The rumored grand bargain would cost the economy about half a million jobs in 2013
Are you ready for a grand bargain? A deficit hawk party! Yes? No? Maybe? (Is this John Boehner?).
With the deadline for the fiscal cliff -- which is really more of a slope -- looming, President Obama and House Republicans have reportedly come close on an agreement that would kick most of the fiscal can. Well, they did for a few hours at least. It didn't take long for Boehner to walk back his support for the plan, but that hardly means it's dead. If there is a grand-ish bargain to be had, it will probably look something like this latest iteration of a deal.
As Ezra Klein reported, the deal comes in three parts: revenue, cuts, and stimulus. Let's break it down, and then break down what it means for jobs in the coming year.
REVENUE. Let the Bush tax cuts expire for households with adjusted gross incomes of $400,000 or more, and limit the value of itemized deductions to 28 percent. In other words, set tax rates for the top 1 percent back to where they were under President Clinton, and stop richer households from taking bigger deductions than middle-class households. All told, it raises a little more than $1 trillion in revenue over the next decade relative to a world where all of the Bush tax cuts continue. As Paul Krugman points out, it's unclear whether this includes the higher taxes on capital gains and dividends scheduled to kick in on January 1, 2013 -- on top of the 3.8 percent Obamacare surtax on capital gains.
Taxes would also go up from switching to chained CPI. As my colleague Derek Thompson explained, chained CPI is an alternative (and perhaps more accurate) measure of inflation that assumes consumers substitute to similar, lower-priced goods when other prices rise. In other words, it says inflation is lower. Tax brackets are indexed to inflation, so a lower measure of inflation means they will rise less -- and more people will creep into these higher brackets. It adds up to about $60-90 billion over ten years.
CUTS. Say hello to chained CPI again. It's not just a tax hike. It's a Social Security cut too. Remember, Social Security benefits are indexed to inflation as well, so the logic of a lower measure of inflation kicks in here too -- benefits will rise slower than they otherwise would have, with the compounded effect hitting older retirees the worst. It's about a $100-200 billion cut over a ten-year window. Congress is supposed to negotiate on another $1 trillion or so of cuts, and if they cannot agree on them there will be -- wait for it! -- a new sequester in the future. Because the last one worked so well.
STIMULUS. Extend unemployment insurance and the refundable tax credits from the stimulus, but not the payroll tax cut. There's also some new, albeit unspecified, infrastructure spending thrown in.
There are a lot of moving parts here, but only three of these moving parts will matter in 2013: the end of the Bush tax cuts for the rich, the end of the payroll tax cut, and new infrastructure spending. In other words, it's unlikely any of the cuts will hit the economy next year. The can known as the sequester would get kicked for another year or so -- unless, haha, Congress can agree to other, immediate cuts -- and chained CPI will be the same as CPI-W in 2013. That leaves the three aforementioned changes -- changes that add up to about a half million less jobs in 2013 than if there was no fiscal cliff at all, as you can see in the chart below. The payroll tax cut is a political orphan in need of a champion.
The Cliff Notes version of why this deal would cost us 500,000 jobs next year is it sucks more money out of the economy than it puts back in. Let's look at it piece-by-piece.
Bush tax cuts for the rich expire. Less money for the rich means less money for the rich to spend. But the rich are different from you and me -- they tend to have money left over after they buy the things they want. In other words, they spend less of their incomes, so a tax hike on them doesn't hurt demand as much as a tax hike on the middle-class would (as we shall see). The Congressional Budget Office (CBO) figures higher taxes on higher earners would subtract about 200,000 jobs next year.
Payroll tax cut ends. Less money for everybody means less money for everybody to spend. That's what the payroll tax, which, remember, hits the middle-class harder than it does the rich, does. But it gets worse. A higher payroll tax means a higher cost of hiring and that means less hiring. A lot less hiring. Working backwards from thesetwo CBO reports shows it means about half a million less jobs in 2013. As the left-leaning Center on Budget and Policy Priorities (CBPP) points out, it's almost twice as stimulative as the Bush tax cuts for the rich, at similar costs. Spending the $115 billion to extend it another year would be money well spent.
Infrastructure. This is where things get admittedly speculative. We don't even know how much infrastructure spending both sides have talked about, let alone what kind of projects, but we can make some informed guesses. President Obama has asked for $50 billion of new infrastructure spending before, which he probably wouldn't get, but we'll use here as a best-case. If we take former Vice Presidential economic adviser and current CBPP fellow Jared Bernstein's rule of thumb that every $1 billion of construction or repair spending adds roughly 9,000-10,000 jobs, and then assume that this new spending would come in over two years, that gives us about 250,000 new jobs in 2013. Again, this is a pretty generous estimate.
As far as can-kicking goes, this ain't too shabby. The CBO figures that the fiscal cliff will cost us 3.4 million jobs next year if Congress does nothing; suddenly, half a million less sounds okay. But Washington can do better. It just needs to go over the fiscal cliff first.
Right now, Obama is offering lower revenues than he originally asked for and entitlement cuts for more stimulus -- and he's not even getting all of the stimulus! It's all because of the baseline illusion. As long as the Bush tax cuts are around, Boehner can claim he's the one offering concessions on revenues by saying he'll raise them at all. It's a silly argument, but it's a silly argument that goes away after January 1, when tax rates automatically go up. Then, Democrats can push a bill that cuts middle-class taxes and cuts deductions for the rich -- the $1.6 trillion from Obama's first offer -- and tell Republicans they have a choice. They can either get less revenue or less entitlement spending, but not both, and in return they have to sign off on all of the stimulus -- extended unemployment insurance, the payroll tax cut, and infrastructure spending. They could even set up a commission -- or a supercommittee, if they're feeling bold -- to cut spending in a year's time, with a new sequester to incentivize them to find cuts.
It's a deal that would bring our medium-term budget closer to balance, without costing the economy in the short-term. Now that would be grand.
If Democratic candidate Doug Jones lost to GOP candidate Roy Moore, weakened as he was by a sea of allegations of sexual assault and harassment, then some of the blame seemed likely to be placed on black turnout.
But Jones won, according to the Associated Press, and that script has been flipped on its head. Election day defied the narrative, and challenged traditional thinking about racial turnout in off-year elections and special elections. Precincts in the state’s “black belt,” the swathe of dark, fertile soil where the African American population is concentrated, reported long lines throughout the day, and as the night waned and red counties dominated by rural white voters continued to report disappointing results for Moore, votes surged in from urban areas and the black belt. By all accounts, black turnout exceeded expectations, perhaps even passing previous off-year results. Energy was not a problem.
How filler words and tiny pauses keep conversations from going off the rails
When one person asks another a question, it takes an average of 200 milliseconds for them to respond. This is so fast that we can’t even hear the pause. In fact, it’s faster than our brains actually work. It takes the brain about half a second to retrieve the words to say something, which means that in conversation, one person is gearing up to speak before the other is even finished. By listening to the tone, grammar, and content of another’s speech, we can predict when they’ll be done.
This precise clockwork dance that happens when people speak to each other is what N.J. Enfield, a professor of linguistics at the University of Sydney, calls the “conversation machine.” In his book How We Talk, he examines how conversational minutiae—filler words like “um” and “mm-hmm,” and pauses that are longer than 200 milliseconds—grease the wheels of this machine. In fact, he argues, these little “traffic signals” to some degree define human communication. What all human languages have in common, and what sets our communication apart from animals, is our ability to use language to coordinate how we use language.
Everything had to go exactly right for Doug Jones, and exactly wrong for Roy Moore—and it did.
MONTGOMERY, Ala.—Everything had to break exactly right for Doug Jones to win the Senate election in deep-red Alabama, and it did. Jones ran a disciplined campaign that hinged on black turnout, and it delivered for him.
But everything also had to break the wrong way for the Republicans, and it did: A series of machinations among senior GOP officials led to a runoff between the unpopular Luther Strange and Roy Moore, best known for losing his judgeship over a dramatic battle to keep a 10 Commandments monument in the state supreme court. Moore had a loyal base of support in Alabama despite—or because of—the litany of controversies attached to him, including his inflammatory remarks about homosexuality and Muslims serving in office. But he was unable to reach beyond that base, and barely tried. And in the end he could not survive allegations by nine women that Moore had pursued or sexually abused them when they were teenagers—one as young as 14. The story consumed the final weeks of the campaign, with Moore unable to offer a substantive rebuttal to the allegations, instead attempting to discredit the mainstream media and his accusers. He went underground during the final stretch of the race, hardly appearing in public while Jones barnstormed the state.
Russia's strongman president has many Americans convinced of his manipulative genius. He's really just a gambler who won big.
I. The Hack
The large, sunny room at Volgograd State University smelled like its contents: 45 college students, all but one of them male, hunched over keyboards, whispering and quietly clacking away among empty cans of Juicy energy drink. “It looks like they’re just picking at their screens, but the battle is intense,” Victor Minin said as we sat watching them.
Clustered in seven teams from universities across Russia, they were almost halfway into an eight-hour hacking competition, trying to solve forensic problems that ranged from identifying a computer virus’s origins to finding secret messages embedded in images. Minin was there to oversee the competition, called Capture the Flag, which had been put on by his organization, the Association of Chief Information Security Officers, or ARSIB in Russian. ARSIB runs Capture the Flag competitions at schools all over Russia, as well as massive, multiday hackathons in which one team defends its server as another team attacks it. In April, hundreds of young hackers participated in one of them.
The president attacked a senator who has emerged as a crusader against all manner of sexual misbehavior by political leaders.
Just after 8:00 on Tuesday morning, President Trump whipped out his phone and fired off this incendiary, insinuating tweet:
Lightweight Senator Kirsten Gillibrand, a total flunky for Chuck Schumer and someone who would come to my office ‘begging’ for campaign donations not so long ago (and would do anything for them), is now in the ring fighting against Trump. Very disloyal to Bill & Crooked-USED!
It’s hardly surprising that Trump is miffed at Gillibrand. On Monday, the gentlewoman from New York publicly called on the president to step down in light of the multiple accusations of harassment and assault swirling around him. Having long pressed for the military to address its sexual-assault problem, Gillibrand has emerged more recently as a crusader against all manner of sexual misbehavior by political leaders: She was the first Senate Democrat to call on her Minnesota colleague Al Franken to step down, and she contends that elected officials absolutely should be held to higher standards than regular folks.
There’s a fiction at the heart of the debate over entitlements: The carefully cultivated impression that beneficiaries are simply receiving back their “own” money.
One day in 1984, Kurt Vonnegut called.
I was ditching my law school classes to work on the presidential campaign of Walter Mondale, the Democratic candidate against Ronald Reagan, when one of those formerly-ubiquitous pink telephone messages was delivered to me saying that Vonnegut had called, asking to speak to one of Mondale’s speechwriters.
All sorts of people called to talk to the speechwriters with all sorts of whacky suggestions; this certainly had to be the most interesting. I stared at the 212 phone number on the pink slip, picked up a phone, and dialed.
A voice, so gravelly and deep that it seemed to lie at the outer edge of the human auditory range, rasped, “Hello.” I introduced myself. There was a short pause, as if Vonnegut were fixing his gaze on me from the other end of the line, then he spoke.
H.R. McMaster previewed the administration’s new plan on Tuesday, which offers a striking contrast to the visions of other recent presidents.
The Trump administration unveils a National Security Strategy next week, but National-Security Adviser H.R. McMaster provided an advance glimpse of the plan on Tuesday.
A helpful way to understand where this still-new administration is leading is to compare McMaster’s bullet-pointed speech to the final Strategy documents released by two previous administrations, in 2015 and 2006, and note what is changing. McMaster spoke at a Washington conference hosted by Policy Exchange, a U.K. think tank that I chaired from 2014 until earlier this year. Granted, his short speech inevitably abridged the long-form document. Yet even allowing for that, the differences can be seen.
The Obama administration’s 2015 document addressed in some detail epidemics and climate change. The Bush administration committed the United States to supporting human dignity, opening societies, and supporting the building of democracy. The main lines of the Trump approach jettison these concerns. If McMaster fairly summarized the new approach, the United States will soon formally commit itself to a lonelier and less generous course.
Winning images and honorable mentions from the four categories: Wildlife, Landscapes, Aerials, and Underwater.
National Geographic has announced the winners of its annual photo competition, with the Grand Prize Winner Jayaprakash Joghee Bojan receiving a prize of $7,500 for his image of an orangutan in Borneo. National Geographic was once again kind enough to let us display the winning images and honorable mentions here from the four categories: Wildlife, Landscapes, Aerials, and Underwater.
Will the vice president—and the religious right—be rewarded for their embrace of Donald Trump?
No man can serve two masters, the Bible teaches, but Mike Pence is giving it his all. It’s a sweltering September afternoon in Anderson, Indiana, and the vice president has returned to his home state to deliver the Good News of the Republicans’ recently unveiled tax plan. The visit is a big deal for Anderson, a fading manufacturing hub about 20 miles outside Muncie that hasn’t hosted a sitting president or vice president in 65 years—a fact noted by several warm-up speakers. To mark this historic civic occasion, the cavernous factory where the event is being held has been transformed. Idle machinery has been shoved to the perimeter to make room for risers and cameras and a gargantuan American flag, which—along with bleachers full of constituents carefully selected for their ethnic diversity and ability to stay awake during speeches about tax policy—will serve as the TV-ready backdrop for Pence’s remarks.
Democrat Doug Jones defeated Roy Moore in Alabama’s Senate race, narrowing the Republican majority and handing the president a major political setback.
Democrat Doug Jones defeated Republican Roy Moore in Alabama on Tuesday night, snagging a U.S. Senate seat in a upset and providing an appropriately unpredictable end to a bizarre race.
The election saw an uneasy coalition formed between President Trump and the Republican establishment only to be rebuked in the GOP primary; a sitting senator defeated in a primary runoff; a candidate refusing to withdraw despite a series of sexual-misconduct allegations involving teenagers; and, in the end, a Democrat robbing Republicans of a Senate seat in the deep-red Deep South.
With the last few precincts being counted, Jones was headed for a narrow but decisive victory over Moore, an archconservative culture warrior who was twice removed as chief justice of the state supreme court for defying federal judges. The race is at once an outlier—Moore was a uniquely flawed candidate—and the latest example of Democratic enthusiasm, and in particular African American engagement, spiking in backlash to the Trump era. Early analysis suggests Jones’s victory came on the power of black turnout that far exceeded expectations and white turnout that sagged in the face of a scandal ridden, bigoted GOP candidate.