[Eastwood's] joke about Obama telling Romney (we can safely infer, I think) to go f&^# himself still crosses a line, though in post-“You lie!” America it’s hard to say where exactly that line is anymore. But as a matter of pure politics—this being a convention, after all—was Eastwood really so terrible?
One of the biggest problems for Romney as a political communicator is the fundamental impossibility of translating the free-floating, inchoate animus toward Obama… into a vocabulary that makes sense…. More base-friendly Republicans have mostly succeeded in translating it into varieties of spittle-flecked rage or outright conspiracism, but it’s hard to see this kind of thing coming across much better with the sliver of voters left to win over in the next two months.
But Eastwood’s performance channeled a gentler, less toxic version…. He embodied the people you would meet on the margins of the early Tea Party rallies: usually older, not terribly politically engaged, unclear on what it was that the stimulus or (later) the Affordable Care Act actually did or didn’t do, but possessed of a deep conviction that things were somehow just going wrong.
Sure, most of what he said was daft—“Closing Gitmo—why close that? We spent so much money on it”—but that’s sort of the point. Eastwood, for all his fame and wealth, did not seem of a piece with the Olympians and successful entrepreneurs parading across the stage earlier in the evening. He came across more like a surrogate for a cranky, bewildered swath of America—one whom the Republicans venerated last night, and liberals and journalists are tearing to shreds today. In a different venue, you might call it a solid performance.
Yes, there are strong reasons to believe that expansionary fiscal policy (supported by monetary policy) or banking policy to deal with the household balance-sheet problem (supported by monetary policy) would be preferable ways of rebalancing aggregate demand. But as long as Boehner, Cantor, Ryan, and McConnell hold blocking positions in the Congress, expansionary fiscal policy is not going to happen, and as long as DeMarco and Geithner hold blocking positions in the bank regulatory structure, aggressive banking policy to deal with impaired household balance sheets is not going to happen either.
That leaves monetary policy: not guaranteed to work, but worth trying.
BMy quick summary: Bernanke in the Hole. Jackson Hole, that is:
- Things are really, really bad.
- The damage is cumulative; the longer this goes on, the worse the prospects for the future.
- The Fed has the power to do a lot to help the economy.
- While you can argue that there are costs to action, the case for major costs is quite weak, and in particular much weaker than the case for major benefits.
- Therefore, what we at the Fed will do is, um, sit on our hands some more, and think very seriously about maybe, someday, doing something.
Eschaton: The Big Picture: Even if we believe the premise that, say, everything was done with the banksters in mind, it doesn't mean that the banksters, or the subset of them dealing with housing issues, or their lobbyists, really have a big picture sense of what's good for them. You know, their model shows how doing X will give them a bunch of extra money on some set of mortgage securities, but doesn't take into account that throwing millions of people out of their homes might cause them some additional problems.
I don't actually assume that Our Galtian Overlords actually know what they're doing most of the time.
Eschaton: Hope or Hopeless: The administration has been horrible on housing…. I think they've been horrible from the perspective of all of the stakeholders, though thinking, perhaps, of some stakeholders more than others in the process. Happy they're improving, not convinced it's real.
And Neil Barofsky:
Tim Geithner’s principal hypocrisy: Last week the acting director of the Federal Housing Finance Agency, Ed DeMarco… announced that he would not approve the Obama administration’s request that struggling borrowers whose mortgages are backed by Fannie Mae and Freddie Mac receive debt relief through principal reductions subsidized by the Troubled Asset Relief Program (TARP). DeMarco’s refusal was based on his concern that granting such relief would encourage other borrowers to “strategically default”….
This is not the first time this debate is happening – but last time around, Geithner was the one arguing DeMarco’s points…. [N]o one should be fooled that the administration’s entreaties to DeMarco are anything but political posturing…. Treasury Secretary Timothy Geithner, using the same justifications now offered by DeMarco, consistently blocked efforts to use TARP funds already designated for homeowner relief through a principal reduction program that could have a meaningful impact on the overall economy….
Geithner avoided this path to a housing recovery, explaining that he believed it would be “dramatically more expensive for the American taxpayer, harder to justify, [and] create much greater risk of unfairness.” Treasury amplified that argument in 2010, after it reluctantly instituted a weak principal reduction program in response to overwhelming congressional pressure. That program incongruously left it to the largely bank-owned mortgage servicers (and to Fannie and Freddie) to determine if such relief would be implemented. In response to our criticism that the conflicts of interest baked into the program would render it ineffective unless principal reduction was made mandatory (when in the best interests of the holder of the loan), Treasury reinforced Geithner’s early statements, refusing to do so primarily because of fears of a lurking danger: the ”moral hazard of strategic default.” The message was clear: No way, no how would Treasury require principal reduction, even when Treasury’s analysis indicated it would be in the best interest of the owner, investor or guarantor of the mortgage….
Which is why it should not be surprising that rather than engage in bold action, such as replacing DeMarco with a recess appointment, the administration has responded with only a letter…. [T]he administration – whether through principal reduction or otherwise – has never prioritized coming up with an effective approach to helping homeowners and reviving the housing market, even when it had a multi-hundred-billion-dollar TARP war chest at its disposal….
This is not a conversion – it is a political convenience. Geithner may well be correct when he wrote in a letter to DeMarco that an effective principal reduction program would “help repair the nation’s housing market” and that the refusal to do so is not “in the best interest of the nation,” but it is his own policies that are primarily to blame for where we are today…. Geithner wrote this week to Demarco: “You have the power to help more struggling homeowners and help heal the remaining damage from the housing crisis.” If only he had heeded his own advice.
Brad DeLong: Is Macroeconomics Hard? No: "Math is hard," said Malibu Barbie, famously--and a ton of criticism came down on her for the implicit message that her auditors should go off and do other, easier, things instead and leave the math to the trained professionals. Is macroeconomics hard in this sense? I confess that I do not think so. I think that macro is pretty easy...
Let's go back in time almost two centuries, to the days when--first after the end of the Napoleonic Wars and then in 1825-6--the nascent intellectual community of economists confronted the question of whether the circular flow of economic activity as mediated by the market system could break down and the economy become afflicted by a "general glut" of commodities.
There was no question that there could be a "glut" of particular commodities. An example may make this clear:
Suppose--this is Berkeley, after all--that households decide that they want to spend less than they have been spending on electricity to power large-screen video and audio entertainment systems and more on yoga lessons to seek inner peace. The immediate consequence--within the "market day," as late-nineteenth century British economist Alfred Marshall would have put it--of this shift in preferences is excess demand for yoga instructors and excess supply of electric power. Prices of electricity (and of large-screen TVs, and of audio systems) fall as unsold inventories pile up in stores and as generators spin down and stand idle. Yoga instructors, by contrast, find themselves overscheduled, working ten-hour days, and stressed out--and find the prices they can charge for their lessons going through the roof. Workers in electric power distribution and in video and audio production and sales find that they must either accept lower wages or find themselves out on the street without jobs.
Over time the market system provides individuals with changing incentives that resolve the excess-supply excess-demand disequilibrium and restore the economy to equilibrium balance. Seeing the fortunes to be earned by teaching yoga, more young people learn to properly regulate their svadisthana chakra and teach others to do so. Seeing unemployment and stagnant wages in electrical engineering, fewer people major in EECS. The supply of yoga instructors grows. The supply of electrical engineers shrinks. Wages of yoga instructors fall back towards normal. Wages of electrical engineers rise. And balanced equilibrium is restored.
Thus we understand how there can be a glut of a particular commodity--in this case, electric power. And we understand that it is matched by an excess demand for another commodity--in this case, yoga instructor services to properly align your svadisthana chakra.
But can there be a general glut, a glut of everything?
Some economists early in the nineteenth century said yes--and that the economy was experiencing one, and that the fact that such "general gluts" could manifest themselves was a problem with the market system that economists needed to figure out how to solve. Thomas Robert Malthus was the most prominent of those who protested. He agreed that the then-fashionable economic theory said that a glut in one market had to be balanced by a surplus of excess demand in another. But, he said, so much the worse for economic theory:
Malthus on Ricardo: [A]ccording to [Ricardo's]... theory of profits... the master manufacturers would have been in a state of the most extraordinary prosperity, and the rapid accumulation of their capitals would soon have employed all the workmen that could have been found. But, instead of this, we hear of glutted markets, falling prices, and cotton goods selling at Kamschatka lower than the costs of production. It may be said, perhaps, that the cotton trade happens to be glutted; and it is a tenet of the new doctrine on profits and demand, that if one trade be overstocked with capital, it is a certain sign that some other trade is understocked. But where, I would ask, is there any considerable trade that is confessedly under-stocked, and where high profits have been long pleading in vain for additional capital? The [Napoleonic] war has now been at an end above four years; and though the removal of capital generally occasions some partial loss, yet it is seldom long in taking place, if it be tempted to remove by great demand and high profits; but if it be only discouraged from proceeding in its accustomed course by falling profits, while the profits in all other trades, owing to general low prices, are falling at the same time, though not perhaps precisely in the same degree, it is highly probable that its motions will be slow and hesitating...
Jean-Baptiste Say defended the theory. He wrote to Malthus claiming that theory was sound, and that the idea of a "general glut" was logically inconceivable:
Letters to Mr. Malthus: I shall not attempt, Sir, to add... in pointing out the just and ingenious observations in your book; the undertaking would be too laborious.... [And] I should be sorry to annoy either you or the public with dull and unprofitable disputes. But, I regret to say, that I find in your doctrines some fundamental principles which... would occasion a retrograde movement in a science of which your extensive information and great talents are so well calculated to assist the progress.... What is the cause of the general glut of all the markets in the world, to which merchandize is incessantly carried to be sold at a loss?... Since the time of Adam Smith, political economists have agreed that we do not in reality buy the objects we consume, with the money or circulating coin which we pay for them. We must in the first place have bought this money itself by the sale of productions of our own. To the proprietor of the mines whence this money is obtained, it is a production with which he purchases such commodities as he may have occasion for.... From these premises I had drawn a conclusion... “that if certain goods remain unsold, it is because other goods are not produced; and that it is production alone which opens markets to produce.”... [W]henever there is a glut, a superabundance, [an excess supply] of several sorts of merchandize, it is because other articles [in excess demand] are not produced in sufficient quantities... if those who produce the latter could provide more... the former would then find the vent which they required.... You, on the contrary, assert that there may be a superabundance of goods of all sorts at once; and you adduce several facts in favour of your opinion. M. Sismondi had already opposed my doctrine...
As the young John Stuart Mill put it, the core of the argument of Say, Ricard, and their school was that:
There can never, it is said, be a want of buyers for all commodities; because whoever offers a commodity for sale, desires to obtain a commodity in exchange for it, and is therefore a buyer by the mere fact of his being a seller. The sellers and the buyers, for all commodities taken together, must, by the metaphysical necessity of the case, be an exact equipoise to each other; and if there be more sellers than buyers of one thing, there must be more buyers than sellers for another...
Thus a general glut was as impossible as a square circle or a solid gas.
Yet Say changed his mind. By 1829, in his analysis of the British financial panic and recession of 1825-6, Jean-Baptiste Say was writing that there could indeed be such a thing as a general glut of commodities after all: "every type of merchandise had sunk below its costs of production, a multitude of workers were without work. Many bankruptcies were declared..."
The general glut, Say wrote in 1829, had been triggered by a panicked financial flight to quality which had led the Bank of England to shrink its liabilities:
The Bank [of England], legally obliged to redeem its banknotes in specie... [t]o limit its losses... forced the return of its banknotes, and ceased to put new notes into circulation. It was then obliged to cease to discount commercial bills. Provincial banks were in consequence obliged to follow the same course, and commerce found itself deprived at a stroke of the advances on which it had counted, be it to create new businesses, or to give a lease of life to the old. As the bills that businessmen had discounted came to maturity, they were obliged to meet them, and finding no more advances from the bankers, each was forced to use up all the resources at his disposal. They sold goods for half what they had cost. Business assets could not be sold at any price. As every type of merchandise had sunk below its costs of production, a multitude of workers were without work. Many bankruptcies were declared among merchants and among bankers, who having placed more bills in circulation than their personal wealth could cover, could no longer find guarantees to cover their issues beyond the undertakings of individuals, many of whom had themselves become bankrupt...
What was going on?
The answer was nailed by John Stuart Mill in that same year.
Mill's explanation: there was indeed a "general glut" of newly-produced commodities for sale and of workers to hire. But it was also the case that the excess supply of goods, services, and labor was balanced by an excess demand elsewhere in the economy. The excess demand was an excess demand not for any newly-produced commodity, but instead an excess demand for financial assets, for "money":
Although he who sells, really sells only to buy, he needs not buy at the same moment when he sells... there may be, at some given time, a very general inclination to sell with as little delay as possible, accompanied with an equally general inclination to defer all purchases as long as possible.... In order to render the argument for the impossibility of an excess of all commodities applicable... money must itself be considered as a commodity....
Those who have... affirmed that there was an excess of all commodities, never pretended that money was one of these commodities.... What it amounted to was, that persons in general, at that particular time, from a general expectation of being called upon to meet sudden demands, liked better to possess money than any other commodity. Money, consequently, was in request, and all other commodities were in comparative disrepute....
The result is, that all commodities fall in price, or become unsaleable.... [A]s there may be a temporary excess of any one article considered separately, so may there of commodities generally, not in consequence of over-production, but of a want of commercial confidence...
How, exactly, should economists characterize the excess demand in financial markets? Where was it, exactly? That became a subject of running dispute, and the dispute has been running for more than 150 years, with different economists placing the cause of the "general glut" that was excess supply of newly-produced goods and of labor at the door of different parts of the financial system.
The contestants are:
Fisher-Friedman: monetarism: a depression is the result of an excess demand for money--for those liquid assets generally accepted as means of payment that people hold in their portfolios to grease their market transactions. You fix a depression by having the central bank boost the money stock. Eliminating the excess demand for money also brings the goods and labor markets into balance and out of excess supply.
Wicksell-Keynes (Keynes of the Treatise on Money, that is): a depression happens when there is an excess demand for bonds--for ways of moving purchasing power from the present into the future. The workings of the banking system lead the market rate of interest to be above the natural rate of interest which balances the supply of funds saved and the demand for funds to finance business investment. You fix a depression by either reducing the market rate of interest (via expansionary monetary policy) or raising the natural rate of interest (via expansionary fiscal policy) in order to bring them back into equality. Then, with no more excess demand for bonds, the goods and labor markets will also be back in balance and out of excess supply.
Bagehot-Minsky-Kindleberger: a depression happens because of a panic and a flight to quality, as everybody tries to sell their risky assets and cuts back on their spending in order to try to shift their portfolio in the direction of safe, high-quality assets--which, of course, everybody cannot all do at the same time. The excess demand is an excess demand for high-quality AAA assets in particular, not of money (although outside money and some inside money are AAA assets) and not of bonds (some of which are AAA assets, but not all). You fix a depression by restoring market confidence and so shrinking demand for AAA assets and by increasing the supply of AAA assets. Eliminating the excess demand for high-quality assets is eliminated will bring the goods and labor markets out of excess supply and back into balance.
From the perspective of this Malthus-Say-Mill framework Keynes's General Theory is a not entirely consistent mixture of (1), (2), and (3)...
Note that these financial market excess demands can have any of a wide variety of causes: episodes of irrational panic, the restoration of realistic expectations after a period of irrational exuberance, bad news about future profits and technology, bad news about the solvency of government or of private corporations, bad government policy that inappropriately shrinks asset stocks, et cetera. Nevertheless, in this Malthus-Say-Mill framework it seems as if there is always or almost always something that the government can do to affect asset supplies and demands that promises a welfare improvement over, say, waiting for prolonged nominal deflation to raise the real stock of liquid money, of bonds, or of high-quality AAA assets. Monetary policy open market operations swap AAA bonds for money. Quantitative easing that raises expected inflation diminishes demand for money and for AAA assets by taxing them. Non-standard monetary policy interventions swap risky bonds for AAA bonds or money. Fiscal policy affects both demand for goods and labor and the supply of AAA assets--as long as fiscal policy does not crack the status of government debt as AAA and diminish rather than increasing the supply of AAA assets. Government guarantees transform risky bonds into AAA assets. Et cetera...
And then there are, of course, those who never read their John Stuart Mill of 1829, and who never noticed that Jean-Baptiste Say in 1829 had retracted his 1803 claim that a general glut is impossible. They continue claim that a depression is not an economic disequilibrium that can be cured by proper government policy at all--but rather an economic equilibrium that can only be made even less pleasant by government intervention. Think of Karl Marx, Friedrich Hayek, Ludwig von Mises, Andrew Mellon, Robert Lucas, et cetera.
This fraction maintains that in a depression there is no excess supply of goods and labor in any meaningful sense. But, instead, they say:
goods and labor markets are in balance--no government policy to raise employment and production is welfare-increasing--it is just that technological regress has lowered the productivity of labor, and employment is low because real wages are low and workers would rather be unemployed; or
goods and labor markets are in balance---no government policy to raise employment and production is welfare-increasing--it is just that workers have an increased taste for leisure that has raised their reservation wage, and employment is low because real wages are high and businesses would rather not hire; or
goods and labor markets are in balance---no government policy to raise employment and production is welfare-increasing--it is just that previous overinvestment has given us a capital stock that is too large and misallocated, and employment is low because workers cannot quickly be redeployed into jobs in the consumption goods sector; or
goods and labor markets are in balance---no government policy to raise employment and production is welfare-increasing--it is just that workers have mistaken nominal shocks for real shocks, and think that real wages are lower than they are because they misperceive the price level.
It is pretty clear that they are wrong.
Indeed, John Stuart Mill and Jean-Baptiste Say back in 1829 had pretty clear and convincing arguments that this no-disequilibrium fraction is wrong. And Mill's and Say's arguments have not become less clear and convincing in the past 180 years.
I like this Malthus-Say-Mill framework. I think that this framework allows me to at least characterize every position on our current macroeconomic dilemmas that I have heard--like, for example, that the advocates of austerity are convinced that further debt issue by the U.S. government will crack the U.S. Treasury bond's status as a safe asset and thus increase, not decrease, the excess demand for AAA assets and increase, not decrease, the excess supply of recently-produced commodities and labor.
And it is not rocket science.
But it is, however, cutting-edge economics--cutting edge for 1829, that is.
 People who, along with me, took Olivier Blanchard's Economics 2410b course in spring 1983 will note how closely this tracks what Olivier was trying to teach us in the three classes--the week and a half--he spent on Lloyd Metzler's "Wealth, Savings, and the Rate of Interest." (The only distinction Metzler is missing that I think is needed is the distinction between safe and risky bonds.) And, of course, Edmond Malinvaud's Theory of Unemployment Reconsidered
Robert's Stochastic Thoughts: Edited down from TPM
Sandoval’s office claimed his request for flexibility was not actually a request for a waiver.
“Nevada hasn’t requested a waiver and has no intention of requesting one,” his spokeswoman Mary-Sarah Kinner told the Las Vegas Sun. “The letter was not a request for a waiver; it was a request to explore the possibilities.”
In August 2011, Sandoval’s Health and Human Services director approached the Obama administration: “Nevada is very interested in working with your staff to explore program waivers that have the potential to encourage more cooperative relationships among the state agencies engaged in economic stimulus through job creation, employment skill attainment and gainful employment activities,”
I honestly admire Kinner's audacity.
Romney’s speech: Where was the policy?: A few thoughts on Romney’s speech.
1. We heard precious little about Mitt Romney’s plans for the country. By my count, Barack Obama’s 2008 convention speech spent 768 words describing his domestic and economic policies. Romney’s speech spent 260 words. There was almost no mention — and absolutely no description — of his budget, tax, health care or Medicare plans.
The only policy idea he described in any detail was his five-point plan “to create 12 million new jobs.” The plan is more domestic energy production, more free trade agreements, more skills development, more deficit reduction, and cutting taxes and regulations. It is difficult to see how these policies — most of which would take some time to work — would address the jobs crisis…. But… they don’t have to. Romney’s target of 12 million jobs over the next four years happens to be the same number of jobs the economic forecasting firm Moody’s Analytics expects us to add even without major policy changes.
Here’s Romney’s theory of why Obama failed: “The President hasn’t disappointed you because he wanted to…. He had almost no experience working in a business. Jobs to him are about government.” But if business experience is the key qualification for a president, why did Romney pick Paul Ryan, who has spent even less time in the private sector than Obama, to be his vice president?
The most devastating line in Romney’s speech: “If you felt that excitement when you voted for Barack Obama, shouldn’t you feel that way now that he’s President Obama? You know there’s something wrong with the kind of job he’s done as president when the best feeling you had was the day you voted for him.”
Perhaps it was just me, but I had trouble following the basic thread….
Romney’s speech included a number of riffs at odds with his policies. For instance: “Nearly one out of six Americans is living in poverty. Look around you. These are not strangers. These are our brothers and sisters, our fellow Americans.” There is simply no way, given the nature of Romney’s budget promises, that programs for the poor won’t be slashed to the bone. Similarly, he spent some time extolling the virtues of NASA, but it’s also hard to imagine that program surviving the 40 percent cut to all non-Medicare, non-Social Security, non-defense spending that Romney’s budget envisions.
The biographical portion of Romney’s speech was very strong….
But there was a glaring omission from Romney’s biography: He made almost no mention of his time as governor of Massachusetts…. There was nothing on his health-care bill, his budgets, his ability to work with the Democrats in the state legislature…
Whoever planned the convention failed Romney terribly. The first night lacked a clear case for Romney, but ended with a rousing argument for Chris Christie in 2016. The second night was better, but the case Paul Ryan made still seemed to fit Ryan better than it fit Romney. And putting Clint Eastwood in prime time to interview an empty chair on the night of Romney’s acceptance speech was an absolute disaster….
Speaking of which, you should read the full transcript of Clint Eastwood’s speech. The Obama campaign’s response also deserves to be quoted. “Referring all questions on this to Salvador Dalí,” campaign spokesman Ben LaBolt e-mailed to reporters…
Romney Speech Reaction: Mitt Lied About Medicare, and About "Apology", But Did Not Mention Welfare Reform Once
Does this mean that the Ryan-Romney campaign has finally decided that it needs to dial back its most blatant lies?
A not-very-truthful speech in a not-very-truthful campaign: Honestly? I didn’t want us to write this piece. The original pitch was for “the five biggest lies in Paul Ryan’s speech.” I said no…. I wanted us to bend over backward to be fair, to see it from Ryan’s perspective, to highlight its best arguments as well as its worst. So I suggested an alternative: The true, the false, and the misleading…. An hour later, the draft came in — Dylan Matthews is a very fast writer. There was one item in the “true” section.
So at about 1 a.m. Thursday… I sat down to read it again… with the explicit purpose of finding claims we could add to the “true” category. And I did find one. He was right to say that the Obama administration has been unable to correct the housing crisis, though the force of that criticism is somewhat blunted by the fact that neither Ryan nor Mitt Romney have proposed an alternative housing policy. But I also came up with two more “false” claims. So I read the speech again. And I simply couldn’t find any other major claims or criticisms that were true.
I want to stop here and say that even the definition of “true” that we’re using is loose. “Legitimate” might be a better word….
But Ryan’s claims weren’t even arguably true. You simply can’t say the president hasn’t released a deficit reduction plan. The plan is right here. You simply can’t say the president broke his promise to keep your GM plant open…. You simply can’t argue that the Affordable Care Act was a government takeover of the health-care system. My doctor still works for Kaiser Permanente, a private company that the government does not own. You simply can’t say that Obama, who was willing to follow historical precedent and sign a clean debt ceiling increase, caused the S&P downgrade, when S&P clearly said it was due to congressional gridlock and even wrote that it was partly due to the GOP’s dogmatic position on taxes.
Oh, and here’s one we missed: “You would think that any president, whatever his party, would make job creation, and nothing else, his first order of economic business. But this president didn’t do that. Instead, we got a long, divisive, all-or-nothing attempt to put the federal government in charge of health care.” The stimulus — which was the administration’s major job creation package — came before health care. It was their first priority. That’s simply inarguable.
After rereading Ryan’s speech, I went back to Sarah Palin’s 2008 convention address. Perhaps, I thought, this is how these speeches always are. But Palin’s criticisms, agree or disagree, held up. “This is a man who has authored two memoirs but not a single major law or reform — not even in the state Senate.” True. She accused Obama of wanting to “make government bigger” and of intending to “take more of your money.” That’s not how the Obama campaign would have explained its intentions, but the facts are the facts, and they did have plans to grow the size of government and raise more in tax revenues. Palin said that “terrorist states are seeking nuclear weapons without delay” and “he wants to meet them without preconditions,” which was true enough.
This has been a central challenge during this election. The Republican ticket, when it comes to talking about matters of policy and substance, has some real problems – problems that have nothing to do with whether you like their ideas. Romney admits that his tax plan “can’t be scored” and then he rejects independent analyses showing that his numbers don’t add up. He says — and Ryan echoes — that he’ll bring federal spending down to 20 percent of GDP but refuses to outline a path for how well get there. He mounts a massive ad assault based on a completely discredited lie about the Obama administration’s welfare policy. He releases white papers quoting economists who don’t agree with the Romney campaign’s interpretations of their research.
All this is true irrespective of your beliefs as to what is good and bad policy, or which ticket you prefer. Quite simply, the Romney campaign isn’t adhering to the minimum standards required for a real policy conversation….
I don’t like that conclusion. It doesn’t look “fair” when you say that. We’ve been conditioned to want to give both sides relatively equal praise and blame, and the fact of the matter is, I would like to give both sides relatively equal praise and blame. I’d personally feel better if our coverage didn’t look so lopsided. But first the campaigns have to be relatively equal. So far in this campaign, you can look fair, or you can be fair, but you can’t be both.
Many other people working at the Post whom I have dealt with--Clay Chandler, Ruth Marcus, Jonathan Weisman, Dana Milbank, Glenn Kessler, and Lori Montgomery come immediately to mind--resolve the tension between looking fair and being fair by being careful to know as little as possible about policy substance, so that they have little idea of what actually "being fair" would be.
To his and their credit, Ezra Klein and his stable and Greg Sargent (and earlier, Dan Froomkin) are different. They recognize that being fair will lead to constant attacks by Republican hacks, and deal with it.
Via Matthew Yglesias: http://www.washingtonpost.com/wp-srv/health/documents/mass-climate-plan.pdf
Clint Eastwood's Unbelievable Republican National Convention Speech: Anyone who says that contemporary national political party nominating conventions are too heavily scripted these days has got to watch this video of Clint Eastwood ad libbing to an empty chair at the GOP convention. The Washington Post has helpfully posted the full transcript of his remarks:
Gideon Rachman watches and twitters the RNC so I can do other things. His summary:
Gideon Rachman (gideonrachman) on Twitter: Gideon Rachman @gideonrachman We just had 2 hours build-up about what a warm, inspiring guy he is; and Romney disproves it in 25 minutes. Nice balloons, tho'.
This guy's a zombie.
Will Romney do it?. Perhaps not: gets off to a flat and awkward start. Bored already. Ooh, some demonstrators. Drowned out by USA chants.
Rubio is good: making the zillionth American Dream speech. But it sounds fresh.
Eastwood performance, really weird. He is riffing and rambling and, inter alia, to commit Romney to immediate withdrawal from Afghanistan
Huge roar, I thought it was Romney. But its just Clint Eastwood, sounds a little hoarse. Hope he produces 44 magnum
Romney has strong support among practitioners of skeleton bobsleigh. Captain of Miracle on Ice hockey team, also getting huge reception.
Gingrich and wife doing weird double act at convention: 2 people speaking alternate sentences makes for a lousy speech
After Rice, Ryan comes across as callow and uninspiring. Also has a weird smirk and watery eyes.
My God; a sensible, intelligent, speech at the GOP convention. Its a first. What could Condi Rice be thinking?
Band at GOP convention playing "Signed, sealed, delivered"; same song Obama used in 08. But GOP not using Stevie Wonder version.
George W appears at GOP convention, but only on film. Palin totally absent and unmentioned.
Ron Paul tribute film at GOP convention stresses his small gov views. Ignores his opposition to foreign wars, Pentagon spending.
My report from Tampa. Ann Romney passes her audition | The World | http://on.ft.com/PqtMqo
Joint Brad DeLong-Martin Feldstein Smackdown Watch: Another Interaction Effect Feldstein Misses That Makes It Even More Arithmetically Impossible for Romney to Keep His Promises
We are still waiting for the correction of the arithmetic error in Martin Feldstein's Wednesday Wall Street Journal op-ed.
Everybody is entitled to their own opinion, but not to their own facts--or to their own special rules of arithmetic.
And I missed this. Eliminate itemized deductions for the >$100K crowd, and you don't raise taxable income on a 2009 basis by $640B because they claim the standard deduction. The right number is not $640B but $450B, and multiply that by 24% and you get $108B--barely over half of the $191B that Feldstein had initially claimed.
Hoisted from Comments: Joint DeLong-Feldstein Smackdown Watch: klingedp said...
Another (huge) item missing in the analysis is that people who itemize deductions forgo the standard deduction. If you got rid of itemized deductions, those people would then take the standard deduction.
For my family (AGI over $100K) the change would be from itemized deductions of around $20K (since we have a very small mortgage)to a standard deduction of $11,600. I would assume the difference between itemized deductions and standard deductions would be larger at higher levels of income, primarily due to mortgage interest, but not considering the impact of the switch to standard deductions also overstates the tax revenue that could be produced. Unless, of course, Romney also expects to do away with the standard deductions too.
Battle of Alam Halfa, Egypt. Despite the attention of the RAF and Allied artillery, Rommel’s tanks make it through the minefields by noon and then turn North to attack what Rommel thinks is the Allied lines rearguard area. British General Montgomery has prepared a dense screen of anti-tank guns and tanks (firing from hull-down positions in an anti-tank role) along the Alam el Halfa ridge. The Panzers, confused when the British tanks refuse to come out and fight as they have done previously, are stopped cold by the massed British anti-tank fire as well as pre-ranged artillery from the sides. Rommel loses 22 tanks and 2 of his senior commanders (Afrika Korps commander General Nehring is wounded in an air raid and 21st Panzer Division’s General von Bismarck is killed by a bomb). British losses are 21 tanks.
Tax Policy Center: Feldstein’s Analysis Confirms TPC Findings That It Is Arithmetically Impossible for Romney to Keep His Tax-Policy Promises
We are waiting for Martin Feldstein to correct the headline, the subhead, and the text on his Wall Street Journal op-ed. He needs to correct the arithmetic error that makes his $191B maximum possible revenue number, and state that it is not mathematically possible but mathematically impossible for Romney to keep all of his tax policy promises.
Remember: Glenn Hubbard, Greg Mankiw, John Taylor, and Niall Ferguson did themselves no good by doubling down when caught out.
Samuel Brown, William Gale, and Adam Looney bring the refreshments:
TaxVox » Blog Archive » Feldstein’s Analysis Doesn’t Refute TPC Findings, It Confirms Them: [W]e showed that any revenue-neutral tax reform that included Governor Romney’s specific tax cuts and that met his stated goal of not raising taxes on saving and investment would cut taxes for households with income above $200,000 and would therefore necessarily have to raise taxes on taxpayers below $200,000… even when we considered an unrealistically progressive way of financing the specified tax reductions, and even when we accounted for economic growth and revenue feedback…. Romney economic adviser Martin Feldstein attempts to contradict our finding… [but] confirms our central result…. [I]n Feldstein’s article, taxpayers with income between $100,000 and $200,000 would pay an average of at least $2,000 more….
Feldstein [also] employs several questionable assumptions that understate the revenue loss of Governor Romney’s tax cuts and overstate the revenue gains from reducing tax breaks and deductions…. Feldstein’s version of the Romney proposals would not be revenue-neutral; instead it would result in large revenue losses. Specifically:
He assumes that each dollar of itemized deductions lost by households with income above $100,000 would generate 30 cents in revenue. However, the Romney plan has a maximum tax rate of only 28 percent and most households with income above $100,000 would face an even lower rate on some or all of the additional income from eliminating deductions.
He assumes that taxpayers earning more than $100,000 who currently itemize would lose not only their itemized deductions but also their ability to take the standard deduction. Normally, taxpayers have the option of itemizing their deductions or taking the standard deduction. If the standard deduction were retained… and denying itemized deductions was assumed to raise revenue at the… [real] marginal tax rate of 24 percent under Romney’s plan, Feldstein’s proposals would fall about $70 billion short of revenue-neutral, even if taxpayers don’t change their behavior. However, JCT and Treasury estimates consistently show that the revenue generated by eliminating such deductions would be even lower because taxpayers would change their behavior….
Feldstein does not offer a specific way to pay for the costs of repealing the estate tax…. The estate tax raised $21 billion in 2009, and the JCT, CBO, and Treasury have consistently estimated that estate tax repeal would not only lose revenue but could actually lose more revenue than the listed estate tax revenues, because it would create opportunities for tax avoidance.
Taking the estate tax and other effects into account, Feldstein’s proposals come up at least $90 billion short of revenue-neutral….
Feldstein['s]… analysis reinforces our central finding…. Romney’s tax proposals… [cut] taxes on households above $200,000 and thus requiring net tax increases on households with less income…. Either taxes must rise on those with income below $200,000, or tax preferences for saving and investment will have to be reduced, or revenues will be cut, or promised tax cuts for high-income households will have to be reduced. Trade-offs exist and solutions are possible, but tax reform cannot do everything….
Finally, the debate over what is or isn’t possible distracts from the more important question of what the Romney plan actually is. The governor could settle this issue quickly simply by describing how he’d pay for his tax cuts.
Paul Ryan Son Obama's Fiscal Record at the Republican Convention: I asked my liberal friends on Twitter to send me an itemized list of Ryan’s alleged lies…. Dave Weigel of Slate compiled a useful list….
Charge #1: Paul Ryan accused Obama of cutting Medicare by $716 billion, but Ryan’s own budget preserved those cuts….
It’s true that Ryan’s budgets in 2011 and 2012 preserved Obamacare’s cuts to Medicare….
Charge #2: Paul Ryan criticized Obama for ignoring the recommendations of the Simpson-Bowles deficit commission. But Ryan voted against those recommendations himself….
It’s true that Paul Ryan voted against the Simpson-Bowles recommendations….
Charge #3: Paul Ryan blamed Obama for Standard & Poor’s downgrade of American government debt from AAA to AA+, but Paul Ryan is actually to blame because he resisted tax increases that would have closed the deficit….
I suppose it’s true that you can blame Ryan and the rest of the GOP for opposing trillions in tax increases….
Charge #4: Paul Ryan opposed the stimulus, but he lobbied for stimulus grants that went to his district….
We can debate the merits of the stimulus…. It is also true that Ryan did seek some stimulus money for his district after the law was passed. Ryan had initially said that he had not taken any stimulus money, but was forced to correct that record…. In addition, Ryan voted for a similarly misguided temporary stimulus package under President Bush….
Finally, Weigel and a number of other commentators complained about the Janesville General Motors plant that Ryan cited in his speech. Ryan pointed out that Obama promised that, under his administration, “this plant will be here for another hundred years.” But it closed in December 2008, before President Obama was inaugurated, and didn’t reopen under President Obama’s GM bailout, which is the focus of Ryan’s criticism. As this is a health-care and fiscal blog, I’m going to let others argue about that one.
[On] August 20… the Long Island catapulted Smith and the other F4F pilots toward Guadalcanal. About 1600 the Marines on Guadalcanal heard airplane engines, and were delighted to look up see the American Dauntlesses and Grummans coming in. At this time Henderson Field was a raw, muddy strip about 3500 feet long and 150 feet wide with crude revetments bulldozed around it. The Marine fliers landed without incident. Working through the night, a Navy maintenance unit, CUB-1, serviced and refueled the planes, as the Marines' own ground crews were still on ship. Without proper facilities, the enlisted men of CUB-1 had to hand-pump the fuel directly from 55-gallon drums.
About noon the next day, Smith and his division of four planes had their first aerial combat….
In virtually all of the air defense missions at Guadalcanal, the Wildcats stayed close to base. Barrett Tillman's Wildcat Aces of World War 2 describes the range and payload limitations of the F4F which made this the best tactic….
Smith's most memorable mission took place on August 30, 1942. At 5AM, the Marine pilots ate breakfast, and waited in the Ready Room for word from the coastwatchers that Japanese planes were on their way. No word for four hours. Finally, word came that flights of Bettys and Zeros were on their way. Both the Marine and Army pilots scrambled. The Army pilots flew P-400s (export versions of the Bell P-39 Airacobra, without oxygen equipment) and had to stay below 12,000 feet. The Marine Wildcats climbed to 15,000 feet as rapidly as possible. Smith was rubbernecking all around, trying to keep an eye on the Army pilots below, while scanning up above for Zeros.
Suddenly the radio crackled, "Zeros over us! Jumping us!" He saw twenty plus Zeros shooting up the P-400s. He and the other Marines roared down the 3,000 feet to join the fight. Smith picked a Zero and closed on it, until within 700 feet. The enemy plane filled the gunsight, and Smith opened up. The gunnery pattern converged on the Zero, which flashed into a yellow ball of fire. Victory number 6! The Zeros downed several P-400s and the Wildcats downed several Zeros; the remaining ones scattered. Smith and his division scanned for Bettys. He spotted a Zero emerging from a cloud. He followed and closed in from behind. In seconds, he fired and pieces of the Zero flew backward. It flamed and blew up. Victory number 7!
Smith had 2 kills in less than five minutes, but his mission was to stop the bombers. As he continued to scan, another Zero appeared at 12 o'clock, heading right at him. The Jap's wings flickered first; Smith replied, as the two planes close at 500 knots. Both kept on firing and neither gave way. Finally, the Zero began to smoke and pieces flew off. The plane exploded! Smith rammed his stick forward and dove just underneath the burning fighter, which plunged down toward Henderson Field. Number 8 for Smith!
He looked around. Both he and Lt. Kendrick were hit by many pieces of the last aircraft. Smith descended, trying to meet up with Kendrick, so they can go into the field together. He got down to 800 feet, along the north shoreline, but still couldn't find his wingman. Instead there were two Zeros which apparently had been strafing the field. Attacking two maneuverable Zeros at low altitude with a single Wildcat was very risky, but Smith lined one up and fired. He stayed with his twisting victim, which soon began to stream smoke and flame; it went right into the ground. The other Zero was nowhere in sight. Number 9! Smith located Henderson Field, cut his speed to 75 knots, and landed, finding Kendrick had come in safely ahead of him. The Japs received a bloody repulse this day; 14 of 22 Zeros shot down, the bombers turning back because of weather.
But the best news of the day was the arrival of more Marine fliers: Major Galer VMF-224 and another dive-bombing squadron, VMSB-231. The nineteen newly arrived F4Fs critically supplemented Smith's 5 planes that were left operational by this date. While the brass considered how to get more planes into Guadalcanal, the Japanese took a hand, when sub I-26 torpedoed the Saratoga, putting her into drydock and leaving her planes nowhere to go but Henderson Field.
“The canon against superfluity is not a canon against verbosity.When a thought could have been expressed more concisely, one does not always have to cast about for someadditional meaning to the word or phrase that could havebeen dispensed with. This has always been understood. A [British] House of Lords opinion holds, for example, that in the phrase “ ‘in addition to and not in derogation of ’ ” the last part adds nothing but emphasis. Davies v. Powell Duffryn Associated Collieries, Ltd.,  A. C. 601, 607.”
There must be no use of foreign law by US courts in interpreting our Constitution and laws, nor should foreign sources of law be used in State courts; adjudication of criminal or civil matters.
President Barack Obama came to office during an economic crisis, as he has reminded us a time or two. Those were very tough days, and any fair measure of his record has to take that into account. My home state voted for President Obama. When he talked about change, many people liked the sound of it, especially in Janesville, where we were about to lose a major factory. A lot of guys I went to high school with worked at that GM plant. Right there at that plant, candidate Obama said: "I believe that if our government is there to support you. this plant will be here for another hundred years." That's what he said in 2008. Well, as it turned out, that plant didn't last another year. It is locked up and empty to this day…
One question is whether when Paul Ryan attacked Barack Obama last night for the closure of the Janesville, WI GM plant, he knew or did not know that the plant had been closed before Obama took office.
Paul Ryan Used Government Funds and Power to Try and Save GM Plant: General Motors announced on June 3, 2008 that it intended to close the nearly 100-year-old [Janesville] plant…. [T]he company suspended all operations at the facility by Dec. 23, 2008, eliminating 2,400 jobs. It has been in “standby” mode since….
Ryan was one of 32 Republicans who voted for the $14 billion auto bailout in December 2008…. The task force of which Ryan was a member went as far as to explore the possibility of using funds from the $789 billion stimulus deal approved by Congress, task-force members said, a package Ryan voted against and publicly called a “wasteful spending spree.”…
Former task-force members as well as press releases and a letter from Ryan’s office show the important role Ryan played when GM moved to shut down the plant, which at its height employed as many as 7,000 people, and was one of two operating at the time in Janesville. Tim Cullen was a member of the Janesville school board when Gov. Jim Doyle asked him to co-chair the task force along with United Auto Workers 95 President Brad Dutcher to fight the shutdown. Ryan or his chief of staff attended all the meetings held by the task force, Cullen said, adding, “We worked with officials from both parties, the local health-care sector, local government, the county, and the city to try to put together a package, a proposal to try to get them to stay in Janesville.” Cullen also said “There was not another elected official who tried harder than Paul Ryan to save the plant,” and that Ryan’s chief of staff, Andy Speth, was often Ryan’s liaison to the task force. A task-force member said that the congressman’s office became an important point of contact between GM and the task-force members working to save the plant.“What Paul did was whenever we asked him to try and get a hold of someone in Detroit or General Motors, he would do it,” Cullen said….
On June 3, 2008 Ryan sent a letter to Wagoner cosigned by Feingold and Sen. Herb Kohl. In it, they asked the company to consider the importance of the plant to the town, as well as to explore bringing new product lines to the facility. “The Janesville GM plant has a continued role to play in the future success of GM and we ask that GM reconsider the decision to close the Janesville plant,” the legislators wrote…. “He was completely dedicated,” Cullen said of Ryan’s involvement in the task force. “This is his home town, and he has been the world enough to know that what happens to a town the size of Janesville when it loses a plant of this size.”…
In September of 2008, Ryan traveled to Detroit with three Democrats—Sen. Russ Feingold, Rep. Tammy Baldwin, and Gov. Doyle—to meet directly with GM executives and ask them not to close the plant….
At a campaign stop on Thursday, Ryan claimed that President Obama had promised to “keep the plant open” in Janesville, and laid the blame for its closure at the president’s doorstep even though Obama did not take office until after the facility had closed. Ryan, who task force members said did everything he could to keep the plant open, said that Obama’s purported words were “one more broken promise.”
CAMBRIDGE – Inflation is now low in every industrial country, and the combination of high unemployment and slow GDP growth removes the usual sources of upward pressure on prices. Nevertheless, financial investors are increasingly worried that inflation will eventually begin to rise, owing to the large expansion of commercial bank reserves engineered by the United States Federal Reserve and the European Central Bank (ECB)...
If financial investors are worried that inflation will eventually begin to rise, there is an easy and straightforward way for them to profit: sell 30-year Treasury bonds, and buy 30-year Treasury inflation-indexed TIPS.
If anything happens to raise real interest rates, your losses on your TIPS will be offset by your gains on the 30s you are short, and you will be fine. If anything happens to lower real interest rates, your losses on the 30s that you are short will be offset by your gains on your TIPS, and you will be fine. But if inflation goes up, the cash flows you we on the 30s you are short stay the same and the cash flows the Treasury pays you on tyour TIPS go up, and you profit.
Buying TIPS and shorting 30s is a way of hedging against inflation risk and inflation risk alone.
"[F]inancial investors [who] are increasingly worried that inflation will eventually begin to rise" would be doing more of this buying TIPS and shorting 30s, and we would see the gap in price between TIPS and 30s rise.
Have we? No.
Breakeven inflation for the 30 year TIPS continues the fluctuate between 2.0%/year and 2.5%/year.
Now you can argue that financial investors are being silly, or short-sighted, or foolish, or irrational, or all four in failing to fear that inflation will rise eventually--and I do argue that. But we can read whether financial investors as a group fear rising inflation off of the spread between the 30 and the TIPS. And they don't.
Why make assertions about what financial investors are doing that are (a) contrary to fact, and (b) easily checked? Where is the profit in that?
One of the great things about economics is that prices can often be used to tell us what people are thinking--what they fear, and what they hope for. Why throw that information away?
Sam Brown, Bill Gale, and Adam Looney Are Late to the Feldstein WSJ Op-Ed Romney's-Promises-Are-Mathematically-Impossible Party
Paul Ryan blames me for forcing GM to shut down the Janeway, WI plant before I was president.
I would also like to apologize to him for canceling "Friends" and for creating New Coke
Ben Bernanke at Jackson Hole: The markets have already assumed that a further monetary easing by the Fed is just around the corner, almost certainly to be announced at the next FOMC meeting on September 12-13. At the very least, this will probably involve an extension of the Fed’s guidance on “exceptionally low” levels for the federal funds rate from the end of 2014 at least to mid 2015. However, there is uncertainty…. The key question is whether Mr Bernanke will choose to clarify the ambiguities…. “Additional monetary accommodation” might mean a further expansion in the size of the balance sheet (QE3), or it might mean nothing more than an extension of the rate guidance into 2015. The words “fairly soon” might mean in September, or after the election. And the definition of a “substantial and sustainable” strengthening in the economy leaves a great deal of scope for different interpretations, though it is hard to maintain that such an improvement has already taken place.
It does seem clear that if Mr Bernanke wishes to shift monetary policy in a more expansionary direction, he certainly has the votes to do this….
He has also shown consideration for the views of the more hawkish “participants” at the FOMC, even thought they have no immediate clout as voters. These “participants” (unlike the voting “members”) expressed considerable concern in the latest FOMC minutes about the “costs” of unconventional monetary easing, including possible market disruption, exit problems, and possible effects on inflation expectations. Unlike his predecessor Alan Greenspan, the current chairman likes to operate in a collegial manner, and values unity on the policy committee. While he does not seem very worried about these “costs” himself, he is willing to respect the views of others, at least for as long as there is no immediate emergency developing in the economy or the financial system.
At present, there is no such emergency. According to yesterday’s revised data, real GDP grew below trend at 1.7 per cent in Q2, and most forecasters think that it is tracking at around 1.8-2.3 per cent in Q3…
If 2%/year real GDP growth and a 58.5% civilian adult employment-to-population ratio is not an emergency in the economy, what would an emergency in the economy be?
If Word stops responding after you've written a brilliant paragraph--you can see the words but not save them--remember your phone camera.— Donald Marron (@dmarron) August 30, 2012
Also: Seth Hanlon: FACT CHECK: Yes, Romney's Tax Plan Requires A Middle-Class Tax Increase | ThinkProgress
- Feldstein ignores Romney’s $1 trillion corporate tax cut, which is paid for by individual income tax increases….
- Feldstein redefines the “middle class.”…
- Feldstein cherry-picks his numbers to overstate savings.
Martin Feldstein Accidently Proves Either (i) 152 > 186 or (ii) It Is Mathematically Impossible for Romney to Keep His Tax-Policy Promises
The fact that he sought to prove otherwise and wound up confirming the Tax Policy Center's conclusions purely by accident gives me additional confidence that the TPC knows what it is doing. Martin Feldstein:
Mitt Romney's plan… has been attacked as "mathematically impossible."… this is not the case… IRS data… 2009… cost of the 20% reduction in all tax rates… the Alternative Minimum Tax… the tax on interest, dividends and capital gains for married couples with incomes below $200,000, and for single taxpayers with incomes below $100,000…. This brings the total [dynamically-scored] cost of the Romney income tax cuts to $186 billion… whether this revenue loss can be offset by broadening the tax base of high-income individuals.
It is impossible to calculate the exact effects… since Gov. Romney hasn't specified what he would do… taxpayers with adjusted gross incomes over $100,000… made itemized deductions totaling $636 billion… paid marginal tax rates of 25% to 35%… apply a 30% marginal tax rate to the $636 billion…
Extra revenue of $191 billion—more than enough to offset the revenue losses from the individual income tax cuts proposed by Gov. Romney.
That is Feldstein's point:
- Cost = $186B
- Maximum Possible Revenue = 30% x $636B = $191B
- $191B > $186B
But that point is simply, mathematically, arithmetically wrong.
Taxpayers making more than $100K/year in AGI had marginal tax rates of 25%-35% in 2009--an average tax rate, Feldstein assumes, of 30%.
After Romney's 1/5 reduction in tax rates they will have tax rates of 20%-28%--an average tax rate of 24%.
Multiplying not the wrong 30% but the true correct 24% marginal tax rate by the $636 billion in itemized deductions gets us not $191B but $152B.
$152B < $186B
Note that to get to this point I have already had to give Feldstein four passes--a pass to claim big behavioral responses where they lower his cost number, a pass to claim small behavioral responses where they would raise his cost number, a pass to excuse his failure to use his current bargaining power to get Romney to specify a plan and so commit to good technocratic tax policy, and a pass on his moving-of-the-goalposts in the definition of "high-income taxpayers"--to get this far. I am not happy to give him those four passes. But I am willing to give him those four passes.
This fifth pass, however, I cannot give him.
I cannot let him say that $152B > $186B.
I just cannot.
So I call for the Wall Street Journal to correct the headline. Make it, instead, truthful: "Romney's Tax Plan Can not Raise Revenue without Taxing the Middle Class".
And I call for the Wall Street Journal to further correct the article by adding a subhead: "Martin Feldstein tries as hard as he possibly can to demonstrate that it would not be mathematically impossible for Romney to keep his tax promises, and fails".
And then the last two paragraphs of Feldstein's article needs some editing as well, as part of the correction that I would like to see the Wall Street Journal make:
Since broadening the tax base would not produce enough revenue to pay for cutting everyone's tax rates, it is clear that the proposed Romney cuts would
notrequire anya middle-class tax increase, norand would theyproduce a net windfall for high-income taxpayers. The Tax Policy Center and others are wrong to claim otherwisecompletely correct in their conclusions.
The Romney plan
can reducewill increase the current tax system's distortions, increasing national income in the short run andreducing economic growth in the years ahead. That was the key to the very successful Reagan tax cuts of 1986. It was also the tax-reform strategy embraced by the bipartisan Bowles-Simpson commission in 2010. And it could put the economy back on the right track in 2013.
Republicans: From a Father's Perspective, Learning That Your Daughter Is Pregnant Out of Wedlock Is Like Learning She Has Been Raped...
Booman: These People Are Raping My Mind:
You know what is kind of like learning that your daughter has been raped? Finding out that she's pregnant even though she isn't married. The only difference is apparently that the shotgun is used for a different purpose.
In this case, the comment came from a wingnut who has no chance of unseating Pennsylvania Sen. Bob Casey Jr. And, believe me, Sen. Casey is no prize when it comes to reproductive rights. But he would never suggest the kind of equivalency his opponent suggests here:
MARK SCOLFORO, ASSOCIATED PRESS: How would you tell a daughter or a granddaughter who, God forbid, would be the victim of a rape, to keep the child against her own will? Do you have a way to explain that?
TOM SMITH: I lived something similar to that with my own family. She chose life, and I commend her for that. She knew my views. But, fortunately for me, I didn’t have to.. she chose they way I thought. No don’t get me wrong, it wasn’t rape.
SCOLFORO: Similar how?
TOM SMITH: Uh, having a baby out of wedlock.
SCOLFORO: That’s similar to rape?
TOM SMITH: No, no, no, but… put yourself in a father’s situation, yes. It is similar. But, back to the original, I’m pro-life, period.
Notice that he didn't even address the real issue. Mr. Smith's daughter exercised her choice. She wasn't told to do anything against her will. She wasn't impregnated against her will and she didn't have the baby against her will, and her father didn't try to force her to do anything against her will. The question was about a situation where this freedom of action has been eliminated.
But, seriously, do Republicans have some bizarre ideas about rape, or what?
And Duncan Black comments:
I decided there are basically three issues.
First, they can never really seem to grasp the concept of 'consent.'
Second, they tend to lump rape in with having unapproved sex generally.
Third, for reasons which escape me, a lot of them seem to really really fear having someone "falsely" accuse them of rape.
The Romney Campaign Flies the Flag of the Cayman Islands: Doesn't Anybody Know How to Play This Game?
Gov. Mitt Romney's campaign toasted its top donors Wednesday aboard a 150-foot yacht flying the flag of the Cayman Islands.
The exclusive event, hosted by a Florida developer on his yacht "Cracker Bay," was one of a dozen exclusive events meant to nurture those who have raised more than $1 million for Romney's bid.
I want pictures!
Hans Wijers, [Eastern Front Combat:](http://books.google.com/books?id=Q-npRKRsKd8C&pg=PA59&lpg=PA59&dq=august+29+stalingrad&source=bl&ots=PPR39VtVOR&sig=toScR0MJ2KpBNH3Tpm3G96SWJ-s&hl=en&sa=X&ei=dGQ-UKX6Iqig6QHK04GIAQ&ved=0CDgQ6AEwAg#v=onepage&q=august%2029%20stalingrad&f=false_
Wehrmacht communique: "In the Stalingrad area, the German troops continue their attack against partially extensive enemy fortifications. Multiple counterattacks were beaten off."…
Now we have arrived in the suburbs of the city and in the deep system of enemy positions And there are more deeply-echeloned and well-crafted field fortifications in front of us. Here it becomes clear to all of us why the Russian resistance is so successful Dug-in tanks are scarcely visible, with their guns aimed just over the cover. Flamethowers turn the entire killing ground that we have to cross into a sheet of flame. Closing with the enemy causes losses. And yet we have pierced deeply into the Russian defenses and hope that their resistance will diminish in short order. Behind the long rolling heights lies Stalingrad. Gigantic plumes of black smoke are rising to the skies there, and at night, a bright gleam of fires covers the entire city….
Today, like past days, again saw bitter fighting with the retreating enemy. The Bolsheviks fortify any high ground and obstacle and, as before, defend themselves with determination and bitterness. They hang on to their excellently-fashioned dugouts and make use of every useful section of ground to weaken our still-present impetus and stop us cold. Again and again, there are these damned dug-in T-34 tanks, which are difficult to spot Most of the time, they are spotted too late They completely hose us, and the fields in this wide-open steppe offer no cover from their tank shells In a concentrated hail of fire, our grenadiers are pinned down, and onto them, the Russian flamethrowers hiss and spit their load and cause horrible and hideous casualties.
Overhead are our dive-bombers and close-support aircraft, our JU-88 bombers, which drop their bombs on the Russian positions and bunker systems. Added to that are the rocket launchers located close behind us. They fire their screaming and howling projectiles over our heads into the enemy--a hellish inferno in which no one knows whether fire is enemy of friendly. The attack makes progress only slowly in the scorching heat and raised dust clouds...
In another campaign season, the fact that the opposition edited the president’s voice to say something he didn’t say would be regarded as audacious. This year it’s almost unremarkable.
Each of the videos, by the way, continues with the lament of a hard-working businessman – a Colorado farmer, the owner of a Nevada candy company, and the president of an Ohio electric company – each profoundly insulted by what Obama … um, never actually said. Or maybe the Republicans found the only three businessmen in America who have never made use of the interstate highway system or the Internet…
[W]e construct four individual dummy variables capturing the intensity of female/male distinctions… for the most commonly spoken language in a country. In Santacreu-Vasut and Shoham (2012) we find that countries whose dominant language marks gender more intensively have significantly lower female labour-force participation rate. We also find that, relative to men, women in those countries work more in services, and less in agriculture. These are robust to controlling for geography, colonial history, religion, and climate…. [H]aving a sex-based gender [language] system decreases female labour-force participation by 12% points compared to having no gender [language] system…. We also find that female/male distinctions in language are related to gender political quotas…. [C]ountries whose dominant language emphasises female/male distinctions more intensively are more likely to formally regulate women's presence in politics through the use of quotas and sanctions for their enforcement. Furthermore, those countries show a sharper increase in female political participation ex post quota adoption….
As Borodistsky et al. (2003, p. 65) argue:
Needing to refer to an object as masculine or feminine may lead people to selectively attend to that object's masculine or feminine qualities, thus making them more salient in the representation. This salience in the grammar of languages may influence the salience of gender in speakers' mind (cognition) and/or may reflect the salience of gender distinctions in the culture…
An election cycle in which her husband has declared [mandated] birth control coverage to be a threat to religious liberty is an inconvenient time for her to talk about “that couple who would like to have another child, but wonder how will they afford it.” A convention for a party that opposes any legislation around equal pay for women is an inopportune moment to discuss the “working moms who love their jobs but would like to work just a little less to spend more time with the kids, but that’s just out of the question with this economy.”
A campaign that has stubbornly declared that there is no such thing as women’s issues, that women care about jobs and gas prices, is forced to make an appeal relying both on gender essentialism and the explicit admission that women face structural challenges. Or as Ann put it, “I’m not sure if men really understand this, but I don’t think there’s a woman in America who really expects her life to be easy. In our own ways, we all know better!” No one expects it to be easy. Some people work for it to be better.
Romney and Christie's Hard Truth Problem: I will just note Christie’s use of the future tense. Christie promises Romney “will tell us the hard truths.” It would be hard to contend that he has done so in the past….
Christie’s record in New Jersey is mixed. He really has told some hard truths and defended some politically difficult positions, and the state is better off for it. He has put a focus on pay and benefits structures that have made public employment in New Jersey unaffordable…. Part of his 2010 budget plan was eliminating property tax credits…. This wasn’t popular in the state with the country’s highest property taxes, and it drew fire from the right and left, but it was a necessary part of addressing the state’s dire fiscal situation…. But a hard truth Christie absolutely will not tell is that every one of his budgets has been unbalanced by more than $2.5 billion. When Christie said tonight he has signed “three balanced budgets,” he wasn’t telling a hard truth -- he was using bad accounting to hide a hard truth….
Wow! Jack Hitt:
A Troubling Chant on the Convention Floor: An unscripted moment happened late this afternoon….
There were energetic shouts of “Aye!” and “Nay!” as a Puerto Rican party functionary—Zoraida Fonalledas, the chairwoman of the Committee on Permanent Organization—took her turn at the main-stage lectern. As she began speaking in her accented English, some in the crowd started shouting “U.S.A.! U.S.A.!” The chanting carried on for nearly a minute while most of the other delegates and the media stood by in stunned silence. The Puerto Rican correspondent turned to me and asked, “Is this happening?” I said I honestly didn’t know what was happening—it was astonishing to see all the brittle work of narrative construction that is a modern political convention suddenly crack before our eyes. None of us could quite believe what we were seeing: A sea of twentysomething bowties and cowboy hats morphing into frat bros apparently shrieking over (or at) a Latina.
RNC chairman Reince Priebus quickly stepped up and asked for order and respect for the speaker…
[W]e know that when Romney was running for office in Massachusetts, he was pro-choice. That was position #1.
Since then, he's had three others. In this campaign cycle, at one point when he was asked by Mike Huckabee on Fox News whether he would have supported "a constitutional amendment that would have established the definition of life at conception" -- which, by definition would make all abortions murder -- Romney said, Absolutely." That's #2.
His official position on abortion (#3) has been one of opposition except in cases of rape and incest, and to protect the life of the mother -- but not her health. So what Romney said to Scott Pelley of CBS appears to be his third abortion position of the campaign, and his fourth since he entered public life. A shift on the health exception is not trivial… Ryan said a health exception to a bill banning "partial-birth" abortion would be "a loophole wide enough to drive a mack truck through. The health exception would render this ban virtually meaningless." Anti-abortion absolutists hate the health exemption. As one anti-abortion site puts it:
Pro-abortion doctors have for years considered a "troubled mind" an "impairment of a major bodily function." That is why pro-abortionists pretend to accept "moderate" measures, as long as they include a "health" exception; they know that the exception can be used to allow any abortion at all.
So which of Mitt Romney's three recent positions on abortion should we really believe he holds? Which should religious right voters believe he holds?
In the interview airing tonight, Romney also says this: "Recognize this is the decision that will be made by the Supreme Court," he said. "The Democrats try and make this a political issue every four years, but this is a matter in the courts. It's been settled for some time in the courts." Except that he wrote in 2011 that Roe v. Wade was wrongly decided and contrary to the Constitution. He vowed to appoint only judges who'd uphold the Constitution (as he reads it). So won't the Supreme Court after a few years of a Romney presidency conclude that Roe is unconstitutional and overturn it?
On the other hand, if I were anti-abortion, right now I'd be saying: So, Mitt, you really believe Roe is settled law? And you want my vote? Seriously?
What Matthews is saying Romney is doing isn’t that different from what Romney’s advisers are saying Romney needs to be doing. And it’s certainly what polling evidence suggests they’re doing.
This isn’t where the Romney campaign hoped it would be in August. Recall that Team Romney began with three premises for how to win this election. The first was to make this a referendum, not a choice. The second was to keep it focused on the economy. The third was to bow to Obama’s essential likability by treating him as a decent guy who is simply in over his head.
In recent weeks, the Romney campaign has jettisoned every single one of those premises. In Paul Ryan, Romney found perhaps the only vice presidential candidate whose selection would immediately make the election a choice rather than a referendum. In focusing on Medicare cuts and changes to the welfare program, he’s taken the campaign almost entirely off the economy. And in moving toward ”a more combative footing,” he’s abandoned his effort to try to avoid alienating voters who basically like the president.
Perhaps each and every one of these moves is a genius strategic decision. But the Romney campaign presumably had good reasons for adopting those premises in the first place. That they’re changing strategy so rapidly and noticeably at this late point in the campaign does not suggest they’re particularly confident about where they stand…
Manfred von K., from German Voices:
Chris Christie’s Race to the Botto: In honor of his keynote speech Tuesday night, I thought I’d recount a revealing story about New Jersey Governor Chris Christie from my new book, The New New Deal: The Hidden Story of Change in the Obama Era. If you think of Christie as a disingenuous blowhard who’s more interested in picking political fights than improving public policy, well, this tale probably won’t change your opinion.
The story involves President Obama’s Race to the Top education initiative, which has been hailed by Republicans like Jeb Bush and Mitch Daniels as a groundbreaking advance for public schools. It encourages states to promote charter schools, use student test scores to evaluate teachers, and adopt other reforms that traditionally Democratic unions had always opposed. Christie’s education commissioner, a well-known conservative reformer named Bret Schundler, avidly pursued a Race to the Top grant for New Jersey. “I was extremely excited,” Schundler said later. “It was an opportunity for tremendous bipartisan cooperation.”
In the summer of 2010, when the Obama Administration announced some winners of Race to the Top grants, New Jersey barely missed the cut, in part because its application was docked a few points for incorrect budget information. In typically overstated fashion, Christie held a news conference to blast the Administration for playing politics. He claimed his education aides had tried to submit the correct information during a meeting with the Education Department in Washington, but federal reviewers had refused to accept it. “That’s the stuff that drives people nuts about government,” Christie told the press….
Christie’s allegations about the Education Department interview were potentially explosive. They were also bogus. A videotape of the meeting proved that Christie’s aides never tried to correct their error. Christie, forced to find a new scapegoat, fired Schundler. “Thank God we taped it,” Education Secretary Arne Duncan told me. “When you play it straight, things usually work out in the end.”
And sometimes when you don’t play it straight, you get to give a keynote address.
Real housing prices fell by 0.8% in the past year…
The Case-Schiller home price index was released this morning and the data through June:
showed that all three headline composites ended the second quarter of 2012 with positive annual growth rates for the first time since the summer of 2010. The national composite was up 1.2% in the second quarter of 2012 versus the second quarter of 2011, and was up 6.9% versus the first quarter of 2012.
In short: everything is moving in the right direction.
The index has still quite far from the 2010 post-crisis peak, but its year-over-year rise rise comes amid other recent signs that the housing market is recovering (except in Connecticut). Supply has been shrinking and there are real reasons to think that the specter of distressed properties depressing prices won’t materialize.
The housing market is still restrained by problems like tight lending, a dearth of first time buyers due to the overhang of student debt, and a lack of strong economic growth. In 20 major cities, prices are still well off their peaks, as this great graph from Bill McBride at Calculated Risk shows. As depressing as those drops look, it’s not reasonable to expect a return to 2005/2006 prices, particularly in areas like Las Vegas, Phoenix and Miami where speculation was intense.
A return to even mid-2003 prices won’t fuel another boom, but that’s probably a good thing. And as Nick Timraos notes, rising home prices, however modest, “will help shrink the glut of underwater borrowers and could help buoy consumer confidence”.
No, this is not what a "housing rebound" looks like.
Fact checking for thee, but not for me: Get this: The Romney campaign’s position is now that the Obama camp should pull its ads when fact checkers call them out as false — but that Romney and his advisers should feel no such constraint. This is not an exaggeration. This is really the Romney campaign’s position.
three four things going on in today's Politics-of-Medicare debate:
Core Medicare: Patients over 65 show their Medicare cards and doctors see us. That works well--much better than the private insurance market does, at least for those of us who don't work for large bureaucracies that handle the process so that we... show our employer-sponsored insurance cards, and doctors see us. Ryan wants to break that part of Medicare.
Medicare Advantage: Medicare beneficiaries who want can, now, sign up for what Ryan wants to turn all of Medicare into--an HMO. This was an experiment to see whether private insurance companies could provide better care for seniors at a lower cost than traditional Medicare. The experiment failed. They can't. Obama wants to cut back on this failed Medicare Advantage experiment and use the federal money someplace where it will do more good. Ryan wants to keep spending on Medicare Advantage.
Relative Reimbursements: Today our Medicare reimbursement system pays specialists too much and primary-care physicians and nurses too little--in large part because specialists have lots of time on their hands to fly to Washington and lobby in the reimbursement rate-setting process. Obama wants to establish an IPAB--a body that Ryan also wanted to establish--to reform the reimbursement process and save money by paying specialists less and front-line providers more. Ryan now opposes the IPAB that he used to support.
Romney: Nobody has a clue about what Romney wants to do.
So when something comes across my RSS feed stating that it is "2500 words of statisticians quarreling with econometricians about arcane points of statistical theory", how am I supposed to resist getting sucked in?
And so not that many minutes later I find myself reading:
Chris Sims: Time series econometricians long ago got over the idea that frequency domain estimation, which makes only smoothness assumptions on spectral densities, is any more general than time-domain estimation with finite parametrization. In fact, the preferred way to estimate a spectral density is usually to fit an AR or ARMA model…
But surely if you are, to pick an example out of thin air, interested in estimating how much of a time series is made up of its permanent or near-permanent persistent components, you should estimate that directly--not use short-run autocorrelations to fit a low-order ARMA process and then infer the permanent and near-permanent persistent components from the low-order ARMA representation.
In what sense can "fit[ting] an AR or ARMA model" be the "preferred" way to conduct such an esimation?
Matthew Yglesias is profoundly puzzled by:
I agree with Matt. Domestic producers do not aggressively lobby for trade barriers that reduce their profits. They simply do not. This is not a deep question…
Glaukon: Let us talk about the Inflation Expectations Imp.
Daedalos: The Inflation Expectations Imp?
Glaukon: That is what Robert Waldmann calls him. He is a cousin of the Confidence Fairy.
Glaukon: As you know, if the fiscal authority finally gets its house in order, adopts a sustainable long-term fiscal plan, and demonstrates its commitment to that plan by immediately undertaking politically and economically painful austerity measures, the Austerity Confidence Fairy appears and touches business investment committees with her magic wand, and they begin to spend, and the economy recovers!
Glaukon: When the central bank commits to a program of quantitative easing that is sufficiently large, people's fears that this program of quantitative easing signals higher future inflation leads them to start dumping nominal assets for currently-produced goods and services: that and that alone then generates the higher inflation that they feared, and so the economy recovers!
Kurush: You are, I presume, saying that there is a certain formal symmetry between these two arguments?
I don't know how many of you read a magazine called "Travel," but to those who are familiar with the Hudson River Valley and like it, I think the article called "The President's Home Town," by Herbert Saltford, will be interesting. The reproductions of the murals which Olin Dows has done for the little post office in the village, are particularly nice. In ordinary times, I would say, stop as you drive through the village and see them. Now I shall say, read the article and when normal times return, I am sure you will be tempted to stop at this little post-office and see these charming murals.
I was sent a little book yesterday, which I have just read, called: "Body Servant" by Edith Tatum. This short story of the devotion of a Negro slave to his young Confederate master during the War Between the States is told with skill and senstiveness and deep appreciation of the qualities of the aristocratic young Southerner and his adoring Negro slave.
Great crises bring out great qualities and the descendants of the young plantation owner are today distinguishing themselves all over the world, in airplanes, on ships and in the Army; and a change has come over the descendants of the young slave.
No slave today needs to creep behind his master's regiment, knowing only enough to follow and steal for him, and live for him. The fine qualities in Miss Tatum's "Johnny" have been developed by education, and the Johnnys of today are giving a far greater and more intelligent service to their country as a whole, rather than to one individual.
The news of the Duke of Kent's death last night saddened us all. It is hard that the young King and Queen of England should have to bear a personal sorrow, when their minds and hearts are so torn for their people everywhere. To them, and to the young wife and children of the Duke of Kent, we would like to hold out a hand of sympathy.
War is no respecter of persons and sorrow comes to all, high and low, but the people of Great Britain seem to have learned that there is strength in the merging of sorrow. Where so many suffer, those who survive must be able to go on. Going on means following the day's routine, and submerging sorrow and anxiety in the doing of little things that are always at hand to be done.
This, the British people and their rulers are doing with magnificent courage and fortitude, as are the Russians and the Chinese and the rulers and the people of all the United Nations. We of the United States, look up to them with gratitude and admiration.