America's Political Nightmare in One Paragraph

My god this may be the finest paragraph Paul Rosenberg has ever written:

In truth, the Republican party only has three problems: its policies are unpopular, its policies do not work, and they hate everybody who does not agree with them. In contrast, the Democratic party has only one problem: it wants to be more like the Republicans. 

Don't look to me for the bog standard two party "duopoly" rant because I think adding more parties to a corrupted system is like asking the staff for a new set of dice at a crooked casino - the new dice will be loaded too.  Whatever forces are corrupting the two parties would almost certainly corrupt any new party that emerged absent some kind of deeper understanding of those forces of corruption and real means to defeat them.

Rosenberg's apt synopsis of the Republican party's problems is actually the less important part of his thesis, which is: What the hell is wrong with the Democratic party?  To wit:

But the Democrats have it even worse. They have won the popular vote in every presidential election since 1992 except for 2004, and yet they have been playing defence - rather badly - throughout most of this period. They do not have the means to even consider what it might look like to go on offence, except as a kabuki theatre to rev up their base come election time. 

Examples of this really are legion, from the failure to enact Hillarycare in 1993, triangulating through the rest of the Clinton presidency, failing to end the Iraq War in 2007 with control of Congress, failing to kill the filibuster in 2009, 2011 and now in 2013, the too-small stimulus, voluntarily killing ACORN under a nonsense trumped up non-scandal, falling over themselves to condemn Move On for actually opposing right wing warmongers like Bush, Cheney and Petraeus, failing to get prosecute corrupt bankers and financiers, and we can add stripping the Public Option from Obamacare.  Yes, there were a variety of villains to blame for each of these failures from Liberman to Nelson to the Blue Dogs to Obama himself but the core of it a party unwilling to really grasp the rusty levers of power and effect significant change when it counts.  Keeping the stupid filibuster in place was probably the most obvious sign that at some level, they're happy to have the excuse not act.  Not necessarily because they're "corrupt" in the sense of consciously being bought out to not do what voters sent them to do (though some no doubt are) but in not really wanting to, or being afraid to.

The Republicans are the party that won't take "no" for an answer from the voters, returning with the same bad enrich-the-rich policies over and over, year after year, but the Democrats are the party that won't take "yes" for an answer and give the voters what they want: sound liberal economic policy.  Jobs,  economic security, schools that work, a clean environment.  The Democrats had two chances in 1992 and 2008 where they controlled the trifecta of both houses of Congress and the Presidency and in both cases failed to deliver bold liberal policy that would measurably improve people's lives quickly and noticeably.  That's the big secret of what FDR did to achieve the amazing political success of the 1932-1994 Democratic coalition.  He/They (Democrats) enacted policies that made their lives better.  Not some arcane neoliberal tax credit to employers that only economists can detect any impact from, the government started mailing seniors actual cheques.  They hired people who needed work.  They built stuff that needed building and would be useful anyway - bridges, libraries, schools.  It wasn't complicated, and it worked. People felt things improving, and in 1934 and 1936 gave FDR historic supermajorities to do more of the same.

These insights don't take political genius to understand, in fact it takes a special kind of political genius for the Democrats to avoid these lessons and try to handwave away these obvious truths.  Right wing ideologues and hacks have obvious motives to ply sophistry and revisionism to deride FDR as they simply don't want to win by implementing liberal policy.  They, ultimately, must trick voters into voting against their own interests.  That's much tougher and it's why they lose the popular vote so often, even with their generally better electoral messaging machinery and rampant voter suppression.

Yes, I know the causes are in some sense obvious, lobbyists and corporate money and so forth.  But all that stuff existed in 1932, but Rosenberg suggests a deeper problem, that the leadership of the Democratic party simply don't really want to implement bold liberal policy because they don't believe in it:

Regardless of your own ideology - conscious or unconscious - you just have to wonder why Obama clings so doggedly to both substantive policies and political strategies that repeatedly fail so profoundly. No doubt there are multiple factors involved, but the most compelling answer, I have come to believe, comes down to a lack of vision: Obama quite simply cannot see any alternative. His politics are drastically confined by the crabbed nature of his neoliberal imagination, formed in the shadows of Reagan and Thatcher.  

I tend to agree.  Despite its rampant failure in the past few years, neoliberalism still has the world's elites in thrall.  They evidently cannot turn from it.  Even the ones who know it is failing can't imagine what could take its place.  I hope democratic politics can find some way to dethrone the lot of them and let some new blood take the reins for a spell, because the alternative ways this ends are not good.

Do read Rosenberg's whole piece.

Yglesias' Weak and Incomplete Defence of Romney's Tax Rates

Slate's Matt Yglesias attempts to defend the fact that Mitt Romney generally pays a lower rate of taxation on his millions in income than many working people pay.  It's exactly as unconvincing as you might expect.  To summarize his case:

• Widely accepted economic theory states that lower (or zero) taxation on investment income incents aadditional investment by people who would otherwise not bother investing it (see his example of two doctors deciding what to do with the money they make being doctors)
• It's really a great theory but there's no clear proof of it in the data

No, really, he has no proof of this theory, quote:

That's the theory, at any rate. It's a pretty solid theory, it's in most of the textbooks I've seen, and it shapes public policy in basically every country I'm familiar with. Even researchers like Thomas Piketty and Emmanuel Saez (see "A Theory of Optimal Capital Taxation") who dissent from the standard no taxation of investment income position think capital income should be taxed more lightly than labor income. Empirically, it's a bit difficult to verify that variations in capital gains tax rates and the like really are making a material difference to investment levels. But then again the data is noisy.

I can't help but snark here and express my utter surprise that the empirical evidence for the benefits of trickle down economics is thin.  I could stop right here as I think that alone disqualifies the piece from having achieved its aim, but there's a couple other things to say: 

•  Yglesias contends the doctor who invests his money is being "double taxed" on the money when he has to pay normal income tax rates on the gains he makes.  His commenters take suitable exception to this, even if investment income is taxed like regular, when you sell your $1M in stock, you only pay taxes on the gains not the amount you originally invested.
• It's bizarre to use an example of two upper-middle class professionals to justify the tax rates that Mitt Romney pays.  Romney is in the stratosphere of wealth, he can consume as much luxury goods as he can possible use or want and not have to make hard choices about whether to invest money.  Maybe it could marginally affect how much he invests or spends but Yglesias' example has the prodigal doctor who spends all his money on luxury vacations and such and invests none of it. 

Lack of evidence aside, the glaring logical flaw is that Yglesias is making a utilitarian argument in defence of an inherently unfair (I think he agrees it's at least prima facie unfair) tax preference for unearned income because it supposedly has some great pragmatic benefits, but fails to contend with the downsides of the policy.  This is a tax break that mostly goes to the rich, it has costs, like the direct increase of social inequality, and starving government of revenue or forcing it to get those revenues elsewhere.  A growing body of evidence shows that social inequality has real costs, in health, cohesion, happiness, crime, productivity, education and just about everything in society is affected. 

Even if Yglesias could prove some increase in investment because of lower tax rates, and further prove that additional investment leads to broad societal gains (something he doesn't attempt) - in a utilitarian argument you still have to show the gains are worth the costs.   I strongly doubt letting the rich keep all unearned income tax free (or significantly discounted) could survive that test. 

Finally, as several commenters point out, there's no reason that investment income cannot also be taxed progressively even if the rates are lower than labour income.  Maybe the doctor should pay 15% on his modest capital gains, but why can't Romney pay 25% or 28% on the millions he makes instead of 15%?  Even making the case for lower taxes on investment income in principle is not to defend America's crazy ultra low 15% rate on all capital gains. 

QOTD: HTML Mencken

The thing about the great internet satirists/comedians like Roy Edroso, Tbogg, and the Sadlynaughts is that to be a funny satirist you must first and foremost be an insightful and perceptive analyst in addition to whatever je ne sais quois makes one additionally hilarious.  So I was quite pleased to see HTML Mencken reappear at Sadly, No! a few days ago after a long absence, and it is no surprise to me that the author of one of the all-time great political posts (seriously, read and bookmark that thing if you've never seen it) is back with another great observation worth more notice (bold text added):

But it is Obama’s fault that he’s functioned as a de facto wingnut Trojan horse, and it’s his fanatic supporters’ fault that there is not a consensus on the left accepting of the reality that Barack Obama, a Democrat, has won victories for wingnuttery that Republican Presidents could never win — or dare to even try. One hears “Only Nixon could go to China” a lot these days in reference to Obama’s behavior, the point, I think, being that Obama is performing a superficially self-reversing maneuver in order to substantively further his and his party’s goals, for the good of all — which is what Nixon more or less did. Nixon’s tilt toward the Chicoms did not sabotage what he thought was the most important goal in his party’s foreign policy, which was the containment of the Soviet Union; in the context of conservatism, Nixon was unorthodox but “meant well.” In contrast, in making it safe to destroy social security and medicare, Obama does not “mean well” by liberalism; he does mean to sabotage the most important plank in his party’s philosophy, which is equality through a social safety net. Nixon was using liberal means to further conservative aims; Obama is putting a liberal face on conservative means to achieve conservative ends.

 That is a fantastic insight.  Nixon saved a major conservative goal from conservative short term stupidity in being unwilling to even talk to China when it would be clearly advantageous to the larger goal of containing the Soviet Union to do so.  Obama is not serving some larger liberal aim by cutting Medicare or Social Security.  The most generous interpretation is that he believes the neoliberalism triumphant TINA ("There is no alternative") hypothesis that says the demise of these programs is inevitable and at best he can only delay their demise (this is what I've read explains Tony Blair).   He is not even plausibly aiding his party's long term prospects.  Nixon going to China did not hurt average Americans at all.  He pissed off the extreme anti-communists but otherwise nothing bad happened to America as a result.  Obama is removing the floor that keeps the poorest Americans from falling into the basement when they get sick or old.  Lots of real people will be hurt by this, and they know it (or will be told of it by cynical Republicans happy to exploit a Democrat stepping on the third rail voluntarily).  They will vote accordingly.

The rest of the post is excellent and worth a look.  He makes reference to other events that are perhaps more comparable to what Obama is doing - Andrew Johnson siding against the reconstruction Republicans after Lincoln's death and John Tyler governing as a 19th century Democrat even though he was elected as a Whig under the deceased Harrison.