Archive for October, 2010

1098 Naysayers: Put Your Money Where Your Mouth Is

October 25th, 2010 8 comments

The Sky-Is-Falling Crowd says that 1098’s income tax will be immediately extended to lower earners.

If you’re so sure, here’s a chance to make a buck on your certainty. Fifty bucks, actually.

Here’s the bet:

If, as of April 15, 2014, Washington-state taxpayers with incomes below $200,000 (individual filers) or $400,000 (joint filers) are paying Washington state income tax on their income, I will pay you $50.

If they are not, you will pay me $50.

I will take up to ten of these bets with ten different individuals.

Republicans on Entitlements: Don’t Cut Benefits, Don’t Raise Taxes. Hmmm.

October 15th, 2010 5 comments

71% of ‘pubs don’t want to raise taxes to pay for those ebil entitlements, and 59% don’t want to cut the benefits that those ebil entitlements provide.

And they think Democrats are fluffy-headed utopians?

Americans Disagree on How to Fix Entitlement Programs.

Barry Ritholtz Turns It ON: “Time for Criminal Charges To Be Filed.”

October 14th, 2010 Comments off

Corporations that get free speech rights also have liability for their own criminal actions. Its way past time we start forcing those responsibilities to have some meaning.

This is not about keeping deadbeats in their homes, as a few idiots and liars have asserted. The corporate sympathizers who are too busy fellating the bank to recognize what is going should be ignored. This is about fundamental property rights and the Rule of Law in the United States — nothing less.

Emphasis mine.

Time for Criminal Charges To Be Filed . . . | The Big Picture.

1098: If Millionaires Vote With Their Feet, They Apparently Don’t Care About Income Taxes

October 14th, 2010 2 comments

All the gnashing of teeth and tearing of breasts about “the most productive members of our society” voting with their feet and abandoning our state if we institute an income tax has always seemed a little … overblown.

Turns out it is. If it was true, you’d expect to find a much smaller percentage of millionaires in places that have (high) income taxes.

But you don’t:

The red line is the “trend,” showing the correlation between the two variables. That correlation is vanishingly small: .00003. Yes that’s four zeros.

Notice in particular the blank area the size of Siberia in the lower right, where you should be finding lots of millionaires scurrying to avoid income taxes. Hmm.

You do see New Hampshire and Sarah Palin’s Socialist Utopia of Alaska down sort of over there, but that just tells me that some subset of millionaires seems to like … cold places.

Of the 12 states with the highest concentration of millionaires, 10 (83%) have above- or at-trend (in this case, median) income tax rates.

Many thanks for the effective tax rate data to Eric de Place of Sightline Daily, who did the yeoman’s work of compiling it based on the wonderfully detailed but rather unwieldy Tax Foundation data (XLS).

Millionaires percentage: Phoenix Affluent Marketing (PDF).

Pubs Don’t Cut Spending. They Just Refuse to Pay Their Bills. Video.

October 12th, 2010 2 comments

Ted K gives us this in the comments:

Un. B. Effing. Lievable.

Brad Delong (bold is mine):

As Milton Friedman liked to say, and as he did say when he — I am told — yelled at George W. Bush during his 90th birthday celebration at the White House — to spend is to tax. … If somebody claims to have cut your taxes without cutting spending, do not believe them: all they have done is to shift taxes forward into the future, and made taxes on current consumption lower while making taxes on long-term transfers of wealth into the future higher.

Government Is So Inefficient and Poorly Managed

October 10th, 2010 3 comments

The Office of Management and Budget reporting on tracking for Recovery Act funds:

Of the 74,244 prime recipients required to file last quarter, just 352 failed to file a report last quarter — that’s 99.5 percent participation.

Of the 352 who failed to file, 89 percent of them — or 312 — were first-time non-reporters.  Often one-time non-filers have technical problems reporting, so the relevant agency contacts them with a warning letter that also offers the necessary technical or other assistance.  Other cases of first-time non-reporting have been as simple as internal company or organization miscommunication or personnel changes.  In the vast majority of these cases, the recipient simply resolves their internal technical or staffing issue and files the next quarter.

Of the remaining 40 non-reporters, 32 failed to comply twice, 4 failed to comply three times, and 4 failed to comply four times.  Each of these cases is aggressively pursued by the relevant agency with punitive action ranging from withholding or rescinding funds to litigation, if necessary.  You can take a look at the action being taken in each of these 40 cases HERE . We take these cases seriously, but overall, they represent .1 percent of Recovery Act recipients and involve less than .001 percent of total Recovery Act funding.

That’s the kind of reporting (the quality of the data, cogency of the report, and the great results being reported) that I only dreamed of seeing when my partner and I had our last shop running at its well-oiled best. And we were only managing eight or ten employees! (Yeah: plus dozens of contractors, but still, revenues and profits per employee were pretty off the charts.)

It’s the kind of quality management and operations I experienced in my one brush with Medicare.

The solution to bad government is … good government.

Is Gerrymandering the Flocking Problem?

October 10th, 2010 Comments off

My regular readers will know that I’m fascinated by systems with “emergent properties” — systems where a few simple rules that individuals operate by result in complex and surprisingly organized behavior by the group — group properties that don’t seem to have any obvious direct relationship to the simple rules.

Birds flocking is a great example. Each bird has very simple algorithms — “If I’m on the outside of the flock and the bird next to me gets farther away, move toward that bird.” The result is the organized flock movements we’re all familiar with.

This came to mind when reading this Economist leader on gerrymandering of congressional districts in America.

Time to bury Governor Gerry
AMERICAN exceptionalism comes in many forms, but one of the odder ones is the way it sets its electoral boundaries. In every other democracy worthy of the name, independent commissions perform the sensitive and vital task of adjusting boundaries to take account of shifts in population. But in no fewer than 44 of America’s 50 states, it is state legislatures, composed as they are of party politicians, who decide where the lines should be drawn for seats in the House of Representatives in Washington, DC.

Now obviously other democracies don’t have wonderfully perfect political systems. But still, it made me wonder: could that single fact — that one rule-of-the-system — be largely responsible for many of America’s political (hence economic) failings? Could it inevitably — as an emergent property of the system — render our national politics and economic policy-making dysfunctional or destructive?

Maybe it’s just me grasping for simple, single-answer, one-handed explanations and solutions, but could this fact be responsible for many of the ills that plague our economy — the emergence of ever-longer “jobless recoveries” since the 80s, stagnation of middle-class earnings, increasing inequality, etc.? It’s not hard to imagine such a fact resulting in systematically distorted legislative approach to economic issues.

Could the proximate causes that we keep claiming for these problems — globalization, technology improvements, education issues, etc. — be red herrings, with the ultimate cause lying utterly elsewhere? I’m nowhere near being able to answer that question (if it’s even a useful question), but I did turn up a couple of recent papers that illuminate the subject. Both consider whether, and to what degree, federal courts can and should impose rules and restrictions on state-level gerrymandering of congressional districts.

An Interstate Process Perspective on Political Gerrymandering — an anonymous “Note” from the March 2006 Harvard Law Review — outlines four ways of looking at gerrymandering:

It points out that almost all the analysis of gerrymandering to date has been about intrastate stuff. It cites one article on Interstate Effects (“Partisan Gerrymandering and Disaggregated Redistricting” by Adam B. Cox, Supreme Court Review, 2004) and discusses it at length (emphasis mine):

…as Professor Adam Cox has recently pointed out, both academic commentators and the Justices in Vieth have failed to account for crucial conceptual differences between gerrymandering for state legislative districts and gerrymandering for congressional delegations. Unlike the harms from gerrymandered state legislative districts, the full harms from a state’s gerrymander of its congressional delegation can only be determined by looking simultaneously at all other states’ districting plans, as its delegation is only a subset of a larger legislature. With each state controlling the process of drawing its own congressional district lines,a state’s political gerrymandering might impose costs well beyond its borders.
Some extracts from Cox’s paper may make this clearer:

…evaluating the potential political gerrymander of a single congressional districting plan in isolation prevents a court from identifying the harms, if any, that stem from the manipulation of the composition of Congress as a whole.

To the extent that the harm of congressional gerrymanders can only be identified from a legislature-wide institutional perspective, the Court will inevitably fail if it tries to pin the injury on individual congressional redistricting plans.

He proposes that federal courts adopt a risk/probability-based approach to policing of state congressional redistricting:

So long as courts reduce the level of bias in each state congressional plan in some relatively uniform fashion,they will decrease the probability that the state-level biases will accumulate into an unacceptable level of national bias.

…Judicial intervention can in theory lower the probability that state redistricting schemes combine to produce Congress-wide injuries. But if that probability is low in the first place, judicial intervention becomes less appealing.

Returning to the HLR article, it then moves to its central topic — what it calls Interstate Process defects:
gerrymanders should be alarming because they result from “interstate process” defects. …the legislative process that produces it fails to account adequately for outsiders’ preferences — outsiders who suffer very real harms from gerrymandering. These harms include being governed by potentially unresponsive politicians, having a House of Representatives with an “unfair” partisan balance, and feeling compelled to alter the political processes of one’s own state.
The interstate process perspective thus echoes the familiar economic concept of externalities.

…the concept of an interstate process problem helps justify rigorous judicial intervention in these constitutional areas.

…one state’s political gerrymandering can impose significant costs on out-of- state interests. Yet those out-of-state individuals are not participants in the political process that produces the gerrymandering state’s districting plan.

…Since those harms are uniquely visited upon outsider states, in-state residents likely will have no reason to prevent those harms.

Thus political gerrymandering may actually be a more worrisome species of interstate discrimination than the kinds of discrimination remedied by existing law.

…the people of the entire nation, not just the people of an individual state, have an interest in each state’s selection of federal representatives. Political gerrymandering ignores that interest…

I’ve saved the unfortunate news — from Cox — for the end:

[Whether] courts should continue to police congressional partisan gerrymanders turns importantly on the answer to empirical questions—about how likely it is that injuries will aggregate substantially, and how likely it is that courts will improve the situation. These questions are underexplored. …the legal literature rarely asks whether state-by-state manipulation regularly leads to substantial levels of national partisan bias. While the political science literature has engaged the question a bit more directly, it is somewhat divided on the answer.

He cites two articles from the political-science literature that do address the question — both co-authored by…Cox.

How does your state determine congressional districts?

Who Owns Congress? A Campaign Cash Seating Chart

October 10th, 2010 Comments off

I’ve been meaning to write up a post on this but haven’t found time. And it pretty much speaks for itself, so I’ll just give it to you and you can do with it as you will.

Congressional Seats by Top Donors to Each Seat

It’s pretty clear who wins that X vs. Y encounter: Big Money, 63% to 37%.

And in the Senate it’s not even close. Laughingly, ridiculously not even close:

I’m thinking senators must be bloody expensive, and labor just can’t afford to buy more than a couple — much less collect the whole set.

You don’t need to look much further to explain this.

Who Owns Congress? A Campaign Cash Seating Chart | Mother Jones.

Hat tip Barry Ritholz.

Why I Didn’t Write This Post (Wonky)

October 10th, 2010 1 comment

Re: our trade deficit with China, their undervalued currency, and their purchases of our treasuries.

I queried in comments on a couple of econoblogs a few months back (with no response): why don’t we just prevent China from buying our treasuries in retaliation for their currency policy? I was going to write up the idea as a post, but after thinking about it I realized:

We could prevent them from buying treasuries when they’re originally auctioned.

But: They could always buy them on the secondary market.

But: We could make that illegal.

But: They could still make their purchases through blinds — intermediaries.

We could probably put a dent in that money flow, but probably not much. But in any case the whole thing’s so far beyond my realm of expertise that I didn’t think it was worth a post.

Now I find that some who do know what they’re talking about are making the same proposal, and that Paul Krugman sees the same problems I came up with:

Mysterious Renminbi Proposals

He suggests that the intermediaries would be offshore hedge funds. Always nice to be validated…

The Economic, Political, and Intellectual Equivalent of Bloodletting

October 8th, 2010 Comments off

Colorado: Tax-slashing proposals scare GOP, Democrats
Associated Press Writer

Businessmen gather at an empty Denver Broncos stadium, with an ominous warning: The more than 70,000 vacant seats around them represent the number of state jobs that would be lost if three tax-slashing and debt-cutting measures are approved in next month’s election.

While many states are wrestling with billion-dollar budget deficits, Colorado voters are being asked to adopt ballot initiatives that would ban borrowing for public works, cut the income tax and slash local property taxes.

The net effect, once fully implemented, would cost the state $2.1 billion in revenue annually and still require an additional $1.6 billion in spending on public education, according to an analysis by the independent Colorado Legislative Council.

Even a tea party candidate isn’t supporting all the initiatives, and a coalition of business leaders and politicians has raised $6 million to defeat the initiatives, even as polls show support faltering.

“It will plunge Colorado into another recession,” said Tom Clark, executive vice president of the Metro Denver Economic Development Corp.

I’m just hoping some of the education spending goes to teaching people arithmetic.