Winston Churchill Liveblogs World War II: May 28, 1941
Learned Helplessness and Macroeconomic Policy

For the Virtual Green Room: May 28, 2011...

Things I want to have at the forefront of my brain--for when I am surprised, as I will be, by an unexpected question from an unexpected direction while talking to reporters, phone callers, passers-by, radio interviewers, cable TV interviewers, etc....

A baker's dozen:

  1. On Stephen Moore's claim that "in reality" the Democrats are proposing a 62% top income tax rate: Moore's op-ed is simply not reality-based. There is no such proposal for a 62% marginal top income tax rate, not from any Democratic office holder or advisor. Moore claims that "in the late 1980s, the U.S. was nearly the lowest taxed nation in the world, and a quarter century later we're nearly the highest." The U.S. today has a smaller tax share of GDP than every single other G-7 nation. The reason that the U.S. collects a larger share of taxes from the rich is that our incomes today are much more skewed toward the rich than those of other G-7 nations.

  2. On the GOP's jobs agenda: Ezra Klein: "Academic books pack about 600 words to a page.... The House GOP’s jobs plan, however, gets about 200 words to a page. The typeface is fit for giants, and the document’s 10 pages are mostly taken up by pictures. It looks like the staffer in charge forgot the assignment was due on Thursday rather than Friday, and so cranked the font up to 24 and began dumping clip art to pad out the plan..."

  3. GOP jobs agenda II: David Autor: "1. You have a set of policies that you favor at all times and under all circumstances, e.g., cut taxes, remove regulations, drill-baby-drill, etc. 2. You see a problem that needs fixing (e.g., the economy stinks). 3. You say, ‘We need to enact my favored policies now more than ever.’ I believe that every item in the GOP list... derives from this three step procedure.... That’s not to say that there are no reasonable ideas on this list. But there is certainly no original thinking here directed at addressing the employment problem..."

  4. On House Majority Leader Eric Cantor's 5% Growth Strategy: Larry Kudlow wrote: "I suggested to Cantor that the GOP adopt a 5 percent national growth target.... 'That', he told me 'is a fantastic goal'..." The sum total of Eric Cantor's 5% growth strategy is this: to tell Larry Kudlow that a 5% per year growth target "is a fantastic goal." That is it.

  5. On the Ryan plan to end Medicare as we know it: Peggy Noonon says: "Rep. Paul Ryan['s]... main problem on Medicare is that people fear the complexities and demands of a new delivery system...." But the Ryan plan has no new health-care delivery system. It simply drastically cuts the amount of money the federal government spends on Medicare, and tells you you have to find a private insurance company--and pay all its extra overhead and profits--to dole out the slashed Medicare payments to your doctors.

  6. Ryan plan II: Ezra Klein: "Since 2006... Medicare Part D’s average premium has risen by 57 percent.... That... is a lot faster than inflation, which is what Ryan needs for his [Medicare] plan to work.... When defending Medicare Part D, [Ryan] argues that it came in cheaper than expected, ignoring both the reasons behind that performance and the fact that growth in the program was nevertheless much faster than his plan could bear..."

  7. Ryan Plan III: Ezra Klein: "I asked Ryan how he could say that government control never works in health care when Germany, the Netherlands, France and other countries pay so much less, and get as much or more, than we do. Ryan’s reply... is basically a dodge.... Canada spent about $4,000 per person, per year.... The United Kingdom spent a bit more than $3,000. We spent about $7,400.... When attacking the systems in other countries, [Ryan] cherrypicks numbers to demonstrate they want to save money... but ignores the numbers showing that they spend half as much as we do.... [Ryan] gives people the wrong impression of both Medicare Part D and health systems across the world..."

  8. Ryan Plan IV: Ezra Klein: "Of late, Paul Ryan has adopted the curious tactic of blaming his Medicare plan on Bill Clinton.... So let’s review: President Clinton did not convene a bipartisan commission on Medicare, the bipartisan commission on Medicare that was convened didn’t endorse the plan, and the plan under consideration was very, very different from the plan Ryan has proposed. This talking point Ryan is trotting out just isn’t true..."

  9. On the Wall Street Journal's editorial claim that "the regulatory tax on Americans is now larger than the income tax": The WSJ editorial board writes: "so-called independent agencies like the Federal Reserve... were a perfect 0 for 17 in failing to estimate costs as well as benefits [of regulation]..." Are they seriously claiming that the Federal Reserve has overregulated financial markets over the past decade because it hasn't been writing bureaucratic reports explicitly enumerating and comparing costs and benefits?

  10. On Megan McArdle's claim that "we cannot pay for social security by ending the Bush tax cuts on high earners": McArdle writes: "The [CBPP claims] we could, by simply refusing to extend the Bush tax cuts on high earners, cover virtually all of the Social Security shortfall.... But this is not the case.... [O]ur debt is not yielding 5.25% right now... [but] around 3%..." She says no, but the reality is yes, we could. Interest rates are low during recessions and high during booms. Odds are that as the economy recovers interest rates will rise and average about 5.25% in the future--which is what the CBPP needs for its calculation to be correct.

  11. On Republican opposition to raising the debt ceiling: Right-leaning Clive Crook: "Tea Party true believers may be salivating.... Shutting down the government [by blocking the debt-ceiling increase is a button [Republicans] dare not press.... To do it in 2011, with the economy laid low and financial markets still twitchy, would be the limit of irresponsibility. It would be betting the recovery to make a point. This time, political annihilation might follow, and the party would deserve it..."

  12. On signs of accelerating wage increases: Paul Krugman: "Bloomberg reports on signs that wages may be accelerating. It’s worth bearing in mind that we’re talking about modest stuff — if the employment cost index accelerates to 2 percent, that’s still just productivity growth, and hardly a sign of runaway inflation [as it is consistent with price inflation of zero]. Still, this isn’t what I expected to see, and I will be watching developments.... [Nevertheless,] the invisible bond vigilantes are intensifying their invisible attack: 10-years down to 3.06 percent, and the TIPS spread falling..."

  13. SPEAKS FOR ITSELF Harvey Mansfield on Arnold Schwarzenegger and Dominique Strauss-Kahn: "Men are much more violent, but also more given to innovation and invention. Most science and all common sense says this, but our society now wants desperately to be gender-neutral, and it has great difficulty in admitting this obvious difference.... It certainly seems strange that being capable of rape can make a person better qualified for greatness, but it’s probably true..."