The Real David Brooks

I'd just about given up on David Brooks. Often described as the "liberal's favorite conservative," Brooks can both read and write. [That's an obscure T. E. Lawrence reference, actually.]

As a student at the University of Chicago, he wrote a satirical piece for the school newspaper about a William F. Buckley book called "Overdrive." When Buckley later gave a lecture at Chicago, he announced from the podium, "David Brooks, if you're in the audience, I'd like to offer you a job."

I wish Brooks wrote more satire. His satirical pieces are much, much better than his very serious pieces.

Take for example, this biography of The Real Romney:

Mitt Romney was born on March 12, 1947, in Ohio, Florida, Michigan, Virginia and several other swing states. He emerged, hair first, believing in America, and especially its national parks. He was given the name Mitt, after the Roman god of mutual funds, and launched into the world with the lofty expectation that he would someday become the Arrow shirt man.

Romney was a precocious and gifted child. He uttered his first words (“I like to fire people”) at age 14 months, made his first gaffe at 15 months and purchased his first nursery school at 24 months. The school, highly leveraged, went under, but Romney made 24 million Jujubes on the deal.

Mitt grew up in a modest family. His father had an auto body shop called the American Motors Corporation, and his mother owned a small piece of land, Brazil. He had several boyhood friends, many of whom owned Nascar franchises, and excelled at school, where his fourth-grade project, “Inspiring Actuaries I Have Known,” was widely admired.

The Romneys had a special family tradition. The most cherished member got to spend road trips on the roof of the car. Mitt spent many happy hours up there, applying face lotion to combat windburn.

The teenage years were more turbulent. He was sent to a private school, where he was saddened to find there are people in America who summer where they winter. He developed a lifelong concern for the second homeless, and organized bake sales with proceeds going to the moderately rich.

 The whole thing is here.

The Emperor's New Clothes

Why does Paul Ryan always remind me of The Emperor's New Clothes, the classic Hans Christian Andersen tale? In it, two weavers make a suit of clothes for the king that they claim is made of a special cloth, invisible to stupid people or people unfit for the office they hold. When the king dons his "new suit," and sees nothing at all, he and the members of his court are too afraid of seeming stupid or incompetent to admit aloud the obvious.

In his analysis of Ryan's famous "budget," Paul Krugman suggests the solution to my puzzle:

First, there are a set of tax cuts for higher income brackets and corporations. The Tax Policy Center (pdf) estimates the cost of these tax cuts, relative to current policy, at $4.3 trillion.

Second, there are spending cuts. Of these, approximately $800 billion comes from converting Medicaid into a block grant that grows only with population and overall inflation – a big cut compared with projections that take into account rising health-care costs and an aging population (since the elderly and disabled account for most Medicaid expenses). Another $130 billion comes from doing something similar to food stamps. Then there are odds and ends – Pell grants, job training. Be generous and call all of this $1 trillion in specified cuts.

On top of this we should add the $700 billion in Medicare cuts that Ryan denounces in Obamacare but nonetheless incorporates into his own plan.

So if we look at the actual policy proposals, they look like this:

Spending cuts: $1.7 trillion
Tax cuts: $4.3 trillion

This is, then, a plan that would increase the deficit by around $2.6 trillion.

How, then, does Ryan get to call himself a fiscal hawk? By asserting that he will keep his tax cuts revenue-neutral by broadening the base in ways he refuses to specify, and that he will make further large cuts in spending, in ways he refuses to specify.

And this is what passes inside the Beltway for serious thinking and a serious commitment to deficit reduction.

 Indeed.

Job Creators

Andrew Tobias recommended this 6-minute video, and so do I.

Sempringham Calls Another One

It was no surprise to the highly intelligent readers of Sempringham when Paul Ryan was announced as Mitt Romney's choice for vice president. After all, they'd had the tea leaves read for them.

Why The Stock Market Is Still Not A Safe Place To Be

Something very significant happened on Wall Street last Wednesday: HAL, the computer in 2001: A Space Odyssey, decided to get into the stock market at a firm called Knight Capital Group. Before they pulled the plug, HAL had lost the company $440 million. Not bad for a half-hour's work.

HAL was able to do it because the days of value investing in the stock market are close to over. Instead, the place is given over to boys with their toys: high speed computerized stock trading programs that buy and sell huge blocks of stocks several times a day based on penny differences in price. No "buy and hold" for this crowd.

Felix Salmon has an amazing animated graphic which illustrates the increase of computerized high frequency trading. Please take a look at it. Please, please, please. Keep an eye on the dates in the lower left-hand corner, and watch it to the end. (It's in a continuous loop, it will be obvious when it has started again.)

Salmon says:

Back in 2007, I wasn’t a fan of a financial-transactions tax; today, I am. And this chart shows better than anything why my opinion has changed. The stock market is clearly more dangerous than it was in 2007, with much greater tail risk; meanwhile, in return for facing that danger, society as a whole has received precious little utility. Are spreads a tiny bit tighter than they might be otherwise? Perhaps. But that has no effect on stock-market returns for long-term or even medium-term investors.

The stock market today is a war zone, where algobots fight each other over pennies, millions of times a second. Sometimes, the casualties are merely companies like Knight, and few people have much sympathy for them. But inevitably, at some point in the future, significant losses will end up being borne by investors with no direct connection to the HFT world, which is so complex that its potential systemic repercussions are literally unknowable. The potential cost is huge; the short-term benefits are minuscule. Let’s give HFT the funeral it deserves.

That would be a start, but just a start.  Glass-Steagall, the repeal of which played a large part in the Crash of 2008, is no closer to being restored than it was then. Not a confidence builder.

Andrew Sorkin reports, "Of 878 students at 18 high schools across 11 different states surveyed by the Financial Literacy Group, three-quarters of them said they agreed with this statement: “The stock market is rigged mostly to benefit greedy Wall Street bankers.”

Pretty smart kids.

Very Cool

Don't miss this little video that compares the speeds of Olympic 100-meter sprinters since 1896. Maybe, like me, you don't really care about track and field. Watch it anyway. It's very cool.

Romney's Tax Plan

Kevin Drum is my go-to guy for clear analysis of tax policy. This rundown on the recent Brookings Institution/Tax Policy Center report on Romney's proposed tax cuts lays it out very clearly.

There are two parts to Mitt Romney's tax plan. Here they are:

Part 1: Romney wants to lower tax rates. This part of his plan is extremely detailed. Tax rates would be cut by a fifth across the board. Taxation of investment income would be eliminated for families with incomes under $200,000. The estate tax would be eliminated. The Alternative Minimum Tax would be eliminated. Obamacare's payroll tax increase on the wealthy would be repealed. The corporate tax rate would be cut to 25%.

Part 2: Romney wants to eliminate or reduce various tax credits and deductions in order to increase revenue. This would make up for the lost revenue from Part 1. However, he has provided zero detail about this part of his plan.

Isn't that odd? Romney has extremely specific thoughts about lowering tax rates and is willing to share chapter and verse. But when it comes to the part where you raise some taxes to make up for it, he suddenly thinks he ought to defer to Congress on the details instead of doing their job for them. Why is that?

The analysts at the Tax Policy Center provide a pretty good clue today. Romney himself won't say anything about the credits and deductions he'd target, so they made the most progressive assumptions they possibly could about them by "starting at the top." That is, they made a list of all the possible credits and deductions and then completely eliminated them for the highest income group. This would produce the largest possible increase for the wealthy. Then they worked their way down, and by the time they got to the bottom group they reduce the credits and deductions only enough to make the whole plan revenue neutral. This produced the smallest possible increase for the non-wealthy.

So: the biggest possible increase for the wealthy, the smallest possible increase for the less wealthy. For technical reasons, they could only model this down to $200,000, but that's enough to show what Romney's plan would do. ... When you combine the decrease in rates and the increase from credits and deductions, millionaires would get a tax cut of 4.1%. Everyone under $200,000 would get a tax increase of 1.2%.

At this point, President Obama's problem is trying to get people to believe that Romney actually supports a plan that's so outlandishly friendly to the rich. When the Priorities USA Super PAC tried to inform voters about Paul Ryan's similar plan, Robert Draper reports that "the respondents simply refused to believe any politician would do such a thing." And Romney, of course, will hide behind the fact that he himself hasn't endorsed any particular basket of tax increases to make up for his rate cuts, so the Brookings analysis is just guesswork.

 

Mr. Bean goes to Poland

Loved this, from Paul Krugman:

So on the third leg of his foreign tour, Mr. Bean Mitt Romney lavished praise on the Polish economy. It wasn’t quite as big a blooper as his praise for Israel’s single-payer-plus-price controls health care system, but it wasn’t good.


For one thing, Poland has substantially bigger government than the US; in 2007, that is, pre-crisis, the Polish government spent 42 percent of GDP, compared with 37 in the United States. And despite what Romney claimed, there was no obvious trend toward smaller government; Polish spending as a share of GDP was about the same in 2007 as it had been in 2000.

Oh, and universal health care too.

What's the Matter with Texas?

Ian Millhiser at Think Progress offers a profile of Ted Cruz, who will be the Republican candidate for Kay Baily Hutchinson's seat in the Senate. According to Millhiser, Cruz has "considerable intellect." I guess the bar for considerable intellect has been lowered considerably lately. As Millhiser details, Cruz:

1) Believes George Soros is behind a U.N. plot to eliminate golf courses.

2) Thinks Social Security is a Ponzi scheme.

3) Thinks two states can join together to ignore national laws they don't like.

4) Thinks Sharia law is an enormous problem in the U.S.

And my personal favorite:

5)

Cruz’s very first campaign ad encouraged GOP primary voters to support him because he helped make it easier for Texas to kill an “illegal alien.” According to the ad, “Cruz fought all the way to the Supreme Court” after “the UN and World Court overruled a Texas jury’s verdict to execute an illegal alien.” In reality, the case Cruz won had nothing to do with whether Texas had the authority to kill this man. Rather, it concerned whether Texas could defy a treaty requiring it to inform foreign nationals who are arrested of their right “to request assistance from the consul of his own state.” Even North Korea honored this treaty that Cruz fought to undermine.

Something is misfiring in this considerable intellect.

Who Didn't See This Coming?

The three most predictable news stories following a mass shooting:

1.  Gun control advocates call for stricter laws.

2.  Gun sales increase.

3.  Man shoots self in buttocks, injuring others.

Thorium

All of sudden I'm seeing articles and videos about thorium, a radioactive metal once considered for nuclear power plants but rejected in favor of uranium. This article from Popular Mechanics actually has the best executive summary. A snippet, with my highlights:

Three to four times more plentiful than uranium, today's most common nuclear fuel, thorium packs a serious energetic punch: A single ton of it can generate as much energy as 200 tons of uranium, according to Nobel Prize-winning physicist Carlo Rubbia. In the mid-twentieth century, some U.S. physicists considered building the nuclear power landscape around thorium. But uranium-fueled reactors produced plutonium as a byproduct, a necessary ingredient for nuclear weapons production, and uranium ended up dominating through the Cold War and beyond. 

[snip]

In a traditional light water reactor, uranium-235 interacts with uranium-238 to produce plutonium-239 as a byproduct—a radioactive isotope that can be used for weapons. But when thorium is used instead of uranium-238 as a fertile material to kickstart nuclear fission, the thorium eventually "becomes uranium-233, which fissions almost instantaneously in the reactor, generating other isotopes that make power," Grae says. That means usable weapons-grade nuclear material is not produced, which would theoretically eliminate some security issues now associated with nuclear plants. Grae also claims thorium-powered light water reactors produce a much smaller volume of waste products that decay to relatively safe levels in just six to seven hundred years.

 Interesting.

Aurora, Colorado

Roger Ebert in today's NY Times:

Immediately after a shooting last month in the food court of the Eaton Centre mall in Toronto, a young woman named Jessica Ghawi posted a blog entry. Three minutes before a gunman opened fire, she had been seated at the exact place he fired from.

“I was shown how fragile life was,” she wrote. “I saw the terror on bystanders’ faces. I saw the victims of a senseless crime. I saw lives change. I was reminded that we don’t know when or where our time on Earth will end. When or where we will breathe our last breath.”

This same woman was one of the fatalities at the midnight screening in Aurora. The circle of madness is closing.

I've given up on gun control. There are valid arguments against gun control, but the loony bin is overflowing. This is partly the fault of gun control advocates, who think there's no valid reason to want a gun, so don't understand why anyone would resist gun control. It's certainly the fault of the American Rifle Association, which created and encourages the stereotype of the gun owner as a paranoid fetishist.

It's not going to be resolved in my lifetime.

Thanks, Senator McCain

Wow! Somebody in the GOP is finally standing up to the nut cases.



There is still a large group of Americans who think Joseph McCarthy was a patriot. 

Why Won't Romney Release His Tax Returns?

The contemplation of Romney's refusal to release tax returns left out an obvious and likely possibility:

In one or more years he paid no taxes at all, or ridiculously low taxes, on significant income. We'll call that one the Leona Helmsley Defense.

Romney and the Middle Class

The Tax Policy Center has released it's analysis of Romney's tax plans and Ezra Klein at the Washington Post created a little chart to compare Romney's vision to Obama's:

The numbers along the bottom are the income quintiles: lowest 0-20 percent, etc. The last two bars represent the effect on the top 1 percent and the top .1 percent. You're going to have to click on the chart to make it bigger in order to read it. Among the many jaw-dropping aspects of Romney's plan, please notice that taxes on the lowest 20 percent will increase.

Mike Lux at Crooks and Liars:

As someone in Romney’s opposing camp, I am enjoying the spectacle [of the increasing call for Romney's tax records]. But this whole mess with Romney and his financial secrets reminds us again of a bigger, deeper truth: the rich - at least people who got rich the way Romney did - really are different than you and I. The story of how Mitt Romney got so wealthy, and then how he hid all that wealth and avoided taxes on it, is also the story of the modern decline of America’s middle class.

Right around the time Mitt Romney went into business in the early ‘80s was the moment when, aided directly by Reagan administration policies and the kind of corporate sharks Romney became, the middle class in this country began to decline in size, strength and prosperity. Mitt Romney and his fellow Wall Street sharks became so stunningly wealthy precisely because most of the rest of us got poorer. The working and middle class in this country got laid off, down-sized, out-sourced; their wages went down or flat, their out-of-pocket health care costs went up, and their pensions disappeared; the price of energy and groceries and other necessities went way up; and when the bubble caused by the out of control speculation of Wall Street burst, their one remaining asset - their homes - lost much of its value.

Meanwhile, the guys like Romney who were doing the out-sourcing, lay-offing, wage and benefit-slashing, and financial speculating got filthy rich, and then because of our unprogressive tax laws and because they used Cayman Island and Swiss bank accounts to hide their money, they paid a smaller share of their taxes than those hard-pressed folks in the middle class. [Bolding and paragraph structure courtesy of me.]

Back in January, Romney gave a different view of things:

According to Mitt Romney, the nation's growing focus on income inequality is all about envy.

"You know, I think it's about envy. I think it's about class warfare," the leading Republican presidential candidate said Wednesday on The Today Show.

Obama on the Right Track

Two good current ads from the Obama campaign:

For days we've been reading that the Bain attacks are working, so it's no wonder that, despite Romney's demand for an apology (which would apparently remove forever the possibility of Obama being called a "great" president), the Obama campaign is not backing down. I was worried when I saw Krugman's VSPs (Very Serious People) again missing the forest for the trees.

Paul Krugman:

A lot of people inside the Beltway are tut-tutting about the recent campaign focus on Mitt Romney’s personal history — his record of profiting even as workers suffered, his mysterious was-he-or-wasn’t-he role at Bain Capital after 1999, his equally mysterious refusal to release any tax returns from before 2010. Some of the tut-tutters are upset at any suggestion that this election is about the rich versus the rest. Others decry the personalization: why can’t we just discuss policy?

And neither group is living in the real world.

About those tax returns:



And I especially liked this one:



Why is Romney refusing to release more than his most recent tax returns? I've come up with four possible explanations, though I expect there are more.

He's hiding something that would be very bad for his campaign. The most obvious explanation, though even Krugman couches it with an adverb: "[Romney is] evidently afraid to let voters see his tax returns." Let's call it the Willie Sutton defense.

He's hiding something that would be injurious to himself in the business world, by either tipping his hand on investments or showing himself to be duplicitous to his partners or others: the Unregulated Business defense. Since Romney has already released his 2010 tax returns, the "tipping his hand" part seems unlikely.

He strongly believes his personal privacy is very important, and should not be compromised in order to run for political office. Let's call this one the Candide defense.

There's nothing there. He's just waiting for the attacks to peak, then he'll release his tax returns to show that his detractors are just a bunch of fruit cakes. The Obama's Birth Certificate defense.

If the reason he's reluctant to release the tax returns is related to the Candide or Obama's Birth Certificate defense, we should expect them to be released fairly soon. He's taking a beating.

If the reason he's holding back is either the Willie Sutton or Unregulated Business defense, we'll probably never see them.

Can you think of another reason he won't release his tax returns? Let me know if you can, but be sure to give the defense a name.

Some Good Zingers

Although the Tea Party crowd claims the Founding Fathers as their political ancestors, their sense of American History is based on fantasy.

Benjamin Franklin:

"All the property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it. "

James Madison:

"There is an evil which ought to be guarded against in the indefinite accumulation of property from the capacity of holding it in perpetuity by … corporations. The power of all corporations ought to be limited in this respect. The growing wealth acquired by them never fails to be a source of abuses."

Thomas Jefferson:

"I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country." 

Hat tip to Hullabaloo and Andrew Tobias.

Tobias then quotes a reader, Mike Martin:

The Republicans trumpet their anti-tax message cloaked in ‘Tea Party’ garb as if the Boston Tea Party was a tax protest. Read the history: the British government had just LOWERED the tax on tea when the protest occurred. The issue was not the tax requirement, it was that only licensed tea merchants could sell tea, which undercut both John Hancock’s commercial empire and the widespread smuggling of tea. But perhaps more importantly, after the American Revolution they formed a government without a strong power to tax. After the Shay anti-tax rebellion, George Washington and others held the Constitutional Congress with the Shay’s rebellion as the clarion call for a stronger central government. In other words, the United States of America, the government formed under the U.S. Constitution, was formed precisely to COUNTER an anti-tax rebellion. So the existing Republican Party forms its foundation on opposition to the United States of America and its Constitution: they regularly claim that government is the enemy of the people … ”

 Mike Martin has it absolutely correct.

Musical Interlude

I used to own the album shown in this video. It's a bootleg copy of a Bob Dylan recording session. But I lost it in a one of Chicago's wonderful floods.

And I always loved this particular cut of the album. Dylan was going to sing it on the Ed Sullivan show, and Ed was cool with that, but the CBS lawyers freaked out, and said he couldn't sing it. Dylan walked off the set, and never appeared on the show.

Listening to it now, you might wonder what the hubbub was about. Funny how often that happens.

It's a very funny song, and it makes fun of a bunch of people who – decades later – look absolutely ridiculous. Sort of like Republicans today.

The Education of Judge Richard Posner

Back in 2009 we alerted you to the fact that one of the "intellectual giants" of the conservative movement, federal circuit court judge Richard Posner, had become a Keynsian.

It's taken three years, but Posner kept thinking:

Posner expressed admiration for President Ronald Reagan and the economist Milton Friedman, two pillars of conservatism. [Give him time; give him time.] But over the past 10 years, Posner said, "there's been a real deterioration in conservative thinking. And that has to lead people to re-examine and modify their thinking."

"I've become less conservative since the Republican Party started becoming goofy," he said. [Editorial note: That was 32 years ago.]

Posner, who was appointed to the appeals court by Reagan, speculated that the leaks about the deliberations over the national health care law — which are apparently designed to discredit Chief Justice John Roberts' opinion upholding the law — would backfire. "I think these right-wingers who are blasting Roberts are making a very serious mistake," he said.

"Because if you put [yourself] in his position ... what's he supposed to think? That he finds his allies to be a bunch of crackpots? Does that help the conservative movement? I mean, what would you do if you were Roberts? All the sudden you find out that the people you thought were your friends have turned against you, they despise you, they mistreat you, they leak to the press. What do you do? Do you become more conservative? Or do you say, 'What am I doing with this crowd of lunatics?' Right? Maybe you have to re-examine your position."

Tee-Hee!

Amy Sullivan in The New Republic online:

A Republican state representative in Louisiana now says she was confused when she enthusiastically supported Gov. Bobby Jindal’s voucher bill to fund private schools. From the Livingston Parish News (free registration required):

"WATSON — Rep. Valarie Hodges, R-Watson, says she had no idea that Gov. Bobby Jindal’s overhaul of the state’s educational system might mean taxpayer support of Muslim schools …

'I liked the idea of giving parents the option of sending their children to a public school or a Christian school,' Hodges said.

Hodges mistakenly assumed that 'religious' meant 'Christian.'

HB976, now signed into law as Act 2, proposed, among other things, a voucher program allowing state educational funds to be used to send students to schools run by religious groups …

'Unfortunately it will not be limited to the Founders’ religion,' Hodges said. 'We need to insure that it does not open the door to fund radical Islam schools. There are a thousand Muslim schools that have sprung up recently. I do not support using public funds for teaching Islam anywhere here in Louisiana.'"

I love that line about mistakenly assuming that “religious” meant “Christian.” It happens to so many people…