Why the Republican Intransigence?

As several commentators have pointed out in the past few days, at root this debt ceiling crisis is being caused by the newly-elected freshman Tea Party House members, who are intransigent in the face of all the negotiations. And they are being stubbornly intransigent because they know that historically, under both parties, Congressional deals that involved increased spending coupled with cuts elsewhere have always resulted in the spending increasing, but the cuts never materializing.

The Democratic Senate's current proposed bill is more of the same - an increase in the debt ceiling (which will occur) balanced by vague and/or illusionary promises of cuts that are unlikely to ever materialize. Note that a huge part of Reid's "savings" in his bill are cuts in military spending that are already planned as we withdraw troops from the Middle East. So he is claiming as "cuts' money that wasn't going to be appropriated or spent anyway. This is typical of the tricks Congress has played over the years, Republicans as well as Democrats.

For example, recall that to make the ObamaCare bill appear to be revenue neutral, Democrats in Congress assumed a 30% cut in Medicare payments to doctors. Yet only a few months later, Congress voted to delay that cut once again (as they have each year for years). This has happened repeatedly over the years, under both parties. So one can understand why the Tea Party freshmen are holding out for some real teeth in any proposal to cut spending.

It is too bad we have to be driven to such a crisis to get this done, but at root I think the Tea Party freshmen are right. If whatever spending cuts that emerge from the final bill don't have real teeth, the odds are the cuts won't really happen.

Recommended: President Obama Is No Longer Tethered To Reality

Peter Ferrara at Forbes has an interesting article - President Obama Is No Longer Tethered To Reality. As the title suggests, his article is not very complementary to President Obama. Nevertheless, he is right on most of the points he makes. President Obama's continuous far-left class warfare is not grounded in reality. About the only detail I can fault him on is neglecting to mention that although the US corporate tax rate is one of the highest in the world (true), the real rate many big corporations pay is far less because of all the special interest tax breaks and exemptions politicians (of both parties) have given them over the years.

I have no doubt President Obama, and many of his liberal supporters, believe all the urban myths they are promulgating. One of the serious flaws in our political system is that a basic understanding of economics, and a basic trust of data, are not among the qualifications for elected federal office. In fact, a majority of federal legislators are lawyers, not a field noted in recent years for caring a great deal about truth.

Recommended: Can't We Do This Right?

Thomas Friedman has an eminently sensible Op Ed piece in the July 26, 2011 New York Times: Can't We Do This Right. As he points out, reckless cuts in federal spending by exhausted politicians working under impossible deadlines and maneuvering viciously for political gain are not likely to be the smartest cuts. A reasonable approach would have been, several years ago, to commission a study of what America needs to stay competitive in today's and tomorrow's world in the way of education and infrastructure, and to have planned the cuts around those needs.

Unfortunately, neither political party seems up to this task.

Recommended: The 4 Percent Universe

Richard Paneck has written a wonderful book about the history leading up to the theory of dark matter and dark energy, the personalities of the people who contributed to this theory, and the theoretical struggles and battles along the way. Well worth reading to get a sense of today’s world of physics, astrophysics and cosmology.

Recommended: The Information

The Information, by James Gleick, is an exploration of the evolution of information from the earliest steps of translating spoken language to writing symbols up to present day quantum processing. Gleick leads us through the evolution of information, exploring the personalities of the key players – Einstein, Shannon, Turing, and many others – while explaining the increasingly complex ideas in terms (mostly) accessible to the layman, but still of interest to the expert in the field. A very good book (see details in the annotated book list on the sidebar)

Recommended: Understanding the World's Greatest Structures: Science and Innovation from Antiquity to Modernity

Teaching Company courses are always outstanding, but this course (No. 1153) by Professor Stephen Ressler of West Point is exceptional. The first nine lectures lead the uninitiated through the fundamental physics of the basic structural elements – columns, beams, arches, etc. – and then the remaining lectures examine great buildings, bridges and structures throughout history in terms of how these structural elements are used, and how engineers learned to exploit these structures to build higher and span greater widths. A nice exploration of the intersection between science, engineering and architecture.

Tax numbers and class warfare

President Obama seems to be on this kick of demonizing "the wealthy", whom he proposes to tax more so that "they pay their fair share". So what do "the wealthy" really pay in taxes? There is an interesting chart here at the Tax Foundation website.

According to the IRS (2008 figures, updated 2010), the top 5% earners ($159,619 or more) in the nation already pay 58% of the total personal income tax collected, while the bottom 50% pay only 2.7% of the total personal income tax collected. Seems to me from these numbers "the wealthy" are already paying more than their fair share. Of course liberals love to play Robin Hood and redistribute the wealth (though I notice that liberal politicians, mostly wealthy, seem to use their tax accountants like any other wealthy people, and avoid as much tax as possible). Still, I find President Obama's constant harping on the class warfare themes pretty tiring, and frankly, pretty insincere.

Recommended: Two Speeches, Two Visions

Also worth reading is this mornings Washington Post opinion piece: Two Speeches, Two Visions.

Recommended: Congress in the Lead

As usual, David Brooks has a reasonable, insightful view of matters in his July 25 New York Times Op Ed piece Congress in the Lead. As he argues, the President has proved in the end not to be much good as a negotiator, so the Congressional Old Guard, who understand how deals are really made, has come in and taken over, and will probably cobble together something that can pass both Houses.

I hope he is right.

My best guess

As the current debt ceiling battle clearly reveals, neither party is yet really serious about reducing the federal deficit or the national debt. The Democrats, and especially President Obama, are still in full denial and determined to not only preserve, but even to expand the current entitlement programs. Indeed, some liberal academic commentators, Paul Krugman in particular, are still arguing that the government ought to increase its spending even more to try to kick-start the economy (because the last stimulus program was so successful at bringing down unemployment???).

The Republicans, though driven by the true believers in the House Tea Party faction to demand some sort of real reductions, are still playing with reductions that are a drop in the bucket compared to the real problem. The most they have seriously proposed is about $4 trillion in cuts over ten years, when the problem is “officially” at least $10 trillion in size, and actually two or three times larger if one counts all the “off budget” deficits which Congress has managed to keep out of the “official” counting.

The voters, according to the polls, are really worried about the deficit and the debt in the abstract, but don’t want any of their own entitlements touched. They would probably not vote for any politician who told them the truth, or who proposed to do what is actually necessary to reduce the deficit and debt.

So my best guess is that when all the political maneuvering is over and we are past the next election, the government will still be borrowing about half of what it spends, and the national debt will still be growing at an alarming rate. In the face of this, there really is only one way left to solve the problem – devalue the dollar. I doubt that the government will “officially” devuale the dollar – that would be political suicide. But they can accomplish the same thing by allowing inflation to rise. Indeed, under this scenario, the government probably cannot even control the inflation rate – natural market forces will drive it up as holders of government bonds lose confidence in America’s financial position and there will be little the Federal Reserve can do about it.

It’s not a pretty scenario, but I see little evidence that our current political system can avoid it.

Would Democrats really vote for a tax increase?

President Obama has been (he hopes) scoring political points by painting the Republicans as intransigent about tax increases (excuse me, "revenue enhancements"). But as several commentators have pointed out over the past few days, even if President Obama had managed to get tax increases into a compromise package, it is not at all clear that enough Senate Democrats would vote for tax increases for it to pass. See, for example, Todd Lindberg's piece Could the Senate Even Pass a Tax Hike?

The debt negotiations – again!

We are a week away from the Aug 2 deadline to raise the debt ceiling, and still there is no agreement. Republicans still insist they will not support any new taxes, and Democrats still insist they will not support any modifications to entitlements. President Obama and Speaker Boehner apparently have been close to agreement with each other several times, but their their respective parties in Congress have apparently been unwilling to go along with whatever they agreed to, and so the negotiations have stalled repeatedly.

So from a larger perspective, what is really going on here?

The Huffington Post is certainly correct that this is a “manufactured” crisis – Congress has raised the debt ceiling repeatedly with little or no fuss, and could do so again. On the other hand, judging by President Obama’s budgets since he took office, the administration has no intention of cutting government spending, and has in fact increased it sharply since Obama took office. So those members of Congress who understand, quite correctly, that government spending MUST be sharply reduced, and soon, have to find some way, some leverage, to bring the administration to the negotiating table. The debt limit is about the only opportunity they have, since negotiations on the budget itself seem never to produce enough leverage.

As to the administration’s insistence on including more revenue in any final deal, I find this unconvincing. The only reason to ask for more revenue is to postpone some of the reductions in government spending that are absolutely necessary, now that the government is borrowing almost half of the money it spends. What is really needed is not more revenue (and taxing the rich more, satisfying as that may be to the Democratic base, isn’t going to produce enough new revenue to make any difference to the problem), but more spending reductions.

As to the Democratic party’s insistence that no entitlements be touched, that is either pure politics or pure fantasy. It is financing the entitlements that is driving the nation to bankruptcy, and so it is to entitlements we must look to cut spending. Of course it won’t be popular – having given the kids candy it will never be popular to take it away again – but we simply cannot afford the current entitlements, especially as the population ages.

As to the administration’s insistence on a large increase in the debt ceiling, so that this issue won’t have to be revisited before the next election, that is pure politics. President Obama would certainly prefer not to go through this bruising battle again during election season, but in the end he will probably be forced to take a short-term extension anyway.

All in all, although both sides have been acting (in public, at least) like petulant children, I think the Republicans are right to press this issue. Some of them may indeed be naïve, or ideological purists, and be pressing it for the wrong reason, or just to satisfy the conservative base. Nevertheless, the nation MUST reduce federal spending by a huge amount (at least $10 trillion over the next 10 years), far more than has been mentioned in any of the negotiations thus far, and this administration has to be driven to at least begin to make the cuts, however painful the political process may be.

Recommended: The Obama Downgrade

The news yesterday that Standard & Poor's Ratings Services was considering downgrading the rating on U.S. bonds was hardly unexpected, as noted in the Wall Street Journal piece The Obama Dowwgrade. The key chart in that piece is this one:

As it shows, under this administration federal spending has skyrocketed, and thus far the administration has produced no plan to reduce it. Even in the current debt talks, apparently President Obama has proposed future cuts, but been unwilling to specify even to his own party exactly what he will cut, which suggests that in fact the promised cuts are probably illusory (when the time comes, he will probably propose politically unacceptable cuts, so that they won't actually occur.)

Playing fiscal chicken in the current debt ceiling negotiations is certainly unwise, but what alternative do the Republicans have if the President in fact isn't interested in actually reducing federal spending?

Harry Potter Epitaph

My 16-year old granddaughter Amanda Pekar, an aspiring writer, wrote this piece this evening, and I thought it was worth posting:

Ten years ago, I read a book that changed my life. For ten years, I have read and reread, discussed, speculated about, walked, talked, acted, and dressed Potter. I've grown up surrounded by all things Potter. And all over the world, so have thousands of others.

Tonight, thousands upon thousands of people, from rabid fanatics to casual viewers, are queuing up to watch the final two and a half hours of film for the very first time. Midnight on July 15th, 2011 has been called the end of an era.

I don't think it is.

In some ways, Potter was really over four years ago, on the night that Harry Potter and the Deathly Hallows hit bookstores. With the final installment of the series in our hands, we no longer had the mystery of Harry Potter. The books were all out; there was no more waiting. The part of the books that I had loved best - the tension of waiting for the next book, the speculations and debates about what was going to happen next, and, most especially, the endless hours of searching through the books, looking for the dropped hints and little clues that Rowling had left for her seekers to find - that was all over the moment I turned the final page. I haven't found anything to replace it since.

But if it was the mystery that gripped me from page one, it was J. K. Rowling's world that drove me over the edge into fanaticism. It was so complete, it seemed she had thought of everything. Owls for the postal service, incredible kinds of candy, a workable monetary system... the wizarding world even had its own slang. It was all those details, the little unimportant things, things that not even C. S. Lewis or J. R. R. Tolkien had bothered to put in their worlds, which caught the seven-year-old me, and made me believe.

The final selling point was the characters - and were hundreds of them. Harry, Ron, Hermione, Dumbledore, Voldemort, Snape, Neville, Luna, Ginny, McGonagall, Lupin, Sirius, Umbridge, Bellatrix, Malfoy, Dobby, Lockhart, Moody, Slughorn, Fred and George, Mrs. Weasley, Tonks, and the list goes on and on and on. Every character developed an individual personality, and in the end, very, very few of them ended up being unimportant.

And Hermione was especially important to me. If I had never run across the character of Hermione Granger, my life would be a very different thing. She showed me that you don't have to be pretty to have friends, that it was all right to be smart and show it. She became a guide for me and even something like a friend when I needed one badly, and I must say there are worse role models. Never once does she try to be anyone other than herself, and never once does she turn her back on her word, or a friend. An excellent role model indeed.

The mystery might be over, but J. K. Rowling's world and the characters that inhabit it are in the memories of everyone who read the books or watched the movies, and that's something that can't end, either tonight, or in another ten years.
Of course, Harry Potter has never had and will never have universal popularity. There are as many complaints about it as there are rave reviews, ranging from the valid to the outright absurd. Rowling's prose is not the best, and only an elementary schooler would claim that it was. There are also plenty of inconsistencies in the series; it isn't perfect. But when it comes to the claims that Harry Potter will lead children to really believing they can do magic or to devil-worship, I have to laugh. Really, children do know the difference between fantasy and reality. They can be far more intelligent than adults give them credit for. My answer to all other complaints is simple. I have enormous trouble understanding anyone who is against anything that could lead to this:

Photo by Marco Okhuizen
Seven year olds. Reading 700 page books. That's real magic.

"I will only truly have left this school when none here are loyal to me," Dumbledore once told Harry. It's not the end of an era unless we let it be. Eventually, yes, our generation and our children's generation are going to look back and laugh their heads off at the mania. But for now, the Potter era will only truly be over when we no longer remember the magic.

So where is reality in all of this?

As the debt ceiling talks drone on fruitlessly, with both sides apparently unwilling to concede their main objective – Republicans to avoid any tax increases, Democrats to avoid any changes to entitlements – and both side pointing fingers at the other side and spinning each day’s events to their own advantage, where is reality in all of this?

Here are the key facts (not claims – facts!):

1) As of June 29, 2011, the Total Public Debt Outstanding of the United States of America was $14.46 trillion and was approximately 98.6% of calendar year 2010's annual gross domestic product (GDP) of $14.66 trillion. In other words, the federal government now owns about as much as the annual value of the entire U.S. economy. According to some rankings, that is the 12th highest debt-to-GDP ratio among major nations in the world (and the higher ones are places like Greece!)

2) For 2011, the projected federal budget deficit is $1.645 trillion, on a total budget of $3.818 trillion – in other words the federal government is spending about twice as much as it takes in.

3) In 2010, Medicare and Social Security together consumed 43%, or slightly under half, of the entire budget. (Medicare at $793 billion was 23%, Social Security at $701 billon was 20%)

4) With the aging of our population, the FUTURE unfunded Medicare and Social Security liabilities over the next 75 years are variously estimated at between $70 and $140 trillion under current plans.

Bases on these numbers, a reasonable person might conclude:

a) Spending twice as much as we take in is clearly unsustainable. Spending must be reduced, and reduced drastically (by about half just to stop the INCREASE in the debt, more than that to begin to reduce the debt).

b) There is no way to increase revenues enough to reduce the deficit. If we commandeered the entire GDP of the nation, it would just about cover the deficit.

c) There is no way to make a significant dent in the deficit without reducing the amount spent by Social Security and Medicare/Medicaid, unless we are willing to zero out almost everything else in the federal budget, including the pay and pensions of the President and Congress.

So I conclude that, on balance, the Republicans have the right side of this battle. They might be wise (or at least generous) enough to allow the Democrats a few token tax increases to save face, but in fact this problem is only going to be solved by cutting federal spending, and cutting it by a lot. And beyond that, entitlements are going to have to take a significant share of the cuts, however much pain that may cause in the nation.

Liberals will scream bloody murder (as they are doing) and make all sorts of emotional claims about the poor and elderly being put out on the streets if we make any cuts -- and that may even be true (though I think it unlikely) -- but it is irrelevant. We simply cannot afford the current programs, and the pain we will feel from making the necessary cuts will be nothing to the pain we would feel if the nation goes bankrupt and the entire world financial system simply stops loaning us money.

The debt stalemate - whose to blame?

The talks about raising the debt ceiling seem to have come to a stalemate, and of course (predictably) both sides are loudly pointing the finger at the other side, and spinning their intransigence as the other side's fault. No doubt there is more than enough fault to go around. The liberals refuse to cut entitlements, which is where almost all the debt problem lies, and the conservatives are adamant about no new taxes.

So in the midst of all this political clamor (sound and fury signifying nothing), what would be the terms of a rational deal? Where would we find such a deal?

Well, one might try the President's own Debt Commission. He established a bipartisan commission and charged them with finding a solution to the debt problem, and they did. They reported it in detail in their December 2010 final report. Here, from pages 15-16 of the report, are the major recommendations:

1) Discretionary Spending Cuts: Enact tough discretionary spending caps to force budget discipline in Congress. Include enforcement mechanisms to give the limits real teeth. Make significant cuts in both security and non-security spending by cutting low-priority programs and streamlining government operations. Offer over $50 billion in immediate cuts to lead by example, and provide $200 billion in illustrative 2015 savings.

2) Comprehensive Tax Reform: Sharply reduce rates, broaden the base, simplify the tax code, and reduce the deficit by reducing the many “tax expenditures” – another name for spending through the tax code. Reform corporate taxes to make America more competitive, and cap revenue to avoid excessive taxation.

3) Health Care Cost Containment: Replace the phantom savings from scheduled Medicare reimbursement cuts that will never materialize and from a new long-term care program that is unsustainable with real, common-sense reforms to physician payments, cost-sharing, malpractice law, prescription drug costs, government-subsidized medical education, and other sources. Institute additional long-term measures to bring down spending growth.

4) Mandatory Savings: Cut agricultural subsidies and modernize military and civil service retirement systems, while reforming student loan programs and putting the Pension Benefit Guarantee Corporation on a sustainable path.

5) Social Security Reforms to Ensure Long-Term Solvency and Reduce Poverty: Ensure sustainable solvency for the next 75 years while reducing poverty among seniors. Reform Social Security for its own sake, not for deficit reduction.

6) Process Changes: Reform the budget process to ensure the debt remains on a stable path, spending stays under control, inflation is measured accurately, and taxpayer dollars go where they belong.

Sounds to me pretty much like what the Republicans have been asking for in the negotiations. So if the president won't agree to the perfectly obvious recommendations of his own bipartisan debt commission, I have to conclude that despite the liberal spin, the talks are stalled mostly because the liberals won't face the reality that their cherished entitlement programs are bankrupting the nation.

Quotation of the week

As I watch the childish playacting and finger pointing going on between the politicians of both parties in Washington this week, I am reminded of this quotation from Albert Einstein: "Only two things are infinite, the universe and human stupidity, and I'm not sure about the former."

Corporate taxes

Politicians are arguing, among other things, about whether US corporations get taxed enough. As usual, there is little factual content to the argument - just a lot of emotional appeals. So what are the real facts? A little web research reveals two interesting facts:

1. US corporate tax rates, at 39%, are among the highest in the world. In 2011 among the OEDC (developed) countries only Japan's corporate tax rate is higher

2. Despite that, the proportion of GDP that US corporations pay in federal tax has been dropping for years, as the following chart from the Huffington Post shows:

The reason for the drop in corporate tax revenue, of course, is the myriad special interest deals, loopholes, deductions, exemptions, etc woven into the tax law by Congress over the years.

As I noted in a post months ago, General Electric paid no (zero, nada!) taxes in 2010, on $14.2 billion in profits in 2010. In fact, they got back $3.2 BILLION in government tax credits. Similarly, Exxon Mobile paid no federal taxes in 2009 on $35 BILLION in profits. And so on and so on.....

Clearly we don't need to raise corporate tax rates more (tax the greedy rich corporations), much as liberals like to make that populist argument. Clearly we need only reform the tax law to eliminate all the special corporate exemptions in the present tax law. Then we could probably afford to lower corporate tax rates to a level more in line with our worldwide competitors.

How good is a $4 trillion “grand bargain”?

The administration is talking today of a possible ”grand bargain” with Republicans to cut as much as $4 trillion in spending over the next 10 years. It sure sounds impressive, until one realizes that according to the CBO (Congressional Budget Office) under the current budget projections, the debt is scheduled to grow by $10.5 trillion over the next decade to about $21 trillion. So $4 trillion, while certainly better than nothing (which is what the administration has given us to date), isn’t nearly enough to stop the hemorrhaging. In fact, spending has to be reduced and/or revenues increased by about $10.5 trillion over the next decade just to halt the debt increase, let alone pay any of it down.

But at least Washington politicians (under pressure from Tea Party Republicans) are now beginning to get real about the problem, even if they haven’t yet progressed beyond token proposals.

Whatever either party says, however much they spin any deal they make, however much political credit they try to take, in the end they have only succeeded when they stop the INCREASE in the federal debt. If they haven't done that, they haven't succeeded yet.

Interesting graph

Jay Cost, in the Weekly Standard blog, has an interesting chart in his post Morning Jay: Why Won't the GOP Agree to a Tax Increase?. Here it is:

There are several things to observe. The first is that historically over the past 40 years the federal government has collected about 18% of GDP in revenue (green line), and spent a little over 20% (red line), which is why we have the current debt problem.

The second is that the CBO (Congressional Budget Office) projection of what will happen under the current budget projections departs markedly from this long-term average and climbs sharply into "Greek default land" in only a few years. Clearly this is unsustainable.

The administration claims all sorts of terrible things will happen if we cut back spending to what it has been (as a percentage of GDP) over the past 40 years. That seems a bit of a stretch, since the government seemed to do fine at its historic levels of spending (though of course building up a big debt as it did so).

For the long term, clearly the government has to get revenue (green line) and spending (red line) to at least the same percentage of GDP, if it is to stop increasing the federal debt. Preferably it should strive to get some surplus so it can pay down some of the current debt, if for no other reason than to have room for the option of more "stimulus" spending in future recessions (if one is a believer in Keynesian economics).

But the main message of this chart is simply that the administration's current budget plans are simply a fantasy. There is no way we could sustain them. And three years into his presidency, President Obama has yet to propose a plan that gets us out of this mess -- that clearly is the Democratic party's biggest failure to date. Republican have yet to propose a viable plan either, but at least they are striving to cut the spending, and forcing the administration's hand on this.

Half the US doesn't pay any taxes

Here is an interesting statistic - in 2009, according to the Tax Policy Center, a Washington research organization, about 47% of American families didn't pay any federal taxes at all. So while we argue about whether or not to tax the wealthiest 5% of the people more, almost half the nation isn't paying any taxes. Funny how this doesn't get mentioned much in the current debate.

Perhaps the fairest thing is first to get everyone to pay SOME taxes, before we raise the tax rates more on the top earners.

Recommended: Politics Versus Reality

Thomas Sowell, a plain-spoken economist (a rare breed) from Stanford University, has a piece worth reading on today's RealClear Politics page: Politics Versus Reality. As he says in the opening paragraphs:

It is hard to understand politics if you are hung up on reality. Politicians leave reality to others. What matters in politics is what you can get the voters to believe, whether it bears any resemblance to reality or not.

Not only among politicians, but also among much of the media, and even among some of the public, the quest is not for truth about reality but for talking points that fit a vision or advance an agenda. Some seem to see it as a personal contest about who is best at fencing with words.

His immediate point is about the current debate over whether or not to raise taxes, but it fits lots of other issues as well: the climate change controversy, the creationist controversy, economic policy, etc. etc.

I have observed that there are really two kinds of people in the world, whom I will label "the believers" and "the seekers". Believers (the vast majority) are sure they already know the truth (whatever they conceive to be the truth), and cherry-pick the evidence to support their views, ignoring contrary evidence. The seekers (a small minority of the population) actually pay attention to evidence, because it matters more to them to get closer to the truth (in this complex world, we probably never understand the full truth in all its detail) than to prove their current views are right.

In the current debt/tax debate, this is clearly in operation. Lots of positions are being asserted, with lots of emotional appeals, but precious little evidence about how this or that policy has actually worked in the past is ever discussed, even though almost all the policies being discussed have been tried at one time or another in the past, either here or in other countries.

An interesting statistic

Jeffery Anderson, on the Weekly Standard Blog, says:

When the Obama administration releases a report on the Friday before a long weekend, it’s clearly not trying to draw attention to the report’s contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama’s economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt.

The report was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job.

In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.

Recommended: The Rise and Fall of Al Gore

Walter Russell Mead has an interesting series of posts discussing the rise and fall of Al Gore's climate change campaign. These appear tin three parts: (1) The Failure of Al Gore: Part One, (2) The Failure of Al Gore: Part Deux, and (3)The Failure of Al Gore Part Three: Singing the Climate Blues.

As Mead says in part three

The serial rise and fall of these vacuous civil society movements and the peculiar grip they exercise over the minds of some otherwise intelligent people is an important subject: why do so many people who want to help solve global problems waste so much time and money and, sometimes, do so much harm? Is there some way to harness that energy and idealism to causes and strategies that might do more good? What does the repeated rise and fall of clueless but well educated and well placed enthusiasts teach us about the state of our civilization and the human condition? Are there ways we could nip these Malthusian panics and idealistic feeding frenzies in the bud? Is there some way we could teach future generations to be a little smarter about politics and power so that the 21st century, which is going to have plenty of serious problems, might spend less time chasing mares’ nests?

More than that, the former vice president’s troubles don’t just reflect his personal ideas and limits. Gore’s errors are exemplary: by studying where he goes wrong we can see how a substantial section of our ruling elite has lost its way. Al Gore is steeped in the Blue Social Model that I’ve been posting about; his social imagination has been so molded by modern American progressivism and the liberalism of the late 20th century that he literally cannot conceive of solutions in any terms the conventional center-left wisdom doesn’t make room for.

Re the last post

Re the last post, I just ran across this wonderful quote from Charles Krauthammer:

He himself, as we just heard, said you can’t reduce the deficit to the levels we need without raising revenues. Then he talks about the [tax break for] corporate jets, which he mentioned not once but six times.

I did the math on this. If you collect the corporate jet tax every year for the next 5,000 years, you will cover one year of the debt that Obama has run up. One year.

To put it another way, if you started collecting that tax at the time of John the Baptist and you collected it every year — first in shekels and now in dollars — you wouldn’t be halfway to covering one year of the amount of debt that Obama has run up.

As for the other one, he mentions again and again, the oil depreciation tax break — if you collect that one for 700 years, you won’t cover a year of Obama deficits.

And then here’s my favorite. I worked it out in the car on the way here. If you collect the corporate jets and the oil tax together — get all the bad guys and the fat cats at once — and you collect it for 100 years, it covers the amount of debt Obama added… in February!

And he pretends that he’s the serious adult at the table.

Millionaire's tax breaks - Who's right

As we come down to the wire on the issue of raising the debt ceiling, both Republicans and Democrats are playing childish political theater in public. One only hopes they are being more adult in their private meetings.

Republicans insist on no new taxes (and, in fact, repealing a tax break is a tax increase, whatever the Democrats say). President Obama insists new taxes are needed, and keeps harping on a few high-visibility tax breaks for the wealthy to make his point. So who is right here?

Well, if President Obama managed to repeal the few high-visibility tax breaks he keeps talking about it would make almost no discernible difference to the deficit. For example, the GAO calculates that eliminating the corporate jet tax break would reduce the deficit by about $3 billion over the next 10 years - certainly worth doing, but hardly a drop in the bucket compared to the estimated $50 TRILLION increase in the federal debt over that same period under the current budget.

Certainly it would be worth overhauling the tax code to eliminate all special interest tax breaks. As I have argued in my free market series, government interference in price signals - whether through subsidies (like tax breaks) or price controls - always makes things worse. But in fact it would take HUGE tax increases (in the range 30-40%) on everyone to make a dent in the deficit under the current budget, so in fact reducing spending has to account for most of the savings, unpalatable as that will be to liberals. And in fact most of the reduced spending has to come from entitlement programs, because that is where most of the money is going.

So, like it or not, a realistic solution to our deficit problem has to come mostly from cutting spending - raising taxes isn't going to help much.