Tag Archives: U.S. politics

December 2017 in Review

Most frightening stories:

The U.S. has lost ground relative to its peers on road deaths, and is now well below average. I noted that something similar has happened with respect to health care costs, life expectancy, infant mortality, education, drug addiction and infrastructure. Maybe a realistic goal would be to make America average again.
A lot of people would probably agree that the United States government is becoming increasingly dysfunctional, but I don’t think many would question the long-term stability of our form of government itself. Maybe we should start to do that. The Consumer Financial Protection Bureau has been doing a decent job of protecting consumers and reducing the risk of another financial crisis. The person in charge of it now was put there specifically to ruin it. Something similar may be about to happen at the Census Bureau. A U.S. Constitutional Convention is actually a possibility, and might threaten the stability of the nation.
Daniel Ellsberg says we are very, very lucky to have avoided nuclear war so far. There are some tepid ideas for trimming the U.S. nuclear arsenal, and yet it is being upgraded and expanded as we speak. The North Korea situation is not getting better. Trump may be playing to religious fundamentalists who actually are looking forward to the Apocalypse.

Most hopeful stories:

Exercise may be even better for your brain than it is for your body, and exercising your body may be even better for your brain than exercising your brain itself.
Macroeconomic modeling is improving. So, just to pick a random example, it might be possible to predict the effects on a change in tax policy on the economy. Now all we need is politicians who are responsive to logic and evidence, and we could accomplish something. At least a few economists think the imperfect tax plan the U.S. Congress just passed might actually stimulate business capital investment enough to move the dial on productivity. The deliberate defunding of health care included in the bill is going to hurt people, but maybe not all that dramatically.
Moody’s introduced a new methodology for assessing climate risk in municipal bonds.

Most interesting stories, that were not particularly frightening or hopeful, or perhaps were a mixture of both:

There are life forms surviving in space right now, most likely of Earth origin. I wondered if maybe we should purposely contaminate other planets with them.
Microsoft is trying to one-up Google Scholar, which is good for researchers. More computing firepower is being focused on making sense of all the scientific papers out there.
Futuristic technologies keep coming along. Something vaguely like the “liquid metal” from Terminator 2 is being used for experimental aircraft parts. Vital signs might be monitored soon using a simple RFID device. A tiny electric shock of just the right size to just the right part of your brain might cure you of bad habits. And Magic Leap may finally release…something or other…in 2018.

the tax plan and the mandate

I assumed that the end of the “individual mandate” would seriously undermine funding for Obamacare, and in fact that is exactly what Trump is claiming. But Politifact says we all have that wrong. In fact, those penalties cover only about 3% of the cost of the Affordable Care Act. The main point of the penalty was always a psychological incentive for people to go to the exchanges and find out if they qualified for free or subsidized insurance. People wanted to avoid that penalty even if avoiding it meant they pay more for insurance than they would have paid for the penalty. Not only that, but people who qualify for Medicaid, which is free, have been more likely to find out they qualify for Medicaid because they go to the exchanges after wrongly thinking they are subject to the penalty. So it was somewhat of a psychological trick all along rather than a serious funding mechanism. This doesn’t mean that removing it will have only a 3% affect on premiums for the subsidized private plans – the effect may work in reverse, with more people never going to the exchanges and some not realizing they qualify for free Medicaid benefits. The CBO guesstimate is a 10% increase in premiums as a result of this effect. It’s still going to hurt the working class who need health insurance the most and it’s still immoral. The really immoral part is that as U.S. health care costs continue to spiral out of control in both the public and private sectors, our immoral dishonest politicians are going to point to Obamacare as the cause, and our uninformed citizens are going to believe them.

Michael Boskin and the golden rule

A few serious economists, like Michael Boskin at Stanford, are defending the Republican tax plan. Basically, the argument is that the economic growth benefits of stimulating corporate investment in “equipment” outweighs the outright bribery of wealthy campaign donors.

Summers’s own research results dramatically drive home that point. Using data from a variety of countries and time periods, some as short as five years, he and Brad DeLong of the University of California, Berkeley, (who also opposes the current tax bill) have made the strongest case I know that equipment investment can have a large impact on GDP growth. Moreover, the effect they estimate is much larger than in the conventional models used in most studies, including those relied on by government revenue scorers.

“The analysis suggests a strong and causal relationship between equipment investment and economic growth,” according to Summers and DeLong. They concluded that, “an increase of three or four percentage points in the share of GDP devoted to equipment investment is associated with an increase in GDP per worker of one percent per year.” So, to achieve the 0.3% increase in annual GDP growth that is now being debated, equipment investment would need to rise by 1% of GDP per year, sizeable to be sure, but well within the range of historical experience.

Summers and DeLong also calculate that the social returns from equipment investment are far larger than private returns. Thus, they concluded that “a strong case seems to exist for making sure economic policy does not penalize, and in fact, rewards, investors in equipment”; and that “measures that reduce the tax burden on new equipment investment are likely to be especially potent in maximizing the equipment investment engendered per dollar of government revenue forgone.” Finally, they noted that, “policies with an anti-equipment bias include tax rules that subsidize assets that can easily be levered … [and] pieces of equipment are frequently more difficult to use as collateral for debt than are investments in structures.”

This fits with the “golden rule level of capital” you learn about in economics 101, where “capital” is the “plants and equipment” mentioned above. If as a society you are investing too little in capital (and you have to invest just to hold it steady as it wears out, let alone increase it) your rate of growth is lower than it could be. Deficit spending to increase capital is a sort of free lunch in this case, because growth will offset the expenditures. It is not too hard to imagine this sort of logic extending to investments in research and development, education, and public infrastructure. (By the way, if you really care about economic growth, WHERE IS OUR TRILLION DOLLAR INFRASTRUCTURE BILL YOU LYING SONS OF BITCHES!)

Maybe reducing the corporate tax rate in the U.S. really is a good, efficient policy that will boost growth. My questions are first, how do we know the corporate tax cut will be invested in capital rather than just pocketed? Second, are the lost tax revenues hurting investments in education and infrastructure which could be equally or more beneficial? Third, how can the Republicans torpedo the health care system that was finally starting to help the working class and small business owners, and still sleep at night? It’s hypocritical and immoral. And finally, how can we just accept the rot of institutionalized corruption where politicians are elected by dollars rather than votes, when other advanced countries (a club we may not belong too much longer) don’t do that?

a radical proposal for the North Korea standoff

Philip Bobbit from Lawfare says the current strategies of the U.S. and China governments towards North Korea cannot succeed.

Our current approach to the North Korea problem is a combination of both kinetic and diplomatic threats occasionally alternating with the offer of incentives. This approach cannot succeed. There is nothing the U.S. can do to North Korea that will lead to its renunciation of its nuclear weapons program. North Korea—even before it has developed the capability to strike the U.S. homeland with nuclear weapons—already poses an unacceptable risk of retaliation against our allies in response to an American military intervention. Moreover, there is nothing the U.S. can do for North Korea that might induce it to denuclearize because the Kim regime is convinced that, for domesticreasons, the country can only be assured of remaining in power by keeping its country on a war footing against the United States. Finally, there is nothing the international community, including China, can do to North Korea in the way of greater sanctions, or for North Korea by abating sanctions. Neither action could possibly persuade the Kim regime to give up its nuclear weapons because the regime has concluded that only its threats to others have preserved it thus far.

His solution, if I understand it correctly, is for China to agreed to repel any U.S. invasion, using any nuclear weapons if necessary. China technically has agreed to repel any invasion of North Korea already, but to use nuclear weapons only in retaliation for a nuclear attack. It sounds crazy, but I get the logic that the key to appeasing a paranoid dictator could be to address the paranoia directly.

There is, however, an available strategy that has not been considered and may promise success: a nuclear guarantee for the North Korean regime from China. If China were to give a credible nuclear guarantee to North Korea in the case of a U.S. invasion or preemptive strike against Pyongyang, there would be little point in North Korea risking the survival of its regime by developing long-range nuclear weapons. Such a policy should not be confused with the current mutual defense pact between North Korea and China, one cornerstone of which is China’s no-first-use policy. From Kim’s point of view, there is much security to be gained by such a guarantee of deterrence against the U.S. and much security to be lost if North Korea continues its present course when further technological revolutions in the U.S. render the North Korean arsenal ever more vulnerable. Our aim must be to reorient Kim Jong Un’s paranoia, making him more afraid of losing a unique opportunity for security in the eyes of his own people than he is afraid of dependence on China.

It seems like a simpler, and equally logical, approach on its face would be for the U.S. to pledge to never invade North Korea in exchange for North Korea giving up its nuclear weapons. The U.S. could withdraw some weapons from Asia in return, which would be a good idea anyway. I guess the problem with this is that U.S. promises would not be credible in North Korean eyes. Or, to be more cynical, they need their population to fear imminent U.S. attack in order to keep them under control.

how to defraud the U.S. Census

From the Department of Pre-crime, a guy the Trump administration might appoint to run the 2020 Census might try to cook the books. It seems a little unfair to accuse someone of a crime they haven’t even had an opportunity to consider committing yet, but I found it interesting to consider how it could be done. This sort of thing definitely happens in some countries, for example to perpetuate minority rule in spite of demographic change.

Each census starts with a simple questionnaire sent to every household. In 1970 and 1980, over 75% of those queried sent back responses. In 2010 that figure dropped to 63.5%, and in 2020, with distrust of government at an all-time high and increasing fears of data breach, the response rate will likely be significantly worse—current estimates range from 55% to 60%. To identify the non-respondents—at least 40% of Americans—the Census Bureau will have to exert considerable energy.

Thomas Brunell will determine how vigorously to track down these unidentified people in diverse locations. In rural areas that commonly vote Republican, he could direct workers to scour the trailer parks, while in urban Democratic strongholds, he could order census takers to visit non-responding households only during working hours. He could spend his advertising budget wisely in some places and less so in others. He could dispatch non-Spanish-speaking personnel into Hispanic neighborhoods. He could feed fears of deportation in immigrant communities. He could use credit rating companies to locate non-respondents, although many of the poor will never appear on such registries.

There is a simpler route Brunell could take. He might choose to do little, a tool almost as effective as the nefarious schemes detailed above. So far, the Census Bureau’s budget has been held to its 2010 level, despite a significant increase in the population and the expected rise in the percentage of those who do not respond to the initial questionnaire. Without greater resources and dedicated will, the Census Bureau could leave tens of millions of Americans uncounted. The GAO has warned that the 2020 Census is at “high risk of failure,” but requests to add funds have not yet been granted by Congress. New coping technologies are being introduced, yet trial runs have been curtailed due to lack of financing. Plans to test a Spanish-language questionnaire have also lapsed. Such constraints raise the stakes. When resources are limited, how to allocate those resources becomes paramount.

Trump and the Apocalypse

I was joking last week that in recognizing Jerusalem as Israel’s capital, Trump might be trying to hasten the Apocalypse. I doubt Trump believes in the biblical Apocalypse, and for the record neither do I, but this Alternet author provides a “shocking” reminder that many of his supporters do. This shouldn’t be so shocking, when Christianity is the prevalent religion in the country, and a good chunk of the Bible is literally about the end times and judgment day. Jesus spent a good chunk of his time talking about them, and his followers expected them to happen immediately upon his death. Jewish and Muslim traditions include some form of it too. So I am not saying you can’t be religious without believing in the Apocalypse, but if you do that you are choosing not to take your holy books literally, or to take some parts literally and others not. Or, if you are religious but this topic is a surprise to you, then you aren’t really educated about the typical and historical beliefs of members of your own religion. So make no mistake, there are people out there for whom this is the most important thing and the main thing they spend their time thinking about, and they are going to view the world differently than those of us who do not believe in these things. And there are a lot of them out there.

ignorance and common sense

You would think ignorance and common sense would be opposites. But the term “common sense” has been in fact ruined because of its adoption by ignorant people. I’m not going to name names, but I have one particular U.S. President and political party in mind. Having common sense has come to be defined as believing one’s opinion is the truth. If you believe your opinion is the truth, you not only don’t know the limits of your knowledge, you can take willful steps to avoid acquiring knowledge, and you are completely impervious to evidence or logic others might attempt to share with you. Here are some illuminating quotes from a 2016 Washington Post article somewhat sadly titled Donald Trump doesn’t read much. Being president probably wouldn’t change that.

He said in a series of interviews that he does not need to read extensively because he reaches the right decisions “with very little knowledge other than the knowledge I [already] had, plus the words ‘common sense,’ because I have a lot of common sense and I have a lot of business ability.”

Trump said he is skeptical of experts because “they can’t see the forest for the trees.” He believes that when he makes decisions, people see that he instinctively knows the right thing to do: “A lot of people said, ‘Man, he was more accurate than guys who have studied it all the time…’ ”

Trump said reading long documents is a waste of time because he absorbs the gist of an issue very quickly. “I’m a very efficient guy,” he said. “Now, I could also do it verbally, which is fine. I’d always rather have — I want it short. There’s no reason to do hundreds of pages because I know exactly what it is.”

What is that old saying – he who knows not he knows not, he is a fucking idiot with control of the world’s largest nuclear arsenal. Hopefully his age, propensity for temper tantrums, and fast food habit will lead to him having a stroke and dropping dead relatively soon.

If the Secret Service is reading this, yes I hope he dies soon of natural causes, no I wouldn’t pull the trigger myself, but I would be happy to bring the next silver-plated platter of Big Macs.

On the lighter side, Trump is not the first President with a supposed Big Mac habit. Maybe he will join Bill Clinton’s vegan club. No word yet on whether Hillary has come up with a vegan cookie recipe.

Article V

I think most Americans have a basic understanding that the Constitution can be amended, but that this is hard to do and therefore is not done very often. We treat our Constitution almost as a sacred text and that is one reason that even though our country is young compared to many others, its form of government has persisted in its current form longer than almost any other (I want to say longer than any other, but someone more knowledgeable than me could probably prove me wrong.)

Anyway, there is another way amendments can happen without the consent of Congress, which is for legislatures in two thirds of the states to force a constitutional convention. Sure, we all read about that when we studied the Colonial period in elementary school, right? I can actually walk over to Independence Hall on my lunch break any time I want and see where that all happened.

It turns out that as of now, December 2017, 28 U.S. state legislatures have voted to call a constitutional convention. 34 states would represent the two-thirds required. This could be a good thing. For example, a constitutional convention could clarify the definition of a “person” and get us the clean elections we so deserve. But that is not what is behind this. What is behind this is people who want to gut the federal government’s ability to tax, provide benefits, regulate interstate commerce, and protect the environment. This could actually be the beginning of the end of the republic.

macroeconomic models and tax cuts

The Economist has a piece on macroeconomic models used to evaluate tax policy.

Lurk near PhD economists online or at conferences, and you will hear them talk about “crisis in macro”. They mean that the models and assumptions most dominant among macroeconomists have failed repeatedly since 2007 to predict or even describe what’s happening. A defence, popular among academics, goes like this: we did get it wrong, but as responsible social scientists, we’re busy and fascinated right now, trying to figure out what was broken and how to fix it. It is a fair defence. In particular young macroeconomists have been using bigger datasets and faster computers to more accurately predict human behaviour. Economists are more likely to accept now, for example, that people with and without access to credit or wealth react differently to the same policy, an idea that is slowly working its way into models at central banks and even at the Joint Committee on Taxation.

This progress is unfortunate for Republicans. In the 1990s social science was on their side. Because data and computing power were harder to come by, macroeconomic models relied on thought experiments. The seminal model showing the ideal capital-gains tax rate as zero, for example, dates to 1986. It assumes that the economy consists of only one person. Also, she is immortal. The Wonder Woman economy, if you will. That model is now interesting only for a lecture on the history of economic thought. We’ve moved on, macroeconomists protest. But economists have. And Republicans haven’t…

But if you are going to insist on modeling the future and then planning around it, you have to do it right. The economists at the Joint Committee on Taxation are thoughtful. They read the most recent research. They examine their own models and, when they can, update them—conservatively. If, as Republicans have been insisting for 20 years, we have to assess our tax policies with dynamic scoring, there is no better way to do it than through the JCT. Unfortunately, as modeling has improved, it has not improved in the direction Republicans prefer, which leaves them where they are now. They wanted social science in policy-making, and they got it, in the form of a $1trn tax bill.

I don’t know how any ethical person can support the Republican party right now. They don’t care about facts, logic, or evidence, and certainly not economic growth or raising the living standards of their constituents. They are blantantly and shamelessly committed to lining the pockets of their big-business funders. It’s corrupt, undemocratic and shameful.

November 2017 in Review