Monday Morning

Brent said the Morning Report would be spotty this week so I’ll start with an open thread and a few interesting (to me anyway) links.

This probably seems like a mistake in hindsight.

Foreign politicians and officials who took part in two G20 summit meetings in London in 2009 had their computers monitored and their phone calls intercepted on the instructions of their British government hosts, according to documents seen by the Guardian. Some delegates were tricked into using internet cafes which had been set up by British intelligence agencies to read their email traffic.

The revelation comes as Britain prepares to host another summit on Monday – for the G8 nations, all of whom attended the 2009 meetings which were the object of the systematic spying. It is likely to lead to some tension among visiting delegates who will want the prime minister to explain whether they were targets in 2009 and whether the exercise is to be repeated this week.

In addition to the piece above Snowden isn’t helping himself or us if this  is true.

Former NSA employee, and famed PRISM whistleblower, Edward Snowden is now leaking top secret documents that appear to have nothing to do with the NSA eavesdropping on Americans, and everything to do with hurting the United States’ national security position vis-a-vis Russia before a key Obama-Putin summit.

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In light of the above information it should be an interesting G8 talk Obama is scheduled to give defending our phone and internet surveillance systems.  I have to wonder what those folks will be thinking.

President Barack Obama will defend U.S. phone and internet surveillance efforts during G8 talks next week, explaining to other leaders the importance of the tools in fighting terrorism, and safeguards in place to prevent abuse of the data

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It’s nice to see a company that pays it’s employees well actually do well.  I’ve also heard that Costco employees stick around for years and years and they even have a college education program for people who want to advance within the company.

The big box giant’s profit jumped 19 percent to $459 million last quarter, thanks in part to the company’s efforts to offer discounts to lure more members, according to Bloomberg. The company was able to offer those discounts and boost its profits while paying its workers a decent wage, a claim many of Costco’s competitors can’t make.

A typical Costco worker made $45,000 in 2011, according to Fortune. That’s compared to Sam’s Club workers’ average salary of $17,486 per year, according to salary information site Glassdoor.com.

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I don’t know if any of you saw this interview with the young Air Force guy with PTSD caused by being a drone operator.  I remember thinking that the drones seemed like a good idea for modern warfare, and maybe they are.  I think they save American lives but I’m not sure we’ve gotten their use right yet.

Doesn’t it seem as though we’re not adapting very well to all the new technology and we haven’t actually thought everything through sufficiently?

This is a report on the interview from Richard Engel, but there’s also video at the link.

Bryant said that most of the time he was an operator, he and his team and his commanding officers made a concerted effort to avoid civilian casualties.

But he began to wonder who the enemy targets on the ground were, and whether they really posed a threat. He’s still not certain whether the three men in Afghanistan were really Taliban insurgents or just men with guns in a country where many people carry guns. The men were five miles from American forces arguing with each other when the first missile hit them.

“They (didn’t) seem to be in a hurry,” he recalled. “They (were) just doing their thing. … They were probably carrying rifles, but I wasn’t convinced that they were bad guys.“ But as a 21-year-old airman, said Bryant, he didn’t think he had the standing to ask questions.

He also remembers being convinced that he had seen a child scurry onto his screen during one mission just before a missile struck, despite assurances from others that the figure he’d seen was really a dog.

In 2011, as Bryant’s career as a drone operator neared its end, he said his commander presented him with what amounted to a scorecard. It showed that he had participated in missions that contributed to the deaths of 1,626 people.

“I would’ve been happy if they never even showed me the piece of paper,” he said. “I’ve seen American soldiers die, innocent people die, and insurgents die. And it’s not pretty. It’s not something that I want to have — this diploma.”

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And last but not least from the great state of CA, we passed a budget Friday that made our stingy (hahaha) Governor almost as happy as the other Democrats.  As you probably know Republicans have essentially been side lined.  It ‘s the opposite of states like WI and others where Republicans control all levels.  This piece mentions health care quite a bit and emphasizes how much Obama and others are hoping for a successful implementation here.

Drew Altman, president and chief executive of the Kaiser Family Foundation, said the success of the federal healthcare law hinges largely on the outcome in California.

“California is pace-setting, and everyone in health reform is watching very closely,” he said. “It’s hard to imagine its success until it succeeds in California.”

Many of the healthcare changes are riding on this year’s budget and a series of related bills among those lawmakers are expected to take up Saturday.

“California really couldn’t move full speed ahead” until the budget passed, said Chris Perrone, a director at the California HealthCare Foundation. “It clears the path to a lot of work that needs to happen.”

That work includes computer upgrades to process new patients and outreach efforts to ensure that more people enroll in health plans.

Healthcare was one of the final sticking points in budget negotiations this year. Brown insisted on allowing the state to scale back its coverage if federal money is reduced.

FY2013 CR & 02/21/2013 Open Thread

New NYT piece with some good info on the next stage of the budget fight, the continuing resolution to fund the government through the rest of FY2013 (i.e. through September 30, 2013).

“Taking steps to avoid a full government shutdown at the end of March, the House Appropriations Committee as soon as next week will introduce legislation to keep the government financed through Sept. 30, the end of the fiscal year, but do nothing to stop the pending cuts.”

“The Senate next week will consider competing Democratic and Republican proposals to stop the automatic cuts. The Democratic plan would institute a 30 percent minimum tax rate on incomes over $1 million, cut farm subsidies, and institute military cuts delayed until most United States troops have returned from Afghanistan. Neither plan is expected to win the 60 votes needed to overcome a filibuster

Instead, attention will shift to the next deadline, March 27, when financing for the government runs out.

The House bill would maintain financing at presequester levels, $1.043 trillion, with detailed spending instructions for defense programs devised to give the Pentagon more flexibility. But a provision in the spending bill will say that all levels are subject to automatic cuts to be meted out by the White House Budget Office.”

http://www.nytimes.com/2013/02/21/us/politics/gop-resisting-obama-on-tax-increase.html?pagewanted=2&_r=1&gwh=E1189D5B5E182F1909E62B46AA43A452&ref=politics

If the House is really going to let the baseline be set at pre-sequester levels for the CR, this could constitute a cave for the Republicans. I.e. the sequester was actually in effect for about 1 month tops and now spending is going to be held flat at the old levels.

Update: Good piece by Karl Rove on the various options. I agree with his proposal:

“My own recommendation is that House Republicans should pass a continuing resolution next week to fund the government for the balance of the fiscal year at the lower level dictated by the sequester—with language granting the executive branch the flexibility to move funds from less vital activities to more important ones.”

http://www.rove.com/articles/450

Cutting Waste at DOD – Really!

Department of Everything

Taxing the Job Creators

Or, I suppose I could title it “Crafting Tax Policy Around Creating Economic Growth”, but that seems a little presumptuous, give it’s just a small mish-mash of half-formed musings.

Michael Arrington Spreads The Wealth

Michael Arrington believes in “trickle up” theory. “Wealth rises,” he says. “In the form of smoke, from the $100 bills I use to light my cigars!”

It occurs to me that the job creators are those that start and run small to mid-size businesses, mostly. If that’s the issue, why isn’t there more discussion of tax cuts or advantageous changes in tax policy for small businesses? Small businesses in the process of expanding or hiring are always strapped for cash, and tax bills (both federal and local) obligate hard decisions as regards to capital expenditures and labor expansion. Almost always, money that goes to pay the tax man, if kept, would go towards expanding the business or employing more people.

Wealthy individuals with high incomes are less likely to act as job creators, so it seems less likely, to me, that increased taxation on the wealthy would be a significant drag on the economy. They may invest their cash, but it’s unclear how much that investment does in terms of funding new hiring or innovation in new businesses, versus providing already solvent companies with a solid market capitalization, from which they produce pleasing dividends.

They may hire cooks and maids and gardeners, but it seems such hires are likely very low impact on the economy, and perhaps not the first things to go when a wealthy fellow pays an additional 3%-5% in taxes. Finally, it has been demonstrated that taxes on luxury items radically curtail the purchase of luxury goods, so it could be speculated that additional taxes on the wealthy would negatively impact those companies that produce luxury items. This is a negative, as those employed producing luxury items are better employed in such production than unemployed, but it seems to me that the overall impact on the economy is probably insignificant.

Thus, if the interest is in growing the economy through tax policy, a compromise position that raises taxes on the individual income of those making $250k+ per year, while offering significant tax advantages to small businesses making under $1 million per year, or offering a permanent per-employee tax break that allows small companies that employee a large number of people to pay virtually no federal taxes, would be a better way to stimulate economic growth.

Myself, I don’t care for the rhetoric of class envy. Complaining that the rich “didn’t build it themselves”, or that the wealthy aren’t “doing their fair share” has no resonance with me. I have no moral objection to the rich getting richer, and getting to keep more of their money. The top 2% pay half of all taxes, and that’s a lot. Those folks, as super-rich as they are, are doing their part. Even if Warren Buffet pays less as a percentage rate than his secretary.

However, it seems that we will need to raise revenue in addition to cutting spending (which seems, at best, a pipe dream, and I suspect we will eventually follow the Greek model), and there are probably worse places to raise revenue than increasing taxes on the wealthy, either in terms of income taxes or increases in capital gains taxes over a certain amount (and excluding the sale of primary residences), or even a minor wealth tax for folks who have assets in their name over some arbitrary sum. It seems to me raising taxes on the middle class, or on small businesses, would be more likely to put a drag on the economy.

The reverse of that last sentiment also seems to be true to me: that tax cuts on small businesses, and the middle class, would be more likely to spur economic growth. Although many factors, of course, contribute to economic growth, and tax policy doesn’t make or break the economy, one way or the other, in a vacuum. Until top marginal rates start approach 90%, but then, of course, you suffer another problem as regards revenue: compliance.

It just seems to me that most of the arguments seem to be about abstract things. That is: “The rich can afford it!” – “The rich already pay 80% of all taxes!” – “People with seven homes don’t need another tax break!” – “It’s their money! They earned it!”- “Rich people are greedy and only want more money!” – “You’re just jealous! And a taker! And lazy! What ever happened to self-reliance?” Etc. There doesn’t seem to be much objective discussion of what is meant by taxing the “job creators”, who creates the most jobs (small businesses, or sole proprietorships?), which tax cuts on which groups increases money flowing into the economy, or even who benefits and how much when the economy prospers.

Reaganomics has always been (IMO) unfairly vilified by many on the left (don’t get me started on the constant mischaracterization of the Laffer Curve), when the fact is the fundamental precept of “trickle down” economics makes good sense: cutting taxes at every level puts more money into the economy, and that rising tide lifts all boats. It just lifts the richer boats higher, but if the alternative is that we all sink, I don’t think that’s such a bad deal.

At some level, the tide will have risen as much as it can: that is, if the wealthy pay an effective 18% rate on their income and their taxes are cut to an effective 10%, it has ceased to trickle down in a meaningful way (this is not an assertion, just a theoretical example, real numbers would likely be different, but I think the principle would prove true). There seems to be ample evidence for this, in that the richer are richer than ever, and their wealth has been increasing on a steady curve, with no demonstrable benefit to the overall economy. While I’m not sympathetic to complaints that 1% of Americans control 34.5% of America’s wealth, such wealth concentration indicates a solid increase, over the past few decades, of the fortunes of the very wealthy in this country. I.e., the wealthier are much richer, they have much more money with which to create jobs, and they just aren’t doing it. Not because they are bad people or are evil or greedy, it’s just that tax cuts for the rich don’t produce jobs or economic growth in any meaningful sense. At least, not past a certain level. And we are well past that level.

To repeat myself, it seems to me there is an obvious reason those tax cuts don’t produce jobs or significant economic growth. Those very wealthy individuals don’t have any additional businesses they wish to create, people they need to higher, or local investments they are wanting to make or expand with that additional money. At least, not to the degree that impacts the economy.

Yet, it seems to me there are areas where an increase in money would find it’s way into new paychecks and new capital investments: small businesses and, to a lesser extent, the middle class. These are the folks without a surplus of money, but with people they would hire, if they could, and equipment or appliances that need to be replaced, or businesses they would start, if only they had the money. Yet an excellent opportunity for one side or the other to argue for making the middle class tax cuts permanent, or introducing a new generous small business tax cut, has passed again and again, as the two sides take their largely inflexible position on the Bush tax cuts. It’s all about either increasing taxes on the rich to raise revenue, or preserving existing tax cuts so that the rich can stimulate the economy with the extra money (although there seems to be little evidence of this, and certainly no compelling reason to think that it’s the best stimulation tax policy can make possible).

Put in the bluntest terms, I think Republicans would do well to cave on the Bush tax cuts for those making over $250k+, and build a coalition around making middle class tax cuts permanent, and coming up with some fresh tax cuts for small businesses with more than 3 non-contract employees and less than $1 million (or $3 million, perhaps) in total revenues.

Just letting the Bush tax cuts lapse may increase revenues to the federal treasury, but it’s not going to grow the economy.

A Primer on War with Iran

THIS DOCUMENT IS EASILY READ BY CLICKING THE FULL SCREEN ICON IN THE LOWER RIGHT CORNER.
– Mark

Where the Buck Stops…

So Yahoo! typically posts news articles that are amazingly content-free or are about Hollywood celebs (or both I guess).  But every once in a while, they seem to mistakenly post an article that is somewhat interesting in an academic way.  Now by no means is this one an in depth analysis, but I found it interesting.  It is entitled “Where did the mammoth US budget deficits come from?”  and can be found http://news.yahoo.com/where-did-mammoth-us-budget-deficits-come-211927495.html

Aside from the fact that it will confuse non-ATiM members because it does not distinguish between debt and deficit very well, it is a fairly straitforward look at the budget history and problems.  While it’s probably too simplistic for posters here in general, it could be a base for a more in depth budget discussion…perhaps in preparation for Debate I….or sequestration.

Discussion: Balancing the Budget

This is not going to be a deep, thoughtful post.  I’m more looking for discussion and people’s general thoughts about it.  It is engendered by reading some links jnc posted not long ago and by some comments by john on PL today.  (Hahahaha, john, you certainly got the point of my comment.  I usually bail when that one shows up.)

 

For a start, I think balancing the budget is the beginning point before moving on to tackle the deficit.  Given my leftist leanings, I would like to see that occur with the least disruption to the middle class and to the social safety net as possible – which for me means starting with cuts to defense, raising taxes on everybody (yup, my own self included) at least temporarily, finding some way to deal with rising healthcare costs.

 

What are your thoughts in general?

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