“Passion and prejudice govern the world; only under the name of reason” --John Wesley
Sunday, January 31, 2010
Obama the Bolshevik and closing the rhetoric/reality gap...The Cato edition
The temporary increase in the national debt ceiling approved this month — combined with the prospect of a huge trillion-dollar-plus increase early next year — has once again prompted criticisms of President Obama for runaway spending and record deficits.
All this borrowing is only necessary, we are told, because Obama ran up $1.4 trillion of debt in his first year.
It's true that the White House is pushing big spending items, not least of which is his multitrillion-dollar scheme for government-run health care. But many critics, either out of ignorance or malice, are blaming Obama for deficits that are not his fault.Some Republicans, for instance, complain that Obama tripled the budget deficit in his first year. This assertion is understandable, since the deficit jumped from about $450 billion in 2008 to $1.4 trillion in 2009. As this chart illustrates, with the Bush years in green, it appears as if Obama's policies have led to an explosion of debt. But there is one rather important detail that makes a big difference. The chart is based on the assumption that the current administration should be blamed for the 2009 fiscal year.While this might make sense to a casual observer, it is largely untrue. The 2009 fiscal year began Oct. 1, 2008, nearly four months before Obama took office. The budget for the entire fiscal year was largely set in place while President Bush was in the White House.
So if we update the chart to show the Bush fiscal years in green, we can see that Obama is mostly right in claiming that he inherited a mess.
Some readers, particularly Republicans, are probably thinking I'm letting Obama off the hook too easily.
What about the so-called stimulus, they will ask, with its $787 billion price tag? Or the omnibus fiscal-year 2009 appropriations bill? And how about Cash for Clunkers and Obama's expansion of the children's health insurance program? Didn't these all boost spending in 2009?
The answer is yes. But these boondoggles amounted to just a tiny percentage of FY2009 spending — about $140 billion out of a $3.5 trillion budget — as the pie chart nearby illustrates.
There are some subjective aspects to this estimate, to be sure — I didn't count $25 billion in extra defense spending, for example, because Bush would surely have asked for that as well; ditto bailout for car companies — but the net effect of all the judgment calls isn't to Bush's disadvantage.
Big government won't work any better for Obama than it did for Bush.
On the revenue side, for better or worse, Obama hasn't tinkered much. Obama's so-called stimulus did include a handful of Keynesian-style tax cuts, but his CHIP bill contained some tax increases. The net effect is a slight reduction in tax revenue for FY2009, but not enough to make a noticeable difference.
So what's the final score? Let's use an analogy. Obama's FY2009 performance is like a relief pitcher who enters a game in the fourth inning trailing 19-0 and allows another run to score. The extra run is nothing to cheer about, of course, but fans should be far angrier with the starting pitcher
Obama the Bolshevik and closing the rhetoric/reality gap...
President Obama denied he was a Bolshevik, the Republicans denied they were obstructionists and both sides denied they were to blame for the toxic atmosphere clouding the nation’s political leadership.
The president explained that the "component parts" of the Democratic reform plan are "pretty similar to what Howard Baker, Bob Dole and Tom Daschle proposed at the beginning of this debate last year." Obama reminded GOP lawmakers that they may or may not agree with those three, but by any measure, "that's not a radical bunch."
He added, "But if you were to listen to the debate, and, frankly, how some of you went after this bill, you'd think that this thing was some Bolshevik plot. That's how you guys presented it.... I know you guys disagree, but if you look at the facts of this bill, most independent observers would say this it's similar to what many Republicans proposed to Bill Clinton when he was doing his debate on health care.
"So all I'm saying is we've got to close the gap a little bit between the rhetoric and the reality."
Hear, hear. The biggest irony of the entire health care debate is that Republicans had a complete meltdown -- and may have very well killed the best chance America has ever had to reform a dysfunctional system -- over an entirely moderate bill. Whether they actually believe their own nonsense is unclear, but Republicans managed to convince most of the country that the reform plan is a wildly-liberal, freedom-killing government takeover of one-sixth of the economy. It's tempting to think no one could possibly so dumb as to believe this, but it is, right now, the majority viewpoint in the United States.
But that's precisely why the president's comments were so important -- Americans probably should learn the truth about this at some point. The Democratic plan is exactly the kind of proposal that should have generated bipartisan support -- it cuts costs, lowers the deficit, and adds wildly popular consumer protections, while bringing coverage to tens of millions who need it. It includes provisions long-favored by Republicans and policy wonks of both parties.
Indeed, as I noted the other day, if you were to have assembled a bipartisan group of wonks a couple of years ago, and asked them to put together a comprehensive plan that incorporates ideas and long-sought goals from both parties, they would have crafted a plan that looks an awful lot like the current Democratic plan. That's just reality.
That the GOP considers this centrist proposal "a Bolshevik plot" only helps reinforce how fundamentally unserious they are about public policy.
Reading Politically GSU Meet-up Wed. 2/3/10 Hannah Arendt's Truth and Politics
Henry Citizen Newsletter #151 PDF Edition
Georgia Watch Legislative Update 1/29/10
This is the first legislative update for 2010 from Georgia Watch. We will be sending these communications on a regular basis, and we will include updates on the various issues that Georgia Watch is keeping an eye on at the 2010 Georgia General Assembly. I will arrange the updates by subject matter. That way you can quickly scroll down to the topic of your choice. If you have suggestions for us (or if we made a mistake or missed something) please let us know. Also, if you want me to add a colleague to this list have them send a request to dorrock@georgiawatch.org. If you decide that you would not like to receive these e-mails, contact us and we will remove you from the list.Foreclosure First-Aid (SB 57) SUPPORTLink to Legislation, Votes and Status:In response to the rapid increase of the foreclosure rate in Georgia, Sen. Bill Hamrick (R-Carrollton) filed SB 57 last year. This bill is a holdover from the 2009 session; it passed the state Senate but did not reach the House floor for a vote. So in order to get it to the Governor’s desk, it simply needs approval from the House this year and for the two chambers two reconcile any differences between their two versions.A House Judiciary subcommittee will hold a hearing on the bill on Monday at 1:00pm in Room 132 of the Capitol. We expect that there will be several meetings to consider changes and then a final vote to move SB 57 to full committee.We know that the mortgage brokers are working hard to remove the provision that bans kickbacks to them for getting the subprime consumer into a more expensive loan than what they qualify for. The Center for Responsible Lending found that 61 percent of subprime borrowers prior to the housing crash could have qualified for a home loan with a better rate, but brokers steered them into costlier loans in order to make a higher profit through fees. This is the sort of practice that led to the current financial crisis.Further, broker kickbacks (also known as yield spread premiums, or YSPs) separate the risk from compensation. While the broker is rewarded with a YSP, they bear none of the added risk of the loan – that falls on the borrower and the lender. Like Wall Street bonuses, it’s a short-term financial incentive that is disconnected from long term threats to financial stability.We will be working hard all session to ensure that SB 57 remains a substantive piece of legislation. Please keep an eye out for future updates and calls to action. Here is a short synopsis of the provisions in the current version of the bill, which we want to keep:Define “subprime” loan in the CodeThat allows us to narrow certain protections and standards to subprime loans only. Some standards for subprime loans may not make sense for all home loans. Making policy changes that target subprime loans, those that led to the current economic crisis, can have a big impact without effecting traditional mortgage underwriting.Establish a clear ability-to-repay and underwriting standard for subprime loansReckless underwriting is a primary cause for the current economic crisis and has cost US taxpayers trillions of dollars. The collapse of common-sense underwriting standards has left us with a glut of bad mortgage debt – in all, well-over 50 percent of recent subprime mortgages, and non-traditional mortgages like Option ARMs, have or will fail. When income verification is absent from the review process, it is impossible to determine a borrower’s ability-to-repay. The most basic lending standard has been all too absent, as up to half of all subprime loans awarded, were done so without income verification.Limit kickbacks to mortgage brokersAny mortgage reform legislation should address the direct financial incentives (often called “yield-spread premiums” or YSPs) that mortgage brokers and other originators have to steer borrowers to more expensive loans or unsuitable products. Studies by Harvard, the Department of Housing and Urban Development, and the Center for Responsible Lending have shown that subprime brokered loans are more expensive, more likely to enter foreclosure, and more likely to have prepayment penalties than loans made directly by a lender. North Carolina recently banned YSPs and the Federal Reserve concluded that disclosures were insufficient in addressing the problem of these payments.End prepayment penaltiesGeorgians should never be penalized for paying debt off early. A subprime loan should be bridge to better financing, not an anchor to high cost debt.Require mortgage brokers to do right by the borrowerBrokers should only recommend loans that are suitable for the borrower. Not doing so equates to a higher risk of default.Stop “flipping” or "churning"This is the practice of repeatedly refinancing home loans to generate fee income without providing a net benefit to the borrower. Securities brokers have similar duties that were established in the 1930s and have been extended to mortgage lending in over a dozen states. Georgia homeowners deserve the same protection when making their most important financial transaction.Protecting Seniors from Unsuitable Insurance Annities - (SB 95) SUPPORTLink to Legislation, Votes and Status: http://www.legis.state.ga.us/legis/2009_10/sum/sb95.htmSenator Renee Unterman (R-Buford) filed a bill last year to look out for older Georgians considering investment opportunities. Some annuities products don’t make sense for seniors because the money that is invested won’t be available for a number of years. For individuals in the later stages of their life, it’s very possible that certain investments may lock up their money until after their death, leaving that person with no benefit from their decision to devote funds toward future needs.SB 95 requires that companies selling annuities ensure that the investment is suitable before selling to customers 65 or older. Other states have passed similar laws which have been key in returning funds to seniors who were tricked into an annuity that won’t mature for many years.The bill passed the Senate last year, but now sat in the House Insurance Committee with no action. However, Rep. John Meadows (R-Calhoun) is the new House Insurance Chairman after Rep. Tom Knox (R-Cumming) stepped down to focus on his campaign for Insurance Commissioner. We are hopeful that Chairman Meadows will let this important bill have a vote and move forward towards final passage.Expanding Eligibility of Health Insurance Policies - (SB 329, SB 330) SUPPORTLink to Legislation, Votes and Status: http://www.legis.state.ga.us/legis/2009_10/sum/sb94.htmSB 329 is a very simple bill authored by Judson Hill (R-Marietta) that would allow more young adults to remain on their parents’ health insurance policy. Georgia statutes currently require that the dependent children of parents with group health insurance (which is the most common type of policy offered by employers) must be in college in order to continue to be covered from age 18 to 25. SB 329 simply strikes that requirement from the law so that dependent children can remain on their parents insurance, regardless of the educational status. This will allow more young people to have insurance coverage after high school.Last year, an identical bill (SB 94) passed the Senate but was amended in House Insurance Committee to very different legislation required for drawing down federal dollars to help pay for post-employment health insurance. We expect that SB 329 will also get out of the Senate and may get a fighting chance in the House Insurance Committee under new Chairman John Meadows.It should be noted that the same provisions are present in SB 330, sponsored by Sen. Preston Smith (R-Rome). In addition to allowing more young adults to use their parents’ health insurance, SB 330 also removes a lifetime benefits cap on many health insurance policies and limits the ability of insurers to cancel policies when a paperwork mistake is made by a consumer.That wraps it up for this week. As always, you can e-mail questions or comments to me. Remember, legislators need to hear from YOU -- the people they represent and the people who will be affected by these policy decisions.To identify who your Senator and Representative are, go to www.vote-smart.org.To find copies of these and other Bills, identify members of the Committees and how to contact them, track Committee meetings and votes or watch live or archived video of the House and Senate and select Committee meetings, go to www.legis.state.ga.us.
Ban on texting bills
A proposed House bill that would ban people from sending or reading text messages while driving has hit a bump in the road. Stumped by questions about how the new law would be enforced and how would a police officer determine if someone was sending a text message as opposed to say, making a phone call, forced the House of Representative’s public safety committee to send the bill to a study committee.
“It’s a valid question,” said Rep. Allen Peake (R-Bibb County), the author of one of two bills that would ban texting. “This is the way it should be done. I look forward to perfecting the bill.
Peake, along with Rep. Amos Amerson (R-Dahlonega), both testified Wednesday about their similar bills that would ban texting, while imposing healthy fines and points on an offender’s driver’s license. But committee chairman Burke Day said, based on the number of questions, that it would best to further study both bills and refine them into one.
Two weeks ago, the two House members dropped the no texting bills. Peake’s bill, HB 938, says that anyone found guilty of writing, sending or reading a text message while driving would be fined $50 to $100 and have two points placed on their drivers’ license. Amerson’s bill places the fine at $300.
“With the proliferation of cell phone usage, we must address this clear and persistent public safety issue,” Peake said.
So popular is texting that in a hearing Wednesday on two of the bills pending in the House, both one of the authors and the head of the Georgia Chiefs of Police Association each admitted to thumb-typing messages with one hand while steering with the other.
"I will tell you I am an expert at texting while driving," said Rep. Allen Peake, R-Macon.
Several bills have been filed in the General Assembly:
- House Bill 23: Prohibits drivers younger than 18 from texting or making cell phone calls while on a public road; exempts messages for emergencies and emergency personnel; assesses two points against the driver's record; imposes a 90-day suspension of license for the first offense, six months for additional offenses. Sponsored by Rep. Matt Ramsey, R-Peachtree City, this is the only texting bill to have passed one chamber after the House approved it last year and the Senate Public Safety Committee recommended its passage.
- HB 938: Same definitions and exemptions as HB23 but without an age restriction; assesses two points against the driver's record; imposes a 90-day suspension of license for the first offense, six months for additional offenses; sponsored by Rep. Allen Peake, R-Macon.
- HB 944: Prohibits use of cell phone, laptop or texting while operating a vehicle on a public road; $300 fine; sponsored by Rep. Amos Amerson, R-Dahlonega.
- Senate Bill 327: Prohibits texting while operating a vehicle on a public road; exempts cell phone calls and devices permanently attached to the vehicle; one point and $175 fine for first offense, two points and $500 fine for additional offenses; fines double if an accident is caused; sponsored by Sen. Steve Thompson, D-Marietta.
Objections include those from people who say ample laws already cover distracted driving carrying stiffer penalties, such as reckless driving. Others say it will be difficult to enforce. "How will our uniform officers be able to determine if I am texting or talking on the phone?" asked Rep. Gloria Frazier, D-Hephzibah.
Frank Rotondo, executive director of the Georgia Association of Chiefs of Police, said officers would have to use their judgment but wouldn't pull over drivers without strong suspicions.
Prosecution could be difficult because officers may not have a right to examine an electronic device or phone records without a court order and questions about personal privacy. "The phone, at that point, is not something that I believe, under current law, that [an officer] can take and read," said Rep. Doug Collins, R-Gainesville, an attorney who defends people accused of traffic violations.
Because of the numerous questions raised in the House Public Safety & Homeland Security Committee, chairman Burke Day assigned HB 938 and 944 to a subcommittee for further study. A Senate committee will have to again review HB 23 and could amend it to include drivers of all ages. SB327 is awaiting action in the Senate Public Safety Committee.
Banning texting while driving has gained traction in state legislative chambers throughout the nation. So far, 28 states have a complete or partial ban on texting while driving. Drivers in Tennessee busted for the offense can be fined $50 plus $10 in court costs. Alabama, Florida, Kentucky and South Carolina are the other Southern states with no ban on typing text messages while behind the wheel. Georgia has no limits on cell phone use while driving, except for prohibiting bus drivers from using them. The U.S. Department of Transportation made headlines last week with an announcement that truck and bus drivers caught while driving commercial vehicles and texting could face fines up to $2,750. Last year, President Barack Obama signed an executive order directing federal employees not to text message while driving government-owned vehicles or operating government-owned equipment. The federal government has tried to tackle what is viewed as a growing problem of distracted driving. The Web site www.distraction.gov lists several statistics about the dangers of not paying attention while driving. • Research by the Federal Motor Carrier Safety Administration found drivers who text take their eyes off the road for an average of 4.6 seconds out of every six seconds. At 55 miles per hour, the driver is traveling the length of a football field, including the end zones, without looking at the road. That’s 120 yards. • Drivers who text while driving are more than 20 times more likely to get in a wreck than non-distracted drivers.• In 2008, nearly 6,000 people died in crashes that involved distracted driving.It’s also become a hot button issue in the media. Earlier this month, a 19-year-old Lilburn resident was hospitalized after crashing his car into a telephone pole. He was text messaging a friend moments before the wreck. An Alabama woman was killed Thursday after a driver ran a red light at an intersection. State troopers believe texting while driving played a role in the accident. But do cell phone bans really work?A study released Friday by the Highway Loss Data Institute, an affiliate of the Insurance Institute for Highway Safety, found no decrease in crashes after hand-held phone bans were enacted in three states and Washington, D.C. Comparing insurance claims for crash damage there before and after the bans, researchers found steady claim rates compared with nearby areas lacking bans. “Whatever the reason, the key finding is that crashes aren’t going down where hand-held phone use has been banned,” said Adrian Lund, president of both organizations. “This finding doesn’t auger well for any safety payoff from all the new laws that ban phone use and texting while driving.” Colmans and the not-for-profit industry association he represents push for educating drivers about distracted driving. But he realizes that laws don’t stop people from breaking them.“How many laws do we have against drunk driving?” Colmans said. “How many laws do we have against following too closely? The fact that you have a law certainly does help from an enforcement standpoint because it’s something you can add on to the impact of being involved in an accident or getting stopped. It’s not going to stop because there is a law, but it will help from the standpoint of, ‘If I get caught doing this and I’m in an accident, I’m in more trouble than I would have been before.’”
A new addition to the Jim in 2010 Issue Team
Friday, January 29, 2010
@RepDavis Thank you for all your hard work! You've helped put us years behind....
Did you go to work this morning feeling, well, slightly different? As if you lived in Arkansas?
There’s a reason. This is the day that Georgia became something less than it’s been – a place where flocks and flocks of chickens have come home to roost. Like that playground scene from Hitchcock’s “The Birds,” only not so funny.
This was on the front page of the AJC this morning:
North Carolina has spent more than $300 million since 1992 to bolster its passenger rail service. On Thursday, it saw a return on that investment: a $545 million slice of President Barack Obama’s $8 billion high-speed rail stimulus.
Florida got an even bigger piece of that pie — $1.25 billion. The Sunshine State may have helped its case by boosting funding for mass transit after U.S. Transportation Secretary Ray LaHood warned that it needed to get its act together to compete for high-speed rail funds.
Georgia got a similar warning but didn’t jump to action. It got a $750,000 sliver.
Welcome to Georkansas.
This is how Birmingham felt in the 1960s, when it realized that airlines were indeed serious about big jets and big airports. Rail is the next big thing, and we have dug ourselves a large philosophic hole. Sam Williams, head of the Metro Chamber of Commerce and a longtime advocate of rail, said this morning that it will be years before we can crawl out:
“The first criteria that we’ve heard form the feds is that you have to have a state rail plan thoroughly written and presented. And you have to also have congressional support, and you have to have state government support. We’re so underfunded on infrastructure that, at this stage of the game, I don’t see them diverting any other funds to do the upfront work that North Carolina and Florida have done.
“Those states have spent hundreds and millions of dollars of their own money in the last decade. There may be specific projects – certainly there’s a lot of hope right now over the Peachtree-Auburn trolley project coming out of stimulus money. But stimulus money? We’ve gotten all the money we’re going to get.”
Renay Blumenthal, senior vice president at the Chamber, added this:
“We’ve got to put skin in the game. Which really comes back to why this regional T-SPLOST is so important. The only entity that’s got money to put into transportation right now is the federal government. We need to align our state transportation priorities with the federal transportation authorities to get access to that money. “
Which means that Gov. Sonny Perdue’s proposal for regional transportation districts will have to include language that permits expenditures on rail, or there isn’t likely to be a deal.
On that same topic, Denis O’Hayer at WABE (90.1FM) has picked on a slight split in pro-transportation ranks on the matter of timing, between Atlanta Mayor Kasim Reed and Williams of the Metro Chamber.
Listen to O’Hayer’s full report here.
Perdue has put off a statewide referendum on the issue until 2012. At the Atlanta Press Club on Thursday, Reed said he’d rather have the issue on this year’s November ballot:
“A 2012 vote means 2014 funding. And it’ll be 2014 before you can bond debt and begin significant road projects,” the mayor said.
But Williams told O’Hayer he was content with a 2012 vote:
“We’ve looked at other cities around the nation – Phoenix, Salt Lake [City], Seattle, San Diego. Each of those metropolitan areas took a year to two years to publicly educate people about what is going to be on the ballot — what projects will be picked…..Plus this economy that we’re in now, I wouldn’t want to have a referendum in this day and time.”
One last note on the transportation front: My AJC colleague Ariel Hart has also written about yet another – very complicated — dust-up between Perdue and the state transportation board. Dick Pettys over at InsiderAdvantage posits this:
Our sources say the following steps are now being considered at the highest legislative levels:
– Revisiting last year’s transportation governance reform bill, SB 200, to further restrict the power of the DOT board.
– Drastically cutting the operational budget of DOT.
It is as if the federal government insisted on more proof of the dysfunctional state of transportation in Georgia, and we were happy to oblige.
@RepDavis Thank you for all your hard work! You've helped put us years behind....
Did you go to work this morning feeling, well, slightly different? As if you lived in Arkansas?
There’s a reason. This is the day that Georgia became something less than it’s been – a place where flocks and flocks of chickens have come home to roost. Like that playground scene from Hitchcock’s “The Birds,” only not so funny.
This was on the front page of the AJC this morning:
North Carolina has spent more than $300 million since 1992 to bolster its passenger rail service. On Thursday, it saw a return on that investment: a $545 million slice of President Barack Obama’s $8 billion high-speed rail stimulus.
Florida got an even bigger piece of that pie — $1.25 billion. The Sunshine State may have helped its case by boosting funding for mass transit after U.S. Transportation Secretary Ray LaHood warned that it needed to get its act together to compete for high-speed rail funds.
Georgia got a similar warning but didn’t jump to action. It got a $750,000 sliver.
Welcome to Georkansas.
This is how Birmingham felt in the 1960s, when it realized that airlines were indeed serious about big jets and big airports. Rail is the next big thing, and we have dug ourselves a large philosophic hole. Sam Williams, head of the Metro Chamber of Commerce and a longtime advocate of rail, said this morning that it will be years before we can crawl out:
“The first criteria that we’ve heard form the feds is that you have to have a state rail plan thoroughly written and presented. And you have to also have congressional support, and you have to have state government support. We’re so underfunded on infrastructure that, at this stage of the game, I don’t see them diverting any other funds to do the upfront work that North Carolina and Florida have done.
“Those states have spent hundreds and millions of dollars of their own money in the last decade. There may be specific projects – certainly there’s a lot of hope right now over the Peachtree-Auburn trolley project coming out of stimulus money. But stimulus money? We’ve gotten all the money we’re going to get.”
Renay Blumenthal, senior vice president at the Chamber, added this:
“We’ve got to put skin in the game. Which really comes back to why this regional T-SPLOST is so important. The only entity that’s got money to put into transportation right now is the federal government. We need to align our state transportation priorities with the federal transportation authorities to get access to that money. “
Which means that Gov. Sonny Perdue’s proposal for regional transportation districts will have to include language that permits expenditures on rail, or there isn’t likely to be a deal.
On that same topic, Denis O’Hayer at WABE (90.1FM) has picked on a slight split in pro-transportation ranks on the matter of timing, between Atlanta Mayor Kasim Reed and Williams of the Metro Chamber.
Listen to O’Hayer’s full report here.
Perdue has put off a statewide referendum on the issue until 2012. At the Atlanta Press Club on Thursday, Reed said he’d rather have the issue on this year’s November ballot:
“A 2012 vote means 2014 funding. And it’ll be 2014 before you can bond debt and begin significant road projects,” the mayor said.
But Williams told O’Hayer he was content with a 2012 vote:
“We’ve looked at other cities around the nation – Phoenix, Salt Lake [City], Seattle, San Diego. Each of those metropolitan areas took a year to two years to publicly educate people about what is going to be on the ballot — what projects will be picked…..Plus this economy that we’re in now, I wouldn’t want to have a referendum in this day and time.”
One last note on the transportation front: My AJC colleague Ariel Hart has also written about yet another – very complicated — dust-up between Perdue and the state transportation board. Dick Pettys over at InsiderAdvantage posits this:
Our sources say the following steps are now being considered at the highest legislative levels:
– Revisiting last year’s transportation governance reform bill, SB 200, to further restrict the power of the DOT board.
– Drastically cutting the operational budget of DOT.
It is as if the federal government insisted on more proof of the dysfunctional state of transportation in Georgia, and we were happy to oblige.
The Optimal Eurozone and the Optimal Dollar Zone
There has been a lot of discussion recently over the potential break-up of the Eurozone. Commentators such as Martin Wolf, Paul Krugman, and even the ECB have highlighted problems in some of the periphery nations of the Eurozone that could cause them to eventually abandon the Euro. As Krugman notes, this discussion is ultimately based on theory of the optimal currency area:The basic idea is that there’s a tradeoff. Having your own currency makes it easier to make necessary adjustments in prices and wages, an argument that goes back to none other than Milton Friedman. As opposed to this, having multiple currencies raises the costs of doing business across national borders.What determines which side of this tradeoff you should take? Clearly, countries that do a lot of trade with each other have more incentive to adopt a common currency: the euro makes more sense than a currency union between, say, Malaysia and Ecuador. Beyond that, the literature suggests several other things that might matter. High labor mobility makes it easier to adjust to asymmetric shocks; so does fiscal integration.
Some of Krugman's readers have been asking him what are the implications for the United States from this theory. I happen to have a paper [ungated version]that looks at this very question. In the paper I frame the issue this way:
Is the United States best served by a single central bank conducting countercyclical monetary policy? According to the optimal currency area (OCA) criteria, the answer is yes if the various regions of the United States (1) share similar business cycles or (2) have in place flexible wages and prices, factor mobility, fiscal transfers, and diversified economies. In the former case, similar business cycles among the regions mean that a national monetary policy, which targets the aggregate business cycle, will be stabilizing for all regions. In the latter case, dissimilar business cycles among the regions make a national monetary policy destabilizing—it will be either too stimulative or too tight—for some regions unless they have in place the above listed economic shock absorbers.
[...]Consider, for example, a region in a currency union whose economy is not well-diversified and is slowing down because of a series of negative shocks to its primary industries. If the monetary authorities in this currency union decide to tighten because the other regional economies are expanding too fast then the region slowing down needs price flexibility, labor mobility, and federal fiscal transfers in order to offset the effects of the contractionary monetary policy. If these economic shock absorbers are absent, then this region would find this tightening of monetary policy to be further destabilizing to its economy. In general, the greater the dissimilarity of a region’s business cycle with the rest of the currency union the more important these economic shock absorbers become for the region to be a successful part of an OCA.Graphically, this understanding can be depicted as follows:
Along these lines, I explore in the paper how different state economies respond to a typical monetary policy shock for the period 1983-2008 and compare it to the response of the U.S. economy to that same shock. Comparing the state economies to the U.S. economy is useful since the U.S. economy is the target of monetary policy. To illustrate this exercise, I have graphed below how Texas and Michigan typically responded to such shocks over this time. The solid lines below represent the change to the real economy (measured by coincident indicator) after the monetary policy shock for each region while the dashed lines provide standard error bands which help provide a sense of precision. (Click on figures to enlarge.)
Note that relative to the U.S. economy, the Michigan economy gets hammered by the typical monetary policy shock while Texas does about the same. These disparate responses to U.S. monetary policy shocks suggests that some parts of the U.S. economy may not part of the dollar OCA. Based on this and other empirical evidence in the paper I conclude that the Rustbelt may have benefited from having its own currency. The U.S. economy, then, may not be after all the benchmark OCA case against which the European would want to measure themselves.
David Beckworth on Bernanke's AEA Speech
Here are more responses to Bernanke's AEA speech where he defended the Fed's low interest rate policies in the early-to-mid 2000s:(1) John Taylor in the WSJ
(2) John Taylor on Economics One
(3) David Papell at Econbrowser
(4) John Hilsenrath at WSJ [update: video ]
(4) Mark Thoma & Vernon Smith on Economist's View
(5) Josh Hendrickson at Everyday EconomistThese responses are consistent with my own thoughts on Bernanke's speech. Finally, it is worth noting that Brad DeLong acknowledges that the federal funds rate may have been too low at the time. However, he has a hard time seeing how the low interest rates could have been an important contributor to the housing boom. Let me first say I am glad that Brad DeLong is at least open to the idea that interest rates may have been too low. Second, I would encourage him to look beyond the normal monetary transmission channels in assessing how important the low federal funds rates were to the housing boom. There is obviously more to the story than just low interest rates, but one should not underestimate the effect of them in light of the risk taking channel of monetary policy.
Westmoreland Town Hall -- Help get the word out...
Lynn will hold a town hall meeting with constituents in Upson, Lamar and Pike counties to discuss issues before Congress, including health care legislation, taxes, job creation, cap-and-trade, bailouts and any other federal issue of concern to residents of Georgia’s 3rd Congressional District.WHEN: Monday, Feb. 1, at 6:30 p.m.WHERE: Robert E. Lee Auditorium, 106 East Lee St., ThomastonFor more information, please contact the Newnan District Office at 770-683-2033.
Westmoreland Town Hall -- Help get the word out...
Lynn will hold a town hall meeting with constituents in Upson, Lamar and Pike counties to discuss issues before Congress, including health care legislation, taxes, job creation, cap-and-trade, bailouts and any other federal issue of concern to residents of Georgia’s 3rd Congressional District.WHEN: Monday, Feb. 1, at 6:30 p.m.WHERE: Robert E. Lee Auditorium, 106 East Lee St., ThomastonFor more information, please contact the Newnan District Office at 770-683-2033.
Thursday, January 28, 2010
If I had known then what i know now...
major cuts to my blogroll...
revamp...
looking for volunteers... take an hour out of your week to help change politics...
If you want to help email me at JimN2010@gmail.com.
Citizens of Oregon votes to address their revenue problems...
Oregon voters delivered historic approval Tuesday for a pair of tax increases after a campaign that assured Oregonians they could protect schools and other programs by requiring wealthy individuals and big corporations to pay more.
With 91 percent of the votes counted, Measures 66 and 67 each were passing with 54 percent and 53 percent approval.
Measure 66 raises income taxes on the top 3 percent of filers and Measure 67 boosts business taxes. Both tax increases were approved by the 2009 Legislature but forced to the ballot by opponents’ signature drive.
Oregon House Speaker Dave Hunt called the results “a win for Oregon kids,” whose schools will not face the 5 percent cut in state spending they would otherwise have confronted. The Gladstone Democrat acknowledged that Tuesday’s vote broke from Oregonians’ history of rejecting general tax-raising measures, which were similarly promoted as ways to preserve vital services.
The core difference was these measures were crafted to hit the bank accounts of only the most well-off individuals and the deepest pocketed big corporations — not all Oregonians and businesses across-the-board, as past tax measures have proposed.
“These are asking people who are doing well — even in this economy — to pay a little bit more,” Hunt said. “I think that’s what made the difference.”
The last time Oregon voters approved a general tax increase was in 1930, when they adopted the state’s income tax.
The approval of the two tax increases prompted ominous warnings of economic woe by opponents.
“I think the voters made a huge, huge mistake,” said Oregon Republican Party Chairman Bob Tiernan. “We’re going to have more businesses leave this state and we’re going to have a lot more businesses who are never going to come here.”
Measure 66 raises the marginal income tax on personal income above $125,000 for individuals and $250,000 for couples. It’s projected to pull in $472 million for the current two-year budget cycle.
Its approval means Oregon will have the highest state capital gains tax in the United States and will be tied with Hawaii for the highest state income tax in the country. But when all taxes including sales taxes (which Oregon does not impose) are accounted for, Oregon’s overall per-capita tax burden will be the 34th lowest — up two places from 36th lowest before the two measures were approved.
Measure 67 increases business taxes by a combined $261 million for the biennium. It replaces the 79-year-old $10 corporate minimum tax with a graduated version that will start at $150 and reach $100,000 for those with in-state sales above $100 million. Measure 67 also increases the corporate income tax rate for four years for most corporations, but would set a permanent increase for those with annual profits above $10 million.
Both the pro and anti-tax campaigns waged furious, brief and very expensive media campaigns to sway voters.
According to the most recent campaign finance disclosures, the “yes” campaign, which got more than 90 percent of its money from public employee and teacher unions, reported spending $5.67 million. The opposition campaign had spent $4.6 million up to that point. The majority of its money came from trade associations for banks, grocery-store chains, contractors and other businesses and industries.
Both sides funneled most of those dollars into TV ads, which repeated the themes they thought best made their case to voters. Backers of the tax increases emphasized that they would ensure full school years and prevent classroom overcrowding by making banks and credit card companies and wealthy residents pay their fair share of taxes. Opponents made the case that raising taxes in a recession was a sure way to kill jobs and hinder Oregon’s economic comeback.
Pat McCormick, spokesman for the “no” campaign, said that while the voters may have “bought into the messages of the proponents,” the results won’t likely meet their expectations. He said wealthy individuals, being counted on to generate most of the projected revenue, will likely move out of the state to avoid higher taxes — resulting in lower-than-projected revenue collections.
The revenue from the two measures accounted for 5 percent of the general-fund spending plan assembled by lawmakers for 2009-11 — primarily for education, health and human services, public safety and the courts.
Leaders of the Democratically controlled House and Senate insisted throughout the campaign that if the tax increases failed, they would deal with the resulting budget hole by trimming programs. That likely would have meant cutting state workers and passing big financial cuts along to school districts, to deal with as they might. The Legislature already was scheduled to meet for a month-long session starting Monday.
Senate President Peter Courtney, D-Salem, said he was physically shaking earlier Tuesday while meeting with other lawmakers to discuss possible cuts, which would have included termination of state-funded medical coverage for more than 15,000 seniors and disabled people.
He said voters delivered their approval of lawmakers’ choice to avoid such cuts by creating higher taxes.
“It’s a statement that they had enough faith in the Legislature, that if this is what you want to do we’ll go with it,” he said.
Chuck Sheketoff, an advocate of the taxes and head of the Oregon Center for Public Policy, said the vote was being closely watched by other states where the recession has similarly cut into their ability to stretch tax dollars to pay for education and public services.
“It’s absolutely a road map for other states,” he said. “The road map is to ask those who are still doing well during the downturn to contribute more to the public infrastructure that helped them create their wealth.”
Tiernan, the state GOP chairman, scoffed at such a notion.
“I think only the truly stupid states would follow that model,” he said.
Department of Economic Development --- we can find cuts...
Wednesday, January 27, 2010
Obama[not] the crazy liberal Fox news warned you about...
These days quite a few people are frustrated with President Obama’s failure to challenge conservative ideology. The spending freeze — about which the best thing you can say in its favor is that it’s a transparently cynical PR stunt — has, for many, been the final straw: rhetorically, it’s a complete concession to Reaganism.
But why should we be surprised? Here’s one from the vault. Two years ago, I was deeply frustrated with Obama’s apparent endorsement of the Reagan myth.
There was a lot of delusion among progressives who convinced themselves, in the face of clear evidence to the contrary, that Obama was a strong champion of their values. He wasn’t and isn’t.
That doesn’t mean that there’s no difference between the parties, that everything would have been the same if McCain had won. But progressives are in the process of losing a big chance to change the narrative, and that’s largely because they have a leader who never had any inclination to do so.
Simone Weil on Truth
Poll: Fox Is The Most Trusted Name In TV News
A new national survey from Public Policy Polling (D) finds an amazing result: The most trusted name in TV news, the only one that more Americans trust than distrust, is...Fox!
Respondents were asked whether they did or did trust the various news outlets. Fox turned out to be the only one with a positive score, at 49% yes to 37% no. CNN was at 39%-41%, NBC 35%-44%, CBS 32%-46%, and ABC 41%-46%. The pollster's analysis finds a high level of polarization, with 74% of Republicans trusting Fox, and no more than 23% of Republicans trusting anybody else. Smaller majorities of Democrats trust all the other outlets and distrust Fox. Independents register negative ratings for all the news outlets, but Fox comes the closest at 41%-44%.
"A generation ago you would have expected Americans to place their trust in the most neutral and unbiased conveyors of news," said PPP president Dean Debnam, in the polling memo. "But the media landscape has really changed and now they're turning more toward the outlets that tell them what they want to hear."
Never Trust a Politician
Never Trust a Politician
“It is a well-known fact that those people who most want to rule people are, ipso facto, those least suited to do it... " --Douglas Adams
Another Front Page Washington Post Editorial on the Deficit
Instead of relying on the "bipartisan Committee for a Responsible Federal Budget," the Post could have examined the data from the non-partisan Congressional Budget Office (Table 1-3), which shows that non-defense discretionary spending rose by 6.0 percent annually from 1998-2008. That is slightly less rapid than the rate of growth of entitlement spending over this period and considerably less rapid than the rate of growth of defense spending, which is never mentioned in this piece. Non-defense discretionary spending has risen rapidly in the last two years, although this has been primarily the result of stimulus policies intended to counteract the recession.Remarkably, the piece never once mentions the recession in its discussion of the deficit, even though it is the major reason it has grown to "mammoth" proportions. However, the article did give a spokesperson for House Minority Leader John Boehner the opportunity to mock the proposal for a spending freeze: "given Washington Democrats' unprecedented spending binge, this is like announcing you're going on a diet after winning a pie-eating contest." The piece found no room for any political figure or economist to provide an alternative perspective on the deficit.
hey Tea Party... the Republicans aren't your friends...
Last week’s Supreme Court ruling in Citizens United overturned more than a century of precedent and handed corporations the same free-speech rights as people, including the right to spend unlimited amounts of money to elect or defeat candidates for office.
Among most Republican politicians, that news was greeted with glee. However, the GOP grassroots and the Tea Party movement ought to look at that ruling with a great deal more skepticism, because its impact on the issues that matter most to them could be significant.
Take, for example, earmarks.
In the wake of Citizens United, imagine yourself as a congressman confronted by a fly-by-night company back home trying to get a $200 million earmark for some product the Pentagon refuses to buy. Is that congressman going to be more willing or less willing to say no, knowing that the company can now spend freely in an attempt to unseat him? The power of special interests to armtwist Congress for earmarks can’t help but grow significantly as a result of this ruling.
Or how about those Wall Street bigwigs, manipulating Washington at the expense of Main Street and small business?
When big banks want to gut regulations and get the Security and Exchange Commission off their backs, or when they need another big bailout from the taxpayer, what kind of reception will they now get from congressional committees? Wall Street’s already strong grip on Washington will turn into a death grip now that Congress knows those banks can spend millions of dollars trying to defeat or re-elect them.
Moving jobs overseas?
Much of America’s manufacturing base has already been shipped overseas thanks to trade deals that were championed by corporations eager to tap cheap overseas labor. With corporate America now able to threaten or woo candidates directly, is that process likely to slow or accelerate?
Illegal immigration?
Some jobs, like homebuilding, meatpacking and the service industry, can’t easily be shipped overseas to cut labor costs. So the obvious solution is to move that cheap labor here. When the economy improves and employers once again need workers, how diligent will the federal government be about prosecuting companies for hiring illegal immigrants? We already know that workplace enforcement all but ceased in the Bush administration, mainly to please companies that wanted the cheap, docile workforce that illegal immigration provides. Thanks to Citizens United, those companies now have a much larger voice to ensure they get their way. (See, Saxby Chambliss.)
Government waste and the deficit?
When the next farm bill comes up, just to cite an example, will the farm-state politicians who dominate the agriculture committees say no to agribusiness demands for billions in new taxpayer subsidies? The same is true of industries from automaking to Big Pharma to defense. (See. Saxby Chambliss).
Overall, the biggest complaint of the populist tide is that government has grown unresponsive to the needs of the little guy. Is that problem likely to ease or worsen now that corporations have been freed to “speak loudly” by making unlimited campaign expenditures? Citizens United has given special interests a veritable megaphone to “communicate” with national leadership, while in comparison individual citizens are condemned to living in Whoville, where “even though you can’t see or hear them at all, a person’s a person, no matter how small.’’
Georgia Bill Would Ban Racial Profiling, Mandate Data Collection
(APN) ATLANTA – A group of Democratic State lawmakers and advocates banded together Tuesday, January 26, 2010, to announce the introduction of legislation to prevent law enforcement officers from engaging in racial profiling.
"We know that if your skin color is different or you're a religion other than Christian, you will be singled out," the Rev. Tracy Blagec, Vice President of Communications for Atlantans Building Leadership for Empowerment (ABLE), said during a rally at the State Capitol.
The bills, which will be identical in the State House and Senate, would prevent all law enforcement agencies from profiling and require annual training.
Also, the bills would require officers to track the race, ethnicity, gender, and age of every person subject to a routine traffic stop and require the Attorney General to publish annual public reports and establish procedures to investigate complaints.
"This legislation would give law enforcement agencies and policymakers all the tools they need to address racial profiling in this state," State Sen. Gloria Butler (D-Stone Mountain), chief sponsor of the Senate version, said.
"It is my sworn duty to ensure the rights of every Georgian are protected," State Rep. Pedro Marin (D-Duluth), co-sponsor of the House bill, said. "It is common sense public policy to finally address this wrong."
A 2004 report from Amnesty International USA found approximately 32 million Americans had experienced racial profiling and 87 million are considered to be at "a high risk" of experiencing profiling at some point in the future.
"People of color are more likely to be stopped and searched by police even though they are less likely to have contraband," Butler said.
Accounting for the number of racial profiling incidents is often difficult and expensive, but Butler said Tuesday establishing data collection methods as outlined in the proposed legislation would not add costs to the state budget.
"The data collection methods that are already used can be modified to include and track racial profiling data," she said.
25 US states already have some type of racial profiling legislation in place, including several in the US South, according to a 2009 ACLU report.
"States with racial profiling-related legislation include Arkansas, California, Colorado, Connecticut, Florida, Illinois, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, Oklahoma, Rhode Island, Tennessee, Texas, Utah, Washington and West Virginia," the report says.
"The most common provisions in state racial profiling legislation are vague calls for law enforcement and other state agencies to establish policies prohibiting or combating racial profiling. Twenty-one of the twenty-five states that have enacted legislation have included such provision, although Tennessee’s statute only 'strongly encourages' law enforcement agencies to establish such a policy by 2010," the report states.
"Another twelve states have written express prohibitions of racial profiling into their state codes, even though the practice is clearly already prohibited by the U.S. Constitution," the report states.
The Georgia General Assembly has considered similar bills over the previous decade, but they have all hit roadblocks during various points of the legislative process.
Marin’s 2004 bill received plenty of bipartisan support, picking up 117 votes in the House before dying in a conference committee.
Butler said Tuesday she is optimistic about success in 2010 because more groups are involved in the issue.
As previously reported in detail by Atlanta Progressive News, the American Civil Liberties Union (ACLU) of Georgia and ABLE held two forums in Gwinnett County and another in Cobb last year that allowed many citizens to come forward and share racial profiling horror stories.
Azadeh Shahshahani, Director of the ACLU of Georgia’s National Security/Immigrants' Rights Project, said the forums allowed the two groups to collect key data that did not previously exist and that could supplement proponents' arguments as the debate moves forward.
"Using race, ethnicity, or national origin as a proxy for criminal suspicion violates the Constitutional requirement that police and other government officials accord to all citizens the equal protection of the law," Shahshahani said. "It is time for Georgia to join the ranks of other states that have recognized the problem of racial profiling."