Category: Politics

Wall Street Is Already Reacting Negatively To Debt Ceiling Fight

Wall Street Is Already Reacting Negatively To Debt Ceiling Fight:

[UPDATE: Forgot to add the previous paragraph that follows.] In other words, and completely contrary to what GOP leaders are saying, two major financial market participants are warning that there will be a Wall Street-related price to pay if the debt ceiling is not raised as needed.

The best indication of all that the market has already started reacting negatively is the current trading of credit default swaps on U.S. debt. As of late May, the number of CDS contracts — essentially insurance policies on the possibility of a default — had risen by 82 percent. Equally as important, the cost of a CDS — the best indication of how much riskier U.S. debt has become — rose by more than 35 percent from April to May. Last week I spoke to a number of people who calculate such things for a living, and they said this change means that the interest rate the U.S. government has to pay has already increased by as much as 40 basis points compared with what it otherwise would be. This means higher federal borrowing costs and deficits, and overall higher interest rates on everything from car loans to mortgages to credit cards.

(Via Capital Gains and Games | Washington, Wall Street and Everything ….)

Grade school social studies class: Congress has the Power of the Purse.

A Chicken in Every Pot

How Will the Debt Limit “Game of Chicken” End?:

“The Republican strategy seems to be to ram their Medicare abolition plan into law within the next two months – Treasury says the ‘drop-dead’ date for raising the debt limit is August 2 – before people learn what they are really doing to Medicare.”

(Via Capital Gains and Games | Washington, Wall Street and Everything ….)

Isn’t this exactly what the Republicans accused Palosi and Reid of doing with “Obamacare?”

The Republican Anti-Tax Position Is Rapidly Crumbling Under the Weight of Deficits

The Republican Anti-Tax Position Is Rapidly Crumbling Under the Weight of Deficits:

“There is some evidence that House Republicans are starting to get the message that their tax position is crumbling. On May 11, a senior Republican staffer told Atlantic reporter Derek Thompson that his party’s position on taxes is intellectually dishonest. ‘There are two worlds,’ the aide said. ‘One world is political and the sole objective is to maintain party message. The other world is real and in the real world fixing the deficit is a matter of national survival. When you get down to the real world decisions, it’s not about whether to raise taxes; it’s about the ratio of spending to revenue increases.’“

(Via Capital Gains and Games | Washington, Wall Street and Everything ….)

At some point you have to actually govern.

Is heavy taxation bad for the economy?

Lane Kenworthy demonstrates that anti-tax zealots’ predictions of economic apocalypse are about as credible as other doomsayers.

Is heavy taxation bad for the economy?:

Taxes reduce the payoff to entrepreneurship, investment, and work effort. If taxation is too heavy, these disincentives will weaken a nation’s economy. But at what point does the harmful impact kick in? And how large is it?

Continue reading “Is heavy taxation bad for the economy?”

Yes, Macroeconomics 101 is Correct

“Some Simple Deficit Reduction Arithmetic”:

Kash Mansori notes that it takes more than a $100 cut in government spending to cut the deficit by $100. The reason is fairly simple. A cut in government spending causes output and income to fall, and the resulting fall in tax revenue increases the deficit offsetting some of the gain from the cut in spending…

When the policies they want to pursue have large negative effect on the deficit, the economy, employment etc. Republicans invent a story where the pain goes away. Somehow, the deficit actually falls, output goes up, and employment is stimulated even if it runs counter to obvious intuition. When tax cuts are the goal, we are told that tax cuts lead to so much additional effort that revenues actually go up and this reduces the deficit. We can cut taxes, and reduce the deficit! This magical answer is, of course, nonsense, but Republicans were able to hoodwink quite a few people into believing this.

(Via Economist’s View (Mark Thoma).)

Read Mansori’s entire article.  It’s worth it.  A few nuggets:

Somehow, this simple exercise in macroeconomic math seems beyond the reach of policymakers around the world.

  • Many Republicans (and some Democrats) in Washington continue to believe that they can close a $1 trillion deficit by simply cutting $1 trillion in spending, and are apparently hoping to use the debt ceiling vote to do exactly that.
  • The Cameron government in the UK embarked on an austerity program last year to try to reduce its budget deficit, and now mysteriously keeps missing its deficit reduction targets as the UK economy shrinks.
  • The Greek government was forced into enacting a number of austerity measures last year, and… surprise, surprise… is now missing its deficit targets.

Let Them Eat Cake

Social Insurance Keeps Millions Out of Poverty:

Why would we even think of reducing anti-poverty programs before increasing taxes on the wealthy, say to where they were before George Bush decided that we needed to get rid of Clintons budget surplus (one of the few things he did well)?:

Continue reading “Let Them Eat Cake”

Do Conservatives Ever Tell the Truth?

Yes, but not for long.  Mark Thoma shoots down the conservative think tank site that caught the Wall Street Journal, a paper I no longer subscribe to, in a lie and immediately reversed itself for “editorial reasons.”  There is no truth in conservative ideology when intellectual dishonesty of this sort is the rule.

“The Disappearing Tax Foundation Blog Post”:

I recently noted a post from The Tax Foundation accusing the Wall Street Journal editorial page of of ‘a textbook example of how to lie with statistics.’

Bruce Bartlett points to a Tax Foundation article that accuses the WSJs editorial page of ‘a textbook example of how to lie with statistics.’: The Wall Street Journals Misleading Income Chart. When the Tax Foundation questions someones reliability, you know a line has been crossed.

Brendan Nyhan notes today that the Tax Foundation post has been taken down [cached copy]:

… At this point, youre probably wondering why this post doesnt contain any links to the Tax Foundation website. The reason is that this sort of intra-movement criticism has a short shelf life — so short that the post had already vanished by this morning. Scott Hodge, the president of the Tax Foundation, confirmed that the post had been removed: ‘we withdrew the post for editorial and content reasons.’ He did not elaborate further.

Then, later, he does elaborate further — that is, if we never got around to it qualifies as elaboration:

Update 5/16 4:51 PM [EST]: More from Hodge via email:

Like all organizations we have an editorial process. The piece was posted before I could edit it. I thought it needed revision and editing. We never got around to posting a satisfactory version. Its a moot point now.

Leaving the original post up, and then doing a follow-up post explaining the problem with the first post (which has not yet been explained other than someone thought ‘it needed revision and editing’) would have been a more honest approach.

Either the editorial process is so bad that false claims appear on the site that are later removed without explanation — not a very encouraging sign for the site — or the post was removed because it told the truth. In any case, my statement that the Tax Foundations reliability is questionable is certainly validated by this episode.

(Via Economist’s View (Mark Thoma).)

I Feel Like A Black Republican, Too

TNC, quotes a commenter named David White who must have been channeling me.

I Feel Like A Black Republican:

You know, normally something this stupid wouldn’t bother me, but this story really gets under my skin. If they can try to paint Common as a ‘dangerous black man,’ what black man is immune? If they think Common is vile, then I know they have no use for my black ass. Common is beyond the pale, Michelle Obama hates whitey, Eric Holder is protecting the New Black Panther Party, Shirley Sherrod is discriminating against white farmers, Barack Obama is giving reparations to black people? Conservatives, do you realize how stupid this sounds to black people?

…But shit like this is what prevents me from even getting to the point where I’d give their policies a fair hearing. And I know there are some Republicans and conservatives here, and I say that you have no chance of getting any kind of support from black voters as long as the leaders of your party are pulling these kinds of stunts.

(Via Ta-Nehisi Coates :: The Atlantic.)

Faux News is Complete Bull!@#$

Jon Stewart ethers Faux News:

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Tone Def Poetry Jam – Lyrics Controversy
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook
The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Tone Def Poetry Jam – Lyrics Controversy
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

Healthcare is not a Normal Good

Freakonomics » New Freakonomics Podcast: Does College Still Matter? And Other FREAK-y Questions Answered.

[Healthcare] is virtually the only part of the economy where I can go out and get any service I want—cancer treatment, open heart surgery, have a wart removed, whatever it is—and I pay $3 for it or $5 for it or nothing, even if it costs $50,000 or $100,000.  I mean, imagine if you had the same situation with automobiles.  Where I could show up at the car dealership and I could say, ‘I want the Mercedes for free.’  Well, people say, ‘You can’t have the Mercedes for free.  You have to pay $50,000 for it.’  You say, ‘Why not, I have an inalienable right to free healthcare.  Right?  Why don’t I have an inalienable right to a free Mercedes?’

I love Levitt and Dubner, but here they lose their way.  They miss an important moral dimension to the argument over healthcare.  The best response was in the comments from “Miichael[sic?]”

To extend your Mercedes analogy, what usually happens is that you are told by your personal Car Expert that you need a Mercedes or you will die. You can’t afford one, and your Car Insurer says they won’t pay for one. So you walk. And you die.