New American Paradigm

Generation War - Letter to New Students

Previously I wrote here and here about Boomers and the WWII generation squandering opportunities they gained from massive investment in education, infrastructure, and transportation; all in the name of cutting taxes. 

It's a penny-wise and pound-foolish approach to governance.  Just as we can track the demise of once healthy corporations to cost cutting for short term profits in exchange for long term gains, we can track the rise and demise of civilizations for its investments in itself.

But more importantly, we are setting up a generational conflict between young people who are asked to pay for rapidly increasing benefits to an aging population while being shortchanged themselves.  How long will a jobless college grad, for example, tolerate skyrocketing health care or social security cost increases they suspect they’ll never benefit from?

Michael O'Hare, Professor of Public Policy at UC Berkley, obviously had the same in mind when he penned this letter of apology to his students.

The bad news is that you have been the victims of a terrible swindle, denied an inheritance you deserve by contract and by your merits.  And you aren’t the only ones; victims of this ripoff include the students who were on your left and on your right in high school but didn’t get into Cal, a whole generation stiffed by mine.  This letter is an apology, and more usefully, perhaps a signal to start demanding what’s been taken from you so you can pass it on with interest.

He goes on later..

This deal held until about thirty years ago, when for a variety of reasons, California voters realized that while they had done very well from the existing contract, they could do even better by walking away from their obligations and spending what they had inherited on themselves.

There’s also a response to a note by former Secretary of the Treasury Robert Reich here.

I’m very interested in the way he puts this in terms of an intergenerational contract.  An agreement to invest in youth and leave to them investments that will make them an economic success.  In return we care for them as they get to an age where they can no longer provide for themselves.

If we continue to govern on the philosophy that government is only worth what it benefits us personally, this country is doomed.  We will never compete with a rising China or resurgent Europe.  Already the US, which once had primary and secondary education advantages over the rest of the world, sees itself falling well behind the rest of the developed world.

This is not the model of a society designed for success any more.  While we spend trillions preparing for global wars of the last century, we are leaving ourselves unarmed to compete in the new conflict… economics.

del.icio.us Tags: Budget,Economy,Education,Medicare,Taxes

Technorati Tags: Budget,Economy,Education,Medicare,Taxes

The Crisis of Capitalism – Animated

One of the problems with listening only to views similar to our own is that we develop big fat blindspots that escape your normal thought process.  It’s a pretty rare brain that doesn’t think highly of its own product, so why would it come up with flaws to its own logic.  Jonah Lehrer puts it best:

So here’s my new metaphor for human reason: our rational faculty isn’t a scientist – it’s a talk radio host. That voice in your head spewing out eloquent reasons to do this or do that doesn’t actually know what’s going on, and it’s not particularly adept at getting you nearer to reality.

Amongst renegades of the modern GOP and broader conservative movement this has become known as “epistemic closure” and has been bounced around the blogosphere quite a bit over the last year. If you happened to have taken too much philosophy in college, ignore that meaning of the phrase for a moment.  The idea, is that the movement has closed itself to information from outside right wing blogs, media, and think tanks.  The problem isn’t that they refuse to deal with flaws in their logic, it’s that they never know about them unless someone from the inside comes up with it.

Bruce Bartlett tells a story about being quoted prominently by the New York Times harshly critiquing President Bush.  He worried about reaction from conservative colleagues at a large GOP event he was scheduled to attend that week.

After about half an hour I decided to start asking people what they thought of the article. Every single one gave me the same identical answer: I don't read the New York Times. Moreover, the answers were all delivered in a tone that suggested I was either stupid for asking or that I thought they were stupid for thinking they read the Times.

I suppose this shouldn't have surprised me, but it did. After all, the people I was questioning weren't activists from the heartland, but people who worked on Capitol Hill, at federal agencies, in think tanks and so on. They represented the intelligentsia of the conservative movement. Even if they felt they had no need for the information content of the nation's best newspaper, one would have thought they would at least need to know what their enemies were thinking.

I make an attempt to avoid this same problem by listening to bright people no matter how ridiculous I think their perspective is and in this case it comes from a lecture by a Marxist.  Bear with me now! (I see you rolling your eyes.  Stop that!) 

Consider this… when looking for critiques of our Capitalist system, what better place to look than a person who has no interest in defending it?  They are intellectually free to consider all the options, examine the issues from a fresh perspective, and make challenging assumptions that can cause those of us vested in our theory to think more clearly and honestly about it.

David Harvey is a professor of Anthropology and social theorists at the Graduate Center of City University of New York.  He gave this lecture which has been cleverly animated to keep you interested.  What I took from it and the reason I thought worth passing it along, is this unresolved problem we have with the power of our finance industry and the oversized personal profits it’s able to extract from our system.  Rather than helping and supporting our capitalist system, they’re doing it considerable harm.  The recently passed Financial Regulation (FinReg) bill does little to change that fact.

I think our country’s failure to do so is one of these blindspots that our collective belief in capitalism has created.  The result could be disastrous without response.  But how can we reign in the gambling that Wall Street does with our money without first reigning in the outsized influence they have on our lawmakers through their massive campaign contributions?

Technorati Tags: Debt,Economy,Financial Crisis,Libertarian,Market,Sustainability

del.icio.us Tags: Debt,Economy,Financial Crisis,Libertarian,Market,Sustainability

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Typepad problems… just testing out the solution.

Newsweek - Cutting the Medicare Cuts

An article in Newsweek notes that the GOP, while railing against the exploding deficits, is targeting the unpopular sections of the health care bill which are designed to slow the growth of Medicare costs, but also would not cut the bill's popular new spending.  Specifically they want to get rid of the Independent Payment Advisory Board.

In a nutshell IPAB is designed to be a body of experts who will decide what measures the system will pay for.  Every insurer has something similar.  This is the section that gave rise to Sarah Palin's mythical "Death Panels" saying that her developmentally disabled son would have to stand before some sort of bizarro world tribunal, to justify his medical treatment.

That's crazy but this might be crazier from the sponsor of the effort, Sen. Jon Cornyn (R-Texas).

“In true fashion of Obama-Reid-Pelosi hubris,” Cornyn said, “the IPAB is the definition of a government takeover.”

via www.newsweek.com

Got that?  A government takeover.... of Medicare.  I'd add more here but feeling the urge to throw my computer out the window.

Social Security and Life Expectancy

I remember the day that I figured out I'd never see a dime of Social Security.  It was senior year of high school in civics class (for some strange reason we called it American Political Behavior).  Our teacher explained that when Social Security was enacted people only lived to an average age of 68 and now closer to 78... therefore the system wasn't designed to pay for people that long.  THE SKY IS FALLING!!!

This was a liberal teacher mind you... and I'm sure he was telling us what he thought to be true.  In fact virtually everyone I have ever spoken to on the subject believes this to be as good as gospel.

Except it's not and I feel kinda dumb for never thinking it through.  Paul Krugman explains:

a life expectancy of 68 years doesn’t mean that a lot of people toddle along then suddenly keel over over after threescore and eight birthdays. Mostly it meant much higher child mortality than we have now, which has no relevance one way or the other to Social Security.

Much more to the point is the number of years people could expect to live after reaching 65: 14 years in 1950, 18.5 years now. Not so impressive a change, is it? And the retirement age is already 66 for my cohort, and scheduled to rise to 67 on current law.

via krugman.blogs.nytimes.com

Catch that?  Mortality is an average of everyone born, not an average of everyone that makes it past disease, war, and famine into old age.  Basically what we find is that we've gotten much better at saving children but haven't expanded old age all that much.  When it comes to Social Security, and Medicare for that matter, it's the amount of time paid in and the amount of time paid in benefits that matters.

There are serious problems that need addressing in our entitlement systems, but this was one issue largely accepted as fact that isn't really a problem at all.

Introducing Vote IQ

Thought some here might find this new political social media site interesting.

What's not to love about Vote IQ?  It's a Gig Harbor company, has an All-Star group of advisers from across the political spectrum, utilizes social media to educate voters and connect them with political leaders and causes.  Seems like it's got pretty much everything right?

via www.derekmyoung.com

 

Generation War redux - Jon Stewart Says It Better

I thought I had a perfectly nice rant the other day... of course Jon Stewart had to come along a say it better.  Jerk.

 

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Deductible Me
www.thedailyshow.com
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Generation War – United States of Two Lies

I’m starting a new series today on our federal budget problems.  The central thesis is that for years now Baby Boomers and the “Greatest Generation” have waged a generational war on the rest of us by basing fiscal policy around two central lies the Democrats and Republicans tell us to get our vote.

Today we’ll deal with the revenue side of things and the notion that tax cuts pay for themselves.

I know, given the state of revenue in this country you’d think politicians would be embarrassed to repeat this bullshit, but it’s hard to let the bold lie go once you’ve built your career on making it.  The astonishing thing about it is that it’s not something they leave to the talking heads or party media (Fox News, Wall Street Journal, Washington Times).

Republicans leaders seem perfectly content to make the claim and it seems increasingly so.

Sen. Minority Leader Mitch McConnell – July 13, 2010

"That's been the majority Republican view for some time," Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. "That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

Ummm… about that evidence Senator...

There can be only two explanations, they’re stupid or think you are.

So where does this theory originally come from?  The Laffer Curve.  Originally conceived on the back of a napkin (pictured below) the idea is that the government can raise taxes to a level where their cost is so prohibitive, it actually decreases productivity so much that revenue goes down.  This means that there is a rate at which peak revenue is achieved and rates on either side see declining revenue.

The broader principles that explain the Laffer Curver are known as Supply Side Economics and have gone from being dismissed by George H. W. Bush in the 1980 Republican primary as “Voodoo Economics” to Holy Scripture for the Republican party today with Ronald Reagan as its patron saint.  You might also know it by the name “Trickle Down Economics” which derisively describes the idea that reducing taxes on the rich eventually trickles down revenue to everyone else.

Interestingly, if you talk to basically any economist, none of them think we’re anywhere near the peak of the Laffer Curve.  In fact most think it’s somewhere in the 60-70% range which is where tax rates where for most of the 20th century for the top tax brackets.

Ezra Klein at WaPo did just that and the responses are pretty remarkable.  Paul Krugman, Nobel Economist and talking beard for the NY Times shows his work:

Suppose that the top marginal tax rate is 20 percent, so that high earners get to keep 80 percent of what they make. Now raise the rate to 21 percent. This is a 5 (100*1/20) percent increase in the proportion of income collected in taxes; revenue will only fall if effort falls more than 5 percent. Meanwhile, the after tax return to effort falls 1.25 percent (100*1/80). So the elasticity of effort with respect to earnings would have to be more than 4 for revenue to fall.

At a marginal tax rate of 50 percent, the break point is much lower; just 1. And so on.

Krugman goes on to note, I think correctly, that the real danger with much higher tax rates is evasion.  The higher the rate, the greater the incentive to lobby for loopholes or simply set up offshore accounts and businesses residing in Bahamanian PO Boxes.\

Edit: If you don't believe me, as a couple emails already indictate, listen to what Supply Side sage and former Fed Chair Alan Greenspan said recently on Meet the Press:

MR. GREENSPAN:  Look, I'm very much in favor of tax cuts, but not with borrowed money.  And the problem that we've gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money, and at the end of the day, that proves disastrous.  And my view is I don't think we can play subtle policy here on it.

MR. GREGORY:  You don't agree with Republican leaders who say tax cuts pay for themselves?

MR. GREENSPAN:  They do not.

Right now I know you’re thinking “Derek, if this is bullshit, why does anyone believe it?”

Good question Derek.  I think it’s pretty simple, life would kick ass if we could cut taxes and increase revenue.  Think about it, you give the government less money, but they somehow build and buy more stuff with it.  Awesome right?  It’s like a permanent discount for everything.  If I found a politician that had a spell or incantation that made it work, I’d vote for them too.

Unfortunately this magical thinking has done some serious damage to our country.  These are serious times and we need voters to step up.  At the least, young people, who are literally being ripped off by our parents and grandparents generation need to start pushing back when politicians, the media, or people we know repeat these lies.  It’s your taxes that will pay back the credit card they are maxing out.

But this is only one half of the money for nothing promise.  While the “tax cuts increase revenue” garbage is mostly a Republican war cry, the parties have conspired to sell you the inverse as well claiming they can increase your spending without raising new revenue.  We’ll look at that next time.

6 Ways To Influence Lawmakers

Thought this post from my local blog might be of interest to some people here as well.

Given the fact that I've been in office for 13 years and have lobbied on behalf of various groups and causes, I sometimes forget that communicating with lawmakers is something that's foreign to most people and perhaps a little intimidating.  I mention this because I had a constituent call the other day asking how to go about advocating their cause to the Council.

via www.derekmyoung.com

 

New Yorker - Just How Broken is the Senate?

Previously I noted in a post about Elizabeth Warren's candidacy to run the new Consumer Protection Bureau the severe dysfunction of the US Senate, who would ultimately need to confirm her appointment.  To dive in a little deeper I'm linking to a wonderful in depth article from the New Yorker regarding our broken upper chamber.

It stands on its own merit so I won't go much further, particularly since it'll take the rest of the evening for you to read.  However, what I found so troubling is that the condition of the Senate isn't from any one cause but a confluence of pressures.  Fundraising requirements and populist pressure keep them away from the Senate for much of the week, realignment has increasingly polarized the parties making it far more partisan than before, loopholes in rules that even a single member can exploit to block popular action.

But more than anything it seems that the lack of personal relationships between the parties is at an all-time low.  It used to be common for senators to have very close friendships with colleagues from the other side of the aisle.  They'd dine, vacation, and even confide in each other.  That is simply a thing of the past and where it was once encouraged, is now a sign of betrayal to the party.

Not only is it sad but also counterproductive.  Without trust between members, how will we ever get anything done that the country needs?  The Senate used to be a place where giants debated the issues and even persuaded each other.  Nobody would have thought to block a confirmation to extort the rest of the body because it would violate the gentlemanly code.  Unanimous consent works in a system like that.  It doesn't in the hyper-partisan environment we live in today.

I'm not suggesting we should be naive and hope it turns into a club of intellectual giants again.  But the rules should at least reflect what the body is and make this country governable again.