by Tyler Cowen
on October 18, 2013 at 11:21 am
in Uncategorized |
1. Chris Blattman on foreign aid.
2. Buying shares in sports athletes.
3. Why art dealers don’t want to talk about prices.
4. MIE: Japanese wine for cats.
5. Ezra Klein on tax increases.
6. Where the exchanges are at. The legal issues if Obamacare is not up and running by 2014.
7. Liberal economist expelled from Beijing University.
5. This example of a combination of getting it while totally not getting it is pretty impressive.
also, is “distribution of … growth” now in the running for replacing “redistribution of wealth” in the progressive lexicon? That’s a strange concept.
I had no idea that growth was so easy we could divvy it up beforehand.
paraphrasing Anti-Gnostic from the other day: “Growth is a concern because of public policy leveraging productivity improvements to the hilt.”
That’s because you are reading it from the perspective of policy. Ezra Klein, like everyone else in the CML, is only focuses in defeating the bugbears that haunt their imaginations. It is why the Left always wins. They focus on winning exclusive of everything else. The various groups arrayed against them are too busy debating the policy with one another to put up a fight.
His realization that “the Obama Administration cares more about increasing defense spending [from the sequestration levels] than the average House Republican” shows a capacity to learn something.
You cal it “getting it while totally not getting it,” but I’d say it’s a pretty good effort by Ezra to attempt to understand the other side.
Yeah, like the way I might try to understand cockroaches.
Yes, a good effort, glimmers of understanding. But, ultimately, it’s a political piece.
“At this point, the Republican opposition to taxes has nothing to do with policy. It has nothing to do with the economy. It’s religion. It’s dogma. It’s identity. Refusing to raise taxes is what it means to be a Republican in this day and age.”
I thought the House pushed through a tax increase bill at the end of 2012.
Is there general agreement that, as Ezra suggests, taxes are still low? Or is he just speaking of the middle class on down here?
If you want to keep up the poo-flinging contest, Democratic intransigence on spending is worse.
It’s a total misunderstanding of more than Republicans. Defense is a bloated mess, but at least it is a public good. It doesn’t exist simply to be there to be cut when we need to “take pressure off” entitlements. They still don’t understand what is coming down the pike—because we don’t do public goods anymore, but that last part is just my personal opinion.
Yeah, but the world cop thing is over. We have a continental nation bordered by two oceans and friendly neighbors. Up to the 1930s, our military was for squat, just like Washington envisioned, but I don’t recall having to fend off any invaders from my study of US history.
World cop is cool, but life’s full of tough choices, and this is the lowest of the remaining low-hanging fruit.
That’s a better example than I could have thought of. Before GW Bush’s first term, the debates were all over “nation-building,” then we had this horrible decade, now we have a Democrat president who just picked up right were we left off.
Yes, one of our continuing political problems is that Republicans (understandably) see the tax increase at the end of 2012 as a big compromise that they made, but even moderate Democrats refuse to concede it as a concession at all. In fact, many see it as a giveaway to Republicans that taxes weren’t increased even more, while Republicans are annoyed the Democrats don’t count the effective marginal tax raises in the PPACA as higher taxes.
On the other side, Democrats see the sequestration spending cuts as a complete surrender by their party now, and either a huge giveaway to Republicans or as something terrible that must be reversed (or both.) Meanwhile, Republicans tend to view the sequestration cuts as small beans.
Each side feels like they’ve given a lot and gotten little in return. Hence, instability.
Ezra is being better than the average Dem here, but still commits an error, as you note, eliding over the tax increase.
I just don’t think he believes a discussion of the previous tax changes is relevant. The post is about Dems giving up hope for tax increases going forward.
And this doesn’t apply to all the taxes, but a question for the all the Grovers here: if the law says a temporary tax cut goes away after X year, does not passing a law to create a new tax cut, really count as a tax increase? Are we still saying that?
So Jan, in effect, by extending the hated Bush tax cuts for all but the wealthy, Congress actually passed a massive tax cut in December 2012. Has anyone ever said that?
I think that was the point the Dems were trying to make when they were doing it. It didn’t really win them any support from conservatives, but that’s what it was. I think most media outlets were referring to it as extending tax cuts.
Jan is correct of course.
The expiration of the Bush tax cuts was part of the GOP’s fudging the numbers at the time of the cuts to get them past some threshold.
Clearly, the expiration did result in increased taxes, but part of the blame is Bush’s. Maybe less extravagant cuts wouldn’t have had to be fudged.
part of the blame is Bush’s
Yep, it’s Bush’s fault that a law he didn’t sign or support or vote for was passed in 2012 and a different one he didn’t oppose or veto or fail to vote for was not. Beyond parody.
You didn’t understand what he said. Beyond comprehension, apparently.
They can’t possibly have extended the hatred tax cuts for all but the wealthy. The tax cuts for the wealthy are the only part anyone hated. Purple are all for paying less themselves. But those bastards who make ten times more than we do? How dare they only pay twenty times more in taxes!
When you have the most inequality of all the rich countries, it might make sense to have a more progressive tax system. I mean, obviously not to you personally, but it makes sense to some people.
“The expiration of the Bush tax cuts was part of the GOP’s fudging the numbers at the time of the cuts to get them past some threshold. ”
The expiration of the Bush tax cuts is because the Byrd Rule in the Senate requires a larger majority to do any action that increases the deficit outside a 10 year window (since a Senator can raise a point of order against it.) That’s also why budgets are ten years in general– if you increase the baseline budget, you increase it for the 10 out years, but not past there (technically.)
The Republicans gladly would have made the tax cuts permanent to start with, but the Democrats objected. Since it required 60 votes to overcome that, the Republicans limited to 10 years in order to pass it with only a simple majority. (A number of Democrats voted for the tax cuts in the final bill, increasing the margin, after a previous technical vote had ensured that it was limited to 10 years.)
As always, the majority party (then the Republicans) complained about the minority (then the Democrats) forcing the Senate to require a 60 vote majority to accomplish something.
The Bush tax cuts, even with the tax cuts for the wealthy included, made the tax system more progressive. It cut taxes more proportionately (both as percentage of income and as percentage of taxes) for the poor and middle class than for the wealthy.
You can’t address inequality in the US without raising taxes on the middle class or cutting spending aimed at the middle class.
Yeah, Ezra’s comments about Republicans’ opposition to taxes struck me as particularly projectionist. Every budget battle over the last few years has been cast as Republicans getting spending cuts and Democrats “getting” tax hikes, i.e., it’s Dems that consider being able to raise someone’s taxes a goal in and of itself. Note also that Dems don’t argue for higher taxes as a way to reduce the spending cuts required for debt reduction; it’s actually the opposite. The tax hike that would be required to get Dems to agree to cut spending by 1 trillion dollars would be *more* than that required to cut spending by say 500 billion dollars. Strikingly, the idea that Dems “gain” when taxes are hiked is a characterization that Dems use themselves; it’s not a Republican caricature of Democratic views. In the 80s and 90s (some) Dems used to say that they only begrudgingly wanted to raise taxes as a necessary evil. (Of course, not everyone believed them.) Now, however, they openly present tax hikes or “increased revenue” as a negotiating demand, and they view it as a “loss” if they don’t get to raise someone’s taxes.
Ezra’s assertion that Dems should pursue immigration reform and infrastructure investment rather than tax hikes would make sense for Dems that primarily care about growth, about expanding the pie. However, many Dems care much more about income inequality, about dividing a pie of given size, hence Ezra’s nod to “distribution of…growth”. For those Dems, taxes reduce income inequality by taking wealth away from the wealthy. If those taxes could also be spent on something Dems find worthwhile, that would be a nice bonus. However, there are a non-negligible number of Dems that would want to raise taxes even if that revenue were thrown in a garbage can and burned. Hence, the often heard sentiment that “no one should make that much money” when discussing various people’s incomes. For those Dems, “cutting incentives for rich people to donate to…buy big homes” is indeed much better than cutting defense spending, even if the reason “escapes” Ezra.
You are correct that the Democrat desire to raise taxes is in fact independent and not linked to using “revenue” for spending. However, I wouldn’t attempt to link it rationally to income inequality. Like most political positions, it’s based on ‘us vs. them’ animus, with ‘them’ for Democrat activists being ‘the rich’. Most people don’t reach their policy positions by rational objective analysis, they just find ways to rationalize their emotional animus.
Even if we were talking about rational policy positions, I don’t think anybody really believes that we need X tax dollars in order to have X dollars of spending. We have been running “deficits” of nearly a trillion or more annually for 5 years now and there hasn’t been hyperinflation or any other effects that you would expect from spending massively in excess of revenue. Even Krugman, an economist, thinks we could have had a 10 trillion dollar stimulus by deficit spending without such consequences. So whatever the hell is going on, it seems like linking spending to “revenue” is not currently logically necessary.
Why is he linking to a 6-month old post about 6-month old CBO numbers? I remember one from Sept. that scared the bejeezus out of me.
Is he wrong about how Dems will need to deal with Republicans this round? I mean, other than just doing whatever they want, are you critical of the recommended approach to giving us some tiny chance of actually seeing the committee do something here?
Democrats have “lost” on taxes. Or are they just wrong on taxes?
What does immigration reform have to do with rescuing the government
Maybe Republicans are willing to give on Defense because they are taking the situation seriously while Democrats are still in denial and view the Republicans’ extreme measures with a haughty arrogance.
Who’s being more serious in a situation where Dems are giving on no more taxes and the R’s are giving on cuts to defense spending (one of which already happened, by the way). Republicans just got priorities, man. They’ll take no taxes and defense cuts over any taxes. They’ve seen the ruin that Clinton level taxation wrought and they despise it.
You know who’s being more serious? EVERYONE.
And you know why? Because of the debt ceiling- the only means we have for holding these guys’ feet to the fire and making them do their job, which is not simply “more spending and lower taxes for all”.
If you don’t grok- it’s ok. For some reason, Tyler fails to grasp the strategic aspect of this situation as well.
Jan, what I think you don’t see is how much less we are getting for high taxes.
Yes, one party doesn’t think anything government does is useful stifles efforts to make it better. Like, no, we can’t negotiate drug prices. That wouldn’t stretch our dollars would it?
Oh wait, by “we” did you mean the people, or Republicans? If Republicans, I think you’re getting plenty, considering you’re in a slim majority in the House.
Yeah that is what I said.
“…because they are taking the situation seriously…”
In the year 2000, the actual budget surplus was $5B – that was the amount the gross Federal debt fell.
By 2003, the debt was increasing at $400B per year.
Republicans cut taxes and increased spending, went to war, cut taxes, went to war, cut taxes. And with the huge swing from very small surplus and long looming boomer entitlement burden, then proposed tax cut after tax cut after tax cut.
Federal taxes were 20% of GDP for Clinton’s second term, and by the time Obama’s first term was over, taxes were never above 15% of GDP.
Who has been serious about debt and deficit?
Using the household finance model, the Republicans are like the breadwinner who decides to quit his high paying job making $500,00 because he spends all his time working without time for fun, divorces his wife no longer trophy wife, takes a job as security guard and then borrows and spends on fun things. Like a couple of young bimbos who give him kids who he owes child support.
Now with $1000 a month in income and court ordered payments of $2000 plus debt payments of $3000 a month plus car payments and rent of $2000, the conservative judge tells him:
“you have a spending problem” ??
I have had the misfortune to work with men fighting family court judges and what they hear from the judges is “you have an income problem and you are ordered to get more income.”
Do you think judges ordering people to get higher income to comply with court ordered payments are not conservatives but leftist liberals?
Discussing spending patterns according to who is president rather than who controls congress is silly, and to blame Bush II for deficits when they shrank every year he was in office is also silly.
The only non-silly assessment is that the GOP spends a lot and Dems spend even more.
The page you have requested does not exist or is no longer available”
bad link or bad chinese government?
huh? what does the Chinese government have to do with time.com or japanese wine for cats?
He meant “#7”
Oh, that makes a lot more sense
Bad link, excess space. Should be:
2. That would really be a terrible investment. Once the athlete doesn’t see a significant proportion of his salary his incentives really tank. Why would he kill himself on the field for a max salary when most of it is going away to investors anyway?
6. Sure, but where all the white women at?
The big fear about the exchanges (from the insurance company / death spiral angle) is that they’ll work just enough that the determined subsidized (sick or whatever reasons) will persevere, but the same people who were healthy and young and could have afforded insurance but chose not to won’t both jumping through the hoops.
According to the Kaiser link above, the deadline to enroll is in mid February, but open enrollment continues through the end of March. That’s confusing, and I could easily see the less motivated — the young and healthy, missing the deadline to enroll.
The “deadline to enroll” is the date to avoid penalties. People could enroll after that date and have insurance, but still avoid the penalty. Here’s the problem:
1) The open enrollment period ends March 31st.
2) The law was written, very precisely, to say that if you don’t have insurance on March 31st, you owe the penalty. They probably meant “if you enroll by the end of Open Enrollment,” but they didn’t understand insurance.
3) Insurance plans start on the first of the month (outside life events). In order to have insurance on March 31st, you need to have it starting March 1st.
4) It takes a while to process an application. In order to actually be enrolled and have insurance by March 1st, you need to have applied and sent in your payment by mid-February.
5) Oops. If they had written April 1st instead of March 31st in the law, it would be a lot closer to what they wanted. HHS and the Administration generally didn’t realize this problem until Jackson-Hewitt asked them about it; Jackson-Hewitt had read about it in an IRS ruling.
I think you have a lot of interesting insights in your comments, but this is utter bollocks. The law was not specifically written to allow people to avoid penalties if they enrolled by March 31st in 2014. The short coverage gap exemption is statutory and applies to all years from 2014 forward. It was not keyed to open enrollment at all, which, as I explain below, is set in HHS regulations that did not exist when Congress was drafting the ACA. This short coverage gap exemption is part of the IRC and its administration was committed to the IRS and the Treasury Department.
The initial open enrollment period is not statutory, but rather is set by HHS in its Final Exchange Rule. Indeed, the proposed rule set February 28 as the end of open enrollment for 2014. This was changed to March 31 in the Final Exchange Rule in response to numerous requests from commentators that the open enrollment period be six months rather than five. How Congress could have designed the short coverage gap exemption to mesh with as yet nonexistent HHS regulations to the very law Congress was then drafting is beyond me.
It is also not always true that you need to have applied by mid-February to have coverage on March 1. The Final Exchange Rule requires that coverage be effective no later than the first of the next month when an applicant has applied by the fifteenth of a month. Exchanges can, however, extend this effective date rule to applicants who apply beyond the fifteenth of a month.
The Jackson-Hewitt revelation is apocrypha. HHS’s proposed Exchange Rule ended open enrollment on February 28th. Neither this original deadline nor the change to March 31 had anything whatsoever to do with the short coverage gap exemption at all.
Just to be clear, the reason there is a problem is because individuals are exempt during the first “short coverage gap” during a calendar year. A “short coverage gap” is defined in the statute as a period of less than three months. The statute does not mention March 31st or any other such specific deadline.
The final individual mandate regulations issued by IRS and Treasury have a one-day rule for coverage, which provides that if an individual has coverage for a day in a month, he is considered to have coverage for the entire month. But, generally, a person enrolling in coverage purchased through an exchange will have coverage effective starting on the first the month following the month in which they enroll (at the earliest). Thus, a person who enrolls in March will have coverage effective April 1 at the earliest. Because this person will not have had coverage for all of January, February and March, his coverage gap is one day too long to be a short coverage gap.
A “short coverage gap” is defined in the statute as a period of less than three months. The statute does not mention March 31st or any other such specific deadline.
Thank you for the clarification, but defining it as a period of exactly three months in the statute is indeed the same as defining it as March 31st for people who lack coverage at the start of the year. It remains that if the period were defined for one day longer than the problem would be resolved.
It remains odd that HHS would set the Open Enrollment date to a date that would cause people signing up during the Open Enrollment to have too long of a coverage gap to avoid the penalty. I take exception to your characterization as “utter bollocks” since:
1) The Open Enrollment period is until March 31st.
2) People who do not have insurance at the start of the year, according to the statute, must obtain insurance before exactly three months elapse in order to not have a gap of a full three months; i.e., must have insurance on March 31st, not April 1st. The statute could have been written saying that the coverage gap could be “not longer than three months,” but was not. If it had been, then April 1st would be effective deadline for people lacking insurance at the start of the year.
3) You say that “But, generally, a person enrolling in coverage purchased through an exchange will have coverage effective starting on the first the month following the month in which they enroll (at the earliest)” — noting that it is only guaranteed if the person signs up by the 15th. I believe that this substantially agrees with what I said.
4) Therefore, someone who does not have insurance at the start of the year, but signs up during the last month of the Open Enrollment period, in March will still be subject to the penalty. People who sign up after February 15th but in February may not have coverage.
5) Therefore, while the Open Enrollment period lasts until March 31st, the “real” deadline for uninsured people wishing to avoid the penalty is, as I said, more like February 15th, and this is poorly understood by many people (possibly including high Administration officials), since people may focus on the open enrollment period date.
I understand that some stakeholders may have wanted a 6 month time period for Open Enrollment, but extending it was a ludicrously bad decision by HHS bound to confuse people, if the mandate is not delayed in some way.
I seriously expect that part to be delayed or waived somehow. There’s no way it was intended in such a manner.
If the law as passed gives a specific date, that date will not be interpreted to actually be a different date regardless of how it was intended. The only way it could be delayed or waived, short of amendment by Congress, is by another blatantly unlawful unilateral act by Obama which is something we really should not start getting used to if we want to retain any semblance of the rule of law.
If you seriously think the opponents of the law had a leg to stand on here, then they would have definitely sued by now. They hate this law so much, they would have done it in an instant. They haven’t, it’s legal. That’s it. Rule of law is extant.
3: “Second, I feel that artists themselves are potentially uncomfortable with their prices being discussed in the press, as anyone would be when it comes to personal finances.
That’s an odd idea of “personal finances”, seeing as how it’s commercial – and serves as a form of advertisement, either for “oh, that’s affordable” or “oh, that’s going mad – maybe it’s a speculative opportunity”.
Artists that want to pretend they don’t care about money can easily do so by not selling their art. I don’t suggest it, however.
Tyler, Xia is indeed liberal, but hardly an economist. What economics paper has he published that can legitimately be called research?
Adam Smith: No longer an economist, back to being a moral philosopher only.
I don’t think this is new by any means. I remember years ago hearing of syndicates formed to back pro golfers new to the tour. The backers picked up expenses and maybe paid a stipend for a couple of years in exchange for a share of the winnings.
It also apparently happens with entertainers. A friend once lamented to me that he passed up an early opportunity to invest in Garth Brooks.
But Foster is an established athlete who has already peaked.
For anyone interested in a good ethnographic account of how prices are set in the art market (hint: not by demand), I recommend Olav Velthuis’ “Talking Prices”. He discusses the various strategies employed by art dealers and artists in negotiating the value of goods that are supposed to be seen as outside regular market operations – especially good is the part on the new artists of the 80s (Koons, Hirst) who were suddenly open about their desire to get rich making art.
#3 This part was interesting:
“Publishing prices for the work of established artists creates the illusion that a particular piece is available for purchase on the open market, when this is often not the case. You can’t just buy a work by Gerhard Richter at Frieze; the dealer has thought very hard about who he or she wants to sell to,” and will often work hard to place pieces in museum collections or with a small group of approved collectors.”
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