careful what you wish for...

I think Ezra Klein explains it best in today's Wonkbook why it seems like the most gridlock-inducing scenario is what ended up being played out as a result of last night's election results:

"Welcome to gridlocked America: The GOP is on track to win about 65 seats in the House of Representatives, and 47 or 48 in the Senate. This is a huge victory: the Republican House majority will be the largest since 1928. But it is not a governing majority, even on the congressional level. Democrats still hold the upper chamber. In fact, Harry Reid still leads the upper chamber.

From the perspective of actually getting anything done in the next two years, there was perhaps no worse outcome. Republicans don't fully control Congress, so they don't have enough power to be blamed for legislative outcomes. But Democrats don't control the House and they don't have a near-filibuster proof majority in the Senate, so they can't pass legislation. Republicans, in other words, are not left with the burden of governance, and Democrats are not left with the power to govern. Republicans don't have to be responsible, and Democrats can't do it for them."

By the way, the daily Wonkbook e-mail/blog post is a great read to stay on top of all policies issues going on in Washington.