The Future of Capitalism

The most popular article this morning on Yahoo! News is a piece about an academic study. "Low-intelligence adults tend to gravitate toward socially conservative ideologies, the study found," is the way the article put it. Not a single person identified as a social conservative is actually quoted in the article, and the article's definition of a social conservative — "Social conservatives were defined as people who agreed with a laundry list of statements such as 'Family life suffers if mum is working full-time,' and 'Schools should teach children to obey authority' — seems subject to challenge.

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CNN Florida Debate

January 26, 2012 at 11:10 pm

The four remaining Republican presidential candidates debated again tonight in Florida, moderated by CNN's Wolf Blitzer.

My favorite exchange came when Speaker Gingrich was questioned about his proposal to colonize the moon, including the idea that if 13,000 Americans lived there they could apply for statehood. Mr. Gingrich said "look back at what JFK said," remembering how President Kennedy had inspired a generation.

Mr. Romney accused Mr. Gingrich of pandering to voters in Florida, home of the Kennedy Space Center. "Politicians go from state to state and promise exactly what the state wants to hear," Mr. Romney said.

My second-favorite answer was the one Rick Santorum gave when asked how his religious beliefs would impact his decisions in the presidency. All four of the candidates had a turn to answer the question, but I thought Senator Santorum's answer about how the Constitution exists to protect "God-given rights, not government-given rights," was by far the best.

Cap Gains Rate Set To Rise

January 26, 2012 at 10:02 am

Donald Marron reports that on January 1, 2013, capital gains taxes are scheduled to go up sharply from the current 15% rate:

First, the 2001 and 2003 tax cuts are scheduled to expire. If that happens, the regular top rate on capital gains will rise to 20%. In addition, an obscure provision of the tax code, the limitation on itemized deductions, will return in full force. That provision, known as Pease, increases effective tax rates on high-income taxpayers by reducing the value of their itemized deductions. On net, it will add another 1.2 percentage points to the effective capital gains tax rate for high-income taxpayers.
And that's not all. The health reform legislation enacted in 2010 imposed a new tax on the net investment income of high-income taxpayers, including capital gains. That adds another 3.8 percentage points to the tax rate.

Daily News on Carried Interest

January 26, 2012 at 6:33 am

To judge by this editorial in Mortimer Zuckerman's New York Daily News, add Mr. Zuckerman to the list of billionaires — Warren Buffett, Michael Bloomberg, Rupert Murdoch — who want to change the taxation of carried interest, more than doubling the current rates for long term gains by managers of real estate, oil and gas, venture capital, private equity, and hedge fund investment partnerships. As the post here the other day, "Seven Myths About Romney's Taxes," said, this isn't about how little guys get treated compared to billionaires. It's rather a case "of some billionaires wanting to raise taxes, not on themselves, but on other billionaires and multi-centimillionaires who compete with them for deals, for investment capital, for talent, and in the contest of wealth accumulation."

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NYT on ROSLA

January 26, 2012 at 6:23 am

The New York Times has both a news article and an opinion piece on ROSLA, neither of which even mention the teachers union issue raised here. It's an example of the paper not giving its readers the full story.

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ROSLA

January 25, 2012 at 12:18 am

One of the more interesting lines in President Obama's State of the Union was this: "when students aren't allowed to walk away from their education, more of them walk the stage to get their diploma. So tonight, I call on every State to require that all students stay in high school until they graduate or turn eighteen."

I thought the president was lifting an idea from a friend of mine who is a Boston City Councilor who has been pushing this idea in Massachusetts. Connecticut is reportedly going to 18 as the dropout age in the 2013-2014 school year, while New Hampshire's change to 18 from 16 went into effect in the 2009-10 school year. Students are starting school older these days, so the change doesn't necessarily mean those who drop out will be actually getting more years of education.

Obama State of the Union

January 24, 2012 at 11:31 pm

President Obama's State of the Union speech was in some ways typical of him — in rhetoric and sometimes in substance appearing centrist and unifying, but in other ways divisive and statist.

First the centrist stuff. Perhaps the most memorable passage of the speech was this laugh line: "I've ordered every federal agency to eliminate rules that don't make sense…We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill – because milk was somehow classified as an oil. With a rule like that, I guess it was worth crying over spilled milk. I'm confident a farmer can contain a milk spill without a federal agency looking over his shoulder."

The speech began and ended with praise of American soldiers: "When you put on that uniform, it doesn't matter if you're black or white; Asian or Latino; conservative or liberal; rich or poor; gay or straight."

Seven Myths About Romney's Taxes

January 24, 2012 at 7:52 am

Republican presidential candidate Mitt Romney's tax returns have prompted a new wave of press attention to the tax treatment of private equity managers and of other investment partnerships. There are few other issues about which there is so much misinformation afoot. Here is an attempt to correct some of the myths.

Myth No. 1.: This is an issue about the treatment of the little guy versus billionaires. Not so. Those pressing this issue include Warren Buffett, Rupert Murdoch, and Michael Bloomberg, all of whom are a lot richer than Mitt Romney. It's a case of some billionaires wanting to raise taxes, not on themselves, but on other billionaires and multi-centimillionaires who compete with them for deals, for investment capital, for talent, and in the contest of wealth accumulation.

The GOP Deserves To Lose

January 23, 2012 at 11:34 pm

That's the headline over a very well done Bret Stephens column in the Wall Street Journal: "Thus the core difference between Mr. Romney and Mr. Obama: For the governor, the convictions are the veneer. For the president, the pragmatism is. Voters always see through this. They usually prefer the man who stands for something." Ouch! Then this, on how to survive a second Obama term: "Hope ObamaCare is repealed by the High Court, the Iranian bomb is repealed by the Israeli Air Force, and the Senate switches hands, giving America a healthy spell of Hippocratic government."

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NBC's Debate Flop

January 23, 2012 at 11:18 pm

Tonight's Republican presidential debate was pretty lame. Instead of a debate, it was more of a group interview, with the candidates taking turns answering different questions posed by NBC's Brian Williams and, briefly, two assistants — an editor named Adam Smith from a Florida newspaper and Beth Reinhard of National Journal. Ms. Reinhard at one point asked, apparently seriously, "Why didn't the Bush tax cuts work?" Newt Gingrich answered that the country would have been in much worse shape without them, which is true, but which also failed to adequately capture the growth they unleashed.

The liveliest exchange of the debate was when Mitt Romney tore into Mr. Gingrich, describing him as "an influence peddler in Washington" who "had to resign in disgrace from his job as speaker." Mr. Gingrich tried to avoid responding directly, but finally said to Mr. Romney, "you've been walking around this state saying things that are untrue."

By the time the debate ended, I liked Mr. Romney and Mr. Gingrich both less than I did going in, which was probably just what NBC wanted.

Romney's MediScare

January 23, 2012 at 4:41 pm

Mitt Romney's criticism of President Obama for supposedly cutting $500 billion from Medicare is the subject of my column this week. "Just to be precise, far from cutting $500 billion from Medicare, President Obama has, in a mere three years, managed to increase Medicare spending to $494 billion in 2011 from $391 billion in 2008. That is an increase of $103 billion, or 26% in three years." Please check it out at Reason.com (here) or at the New York Sun (here).

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History and Conformity

January 23, 2012 at 10:52 am

KC Johnson, a professor of history at Brooklyn College, has a piece up at the Manhattan Institute's Minding the Campus site reporting that the University of Iowa's history department "had 22 registered Democrats and zero registered Republicans," while Duke University's "had 32 registered Democrats and zero registered Republicans."

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Conservative Obama Appears

January 23, 2012 at 10:28 am

From a New Yorker piece about White House memos annotated by President Obama:

At the end of another memo about fiscal discipline after the summit, he asked his staff to seek out ideas from one of the most conservative members in the House. "Have we looked at any of the other GOP recommendations (e.g. Paul Ryan's) to see if any make sense?" he wrote.
Obama could be unsentimental toward liberal piety. In May, 2009, his advisers informed him that his budget for global health assistance, much of which goes to combat H.I.V., would increase by a hundred and sixty-five million dollars yet would still face "opposition from the very vocal HIV/AIDS activist community." He wrote back, "How can they complain when we are increasing funding?" At the end, he added, "In announcing this, we should be very complimentary of the Bush Administration."

Unintended Consequences

January 23, 2012 at 10:00 am

A professor at Arizona State University, Chris Herbst, and at Georgia State University, Erdal Tekin, are out with a new working paper from the National Bureau of Economic Research taking a look at what they say are the effects of government subsidies of child care. From the paper:

Our findings consistently show that child care subsidies are associated with reductions in maternal physical and mental health and poorer interactions between parents and children. For example, subsidy receipt lowers the likelihood that a mother reports being in "very good" or "excellent" health and increases the likelihood of showing symptoms consistent with anxiety, depression, and parenting stress. Subsidized mothers also reveal more psychological and physical aggression toward their children, and are more likely to utilize spanking as a disciplinary tool.

About $9.1 billion in federal and state funds were spent on such subsidies in 2009, the authors report. An abstract of the paper is here.

Taxes of the Times, VI

January 23, 2012 at 7:01 am

One of the many valuable services provided by FutureOfCapitalism.com is keeping track of the tax increases supported by the New York Times. An editorial in today's Times comes out for an increase in corporate taxes, which are already among the world's highest. Says the Times, commenting on a report by the president's Council on Jobs and Competitiveness: "All of this would require more tax revenue, but the report discusses corporate tax reform that would not raise more money and would make it easier for American multinational corporations to avoid United States tax on foreign profits. ... At a time when austerity is in vogue, it is also morally indefensible to not ask for more from corporations." This is, by my count, at least the 17th tax increase supported by the Times in recent years.

As a reminder, here are the previous sixteen on the list: