[y66]

Are childcare subsidies a good use of $70 billion per year? Grover J. "Russ" Whitehurst at Brookings suggests there are openings for serious political consideration of new funding and delivery models:

Quote

Families with young children are at the center of our nation’s life and prospects. Childcare expenses for most of these families are both necessary and unaffordable. Most voters want government to do something about that, for the good of families and everything that flows from stable homes and supportive environments for children and adults. The policy arguments on this topic have largely been sideshows about research on long term benefits for children, whether it is desirable for government to gain substantial control over the environments in which young children are reared, and roles of federal vs. state government. The first order issues are more direct. It is clear that many families have to have childcare and that it isn’t affordable for them. How can the federal government pay for it, assure that parents remain in the driver’s seat, minimize unintended negative consequences (including overutilization), and achieve requisite political support? There are answers to these questions and openings for serious political consideration of new funding and delivery models.

Serious political consideration or non-serious? That is the question.

[kenberg]

hrothgar, on 2019-February-21, 07:42, said:

FWIW, the following article by Krugman might help understand his writing style. For better or worse, Krugman believes that there is a class of "professional conservative economists" who don't deal in good faith and that it is pointless to show them much in the way of respect. They are, for all intents and purposes, better paid version of forum trolls like Al_U_Card, Lukewarm, Chas, Drews, and the like. There's no point in trying to convince any of them to change their minds, rather, the goal is to marginalize them.

https://www.nytimes....-bad-faith.html

I read this, and I read, with interest, some of the reader's comments that followed. Being retired provides time to do such things. I think Krugman's writing style reflects his personality. The same is true of everyone.

Let's suppose he is correct that some economists on the right are sell-outs. And let's, at least temporarily, put aside his claim that this doesn't apply on the left. What should be done? I suggest engaging with the people on the right that he thinks are serious. In the article you cite, he acknowledges that such people exist. From what I have seen of his columns, I wasn't sure that he thought so.

It's always possible to find someone on an opposing side to ridicule. Example: Long ago I had a friend who was highly active in the Socialist Worker's Party. An evening with him was an evening of politics. When I pointed out some failures of socialism he explained that this was because there had never been a true socialist state. Later in the evening he was saying that wars were all from capitalism, there had never been a war between two socialist states. I pointed out that if there had never been two truly socialist states then this could explain why there had never been a war between two of them. Another example: The Korean War started when I was 11. My mother, who would have agreed with the above mentioned friend, explained that all wars were about oil. I said that I didn't think there was any oil in Korea. She said that since they were fighting there, there necessarily was oil there. Sort of like Euclidean Geometry with its axioms. There are many such examples.

The trick is to move on from such discussions.

[barmar]

kenberg, on 2019-February-20, 17:12, said:

Any plan to raise 70B per year, and any plan to spend 70B per year, is a significant plan. The fact that the two amounts are the same does not, in itself lead me to conclude that the money should be raised in that way or spent in that way.

One of the most common GOP arguments against new spending programs is "How will we pay for it?", since they often seem to have trouble seeing the long-term economic benefits (although they seem to have no such problem with tax cuts for the wealthy, even though most economists argue against these supposed benefits) or valuing the social benefits.

I don't know if the two proposals were designed specifically to fit together like this (the general ideas have been around for many years, so it's just the amounts that needed to be tinkered with to make them match), but isn't it nice to have an easy answer to that question? If the combination is revenue neutral, and there's also a long-term benefit to society, all the better.

[y66]

Speaking of serious and non-serious consideration of policy ideas, taxes and Tucker Carlson, WaPo just published this story about Carlson's heretofore unaired exchange with Dutch historian Peter Bregman whose comments about tax avoidance at Davos were not well received:

https://youtu.be/6_nFI2Zb7qE

[kenberg]

y66, on 2019-February-21, 11:22, said:

Speaking of serious and non-serious consideration of policy ideas, taxes and Tucker Carlson, WaPo just published this story about Carlson's heretofore unaired exchange with Dutch historian Peter Bregman whose comments about tax avoidance at Davos were not well received:

https://youtu.be/6_nFI2Zb7qE

Whew. I didn't know who Tucker Carlson is, or who Peter Bregman is. Actually I didn't know where Davos is either. And I am still a bit vague abut all 3. I gather that the two of them don't much like each other but everyone likes Davos.


The comment by Bregman that top tax rates in the 1950s were 90% under Eisenhower (he said 70,80,90 but indeed 90) got me thinking of something that I had slightly mis-remembered. I thought the tax rate was cut under JFK but while it is true he pushed the idea I see from the Wik that the assassination left the completion of it to LBJ. The top rate went from 91% tp 65%. The Wikipedia comments:

Quote

The stated goals of the tax cuts were to raise personal incomes, increase consumption, and increase capital investments. Evidence shows that these goals were exceeded by large degree with the combination of tax cuts and domestic spending programs President Johnson advocated, such as Medicare.^[4] Unemployment fell from 5.2% in 1964 to 4.5% in 1965, and fell to 3.8% in 1966.^[4][5] Initial estimates predicted a loss of revenue as a result of the tax cuts, however, tax revenue increased in 1964 and 1965.^[4][6]

<sup>So I gather it worked. That's the way I remember it.

Presumably just about everyone is opposed to tax avoidance, of course the exception being those who are doing it.
The interview got seriously personal.</sup>

[Winstonm]

kenberg, on 2019-February-21, 12:42, said:

Whew. I didn't know who Tucker Carlson is, or who Peter Bregman is. Actually I didn't know where Davos is either. And I am still a bit vague abut all 3. I gather that the two of them don't much like each other but everyone likes Davos.


The comment by Bregman that top tax rates in the 1950s were 90% under Eisenhower (he said 70,80,90 but indeed 90) got me thinking of something that I had slightly mis-remembered. I thought the tax rate was cut under JFK but while it is true he pushed the idea I see from the Wik that the assassination left the completion of it to LBJ. The top rate went from 91% tp 65%. The Wikipedia comments:
[/sup]
<sup>So I gather it worked. That's the way I remember it.

Presumably just about everyone is opposed to tax avoidance, of course the exception being those who are doing it.
The interview got seriously personal.</sup>

The Laffer curve shows a benefit only when taxes are too high; there is a point, though, when tax cuts produce revenue loss. (wikipedia)

Quote

In their economics textbook Principles of Economics (7th edition), economists Karl E. Case of Wellesley College and Ray Fair of Yale University stated "The Laffer curve shows the relationship between tax rates and tax revenues. Supply-side economists use it to argue that it is possible to generate higher revenues by cutting tax rates, but evidence does not appear to support this.[35][19] The lower tax rates by the Reagan administration decreased tax revenues significantly and contributed to the massive increase in federal debt during the 1980s."

[y66]

kenberg, on 2019-February-21, 12:42, said:

Whew. I didn't know who Tucker Carlson is, or who Peter Bregman is. Actually I didn't know where Davos is either. And I am still a bit vague abut all 3. I gather that the two of them don't much like each other but everyone likes Davos.

Carson is a Fox News guy. I've never seen his show either. He's a good proxy for the Fox and Trump fan boys in the WC and the kind of knee-jerk creep that Krugman has let get to him over the years (there have been so many creeps).

Bregman is a Dutch historian who called out the rich people at Davos for talking about ways to help the little people while (hypocritically) refusing to talk about taxes.

Davos is a city in the Swiss alps. I've never been but I read about it in The Magic Mountain.

Carlson is also a self-styled member of the anti-elite elite which is why he thought it would be useful to have Bregman on his show. But it did not turn out that way.

I think you should give Krugman a break. He definitely rubs a lot of people the wrong way. To his credit, I think he's been working on this.

[kenberg]

y66, on 2019-February-21, 14:04, said:

I think you should give Krugman a break. He definitely rubs a lot of people the wrong way. To his credit, I think he's been working on this.

I sort of do. I acknowledge he is smart. If someone aggravates me, that's my problem. There is no point in giving broccoli a break, if I don't like it I don't like it. I can acknowledge that broccoli is good for a person and still not like it. This example is not perfect because in fact I like broccoli. And I like kale, which many don't. I couldn't come up with a good example. But you see my point. I am not on any crusade against Krugman. He is smart, I find his frequent demeaning comments about people who see things differently than he does to be not to my liking. He and I will both go on with out lives, probably neither of us changing much.

Added: On reflection this last page or so is a fine illustration of attempts to avoid the ,ost straightforward explanation. By far the most likely explanation for why Krugman so often refers to others in his articles as ignorant is because he thinks that people who disagree with him are ignorant. It's the way he thinks. It's as simple as that.

[y66]

Here's CBO's take on the 1964 tax cut:

Quote

THE 1964 TAX CUT

The tax reduction most similar to the Roth-Kemp bill is the Kennedy-Johnson tax cut in 1964. It has been asserted that the 1964 tax rate reduction had very large supply effects and, as a result, was self-financing. This assertion has been disputed by the economists who designed that tax cut proposal.

The 1964 tax reduction was enacted to help close the estimated 5 percent gap between the actual and potential GNP that existed in 1963. Personal income taxes were cut from a range of 20 to 91 percent to a range of 14 to 71 percent in two stages in 1964 and 1965. Withholding rates were reduced by the fu11 amount in March 1964. The corporate income tax rate was reduced from 52 to 48 percent. Both of those changes were permanent.

The revenue loss (before feedback) from that personal income tax reduction totaled nearly $12 billion when it reached its full impact; the corporate tax reduction, $3 billion. The overall tax cut amounted to about 2.2 percent of GNP; in today's [1978] economy, a similar size cut would amount to about $45 billion to $50 billion.

In its 1964 Annual Report the Council of Economic Advisers estimated that this personal tax reduction would eventually add about $18 billion to GNP. The corporate tax reduction, along with the continued effects of the previously enacted investment tax. credit, was expected to add about $10 billion to $14 billion to GNP. It has been argued recently that the 1964 tax cut had a substantial effect on aggregate supply and that the overall results were much larger than anticipated. These statements are generally based on the actual performance of the post-1964 economy. The problem with this approach is that it neither isolates the impact of the tax cut from other events. nor does it distinguish supply from demand effects. Many events occurring during this period -- such as the military build-up because of the Vietnam War -- significantly affected the economy.

The 1964 tax cut has been studied by CBO and a number of other analysts. Using three macroeconomic models, CBO estimated that the personal income tax cut alone increased GNP by some $11 billion to $23 billion by 1966. By 1967, three years after passage of the bill, the unemployment rate had dropped to 3.8 percent, as contrasted with an estimated unemployment rate of about 4.5 percent without the tax cut. Tighter labor markets significantly affected inflation, increasing the price level by an estimated 1.4 to 2.2 percent above what it would otherwise have been. According to this analysis, the impact of the corporate tax rate cut was negligible, as compared with the personal tax cut.

None of the models used by CBO showed that the increased economic activity generated by the tax cut raised revenues and lowered countercyclical transfer payments enough to make the tax rate reductions self-financing. Instead, the models showed a net increase in the federal deficit, after three years, of $5 billion to $13 billion above the level in the no-tax-cut simulations.

Although the estimates made by others also show considerable variation, CBO is unaware of any systematic study of the 1964 tax cut that indicates that it was self-financing.

Source

So, the cuts were enacted, GNP grew, in part due to the 1964 tax cut and in part due to other stuff, but CBO could not find any evidence that the tax cut was self financing.

[johnu]

In yet another example of Dennison hiring the "best people", there's this stink bomb,

Justice Department Opens Probe Into Jeffrey Epstein Plea Deal

Quote

Epstein reached a non-prosecution deal in 2008 with then-Miami U.S. Attorney Alexander Acosta’s office to secretly end the federal sex abuse probe involving at least 40 teenage girls. He instead pleaded guilty to state charges, did 13 months in jail, paid settlements to victims and is a registered sex offender.

13 months??? Hard time???
Even from jail, sex abuser manipulated the system. His victims were kept in the dark

Quote

But Epstein — who had a long list of powerful, politically connected friends — didn’t go to state prison like most sex offenders in Florida. Instead, the multimillionaire was assigned to a private wing of the Palm Beach County stockade, where he was able to hire his own security detail. Even then, he didn’t spend much time in a cell. He was allowed to go to his downtown West Palm Beach office for work release, up to 12 hours a day, six days a week, records show.

Holy sh*t! He's getting better living conditions than a Mexican cartel leader in their own private prison.

Alexander Acosta was rewarded for this "deal" by being appointed Labor Secretary by Dennison.

[hrothgar]

y66, on 2019-February-21, 14:04, said:

Carson is a Fox News guy. I've never seen his show either. He's a good proxy for the Fox and Trump fan boys in the WC and the kind of knee-jerk creep that Krugman has let get to him over the years (there have been so many creeps).

Google Tucker Carlson Jon Stewart

https://www.hollywoo...ake-down-961147

[kenberg]

y66, on 2019-February-21, 22:10, said:

Here's CBO's take on the 1964 tax cut:


Source

So, the cuts were enacted, GNP grew, in part due to the 1964 tax cut and in part due to other stuff, but CBO could not find any evidence that the tax cut was self financing.

In 1964 LBJ was saying that he was not going to send American boys to do the job that Asian boys should do. Of course he didn't mean a word of it. A major tax cut simultaneously with planning a very major military engagement is not a good idea. Nonetheless, it is interesting to hear about what the simulations show. There are many things that need doing and just how to finance them is not clear. Certainly the very rich could be taxed more than they are. That seems obvious to me. The 91% of the 50s seems too high, although i imagine it was done to pay for WWII, and for Korea. Perhaps a more urgent need is to address the trickery that makes actual taxation much lower than nominal taxation. It cannot be a good idea to have a lot of our brainpower engaged in how to thwart the tax laws without actually doing anything productive.

[y66]

kenberg, on 2019-February-22, 07:24, said:

Perhaps a more urgent need is to address the trickery that makes actual taxation much lower than nominal taxation.

From Jesse Eisinger and Paul Kiel at NYT (October 2018):

Quote

Tax evasion is at the center of the criminal cases against two associates of the president, Paul Manafort and Michael D. Cohen. The sheer scale of their efforts to avoid paying the government has given rise to a head-scratching question: How were they able to cheat the Internal Revenue Service for so many years?

The answer, researchers and former government auditors say, is simple. The I.R.S. pursues fewer cases of tax evasion than it did less than 10 years ago. Provided you’re not a close associate of President Trump, there may never be a better time to be a tax cheat.

“Due to budget cuts, attrition and a shift in focus, there’s been a collapse in the commitment to take on tax fraud,” said Chuck Pine, who used to be the third-ranking criminal enforcement officer at the I.R.S. and is now a managing director at BDO Consulting. “I believe there are thousands of individuals who have U.S. tax obligations and are not complying with U.S. tax laws.”

The result is huge losses for the government. Business owners don’t pay $125 billion in taxes each year that they owe, according to I.R.S. estimates. That’s enough to fund the Departments of State, Energy and Homeland Security, with the National Aeronautics and Space Administration tossed in for good measure. Unlike wage earners who have their income separately reported to the I.R.S., business owners are often on the honor system.

Quote

During the Obama administration, the I.R.S. asked Congress for hundreds of millions of dollars to carry out the program, but received nothing. Since Mr. Trump took office, the agency has stopped asking.

[Winstonm]

Quote

Jessica Denson, a former Trump campaign official who is suing to have the nondisclosure agreement she signed voided so she can talk publicly about abuse she received, on Friday delivered a blistering denunciation of the man she once believed should be the leader of the free world....

....She then said that Trump supporters should be the angriest people at all of the promises the president has broken to bring ethics back to Washington, D.C.

“I think the supporters of this campaign should be among the most outraged, that they have been taken for fools and used,” she said.

Oh, gee, ya think?

[barmar]

kenberg, on 2019-February-22, 07:24, said:

The 91% of the 50s seems too high, although i imagine it was done to pay for WWII, and for Korea.

Don't forget that this is just the top marginal tax bracket, no one actually was taxed 91% of their income. This tax bracket only applied to income over $200K, which was equivalent to $2M today.

During the 1950's, the to 1% paid an average tax rate of 42%. In 2014 this was 36%.

[awm]

barmar, on 2019-February-22, 11:31, said:

Don't forget that this is just the top marginal tax bracket, no one actually was taxed 91% of their income. This tax bracket only applied to income over $200K, which was equivalent to $2M today.

During the 1950's, the to 1% paid an average tax rate of 42%. In 2014 this was 36%.

This is somewhat misleading, since the “top 1%” for the most part isn’t making $2M/year and so wouldn’t be eligible for the 91% rate. In the 1950s people typically weren’t paid over 2M a year in salary regardless — there would be no point since they would lose it in tax! There were sometimes (then) non-taxable perks like a company car or gold plated pension plan, but in general income inequality was at much lower levels! Another point is that the current top rate *on income* isn’t what the really rich pay — their money mostly comes as capital gains.

It might be more interesting to compare the tax rate paid by people making (say) 100x the median income. This is probably more like top 0.1% (now) and even rarer in the more egalitarian 1950s. I’d bet we would see a lot more difference in tax rates.

[Winstonm]

barmar, on 2019-February-22, 11:31, said:

Don't forget that this is just the top marginal tax bracket, no one actually was taxed 91% of their income. This tax bracket only applied to income over $200K, which was equivalent to $2M today.

During the 1950's, the to 1% paid an average tax rate of 42%. In 2014 this was 36%.

6% is a huge amount when you're talking about billions. Elizabeth Warren's "wealth tax" is only 2%.

[awm]

Winstonm, on 2019-February-22, 15:03, said:

6% is a huge amount when you're talking about billions. Elizabeth Warren's "wealth tax" is only 2%.

This is also a bit misleading because her tax is on aggregate wealth and not income. Even with an optimistic 10% rate of return, 2% of wealth looks like 20% of income. So this effectively increases tax on passive income from around 20% to around 40% (doubling the tax owed). Given that this effects only the wealthiest and that the top rate on active income is around 40%, this strikes me as fairly reasonable... but it’s still a BIG tax hike on those who pay it, much more than 6% of income.

[johnu]

awm, on 2019-February-22, 13:27, said:

In the 1950s people typically weren’t paid over 2M a year in salary regardless — there would be no point since they would lose it in tax! There were sometimes (then) non-taxable perks like a company car or gold plated pension plan, but in general income inequality was at much lower levels! Another point is that the current top rate *on income* isn’t what the really rich pay — their money mostly comes as capital gains.

Agree that besides salary, executives set up top hat pension plans, various types of stock option plans, and other ways to funnel money to them with minimum tax consequences.

Top corporate executives will be able to game the system to come out on top.

US bosses now earn 312 times the average worker's wage, figures show

Quote

The pay gap has risen dramatically, with some fluctuations, since the 1990s. In 1965 the ratio of CEO to worker pay was 20 to one; that figure had risen to 58 to one by in 1989 and peaked in 2000 when CEOs earned 344 times the wage of their average worker.

Does that mean CEO's have increased their own productivity 17 times as much as workers since 1965

[johnu]

johnu, on 2019-February-22, 06:09, said:

In yet another example of Dennison hiring the "best people", there's this stink bomb,

Justice Department Opens Probe Into Jeffrey Epstein Plea Deal

Quote

Epstein reached a non-prosecution deal in 2008 with then-Miami U.S. Attorney Alexander Acosta’s office to secretly end the federal sex abuse probe involving at least 40 teenage girls. He instead pleaded guilty to state charges, did 13 months in jail, paid settlements to victims and is a registered sex offender.

13 months??? Hard time???
Even from jail, sex abuser manipulated the system. His victims were kept in the dark

Quote

But Epstein — who had a long list of powerful, politically connected friends — didn’t go to state prison like most sex offenders in Florida. Instead, the multimillionaire was assigned to a private wing of the Palm Beach County stockade, where he was able to hire his own security detail. Even then, he didn’t spend much time in a cell. He was allowed to go to his downtown West Palm Beach office for work release, up to 12 hours a day, six days a week, records show.

Holy sh*t! He's getting better living conditions than a Mexican cartel leader in their own private prison.

Alexander Acosta was rewarded for this "deal" by being appointed Labor Secretary by Dennison.

A strong defense of Acosta from Dennison:

Trump Limply Defends Acosta’s Handling Of Sex Abuse Case: ‘Seems Like A Long Time Ago’

Quote

“I really don’t know too much about it. I know he’s done a great job as labor secretary and that seems like a long time ago,” Trump said.

Dennison had this to say about Epstein before he was convicted:

Quote

“I’ve known Jeff for fifteen years. Terrific guy,” Trump said of Epstein during a 2002 interview with New York magazine.“He’s a lot of fun to be with. It is even said that he likes beautiful women as much as I do, and many of them are on the younger side.”

"on the younger side" was certainly one of the most astute things Dennison has ever said

Quote

Many people had a big problem with Trump’s use of the phrase “seems like a long time ago,” especially since he has claimed one of his reasons for wanting to build a border wall is to stop human sex trafficking, which he claimed last April was “worse than it’s ever been in the history of the world.”