Ron Suskind's "The One Percent Doctrine"

I just finished reading the new Suskind book about the "war on terror." Reported mainly as an anti-Bush screed becomes some of the facts reported in it are embarrassing (to say the least) to our own Dear Leader, it is in fact very balanced in tone. Obviously George Tenet gets favorable treatment, reflecting his cooperation with the author. But in some ways it actually treats Bush and Cheney far more favorably than people like me, who have completely given up on attributing any good faith whatsover to these individuals, would expect from a fairminded account. It portrays them as actually caring a lot about preventing attacks on U.S. soil and as attempting rationally, by their lights, even if misguidedly, to deal with the threat. Bush does, to be sure, turn out to be a thoroughly unpleasant bully who reads less words per day than the average third-grader, and who thinks his time is best spent focusing obsessively on operational details of particular anti-terrorist operations, which he inadvertently prevents the operators from doing properly. And his response to being warned in person about 9/11, in advance, was to say "Okay, you've covered your ass," and go back to his fishing. But still, when one's expectations are low enough it's not hard for these boys to come off better than one expected.

The best insight I got from the book concerns exactly how Cheney and Bush got it wrong. First an application, then the bigger picture. They insisted on torturing the high-value targets (or those Bush had falsely claimed in public were high-value) because they badly wanted results fast. But the CIA tried to tell them that torture doesn't work as well in getting information as building a relationship with the prisoner (good cop/bad cop style) and using it to coax info out of him. This was rejected, in part because even when successful it doesn't work especially fast. But they got so little out of the torture that it seems clear they made the wrong choice, even leaving aside all moral and reputational aspects.

The bigger point concerns Cheney's doctrine, giving the book its title and offering an organizing theme to explain all the insane things they have done, that if there is a 1 % threat of our being attacked we must treat it as an utter certainty. Hence, action is all and analysis worth next to nothing.

There are many reasons why this approach is mistaken, and the book shows this quite well. But let's start by giving Cheney his due. If one is risk-neutral, a 1% chance of 1 million casualties should be treated the same as a 100% chance of 10,000 casualties (i.e., more than 3 times the direct loss of life on 9/11). So yes, low-probability risks of something really bad happening must be taken seriously.

But Cheney's analysis is totally static. In his view, the 1% risk is completely exogenous. It's just there as an isolated event, and we either ignore it or incur large costs to knock it down to 0%.

There is no such thing as eliminating all risks. Facing some set of risks is unavoidable. And they are endogenous - they are affected by what we do. In other words, if you try to knock out those 1% risks one at a time, like people swatting the gopher in that arcade game, you are simply increasing your downside risk if by doing so you create more new risks than you are eliminating. Arguably this is exactly what the US has been doing, if we grant (I would say over-generously) that Saddam represented as much as a 1% risk to us.

More totally static thinking from the big toad with the bad heart: his way of dealing with endogeneity is to say: we'll make everyone so scared of us that no one will dare do anything. But again this looks just at our move without considering the possibility of counter-moves. How would a Cheney type who was running another country (Iran, Russia, etc.) want to react if he saw the US acting the way Cheney wants it to act? Not by meekly knuckling under, one can be quite sure.

We are not the only actors, and we can't control everything by force or by will. That is the core of why Cheney is so completely wrong even on his own terms, and leaving aside all the bad faith and the contempt for every positive value in our law and our history.

Grover's trover

Grover Norquist appears to be - lying? defying credulity? forgetful? you be the judge - in his latest attempt to explain his up-to-the-elbows entanglement in the sleazy Abramoff-Indian tribes scam.

What a surprise.

The "war on terror"

I'm including fewer Bush items when I have nothing distinctive to add, but I couldn't resist this bit from Matt Yglesias:

According to Bart Gellman's review of Ron Suskind's new book the following things are true:

** Al-Qaedist Abu Zubaydah was captured in March 2002.

** Zubaydah's captors discovered he was mentally ill and charged with minor logistical matters, such as arranging travel for wives and children.

** The President was informed of that judgment by the CIA.

** Two weeks later, the President described Zubaydah as "one of the top operatives plotting and planning death and destruction on the United States."

** Later, Bush told George Tenet, "I said he was important. You're not going to let me lose face on this, are you?" and asked Tenet if "some of these harsh methods really work?"

** The methods -- torture -- were applied.

** Then, according to Gellman, "Under that duress, he began to speak of plots of every variety -- against shopping malls, banks, supermarkets, water systems, nuclear plants, apartment buildings, the Brooklyn Bridge, the Statue of Liberty."

** At which point, according to Suskind, "thousands of uniformed men and women raced in a panic to each . . . target."

Line item veto

House and Senate Republicans are advancing legislation that would establish some sort of quasi-line item veto, empowering the President to identify targeted tax and spending provisions and propose their rescission. Congress would vote yes or no on the package as a whole.

The motivation appears to be providing a fig leaf for the Republicans because they are rejecting Democratic calls to restore the pay-as-you-go rules that, for a while, were actually fairly effective. (They ceased being so when Congress started playing ridiculous games with them, such as calling the need to pay for the 2000 census an unanticipated "emergency" that was outside of the rules.) Pay as you go they denounce as a secret plot to prevent extension of the tax cuts. Well, if you want to add trillions to the fiscal gap, it figures that a rule impeding fiscal irresponsibility would get in the way.

It's unclear that the line item veto being proposed makes any difference. The up or down vote on the whole package means that Congress can easily reject it if the stench of bad publicity isn't too strong. Indeed, one obvious game to play is to have Bush posture by pretending to strike down a bunch of items, knowing that Congress will restore them anyway. Also, while the Senate bill would have the Joint Committee on Taxation decide which items are "targeted tax benefits" subject to the rules, based on an objective definition, the House bill would include only the items that were identified by the House Ways & Means and Senate Finance chairs, making it entirely a silly exercise as they could exclude whatever they liked. Even if they tried to include everything that meets the definition (and why should they if they are cutting deals), the definition is still absurdly narrow. "Targeted tax benefits" are those with only one beneficiary. So far as I can tell from my source (the June 19 Tax Notes), the Senate bill may have the same absurdly narrow definition of a targeted tax benefit.

Even a more genuine line item veto has ambiguous effects on deficits and fiscal gaps. What it basically does to the legislative process is shift a bit more power to the President. So, if the President wants to use it to attack earmarks and targeted tax rules, it gives him an extra tool. But if the President wants to use it as a bludgeon, to trade for votes in favor of his own tax cut and spending proposals, he can do that as well. Gee, I wonder which way the current President would be more likely to use it.

The House bill has a provision expressing the sense of Congress that the President should not use his rescission authority as a bargaining tool to secure votes on other legislation. Yeah, right.

Public service message

I thought I had seen a lot of different scams from incoming e-mail, but here is apparently a new one.

Last Friday I got a message from "Internal Revenue Service!" with the enticing subject line: "refund of $63.80."

The message, ostensibly from service@IRS.gov, was as follows:

[IRS Logo]

"After the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $63.80. Please submit the tax refund request and allow us 6-9 days in order to process it.

A refund can be delayed for a variety of reasons. For example submitting invalid records or applying after the deadline.

To access the form for your tax refund, please click here.

Regards,
Internal Revenue Service."

Hoping that I wouldn't pay the price for my curiosity, I clicked on the link, and saw that it asked me for full credit card information, which I am not going to provide.

This one is better than the usual Nigerian scam about the million dollars a stranger wants to split with you. Indeed, it's better than the phantom messages, ostensibly from Chase Manhattan or eBay, that I still occasionally get.

Has anyone else out there gotten this one?

Non-death of the non-death tax

By now, most interested readers may already know that efforts to have the Senate approve permanent repeal of the estate ax failed today. (I refuse to call it the "death tax" for two reasons: the renaming is Orwellian language manipulation, and it is less accurate than the old name. The tax really is levied on estates. No one owes the tax solely by reason of dying. For that matter, the gift tax, which has nothing to do with death, is part of the same instrument.)

Under current budgetary circumstances, repealing the estate tax would have been utterly insane. The U.S. fiscal gap makes such a move preposterously bad policy absent offsets to make the change at least revenue-neutral. I also would object to the repeal distributionally if one rules out compensating changes to replace the lost progressivity. And doing it while Medicaid is being cut for supposed deficit reduction reasons is obscenely hypocritical.

Nonetheless, in a sane political and budgetary environment the merits of keeping the estate tax would be a much closer call than many on the left believe. Suppose the fiscal system's overall progressivity would be about the same either way. This assumption could be reasonable, under the right circumstances, for several different reasons. There might be an express political trade-off at some point. The long-term political equilibrium might be such that less progressivity in one way means more in another. And simply as a guide to clear thinking, one should separate the question of how progressive the fiscal system should be from that of this particular instrument's merits.

Suppose we are thinking about efficiency, also known as reducing deadweight loss (i.e., instances where someone is made worse off and no one is made better off). The great virtue of the estate tax as an efficient device for accomplishing redistribution is that some bequests are accidental. People without strong bequest motives may die before they have fully used up their wealth. Since they are not thinking about a tax levied after they die, work and saving are not deterred by the estate tax to the extent that this is the true story.

The great vice of the estate tax, relative to other means of accomplishing comparable overall progressivity, is that deliberate bequests have positive externalities. Suppose you are choosing between blowing all your wealth before you die on conspicuous consumption or leaving it to your kids. The former means that the money is paid out once for market consumption. The latter involves your getting some consumption value out of making the bequest (since we are positing altruism or other warm feelings towards your kids), and then they get to use it in market consumption. So in effect consumption occurs twice rather than once. This point is often put moralistically, as in: Why should we favor the Malcolm Forbes types who throw huge parties before they die over those who scrupulously leave more to their kids. But it is a straight welfare economics point as well.

Anyway, this tradeoff makes the merits of the estate tax an interesting issue for tax policy debate. But in Washington, things go forward or not on a much cruder and more basic level.

Must reading

I don't know how to assess this, but no one who is intellectually honest can dismiss it out of hand. Luckily for all of the major media, this is no constraint on them.

Dynamic scoring of fundamental tax reform: the good news and the bad news

Courtesy of Bruce Bartlett, here is a link to a pdf file of the just-released Treasury study of the dynamic growth effects of the tax reform plans reduced last year to zero acclaim by the Tax Reform Panel.

The good news (leaving aside that none of the plans has a chance of being adopted): the Panel's "Growth and Investment Tax" (GIT) ostensibly would raise national income, over the long run, by somewhere in the range from 1.4% to 4.8%. A straight-up progressive consumption tax ostensibly would do so by 1.9% to 6%. For the Simplified Income Tax (SIT), the predicted growth in national income was only 0.2% to 0.9%, but hey, that's better than nothing.

Bad news item #1: Since the plans are revenue-neutral relative to the Administration's budgetary baseline (present law minus all of the tax cut phase-outs and plus a number of unenacted Bush tax cut proposals), they might very well reduce national income relative to present law (with the phase-outs and no new tax cuts), since they result in a fiscal gap that is trillions of dollars higher.

Bad news item #2: I suspect that the models over-estimate the effects on the capital stock and economic growth of shifting from an income tax to a consumption tax. My reason for suspecting this is technical, rather than reflecting some personal hunch about saving behavior. The recent literature suggesting that income taxation and consumption taxation differ only in their treatment of the real riskless interest rate implies that the two systems are more alike than we have long thought. The real riskless rate has typically been in the 1 to 3% range, whereas the risky rate that I suspect the Treasury models use in predicting behavioral responses is much higher. To my knowledge, economic models generally have not incorporated this point as fully as perhaps they ought. The riskless rate point should also lower estimates of the deadweight loss resulting from inter-asset differences in cost recovery rate. But permanent gaps in the tax base, such as the exclusions of imputed rental income and various fringe benefits, are not directly affected by the change in thinking about timing issues.

One reason I suspect this is the magnitude of the growth rate differences attributed to the GIT versus the SIT. Even leaving aside that the former is partly an income tax while the latter is partly a consumption tax, the significance attributed to the timing point seems (admittedly at a casual glance) rather high, especially when compared with the SIT versus present law. Many economists, including for example Glenn Hubbard, have argued in print that the inter-asset distortions in the tax law are more important than the income vs. consumption tax choice, but the Treasury's dynamic analysis seems to come out the other way. Sure, theory should give way to empirics, but what we have here are estimated empirics that are themselves based on a theory.

New Treasury Secretary

Bush has just named Henry Paulson, the chairman of Goldman Sachs, to replace poor pitiful John Snow as the Treasury Secretary. Past Goldman Sachs chiefs to figure on the national scene include Robert Rubin and Jon Corzine, obviously formidable players.

It's a mystery to me why a person with such a high-powered job would want to be the Treasury Secretary at a time like this.

According to the New York Times, "Republicans had long been pushing for a change at Treasury, arguing that Mr. Snow, despite devoting much of his energy to making the case that the economy had flourished under Mr. Bush, had failed to convince the public at large. Mr. Paulson is known as an ardent and engaging salesman."

That undoubtedly is what the Bush Administration wants him for, since salesmanship is all they ask of a Treasury Secretary (Rove handles the actual economics). Raising, of course, the question of what Paulson thinks he is doing. No doubt they promised him more than this, but why would he believe them? (Or think they could deliver, at this point, even if they were so minded?)

Chuck Schumer is happy, praising Paulson's "experience, intelligence and deep understanding of national and global economic issues." Unfortunately, this is about as relevant to the responsibilities they are likely to give Paulson as the statement in the Times that he prefers birdwatching to playing golf.

UPDATE: The best phrase I've seen about this is that the Bush Administration was so desperate that they resorted to scraping the top of the barrel.

A day late and a dollar short

It's hilarious to see Bush "admitting mistakes" at this late date. The only personal mistake he admits is using tough guy language on a couple of occasions ("bring it on," "dead or alive" ) three and five years ago. But that's apparently behind us now, since he tells us he has learned about "expressing myself maybe in a little more sophisticated manner."

How nice for him to get that off his chest. I won't add anything about the "more sophisticated" bit, although my twelve and ten year old kids thought it was hilarious coming from Bush. Too easy a target.

Turn, turn, turn

Having noticed that Bush has twice in the last month (on 5/1 and 5/22) hailed developments in Iraqi politics as "turning points" in the war there, I thought I'd try to find out just how many turning points there have been. So I did a couple of quick Lexis searches, restricted to the New York Times and the Washington Post. It turns out that, in addition to turning points, there have also been quite a few "milestones." In particular:

July 2003: formation of temporary governing council is an "important milestone."

June 2004: the handover of sovereignty is a "turning point."

January 2005: Iraqi elections were both a "turning point" and a "milestone."

August 2005 and/or October 2005 (not sure if one date is wrong, or, if both are right, whether they relate to different stages): adoption of Iraqi constitution and/or progress towards adoption thereof were "milestones."

December 2005 - Iraqi parliamentary elections were a "major milestone."

Then most recently we have 5/1/06 and 5/22/06, both involving "turning points" that I believe were not exactly the same.

Wow, things are sure going well out there.

Book update

I've finished the third book in the very loosely related trilogy by J. T. Farrell about British imperial decline (Troubles, Siege of Krishnapura, Singapore Grip) and highly recommend it. But in Singapore Grip I thought the anti-colonialist satire was at times a bit overdone. Flawless touch in the first two books, however.

Then I read Richard Condon's The Manchurian Candidate (basis for the 1962 movie that spawned a recent update) - a real hoot and great paranoid fun.

Now I'm reading Daniel Dennett's Breaking the Spell, about religion as an evolutionary phenomenon. I'm finding it a bit too pop in style, and too engaged in laboriously meeting objections to the enterprise that I don't have. Dennett is doing this in the hope of having a bigger impact rather than just preaching to the choir, a worthy goal but one I doubt he'll meet, but in doing so he's certainly weakening the book's appeal to choir members such as me.

At work I'm making great strides on an article I rather like so far, "Permanent Income and the Annual Income Tax," about the use of lifetime versus shorter-term measures of wellbeing in fiscal rules such as taxes and transfers. The summer comes early for legal academics who start teaching in late August, but that's not to say too early.

Fun in the nation's capital

I was in Washington for the spring meeting of the National Tax Association this past Thursday, and the lunch talk was given by Ed Lazear, the labor economist and recent Tax Reform Panel member who is now on Bush's Council of Economic Advisors. Though I realize the job puts pressure on one's public utterances, I was dismayed by the level of sales pitch that I was hearing, all this stuff about how the Administration's tax policy has wonderfully boosted economic growth, increased national saving, etc., etc. E.g., attributing the recent economic growth rate to the tax cuts, rather than to the recessionary trough that the growth came from, and not acknowledging the fairly obvious point that there were also high growth rates after the 1993 tax increases. Claiming that the dividend tax cuts will create vast increases in national saving and economic growth, as predicted by economic theory, blah blah blah.

With no ill will towards Lazear, I must say I found it a bit stomach-turning, even more so than the cardboard cheesecake with raspberry sauce that was sitting in front of me. So I waved my hand like a first grader so I would get to ask the first question, and was I suppose a bit blunt. I noted that economic theory can't predict the consequences of a tax cut in isolation; it needs to be a balanced-budget exercise that includes the offset. I noted that the Administration has vastly increased the fiscal gap, with huge likely negative effects on national saving even if there is no catastrophe. I noted the immense transfers to older generations, from unsustainable tax cuts that will have to be reversed later on plus the Medicare prescription drug benefit, likely to reduce national saving due to the income effect (seniors save less than younger people for lifecycle reasons). Maybe I had one or two more points before I subsided and let Lazear have at it.

I wouldn 't say he answered me, though I can't say I blame him. At some point he started saying something about how, with just a little economic growth, all the deficits will totally disappear. This was a bit thick. So I started to cut in: "There isn't a single reputable expert in the country who believes - "

"I've got the floor now!" was his answer, so I subsided again. He did acknowledge sharing some of my concerns.

No hard feelings, but a job in the Council of Economic Advisors really isn't very good for one's reputation these days.

UPDATE: A Washington Post editorial on Lazear's speech said it all: "Down Is Still Up; The White House continues to tax reality."

Bob Herbert (if anything) understates it

Someone needed to say this in the MSM:

"The Bushies will tell you that it is dangerous and even against the law to inquire into these nefarious activities. We just have to trust the king.

"Well, I give you fair warning. This is a road map to totalitarianism. Hallmarks of totalitarian regimes have always included an excessive reliance on secrecy, the deliberate stoking of fear in the general population, a preference for military rather than diplomatic solutions in foreign policy, the promotion of blind patriotism, the denial of human rights, the curtailment of the rule of law, hostility to a free press, and the systematic invasion of the privacy of ordinary people."

Important military task

According to today's New York Times, "President Bush told President Vicente Fox of Mexico that the use of National Guard troops would only be temporary."

Yes, I think through the November election should just about cover it.

The big question: does Bush get to play dress-up again? Maybe with a Sergeant Pepper outfit and a toy gun?

The next step in budgetary sleaze

Upon reflection (and with thanks to Kirk Stark for nudging me to see it this way), I am disappointed with Congress's lack of imagination in using tax cuts to "pay" for tax cuts, via the IRA conversion rule that raises $6 billion over ten years but increases the fiscal gap by $16.6 billion. Why stop there?

Here's an idea. Take people who are newly graduated from law school or medical school. They might easily have expected career earnings with a present value of, say, $10 million, and expected lifetime income tax liabilities under present law with a present value of, say, $3 million. The income and liabilities are mostly back-loaded, since their earnings would be expected to rise over time. So here's what we do. We let them "prepay" $50,000, which the government will be happy to lend them for 9-1/2 years at zero interest. All who "prepay" are totally exempt from any further income tax liability for the rest of their lives, starting in 10 years. Leaving aside the credibility problems, what a great revenue raiser within the budget window!

Sleazy budget games

I noted in the previous post that the latest tax cuts passing through Congress "raise revenue" to offset a tiny portion of the overall tax cuts by actually losing more revenue, the device being to hurt the government's long-term financing by paying people to convert traditional IRAs into Roth IRAs.

Len Burman at the Urban Institute has the details. The IRA provision in the legislation is scored as a $6.4 billion revenue-raiser over the next ten years. But its estimated long term revenue consequence, in present value terms, is a loss of $16 billion.

Corporate executives who did this sort of thing would go to jail. Come to think of it, there's a pretty good chance that a lot of the people behind this brilliant initiative will end up going to jail, albeit for different reasons.

One last amusing detail: the tax-cutting legislation is entitled the "Tax Increase Prevention and Reconciliation Act." First you put in phony sunsets that hold down the revenue estimates. Then you call extending the tax cuts "Tax Increase Prevention." Then you do it again, since the extension is only for 2 years.

"Orwellian" has become such a cliche - how can we freshen it up when it is needed so regularly?

Tax policy: some good news and some bad news

First the good news: Bush plans to name Eric Solomon the Assistant Secretary of the Treasury for Tax Policy. Solomon, one of the few people I can think of to serve under both the Clinton and Bush Administrations without having a set term, is one of the good people in government. My guess is that more political people didn't want the job or had confirmation issues or both.

The bad news is that the Republicans in Congress have agreed to a $70 billion tax cut bill. That's $70B over two years - it's just temporary extenders of reduced capital gains and dividend rates and AMT relief. So it brings us a larger fiscal gap and only a tiny respite from the nightmare the Republicans caused in 2001 and 2003 with all of their dishonest, rent-extracting phaseouts of new provisions. (Rent-extracting because they make their fat-walleted friends keep lobbying them for extension.)

One way they are going to "pay" for keeping the hit at "only $70B is to lose money for the government over the long run by inducing people to shift from traditional IRAs (deduction upfront, inclusion on the backend) to Roth IRAs (no deduction today, ostensibly no inclusion upon withdrawal). The myopia of a 2-year budget window permits them to present this long-term revenue-losing shift (since people have to be compensated to switch) as revenue raising. So it is as dishonest and irresponsible as most other things in recent tax legislation, if not more so.

Worse news still is that, to keep this at $70B and keep more tax cuts coming in the future, they deliberately left out "extenders" with strong and bipartisan political support, such as the research and development credit. That way, they get to cut taxes still more later on.

Bush I expect to hail this while at the same time grandstanding about how demanding a $20B cut (over 5 years?) in a pork barrel spending bill makes him a deficit hawk.

Elizabeth Bumiller, arch ironist?

Elizabeth Bumiller, the NY Times White House correspondent, aroused my ire last week when her account of the White House Correspondents Dinner mentioned Bush's "comedy" routine but omitted any mention of Colbert.

Today, Bumiller does a little better in her article, "His Legacy and His Library Occupy Bush's Thoughts."

This one at least has a non-lapdog subtext, as in the statement that "Two and a half years before he leaves office, with his popularity at record lows, Mr. Bush is actively thinking ahead to his post-White House life." In other words, to add my own gloss, perhaps he is as eager for his term to end as I am. (Well, he couldn't possibly be AS eager.) That would at least show good judgment.

But I loved this bit:

"'I would like to leave behind a legacy or a think tank, a place for people to talk about freedom and liberty, and the de Tocqueville model, what de Tocqueville saw in America,' Mr. Bush told Mr. Schieffer. 'I would like for there to be a place where young scholars come and write and think and articulate and opine and teach.'"

The jokes here practically write themselves. "Freedom and liberty" is truly an amazing focus, coming as it does from the principal proponent of torture and domestic authoritarianism in U.S. history. De Tocque - who?? No way on earth that Bush has actually heard of him. And yes, scholarship, what a natural legacy for this guy, almost as apt as freedom and liberty.

Glenn Hubbard and Stephen Colbert videos

In case anyone who's interested hasn't seen it yet, here is the link for the amusing Glenn Hubbard video made by students at the Columbia Business School. Suitable for viewing by anyone who knows (or is told) that Glenn reputedly was a candidate for Alan Greenspan's job before it went instead to Ben Bernanke.

But, turning to the Colbert video, words fail me. Give him a Pulitzer Prize for this, throw in the Nobel Peace and Literature Prizes, and it would still fall far short of doing his achievement full justice.

Anniversary celebration

What a nice, if thoroughly traditional, way to celebrate the third anniversary of Bush's "Mission Accomplished" stunt.

Bush is celebrating it with a page from his greatest hits, hailing the formation of a new Iraqi government as a "turning point."

If that by itself isn't encouragement enough, note that he announced the good news after talking with Rumsfeld & Rice about their "surprise visit" to the most fortified spot in the Green Zone.

I am looking forward to more good news whenever Rumsfeld gets around to making a surprise non-visit.

Our friend Grover

Sometimes, when people get books they think may talk about them, the first thing they do is look in the index under their own names. I'm not among these people, but only because I don't expect to figure in indices other than for an occasional scholarly cite.

Today, I got a complimentary copy, from Doubleday, of Matthew Continetti's newly published "The K Street Gang." Perhaps they're hoping I'll mention it in my blog or something. Anyway, I went straight to the index - not for myself, of course, but for Grover Norquist. I was not disappointed. Entries in 3 sub-categories: "ideology," "Indian gaming interests and," "rogue or bogus clients."

The balance between these sub-categories sounds just about right for Grover.

Idiot season

No matter how cynical one is about politics - and I try to set the bar high for myself - it's hard not to get trumped every day of the week. You can't keep up with these guys.

Okay, gasoline prices are way up. What do you expect when Iraq is in flames and Iran will be nuked if Karl Rove concludes that this will pay off electorally in November.

But not to worry, the Democrats have a great plan. Let's suspend the gasoline tax for six months. If the U.S. has monopsony power in the world marketplace, this amounts to saying: let's take the money out of the U.S. government's hands and make sure that foreign governments or oil companies get it instead. Or, if the price does moderate, it says: let's make sure the price signals don't get through and start changing American energy behavior. We wouldn't want to start reducing our international economic vulnerability, after all.

Senator Frist's office, whether or not stupider, is at least funnier. Our friend the timely-trading video diagnostician wants to start mailing out $100 checks to people. No need even to own a car for this one. And the deep thinking behind it is almost as rich as the proposal itself. From today's New York Times:

"David Winston, a Republican pollster who advises the Senate Republican leadership, called the rebate an intuitive way to show voters that Republicans were on their side. 'It is like putting the American family budget ahead of oil company profits, Mr. Winston said. "'How do you help the American families out? Well, give them some money.'"

Not TOO far ahead of oil company profits, however, given that American families are paying for their own checks through the increased fiscal gap. And what's more, the rebate is merely "the signature element of a broader Senate Republican leadership plan announced Thursday that included new incentives for the oil industry to increase its refining capacity and ... would open the Arctic National Wildlife Refuge in Alaska to drilling."

At a certain point there's really nothing left to say.

Another newly posted paper of mine

"Welfare, Cash Grants, and Marginal Rates." available here. The abstract is as follows:

"Marginal rates are frequently analyzed based solely on taxes, without regard to benefit phase-outs that have exactly the same incentive and distributional effects as increasing positive taxes. This myopia reflects the notion, rooted in our current fiscal language, that “taxes” and “spending” are fundamentally different. In fact, however, the difference is purely one of labeling.

"Among the ill consequences of this confusion between substance and labels is the political unfeasibility of demogrant or negative income tax proposals. These proposals often are criticized for seemingly providing universal and unconditional cash grants. In fact, however, cash grants can be just as conditional or selective as benefits that are labeled as “welfare.” Clearer thinking about these matters would expand the realm of politically feasible policy choices, and make excessively high marginal tax rates on people who are escaping poverty easier to avoid."

This one is admittedly a bit of a rehash of past work. I have written about these issues before, but reworked and extended previous writings, while also explicitly linking it to related themes, to serve as chapter 9 of my forthcoming book with the Cambridge U Press, entitled "Taxes, Spending, and the U.S. Government's March Toward Bankruptcy." I then decided (with the Press's kind approval) to break out a revised and shortened version of the chapter to appear in a forthcoming SMU Law Review tax symposium. That, in turn, is the newly posted paper.

Upcoming NYU conference in honor of David Bradford

Coming up on Friday, May 5. This is going to be a serious academic conference, not a tribute session, consistently with what David would have preferred.

Here's the schedule, although the order of the papers still might change:

PANEL 1: ISSUES OF BUDGET MEASUREMENT
Authors:
Jerry Green, Harvard University
Laurence Kotlikoff, Boston University

Discussants:
Daniel Shaviro, NYU
Kent Smetters, University of Pennsylvania

PANEL 2: THE NEW VIEW OF CORPORATE DIVIDENDS
Author:
Roger Gordon, UC San Diego

Discussants:
William Andrews, Harvard University
George Zodrow, Rice University

PANEL 3: FISCAL DECENTRALIZATION
Author:
Wallace Oates, University of Maryland

Discussants:
Harvey Rosen, Princeton University
Charles McLure, Hoover Institution

PANEL 4: THE CHOICE BETWEEN INCOME TAXATION AND
CONSUMPTION TAXATION
Author:
Alan Auerbach, UC Berkeley

Discussants:
Glenn Hubbard, Columbia University
Alvin Warren, Harvard University

PANEL 5: ISSUES OF TRANSITION TO A CONSUMPTION TAX
Author:
Louis Kaplow, Harvard University

Discussants:
James Hines, University of Michigan
Kyle Logue, University of Michigan

PANEL 6: CONSUMPTION TAX IMPLEMENTATION
Author:
David Weisbach, University of Chicago

Discussants:
Edward McCaffery, USC
Joel Slemrod, University of Michigan

Five of the six papers (very shortly to be all six) can be downloaded here.

UPDATE: The order of Panels 5 and 6 has been flipped to accommodate speakers' schedules.

For once I'm glad he's lying

Obviously Bush's pledge to look into "price gouging" on gasoline is a sham. Then again, it probably should be.

Of course, if he hadn't messed up so badly in the Middle East, with more insanity possibly to come, the world price would probably be lower.

A tale of three headlines

1) From today's Washington Post: "Inspectors Find More Torture at Iraqi Jails; Top General's Pledge To Protect Prisoners 'Not Being Followed'."

2) From today's New York Times: "Moves Signal Tighter Secrecy Within C.I.A." The article elaborates that Bush's handpicked CIA director (Porter Goss) is trying "to re-emphasize a culture of secrecy that has included a marked tightening of the review process for books and articles by former agency employees."

3) From today's Wall Street Journal: an opinion column by Natan Sharansky, entitled "Dissident President." Here we learn that Bush is "a man fired by a deep belief in the universal appeal of freedom, its transformative power, and its critical connection to international peace and stability .... Now that President Bush is increasingly alone in pushing for freedom, I can only hope that his dissident spirit will continue to persevere."

... Okay, enough with the deadpan. Somewhere, Andre Sakhorov is vomiting at the thought that the term "dissident" could be so inverted and debased.

Another year done at the NYU Tax Policy Colloquium

We're already gearing up for next year, when my co-convenors (?) will be Alan Auerbach for 7 weeks and Rosanne Altshuler for 7 weeks.

New Fiery Furnaces album

Okay, I was on the fence about buying it, and did so partly to fill out my $25 minimum free delivery from bn.com without losing same-day Manhattan delivery for the Star Wars books one of my kids wanted.

And this same individual scored undeniable points this morning when he heard me playing it and asked: "What exactly do you like about this, Dad?" I threatened him with Captain Beefheart's Trout Mask Replica, and that was that.

True as well, the album sounds a lot of the time like the pretentious arty kids in high school trying to make grand philosophical statements.

But it is on the whole enjoyable and often very much so. Albeit not one of those things that would get one through exercising at the health club. (For that, "EP" is the Fiery Furnaces' best bet.)

Also good (and probably on the whole better) first impressions for the Islands' Return to the Sea, this being the first release by former members of the Unicorns.

Overheated sentence of the day

From today's New York Times article about the possibility of a further White House staff "shake-up," here involving "moving Harriet E. Miers from her job as President Bush's counsel" [to a different White House job?]:

"Mr. Bolten's thinking about Ms. Miers, however tentative, provided an insight into the scale of his ambitions for overhauling the White House staff and, should he proceed, could amount to a test of how far he would be able to go in bringing about change."

Wow, the ambition here is simply breathtaking.

Is sports journalism better than other journalism?

While at the health club this morning, I noticed that ESPN is devoting a lot of lead coverage to the Duke lacrosse players rape charges. From one perspective, this is journalism as usual, focusing on sensationalistic stories about crimes. On the other hand, though, this is sports not national or world news, and from that perspective their spending a lot of time on this story may verge on being admirable. Somehow I don't think of the ESPN viewership base as dying to see this story, but it dramatizes an important message about the distorted culture of professional, or at least male professional, sports (counting big-time college sports as professional).

What a surprise

Bush's new budget chief, replacing Josh Bolton who became chief of staff, is Rob Portman, previously the trade rep. Portman's # 2 moves up to be the new trade rep.

Budget expert Stan Collender's first two points in discussing the Portman appointment were as follows:

"1. Not much budget experience

2. Loyalty to the president may be his biggest asset."

How unusual for this Administration.

I'd add, that Bush sure has a way of getting fresh blood into the Administration, doesn't he. It's a shame that the line about the deck chairs at the Titanic has become such an overused cliche.

My latest paper draft

ABSTRACT: One of the main advantages of consumption taxation that its advocates, including me, have claimed is simplification. However, the extent to which simplification actually would result from a major consumption-based tax reform would depend not only on the compliance and administrative issues raised by the structure of the hypothetical new system, but also by the politics of enactment. This paper, commissioned for a conference concerning consumption-based reform, asks the inevitably speculative question of how the politics of such a reform, if it occurred, would affect (or impair) the end product. The conclusions reached are not very optimistic.

You can download it here.

Prediction (with promise to fess up later if I'm proven wrong)

The U.S. is going to attack Iran this year. The timing will be set for maximum impact on the 2006 U.S. Congressional elections.

For extra credit: not a prediction, but I wouldn't be surprised by the use of tactical battlefield nukes. One important advantage is that this may help to smoke out Democratic opposition, or in the alternative make them more complicit.

Final point to keep in mind: this would lead to much greater protests than invading Iraq (potentially another advantage). Bush claims unlimited Commander in Chief powers to act domestically as he sees fit to prevent harm to the war effort.

Musical update

At first I wasn't enormously enthralled with the new eponymous album (aka the "Gun Album") by the Minus 5 (mainly Scott McCaughey/Peter Buck). The style is just extremely familiar from McCaughey's earlier work and from its roots in late 60s influences. Bur after a few listens I have come to like it. Gap between the relatively cheery sound and the mordant (to put it mildly) lyrics is especially enjoyable.

The best defense of Bush's leaking

The newspapers have been all over the Administration's incessant leaking for political reasons, while any or all disclosure of information by anyone else, including where it exposes crimes, is deemed a treacherous blow to our national security.

Bush has of course the definitional defense - if leaking is defined as anything not by him, then of course he is never guilty of it. But he also has a stronger defense against the claim of having harmed our national security for crass political reasons.

In the latest Libby imbroglio, it turns out that the information the Administration leaked to discredit Wilson was already known to be false.

There you have it. Surely the Administration is safe from any charge of damaging national security through leaks when it is careful to leak only false information (as it did throughout the Iraq war controversy).

But is there anything else wrong with suppressing accurate information while leaking lots of false information? Gee, I'll have to think this over a bit more.

Radio silence

I've been silent for a while due to a death in the family, but plan to resume posting soon.

It's come to this (yawn)

This article describes a House GOP revolt against Rove's planning to follow the usual bloody-shirt playbook in the 2006 Congressional campaign:

"Instead of Mr. Rove's pro-security agenda, House Republicans have pressed the White House for greater spending allocations to GOP-held congressional districts that face serious Democratic challengers. The sources said constituents have been judging the candidates by their ability to bring government funding and jobs to their districts.

"'If we can't deliver the pork, then we're out of business,' the senior GOP source said."

From early Pat Boone to late-vintage Elvis in only 12 years ...

Tax cut on repatriated earnings

Courtesy of the always-helpful TaxProf Blog, I note that the American Shareholders Assocation has just published a report concerning the recently enacted temporary tax cut on repatriated earnings, permitting U.S. multinationals, for a short time window only, to bring back overseas funds and pay tax on them at only a 5.25% rate rather than the full rate. The report shows that the amount repatriated vastly exceeds amounts projected by the Joint Committee on Taxation. The total is expected to surge past $300 billion, as opposed to a projected total of $130 trillion.

I always thought this was horrible legislation, a view shared by most who were not on the lobbying payroll of the groups seeking it, and shared even by those (including me) who believe that there is much to be said for a permanent low tax rate on repatriated foreign source active business income, or indeed U.S. exemption (making our system a territorial one purely on U.S. source income). The problem lies in the temporary character, which you can't credibly say will be once only. (You can say it, but don't expect anyone to believe you.) So foreign tax repatriations after the window closes will be down, I would expect, not only because pent-up repatriation demand has been satisfied but because people are waiting for the next low-rate holiday.

The unexpected flow of dividends makes the provision even "better" than its enactors expected, from a totally myopic point of view. Current revenues are increased, making the deficit smaller, if enough of these funds would otherwise have remained abroad for now. But future revenues, outside the budget window, are reduced, very likely by a much greater present value than the short-term increase. You can be certain that this gimmick will be used again and again in the coming years - increasing short-term revenues in exchange for damaging the U.S. government's long-term fiscal position. The push to encourage conversion from traditional IRAs to Roth IRAs (the cost of which is back-loaded) is the most prominent example of this, but surely will not stand alone.

I must say I'm not surprised by the under-estimate, even though I'm certain that the Joint Committee did its revenue estimates reasonably and in good faith. There was so much lobbying muscle behind this provision that you knew a lot of money had to be involved.

On the other hand, it's a bit surprising that the companies are willing to pay 5.25%. Current wisdom among the leading international tax economists and lawyers is that the repatriation tax is awfully easy to avoid, so why pay anything? I suspect that it has something to do with accounting. Even if the companies pay more tax than they would have otherwise, management would likely be fine with that if it permitted them to free up deferred tax liabilities that they had booked for financial accounting purposes. As I once heard an investment banker remark, "Saving taxes is all very nice, but reported earnings per share make the world go round."

Of course they do

Today's NY Times headline: "On Anniversary, Bush and Cheney See Iraq Success."

Meanwhile, the Wall Street Journal has an op-ed helpfully explaining how Bush, through Condi, could effectively get a third term.

Not recommended

Jonathan Ames' novel, "Wake Up, Sir!" It lured me with the conceit of borrowing Jeeves (or ostensibly an identical namesake) from the Bertie Wooster novels, to be the improbable valet (or do I mean gentleman's personal gentleman") for a contemporary American layabout, but proved thin gruel for as long as I kept going.

On the other hand, Belle and Sebastian's new album is growing on me a bit.

Cost of the Iraq war

Economists Linda Bilmes and Nobel Laureate Joseph Stiglitz have just published a National Bureau of Economic Research Working Paper in which they estimate that the cost of the Iraq war to the U.S. will exceed $1 trillion if our troops return by 2010, or $2 trillion if they stay through 2015. Bilmes and Stiglitz base this estimate, not just on budgetary costs that are officially allocated to the war, but on a comprehensive look at its long-term budgetary effects. Thus, for example, they include increased military recruitment costs and disability payouts by reason of the war, as well as the macroeconomic effects of higher energy prices.

As they note, in 2002 Rumsfeld estimated a total war cost of $50 to $60 billion, with Paul Wolfowitz saying the post-war reconstruction would be free from the U.S. standpoint due to Iraqi oil money. Bush Administration economic advisor Larry Lindsey was harshly rebuked for suggesting that the war's cost might reach $200 billion.

Large numbers are hard to grasp, so let's just put it this way. Rumsfeld's estimate was somewhere around 2 to 5 percent of the total estimated by Bilmes and Stiglitz. Lindsey's supposed over-estimation was 10 to 20 percent.

All you really need to know about Bush

This is an actual quote - not a joke - from a page 1 New York Times article, in tone a pure puff piece, that appeared on Sunday, May 21, 2000. The article is called "GEORGE W. BUSH'S JOURNEY: A Boy From Midland," and tellingly (in retrospect) subtitled "A Philosophy With Roots In Conservative Texas Soil." The author (Nicholas Kristof) quotes Bush childhood friend Terry Throckmorton as follows:

"We were terrible to animals," recalled Mr. Throckmorton, laughing. A dip behind the Bush home turned into a small lake after a good rain, and thousands of frogs would come out.

"Everybody would get BB guns and shoot them," Mr. Throckmorton said. "Or we'd put firecrackers in the frogs and throw them and blow them up."

Funny how unsurprised I was by this.

Random notes

I have discovered my cats' top-secret, feline-eyes-only memorandum detailing their plans for the day:

"1. Hang around kitchen asking for food.
2. Sleep.
3. Hang around kitchen asking for food.
4. Sleep."

No big surprises here, I must admit.

On a wholly different note, lately I've been listening to a self-compiled (via iTunes) album consisting of 18 selections from XTC's Andy Partridge, Fuzzy Warbles volumes 1-6. These records are a weirdly self-indulgent project of Partridge's, involving the release of all sorts of demos and outtakes that XTC or he compiled over the years. Mostly filler or out-takes of released songs, but each of the six volumes has 3 or 4 gems, which you can find through a combination of reading customer reviews on Amazon and playing 30-second song samples on iTunes. So selected, the song quality is if anything higher than on an average XTC album, although the production values are lower. It sounds like it comes from some strange alternative universe in which Paul McCartney had retained all of his talent and taste after leaving the Beatles.

New light on old battles

Last Thursday at the NYU Tax Policy Colloquium, our guests were Joe Bankman and David Weisbach, presenting their recent paper on income vs. consumption taxation, available here under the March 2 date. Profuse apologies for getting the title backwards on the cover sheet.

Bankman and Weisbach push a pro-consumption tax line that I have also pushed in print. The basic idea we share is that a consumption tax can be just as progressive as an income tax, while being more efficient and perhaps also doing a better job of ranking people (on a lifetime basis) in terms of how well-off they are.

One of the big points of contention concerns the burden of the consumption tax on future consumption. Income tax advocates commonly complain that, say, Bill Gates and his heirs won't pay consumption tax on their huge fortune until it is actually all spent on consumption, if it ever is. Consumption tax advocates reply that, assuming a perpetual fixed-rate tax, the wealth is already bearing the burden and has merely gotten to defer payment at a market rate of interest (meaning that the deferral does not reduce the present value of the liability). No difference than if wealthy people paid more tax today but did enough extra borrowing to fund the cash flow. And hard to deny if you accept, as most do, that a consumption tax is neutral as to when one consumes, thus supporting the conclusion that wealthy people aren't paying less, in present value terms, merely because they defer spending their wealth. In any event, this is the argument that I and others (such as Bankman and Weisbach) have made.

In the course of the discussion, largely due to Alan Auerbach's efforts as Colloquium co-convenor and lead discussant for the session, it became clear how uncontroversial all this would be if people in fact invariably spent all their wealth before dying. E.g., if Bill Gates actually were guaranteed to spend his entire fortune before heading to that virtual cyber-place in the sky, then his deferring payment at a market interest rate would be accepted by nearly everyone, I think, as good enough to support viewing the unpaid tax as being borne by his wealth today. But of course Gates is not going to consume it all. Instead, at least if he didn't plan substantial charitable bequests, it presumably would all be going to his children.

Since this is what makes income tax advocates cavil at the equivalence claims, it seems clear that the treatment of bequests is at the heart of the income vs. consumption tax debate, even though I and others have been accustomed to describing the debates as wholly separate. Inherited wealth is at the heart of the dispute, even though one could have an income tax or a consumption tax with or without an estate or inheritance tax. (The latter would be paid by recipients of bequests, with the rate structure depending on how much one got rather than on the size of the overall estate. The optical reason for this is that it combats calling the thing the "death tax." The substantive reason is that, if inheritance of concentrated fortunes is the concern, the tax should depend on the degree of concentration that persists.)

Let's back up here a second. How could one possibly support an inheritance tax if one favors consumption taxation? They're often thought inconsistent, because taxing bequests implies taxing saving given that it happens over time.

But in fact there is a separate thread here. Henry Simons, in his "Personal Income Taxation" book, famously urged that gifts be double-taxed (non-deductible by the donor, but included by the donee). In doing so, he was addressing the definition of the consumption piece of the income tax base. He argued that it's clearly consumption by the donor, who does it voluntarily in lieu of spending the money, say, on restaurants or vacations, while at the same time financing current or future consumption by the donee (who indeed is better-off than one who had to render services to get cash). And Simons was clearly correct, in terms of how we might most logically think of the gift as affecting the welfare of the two parties.

Why not double-tax gifts, then? Leaving aside administrative problems (especially when we think of all the gratuituous transfers of services inside a household), the best argument against, developed at some length in work by Louis Kaplow, is that there's an altruistic externality we might not want to discourage, from the fact that a gift dollar in effect purchases $2 of consumption value (by the donor and the donee).

Let's cycle back to the consumption tax. Bequests other than accidental ones (i.e., those left without donative motives because the decedent didn't live long enough to use it all up) "should" be included in the consumption tax base, as consumption by the decedent, if we are looking just at how well-off the decedent is compared to people with the same budget line who simply had different consumption preferences. Then we would also tax the heir, like any other donee, on spending the bequest on consumption. Again, this would seemingly be the right rule in the absence of the altruistic externality. All this leaves unsolved the question of whether taxing gifts just once is the right response to the altruistic externality, as opposed to being, e.g., either too big or too small a benefit (perhaps more likely the latter).

So the treatment of bequests and other gratuitous transfers raises issues that are separate from the income vs. consumption tax question of taxing saving.

Why would we have an estate or inheritance tax, on top of having decided that generally taxing gratuitous transfers once is the way to go? The argument is presumably one of negative externalities to bequests, which worsen the relative position of non-recipients. Again, whatever one thinks of this, it's distinct from the income vs. consumption tax debate.

Final point trying to tie all this together: if we want to tax gratuitous transfers at once, taxing the bequest at death as consumption but then giving some sort of credit to the donee against future income or consumption tax liability as to the amount received would address the multi-generational timing point that income tax advocates hold against the consumption tax. And it would not increase the tax burden on saving or bequests if we could make the tax present value-equivalent to deferring it (via the offset against future tax liability). An issue worth exploring?

The thrill is gone

While the new Belle and Sebastian album is reasonably pleasant, and while I respect the way they have reinvented themselves. moved on to new things, become livelier, etc., I don't find it nearly as compelling as the best of their earlier work.

Another stake through the already shriveled heart of "starve the beast"

Budget expert Stan Collender explains the following in his "Budget Battles" column (all text here is his, not mine):

The "starve the beast" theory of budgeting they have been using assumed that big deficits would pressure Congress to reduce spending.

It now looks as though the theory is really nothing more than a scary fiscal fairy tale.

If it were true, it would be happening now. The federal budget deficit could be close to or exceed $400 billion for several consecutive years and the five-year moving average deficit has never been higher than it is today.

But instead of making members of Congress consider spending changes, more representatives and senators of both political parties appear less willing to cut spending than ever before.

For example, many of the spending cuts in the Bush fiscal 2007 budget have already been rejected in one way or another. Some were literally dismissed out of hand when many of the most influential and powerful Republicans indicated they would not accept the president's proposals. Other Bush spending changes were rejected one or more times in previous years and have little or no chance of being enacted this year…

How did this happen?

As previous " Budget Battles " columns have pointed out, the beast has gotten so big that the spending cuts needed to reduce it are not politically palatable. The spending changes that are possible won't make enough of a difference for senators and representatives to support them.

The starve-the-beast strategists also seem to have not thought about the possibility that spending increases would be enacted at the same time as tax cuts. The Medicare prescription drug plan, activities in Iraq and Afghanistan, Katrina relief and homeland security together increased the deficit by more than $1 trillion over 10 years at the same time that a series of tax cuts were reducing revenues. Tax cuts alone might have left the deficit manageable; tax cuts plus spending increases did not.

At the same time this was happening, the White House was telling people that the deficit was not a problem so that any interest in moderating the policies that were feeding the beast were swatted away.

This makes the starve-the-beast strategy the latest example of a Washington myth, something that sounds plausible but turns out to be nothing more than fiction.

Bruce Bartlett's Impostor

I’ve been looking forward for some time to reading Bruce Bartlett’s Impostor, and finally I’ve gotten my chance. It’s very much worth reading. Bruce powerfully makes the case that the current Bush Administration has absolutely nothing in common with principled small-government conservatism, is unique among modern U.S. Administrations in having no policy process, is leading us towards fiscal disaster, and that its budget policy cannot rationally be defended from a conservative viewpoint on “starve the beast” grounds.

As readers of this blog may have discerned, these are all views I share, although my philosophical orientation differs from Bruce’s (mainly in my having more of a taste for progressive redistribution and not as strong a prior as he does - albeit some - about market versus government solutions). But he powerfully makes his case, and I am unaware of any thoughtful or intelligent countervailing point of view on his claims, perhaps because none is possible. (Reciting slogans doesn’t count, even if you are Milton Friedman.)

One reason I consider Bruce’s point of view so important, beyond the politics of the current day, is that a solution to our fiscal problems is politically impossible without bipartisanship. Principled people on the right and the left actually agree about a lot, and could make a deal that both agreed was way better than policy today if they were empowered to do so. But national politics has to permit such an alignment, in the manner of the 1983 Reagan-Tip O’Neill agreement that helped sustain Social Security, or the 1986 tax reform. Bruce is one of the first people on the right to really grasp this, e.g., by calling for a VAT, on top of the current set of taxes, as better than just going on the way we’ve been. The Republican Party’s march to the extreme (albeit not small government conservative) right reflects a lot of political factors such as voter turnout patterns, gerrymandering, and the diminished number of battleground states, but it also reflects the ideological climate of partisan trickery uber alles. People like Bruce Bartlett and William Niskanen restore one’s faith in conservatives even if one has areas of persistent disagreement with them.

One of my favorite tidbits: at p. 32, we learn that Glenn Hubbard was “strongly chastised by Bush for telling him that a decision that he, Bush, had made was not good economic policy. Hubbard was told never to tell him that again.” If only Glenn Hubbard would speak frankly in public about this President and Administration, it would be great fun to hear.

Dubai port deal

While I doubt that it actually endangers our national security, it is certainly fitting that a White House that so often has demagogically misused security concerns for its own partisan ends is getting a bit of the same treatment this time. For them to complain would be a bit like Jack the Ripper saying that someone is being too rough.

I also suspect corruption or at least cronyism in this matter, albeit unrelated to the Dubai issue as such, given White House practices in Iraq and elsewhere along with the news reports suggesting that the contract was awarded to a company with prominent friends.

Resignation of Larry Summers

I gather from the Times that Larry Summers is about to resign as Harvard's President. Although he dug his own grave by making various impolitic and questionable statements, I regard this as an unfortunate turn of events. Admittedly judging him from a distance, Summers seemed to be someone who cared about academic standards and about taking teaching obligations seriously, and who, to some extent, ran into interest group opposition that ably took advantage of his blunders.

Cat awards

For the sixth straight year, Shadow has won the Good Guy Award, Feline Category, for our household.

Ursula wins a Purple Heart for coming downstairs while two fifty-pound basset hounds were visiting. They immediately gave chase, baying loudly, but she scampered around the kitchen and back upstairs just in time.

Buddy wins - well, let's just call it the We Love Him Anyway Award. Very sweet-tempered, but with a young cat's taste for excitement.

At a certain point, you just have to laugh

Whittington, out of the hospital, is "deeply sorry" for all the trouble Cheney "has gone through this week."

I'm sorry you shot me! Please forgive me!

Our Vice President

The following statement by the Humane Society of the United States is available here:

"Monday's hunting trip to Pennsylvania by Vice President Dick Cheney in which he reportedly shot more than 70 stocked pheasants and an unknown number of mallard ducks at an exclusive private club places a spotlight on an increasingly popular and deplorable form of hunting, in which birds are pen-reared and released to be shot in large numbers by patrons. The ethics of these hunts are called into question by rank-and-file sportsmen, who hunt animals in their native habitat and do not shoot confined or pen-raised animals that cannot escape.

"The Pittsburgh Post-Gazette reported today that 500 farm-raised pheasants were released yesterday morning at the Rolling Rock Club in Ligonier Township for the benefit of Cheney's 10-person hunting party. The group killed at least 417 of the birds, illustrating the unsporting nature of canned hunts. The party also shot an unknown number of captive mallards in the afternoon.

"'This wasn't a hunting ground. It was an open-air abattoir, and the vice president should be ashamed to have patronized this operation and then slaughtered so many animals,' states Wayne Pacelle, a senior vice president of The Humane Society of the United States. 'If the Vice President and his friends wanted to sharpen their shooting skills, they could have shot skeet or clay, not resorted to the slaughter of more than 400 creatures planted right in front of them as animated targets.'"

Even more fun when you're drunk, of course.

A new front in the anti-tax war

A group called the "Coalition for Tax Competition" has just sent a letter to OMB Director Bolton urging that the U.S. de-fund the Organization for Economic Cooperation and Development" (OECD), due to the latter's strong efforts in recent years to coordinate international responses to tax competition (and, I should add, tax evasion, which is different but can involve the same players).

With Grover Norquist and other anti-tax luminaries being the signatories, their sending this letter to the White House is presumably a formality, in the sense of being merely a PR stage in a coordinated campaign that involved White House participation from the start.

I'll give these guys one thing. The issues raised by tax competition are indeed two-sided. They claim that tax competition is good because it lowers overall tax levels and welfare state funding. Although some on the left (Reuven Avi-Yonah, for example) agree with this albeit seeing it as bad rather than good, I personally feel it's overstated in that the main tax base for all nations - resident individuals' earnings - is not at this point greatly affected. But there are market benefits to reducing the tax systems' cartel power. On the other hand, tax competition can actually be inefficient, since it may simply create tax preferences for mobile businesses that can exploit it and permit tax reduction via wasteful planning transactions. And without cartel power via taxation, it would be impossible to fund public goods. The correct analysis here lies at the margin, and I don't know how it would come out - it depends, for example, on various political imponderables regarding the response to the relatively minor revenue effect.

The signatories also claim that tax competition is good for the U.S. That, of course, depends. They may be right in cases where U.S. individuals who own interests in multinational entities (MNEs) pay less tax to foreign governments by reason of tax competition, and thus possibly more to the U.S. via reduced foreign tax credits. They may also be right in cases where the U.S. can compete successfully with foreign countries for tax base. (Although note that, these days, we have relatively high corporate tax rates.) But they are wrong, from a U.S. national welfare standpoint, in cases where either of these scenarios runs in the other direction - i.e., where we're talking about foreigners' tax payments to the U.S. that would be creditable, or other countries tax-competing with us for a share of the worldwide base.

One point they don't address: the OECD is accused at times, in its anti-tax competition initiatives, of favoring the interests of high-tax developed countries relative to low-tax less-developed countries. Insofar as this is true, the OECD might be serving U.S. interests (and those of our peers) but at the expense of poorer countries. This is certainly open to criticism from a global welfare standpoint.

The easy tiebreaker would be to say: If Grover Norquist is for it, I should be against it. Certainly an excellent rule of thumb, but ultimately too knee-jerk for my taste. This is a subject that could bear being debated more in tax policy circles.

That darn pre-9/11 mindset, I can't seem to shake it

Maybe it's just me, but looking casually at the New York Times I once again had the feeling of having stepped into an alternate universe, totally unimagined in the U.S. before the 2000 election.

First, on page 1, the headline: "Tough U.S. Steps in Hunger Strike at Camp in Cuba." The article explains: "Guards have begun strapping detainees into 'restraint chairs' to feed them through tubes and prevent them from vomiting." Keep in mind, of course, that many, perhaps most, of the detainees at Guantanamo have no connection to terrorism, and were picked up by chance or mistake because the U.S. troops overseas have been operating in places where they simply don't have the local knowledge to figure out who is who.

Inside the paper, news concerning Attorney General Gonzales' performance at Senate hearings concerning the secret wiretapping. He is asked how could the disclosure have hurt national security. Wouldn't you think al Qaeda terrorists already knew that the U.S. might be trying to monitor their communications?

Well, yes, Gonzales agreed. "But if they're not reminded about it all the time in newspapers and in stories, they sometimes forget."

So apparently the harm to national security had nothing to do with disclosing the program itself, but with reminding those zany, forgetful kooks out there that the U.S. is in fact trying to catch them. (Although frankly I wouldn't be too worried, if I were in their shoes - they're being chased by the guys who cornered bin Laden at Tora Bora and did such a great job with the Iraq reconstruction & insurgency, and in New Orleans.)

Gonzales then explained that the program had helped identify "would-be terrorists here in the United States."

For once, the often over-verbose Senator Biden was equal to the occasion.

"Have we arrested those people?" he asked. Gonzales replied evasively. In fact we know there were no arrests - these things are always announced, even when it harms national security, as in the notoriously premature White House leak concerning an arrest in Pakistan in fall 2004.

Finally Biden said: "Well, I hope we arrested them — if you identified them. I mean, it kind of worries me because you all talk about how you identify these people, and I've not heard anything about anybody being arrested."

Okay, so the terrorists the Administration found in the U.S. haven't been arrested yet. But I bet they're on double secret probation or something, at an absolute minimum.

Bush's budget

Amazingly enough, a New York Times editorial had the best line, comparing it to James Frey's "A Million Little Pieces" (as in, an unacknowledged work of fiction). The budget is DOA anyway, and I think adults have better things to do than fussing about the idiotic details of the Bush "plans." As usual it has interesting statistical info of various kinds.

Halftime at the Super Bowl

Had Paul McCartney performed at Super Bowl I (Jan 1967), and the Rolling Stones the next year, that might actually have been worth watching. But 38 years too late isn't exactly a near miss.

Just trying to help

I've been working hard lately on tutoring this tennis & squash player who often plays very well, but keeps on forgetting about patience and composure, with the consequence that he can be too erratic.

Myself.

Budgetary savings, Bush Administration-style

Having just eked out a victory in the House over reducing spending by $39.6 billion over 5 years (i.e., less than $8 billion per year), the Administration is now trotting out its supplemental budgetary request (i.e., outside the supposed Pentagon annual budget of $439.3 billion) of an extra $120 billion for Iraq and Afghanistan for one year.

You know the old saying: One step forward, fifteen steps back.

Jason Furman on robust solvency and dependency indexing for Social Security

Interesting paper today, and one of broader policy interest, at today's Tax Policy Colloquium, which I am running along with Alan Auerbach at NYU Law School this semester.

BTW, the weekly schedule and papers are available on-line here.

Furman addresses what one might call the second-order fiscal problem in Social Security. The first-order problem is the program's existing fiscal gap, recently estimated at about $11 trillion. (And of course the broader U.S. fiscal gap, without which this would be less of a concern.) The second-order problem is that, even if we fixed the first-order problem based on our best estimates as of today, a problem of under- or over-funding would reemerge once there was new information about demographics, wage growth, etc. We can probably be confident that the political system will be unable to handle these changes in a timely fashion, for a range of reasons ranging from voters' loss aversion (relative to current law) to interest group politics to chicken games between Republicans and Democrats re. how to adjust the system.

Furman therefore proposes that changes be evaluated in terms of "robust solvency," i.e., how would their restoration of sustaiability survive changes to economic and demographic forecasts. Built-in features of the system reduce the risk exposure to changes, e.g., in GDP growth, but changes in the worker to dependent ratio, e.g., due to changes in fertility or mortality, are a different matter.

An example of a change that would not meet the robust solvency standard is changing from wage indexing to price indexing of benefits, for affluent seniors or all seniors. The problem with this change, from a robust solvency standpoint, is that, if economic growth is lower (increasing the Social Security funding program), the benefit cut it imposes is smaller (since wage indexing is then less in excess of price indexing), while, if economic growth is higher and benefits cuts are thus less needed, the benefit cut is higher. He therefore considers a shift to price indexing markedly inferior to an identical benefit cut, by an expected-value standard, that lacks this perverse and backwards feature.

As an implementation of robust solvency, Furman proposes dependency indexing, or having taxes and/or benefits adjust automatically to unexpected changes in the dependency ratio. This would make the system self-correcting without requiring the political system to show unexpected maturity in responding in a timely fashion. This idea could be combined with any Social Security reform that created sustainability under current median projections.

I consider this a very creative and worthwhile idea that merits serious consideration at a minimum and incorporation into various reform proposals on the high end.

Briefly on Bush's HSA proposal

I've certainly seen worse things come out of this Administration. E.g., the plan does address some genuine anomalies in existing law, such as the more favorable treatment of insured than uninsured routine coverage, and the difficulty of replicating the benefits of tax-free employer-provided plans if you don't have a large enough pool of employees to satisfy the insurance company's taste for diversified risk.

But of course it figures that once again, as always, the answer is more tax cuts. Also, although the short-term budget picture doesn't show the difference, HSAs that are permanently tax-free have a larger long-term budgetary cost than tax-free savings accounts that merely defer income.

One question I would ask myself before establishing an HSA, if I didn't expect to use it for a while, is how confident one should be, in the face of an enormous fiscal gap, that currently promised future tax benefits will actually be there when one is ready to use them.

Bush's little-known literary bent

A news report today says: "One day after President Bush vowed to reduce America's dependence on Middle East oil by cutting imports from there 75 percent by 2025, his energy secretary and national economic adviser said Wednesday that the president didn't mean it literally."

I'm reminded of the old joke - is it from Monty Python? -

Older man: "Is it for the likes of you that I lost a leg in the War?"

Younger man: "But James, you have both your legs."

Older man: "I was speaking metaphorically, you fool!"

No emphasis on HSAs in the State of the Union after all

Although I gather there is still an HSA proposal, on which I may comment soon.

This is all hearsay, as I couldn't watch the State of the Union. Prior commitments; other important things I had to do. What was it - maybe collecting driftwood, or googling the word "spam" - or was I checking my cats' gums to see if they've been brushing - or was it reading the phonebook? I can't quite remember, but anyway I know it was a much better investment of time than watching 52 minutes of dreck.

Ouch

It's nice to be reminded that I'm generally against the Democrats when they're in power, albeit nowhere near as vehemently as I am against today's governing cabal. But a fresh reminder comes from Josh Marshall's Talking Points Memo blog, of which I am generally a fan, but which today is circling the wagons against Bush's reported HSA proposal, and the general conservative position, by saying:

"[T]he core premise of the policies the president is about to lay out is that Americans are over-insured when it comes to health insurance. Over-insured. Got too much insurance."

Josh's point, of course, is that millions of Americans lack any health insurance. But the conservative position concerns something else. Its point is that the Americans who have health insurance have too much, or more specifically too much low-end, health insurance. As in coverage for routine expenditures that reduce cost-consciousness among consumers. I make you pay for treatment that I value at less than its cost, and you do the same for me. We both end up paying for each other (and everyone else who is doing the same thing) through our insurance premiums.

It's not really helpful to miss, be it ignorantly or willfully, the correct point behind the conservative analysis of healthcare. How important the over-insurance problem is compared to the lack of coverage for poorer Americans one can reasonably debate. (Although the two might be linked, in terms of misallocation of resources.) How much correctly oriented cost-consciousness we can really expect in a market as flawed as that for healthcare is another open question. As per my earlier post, I don't think HSAs are a constructive answer to the sector's unsustainable growth and its fiscal consequences. Put me down instead for the Tax Reform Panel's proposal to cap the exclusion for employer-provided health insurance. (Not to say that the reforms and rethinking should stop there.) Another fair point is that it borders on insane, in the current budgetary setting, to address the over-insurance (for the insured) problem by adding more tax benefits rather than by paring them back. But let's not fail to see a genuine problem concerning misaligned incentives that affects not just consumers but the entire healthcare industry. (E.g., why should drug companies chase cost-saving treatments rather than expensive new ones when their market isn't cost-conscious.)

I've wanted to return to being a good-humored plague-on-both-their-houses type, as I was until recently. But the Republicans haven't been willing to help me on this - I can'f warm up to the idea of living in a corrupt dictatorship run by incompetent scoundrels - so I wish that the left & Democrats would hold off for now on doing their part.

Consequences of the fiscal gap

Anyone who takes a serious look at the U.S. government's current budgetary course knows that what we are doing is unsustainable. And we all know "Stein's Law," coined by the late economist Herbert Stein, which holds that anything that cannot happen indeed will not happen. But how will things shake out when the crunch comes?

The scenario that has gotten the most attention, and that I tend to believe, is that the U.S. government can't sell its bonds because its solvency is no longer credible, starts printing money triggering inflation, etcetera. But a second view is that we will avoid all these problems, and keep the bondholders happy, by enacting huge Social Security and Medicare cuts that involve means-testing, and that essentially convert these programs into mere safety nets for the elderly poor.

This might be a better outcome if it heads off larger economic dislocations - at least if you aren't one of the people whose benefits are substantially cut. But why would we expect it? The main argument I hear is that the Federal Reserve Board is independent and would refuse to start printing money (and also importantly, investors in the bond markets would know and rely on this). Thus, politically powerful though seniors are, taking the fiscal gap out of their hide, along with tax increases and the like, would at some point become the political path of least resistance.

Obviously, this depends on just how strongly rooted the Fed's independence actually is. Congress can bring the Fed to heel whenever it likes by changing the enabling legislation. So the question is whether the political commitment to the Fed's independence is (or rather at the key moment will be) stronger or weaker politically than the aversion to cutting benefits. This will depend in part on the political actors in place at the time, including the Fed Chairman, who would have to decide how forcefully to play his hand.

Supine media

Why exactly does today's Washington Post headline say: "Bush Reasserts Presidential Prerogatives," rather than "Bush Stonewalling on Abramoff, Katrina, and Wiretaps"?

Health savings accounts

Bush is reportedly going to make expanded health savings accounts (HSAs) a central part of his State of the Union address. At this point, it's about the only big-sounding domestic initiative that he can plausibly try to conjure up. This would apparently be coupled with people's choosing high-deductible health insurance plans. E.g., you put $2,000 in the plan, pick health insurance with a $2,000 deductible, and then you are actually paying medical expenses out of your own pocket, albeit with tax-deductible cash. (To make it really out of your own pocket, the HSA rolls over and becomes an expanded retirement saving account.) We already have something along these lines in the law, but presumably he'd expand it significantly.

I have a lot more sympathy for the idea of making people cost-conscious in their healthcare expenditures than many in the liberal blogosphere do. But - it's not clear to me how well this low-information market, in which people don't really know what they need to and are being instructed by medical professionals with incentive structures of their own, can really function even with greater cost-consciousness.

Another criticism in the liberal blogosphere is that Bush, as usual, is trying to save big companies money. The idea is that the high-deductible insurance, which they presumably still pay for, gets cheaper, while the workers are paying more out of pocket. This is only a transition effect (wages and so forth should presumably shake out to a similar equilibrium as before), but politics is all about transition effects, and I suppose companies might gain big time as the adjustment occurred, depending on how locked-in the current terms of employment are in the short term.

To my mind greater cost-consciousness ought to help, although perhaps not as much, in the healthcare industry, as one would like to think. When it does help, while less medical services are being consumed, presumably that reflects that they weren't actually worth the out of pocket cost to the consumer.

One big problem with the Bush plan: as always, is bigger deficits and a worsened fiscal gap. Plus, gaps in insurance coverage would remain. More generally, the pooling of health risks, which is unambiguously socially desirable insofar as the risks are exogenous (not affected by the patient's behavior), and mixed rather than all bad even when it's endogenous, is not helped by the plan and possibly would get worse.

There are 2 potentially sane answers to the healthcare cost expansion crisis. The conservative idea is risk-adjusted vouchers. If A figures to cost the health insurance company $1,000 more a year than B, A's voucher to use towards purchasing the insurance is $1,000 higher. Economist Laurence Kotlikoff advocaes this approach, and the Bush I Administration was working on it for possible consideration after the 1992 election. The problems with this approach are (1) it still requires healthcare markets to work reasonably well in terms of consumer choice, and (2) it requires healthcare markets NOT to work so well that the insurance companies can outsmart the government and cherry-pick the people who are the best risks for them given the gap between voucher differences and actual risk differences.

The other idea is national healthcare, as Paul Krugman keeps advocating in the NY Times. I spent enough time at the University of Chicago to approach this as a huge skeptic. But other countries that provide it do indeed appear to get just as good (or better) healthcare results as we do, adjusted for all relevant variables, for a much lower GDP share and per capita cost. The government solution doesn't have to be absolutely good to be worth considering, just good given the alternatives.

Of course, when you think about how utterly corrupt and depraved our political system is these days (with the Medicare prescription drug bill being Exhibit A through Z), you have to wonder. This is a bill that apparently arbitrarily excludes particular drugs from coverage just because some lobbyist or other, presumably working on behalf of a rival product, got it excluded with no explanation or rationale. We know for certain that, if the current Republicans in Congress designed a national healthcare plan (anathema though this would be to them), they would make it so horrendously bad that the days when doctors bled their patients would acquire a gauzy nostalgic haze by contrast. So the question is how much better legislation written by future Congressiones would be. Are the current Republicans exceptionally depraved when measured against the future as well as the past? Or are they merely the harbinger of how, from now on, things are going to be? I'm not sure I want to know.

Signs of aging

Need reading glasses for restaurant menus; have to watch diet more carefully; recently confused Devendra Banhart with Sufjan Stevens.

Why is Congress so corrupt?

Here is a good column by Bruce Bartlett, discussing why Congress has become so corrupt that the Abramoff was inevitable and (its detection aside) utterly unsurprising. He notes how different the system was in the 1970s when he worked on the Hill, to which I'd add that it was still about 60 to 80% like that, rather than like today, when I was on the Hill in the mid 1980s.

My main quibble with the column is as follows. Bruce blames the Congressional "reforms" of the 1970s that hit the seniority system for starting the slide away from institutional pride and towards corruption, and says that the post-1994 changes did the rest of the damage. While I agree with his assessment of these changes, I suspect the moral collapse was inevitable anyway for broader cultural and institutional reasons. E.g., increasing partisanship for various structural reasons, ever greater move towards soundbite politics, celebrity culture, far greater professional fluidity in all kinds of fields, the stock market bubble culture of the 1990s, etc. Take the likes of Bill Frist, leaving aside that I consider him a disgusting political slut and looking just at the career path. Doctor from super-wealthy family gets a Senate seat, is immediately itching to move onward and upward if he can, etc. Not exactly the same type of story as Everett Dirksen or Russell Long.

Bruce concludes that the thing to do is bring back the committee system from pre-1974. He notes that, with its demise:

"A lobbyist no longer needed to know the substance of a bill or have long experience with the committee of jurisdiction. He just needed to know one guy in the leadership who could stick his proposal into a bill when no one was looking. By the time the bill was even printed, it would already be law.... [Thus,] a real reform would be to empower Congress's committees once again and make it harder for the leadership to act without proper oversight and deliberation."

Were it up to me, I'd certainly give this a try. But I suspect that Humpty Dumpty cannot in fact be put together again.

I realize that, unlike Bruce, I am not being very constructive here.

Something to look forward to

According to the NY Times:

"The White House acknowledged on Thursday that the budget deficit would climb back above $400 billion this year, erasing the brief improvement last year and complicating President Bush's vow to cut the deficit in half by 2009."

Now for the good news. The Bush White House has a notorious practice of high-balling early estimates of the deficit for the next year, so that when it comes out lower at the end of the year they can crow that things are improving & that their economic "policy" is working. Perhaps they are planning to do this again.

The article also notes:

"[G]overnment spending has climbed sharply, from 18.5 percent in 2001 to nearly 20 percent for each of the past three years. By contrast, tax revenues plunged to as little as 16.3 percent of the nation's economy from 19.8 percent in 2001."

And this even without regard to the $18.2 trillion (over the infinite horizon) Medicare prescription drug benefit that starts this year and can be expected to grow rapidly.

Light reading

Biographers are notoriously biased towards their subjects, leaving aside the hateography genre of recent years. But even before I started reading Ron Chernow's Alexander Hamilton bio, it was plain to me how Hamilton towered in every way - morally, intellectually, personally, philosophically, politically - over the indolent slaveholder who became our third president.

It seems to have taken two centuries for Hamilton to get his due, and for people to see through the Swift-boating of the late 1790s. That time, rather than a cowardly deserter attacking the military credentials of a war hero, it involved a cosseted Virginia grandee with hundreds of slaves (sold down the river when he died to pay off his debts) portraying someone who came here at age 20, penniless and from a broken family, and who also happened to be an abolitionist, as a sneering "aristocrat."

Bush and hearings on the secret domestic wiretapping

The NY Times says that Bush is "resigned" to hearings, and quotes him as saying:

"There will be a lot of hearings to talk about that, but that's good for democracy. Just so long as the hearings, as they explore whether or not I had the prerogative to make the decision I make, doesn't tell the enemy what we're doing. See, that's the danger.''

I suspect that "tell[ing] the enemy what we're doing" actually means "exploring whether the program was restricted to wiretapping suspected terrorists, as opposed to others of interest to the Administration."

Alito

From the start my thought was, so long as he's competent and not a loony, might as well approve him. And my sense was that he met this standard. But I am starting to wonder.

All that stuff he said in the past and now tries to shrug off gets disturbing, after a while. And for me the make or break issue is, not abortion, but rather Presidential dictatorship.

In today's hearings, based on news reports (I consider my time too valuable to watch these bloviathons), I note that he almost certainly lied about his knowledge concerning Concerned Alumni of Princeton, a conservative group that any alum of a certain era (such as him and me, to name two) knows about. And since he was a member for 8 or 9 years, he should certainly know lots more about them than I do, which is lots less than he apparently admits to.

But I particularly disliked the quote from the news report where, asked if the President has to follow the law, he said: ""The president has to follow the Constitution and the laws."

On its face, what could be more anodyne. But in context, this appears to be an endorsement in code of the Yoo position that the President is an absolute monarch during his term of office (and presumably beyond, if as Commander in Chief he decides to cancel the next election). This is Bush Administration-speak for "The President doesn't have to follow any laws that he doesn't like. Any time he claims constitutional authority to disregard the law, no further inquiry by any branch of government is permissible."

I'm offended both by the dangerously authoritarian cast of this theory and by what I judge to be Alito's disingenuous use of code words to mislead about his true beliefs and intentions. The use of code words suggests that he is a card-carrying member of the White House talking points brigade.

If he's confirmed, I hope I'm wrong.

No small d democrat (or small r republican) he

Has there ever been a president so insistent as Bush on the theme that nearly all criticism of his foreign policy is impermissible?

According to the NY Times, Bush says we must restrict ourselves to a debate "that brings credit to our democracy, not comfort to our adversaries." And he adds: "There is a difference between responsible and irresponsible debate and it's even more important to conduct this debate responsibly when American troops are risking their lives overseas."

Isn't preventing "irresponsible" debate, if he judges it overly harmful to our troops and helpful to our adversaries, unambiguously within his interpretation of his commander in chief powers? How could it possibly not be?

NY moment

While getting my son lunch in Two Boots Pizza, I'm pretty sure it was Quentin Tarantino standing there. I asked him if he had ordered already. He said yes, and a minute later got his takeout in a box.

I thought of asking him if he had ordered Mr. Pink, which is one of the specialty pizzas at Two Boots, but the New York code holds that you neither hassle celebs nor appear too interested.

Quote of the day

From E.J. Dionne in today's Washington Post, brought to my attention by a friend:

"What the Republicans need is 50 Jack Abramoffs," his friend Grover Norquist told National Journal in 1995. "Then this becomes a different town."

I would add a comment on this, but it's just too easy. Creative suggestions welcomed.

On a lighter note

One nice thing about being a parent, especially when the kids are of your gender and thus have temperamental similarities, is that you can introduce them to stuff you liked at their age, if (and only if) you think it will work.

I remember, at age 10 or so, being amused by a little comic book by Mad Magazine's Don Martin, called "The Mad Adventures of Captain Klutz." Got it last month on eBay as a holiday gift for the fellas, with 8 other Mad books (4 also by Don Martin), for a cool $3.26 including shipping.

Fellas have enjoyed the books, Captain Klutz especially, just as I did at that age.

Sample quote: Captain Klutz is fighting Sissyman, who, having immobilized our hero with an ice cream gun, says:

"And now I'm off to steal a million dollars. But first, permission! Mommy, can I go out to play?"

"Of course, dearikins. But don't be latesies for din-din!"

(He's Sissyman, you see.)

I remember being delighted by this passage, as they are now, when I was of suitable age. Indeed, it would be bootless to deny that I can still recapture a bit of the old feeling.

Don Martin had some genuine merit as a comic artist. I recall his obsession with the fairy tale in which the princess kisses the frog and he turns into a prince. In one variant, she kisses him and she turns into a frog, and they hop off together. In another, he turns into a prince and they ride off together, but then he sees a fly and zaps it with a 10-foot long tongue. In a third, he turns into a prince and then, in the last frame, we see the wedding. People on her side in the audience, frogs on his side.

I'm sure there were more.