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.
Angela Merkel has served formal notice that she will lead the German wandering away from the American alliance.
Seven years after the end of the Second World War, on the 10th of March 1952, the governments of the United States, the United Kingdom, France, and the newly established Federal Republic of Germany received an astounding note from the Soviet Union.
The Soviet Union offered to withdraw the troops that then occupied eastern Germany and to end its rule over the occupied zone. Germany would be reunited under a constitution that allowed the country freedom to choose its own social system. Germany would even be allowed to rebuild its military, and all Germans except those convicted of war crimes would regain their political rights. In return, the Allied troops in western Germany would also be withdrawn—and reunited Germany would be forbidden to join the new NATO alliance.
Should you drink more coffee? Should you take melatonin? Can you train yourself to need less sleep? A physician’s guide to sleep in a stressful age.
During residency, Iworked hospital shifts that could last 36 hours, without sleep, often without breaks of more than a few minutes. Even writing this now, it sounds to me like I’m bragging or laying claim to some fortitude of character. I can’t think of another type of self-injury that might be similarly lauded, except maybe binge drinking. Technically the shifts were 30 hours, the mandatory limit imposed by the Accreditation Council for Graduate Medical Education, but we stayed longer because people kept getting sick. Being a doctor is supposed to be about putting other people’s needs before your own. Our job was to power through.
The shifts usually felt shorter than they were, because they were so hectic. There was always a new patient in the emergency room who needed to be admitted, or a staff member on the eighth floor (which was full of late-stage terminally ill people) who needed me to fill out a death certificate. Sleep deprivation manifested as bouts of anger and despair mixed in with some euphoria, along with other sensations I’ve not had before or since. I remember once sitting with the family of a patient in critical condition, discussing an advance directive—the terms defining what the patient would want done were his heart to stop, which seemed likely to happen at any minute. Would he want to have chest compressions, electrical shocks, a breathing tube? In the middle of this, I had to look straight down at the chart in my lap, because I was laughing. This was the least funny scenario possible. I was experiencing a physical reaction unrelated to anything I knew to be happening in my mind. There is a type of seizure, called a gelastic seizure, during which the seizing person appears to be laughing—but I don’t think that was it. I think it was plain old delirium. It was mortifying, though no one seemed to notice.
She lived with us for 56 years. She raised me and my siblings without pay. I was 11, a typical American kid, before I realized who she was.
The ashes filled a black plastic box about the size of a toaster. It weighed three and a half pounds. I put it in a canvas tote bag and packed it in my suitcase this past July for the transpacific flight to Manila. From there I would travel by car to a rural village. When I arrived, I would hand over all that was left of the woman who had spent 56 years as a slave in my family’s household.
The condition has long been considered untreatable. Experts can spot it in a child as young as 3 or 4. But a new clinical approach offers hope.
This is a good day, Samantha tells me: 10 on a scale of 10. We’re sitting in a conference room at the San Marcos Treatment Center, just south of Austin, Texas, a space that has witnessed countless difficult conversations between troubled children, their worried parents, and clinical therapists. But today promises unalloyed joy. Samantha’s mother is visiting from Idaho, as she does every six weeks, which means lunch off campus and an excursion to Target. The girl needs supplies: new jeans, yoga pants, nail polish.
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At 11, Samantha is just over 5 feet tall and has wavy black hair and a steady gaze. She flashes a smile when I ask about her favorite subject (history), and grimaces when I ask about her least favorite (math). She seems poised and cheerful, a normal preteen. But when we steer into uncomfortable territory—the events that led her to this juvenile-treatment facility nearly 2,000 miles from her family—Samantha hesitates and looks down at her hands. “I wanted the whole world to myself,” she says. “So I made a whole entire book about how to hurt people.”
It’s known as a modern-day hub of progressivism, but its past is one of exclusion.
PORTLAND, Ore.— Victor Pierce has worked on the assembly line of a Daimler Trucks North America plant here since 1994. But he says that in recent years he’s experienced things that seem straight out of another time. White co-workers have challenged him to fights, mounted “hangman’s nooses” around the factory, referred to him as “boy” on a daily basis, sabotaged his work station by hiding his tools, carved swastikas in the bathroom, and written the word “nigger” on walls in the factory, according to allegations filed in a complaint to the Multnomah County Circuit Court in February of 2015.
Pierce is one of six African Americans working in the Portland plant whom the lawyer Mark Morrell is representing in a series of lawsuits against Daimler Trucks North America. The cases have been combined and a trial is scheduled for January of 2017.
The permissiveness of Republican leaders who acquiesce to violence, collusion, and corruption is encouraging more of the same.
In the annals of the Trump era, May 25, 2017, will deserve a special mark. Four remarkable things happened on Thursday, each of which marks a way that this presidency is changing the nation.
The first remarkable thing was President Trump’s speech at the NATO summit in Brussels. Many European governments had hoped—which is a polite way to say that they had suggested and expected—that Trump would reaffirm the American commitment to defend NATO members if attacked. This is the point of the whole enterprise after all! Here’s how it was done by President Obama at the NATO summit after the Russian invasion of Crimea:
First and foremost, we have reaffirmed the central mission of the Alliance. Article 5 enshrines our solemn duty to each other—“an armed attack against one … shall be considered an attack against them all.” This is a binding, treaty obligation. It is non-negotiable. And here in Wales, we’ve left absolutely no doubt—we will defend every Ally.
Some firm handshakes, forced smiles, and awkward sword dances. In short, nothing.
Let’s hear it for the Rainbow Tour It’s been an incredible success
We weren’t quite sure, we had a few doubts
Will Evita win through?
But the answer is yes
There you are, I told you so
Makes no difference where she goes
The whole world over just the same
Just listen to them call her name
And who would underestimate the actress now?
—Andrew Lloyd Webber and Tim Rice, Evita
Like Donald Trump, Juan and Eva Perón were populists. They seem to have shared Trump’s understanding of the purposes of philanthropy (for more, read up about the Eva Perón Foundation) and the importance of fiscal probity. And like Eva in 1947, Donald Trump has just completed a glitzy overseas trip.
It had ample farcical episodes: the Saudi king, the dictator of Egypt, and the president of the United States placing their hands on a glowing orb that evoked for some a lampoon of Lord of the Rings. The secretary of state assuring us that no one overseas was paying attention to Trump’s domestic troubles (palpably, indeed laughably, untrue) even as his spokesman excluded the American press from a briefing attended by the considerably more docile reporters of the Kingdom of Saudi Arabia. The national-security adviser insisting, “The entire trip is about human rights, about all civilized people coming together to fight the hatred”—an odd remark to make in a country that lops the hands off thieves and the heads off apostates. The commerce secretary, in one of his more witlessly thuggish remarks, observing complacently about urban Riyadh: “There was not a single hint of a protester anywhere there during the whole time we were there.” And then there were the video clips: Melania flicking away her husband’s groping hand and the Leader of the Free World giving the prime minister of little Montenegro a good hard shove.
The increasingly illiberal European country offers shelter to a growing number of international nationalists.
In February 2017, at the state of the nation address, Viktor Orbán, the prime minister of Hungary and the leader of the far-right, anti-immigrant Fidesz party, offered his vision for the country in the coming year. “We shall let in true refugees: Germans, Dutch, French, and Italians, terrified politicians and journalists who here in Hungary want to find the Europe they have lost in their homelands,” he proclaimed.
In reality, Orbán’s “refugees” have been moving to Hungary, and Budapest in particular, for years. A small clique of Identitarians, or aggrieved nationalists from Sweden, the United Kingdom, the United States, France, and elsewhere, all motivated by their disdain for their home countries’ commitment to liberal values, have found an ideological match in his Hungary, where two extreme far-right parties, the governing Fidesz and Jobbik, the largest opposition party, make up most of the National Assembly. Jobbik is the first European political party to champion a border wall. Its members frequently express open anti-Semitic and anti-Roma sentiments, and prioritize the preservation of “Hungary for the Hungarians.”
A Washington Post report suggests the president's son-in-law and adviser sought to give Moscow information he wanted to conceal from America's own intelligence agencies.
Why did Jared Kushner seemingly trust Russian officials more than he trusted the U.S. government?
Friday evening, The Washington Post broke the story that, according to an intercepted report by the Russian ambassador in Washington to his superiors in Moscow, Kushner sought to use secure communications facilities at the Russian Embassy to correspond directly with Russian officials. The Russian ambassador, Sergei Kislyak, reported that the proposal was made in December, after Trump won the election but before he had taken office. The conversations reportedly involved Michael Flynn, the former Trump national-security adviser who was fired after it was revealed that he lied to administration officials about the content of his conversations with Russian officials.
Preston Brooks, Greg Gianforte, and the American tradition of disguising cowardice as bravery
You wouldn’t say that Preston Brooks sucker-punched Charles Sumner in the Senate chamber in 1856—but only because he used a cane. Brooks, a South Carolina congressman, began bludgeoning Sumner, the anti-slavery Massachusetts senator, while Sumner wasn’t looking, and beat him unconscious as Sumner was still bent under his desk trying to stand up.
Brooks and his supporters in the South saw the incident as an act of great valor, as the historian Manisha Sinha writes. Brooks bragged that “for the first five or six licks he offered to make fight but I plied him so rapidly that he did not touch me. Towards the last he bellowed like a calf.” The pro-slavery Richmond Enquirer wrote that it considered the act “good in conception, better in execution, and best of all in consequence.” Other “southern defenders of Brooks,” Sinha writes, praised Brooks for his “manly spirit” and mocked Sumner for his “unmanly submission.” It would have been manlier for the unarmed Sumner not to have been ambushed.