The Conservative Nanny State (Dean Baker)

Great book. You can read it for free in Abode Reader here.
Here's an excerpt from the preface:

"The key flaw in the stance that most progressives have taken on economic issues is that they have accepted a framing whereby conservatives are assumed to support market outcomes, while progressives want to rely on the government. This framing leads progressives to futilely lash out against markets, rather than examining the factors that lead to undesirable market outcomes. The market is just a tool, and in fact a very useful one. It makes no more sense to lash out against markets than to lash out against the wheel.

The reality is that conservatives have been quite actively using the power of the government to shape market outcomes in ways that redistribute income upward. However, conservatives have been clever enough to not own up to their role in this process, pretending all along that everything is just the natural working of the market. And, progressives have been foolish enough to go along with this view."

Health Care and Budget Deficit Calculator

This is BRILLIANT (courtesy of the Center for Economic and Policy Research)
Notice that every country on the list has higher life expectancy and exponentially lower health care costs.

We need a public plan that can negotiate lower costs and we need it FAST.

Tougher Building Codes are a Must!

Great article on the need for tougher building codes across the U.S. for greater energy efficiency

Austin has had tough building codes for 25 years and as a result was able to forgo building another coal-fired power plant.

Tough codes make sense any way you look at it: cost-savings for consumers (particularly low-income households) in the form of lower energy bills; job-creation with greater demand for energy-efficient building; carbon- dioxide reduction for EVERYONE.

Without a national mandate, private builders will not have the incentive to participate and a tougher mandate in one town would encourage builders to find the cheapest (a.k.a. the weakest energy codes) place to build. This is essentially a race to the bottom and would be much more expensive in the long-run.

There is already plenty of federal and state-funding in the form of tax credits to participate. Now all we need is a mandate that ALL new buildings be built to maximum energy efficiency, with tougher standards put in place every year as the technology allows.

Tough topic, but an important and relevant one

Peter Singer makes some interesting points in this article in today's NYTimes. It can appear cold at times--specifically when talking about how economists "value" human life--but these are the tough questions that need to brought up:

You have advanced kidney cancer. It will kill you, probably in the next year or two. A drug called Sutent slows the spread of the cancer and may give you an extra six months, but at a cost of $54,000. Is a few more months worth that much?

There is a song that comes to mind - the Rolling Stones' "You can't always get what you want". Especially when what you want won't save your life and will come at the expense of saving someone else's life.

Correcting 5 Myths About the Stimulus

CBPP Gets It
Conservative Congressmen Don't Get It.

Here are the 5 myths. See the link for details:

"1: The recent rise in unemployment does not mean the law is not working.

2: The Administration and Congress expected the stimulus money to be spent gradually over the next two to three years, and what’s been spent to date is stimulating the economy and helping millions of Americans.

3: The nation faces a very serious long-term budget problem, but the recovery law will exacerbate that problem only a very small amount.

4: The law was specifically designed to help states close their budget shortfalls.

5: States are properly using stimulus funds for short-term projects."

More on Health Care Reform

Jonathan Gruber, Economics Professor at MIT, and well-respected health-policy expert:

Despite the resistance to changing the status quo, I believe that the most sensible source of financing for universal coverage would come from reducing the expensive, regressive, and inefficient subsidization of employer-sponsored insurance. Scaling back the exclusion would be highly progressive and would have the added benefit of reducing the incentives for overinsurance and excessive health care spending. This win–win solution would ameliorate a fundamental flaw in our current system while raising the revenues required to cover the uninsured.

Robert Reich and Paul Krugman on Health Care Reform

Tax the Wealthy to Keep Everyone Healthy:

It's the most blatant form of Robin-Hood economics ever proposed. The universal health care bill reported by the House yesterday pays for the health insurance of the 20 percent of Americans who need help affording it with a surtax on the richest 1 percent.

There's another word for it: fair. According to the most recent data (for 2007), the best-off 1 percent of American households take home about 20 percent of total income -- the highest percentage since 1928.

Amen, brother.

Here's Krugman:

OK, so the CBO score for the 3-committee House health care plan is in: $1 trillion over the next decade for 97 percent coverage of legal residents.

That’s a bargain: the catastrophe of being ill without insurance, the fear of losing insurance, all ended — for much less than the Bush administration’s useless $1.35 trillion first tax cut, quickly followed by another $350 billion.

New Reports on Social Security and Medicare

Recession drains Social Security and Medicare

Not exactly, says Robert Greenstein of the Center for Budget and Policy Priorities:

The trustees’ report on Social Security shows that the program does not face an immediate crisis and isn’t at risk of collapsing and lacking funds to pay any benefits, even in the long run, but that Congress needs to restore Social Security’s long-term solvency so it can meet its promises — and the sooner it does so, the better.

Better yet:

These budgetary pressures underscore the importance of President Obama’s proposal to allow tax cuts for Americans making over $250,000 to expire after 2010, as scheduled. If Congress does not enact that proposal, the revenue loss over the next 75 years will be almost as large as the entire Social Security shortfall over this period. Members of Congress cannot legitimately claim that the tax cuts for people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat.

Medicare isn't the problem, it's health care costs:

The fundamental cause of Medicare’s financing problems is the rapid rise of health care costs throughout the U.S. health care system, not the nature or structure of Medicare itself. For more than 30 years, the rate of growth in Medicare costs per beneficiary has essentially mirrored the rate of growth in health care costs systemwide, including in the private sector. Numerous health and budget experts across the political spectrum — including White House budget director Peter Orszag, former Comptroller General David Walker, and Republican health care expert Gail Wilensky — have noted that addressing Medicare’s financing problems will entail slowing health-care cost growth systemwide.

The 100 Days of FDR

Arthur Schlesinger Jr. from his 1983 op-ed:

The time had come, Roosevelt said, to ''restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit. ... These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and our fellow men.''

Perhaps our nation will be more united, more equitable and more prosperous, too, if we abandon the current program of cutting taxes for the rich and social programs for the poor and recall the proposition Roosevelt set forth in his second inaugural:

''The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.''

Going Dutch

I love this piece from this week's NY Times Magazine. Living in Spain for 6 months in 2006 opened the door to many questions about the existential differences between Europe and the United States, and how those differences translate into political feelings and public policy decisions. Here's an excerpt:

For the first few months I was haunted by a number: 52. It reverberated in my head; I felt myself a prisoner trying to escape its bars. For it represents the rate at which the income I earn, as a writer and as the director of an institute, is to be taxed. To be plain: more than half of my modest haul, I learned on arrival, was to be swallowed by the Dutch welfare state.

But to ponder relative tax rates is only to trace the surface of a deeper story. In fact, as my time abroad has coincided with the crumpling of basic elements of the American economic and social systems, and as politicians, commentators and ordinary Americans have cast about for remedies or potential new models, I have found myself not only giving the Dutch system a personal test drive but also wondering whether some form of it could be adopted by my country.

Gay rights and the Big Picture

From the NY Times:

In the words of David Mixner, a writer, gay activists are beginning to wonder, “How much longer do we give him the benefit of the doubt?” Last weekend, Richard Socarides, who advised President Bill Clinton on gay issues, published an opinion piece in The Washington Post headlined, “Where’s our fierce advocate?”

Tobias Wolff, a law professor at the University of Pennsylvania who was Mr. Obama’s top campaign adviser on gay rights, said the president needed time to build political consensus. “I think he has a genuine sense,” Mr. Wolff said, “that in order to move these issues forward you need broader buy-in than you are going to get if you poke a stick in too many people’s eyes.”

I wanted to echo what Professor Wolff mentioned above. President Obama has taken a lot of flack (it comes with the job!) for being irresolute or vague in his policy positions during an already uncertain time. People are looking for a leader that takes firm stands on issues, and reassures the public with certainty in all areas. Its not that President Obama doesn't embody these qualities, but with all due respect, this just isn't his style. Unlike his predecessor, Obama is not ideologically intractable. He is a consensus builder, a pragmatist, and a firm believer in the idea that the change he wants to create is centrifugal--that is, it requires the action of everyone outside of Washington. He understands that to placate our collective fears about the economy, the wars in Iraq and Afghanistan, climate change, etc. requires careful consideration of all sides of the argument, not catering to special interests or partisan politics.

No doubt many people (myself included) will be frustrated in the short run with the slow pace in progressive policy making, no matter how high our approval rating for President Obama. Nonetheless, I am optimistic that President Obama's consensus building tactics and deliberate political strategies will pay long run dividends in the form of real, sustainable change. There is a time for quick, experimental policy making (FDR, and to an extent President Obama, did quite a bit of this in his first 100 days), and there is a time for careful, deliberate consensus building to usher in a new era of progressivism. I think for the most part, President Obama's style is the latter.

A Stronger Safety Net

Jacob Hacker from The American Prospect:

If ever there were a time for an alternative to the reigning orthodoxies of risk management, this is it. Now is the time to adopt a vision not of individuals managing economic uncertainties on their own with limited government help but of all of us providing the common foundation for economic prosperity and advancement through smarter and broader sharing of risk.

In an era of partisan polarization and gridlock, we have failed to update our nation's safety net to reflect the changing economic and social realities of our nation.

The Good and the Bad News about Civil Service

Gregory J. Junemann, president of the International Federation of Professional and Technical Engineers during the testimony of John Berry, director of the Office of Personnel Management:

“Ever since President Reagan vilified government as ‘the problem,’ the civil service has borne the brunt of this slander and has been unjustly scapegoated for many of the country’s ills...However, the hostility towards government service only came to full fruition under the administration of George W. Bush. Although different agency directors used different tactics, the goal was the same: to undermine the independence of the civil service and to provide the flexibility to co-opt the federal workforce and its resources for political ends.”

On a more positive note, Max Stier, president and chief executive of the Partnership for Public Service alludes to Obama's effect on the stigma against government:

With Barack Obama’s election, many of them feel a new sense of energy in their mission of public service. “I believe that we have a once-in-a-lifetime opportunity to revitalize our federal government,” Stier said.

I hope to expound on this topic in the days and months to come. For me personally, my interest in politics and better policymaking has as much to do with George W. Bush as it does with Barack Obama. The politics and policies of the last 8 years--as atrocious as they were--have only galvanized my desire for better politics and policies. And the emergence of one Barack Hussein Obama during that time has further inspired me to pursue public policy as a vocation. The current administration's first 100 days alone have set a new tone with effective, public-minded policy, and I hope the next 100 days (and beyond) will be as exciting as the first.

1.6 Million New Jobs during Obama's First 100 Days

From GovCentral:

The $819 billion Recovery Act has been estimated to create or save more than 3 million jobs by the end of next year...According to Recovery.gov, the funds will be allocated to infrastructure, healthcare, education and training, and energy. Among the first to receive funds will be shovel-ready projects, or those projects that are ready or nearly ready to be started...According to the total tally of StimulusWatch.org, there are 1,604,371 jobs lined up for the next year.

Here's a list of Stimulus projects in my home of North Carolina. I am most excited about the North Corridor light rail line additions from downtown Charlotte up to southern Iredell where I live now. Charlotte is one of the fastest growing cities in the US and keeping up with demands for improved infrastructure has been a challenge for city planners. A light rail network will be a huge step for bringing the city together, creating jobs, reducing congestion on highways and roads, and reducing pollution from cars.

Good Government and Animal Spirits

Great Op-ed piece in the WSJ from Nobel Laureate George Akerlof and Yale Economist Robert Schiller:

Such a world of animal spirits justifies the economic intervention of government. Its role is not to harness animal spirits but really to set them free, to allow them to be maximally creative. A brilliant player wants a referee, for only when the game has appropriate rules can he really show his talents. While the sports of baseball and football haven't changed much in the last century, the economy has -- and American financial regulation hasn't had an overhaul in 70 years. The challenge for the Obama administration, along with the U.S. Congress and our SROs, is to invent a new and better American version of the capitalist game.

Government Spending 101

From the Center on Budget Policy and Priorities:

While critics often decry “government spending,” it is important to look behind the rhetoric and determine whether the actual public services that government provides are valuable. To the extent that such services are worth paying for, the only way to do so is ultimately with tax revenue. Consequently, when thinking about the costs that taxes impose, it is essential to balance those costs against the benefits the nation receives from public services.

After-Tax Income Changes (1976-2006)

From the Congressional Budget Office via Brad DeLong and Ezra Klein:

Its astonishing the leap within the top 5th, particularly the top 1%. Granted, the top 1% starts around $300K or so if I'm not mistaken--so the numbers are a bit distorted in this category since it includes the likes of Bill Gates and A-Rod with the likes of a duel-income family making $300K. Maybe a calculation of the median for the top1% would be more appropriate; or maybe breaking the top 1% into smaller sub-categories (0.1%, 0.001%, etc.)

Education and Inequality

From Peter Orszag, President Obama's Director of the Office of Management and Budget:

This slowdown in the growth rate of educational attainment is a problem both in terms of attenuated economic growth (the hard head part) and increased economic disparities (the soft heart part). As Claudia Goldin and Lawrence Katz have shown, both effects are traceable to a decline in the relative supply of highly educated workers – which dampens economic growth while also increasing the wage premium for being a college grad. Said differently, the fewer college grads we produce, the slower overall economic growth and the higher the salaries for those fortunate enough to go to college. And since we know that those from lower-income families are less likely to go to college and graduate (as compared with students from higher-income families with similar test scores), the overall result is that we perpetuate inequality.

Claudia Goldin spoke to the Economics majors at Davidson College last year and gave an exceptional talk on this very subject. Education has to be at the center of any social policy geared at reducing inequality in this country.

30 years of economic growth?

Paul Krugman, again:

In short, how much of the apparent US productivity miracle, a miracle not shared by Europe, was a statistical illusion created by our bloated finance industry?

He cites this paper from June 2007 by Dean Baker and David Rosnick of the Center for Economic and Policy Research. I think if we as a nation start being honest with ourselves (starting with using more appropriate indicators of economic health) , we will find that we have a bit of growing-up to do.

Big Business in Bed with Big Government

This kind of thing really makes me want to start a revolution.
Courtesy of Mother Jones:

It's nothing unusual for the chairman of an influential committee to haul in loads of campaign cash from the businesses that are within his committee's jurisdiction. But with his future in the Senate in jeopardy, Dodd truly has to rely on his supporters in the industries he oversees, all while presiding over key components of the various financial bailouts currently underway. That is, he's pushing the envelope when it comes to Washington's pay-to-play routine.

Also, here's this morning's op-ed from Paul Krugman. Great stuff as always.

Update: Amen, via Simon Johnson at The Baseline Scenario

Let's Get Smarter

Nicholas Kristoff talks about Raising the National I.Q.

“Some of the things that work are very cheap,” Professor Nisbett noted. “Convincing junior-high kids that intelligence is under their control — you could argue that that should be in the junior-high curriculum right now.”

The implication of this new research on intelligence is that the economic-stimulus package should also be an intellectual-stimulus program. By my calculation, if we were to push early childhood education and bolster schools in poor neighborhoods, we just might be able to raise the United States collective I.Q. by as much as one billion points.

Beer, Tea & Tobacco

Harvard economics lecturer Jeffrey A. Miron and Yale Law student Elina Tetelbaum, on Forbes, present findings against the logic that a higher legal drinking age reduces traffic deaths:

The major implication of these results is that the drinking age does not produce its main claimed benefit. Moreover, it plausibly generates side effects, like binge drinking and disrespect for the law--the very behavior that events planned for this month's alcohol awareness theme are designed to deter.

Ryan Avert puts those "tea party" cronies in their place:

Consider this -- core consumer prices rose slightly in March thanks primarily to an 11% increase in the cost of tobacco products (there's that Obama tax increase), and smoking is much more prevalent in the population among the poor.

Which isn't to argue against cigarette taxes; they're a valuable public health tool. It's just to note that pretty much any way you slice recent economic data, things end up being harder for those with lower incomes. Something to keep in mind tonight as you watch tea bag coverage rolling in.

John Stewart does too (pretty funny)

Asset Bubbles and Income Inequality

Interesting post from Justin Fox via Mark Thoma

Well now, after looking at the data about the country's 400 highest earners and reading the comments by pneogy and shepherdwong, I am ready to offer an important new theory (well, not entirely new): The rise in income inequality over the past 30 years has to a significant extent been the product of a series of asset-price bubbles. Whenever the market (be it the market in stocks, junk bonds, real estate, whatever) booms, the share of income going to those at the very top increases. When the boom goes bust, that share drops somewhat, but then it comes roaring back even higher with the next asset bubble. It's not the same people raking it in every time—there's lots of turnover in the top 400—but skimming the top off of asset bubbles appears to have become the leading way to get rich in these United States in the past three decades. ...

Also, from Fortune Magazine just before the election about the HENRYs ("High earners, not rich yet"):

Most of all, the HENRYs face daunting choices. "They can become wealthy, but they must starve themselves of luxuries to get there," says advisor Tysk. "These people save only because they go without." Most HENRYs view achieving a comfortable retirement as a long and difficult climb.

The dream still lives for the HENRYs, but it's elusive. It's a dream that enriches us all, and that America would do well to nurture.

Another nuance to the tax debate. I don't think it's as much a sob story as the authors try to make it out to be, but it does present another side.

Happy Tax Day, America

Some noteworthy tax-day posts from Huffington and others:

• Famous Tax Cheats
  
• Why Our Tax Code is So Complicated
• The Burden of Tax Havens on the Rest of Us ($100 billion)
  
• Taxing Matters
• Paul Krugman - "Tea-Parties Forever"
• Robert Reich - "A Short Citizens Guide to Kooks, Demagogues, and Right-Wingers on Tax Day"
  

Progressive or Not? You Decide:

Not enough:

• Mother Jones - "How to Think About Taxes (Differently)"
• Ezra Klein - Tax Graphs
• NYTimes Economix Blog - Better Tax Graph than Ezra's

Maybe:

• Tax Foundation - Tax Burden the Wrong Way to Think About It (read the abstract)
• Tax Foundation - 10 Myths About Tax Policy
  

Fun thoughts via the Urban Dictionary:

plaid:
1. Cool, in-style, pleasing to look at; awesome
2. An incredible pattern created by the Scots and Irish in ancient times.

granola:
1. A person who dresses like a hippie, eats natural foods (granola), and is usually a Liberal, but in all other ways is a typical middle class white person, and is likely to revert back to being straight when they finish college.

It's Official...

...I've joined the blogging world. I figured since I spend a decent amount of time reading these things I might as well have my own. Welcome to Plaid & Granola, your one-stop shop for what I'm reading and thinking about at the moment. I'm new to this, so I'm not quite sure how the blog will evolve - hopefully with feedback from the loyal fans I can shape the content of my postings to keep you intrigued. Be sure to leave comments and feedback. And remember: Be safe. Safety first, then teamwork...