Archie and the NRA

Back in the '70s, it must've been, Archie Bunker was a cultural icon. Played by Carroll O'Connor, a Hollywood journeyman who was, in fact, a leftie of the old school, Archie was the paterfamilias in a situation comedy in which the gimmick was his recurring arguments with his son-in-law. The son-in-law's name is lost, at least to me: Archie called him "meathead," because he was a classic liberal while Archie was an unreconstructed bigot at a time when that was still common enough to be funny.

The 70s were the heyday of airplane hijackings, the safe kind where the airplane actually landed, eventually. So hijacking was an issue; and Archie's solution, the subject of a vehement argument in one episode, was to "arm all your passengers." No hijacker would dare try anything if he knew that there were 100 or 200 guns on the plane.

Archie was played as satire; but it is worth noting that many viewers missed the satire and agreed with Archie, on this as on many other issues.

The President of the NRA, Wayne LaPierre, said today that the solution to "a bad guy with a gun is a good guy with a gun." Every school in the country, he said, should have an armed guard; and Congress should immediately appropriate the necessary funding.

So, let's see, here: according to the "Back 2 School Stats" from the National Center for Education Statistics, there are about 99,000 public schools in the U.S. To make the arithmetic easier, and noting that private schools are not included here, let's say one armed guard for each of 100,000 schools.  On one NPR broadcast today, I heard someone estimate a cost of $85,000 per armed guard, counting salary, benefits, equipment (the gun!), the entire training and supervision infrastructure.

So, that's $8.5 billion. Per year. Add private and parochial schools and we are clearly talking, say, $15 billion or so. But what the hey: spare no expense to protect our children.

But schools aren't chosen by wackos because of an animus against education; they're chosen because a reliably dense supply of people can be found there. Churches work, too; witness this year's shooting at a Sikh temple in suburban Milwaukee (the doofus thought the Siks were Moslems). So, while we're at it, we'd better protect the churches, mosques, temples, synagogues, meeting houses, and so on, too.

The Hartford Institute for Religion Research tells us that the best estimates say there are about 300,000 religious congregations in the U.S. Of course, most of those only have significant attendance once or twice a week, so let's estimate that we could do with part-timers to cover them. Maybe 50,000 to 100,000 full-time equivalents (this is complicated in that the vast majority of congregations meet at more or less the same time, so we would have to have a lot of part-timers).

But then, what about all the other places people congregate? Movie theatres, for instance, and shopping centers, and sporting events. We'd better have armed guards --lots of them, because these places have a lot going on, lots of entrances, lots of different people in charge, to varying degrees.

I expect we are going to need, maybe, a half-million armed guards, more than the police and private guards we already have. After all, we've got to have an adequate supply of good guys with guns, because, as Mr. LaPierre said, there are bad guys out there, with guns.

But I wouldn't be surprised if we could handle the whole thing for around $50 billion per year, which is chump change. Maybe we could even save on that, if we used, you know, community-watch volunteers.

Like that guy --Zimmerman?-- in Florida. We could just deputize them all. So, pretty much everywhere we would go, there would be a friendly, helpful, competent, well trained government employee keeping us safe. And don't forget, we'd all have guns of our own!

And it would be easy to pay for: just raise the price of every bullet sold, by the necessary amount.

The Secret

Something is going unsaid in the flurry of stories about guns in America, and the justifications, the real and important need, for unfettered access to them, for "protection."

But first, let me readily acknowledge that if I lived on a farm in central Nebraska, I would consider it only sensible that I have a firearm: the nearest law enforcement authority, even perhaps the nearest neighbor, would likely be a long way away, and the response to an emergency that I am used to in Hyde Park --often a matter of 5 minutes or less--, would not be forthcoming. That does not necessarily mean I would require a 30- or 100-round clip for my "semi-" automatic weapon. let alone that I would need 20 or more guns. But perhaps an absolute ban of the type we have had, until recent Court rulings, in cities such as Chicago might not be proper.

Those arguments are not heard, though. We hear undifferentiated claims of need for protection, at all times and everywhere. Indeed, there have been laments that the kindergarten teachers at Sandy Hook were not packing heat. The people making those kinds of statements would seem to envision a school full of Diamond Lil-type gals, Glocks tucked into their garters; because, after all, if it were in the desk drawer, or the purse, way across the room or down the hall it would not likely do the job, would it?

The real argument isn't being made: it is that a significant number of people in this country believe that they must protect themselves from the government.

They believe Obama will attempt to drive them into the salt mines of socialism; or that black helicopters will descend to enforce martial law on Happy Valley; or, like the Texas sheriff recently, that the U.N. will attempt to take over his county by force. And if they are too rational to buy into any of these widely-held fears, they believe that the government will simply attempt to ban all weapons and confiscate all those now in the hands of the populace.

They won't say this, at least not many of them. But there are deeply-held fears that the always-at-hand "they" are coming to get "us." The fact that the president is a Negro has exacerbated these fears, no matter that Obama is not Malcolm X; hell, he isn't even Al Sharpton or Jesse Jackson. But once you have such a fear, any attempt at any kind of regulation is viewed as confirmation of the belief.

And so the primary response, across the country, to the killing of a couple dozen six year-olds in a school in Connecticut has been a run on large-capacity magazines and rapid-fire weapons.

Scalia, Sodomy, Bestiality, & Murder

To be fair, the distinguished Justice said that he wasn't equating sodomy with murder. He was just showing that banning one of these practices was much the same as banning the other: both prohibitions would simply be an expression of community morality. The Associated Press (as reported by Slate) quoted Scalia as saying, "If we cannot have moral feelings against homosexuality, can we have it against murder? Can we have it against other things?" 

He was saying that it is legitimate for communities to express their moral feelings via legislation, prohibiting those things to which they object. His example was murder; but how about smoking, or listening to rock and roll, or uncovering a woman's face in public?

Leaving aside the imprudence exhibited (not for the first time) in his speaking publicly on an issue that is currently before the Court, it is instructive that Justice Scalia is willing to follow Rick Santorum in making comparisons between things that have fundamental differences. Santorum, as widely noted at the time, asked how, if we were to allow homosexuals to marry, we could legitimately prevent a man from marrying a monkey. He was ignoring the most obvious feature of the comparison he attempted to force: that of consent. It is present in a marriage between humans, but a member of a non-human species cannot, we understand, give its consent. The same is true, of course, in the case of murder: both parties typically do not consent to the act (if they do, we call it "assisted suicide," and we sometimes allow it). If my morality would forbid some private action by other individuals, Scalia seems to think that I have the right to ban it.

But even ignoring this basic issue, it is hard (though not impossible, I admit) to believe that Scalia would endorse, for example, laws against interracial marriage. Segregation itself was generally a matter of, well, morality, as the majority would have had it, when the Court ruled it unconstitutional. Why was Plessy v. Ferguson wrong and Brown v. Board of Education right, when the former represented an endorsement of widely-held community standards and the latter repudiated those same standards?

Scalia appears, in short, to be saying that the rule of law under the Constitution is whatever the majority says it is, regardless of the rights of the minority.

A Letter to My Senator

Senator Durbin -- on one of the talk shows today you argued (1) that the Medicare eligibility age should not be raised, and (2) that Medicare should be means tested.

As to (1), I agree with you, and not mainlly for the reason you gave (to avoid a coverage gap for retired 65 and 66 year-olds), but because it would save the government very little money. 66 year old people are not the expensive Medicare beneficiaries; various commentators have estimated the savings at such small amounts that such a move sounds just, well, stingy, a suitable first step for a Republican whose actual agenda is to destroy Medicare.

As to (2), means-testing an "entitlement" turns it into a welfare system rather than a universal right. Don't go down this road; it's just the first step, again, in a Republican design, first to denigrate the program's participants as recipients of "welfare," then to destroy the program by "ending welfare as we know it" --substitute "Medicare" for "welfare" and you have Paul Ryan's call to arms. As a defender of traditional American social values, you should not, I think, be willing to place yourself in such a position.

Thank you,

Tony Walters

Business, Small (or, B-S)

Okay, it's time to parse one of the big recurrent themes of the Republicans in Congress, and what Pat Buchanan would call their "Amen Chorus" in the pundit class: Raising taxes on the top 2% would hurt Small Business (the phrase is always, like the name of the deity, capitalized --we will follow that custom here, out of a deep respect for American Religion).

The argument goes more or less like this:

• Most "Small Businesses" are, in fact, flow through entities (e.g., sole proprietorships, limited liability companies, partnerships), the profits of which are taxed on the returns of their owners. Hence, they are taxed at the individual rates.
• Therefore, increasing the tax on upper-income individuals means increasing the tax on their companies, in all these cases.
• When you increase taxes on Small Business, you prevent those companies from hiring more employees. So you stifle growth and employment.

Now, I suppose the first thing to point out are the underlying assumptions:

1. The Small Businesses in question are profitable enough to generate at least $250,000 in profits for (each of) their owners, assuming they file joint returns.
2. Given the opportunity to increase the business by, say, gaining a new customer that would require hiring a new employee, the owner would gladly hire the new person if the owner faced a tax rate of 35% on the extra profits thereby generated. But he would forego that opportunity if his tax rate on the resulting profits would be 39.6%.

As it is only the profits in excess of $250,000 per owner that would be taxed at the higher rates, the additional tax on, say, a $300,000 profit would only be 4.6% of $50,000, or $2,300. Not zero; but not exactly confiscation.

Forbes Fantasies

For the past year or so, I've been receiving Forbes in the mail. I don't know why this is, but I assume someone sent me a gift subscription (can't thank whoever it is because I never found out who). And I find that it has some occasionally useful articles on various aspects of money, investing, and so forth.

But that's not why I read it. I look forward to the one-page essays near the front of each week's edition. Most of them are headlined "Thought Leaders," and they are typically quite awful, when they are not screamingly funny in their incoherence (see Schlaes, Amity). The best, though, are often those of the publisher, Steve Forbes. Today's text is his October 22 piece, "Gold Can Save Us From Disaster."

Steve's argument is that stable currency is the answer to our prayers, economically speaking, and a return to the gold standard would produce the desired stability. Here is his complaint: "An unstable dollar is wreaking havoc on our capital markets, depriving us of money for productive enterprises and future enterprises while subsidizing government debt on a scale never before seen in U.S. history." I'd like to examine that claim.

First, is our dollar unstable?

By coincidence, this piece in the Atlantic online from just last August makes the point that price stability under the gold standard is not necessarily better than under a fiat money standard. In general terms, price stability is a desirable goal, because it allows for predictability in the markets. But it is not necessarily the primary goal of economic policy.

Second, does an unstable dollar "wreak havoc" on our capital markets?

This article from the archives of the Federal Reserve provides fascinating real-world instances of how the requirement to maintain the gold standard, in the face of external pressures, threatened the capital markets --the NYSE itself was closed for four months in 1914 as a direct result of the need to maintain the gold standard; I wonder what Mr. Forbes would have to say about that sort of event. By contrast, the capital markets in the US, whether you look at stock prices and trading volumes or market rates of interest,  currently seem to be functioning well.

Third, are we "deprived of money for productive enterprises and future enterprises" (an awkward pairing; not sure what, if anything, Forbes is getting at here)?

Well, I guess that comes down to a question of who is being "deprived." Given the historic amount of cash in the coffers of American business (see here and here), it is tough to say that businesses don't have money to invest in "productive enterprises or future enterprises." So I suppose we ought to assume that the "we" actually means what it says, that is, Mr. Forbes himself, and others like him. I suspect, in other words, that he is lamenting the historically low level of interest rates, which, he says at another point in his article, punishes savers (or the wealthy in general).

Fourth, is government debt being subsidized "on a scale never before seen in U.S. history?"

Again, it's a little hard to understand what he means by this. I expect that the "subsidy" he refers to is simply the fact that, because interest rates are so low, the government can finance its historically high level of debt at a cost in annual interest that is lower than the total paid in any year during the G.W Bush administration. In other words, the cost to the taxpayer of current government borrowing is less than at almost any time in our history --which, in other circumstances, would be regarded by Mr. Forbes as a good thing (at least, to the extent that he would regard higher costs, in general, to the taxpayer as being a bad thing, which would depend on whether he really cares about "the taxpayer"). So the government is not as constrained in its borrowing as he would wish --for reasons having little to do with the overall state of the economy. Presumably, Mr. Forbes would want the government to be paying much, much more for the money it borrows. Lenders usually do.

Now, it is certainly true that, if we were on the gold standard, interest rates would be much higher: because the supply of gold is fixed, more or less, the government could not print money; and therefore the money already in circulation, backed by gold reserves, would be much harder to come by and so would cost more. And that would be good for lenders. But it would be very bad for borrowers; and borrowers are by far the majority of the people, and certainly are the portion of the population currently most in need. Also, at a time when expanded economic activity may be needed, say, to stave off recession or depression, the government, or the central bank, would not, on a gold standard, have the flexibility needed to pump money into the economy and so increase economic activity; the result would be an inability to put any brake on economic contraction of the sort we have experienced in recent years.

It seems to me that Mr. Forbes is actually (whether he knows it or not) lamenting the lack of deflation in the economy. Deflation is what we could expect if we were on the gold standard; and deflation would suit a lender just fine: it would mean that he'd be getting paid back in ever more valuable dollars. And inflation, on the other hand, is what Mr. Forbes fears; like a great many other conservatives, he appears to ignore the facts of the past 5 years and continue to expect runaway inflation any day now, just as has been predicted, over and over, for 5 years, by his ideological compatriots.

It is worth noting that, in a Chicago survey of 40 economists at the top economics departments in the U.S. academy, all of them (except for a few non-respondents) registered a "disagree" or a "strongly disagree" to the assertion, "If the US replaced its discretionary monetary policy regime with a gold standard, defining a "dollar" as a specific number of ounces of gold, the price-stability and employment outcomes would be better for the average American."

Comments from the 40 economists range from the measured "A time series plot of the price of consumption in ounces of gold, and then in US dollars, clarifies that gold is not a stable standard." to  "A gold standard regime would be a disaster for any large advanced economy. Love of the G.S. implies macroeconomic illiteracy."  to "eesh. Has it come to this?"  

Mr. Forbes, it ought to be noted, joined the magazine that bears his name (and that of his father, and his grandfather who founded Forbes) soon after his graduation from Princeton in 1971, and has never worked anywhere else.  So it should come as no surprise that his exposure to the real world, as opposed to the cloistered precincts of old money, has been minimal and awkwardly-pursued (according to his Wikipedia biography, Time magazine called Forbes's abortive 1996 campaign for the Republican presidential nomination a"comedy-club impression of what would happen if some mad scientist decided to construct a dork robot." and also described his campaign as "wacky, saturated with money and ultimately embarrassing to all concerned." But his think pieces in his family's rag, even ignoring his confident "yes, he [Romney] will win this election, despite all the claptrap to the contrary" in the article under discussion here, are noteworthy: pomposity can be easily satirized; but when it is so spectacularly ill-informed, it satirizes itself.

Euros and Dollars

Not so small a point:

The GDPs of Greece and Portugal, according to the World Bank, are each roughly two thirds that of Germany, and about 77% of the European Union taken as a whole. That is to say, Greece and Portugal are poor countries, the weak sisters of that economic bloc. So, perhaps it is understandable that Greece and Portugal should appear constantly, since the Crash, to be circling the drain. They started in last place, and are certainly in no position to compete now, with their 25% unemployment rates and persistent housing crises. Just today, a Greek woman, while the sheriff was ascending the stairs to evict her, exited her apartment via a fourth-floor window; in response to this widely-publicized suicide, Greece has put most foreclosures in abeyance for the foreseeable future, simultaneously with the adoption of stringent new austerity measures. The populace of that sad country, beset with Nazi thugs roaming the streets in search of immigrants, has virtually nowhere to turn; there's just no money to be had, even for the most basic necessities.

The GDP per capita of Mississippi is about half of that of Connecticut, and roughly three-quarters of that of the entire US, on average (link). So Mississippi looks, at least in this respect, like a Greece or a Portugal --in fact, its GDP per capita is almost exactly the same as that of Portugal and a bit less than that of Greece ($26,087 for Mississippi, vs $26,948 for Greece and $25.395 for Portugal). Mississippi is a "poor" state; it brings up the rear, in terms of the US economy, except for Puerto Rico, the Mariana Islands, and similar possessions.

Yet Mississippi's unemployment rate is 9.2%; very bad by US standards, but only about 1.5 percentage points worse than the national average. The Greeks would think they'd died and gone to heaven if they had that rate. And although, like many areas of the US, Mississippi is undoubtedly suffering in the recession, its situation is by no means noteworthy, in terms of national news coverage.

What's the difference? Why isn't Mississippi, which could be called our "Greece," spiraling out of control as that European country appears to be doing? I've pointed out previously that Greece doesn't control its own currency, and that fact puts the country in a straitjacket when it comes to controlling its economic destiny. But Mississippi, of course, doesn't have its own currency, either; so that can't be the difference.

Mississippi, in foregoing the right to have its own currency, and in surrendering the right to control its borders, gained something that Greece, in taking the same steps, did not gain: the state, unlike the country, is part of a single financial system. Unemployment in Mississippi is subsidized by unemployment compensation that originates at the national level; welfare, social security, Medicare coverage, and so forth, are all either federally provided or at least federally controlled and subsidized. And so, when Mississippians lose their jobs, money is transferred into the local economy, from other states, in the form of unemployment compensation. Elderly Mississippians benefit from Medicare, which does not depend on income earned in Mississippi.

In effect, Mississippi benefits from transfers of these kinds from elsewhere in the US. Rich states, mainly in the North and East, subsidize poor states, mainly in the South and West. It's pretty much consistently that way. Mississippi ranks 50th, and Massachusetts 4th, in the per capita amount of federal taxes paid by its residents. In terms of net contribution (all federal taxes) to the federal budget, Massachusetts ranks 11th, at about $2,133 per resident, net contribution; Mississippi ranks 49th, at a negative $6,765 per capita (link and link). So the local economy of Mississippi benefits substantially from the influx of money from outside the state; this keeps the stores open and their employees working.

We have, in other words, what economists call a fiscal union. All the states are part of the same federal budget and are subject to the same federal tax regime. And their residents all participate in the same social safety net. So it doesn't matter, for example, that Mississippi cannot coin its own money. In fact, that state and most of its neighbors benefit substantially from membership in this fiscal union.

It's ironic that, with a few notable exceptions such as Texas, most of the net contributor states are reliably Democratic, while many of the most Republican (not to say anti-federal government --whoops, I just said it) states are those which benefit most by the transfer to their people of taxes paid elsewhere. 

But back to the main point: the creation of the Euro involved a monetary union --a single currency-- without creating a fiscal union --a unified budget, tax regime, and welfare system. And this is at the heart of the problem for the poor countries of the European Union. And it is why Mississippi is not, and will not be, in the sad state of Greece and other poor members of the Euro. 

Unless certain political elements get their wish, and federal programs are devolved to the states.

The Food Stamp President

Okay, let's first just look at the history.

The first food stamp program --they were called "food scrips" then-- originated in the thirties, in response to the widespread need during the Depression. Participants could buy a defined amount's worth of "orange" stamps, which were good for any food item, and with them get a proportional amount of "blue" stamps, that could be used to purchase only surplus commodity foods. By the end of its first year the program was regarded as a success in two ways: (1) as the nation began to ramp up its military preparedness, food stamps were viewed as enabling a larger supply of potential soldiers who were physically fit, malnutrition having been a serious problem; and (2) the food stamp program provided a market for surplus agricultural products and thus kept farm prices from collapsing --the government was already concerned about maintaining robust farm production to meet the needs of what looked like a brewing war effort.

This program was discontinued in 1943; the food surplus and the unemployment problem had vanished due to the war. It was revived during the 1961 recession by President Kennedy, and made applicable only in a few coal-mining areas where changes in the economy had produced widespread unemployment (Kennedy had begun his presidential campaign with an unexpected victory in the West Virginia primary, and the program was the result of a campaign promise). The first recipient was a miner whose mine had been closed a year earlier, and who had 13 children. He got a monthly allotment of $95, which the FDA expected would cover about one-third of his family's need.

In 1964, the program was expanded across the nation as part of the War on Poverty. Ronald Reagan, in campaigning in 1976, attacked the specter of a "strapping young buck" --yes, he really said that, in Florida-- using food stamps to buy a T-bone steak; but a year later, during another recession, the program had just over 16 million participants. By the way, there were 220 million people in the USA then, compared to 314 million today).

Jumping ahead, the number of people fell in the early '80s (Reagan, again) but then grew rapidly in the '90s; there were 27 Million participants in 1994. Republican efforts during the Clinton Administration succeeded in defining the food stamp program as "welfare," thus subjecting participants to the new work requirements that were a centerpiece of the Clinton "end welfare as we know it." As a result, enrollment began to decline substantially: single mothers and their toddlers aren't good candidates for work, it turns out, nor are elderly sick people. It was estimated in 2001 that half of the eligible population no longer received food stamps. Under G.W. Bush, the program was again liberalized, though, as the price the Democratic Congress exacted for an expansion of the farm subsidy program. Under Bush, the program also dispensed with paper coupons and began using electronic benefit cards; this step, along with the program's new name, Supplemental Nutrition and Assistance (SNAP) reduced the stigma of food stamps. In 2008, according to the Food and Nutrition Service of the USDA, about 66% of the 41 million eligible persons were actually receiving SNAP benefits. Overall participation was about 20 Million people in 2000; that had grown to about 30 Million in 2009; the average monthly benefit per person in the program is currently about $125. Currently, about 47 million people receive benefits. Well over $50 million is spent annually on the program.

Now: What does it mean to call Obama the "Food Stamp President?"

Well, certainly the number of people receiving SNAP benefits has grown during Obama's administration. Unemployment has also grown, dramatically. Here are some numbers:

	Month	Jobs Lost
	Aug '08	300,000
	Sep	450,000
	Oct	550,000
	Nov	725,000
	Dec	650,000
	Jan'09	780,000
	Feb	720,000
	Mar	750,000
	Apr	500,000
	May	400,000
	Jun	500,000
	Jul	350,000

That's nearly 7 Million jobs lost in the last 6 months of the Bush Administration and the first 6 months of the Obama Administration. In only one month during 2008 and 2009 was there a net gain in employment. If the eight or nine million people who lost jobs during those 2 years had one dependent each, and if all of them applied for SNAP starting 6 to 12 months after they became unemployed, that would account for an increase from 30 million at the start of 2009 to well over 45 million, all by itself.

Of course, the overly-simplistic nature of this analysis is obvious, on several counts; but the point is just to demonstrate that the increase in people on food stamps should not have been unexpected. It's very similar to the argument that government expenditures exploded under Obama, or that government employment spiked, again, as an example of waste, growth in big government, and so on, during the first part of 2010. There are reasons for this, and they point to the proper functioning of government rather than to the excesses of our first Muslim, Socialist, America-hating president. Automatic increases in unemployment compensation payments largely account for any unusual growth in government expenditures, and government employment in 2010 spiked, in April, due to the hiring of hundreds of thousands of temporary Census workers --it dropped back to the pre-Census level two months later.

So: you can complain that Obama didn't do enough to end the recession or to stanch the bleeding, where unemployment is concerned. I agree with that. But the food-stamp situation is just an aspect of that, not a separate indictment, as if there was an Obama plot to put zillions of people on food stamps.

Small Points

For our text today, let's look at a couple of claims that were repeatedly made during the late, unlamented election campaign:

1. The US is heading towards becoming another Greece.

Greece is suffering for these reasons. It has historically ---

• been unwilling or unable to enforce its own tax laws, so tax evasion is so endemic it's become the norm.
• earned its revenues largely from a few industries: tourism, olives, wine.
• had very high public employment (as a percent of total employment)+

All this produced a low-output economy, with a low-energy (if you will) society. If you've ever spent a week vacationing on a Greek island, you probably, at this point, say, "Opaaa!!!" The Greeks have (or had) a society and a culture that was a pleasure to experience, at least as a visitor: devoted, seemingly, to a relaxed pace and an appreciation of life's little pleasures: sipping coffee or wine in the sun for two or three hours in the afternoon; slow, easy late afternoons, late dining, late rising in the morning. Sounds nice, no?

And then came the Euro. German productivity, German GDP/debt ratios, and so forth became the standard for ... Greece! Whatever you know or don't know about those two countries, does that make sense to you?

A full analysis would be long and complicated. But here is a simple fact:

• The US has its own currency and its own central bank. Greece does not.

What does this mean: First, that the US (via the Federal Reserve) can control the interest rates it pays, because those rates are set by the central bank. And when external economic pressures become too great, or creditors begin demanding interest rates that are too high, the US can also let the value of its currency float.  The pressures will drive the currency down in value, which has two benefits to the US: (1) it can repay debt with cheaper dollars*, and its exports become cheaper, thus improving thehealth of the manufacturing and other sectors that produce these exports. Greece can do neither of these things. The only thing Greece can do, and it is a slow and painful thing to do, is reduce salaries and benefits internally. This takes a long time, seriously harms the population's standard of living, and exacerbates the deficit problem because it (like the austerity that has been insisted upon by Germany, and which has further harmed every country where it has been tried) reduces the total amount of money in the economy and the resulting tax receipts.

In contrast, if the international investment community (bond buyers) decides it does not have confidence in the US economy, it will refuse to buy US Treasuries, consequently bidding down the price (which is the same as bidding up the interest rate). This is what has happened to Greece (and Spain, but Spain is a different case). Greece cannot afford the debt service on its national debt, at 6% or 7%. The US, through its central bank, can choose to let rates rise; but if it does not the value of the US currency will fall, which accomplishes the same thing in some ways.

Interestingly, even with the debt-ceiling crisis, the interest rate on US Treasuries has remained at an historic low for the past few years. Also note that there has been a steady chorus of doom-sayers predicting runaway inflation unless the US embarks on a huge austerity program. These people have been wrong for four years now; and those who made bets on higher interest rates have lost a lot of money.

But what is clear is that the U.S. bears no resemblance to Greece, and no matter how bad our debt situation becomes, a Greece-like situation is, practically speaking, not possible.

*Another way of looking at all this is that if you have your own currency, and your debts are denominated in that currency, you control your own fate. If you use a currency controlled by others, others will control your fate.

2. Obama has resolutely ignored the recommendations of his own Bowles-Simpson Commission, including the recommendation to cut individual tax rates substantially.

In fact, there was no "Bowles-Simpson Commission Report." The 18 members of the Commission were unable to agree on a report, in part because of member Paul Ryan's "no" vote on the report proposed to be issued.

This is true, Look it up. It is the reason we are facing the "fiscal cliff," at least the "sequester" part of it. If B-S (!) didn't produce a report  that would be accepted by Congress, the agreement was that Congress (through its "Supercommittee") would produce a deal itself, or the sequester would automatically occur on 1/1/13. All this was according to the Budget Control Act of 2011.

Bye, Bye, Cubs!

The Ricketts paterfamilias, one Joe Ricketts, has this really great idea, see: spend ten million bucks plastering pictures of Negroes all over the country during the coming election season. See, one of the Negroes is, however illegitimately --isn't even an American, or a Christian--, the current President; and the other is a retired minister who is on record as saying the kind of intemperate things that people like Pat Robertson have said about America. The retired minister, see, was the secret mentor of the Muslim president; and if America only knew that, why, the Republicans would sweep the polity and restore fiscal sanity to our country, cutting off the lavish tax money giveaways to all those other Negroes, in the process.

Isn't ten million a lot to spend on this kind of foolishness?

Not when you're confidently expecting the City of Chicago to give you $150 million to outfit your fancy new toy, Wrigley Field.

I admit, it's not much of a sacrifice, electing to forego the exquisite experience of watching the Cubs flail about that storied ballpark. But, like one of their better players, who today announced his retirement, I will henceforth render the attention I give to Chicago sports in the direction of the South Side, where the announcers do not have to congratulate the left fielder on his determination, a decade into his career, to learn how to catch a fly ball.
I don't have an account at AmeriTrade --pace Sam Waterston-- that I can cancel. So I'll have to take at least part of my stand against gutter politics and criminally rich bigots by avoiding the Cubs, from now on.

Small loss. It's July, and the Cubs are safely in last place.

Treason!

Dr. Shakil Afridi, the Pakistani physician who set up a fake health clinic in Abbottabad, the operations of which eventually provided the CIA with strong clues concerning the whereabouts of Osama bin Laden, was sentenced by a Pakistani court to 33 years in prison for treason.


As McClatchy newspapers writes, "The Afridi case illustrates the stark differences between the two countries on anti-terrorism issues. Afridi is regarded as a hero by American officials but as a traitor in Pakistan." The United States had been negotiating, prior to Afridi's conviction and sentencing, to have him released.


Q: How is this case different from that of Jonathan Pollard?

Read more here: http://www.sacbee.com/2012/05/24/4512979/pakistani-in-bin-laden-hunt-sentenced.html#storylink=cpy

Taxes and the Constitution

Response to an op-ed piece in the NYT:

Richard Epstein argues that, in granting to Congress the power to tax, the Constitution restricted the use of this power to what he calls “public goods.” He defines public goods as benefits that must be given to all citizens if they are given to any, and then makes a rhetorical leap: “General welfare … is best read as covering only matters that advance the welfare of the United States as a whole.”

I suspect that Mr Epstein, confronted with a student’s argument that some text is “best read” in one way and not in some other, would ask why. And surely he owes his readers the same courtesy, particularly because he goes on to assert that “the redistribution of income, or ‘transfer payments’ among citizens … doesn’t qualify for taxation …”

It would be instructive to learn how, for instance, the transfer of payroll taxes collected in Chicago to retirees in Florida, in the form of Social Security benefits, does qualify. Or how the expenditure of federal funds to address the problems caused New Orleans by the Katrina hurricane is permissible. And, of course, if the power to tax can be used “to pay the Debts” of the government, does Epstein mean to suggest that the government may not incur a debt, unless the related expenditure passes the test of benefiting the United States as a whole? How is that test to be applied?

But more fundamentally, Epstein should tell us who gets to decide what “advance(s) the welfare of the United States as a whole.” If providing our Congressional representatives and their families health insurance coverage, at taxpayer expense, benefits the United States as a whole, but providing the same benefit to other citizens does not, what is the principle at work?

If we allow the recent trends to continue, until the polity consists of one hundred fifty million citizens who have no income, and one hundred fifty million who each have incomes of one million dollars, so that the average income is a half million dollars, would Epstein argue, first, that the welfare of the United States as a whole is undisturbed, and second, that the power to tax cannot be used to take (by taxation), say, five per cent from the top half and transfer it to the bottom half so as to keep half the population from living and dying in the streets?

I think Epstein has labored too strenuously to produce an argument that, ultimately, says the power to tax cannot be used for any purpose that does not directly benefit each and every American. If we take him at his word, most of the budget of the United States is subject to the charge of being unconstitutional. Maybe that is his point.

A Distant Hope

Fresh news on the Tenth Amendment: The Arizona Secretary of State has requested that the State of Hawaii "officially" confirm that it has the president's birth certificate.

The Secretary, one Ken Bennett, hastened to say that he himself was not a "birther;" he's just accommodating the request of a constituent. One presumes that the youth of Arizona are taught, in their English-only-at-all-costs public schools, that "constituent" and "whacko" are synonyms. If only I were a "constituent," I could request that Mr. Bennett apply to the Government of Mars that Sheriff Joe Arpaio was not, in fact, born in that jurisdiction. Lack of an appropriate response would presumably bar Mr. Arpaio from ballot access.

But please, please, Hawaii: don't respond. Let Arizona keep Obama off the ballot. Expose the crazies for who they are, and let the state go on record as refusing to put the President of the United States on its ballot for the 2012 election.

Is that too much to hope for?

A Healthy Dose of Reality

Suddenly, the press, fresh from a near-consensus that the Supremes would find Obamacare constitutional, is abuzz with the news that Justice Kennedy frowned, or something. As Jeffrey Toobin writes, "All of the predictions including mine that the justices would not have a problem with this law were wrong."

So be it. Having read a big chunk of the 2,000-plus pages of this law, I won't be able to muster much grief at its demise.

Besides, there is an obvious solution for the President, should he wish to avail himself of it. A couple of simple rules would suffice.

First, reduce Medicare support for hospitals providing charity care. Cover only palliative care --the relief of pain and the mitigation of damage that would prevent discharge of a patient: fix broken legs, provide antibiotics. No heart operations, no cancer treatment, no dialysis.

Second, allow insurers to impose a two-year waiting period on anyone applying for new coverage.

Both these rules would probably require nothing more than executive orders. And I can promise that the free market that everyone loves so much --the big insurance companies-- would be only too happy to abide by the two-year rule, given the requirement that they accept all comers.

Assuming the Supreme Court leaves the law intact, except for the hated individual mandate (not necessarily a safe assumption, given the ideological underpinnings and political motivations of this Court), the government could still provide subsidies for the low-income newly-insured.

Cutting the hospital subsidies for charity care would remove a major incentive for tax-exempt hospitals to retain their tax exemptions, with all those odious anti-inurement rules; so there may even be an upside to states and municipalities who could begin putting these huge organizations with their enormous physical plants onto the real estate tax rolls.

Now, many people, seeing the impossibility of enrolling later if they did not enroll now, would probably sign up for insurance; even healthy twenty-somethings who are sensible would do that. But inevitably lots of people would remain without coverage. It would take a few years of horror stories for the message to get across: no, we won't let you die in the street. You can die at home, with morphine, but not with Avastin, or dialysis, or a bypass operation that you cannot pay for yourself. So you might want to think about getting coverage before you need it --because by the time you need it, you won't be able to get it. And no more Emergency Room admission when you're feelin' poorly.

Sorry. It's a tough world. But it's the one you voted for.

Of course, an awful lot of people might flock to Massachusetts.
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Am I Nuts?

Or is half the country? I mean, okay, let's assume you are dissatisfied with the direction Obama has taken things during the past 3 years. You don't think universal health care should be a concern of government. you think that the big banks should have been allowed to fail (that was a Bush thing, but never mind). You opposed the stimulus, even though roughly half of the dollars went to individuals in the form of tax cuts and rebates.

In short, let's assume you are a principled conservative: government ought to run the post office, the military, and maybe some ports and public safety; otherwise it should just get out of the way. Now, on the Republican side you have Romney the business guy, with a demonstrated ability to manage things (the Olympics), with success in governing one of the most liberal states in the union, and so on. An obviously intelligent, stable, reasonable man. Then you have Santorum, who famously compared gay marriage to marriage between a man and an orangutan (or whatever); who clearly opposes contraception, let alone abortion --nemmine the fact that he has fewer kids than one might expect from a good Catholic. And he's been at the public (and government-aligned nonprofit) trough for a long time, and his policy recommendations include bombing Iran.

Why is this a close choice? I'm not even going to talk about Gingrich, who I think even Republicans sense is dangerously unstable, self-aggrandizing, grandiose, and deluded. Why would you seriously entertain voting for Santorum? I mean, where's the substance? Even his own constituents tossed him out of the US Senate by an embarrassing margin. Is it really true that all we care about is how nice someone is?

Recall the Hillary Clinton/Barack Obama primaries. Wasn't there some honest substance there, never mind who you favored? Didn't both of them come across as serious people? And can you really say as much about the Republican alternatives, this time?

Am I crazy? Or is a significant plurality of the American electorate?

Oh.

So Shall you Reap

The Republican establishment, it is everywhere reported, is upset at the prospect (which seems to be fading a bit) of a Gingrich nomination. Of course, he'd be a disaster; Obama would virtually be guaranteed a landslide if they were stupid enough to nominate Newt. but it's nice to see them squirm.

The Republican Party, for almost all of my adult life, has been the party of racism, of cynical manipulation of the basest fears and prejudices of the least-educated portions of our population, even as it has also curried favor with the wealthiest and most privileged. The Republican strategy of division has sold a lot of books --both in its promulgation and in analysis of it-- and done a huge amount of damage to our polity.

But they have only themselves to blame for Gingrich. What did they expect, when they stood silently by, or even actively encouraged, ceaseless ad hominem attacks on President Obama, from thinly-veiled racist comments and arguments to Senator DeMint's "You lie!" called out during the State of the Union address.

When the Republican Senate Minority Leader, at the start of Obama's term, announced in all sincerity that his primary legislative objective would be to see that Obama would be a one-term president, he was in effect saying, to hell with the duties of governing; we will be about naked political advantage, gained no matter the cost. And when the Republican establishment stands silently by when Obama is attacked as a racist, as one who hates his country and wants to subvert it?

Well, then, they deserve Gingrich and worse (of which they have seen, and continue to see, plenty in their own primaries). They are despicable people, and they get what they sought. Unfortunately, their comeuppance threatens to be the punishment of all of us.

So Much Nonsense, So Little Inquiry

Listening to Republican Debate XVII: When a dabbler in policy-think such as I am can spot the inaccuracy, the inconsistency, the enormous and questionable assumption in the statements of a candidate, you wonder why there is never a follow-up question that points it out.

Examples, from flipping on the tv for 3 minutes tonight:

Gingrich: Every American will be an investor when he goes to work (I missed the question, but he was obviously talking about privatizing Social Security), and will have an estate to leave his children, which he doesn't get now. Q: What causes this Everyman investor to make intelligent investment decisions? And what happens when, the year he retires or the year after, the market loses half its value, which has happened twice in the past 25 years?

Santorum: We'll cut the corporate income tax in half. It'll become like a Net Profits Tax (what does he think it is now?). But we'll only do it for manufacturers who keep their jobs in the U.S. They are the jobs that are leaving. Q: Has he never heard of call centers in India, or service bureaus in China or Taiwan?

What a waste of time; these guys are pathetic. Romney included. Huntsman, the only sensible guy in the field, dropped out today. I heard someone on the radio explain it this way: He's not charismatic, he's not exciting.

How about his policies?