McCain's flight suit

This apparently is it, courtesy of the Hoa La Prison in Hanoi (aka the Hanoi Hilton), which is now a museum. I'll admit to feeling a twinge of sympathy for the guy when I saw it, although it's my personal feeling that, in his late-career desperation (last chance for the brass ring and all that), McCain - much like Hubert Humphrey in 1972, for those whose memories go back that far - has definitively thrown his integrity in the trash.

End of class in Singapore

Week 2 of my 2-week Tax Policy stint in Singapore went pretty well. Though I was trying to explain fairly advanced ideas to people who had variable backgrounds in tax law and public economics, with time things kept getting better and it ended up being a good experience on both sides (I think).

Last night, after the last 3-1/4 hour session, I met most of the class for dinner at a hawker center in Chinatown. I almost always find I like students, these included, though, since I don't feel professors should initiate out-of-the-classroom contacts, there is admittedly pre-selection for people who are interested in talking to me.

This brings to mind my look-alike Ringo Starr's response, in an early publicity write-up, to the question, "What sort of people do you like?" He answered "Enyone [sic] who likes me." But I am mocking myself, not the students, when I mention that.

This time, like last year, I ended up teaching people from every continent except Antarctica and Australia. Really very interesting to talk to people from varied backgrounds and yet in many ways part of the same world culture. Those at the dinner were from (among other countries I'm sure), the US, Brazil, Belgium, China, India, Rwanda, and Uganda.

Anyway, here is a beautiful (??) though non-vegetative photo from the Singapore Botanical Gardens.

Random notes from one week plus in Singapore

Lectures would be going well except I am being over-ambitious (good students but they know less about tax than my usual in NYU) and I find myself running out of time each day. Adjustments in the second week should take care of the worst of it.

When on Arab Street, visitors to Singapore should seek out Cafe Zam Zam but avoid Cafe Le Caire (distressingly mediocre for its venue). But our mainstay has been the hawker center near our residence - very good food from a variety of stalls for about $3-4 a meal.

A cabdriver the other day asked if I'm related to Prince Charles. It's usually either that or Ringo Starr. I suspect that I am related to neither, however, unless their Ukrainian/Byelorussian Jewish roots are greater than has previously been reported.

And don't believe the tabloids. These two are just very good friends.

Feeding the sting rays

The Underwater World Aquarium at Sentosa Island in Singapore has a petting tank with tame juvenile sting rays (de-barbed to prevent Steve Irwin replays) that you can feed little bits of squid that you purchase for this purpose. The sting rays are delicate in grabbing the squid without gnawing your hand, an important detail that this picture (showing my arm) may not make clear. You can also pet them in the shallow water tank. They are amazingly silky-smooth and pleasant to the touch.

The 2008 presidential campaign and the fiscal gap

From the Tax Policy Center:

"Although both candidates have at times stressed fiscal responsibility, their specific non-health tax proposals would reduce tax revenues by $3.7 trillion (McCain) and $2.7 trillion (Obama) over the next 10 years, or approximately 10 and 7 percent of the revenues scheduled for collection under current law, respectively. Furthermore, as in the case of President Bush's tax cuts, the true cost of McCain's policies may be masked by phase-ins and sunsets (scheduled expiration dates) that reduce the estimated revenue costs. If his policies were fully phased in and permanent, the ten-year cost would rise to $4.1 trillion, or about 11 percent of total revenues. Both candidates argue that their proposals should be scored against a "current policy" baseline instead of current law. Such a baseline assumes that the 2001 and 2003 tax cuts would be extended and the AMT patch made permanent. Against current policy, Senator Obama's proposals would raise $700 billion, an increase of 2 percent, and Senator McCain's proposals lose $600 billion, a decrease of roughly 2 percent."

Against this background, Obama - less fiscally irresponsible than McCain but by a smaller margin than I would have hoped - deserves a bit of credit for realism and political courage in proposing the "donut hole" payroll tax increase. But that said, and leaving aside that to make no revenue-raising proposal whatsoever would be worse still, I am not wild about this proposal. Generally I prefer base-broadening to raising marginal rates. Plus I favor slowing the rate of entitlements growth. Rate increases are bound to be necessary by one means or another (enacting a VAT, hence increasing its current rate from zero, is merely another genre of this), but I'd prefer to try to do some of the other stuff at the same time. And from an optimal tax standpoint the marginal rate at upper echelons under the Obama proposal is probably too high, although it's true that this is just a wage tax increase, not a capital income tax increase, which from an efficiency standpoint makes it more defensible.

Singapore in a nutshell

I was walking down the street yesterday, and saw a woman walking her dog. Not only did she clean up the dog's mess, but she wiped the dog's bottom afterwards, much as one might with a baby.

Meanwhile, a shot of a performing contortionist in Chinatown.

Scalia flunks History 101

From his dissent in the Boumediene case: “The game of bait-and-switch that today’s opinion plays upon the Nation’s Commander in Chief will make the war harder on us.”

The president is not “the Nation’s Commander in Chief.” He is the commander in chief of the armed forces. Scalia shares the militarized mindset of regimes like that in North Korea. His view of the world does not belong (least of all on the high court) in a country like the United States.

Just before we landed

Photo courtesy of my wife.

After severe jet lag on Day 1 (too exhausted at 7 pm to read a book or even watch Curb Your Enthusiasm without keeling over), we're feeling better today.

Off to Singapore

I leave in a couple of hours for JFK Airport, flying to Singapore to teach Tax Policy over 2 weeks at the NYU@NUS program.  The topics for the 8 classes are (1) public economics, (2) horizontal equity [and lots of related stuff], (3) vertical equity, (4) income versus consumption taxation, (5) corporate taxation, (6) corporate tax shelters, (7) international taxation, and (8) deficits and long-term budgeting.

I had a very good experience teaching this class in Singapore last year.  The students came in knowing virtually nothing about tax law, tax policy, or public economics, but were otherwise strong students and highly motivated, also with a great esprit de corps.  And we pretty much hit it off - among other reasons, because they could see I cared.  Every year is a completely new vibe, however.

Tourism is admittedly a significant part of the motivation for doing this.  We (I'm traveling with my family) will definitely return to Arab Street, the Zum Zum Restaurant, Little India, Chinatown, the Night Safari, the zoo, and the aquarium.  Then, in Vietnam, we'll be staying in Hanoi, Sapa (mountains and hill tribes), Halong Bay (beautiful limestone caves), and Hoi An (resort).

I may post pictures from the trip here from time to time.

Gas tax, the sequel

For McCain, raising the gas tax issue again may verge on being a forced move.  With gas prices up and the stock market down, and with Obama pounding him on the economy and his lack of non-Bush ideas, I don't see where else McCain can go.

This time, the pushback against the gas tax holiday should emphasize more the point that it is unlikely to lower gas prices at the pump, hence it is actually a disguised giveaway to the oil companies rather than a sop to consumers.  Thus, it is just another trademark Republican special interest scam merely dressed up as populism.  The type of thing you'd expect Cheney or Tom DeLay to do.

This pushback has the advantage not only of being true, but of reversing the populist narrative, whereas just calling it irresponsible (although that's true too) would concede the point.

Jason Furman named top economic adviser to the Obama campaign

I count this as very good news, not just because I know Jason but because he has, in my experience over quite a few years, been consistently fair-minded and intellectually honest, even when he took shots for this (an example being the Walmart dust-up a couple of years back).  Among other virtues, Jason has a good understanding of a wide range of tax reform issues, and also of healthcare issues as mediated through the fiscal system (tax and otherwise).  Accordingly, subject to the myriad other factors that would determine the proposals and accomplishments of a hypothetical Obama Administration, the appointment speaks well for what tax and healthcare policy would look like in that state of the world.

I probably agree less with Jason about international tax policy (i.e., the taxation of outbound investment by US multinationals) than about other leading issues, but that's fair enough.

It's my understanding, by the way, that reputable economists on the right generally share my high assessment of Jason.

To be sure, economists and other policy types on the left used to, in bygone days (i.e., until a couple of months ago) think similarly well of Doug Holtz-Eakin.  But that was before Doug either sold his soul for one of the nine rings for mortal men or was placed under the Imperius Curse, depending on whether your taste runs to Middle Earth or Harry Potter.

Jason, however, has previously been through a general election campaign for president.  So I am very hopeful that he, unlike Doug, will sail through again with his reputation intact.  There is also strong reason to hope that the Obama campaign will (continue to) be much more fiscally responsible and intellectually honest than the lost-cause (from this standpoint) McCain campaign.

Vacation reading

I wouldn't entirely call it a vacation, given that I will be doing 28 hours of teaching in Singapore over 8 days, but I'll nonetheless be loaded with vacation reading when I hit the airport tomorrow night.  

Unless I drop one to save weight, I'll have:

1) Ian MacDonald, Revolution in the Head: The Beatles' Records and the Sixties [for the airplane on the way out],

2) Alistair Horne, A Savage War of Peace: Algeria 1954-1962 [Iraq War avant la lettre],

3) Joe Keenan, My Lucky Star [supposed to be a Wodehousean Hollywood novel],

4) Adam Tooze, The Wages of Destruction: The Making and Breaking of the Nazi Economy [not your typical beach read, but highly recommended here & there],

5) Jeannette Walls, The Glass Castle [spouse-recommended memoir],

6) Rick Perlstein, Nixonland [hope it's not too depressing and is analytical not too shrill],

The weight of these is enough to make one think wistfully about the Amazon Kindle.  But if I need more there's always the Borders on Orchard Road out there.

Yes, economists can teach at law schools, but not constitutional law

Doug Holtz-Eakin appears to be branching out a bit from his earlier public economics insights as a McCain adviser, such as in his statements that replacing depreciation with expensing has zero revenue cost and that you can pay for $5.7 trillion in tax cuts over ten years by cutting targeted tax benefits that amount to $30 billion per year.

As the New York Times reports, he is now branching out into constitutional law, at least in the sense of reporting on McCain's apparent constitutional view that the president has unfettered discretion to wiretap Americans, at least in their international communications, no matter what any statutes say or don't say. Holtz-Eakin suggests (though in fairness one could say that he is simply reporting what McCain ostensibly thinks) that only "the ACLU and trial lawyers" disagree with this.

I have supported several economists for appointment to the NYU law faculty, but not to teach constitutional law. This does not appear to be grounds for rethinking that limitation - though, then again, the views Doug reports on constitutional law are every bit as credible as what he has been saying about tax and budget policy lately.

What a kidder

McCain warned yesterday that Obama's policies would create chaos in the Middle East.

Next up, Isiah Thomas warns that Walsh and D'Antoni will make the Knicks a loser.

Summer academic writing

Although my month in Singapore and Vietnam looms, I have begun the first of what I hope will be two articles this summer (probably extending into the fall). Working title: "The Long-Term U.S. Fiscal Gap: Is the Main Problem Generational Inequity?"

Short answer: no, since it is so hard to specify the optimal generational policy. The big problem, I conclude, is inefficiency. I plan to make use of the under-utilized concept of tax smoothing, extended to the expenditure side, in exploring the gap between optimal and actual U.S. budget policy.

Broadly speaking, this is somewhat familiar ground for me. The impetus comes from (1) a Tax Policy Colloquium session with Alan Auerbach a couple of months back, along with (2) my being invited to present a paper at a conference on generational equity, to be held this fall at the George Washington University Law School. I do hope to break some new ground on both the distributional and efficiency issues, however (more on the latter, since on the former my point is more to discuss how little we know).

My second planned article, which I consider more novel but which timing issues compel me to push back, is "The Current Intellectual State of the Play in U.S. International Tax Policy," a topic on which I have blogged a bit, and on which I gave a talk in Israel last month.

Without a cellphone (!!)

I feel as if I have left the 21st century and plunged back into the earlier dark ages. My cellphone broke after many years, and rather than buy a new one (or commit to a two-year plan so I could get one for free) I've decided to get an iPhone.

But what with the pervasive rumors that the new generation iPhone will be out as soon as next week, along with the fact that I am about to leave the country for a month (Singapore followed by Vietnam) and thus couldn't use a cellphone without hefty roaming charges anyway, I decided just to cancel my prior service and sit tight, waiting for July.

So for now I am down to landlines (or borrowing from a family member).

To those who can't imagine it, in most other respects I remain more comfortable than, say, a Survivor contestant.

Mankiw versus DeLong

In Sunday's NY Times, Greg Mankiw had a column calling for a cut in the U.S. corporate tax rate. as per McCain's campaign platform, but with the important difference that Mankiw wants to finance it (assuming it's not providentially in Laffer territory) by increasing the gas tax.

I idly thought for a moment of writing a blog entry saying that I thought this package would be a good idea.  I discuss the reasons for a corporate rate cut in my forthcoming book on U.S. corporate taxation, and am fine with the idea if it is fully financed (such as by raising the gas tax), although I think it also should be linked to shifting more of the taxation of corporate income to the owner level, such as through (a) Ed Kleinbard's cost of capital allowance (COCA) idea of time value of money-style corporate-level deductions and investor-level inclusions for equity as well as debt, and (b) doing more to impute "reasonable compensation" minimum salaries to US resident owner-employees.

Anyway, before doing anything I noted a Brad DeLong blog entry not only denouncing Mankiw but saying that the publication of his column is an example of how MSM publications are headed for the dustbin of history.

Brad's bone to pick reflects either having missed the bit about financing or considering it after-the-fact window dressing with a tendency to mislead the reader into thinking that McCain, no less than Mankiw, is actually inclined to be responsible, which of course he isn't. (McCain would no sooner finance anything than forego endless war.)

The debate has turned into a bit of semantics about how one should read Mankiw's column or think that he anticipated others reading it.  I'm with Mankiw, although it's likely true that the column's net effect on future events is to encourage an unfinanced corporate tax cut.  That's not really one's fault if one states the correct idea and is sufficiently forthright rather than slippery - a test that, in my reading, Mankiw passes.

Reverse spin?

The noise machine message about Scott McClellan's memoir is that he sounds like a left-wing blogger (Karl Rove when it first hit the papers), or that it sounds like a Democrat wrote it (Robert Novak in today's Washington Post).

Another way of saying the same thing would be that a Bush insider has written a memoir confirming the accuracy of the Democrats' and left-wing bloggers' view of the Bush Administration.