The interesting thing about Obama's birth certificate

is that his mother, Stanley Ann Dunham, apparently first signed her name "Ann Dunham Obama" and then added Stanley in parentheses up above. 

In the excerpt of Janny Scott's new book about Obama's mother published in last Sunday's New York Times Magazine, Obama had this to say:

“She was a very strong person in her own way,” Obama said, when I asked about Ann’s limitations as a mother. “Resilient, able to bounce back from setbacks, persistent — the fact that she ended up finishing her dissertation. But despite all those strengths, she was not a well-organized person. And that disorganization, you know, spilled over.

Yeah, maybe a little..or else Mrs. Dunham Obama just did not like her first name. And oh yes, she was 18 years old.

Nice strong signature, btw. Call the French analysts!

End of the Age of America? Not quite so fast...

China's GDP is a bit less than half that of the U.S by conventional measures.; its population is about four times as large, and its rate of annual GDP growth about triple.  The IMF is now forecasting that China's GDP will surpass that of the U.S. by 2016.

The IMF gets to that watershed so quickly in large part by adjusting current figures for "purchase power parity" (PPP)-- that is, adjusting for the artificially low exchange value of the yuan.  PPP-adjusted, the IMF pegs China's current GDP at about 74% that of the U.S., as opposed to approximately 40% in 2010 as conventionally measured, according to IMF figures.

Brett Arends, reporting this forecast in Marketwatch, concludes:

This is more than a statistical story. It is the end of the Age of America. As a bond strategist in Europe told me two weeks ago, “We are witnessing the end of America’s economic hegemony.”

I wonder if that is necessarily so. Certainly not immediately.  At present, the European Union's economy is larger than that of the U.S., but it projects nowhere near the comparable military or soft power.

While China's population is about  four times that of the U.S., its per capita income, by conventional measures, was a bit less than 1/10 as large in 2010, according to the IMF. Call it 1/6, PPP-adjusted.  China spends 2.2% of GDP on its military, compared to 4.7% in the U.S (Stockholm International Peace Research Institute).  It collects 17% of GDP in taxes, compared to 28% for the U.S (Heritage).

A presidential power play in passive voice

It's a cliche of writing instruction to admonish students to prefer active voice verbs to passive ones.  There are obvious exceptions, such as when the writer wants to emphasize the object of the verb rather than the subject.

Normally, though, you'd think that active voice works better when you want to emphasize the agency of the subject. Not always!

Ever since the 2011 budget deal was struck at the literal 11th hour, Democrats have been bemused by the apparent perversity of the president taking credit for spending cuts that Democrats were presumably fighting tooth and nail to minimize.  As details emerged and the media pegged the value of the cuts at about half the original sticker price, the administration stepped up its bid to take credit both for minimizing the cuts (preserving key "investments") and for signing off on them -- boasting about "the largest annual spending cut in our history" (true only in absolute terms).

The outline of the president's long-term budget plan posted at WhiteHouse.gov extends this rhetorical act of taking ownership of the deal.  And, to return to grammar, the passive voice helps make the claim more emphatic:

The budget agreement negotiated by the President last week represented the largest one-year reduction in discretionary spending in our history, even as it invested in areas key to our long-run economic growth and competitiveness.

Why not write "The budget agreement that the President negotiated last week..."? Shouldn't a forceful president's activity be accorded the active voice? No.

Studied ambiguity in tax reform negotiations

There is a good deal of confusion and obfuscation on both sides of the debate over tax reform  -- at least, over the kind of centrist tax reform outlined in the Bowles-Simpson plan and being negotiated by the Senate Gang of Six.
The basic premise is to vastly reduce targeted tax breaks both personal and corporate while simultaneously reducing marginal tax rates.  The battlegrounds are presumably how much to reduce which tax breaks and how much of the resulting revenue to devote to lowering rates as opposed to deficit reduction.

For Republicans, the taboo is to "raise taxes."  Their potential cover is to lower marginal rates while raising the government's net income, most easily measured as a percent of GDP.  That's the point of obfuscation -- will they or won't they?  Can Coburn/Chambliss/Crapo sell Republicans on raising more revenue in any given year than the current tax code would bring in? Will they try?

For Democrats, the loaded phrase is to raise taxes on the wealthy, which they are sworn to do.  The problem is that that goal is generally equated with (or let's say mainly symbolized by) letting the Bush cut in the marginal rate for the wealthiest 2% expire. Comprehensive tax reform of the sort envisioned by Bowles-Simpson would render debate over the Bush tax cuts moot -- all marginal rates would be lowered (while in Bowles-Simpson capital gains would be taxed at ordinary income rates -- a major hike on the rich). Can Obama and the Democratic leadership in Congress get behind a plan that will reduce the top marginal income tax rate on the wealthy? Will they try?

Obama: better hedge than wedge

John Judis makes a strong case that Obama has got the wrong strategy for reelection: that by focusing on deficits, he is playing on Republicans' turf; that he should focus relentlessly on jobs, which is what the electorate says it cares about; and that he should basically be working to slam the GOP relentlessly for blocking whatever sheaf of job-growth plans he puts out, as they will surely do.

Perhaps Judis is right. But an unspoken premise in his argument is that messaging matters more than policy. Obama knows that as of now he can't get any job growth plans through Congress. Should he run on Republicans' refusal to pass his proffered plans?

What I think Judis should at least acknowledge is that Obama has already taken the best shot he could, in the runup to 2012, at juicing the economy. His huge gamble was the tax cut deal of December 2010.  In exchange for a Democratic pearl of price -- early sunsetting of the Bush tax cuts for the wealthiest 2% -- he won an (under the circumstances) enormous jolt of fresh stimulus, the key components of which were 13 months of extended unemployment benefits, a bit more than a 32% cut in individuals' payroll tax,* and accelerated investment writeoffs for businesses.  Moody's Mark Zandi pegged the value of Democratic agenda items in that deal at $336 billion. Republican agenda items in that deal worsen the deficit for relatively little benefit -- they were less efficient stimulus, but stimulus nonetheless.

Craving salt in the wounds of time...

Wondering about the sad propensity of aging men captured by OkCupid below?




Robert Frost perhaps can't tell us why, but he can tell us how it feels. The pivot comes halfway through at "now" (my crude emphasis below):

Medicare funding in perspective

Keith Hennessey's Medicare primer* highlights a rather obvious funding fact recently brought into sharp focus by James Kwak. First, the basics of Medicare funding, courtesy of Hennessey:

There are three main sources of financing the program.

• There are three financing sources:  dedicated payroll taxes, beneficiary premiums, & general revenues (income taxes).
• payroll taxes:  2.9% of all wages.  ½ paid by employee, ½ by employer.
• premiums:  25% of “part B” costs ≈ $96-115 per month.  High income seniors (income > $85K/person) pay higher premiums.
• premiums:  a % of “Part D” drug costs.  (complex formula). High income seniors pay higher premiums.
• general revenues = total spending – (payroll taxes + premiums)

Then, an elegant solution to Medicare funding per se, courtesy of Kwak (my emphasis):

We have to recognize that there are two separate problems, and they are not equal. The primary problem is health care inflation. The secondary problem is the long-term Medicare deficit. That’s a secondary problem because it’s largely a result of the primary problem.


Of these two, the Medicare deficit is the easier problem to solve: index the payroll tax to actual health care costs. This should automatically solve the Medicare deficit because as Medicare’s costs go up, its funding will go up at the same rate.*

"MedPAC on steroids" is toxic to many...

Hey, we're having a real debate about controlling healthcare costs.

Some "responsible" conservative commentators, a.k.a. New York Times op-ed writers, who expressed queasiness about Paul Ryan's plan to convert Medicare into vouchers of ever-shrinking value nonetheless praised Ryan for opening up discussion of how to control Medicare costs specifically and healthcare costs generally. The same is true of Obama's counter-proposal, a centerpiece of which is strengthening the mandate of the Independent Payment Advisory Board (IPAB) created by the ACA to limit the prices Medicare pays for various treatments.  A strong IPAB was one of Obama's chief priorities in the legislation. He would not fight for a public option, but he fought for IPAB.

Surprise surprise: the Wall Street Journal editorial board does not like IPAB:

Mr. Obama, by contrast, is relying on the so far unidentified technocratic reforms of 15 so far unidentified geniuses who are supposed to give up medical practice or academic research for the privilege of a government salary. Since the board is not allowed by law to restrict treatments, ask seniors to pay more, or raise taxes or the retirement age, it can mean only one thing: arbitrarily paying less for the services seniors receive, via fiat pricing.

Chronicle of an early social contract

In his new book The Origins of Political Order: From Prehuman Times to the French Revolution, Francis Fukuyama considers the origins of the social contract that formed the state, and speculates whether it could ever have been the product of a conscious decision on the part of a tribal society. He does not take this discussion where I thought he would:

     Thomas Hobbes lays out the basic "deal" underlying the state: in return for giving up the right to do whatever one pleases, the state (or Leviathan) through its monopoly of forced guarantees each citizen basic security. The state can provide other kinds of public goods as well, like property rights, roads, currency, uniform weights and measures, and external defense, which citizens cannot obtain on their own. In return, citizens give the state the right to tax, conscript, and otherwise demand things of them. Tribal societies can provide some degree of security, but can provide only limited public goods because of their lack of centralized authority. So if the state arose by social contract, we would have to posit that at some point in history, a tribal group decided voluntarily to delegate dictatorial powers to one individual to rule over them. The delegation would  not be temporary, as in the election of a tribal chief, but permanent, to the king and all his descendants. And it would have to be on the basis of consensus on the party of all the tribal segments, each of which had the option of simply wandering off it didn't like the deal.

Fight and flight in response to the budget conundrum

It strikes me that there are two core emotional reactions to the U.S.'s structural budget deficit -- or at least, two writerly tropes that one encounters over and over.  The first is "we are facing societal collapse" -- call it Mitch Daniels hysteria (our debt is "the new Red Menace") -- and the second is, "all we have to do is x," where x is the author's personal brew of preferred spending cuts, tax hikes and program redesign.

For the latest in the hysterical school, here is Jim Manzi:

The long-term forecasts, however, illustrate the crucial point that we are sitting on the mother of all bubbles. Many, probably most, Americans anticipate a stream of consumption that will be provided for them into old age by the government (i.e., other taxpayers). Unfortunately, most American taxpayers do not anticipate the kind of enormous increase in taxes that would be required to pay for this stream of benefits. One or both of these expectations will not be met. Americans as a whole are simply less wealthy, in the most useful sense of rationally anticipatable future material consumption, than they think they are. And the size of this disconnect is vastly greater than, for example, the size of the housing price bubble that just popped.

Fallows & co. on offloading medical risk on seniors

James Fallows, trying to put his finger quickly on what is off-whack about Ryan's voucher replacement for Medicare, has recourse to Fiscal Times correspondent Merrill Goozner (Fallows' emphasis and comment following):

Here's the real argument young and middle-aged people need to hear, and the real reason why the "more skin in the game" argument can never work for seniors or other vulnerable populations, including them when they reach that age. Seniors and the poor account for over half of health care spending. Within those groups, 5 percent of the population accounts for 50 percent of health care costs; and 20 percent of the population accounts for about 80 percent. These costs come for the most part at times when economic incentives have no influence at all on medical decision-making: in medical crises; in treating chronic conditions; and, for most Medicare patients, in the last six months of life.

That's why a voucher program for Medicare, which will shift an increasing share of those inevitable costs onto the elderly themselves, can fairly be categorized as a 100 percent estate tax or death tax. People under 55 need to know that if the plan crafted by Rep. Paul Ryan were passed, most of them will never have a cent to leave to their children. It will all go to the health care industry to support the American way of dying.

Here's a bit of real world evidence supporting that view: Why is the savings rate so unbelievably high in China -- as much as 50 percent of the GDP? There are many reasons, crucially including exchange-rate policy. But a very powerful individual motivator is each family's knowledge that there is no Medicare-like system for their older members. Health care is on cash-payment basis there, and so every family must save like crazy against the risk that the parents or grandparents will require very expensive late-in-life care. More savings would be good for America, but that's not the right way to induce them. It's hard to believe that the Republicans will seriously embrace a plan to undo Medicare.

That evoked a lot of reader response, including from yours truly:

We [already] have that de facto "death tax" in connection with nursing care.

Every family that doesn't have a spare 100k/year effectively rolls the dice regarding how much of an estate may be eaten up by nursing care at the end of life. The only private remedies are 1) LTC [long-term care] insurance, a highly uncertain and problematic product, and 2) strategies to offload assets to children while there's still time.

Perhaps this system is the best we can do right now. There's certainly no will in the U.S. to tax ourselves to the extent that would be needed to provide something like universal LTC coverage. (In an ideal world, how about this bargain: a massive [by US standards] estate tax earmarked for LTC coverage.) But as you suggest, adding near-complete exposure to medical expenses for the elderly would make this risk burden intolerable. I can't believe we're seriously considering it. And in fact, we're not (unless we get a GOP president and Congress before the party changes course...

Teach your constituents well

Ezra Klein spotlights a potential problem for the GOP in 2012: in 2010, candidates incited the party's base and the nation's seniors to fear and loathe the Medicare spending reductions with which Democrats largely funded the Affordable Care Act -- and now, just a few months later, the party has backed Ryan's plan to privatize and radically devalue Medicare.  Klein further  notes a polling anomaly: Republicans are far more averse than Democrats to any attempts to reform Medicare:

A Gallup poll released Wednesday underscored the tension in the Republican coalition. It asked Americans whether they “think the government should completely overhaul Medicare to control the cost of the program, make major changes to Medicare but not completely overhaul it, make minor changes to Medicare, or should the government not try to control the costs of Medicare?” Among Democrats, “minor changes” was most popular, followed by “major changes.”

You might assume that Republicans would be a lot friendlier to remaking the program. Not so. Among Republicans, “not try to control costs” was the most popular position, followed by “minor changes.” And to call Ryan’s plan anything less than a complete overhaul would be to insult it.

It's a fair cop, guv'nor

I like to think of myself as impervious to marketing -- a false pride, because a) I still find myself singing commercials I heard a lot when I was five, and b) it's smart to be receptive to marketing that helps you locate what you want/need.

None of that is strictly relevant to an experience that ripened this morning -- a rare case of a mundane product working its way through to consciousness.

The Wire's David Simon: "Statistics will always lie" when someone's job is at stake

Via The Dish, an interview with Bill Moyers in which Wire creator David Simon highlights the perverse effect of performance incentives:

One of the themes of The Wire really was that statistics will always lie. Statistics can be made to say anything. You show me anything that depicts institutional progress in America: school test scores, crime stats, arrest reports, anything that a politician can run on, anything that somebody can get a promotion on, and as soon as you invent that statistical category, fifty people in that institution will be at work trying to figure out a way to make it look as if progress is actually occurring when actually no progress is. I mean, our entire economic structure fell behind the idea that these mortgage-backed securities were actually valuable, and they had absolutely no value. They were toxic. And yet they were being traded and being hurled about, because somebody could make some short-term profit. In the same way that a police commissioner or a deputy commissioner can get promoted, and a major can become a colonel, and an assistant school superintendent can become a school superintendent, if they make it look like the kids are learning and that they’re solving crime. That was a front-row seat for me as a reporter, getting to figure out how once they got done with them the crime stats actually didn’t represent anything.

I can't help but note that when the Michelle Rhee testing scandal broke in late March, I used an episode of The Wire to illustrate Campbell's Law -- the principle that incentives corrupt:

Of presidential candidates and Langston Hughes

There's an irony behind the irony of Rick Santorum accidentally borrowing a campaign slogan from Langston Hughes:

Santorum by and large stayed on message but was tripped up a bit when a student asked him if he knew that the choice of his slogan, "Fighting to make America America again," was borrowed from the "pro-union poem by the gay poet Langston Hughes."

"No I had nothing to do with that," Santorum said. "I didn't know that. And the folks who worked on that slogan for me didn't inform me that it came from that, if it in fact came from that."

The really funny part is that Obama's favorite trope about America, his constant recourse to the paradox inherent in the phrase "a more perfect union," is embodied, in a bitterer vein, in Hughes' poem.

Let America be America Again. is a poem of fathomless pain, an anthem of the excluded. It begins with a pious, nostalgic wish that meets a harsh (anonymous) counterpoint:

Let America be America again.
Let it be the dream it used to be.
Let it be the pioneer on the plain
Seeking a home where he himself is free.

(America never was America to me.)

A gloss on a 'quote of the day'

The Dish frames up an emotionally satisfying reality check from  Joe Klein:

"It's painful when reality intrudes. Here is the reality: the Republicans have spent the past 30 years creating deficits and the Democrats have spent the past 30 years closing them. The unimportance of deficits became an article of faith during the second Bush Administration: "Reagan proved that deficits don't matter," Dick Cheney famously said. It has been rather hilarious for those of us with even a minimal grasp of recent history to watch these folks pull fierce 180-degree turns on the issue--and it is even more hilarious to watch them accuse Obama of hyper-partisanship after the dump-truck full of garbage they visited upon his head these past few years."

Klein was reacting to Republican fulminations such as this from Pete Wehner (link in the Klein post):

President Obama's speech today was both outrageous and insulting, a practically perfect combination of demagoguery and shallowness. It was not a serious substantive speech; it was a political missile whose intention is was to destroy, through libel, the House Republican's 2012 budget. It was not an effort to engage in a serious discussion; it was an effort to create a cartoon image of Obama's critics.

I suspect that whatever else Americans of any political stripe think of Obama, they know he's no rhetorical flame-thrower.  In a battle over which side is excessively partisan, he wins -- poll after poll shows that Americans trust him to compromise far more than they do the Republicans.  For a second reality check, note that in this speech Obama partially offset his "partisan" attack -- that is,  a frank expose of the Ryan Plan's values and likely effects, and a short history lesson about the debt amassed in the 80s and naughties --  with a sharing of credit for the deficit reduction successes in between:

To meet this challenge, our leaders came together three times during the 1990s to reduce our nation's deficit -- three times. They forged historic agreements that required tough decisions made by the first President Bush, then made by President Clinton, by Democratic Congresses and by a Republican Congress. All three agreements asked for shared responsibility and shared sacrifice. But they largely protected the middle class; they largely protected our commitment to seniors; they protected our key investments in our future.

That is in service of his apparent continued belief that he can, against all the odds, strike a deficit deal with Republicans today:

I fear the "best news about Obama's budget plan" was a mirage

Yesterday, I celebrated this gloss on Obama's budget plan from Paul Krugman:

I don’t want to step too much on the administration’s selling point, but progressives upset by the claim that there are three dollars of spending cuts for every dollar of tax increases should be aware that there’s a bit of creative labeling going on. As I understand it, they’re counting both interest savings and reductions in “tax expenditures” — subsidies through the tax code — as spending cuts. It’s a much more balanced plan if you look at the balance between revenue increases and non-interest outlays.

On the basis of the administration's plan outline, this looks plain wrong to me. The plan itemizes $2.01 trillion in projected spending cuts over 12 years -- $770 billion in  discretionary spending, $400 billion in security, $480 billion  in healthcare on top of projected ACA savings, and $360 billion in other mandatory spending. It projects $1 trillion in saved interest payments, and another $1 trillion in new tax revenue.  That last figure would seem to include some conflation of sunsetting the Bush tax rates and reforming the tax code along Bowles-Simpson lines, albeit with some undefined skew toward reducing the tax reductions of the wealthy in particular. I see no indication that the administration is counting $1 trillion for the Bush sunset and another trillion in tax reform -- which would make no sense, the the envision reform would lower marginal rates, presumably (if Bowles-Simpson is a guide) to below current rates. 5 x 1 does not equal 4.

Update: Howard Gleckman notes the ambiguity and overlapping categories of of possible revenue sources  in more detail here.

Shorter Ryan

James Kwak reduces it to handy twitterable length:

The bottom line is that the Ryan Plan increases beneficiary costs more than it reduces government costs.

Unbelievable?  Here are the underlying CBO projections:

In 2030, under current law, a 65-year-old Medicare beneficiary’s health care will cost $60. (Obviously, this is using an index, not real dollars.) Medicare will pay $35 and the beneficiary will pay $25 in Part B premiums and cost sharing. Under the CBO’s more likely “alternative fiscal scenario,” her health care will cost $71, of which Medicare will pay $41. Under the Ryan plan, the same health care purchased in the private market will cost $100; “Medicare” will give her a $32 voucher, and she’ll pay the last $68 on her own.

Privatization, it's wonderful.

Read Kwak's whole post for some real clarity on the severable problems of Medicare funding and healthcare inflation.

Red meat, with a dash of bipartisanship

Jonathan Bernstein points out that Obama today delivered red meat to some very anemic-feeling progressives:

Liberals like to think of themselves as the grown-ups of the budget debate? Obama gave both a budget history lesson and some facts about the composition of the budget that positioned himself -- and liberals -- as serious, compared to those who talk about waste, abuse, and foreign aid.

True dat, but by way of counterpoint: while Obama quite pointedly blamed Bush for the enormous deficits and debt of today...

But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed. We increased spending dramatically for two wars and an expensive prescription drug program -– but we didn't pay for any of this new spending. Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts -– tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.

He also biparti-parceled the credit for deficit reduction in the decade preceding:

our leaders came together three times during the 1990s to reduce our nation's deficit -- three times. They forged historic agreements that required tough decisions made by the first President Bush, then made by President Clinton, by Democratic Congresses and by a Republican Congress. All three agreements asked for shared responsibility and shared sacrifice. But they largely protected the middle class; they largely protected our commitment to seniors; they protected our key investments in our future.

As a result of these bipartisan efforts, America's finances were in great shape by the year 2000. We went from deficit to surplus. America was actually on track to becoming completely debt free, and we were prepared for the retirement of the Baby Boomers.

The best news about Obama's budget plan

Update: I fear this post is wrong -- Krugman seems to me to have been mistaken.

Paul Krugman has unraveled what struck me as the central mystery of Obama's deficit reduction speech -- and revealed the President's plan to be far more progressive than it looks.  My question (#3 in prior post): since Obama pegged the gain from sunsetting the Bush tax cuts for the wealthiest 2% at $1 trillion over 12 years, and also proposed reducing "tax expenditures" (targeted tax breaks) in a comprehensive tax code overall, how did that add up to just $1 trillion in total tax hikes?  Why does 1 + x = 1?*  Krugman:

I don’t want to step too much on the administration’s selling point, but progressives upset by the claim that there are three dollars of spending cuts for every dollar of tax increases should be aware that there’s a bit of creative labeling going on. As I understand it, they’re counting both interest savings and reductions in “tax expenditures” — subsidies through the tax code — as spending cuts. It’s a much more balanced plan if you look at the balance between revenue increases and non-interest outlays.

Just to clarify, the White House fact sheet explicitly counts interest savings in the 3:1 ratio. But counting reduced "tax expenditures" as spending cuts -- that really tips the ratio, and it's brilliant politics as well as a perfectly fair use of the English language.  It's brilliant because a) conservatives occasionally have flirted with the same concept -- Coburn, in a recent tussle with Grover Norquist, struggled to effectively define ending the ethanol tax credit as a spending cut -- and b) protesting that cutting a tax break is not a "spending cut" should tie the GOP in knots, since creating new tax breaks has been a preferred mode of social spending for two decades.