Brendan Nyhan

Finals blog outsourcing — Brad DeLong carries the ball on Bush’s plan to let you invest your personal account in Treasury bonds.

From the press conference Thursday:

I know some Americans have reservations about investing in the stock market, so I propose that one investment option consist entirely of treasury bonds, which are backed by the full faith and credit of the United States government. Options like this will make voluntary personal retirement accounts a safer investment that will allow an American to build a nest egg that he or she can pass on to whomever he or she chooses.

DeLong:

What the Federal Reserve is telling us is that the 20-year TIP [an inflation-protected Treasury bond] is currently providing a real yield of 1.87% per year. What Bush is not telling you is that, under the Bush plan, if you divert $1000 from your Social Security to private accounts, that amount is clawed back–charged to an account associated with your normal Social Security benefit, that amount is then compounded at 3% per year plus the rate of inflation, and then after you retired deducted over time from your normal Social Security benefit.

If you are 45 and if Bush’s plan were available today…

Follow George W. Bush’s advice, divert $1,000 into your private account, invest it in TIPS, and at the 1.85% per year interest rate you will indeed by able to collect an extra amount worth $10.11 a month in today’s dollars when you retire at 65…

But the clawback would reduce your normal Social Security benefit by $14.16 a month. You’re $4.05 a month behind.

“Building a nest egg.” Feh!

Did nobody inside the White House bother to run the numbers? Did nobody care?

And media coverage of Bush’s “progressive indexing” plan since the press conference has been ridiculous – falsely claiming he would increase benefits for the poor, suggesting his plan would only cut benefits for the rich, and failing to clarify that it would cut benefits substantially relative to current law (see Media Matters here and here as well as Kevin Drum).

Mickey Kaus catches the New York Times in the act. Here’s how a recent story on Education Secretary Margaret Spellings

But since taking office in January, the onetime Austin earth mother, who greets visitors to her office with a “Come on in, y’all” and often displays wit and charm, has also shown her willingness to engage in bare-knuckle politics, fighting to tamp down a growing rebellion against President Bush’s No Child Left Behind law.

Ed Crane of the Cato Institute speaking about Karl Rove:

Crane, who has been pushing to privatize Social Security for decades, blamed Rove for focusing on convincing the country that the system was facing a financial crisis rather than advertising the benefits of personal ownership. ”If you focus on the green-eyeshade approach, people’s eyes are going to glaze over,” said Crane, who made his views known to Rove in a memo and follow-up meeting. ”You could argue that Rove likes the scare tactics in politics. You know, elect Bush, or Al Qaeda’s going to get you.”

A word of warning — don’t believe all the great reviews for Kung Fu Hustle. It isn’t funny and the action scenes are mostly boring CGI stuff. What a disappointment. I’m sending Stephen Chow a bill for $12.

I don’t say this often, but James Taranto is right — the much-touted Washington Post poll showing overwhelming opposition to getting rid of the filibuster for judicial nominations is deeply flawed:

The
Post’s Phony Poll
“Filibuster Rule Change Opposed” is the headline of the lead story
in today’s Washington Post. The paper reports on a poll of 1,007 “randomly
selected adults.” The results are here
(PDF), and the relevant questions are No. 34 and No. 36, which appear
on page 13 (both, for some reason, after No. 35):

34. The Senate has confirmed 35 federal appeals court judges nominated by
Bush, while Senate Democrats have blocked 10 others. Do you think the Senate
Democrats are right to block these nominations? Do you feel that way strongly
or somewhat?

Result: Right 48% (22% strongly, 26% somewhat), wrong 36% (17% strongly, 19%
somewhat). Here’s the other question:

36. Would you support or oppose changing Senate rules to make it easier for
the Republicans to confirm Bush’s judicial nominees?

Results: Support 26%, oppose 66%.

Read these questions carefully and you’ll see that the Post’s headline is false.
The poll not only doesn’t use the word filibuster; it doesn’t even describe
the procedure. The way the question is worded, the Democrats could have “blocked”
the nominations by the normal method of voting them down–and there is no reason
to think that “randomly selected adults” would have been paying enough
attention to know the difference. (Tellingly, the poll asks how closely participants
have been following the Tom DeLay kerfuffle–only 36% say even “somewhat”
closely–but does not ask the same question about the judge issue.)

The introduction to the question should have been worded: “. . . Senate
Democrats have used a procedure called the filibuster to block a vote on 10
others.” As it is, this poll is either a very sloppy bit of work or a deliberate
attempt to mislead the Post’s readers–including members of the U.S. Senate.

The New York Times picks up on this point of view in its filibuster story today, but attributes criticism to “Republicans”:

Republicans argued that the questions were biased, in that the rule change was described in the poll as “changing Senate rules to make it easier for the Republicans to confirm Bush’s judicial nominees” rather than referring to the need for a simple majority vote.

Why not call some polling experts? This is the laziest sort of “he said”/”she said” reporting. The question is indisputably bad. If you don’t mention or explain the filibuster, the results can’t possibly be valid.

Update 5/3: The People for the American Way Foundation claimed in an email to supporters that the question proves that public support for the filibuster has increased:

In the four weeks since PFAW Foundation launched our national public education campaign through TV ads and grassroots organizing, support for the filibuster and opposition to the “nuclear option” has increased 20 percentage points!

But the question has never been asked before in the same form. There’s no reason to think public opinion has changed substantially. PFAW is just misleading their membership.

Everyone who cares about the media should read Jay Hamilton’s All the News That’s Fit to Sell, which shows that many of the cultural/political explanations of press behavior that we toss around turn out to have deeper economic foundations. (Bonus: He’s a really nice guy.)

Here Brad DeLong paraphrases a profound but depressing comment that Hamilton made at a recent conference:

Jay has depressed me about the prospects for organizations like the [Washington] Post. One of his main points is that organizations like the Post are by-and-large not in the information-for-citizenship business but in the entertainment business: the important thing for the Post’s editors is that they print lively political-entertainment cage matches. It’s only those organizations that are in the business of selling producer information to those who will then use that information and need it to be accurate–the Financial Times, the news pages of the Wall Street Journal, the National Journal (for political and lobbying news: not economics, finance, or business coverage)–that can sustain a culture in which getting the story right before the jump is an important institutional value.

And even though the Post could be better, the fact that it’s so much more aggressive at fact-checking than the New York Times seems attributable to the same phenomenon — political professionals in DC remain part of the Post’s core audience, whereas the Times serves a diffuse group of national consumers. What this means is that the prospects for aggressive fact-checking by most media outlets are dim unless the economic incentives change (maybe as a result of the increasing commodification of “he said”/”she said” news?).

I opened my trusty RSS reader just now and found an, uh, interesting ad inserted into Andrew Sullivan’s feed:

Somehow, it seems appropriate…

Today’s Wall Street Journal editorial on the tax code, which concludes that “[t]he U.S. tax system is already ‘progressive’ enough,” uses a common trick: talking about the rising tax share paid by upper income Americans without once mentioning the rising pre-tax income share that they receive. Here’s how the Journal frames it:

The authors found that over the course of 20 years the richest 0.1% of all taxpayers saw their overall tax share double — to 11.05%, from 5.06%. The top 20% of all earners also saw their tax share increase sharply to more than two-thirds of all taxes paid. Meanwhile, the bottom 20% of earners paid only a tiny share in 1979 but saw even that share cut in half 20 years later — including payroll taxes.

When you receive a disproportionate increase in pre-tax income, you’re going to pay more taxes — this isn’t rocket science. (There are other changes that affect relative tax burdens, of course, but to not even mention the massive gains made by the rich over the last two decades is intellectually dishonest at best.) The paper (PDF) that the Journal cites in the editorial makes this clear:

The share of income accounted for by the top 1 percent of the income distribution has climbed steadily from a low of 9.58 percent (3.28 for the top 0.1 percent) for 1979 to a high of 21.55 (10.49 for the top 0.1 percent) for 2000… This pattern of an increasing share of total income is mirrored in the 1-to-5 percent class but to a considerably lesser degree. For this group, the income share increased from 12.60 percent to 15.14 percent in this period. The 5-to-10 percent class’s share of income held fairly steady over this period, going from 10.89 percent for 1979 to 11.28 percent for 2002. The shares of the lower percentile-size classes, from the 10-to-20 percent classes to the four lowest quintiles, show declines in shares of total income over the 24-year period.

Thus, it’s not surprising that shares of income taxes shifted accordingly:

The share of income taxes accounted for by the top 1 percent also climbed steadily during this period, from 19.75 percent (7.38 for the top 0.1 percent) for 1979, then declined to a low of 17.42 percent (6.28 for the top 0.1 percent) for 1981, before rising to 36.30 percent (18.70 for the top 0.1 percent) for 2000. The corresponding percentages for 2000 for the 1-percent and 0.1-percent groups are 37.68 percent and 19.44 percent, respectively, accounting for the 2000 tax rebate, which is discussed below. The 1-to-5 percent size class exhibited relatively modest change in its share of taxes, increasing from 17.53 percent to 20.29 percent (20.52 including the rebate for the child tax credit) in the period. The 5-to10 percent class, and all lower income-size classes, had declining shares of total tax.

But you won’t find any of this in the Journal – just their cherry-picked statistics.

Update 4/26: Glenn Reynolds links. See also Kevin Drum, who posted similar thoughts on the editorial. But most importantly, see the first comment below, which alleges that I’m a soak-the-rich leftist. How he reached that conclusion based on this post is beyond me — do only leftists demand honesty in editorials on tax policy? As I’ve said before, I’m a DLC moderate, but this is not about my politics. Whether you care about growing inequality or not, the rising share of income going to upper income earners is a major factor in the distribution of the tax burden. Welcome to reality.

Update 4/27: Sadly, some people are having a really hard time understanding this, so here’s a simple model to fix ideas. There are ten people in society. Three of them — the “rich” — make $100/year and pay a tax rate of 30%. Seven of them — the “poor” — make $40/year and pay a tax rate of 15%. Thus, the rich pay $90/year in taxes while the poor pay $42/year, which means that the rich pay 68% of the taxes measured as a share of the total tax burden.

Now, fast forward a couple of decades. Let’s assume that over that period, the rich have done really well, increasing their incomes to $150/year, while the poor are doing only marginally better with incomes of $50/year. We see that the rich pay $135/year in taxes while the poor pay $52.50. Even though the tax structure did not change, the share of total taxes paid by the rich increased to 72%.

The trick the Journal uses is to ignore the changing distribution of pre-tax income and say, “The tax system has become more progressive because the rich are paying more of the taxes.” But this happened in our model even though the tax code stayed exactly the same and the poor’s income improved marginally. Now, in real life, the tax code obviously changed in various ways, but the fact remains that the rich now command a larger share of pre-tax national income than they did in the past. As a result, it’s not surprising that they pay more of the taxes — and it’s not surprising that the Journal went to such lengths to conceal this fact from its readers.

Update 4/27: For more, see this Spinsanity post on how the progressivity of the tax system is spun (an issue I discuss below in comments).

The centrist/Internet third party meme appears to be catching on. Sadly, the latest victim is Ron Brownstein, one of the best political journalists working today. He begins the column by quoting Joe Trippi, the Johnny Appleseed of this stupid idea:

MoveOn, and groups like it on the left and right, chisel at the power of the major political parties by providing an alternative source of campaign funds and volunteers. But otherwise, the two parties that have defined American political life since the 1850s have been largely immune from the centrifugal current of the Internet era.

Joe Trippi, a principal architect of Howard Dean’s breakthrough Internet strategy in the 2004 Democratic presidential campaign, is one of many analysts who believe that may soon change. The Internet, he says, could ignite a serious third-party presidential bid in 2008.

…Trippi believes an independent presidential candidate who struck a chord could organize support through the Internet just as inexpensively. “Somebody could come along and raise $200 million and have 600,000 people on the streets working for them without any party structure in the blink of an eye,” he says.

Brownstein does concede that this is harder than Trippi makes it sound, but he’s still wildly unrealistic:

The hurdles for an independent presidential candidate remain formidable. Even one that attracted a competitive share of the popular vote might have trouble winning many electoral college votes; the strongest candidate could still face the syndrome of finishing second almost everywhere, trailing Republicans in the red states and Democrats in the blue. To have any chance, an independent would need to nearly run the table in battleground states — like Wisconsin and Pennsylvania — that don’t tilt decisively to either side.

Yet if the two parties continue on their current trajectories, the backdrop for the 2008 election could be massive federal budget deficits, gridlock on problems like controlling healthcare costs, furious fights over ethics and poisonous clashes over social issues and Supreme Court appointments. A lackluster economy that’s squeezing the middle-class seems a reasonable possibility too.

In such an environment, imagine the options available to Sen. John McCain (R-Ariz.) if he doesn’t win the 2008 Republican nomination, and former Democratic Sen. Bob Kerrey of Nebraska, now that he’s dropped his flirtation with running for mayor of New York. If the two Vietnam veterans joined for an all-maverick independent ticket, they might inspire a gold rush of online support — and make the two national parties the latest example of the Internet’s ability to threaten seemingly impregnable institutions.

Allow me to quote myself to explain why this is such nonsense:

Almost everyone who’s had significant online fundraising success in politics has done it by appealing to partisans, who by definition are loyal to a party. And even if the “Internet candidate” could raise $100 million, we have this little thing in political science called Duverger’s Law. As the introductory political science text I teach to freshman puts it, “In any election where a single winner is chosen by plurality vote (whoever gets the most votes wins), there is a strong tendency for serious competitors to be reduced to two because people tend to vote strategically.” Why would we expect a third-party challenge to overcome this dynamic? The two parties have vast advantages in financial resources, mobilization, and voter loyalty. To convince people you could win, you’d have to create an inordinate amount of momentum. And to do so, you’d have to have a constituency that supported you — the Internet is not an ideology or a voting bloc…

In fact, the lesson from this election is that the parties and major party candidates are adopting the Internet into their playbook, just as big business did a few years ago. Technology hasn’t repealed the laws of politics, just as it didn’t repeal the laws of business.

The dynamics of Duverger’s Law are what Brownstein doesn’t understand. It’s a giant coordination game. Even the voters who would prefer a centrist third-party candidate have no incentive to support him if he is in third place because doing so will hurt their second choice. Absent extraordinary circumstances, it’s almost impossible to dislodge the parties and create a dynamic where a third party candidate can become one of the top two contenders. This is why so few liberals supported Nader in 2004, and why Perot lost by large margins in 1992 and 1996.

My advice for Brownstein – next time, call Gary Cox at UCSD, the author of Making Votes Count, which is the key political science book in this area. Don’t send a hack consultant to do a political scientist’s job!

Previous entries in this series:
–The moderate party fantasy (3/27/05)
–The “party-in-a-laptop” bubble (11/15/04)
–Futurist nonsense (11/2/04)

Josh Marshall has been all over the Republican effort to pretend that the phrase “nuclear option” is a Democratic talking point. The latest offender is that scourage of stray cats, Senate Majority Leader Bill Frist:

“I don’t think it’s radical to ask senators to vote,” Dr. Frist said. “Now if Senator Reid continues to obstruct the process, we will consider what opponents call the ‘nuclear option.’ Only in the United States Senate could it be considered a devastating option to allow a vote. Most places call that democracy.”

Ironically enough, Republican Senator Arlen Specter then calls it the “nuclear option” in the same article (as well as the “constitutional nuclear option,” which is a mess on the scale of Tim Russert’s “private personal accounts”):

“I think it is really necessary for Democrats not to follow a straight party line on voting for filibusters and Republicans not to follow a straight party line on voting for the so-called constitutional nuclear option,” he said on CNN. “I think, if we voted our consciences, we wouldn’t have filibusters, and we wouldn’t have a nuclear option.”

And as I pointed out a few weeks ago, Republican Senator Trent Lott is credited with originating the description of the tactic as “nuclear” by Bill Safire himself, though Lott tried to dodge credit for it:

In March 2003, the Mississippi Republican Trent Lott was troubled by the Democrats’ use of the threat of a filibuster, or Senate-stopping “extended debate,” which prevented a vote on some of President George W. Bush’s judicial nominees. Charles Hurt of The Washington Times wrote that Lott told him of a plan that might allow Republicans to confirm a judge with a simple 51-vote majority – rather than the 60 votes needed under the rules to “break” a filibuster. Lott “declined to elaborate, warning that his idea is ‘nuclear.”‘ This led Michael Crowley of The New Republic to ask rhetorically: “What might Lott’s ‘nuclear’ option be?”

…Those in the minority think of the filibuster as a barrier to the tyranny of the majority; those in the majority think of it as a subversion of democracy’s majority rule. I asked Lott if he was indeed the coiner of this year’s most radioactive phrase, and he demurred: “I don’t recall being the first to use the word ‘nuclear.’ I prefer calling it the constitutional option. The other side is acting like we’re going to blow the place up.”

This is all in Google; will the press really fall for this sort of obvious mau-mau campaign?

Update 4/25: Apparently the answer to that question is yes – Josh Marshall points us to an astonishingly long Media Matters list of all the outlets that have succumbed to the GOP pressure campaign.