A Really Long Graph of 9-9-9

Economist Jared Bernstein today comments on candidate Cain's 9-9-9 plan and shares a graph that illustrates clearly the answer to "who benefits and who pays."

Here's the graph:

9-9-9 Abracadabra, Presto Change-o Poof!

Paul Krugman has posted the Tax Policy Center's analysis of Herman Cain's 9-9-9 plan. TPC's analysis doesn't even address the "what becomes of Social Security and Medicare without the payroll tax" question. Here is Krugman's post with links to the sources:

October 18, 2011, 5:27 pm

TPC Does Herman Cain

The Tax Policy Center has the distributional analysis of 9-9-9. It’s awesome:

Howard Gleckman summarizes:

A middle income household making between about $64,000 and $110,000 would get hit with an average tax increase of about $4,300, lowering its after-tax income by more than 6 percent and increasing its average federal tax rate (including income, payroll, estate and its share of the corporate income tax) from 18.8 percent to 23.7 percent. By contrast, a taxpayer in the top 0.1% (who makes more than $2.7 million) would enjoy an average tax cut of nearly$1.4 million, increasing his after-tax income by nearly 27 percent. His average effective tax rate would be cut almost in half to 17.9 percent. In Cain’s world, a typical household making more than $2.7 million would pay a smaller share of its income in federal taxes than one making less than $18,000. This would give Warren Buffet severe heartburn.

Candidate Forum

Tonight at 7:30 the Old Theater in Oriental, there will be a candidate forum for the three mayoral candidates.

Out of Pamlico County's nine municipalities, the only contested race is Oriental's race for mayor.

The forum could be interesting, and offers a chance to ask questions just before the election.

Voting for Alliance, Bayboro and Oriental begins the day after tomorrow during one-stop voting at the Board of Elections office in Bayboro. One-Stop continues until 1:00 PM Saturday, November 5th. Election day is November 8th at the usual election location in each municipality.

Don't forget to vote.

Seven Lies

Economist Mark Thoma in his blog today quotes from Robert Reich's analysis of "The Seven Biggest Economic Lies." He then adds seven more of his own.

It's worth reading the blog post to follow the comments.

Mark Thoma:

Robert Reich:

The Seven Biggest Economic Lies, by Robert Reich: ...Here’s a short ... effort to rebut the seven biggest whoppers now being told by those who want to take America backwards...:

1. Tax cuts for the rich trickle down to everyone else. Baloney. Ronald Reagan and George W. Bush both sliced taxes on the rich and what happened? Most Americans’ wages (measured by the real median wage) began flattening under Reagan and have dropped since George W. Bush. Trickle-down economics is a cruel joke.

2. Higher taxes on the rich would hurt the economy and slow job growth. False. From the end of World War II until 1981,... the top taxes on the very rich were far higher than they’ve been since. Yet the economy grew faster during those years than it has since. ...

3. Shrinking government generates more jobs. Wrong again. It means fewer government workers – everyone from teachers, fire fighters, police officers, and social workers at the state and local levels to safety inspectors and military personnel at the federal. ...

4. Cutting the budget deficit now is more important than boosting the economy. Untrue. With so many Americans out of work, budget cuts now will shrink the economy. They’ll increase unemployment and reduce tax revenues. That will worsen the ratio of the debt to the total economy. The first priority must be getting jobs and growth back by boosting the economy. Only then, when jobs and growth are returning vigorously, should we turn to cutting the deficit.

5. Medicare and Medicaid are the major drivers of budget deficits. Wrong. Medicare and Medicaid spending is rising quickly, to be sure. But that’s because the nation’s health-care costs are rising so fast. ...

6. Social Security is a Ponzi scheme. Don’t believe it. Social Security is solvent for the next 26 years. It could be solvent for the next century if we raised the ceiling on income subject to the Social Security payroll tax. That ceiling is now $106,800.

7. It’s unfair that lower-income Americans don’t pay income tax. Wrong. There’s nothing unfair about it. Lower-income Americans pay out a larger share of their paychecks in payroll taxes, sales taxes, user fees, and tolls than everyone else. ...

Seven more: tax cuts pay for themselves, regulation and uncertainty are holding back the economy, there are plenty of jobs but people don't want to work, Fannie, Freddie, and the CRA caused the crisis, CEOs deserve their high incomes, most unemployment is structural, and regulating the financial sector will harm economic growth. (And, for good measure, global warming doesn't exist and if does exits it wasn't caused by people. Even if it was caused by people, carbon taxes are still bad.)

Cardinals Vs. Rangers? What Gives?

I don't suppose I'm any more surprised than anyone else that the baseball playoff series sent Saint Louis and Texas to the World Series.

Not exactly a subway series.

For you youngsters who don't know what a subway series was, that was a series where the fans could get to all of the games on the subway. It might have happened, for example, between the Boston Red Sox and the Boston Braves. Or the Philadelphia Philles vs. the Philadelphia Athletics. Or more likely, the New York Yankees vs. either the New York Giants or the Brooklyn Dodgers. About the only place a subway series might happen today is between the San Francisco Giants and the Oakland Athletics. Would that be a BART series? Washington Nationals vs Baltimore Orioles doesn't qualify, either. It might be a MARC series.

The first World Series I remember was the 1947 series between the New York Yankees and the Brooklyn Dodgers. A subway series.

World Series games were daytime games until 1971. The exception is the final inning of the 1949 series was played under the lights. Otherwise the game would have been called because of darkness.

We had no television in Midwest City, Oklahoma in 1947. We followed the World Series on radio. My sixth grade teacher let the class listen to the games. I was the only member of the class who knew how to keep score, so I chalked a big scorecard on the blackboard and kept score during the games. It was a pretty exciting series, going seven games. Even then, I rooted for whoever played the Yankees, but it was in vain. Brooklyn lost.

I'm sure we learned something during those October afternoons, but I don't remember what it was.

Marvelous Music

The Old Theater resounded this evening with music provided by the Borromeo String Quartet.

The founder of the quartet and native of Durham, Nicholas Kitchen, introduced each piece with an explanation of how it fit in the composer's life and work.

As appropriate for the Old Theater, the concert consisted of old music: by Bach (1685-1750), Beethoven (1770-1827), and Schubert (1797-1828). But the oldest item on the program was cellist Yeesun Kim's Peregrino Zanetto cello, made about 1576.

Nicholas Kitchen emphasized that the quartet's violins, viola and cello had no electrical or electronic components. The sound they made was totally acoustic, using ancient technology.

But there was modern technology on the stage. On the music stand in front of each player was an Apple Macintosh laptop, which displayed the entire score. Pages of the score were turned by a foot pedal fabricated by Mr. Kitchen who paged forward as necessary, allowing each player to be on the same page.

The 435-year old cello filled the air with rich, mellow sound. I would love to hear the same instrument perform a cello concerto.

Apparently the Macintosh computers (circa 2010) performed impeccably as well.

The concert might have served as a paean to the late Steve Jobs.

There Is No Perfect Boat

One of the things sailors learn early on is that there is no perfect boat. Boat designers have to first learn the purpose for which a boat will be used before putting pencil or pen to paper. If the boat will be used for more than one purpose, he must craft a compromise design (racing and cruising, for example).

Dogma has its place and sometimes intrudes. Almost always to the detriment of competition with designs crafted without dogma. The best case study of a boat designer little hampered by dogma and free to follow design considerations wherever they led was Nathaniel Herreshoff. His designs were so successful in competition that they were often banished from racing by rules changes.

In my view, the tasks of government should be managed by people untrammeled by dogma, focusing only on the aim or goal of government policy.

But we seem unable to agree on goals.

I believe the goal of economic policy should be to craft policies that work. But work to what end? To the end of general prosperity.

Not necessarily equal prosperity, but neither should the end sought be vast inequalities.

From the beginning of the New Deal until some time in the 1970's, our general economic prosperity was the envy of the world. It was a time of strong labor unions, effective government regulation of banks and corporations, of steeply progressive income taxes. And a prosperous middle class.

In recent years it has become fashionable to speak of the generation that lived through the depression, went off to triumph during World War II and returned to the GI Bill and jobs that built our postwar prosperity as "the greatest generation."

They surely merit our admiration.

But in my view the greatest generation were the leaders who had the vision and persistence to guide us through this economic catastrophe and succeed in war and reconstruction afterward. That generation was born in the late nineteenth century, educated early in the twentieth century and with formative experiences during and after World War I.

This was my grandparents' generation, not my father's.

The guiding principal of my grandparents' generation, at least among the best leaders, was to question dogma and abandon it if necessary. Do what needed to be done, in a rational way after studying the problem.

This generation and the generation before them built the Brooklyn Bridge, America's great railroad system, designed and built automobiles affordable by working families, set aside national forests and parks for public enjoyment, and generally fashioned a world we all could enjoy.

They certainly had disagreements among themselves, but in general were able to debate public issues on their own merits.

This tradition is fading.

One place the tradition had continued was in weekly discussions on National Public Radio between Robert Reich, President Clinton's Secretary of Labor, and David Frum, a former speech writer for George W. Bush.

Last Wednesday, David Frum withdrew from the radio show on the grounds that he can no longer represent the views of the Republican Party.

Robert Reich lamented that decision on the grounds that we need to explore and debate issues on their own merits, not on the basis of dogma.

Reich is right.

What Does Government Do For Us?

I have been watching the Republican presidential debates with some sense of wonder. As in, I wonder what world the candidates inhabit.

When Ronald Reagan ran for president, he famously intoned: "government isn't the solution - government is the problem." The present batch of candidates takes this mantra to new levels.

It isn't true.

But we seem to have a national amnesia about the role of the federal government in fostering the degree of prosperity that we enjoy. The "Tea Party" and their adherents seem bent on destroying the structure that has built that prosperity.

An integral part of the attack on our general prosperity is an attack on the New Deal. This is nothing new. Republicans attacked the New Deal from the beginning and have been attempting to undo it ever since.

The attacks only began to achieve success in the late 1960's, after a generation came along with no personal memory of the Great Depression and the New Deal and no recollection of the poverty and backwardness of much of rural America before the New Deal.

I am old enough to have seen remnants of the poverty that preceded the New Deal and to have witnessed the transition to greater prosperity that the New Deal set in motion. Just last month I drove through rural Mississippi on highways built during the depression (my father worked on some of them), past schools built by the Works Progress Administration, along recreational waterways held in check by flood control projects. I drove past farms that wouldn't have electricity without the Rural Electrification Act of 1936.

Michel Hiltzik has published a timely book, The New Deal: A Modern History. Yesterday's edition of the on-line magazine, Slate, published a good review of the book and a summary, drawn from the book, of the New Deal's accomplishments. It is worth reading the review here.

It occurs to me that, by comparison to the visionaries who led America out of a very dark time in our history, today's Republicans have a cramped, crabby and very limited vision of our country.

But if we have eyes to see, here in Pamlico County, we see the New Deal at work. We have not been left to our own devices to recover from a major hurricane. Both as individuals and as a county and a state, we have been saved from total economic collapse by measures put in place by the New Deal. Without those measures, banks would have collapsed and even more jobs would have been lost.

Things could be a lot worse, and without the New Deal, they would be.

But the enduring accomplishment of the New Deal is that leaders of that effort had a vision of the future. That vision of Americans working together for progress and improvement dominated government planning and accomplishments for nearly half a century.

Let's not lose the vision.