One thing that’s overlooked by those who defend Ron Paul on civil liberties grounds is Paul’s staunch opposition to what I would argue is the greatest boon to liberty in American history: the 14th Amendment. If it were up to Ron Paul, it’d be removed from the Constitution, and he’s said so on numerous occasions. Not only because of his opposition to Birthright citizenship, but because of his opposition to applying the Bill of Rights to state governments.

The grand centerpiece of the 14th Amendment is this:

No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Over the course of decades of jurisprudence, this portion of the Amendment has been interpreted into what is known as the “Incorporation Doctrine” – which basically says that the Bill of Rights applies to the actions of States, not just the Federal Government. (It’s been a bit haphazard – different parts of the different amendments have only been applied to the states ad hoc, over time, as cases come before the Supreme Court.)

It’s the Incorporation Doctrine that prevents states from imposing religious doctrines in schools. It’s the Incorporation Doctrine that prohibits states from abridging free speech. The Incorporation Doctrine that provides that states have to provide fair trials and compensation for eminent domain. It’s the Incorporation Doctrine that says that state governments infringe on the right to bear arms.

A President Paul may not be able to override Congress on matters of foreign policy and the drug war. But I don’t think he’ll have any problem getting ultra-conservative judges who take a dim view of the Incorporation Doctrine appointed to the Bench – there are definitely legal circles where this is a popular position. He might not be able to get the 14th Amendment repealed, but I wouldn’t be terribly surprised if he made a good go at it. If not through outright repeal, then by passing legislation limiting the jurisdiction of the courts over different state government issues (he’s introduced legislation in the past to this effect).

It’s precisely for this opposition to Incorporation that’s made Ron Paul popular among politically conservative Evangelicals. As Benjy Sarlin notes:

[Rev. Phillip] Kayser and other endorsers praise Paul’s opposition to federal encroachment on states’ rights, especially via the judicial system. The idea is that even if they don’t agree with him on individual issues, Paul’s ideological belief that almost all federal intervention into states laws are unconstitutional would give them more latitude to restrict abortion and gay rights in their own states and communities.

In an interview with TPM, Christopher J. Neuendorf, pastor of Holy Cross Evangelical Lutheran Church in Davenport, Iowa described this “liberty” as Paul’s chief selling point.

Historically speaking, and especially in the last 70 years, the biggest battles for civil liberties have been against infringements by state governments. And the Incorporation Doctrine has been key to that battle in stopping those infringements. But a Ron Paul Presidency would lead to a weakening, if not eventual outright reversal, of Incorporation. Leaving state governments once again able to attack civil liberties more vigorously.

Nehemiah Scudder was a non-interventionist, too.

(cross-posted to League of Ordinary Gentlemen)

A brief word about the love for Chris Christie and the desire to see him run for President. Most of it seems to stem from the love for his blunt, “straight talk” – which is media speak for “undiplomatic jerk.”

A note from my personal experience: blunt “straight talkers” make for lousy leaders. Their style breeds resentment, and makes people unwilling to contribute ideas or bring up problems. They might shake things up in the short term, but in the long run a “straight talker” will devastate the institutions of an organization.

The reason why that is is because straight talkers make people fear failure and foster syncophancy and groupthink. Nobody wants to be on the receiving end of blistering insults, so nobody’s going to bring up fresh ideas or criticism when they’ll probably just get chewed out for it. The result is a lack of innovation, the lack of a cohesive organizational culture, anxiety, and an erosion of institutions in favor of the personal. That is not a recipe for long-term success.

It’s also a leadership style that is lousy in focusing on the details – something that has plagued Christie’s Administration in particular.

The media and the public at large swoon over straight talkers in large part because I think we chafe a little bit against the societal demands for civility, and there’s a part of us that wishes we could just say what mean, too. But if you think about your real life, and the people you know, do you admire the folks who say what they feel without regard for politeness? Or do you just think they’re jerks?

Personally, I’m in the latter camp.

Real leaders are strong, but they also welcome new ideas, foster consensus, and respect civility. George Washington wasn’t a “blunt talker.” Neither was Abraham Lincoln. Both of them were strong men or were more than happy to oversee Cabinets with people who vehemently disagreed with each other. And both were nonetheless able to bring those people together as a team to both begin the institutions of the United States and to preserve them.

Can you imagine Chris Christie being able to do the same? Can you imagine him giving a speech containing this sentiment?

With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation’s wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.

Me neither.

Kevin Drum relays an excellent argument for raising taxes from Bill O’Reilly:

If Barack Obama begins taxing me more than 50 percent, which is very possible, I don’t know how much longer I’m going to do this. I like my job but there comes a point when taxation become oppressive.

It’s obviously not possible, politically or otherwise, for Bill O’Reilly to pay an effective rate of over 50%. Obama isn’t pushing for it and it’d never get passed Congress. Even a top marginal rate of 50% isn’t going to happen. (Though if anyone ever pushes for it, I hope they argue that we need to return to “Reagan-era tax rates,” just to see the rhetorical call and response.)

That said, like Kevin, normally I wouldn’t support a marginal rate that high (I think returning to Clinton-era taxes once the economy recovers is just fine), but if a high marginal rate means that Bill O’Reilly quits his job, well… that’s a nice ancillary benefit.

Of course, what’s sad about this is that Fox News is so far gone that losing O’Reilly means losing one of the few sane voices left on Fox. Yeah, that scares me, too.

(Image Credit)

“It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.”

The above quote is from notorious hardcore lefty Adam Smith, in his famous socialist tract On the Wealth of Nations, where he proposes a progressive taxation, that the government should protect workers from the predations of their employers, and that a government that serves only the interests of the wealthy will suffer economic collapse.

The point is, I’ve noticed a lot of people flinging the word Marxist at President Obama after his speech today proposing higher taxes on the wealthy. Those people need to be hit over the head with a copy of Das Kapital until some of it sinks in through osmosis.

Obama’s proposals are well within the republican tradition, well within the classical liberal tradition, and well within the free-market tradition. You might question the wisdom of particular aspects of his policies given current economic conditions. Or argue that it doesn’t make a lot of sense to raise taxes now when we can borrow cheaply.

But calling the President a Marxist only exposes the speaker’s ignorance of Marxism, the history of capitalist countries, and President Obama.

[/rant]

Personally, I only have one issue with Obama’s “millionaire tax,” and that’s the way it structured. It would make more sense to simply add another marginal rate on a higher income level (say, a 45% marginal rate on $1,000,000+), or, as James suggested, lifting the FICA cap, or taxing capital gains as ordinary income. But that’s purely my preference only as a matter of making it easier to enforce. Personally, I don’t see the need to raise taxes right now, since we have a sluggish economy and we can borrow money at a negative interest rate. But if taxes are raised, taxing wealthy individuals’ income is the most harmless way to do it.

I also don’t mind a bit of class warfare here, considering how many of the wealthy in this country get that way through rent-seeking and speculation. It’s also worth putting in perspective just how bad wealth inequality in this country is. Not income inequality. Wealth inequality.

I’ve shown this image before. See that yellow sliver? That’s 80% of the population. They own 7% of the total wealth in this country. And things aren’t looking up.

That’s the change in wealth in the United States since 1983. It’s tied to this:

Which is the change in income over the past few decades.

I’ve read too much history to believe that a society where the rich get richer, the middle class stagnates at best, and the poor get poorer is a healthy society. The United States has one of the lowest rates of class mobility in the OECD, meaning that people are more likely to be stuck in their parents socioeconomic system. The poor get stuck, while an awful lot of today’s wealthy had wealthy parents (see, e.g. the Kochs). We rank near dead last when it comes to numbers of people who are self-employed or own small businesses. There are profound economic and political structures dedicated to maintaining the economic status quo.

A tax on millionaires won’t change the underlying structural problems in American economics and society. But it’s where raising taxes will do the least amount of harm.

Karl Smith wonders why the U.S. Government is even bothering to collect taxes right now, since interest rates are negative, which makes borrowing cheaper than cash right now.

Now do you believe that the real US economy will grow faster than 1.1 percent per year over the next 30 years? We should hope so, because if it doesn’t then lots of our forecasts are going to be waaay off.

Well that means that if we suspend taxation, borrow to fund the government and then keep rolling in the interest payments into the debt, our total obligation as a fraction of the economy will keep falling every year over the 30 year horizon.

Suppose real growth is 3 percent per year. Then this years obligation as a fraction of GDP falls by 1.9 percent per year, every year for 30 years. This means that in 30 years this obligation as a fraction of GDP will be only 56% as large.

Even if we then pay it all off in one lump payment we will only have to increase taxes by 56%. That increases deadweight loss by 146%. However, we saved 100% of deadweight loss in the current period. So our net increase in deadweight loss is only 46%.

Read the whole thing you can see all of Karl’s assumptions and math. I’m sure there’s a reason why this math doesn’t work out. But maybe there isn’t? What if we just suspend tax collection until certain conditions are met, like a certain % yield on ten year bonds for a period longer than X days. Or until the BLS says that unemployment is below a certain threshold. Or a combination of these. I have no idea. I’m not endorsing this proposal. I just find that there’s an insane genius to the logic.

Bottom line: it’s late and I don’t feel like doing in-depth analysis. So I’ll let you guys kick this idea around. What do we say to a temporary suspension of all federal tax collection as a stimulus program?

I’m not sure what astounds me more. The compassion and pragmatism in Reagan and Bush’s positions on illegal immigration, or the fact that they’re not speaking in talking points. Either way, it’s a sad reminder of what the Republican Party used to be.

It will pain a lot of folks to understand this, but I don’t think you can understand Barack Obama’s economic policies without coming to the realization that they are traditional pro-business conservative economic policies. Obama and Congress have worked to cut taxes to the point where federal revenues are at all time lows – in particular, by focusing on tax breaks for the wealthy and upper-middle class. As a result of the ACA, Medicare spending growth has slowed down significantly. He’s agreed, as part of the debt deal, to cut spending. He’s frozen federal salaries. He’s embarked on a huge regulatory review to cut regulations and has fast tracked federal permitting for construction and infrastructure projects. Since he took office, the United States has lost almost 600,000 state, local, and federal jobs.

Less spending. Low taxes. Fast tracking permitting. Reviewing and cutting regulations. Cutting government spending. Firing government employees and freezing the salaries of others. All of these are popular pro-business conservative ideas.

And yet, the economy still flounders. Why? Because these policy prescriptions don’t address the root problems in our economy. (That doesn’t mean they’re all bad, by the way.) The economy right now is not struggling because of uncertainty over what the government’s going to do next. It is not struggling because of high taxes or regulatory burdens. It is struggling because there is a lack of demand for goods and services. Don’t believe me? Ask small businessmen:

Other small firms say their problem is simply a lack of customers.

“I think the business climate is so shaky that I would not want to undergo any expansion or outlay capital,” said Andy Weingarten, who owns Almar Auto Repair in Charlotte. He’s thinking about hiring one more mechanic.

Added Barry Grant, the regional president of Meritage Homes Corp., in California, “It starts with jobs. … There’s an awful lot of people sitting on the fence; they’re waiting for a sign.”

The government should be pursuing policies that boost demand for goods and services, whether that demand comes from the public or private sector. Inflation is below targets right now, so if we’re careful that shouldn’t be a concern. Debt isn’t a concern because right now borrowing is cheaper than cash. The Fed should pursue QE3. And the Federal government should commit a strong amount of spending to time-limited projects, particularly fixing up our aging infrastructure. Tax cuts could be part of the mix, too – but they need to be targeted at lower and middle class. A payroll tax holiday could do the trick. Or we could just send every household that files an income tax a $2000 check. It doesn’t matter.

The point is that while interest rates for federal borrowing are in the negative, there’s no downside to increasing short-term debt. As long as tax cuts and spending have a defined time period where the window closes when the economy picks up, the long-term budget impact should be nil.

In short, we need to stop paying attention to the politicians who claim that government is slowing down business growth, and start listening to the business folks – who say that what they need are customers.

To be clear. I believe in evolution and trust scientists on global warming. Call me crazy.

Alas, those aren’t sentiments that will take you very far in today’s GOP.

By far, the biggest threat to the long-term solvency of the United States is the explosion of Medicare costs. Take current budget projections and remove Medicare, and Federal budget deficits are very manageable. Put it back in, and it looks like a disaster.

Which is why it’s amazing to me that there’s a little fact about Medicare under the Obama Administration that’s gone unheralded: the growth in Medicare outlays has significantly diminished – and it looks like a trend that will keep going strong in the future.

While our elected representatives wrangle over slicing entitlements, virtually no one seems to be paying attention to an eye-popping fact: Medicare reimbursements are no longer accelerating at a break neck-pace. The new numbers should be factored into any discussion about healthcare spending: From 2000 through 2009, Medicare’s outlays climbed by an average of 9.7 percent a year. By contrast, since the beginning of 2010, Medicare spending has been rising by less than 4 percent a year. On this, both Standard Poor’s Index Committee and the Congressional Budget Office (CBO) agree. (S&P tracks healthcare spending with the help of Milliman Inc., an independent actuarial and consulting firm.)

What explains the 18-month slow-down? No one is entirely certain. But at the end of July David Blitzer, the chairman of Standard &Poor’s Index Committee, told me: “I’m hesitant to say that this is a clear long-term trend. But it’s more than a blip on the screen.”

There are, no doubt, a number of factors influencing this slowdown in growth, but according to Zeke Emanuel, one of the major reasons for the slowdown is health providers preparing for the implementation of the Affordable Care Act:

Zeke Emanuel, an oncologist and former special adviser for health policy to White House Office of Management and Budget director Peter Orszag, is certain that this is what is happening. When I spoke to him last week, Emanuel, said: “This is not mere chance: this is directly related to the initiation of health care reform.” It is not the result of reform, Emmanuel emphasized. The reform measures that will rein in Medicare inflation have not yet been implemented. But, he explained, providers are “anticipating the Affordable Care Act kicking in.” They can’t wait until the end of 2013: “They have to act today. Everywhere I go,” Emanuel, added, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’

It’s important to remember when you look at CBO projections for spending, they do not include the several different cost control provisions, as the CBO has said that its impossible to estimate their impact. But if this article is accurate, it appears that those measures are having an effect now – even before they go into law.

I find that encouraging.

Russell Korobkin has a post up discussing what the Treasury Department’s ideal policy is for paying the U.S. Government’s obligations in the event that the debt ceiling isn’t raised. Personally, I find this problematic, because the Treasury Department doesn’t actually have any legal authority to prioritize payments. Felix Salmon isn’t as bothered. He relies on a GAO report from 1985 that states that in the absence of Congressional direction, the Secretary of the Treasury is empowered to prioritize payments from the government.

Personally, I think that that’s the wrong attitude. In the absence of Congressional authority to prioritize payments, I agree with the Treasury’s sotto voce assurances that it’s just going to make payments in the order they’re received. Any prioritization by Treasury seems, to me, to be a usurpation of Congressional authority by the Executive Branch. Congress made laws that appropriate funds to pay for certain programs. Any prioritization scheme amounts to the Treasury making de facto appropriations decisions.

I think this is worrisome. But on the other hand, it goes to a trend in our politics that has been escalating since the 1960s. More and more, Congress has been willing to simply forego its role in making policy to the President. This trend has only been highlighted during the Obama Administration, because Obama, more than any President in recent memory, has been deferential to Congress’ role as policymaker. We saw that in the Health Care Bill and Stimulus Packages, and we’re seeing it now in the debt ceiling fiasco. The result is an almost desperate flailing by Congress to get the President to do something. That’s a bad thing for Constitutional governance.

Hand in hand with this is that it’s been fascinating to me to see a meme spreading in the conservative sphere, claiming that Obama “has no plan” for the crisis. I find it fascinating for a couple of reasons. First off, here’s Obama’s plan right here. Second, Obama’s stated that he’d sign Reid’s plan.

Third and finally, however, there’s a lot of rhetoric in conservative circles about fidelity to the Constitution. Well, it’s clear who’s supposed to originate budget and revenue related policy: Congress. Not the President. Congress. All the Constitution allows is for the President to veto budget laws. Yes, we’ve established a tradition of the President putting forth policy, but it’s just that — a tradition. And not a healthy one.

One of the reasons that Rome went from being a Republic to an Empire is that the Senate kept abrogating its authority to Caesar. Personally, I’d prefer we not follow in Rome’s footsteps.

As Doug reported, John Boehner’s walked away from debt deal talks. In his letter to the GOP caucus, Boehner highlights the complete, innumerate nonsense that is the position of the Republican Party. Let me highlight two pieces.

The House this week passed such a plan…the Cut, Cap & Balance Act, which passed the House with bipartisan support.

[...]

The President is emphatic that taxes have to be raised.

I won’t get into the merits of the Cut, Cap & Balance Act — that’s been ably handled by my colleagues. I will simply point out this:

The Cut, Cap & Balance Act cuts spending to 18% of GDP and caps it there. It also demands that the budget be balanced.

But here’s the thing – Federal revenues are less than 15% of GDP thanks to Obama’s overzealous slashing of taxes. So even under the “Cut, Cap and Balance” plan, taxes need to be raised to match spending or else you’re looking at an over half-trillion dollar deficit.

The Republican position on taxes relative to the deficit simply makes no sense, either economically or mathematically.

Mr. Obama suggested in Thursday’s meeting that leaders end tax breaks for ethanol producers, oil and gas companies and corporate jet owners, and offset those tax increases with an extension of the payroll tax credit for employees, a Democratic official familiar with the meeting said, but Republicans said they would not support it.

Replacing special interest tax breaks with a tax holiday for everybody, and Republicans turn it down? That’s just baffling. Are they TRYING to live up to their stereotypes as slaves to the interests of the rich?

h/t Nate Silver

The graph above, which I snagged from Karl Smith, illustrates the point that concern for the deficit at this point in time is simply absurd. This is a graph of interest rates on Federal debt. You will note that at this time, interest on Federal debt is actually negative.

Let that sit in your mind for a minute. The interest rate is negative.

That means that right now, it is actually cheaper for the Federal government to borrow money than to spend cash. Which means that it makes more financial sense for the Federal government to borrow money than to spend cash. Which means that all the haranguing about the size of the deficit right now is pointless, because taxpayers are actually getting a better deal by having a deficit than if we had a balanced budget.

No, it won’t be like this forever. Yes, the deficit is a long term problem.

But it isn’t today’s problem. Not by a long shot.