Thursday, April 28, 2005

No input from Democrats on Supreme Court nominees?

I'm way out of my element pondering about this filibuster stuff, but in my naivete, it seems like the obvious reason the Republicans want to end judicial filibusters has little or nothing to do with the ten out of two hundred or so judicial nominations that Democrats have blocked on lower court nominations, and everything to do with the Republicans being able to make nominations for the two or three likely supreme court vacancies during the next four years without having to make choices that have bipartisan appeal.

Is that the case?

Monday, April 25, 2005

WSJ editors don't know the meaning of "Progressive"

The WSJ's misdirection of the day seems to be a study that shows that the income tax code is just as progressive today as it was in 1979.

The basic fallacy of My first reading of the reseach paper behind this op-ed suggests that the WSJ editors are referencing the share of tax revenue collected from different segments of the income distribution, but fail to account for the change of the income distribution. The share of income for those in the top tenth of one percent of the population roughly TRIPLED since 1979, but the fraction of federal taxes paid by the top tenth of a percent of earners went up much less than that.

Here's a link to the paper apparently referenced by the WSJ.

If the tax code in 1999 was as progressive as it was in 1979, the fraction of taxes paid by the top one-tenth of a percent of the population would have more than tripled in the 20 years from 1979 through 1999; instead, the top tenth of a percent tripled their income, but paid considerably less than three times the share of taxes.

That's a regressive shift. So, while the tax code remains "progressive", according to the authors of the quoted paper, it is considerably LESS progressive than it was in 1979.

So. Two possibilities: either the editors of the WSJ are unable to compare progressivity of two eras because they were confused by a relative tripling of incomes; or the editors of the WSJ are once again pulling a rabbit out of a non-existant hat.

Hop, hoppity hop?

Saturday, April 16, 2005

Heritage Foundation Doesn't Understand the Stock Market

The Heritage foundation released yet another Social Security calculator, this one supposedly based on "extensive demographic information and econometric modeling".

As with most of the other calculators out there, this one spits out a single number for an estimated benefit you "could" receive. Yes, you "could" receive that benefit, if your stock market account happens to have the exact rate of return presumed by the Heritage Foundation. But this model has two basic flaws. First, it says absolutely nothing about risk. It doesn't say, you could get a benefit of X, or if you're lucky, 2X, or if you're not so lucky, 1/2 X. It says, you can get a return of X.

And not only that, but X is based on the presumption that the stock market in the next 50 years is going to look like a repeat of the stock market during the past 50 years. As analysts always say, "past performance is not a guarantee of future returns". Economists in general project future returns are likely to be somewhat lower than recent historical returns.

Down in the Heritage Fondation's small print we read:


This calculator is an educational tool designed to help citizens better understand Social Security. It is not intended for use as a retirement planning tool. The data, assumptions, and formulas used in this calculator are based on the best information currently available to The Heritage Foundation.

So, the Heritage Foundation says their model isn't good enough for you to plan your future on, but it is good enough that you should gamble with the most predictable part of you retirement security.

Here, fishy fish fish!

Friday, April 15, 2005

Wall Street Journal embraces Complex Tax Code

The Wall Street Journal editors today endorsed leaving the AMT unreformed until inflation forces millions more taxpayers to pay the tax and it can replace the income tax.

Many economists also believe that tax reformers could do worse than letting the AMT grow until it actually replaces the regular code . The AMT is a modified flat tax with lower rates (26%, and 28% on more than $175,000) than the current top marginal rate of 35% (or about 37% with PEP and Pease). It would have to be indexed for inflation, and its wicked complexity would have to be undone so it didn't raise marginal rates for most Americans. But moving in the AMT's direction of top marginal rates in the 20-percent range and fewer deductions is where useful reform will have to go.

For those of you afflicted by the tax, the WSJ editors think it should be used as a bargaining chip to force Democrats to accept other tax reforms the WSJ considers a higher priority.

So, for those of you among the 34 million expected to be hit by the AMT within the next few years, you now know the WSJ editors don't really care if you get hit with the AMT, and that the WSJ editors don't really want tax reform to minimize complexity, but instead, they want tax reform to minimize taxes on people richer than you who work for less of their income than you do. They'd go along with reform of the AMT, but only if as part of a bargain.

The price of admission on the GOP tax cut wagon seems to be getting higher. Must be all of Tom Delay's legal defense bills and the high cost of trying to sell the American public on phasing out Social Security.

Wednesday, April 13, 2005

Tom Delay's New Gerrymandering Plan

It appears that Tom Delay, having won the battle of redistricting Texas's congressional districts, has his sights set on redistricting the federal judiciary . This, after recognizing in retrospect that it is inappropriate to simply go for vigilante justice against wayward judges.

Go, Tom!

Conservatives laud Bill Clinton

Who would have thunk that conservatives would laud Bill Clinton for his proposal to reform Social Security? You'd think Clinton was John F Kennedy, to hear the gushing praise heaped on Clinton's alleged proposal to privatize Social Security.

Since conservatives seem to think Clinton knew how to save Social Security, let's set the way back machine to 1998 and 1999, and see what Clinton actually proposed.

PRESIDENT CLINTON: I believe, first of all, we have to reform Social Security in a way that strengthens and protects the guarantee for the 21st century. We should not abandon a basic program that has been one of the greatest successes in our country’s history. Second, we should maintain universality and fairness. For half a century this has been a progressive guarantee for citizens. We have to keep it that way. Third, Social Security must provide a benefit that people can count on. Regardless of the ups and downs of the economy, or the financial markets, we have to provide a solid and dependable foundation of retirement security. Fourth, Social Security must continue to provide financial security for disabled and low-income beneficiaries. We can never forget the one in three Social Security beneficiaries who are not retirees. And, fifth, anything we do to strengthen Social Security now must maintain our hard won fiscal discipline. It is the source of much of the prosperity we enjoy today.

And then there was the Heritage Foundation's assessment:

Clinton's Newest Social Security Plan: From Bad to Worse

including this gem:

  • Using general tax revenues for Social Security would set a dangerous precedent. Social Security has always been self-funded through an explicit tax. However, the IOUs added to the trust fund under the President's plan would have to be repaid with general tax revenues. Funding the system with other tax dollars would break down what little fiscal discipline remains and open the door to more irresponsible spending.

  • So. It sounds like Heritage is flat out against the idea of issuing real treasury debt to finance a "transition" to private SS accounts, doesn't it!

    How about this. Since conservatives praise Clinton on Social Security, why not just use his guiding principles? Oops. The proposals put forth by the Bush administration fail every one of Clinton's guiding principles.

    Monday, April 11, 2005

    Bipolar Disorder?

    You read them , and decide .

    Wednesday, April 06, 2005

    NRO Acknowleges Trust Fund Generates Real Interest Payments, Too!

    A couple weeks ago, the WSJ editors acknowledged that the Social Security trust fund bonds generate real interest income.

    Now, National Review says the same thing:

    In fiscal year 2004, Cato Institute scholar Michael Tanner reports, the Treasury collected $570.7 billion in payroll taxes and credited Social Security with $89 billion in interest. Social Security recipients received $501.6 billion in benefits. This $158.1 billion balance — which could have funded personal-retirement accounts — instead flowed into general revenues.

    Both the WSJ and NRO want to have it both ways. First, they say the trust fund is worthless. Then, they say at the same time that the interest paid on the worthless trust fund bonds can be used to put real cash into private accounts.

    The NRO says the interest paid is so real that it flowed into general revenues last year. That's sort of like saying the interest on savings bonds flows into general revenues as long as you don't cash in your savings bond. Well, maybe, guys, but the revenue had to flow OUT of general revenues to pay the interest, so, for savings bonds, and for the SS trust fund bonds, the interest payments really are just bookeeping entries, until the bonds are redeemed.

    But the basic point is this. The WSJ editors, and National Review, are making a political statement. They have no qualms about diverting the Social Security trust fund assets and interest into private accounts. But they do have qualms about using the trust fund assets and interest to pay traditional Social Security benefits. They've never liked Social Security, they've always wanted to get rid of it, and they're playing gamees with the trust fund - which they can claim as an asset if it is a way to phase out Social Security, and a liability if it must be used to pay benefits to people who've paid Social Security taxes all their working lives.

    But come on, guys. You can't have it both ways. If the trust fund is good enough to generate interest payments that can be diverted to private accounts, it is good enough to pay the benefits that congresses for the past 70 years have structured it to pay. No more whiny, hypocritical conservatism, please.

    Tuesday, April 05, 2005

    When will Bush have Spent the Trust Fund?

    You know those national debt clocks?

    I think someone should make a "He Spent the Trust Fund" countdown clock. It would project the day when the Bush administration has spent all the money in the Social Security Trust fund.

    Technically, I think the day has already come and gone, since the gross public debt has increased by more than $2 Trillion since Bush was inaugurated in 2001, while the trust fund has only about $1.7 Trillion.

    But if you go by the increase of the publicly held debt, we've only borrowed about $1.2 trillion, and the administration doesn't project it will have borrowed $1.7 Trillion until fiscal year 2006.

    Monday, April 04, 2005

    Go Tar Heels!

    A small tribute to the group of players Matt Doherty brought to Chapel Hill, and their wide open style of play, and their awesome season this year under the classiest college coaching act since Dean Smith.

    And a tip of the hat to the other 64 teams that went home with a loss in the tournament.

    Illinois .vs. Carolina was one of the classics. Wish both team could've won. Glad my team did.

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