Romney's Tax Plan

Mitt Romney has a tax plan that broadly promises to lower tax rates without increasing the deficit. The plan achieves these goal by broadening the tax base by eliminating unspecified deductions.

The Obama campaign has claimed that Romney's tax plan will raise taxes on the middle class, while Romney's campaign vigorously denies this.

The Obama campaign's claim is based on a study by the Tax Policy Center that concluded that Romney's plan could not achieve all of its stated goals. The conclusions of this study have not been contradicted. Those goals are:

• cut current marginal income tax rates by 20%
• preserve and enhance incentives for saving and investment
• eliminate the alternative minimum tax
• eliminate the estate tax
• maintain revenue neutrality

In fact, the unwillingness of the Romney campaign to specify which deductions it would eliminate to finance the planned tax cuts makes any detailed and definitive analysis of the plan impossible. All the Tax Policy Center could do was make some assumptions. Its assumptions were favorable to the Romney plan. However, the TPC also claimed that these assumptions were politically unrealistic, and that under any politically feasible set of assumptions, the Romney plan would be even less able to meet the five stated goals. Romney and his supporters have indicated that they would be willing to adjust the details of the plan to meet its stated goals (e.g., cutting rates by 18% instead of 20%), but it has not been specific about this.

The Obama campaign's assertion that Romney's plan will raise middle class taxes assumes that a President Romney would insist upon maintaining all five of the goals of his tax plan, and would thus need to seek additional revenue elsewhere--that is, raising taxes on the middle class. Although the GOP has put forward a consistent theme that too many people pay little or no income taxes--lending support to the view that the party is at least open to the idea of raising taxes on the middle class--there is nothing in the Romney plan that would require this.

In fact, taking history as a guide, the GOP has been reluctant to raise taxes on anyone, including those in low and middle income groups. Whether this is a matter of ideology or political expediency is not clear. What they have been shown repeatedly willing to do is to finance tax cuts for the affluent though deficit spending. That's what happened during both the Reagan and the G.W. Bush administrations. There is no reason to believe that a Romney administration would be any different.

Therefore, it seems most likely that a President Romney would not raise taxes on the middle class as the Obama campaign claims, but rather simply pay for his tax cuts by raising the deficit, and thereby abandon the his plan's final provision, which is to maintain revenue neutrality.

Money and Politics

Want good evidence how corrosive the Citizens United decision was for our electoral process?

Republican	Democratic
$36,591,800	$4,225,700
$16,959,200	$3,220,238
$15,940,900	$2,436,300
$4,794,700	$9,882,238	Total
$2,860,900
$2,800,933
$2,229,539
$82,177,972	Total

Not only is there a 9-to-1 partisan difference between the top-ten donors, but it is also simply unhealthy for a democratic process to be subject to this type of influence by big money interests.

The Best Article on Obama's Economic Performance I Have Read

David Leonhardt has an excellent article on Obama's economic record in the New York Times Sunday Review, its strengths and weaknesses.

He criticizes Obama on three grounds.

• Obama should have immediately filled the two vacant chairs on the Federal Reserve. Had he done so, Leonhardt argues, the Fed would have acted sooner and more aggressively to improve the economy.
• Obama should have included an insurance policy in the stimulus bill that would automatically extend some of its provisions as long as unemployment stayed above a certain threshold.
• Finally, Obama should have been as aggressive in dealing with the housing problem as he and Bush had been when dealing with the banking system.

I find some merit in these observations, with a few caveats.

First, it is unclear to me that Congress would have agreed to automatic triggers extending a stimulus many of them did not like in the first place. A more telling criticism, I think, is that the stimulus could have been more narrowly tailored to have direct stimulative effect. Many of its provisions were laudable and justifiable on their own merits, but had dubious effects on job creation. I am thinking of the measures such as those aimed at high-speed rail, green energy, and encouraging electronic medical records. The stimulus would have had a more profound affect on job creation had it included more infrastructure spending and aid to state and local governments.

Second, the administration tried and failed against GOP opposition to get Peter Diamond on the Fed board. This is not just a story of what Obama didn't do. It is also a story about GOP obstructionism.

Third, the criticism I am most sympathetic to is the one concerning housing. The administration never seemed to have the same enthusiasm for helping main street as they had showed for helping Wall Street. However, even here conservative opposition plays a important role. The initiating event that actually created the Tea Party movement was Rick Santelli's rant on floor of Chicago's Commodity Exchange bemoaning even the meager aid that the administration planned to offer home owners.

However, these are fairly small quibbles. Overall, Leonhardt's article is the best summary I have read of the Obama administration's reaction to the 2008 financial crisis.

Signs of Desperation

The presidential polls are not going the way conservatives expected. Obama is up by about 4% in national polls and is polling even better in the battleground states.

One response to this phenomenon among conservatives is to criticize the polls themselves, arguing that they have a Democratic bias. A good example of this is found on the National Review web site in an article by Jim Geraghty and quoted repeatedly throughput the conservative blogosphere.

This really smacks of desperation. For example, one statistic cited repeatedly is that the last Gallup poll before the election showed Clinton up by 12%, when in fact he only beat Bush by 5.6%. A very strong Democratic bias, yes? Well, no. If you look at the actual data, that difference between the last pre-election polls and the final result had nothing to do with a pro-Democratic or anti-Republican bias. The change in the results is entirely accounted for by a large shift away from Clinton towards Perot. The polling for Bush was quite accurate. If anything, the polling in 1992 shows a bias against independent candidates.

I looked at the data published by Gallup for Presidential polling going all the way back to 1932 comparing the last poll before the election with the actual election results. I ignore exit polling, which is notoriously unreliable. I also assume that any final polling result that gets the actual election results +-1% shows no bias. The result? There is a measurable partisan bias towards Democrats in seven elections and a measurable partisan bias towards Republicans in eight elections! In other words, no consistent bias at all.

 

As recently as 2000, Gallup showed a bias against the Democratic candidate. The largest single polling error was in 1932, when FDR underpolled the actual result by 6.8%, a huge GOP bias. Interestingly, this anti-Democratic bias is even larger than the famous polling error of 1948, when Truman unexpectedly won against Dewey.

The problem is not the polling. It is the candidate.

Obama and the White, Working Class

I ran across an interesting bit of information today. You often hear that Obama has real trouble attracting support from the white, working class. It turns out that this is only partially true. Consider the following graph.

Source: Recent survey from the Public Religion and Research Institute—entitled “Beyond God and Guns”

In the West, Midwest, and Northeast support for Obama and Romney is fairly evenly divided. Obama doesn't have a white working class problem. He has a white, working class problem with Southerners, who overwhelmingly support Romney, which skews the national results.

So, white, working class Southerners don't care for a black guy. . . . . I think I have heard this music before.

How to Lose a Reputation

Paul Ryan had (notice the tense?) a Beltway reputation for being a straight shooter. After his fact-challenged convention speech and performance on the campaign trail, that reputation has taken a hit, perhaps an unrecoverable one.

The latest campaign statement that seems to emanate from an alternate sphere of reality is his insistence that Obama has been weak on foreign policy in a way that invites attacks, such as the recent attack on the consulate in Benghazi.

We should, perhaps, ask Mr. Ryan if George Bush projected weakness in his first 10 months in office in hope of explaining a domestic terrorist attack that claimed 3,000 American lives. We might also inquire as to the weakness projected by Ronald Reagan in months preceding the 1983 attack on the barracks in Beirut that killed 241 Marines. Finally, we might ask the jihadis--what is left of them--operating in the tribal regions of Pakistan if they think that Obama has been weak on foreign policy.

Quite apart from these delusional speeches by Mr. Ryan, I have begun to wonder if for some reason conservatives are inherently more partisan than liberals. Is there something about the conservative soul that lends itself to a myopic partisan worldview? I think back to the period after the election of G.W. Bush, an election that, if any election ever was, ideal for stoking partisan resentment from the losing party. He won after a contested vote in a state controlled by his brother and a disgraceful ruling by Republican judges on the Supreme Court. Despite this, Democrats were willing to work with the new president when they found common ground. Ted Kennedy helped shepherd Bush's "No Child Left Behind" initiative through Congress. Compare this to the almost unanimous rejectionist attitude Republicans in Congress adopted regarding Obama's legislative agenda, including opposing policies that they had recently championed.

Perhaps it is the fact that the GOP is a more ideologically uniform party than the Democrats. Perhaps it is that the conservative disdain for government leads them to have less interest in public policy than Democrats. Absent an legitimate interest in policy, its costs and effectiveness, they are left with little more than a desire for power. I honestly don't know.

The Most Interesting Hollywood Biography

As this EW piece on Mary Pickford points outs, in her day she was the most famous woman in the world, arguably the most famous woman the world had ever known. However, the article only hints in a couple of sentences towards the end how ultimately tragic her life was. "She remained a fierce producer, but as an actress she was losing her clout, when she got older. Then she became a recluse."

Mary Pickford co-founded both United Artists and the Motion Picture Academy of Arts and Sciences, had unparalleled wealth, fame, and personal happiness, and who, in just a few short years, lost it all (except the wealth). In rapid succession she lost her mother (with whom she was almost preternaturally close), her husband, her career, and her talent. Once it was gone, she failed at everything she tried, including adoptive parenthood. The final years of her life were lived as a sad, Howard Hughes-like recluse.

It is a fascinating portrait of a life lived that embodies the ominous warning quoted at the end of Patton, something Patton apparently never actually wrote, but would certainly have agreed with,

The conqueror rode in a triumphal chariot, the dazed prisoners walking in chains before him. Sometimes his children, robed in white, stood with him in the chariot, or rode the trace horses. A slave stood behind the conqueror, holding a golden crown, and whispering in his ear a warning: that all glory is fleeting.

Obama's Biggest Failing

Joel Klein hits this right on head. See this.

I often wonder if Obama simply lacks the temperament to be a politician.