It may be unfair to blame Michael Kinsley for Mickey Kaus, Charles Lane, Gregg Easterbrook, and Megan McArdle, just as it is unfair to blame Quentin Tarantino for Guy Ritchie. But there’s certainly no question that Kinsley pioneered a certain style — call it glib, neo-liberal contrarianism — that his intellectual heirs eventually ran into the ground. Here, Kinsley sounds more like one of his dipshit imitators and less like the guy who saw through George W. Bush from the get-go:
Here is the key point: If deficits of any size are harmless, why do we bother to have taxes at all? Why not let the government spend as much as it wants and borrow the whole amount? Deficits are larger than we could have imagined even a few years ago. If there is some limit, what is that limit if we’re not near it now? I’m not against another job-creating stimulus if my economic betters like Jamie Galbraith think it’s necessary. I would just like to hear some sort of acknowledgment that it isn’t free: that we are digging a hole that someday soon we will have to fill.
Can he really be this dense? The argument in favor of short term deficit spending during a recession is that it staves off things like increased structural unemployment and thus boosts future tax revenues, which offsets near-term budget deficits. It’s not that complicated. You can dispute that the argument is correct, of course, but to pretend that Krugman, Galbraith, et al. are ignoring the issue of debt is just silly. Look, I don’t agree with supply-side economic analysis, but I do understand that it isn’t all “Reagan proved deficits don’t matter” (as Cheney once said), that supply-siders claim lower taxes will fuel economic growth and increase future tax revenues, I just think that their arguments are incorrect (I think history bears this out). I might add that even though I disagree with supply-siders, I also believe that setting tax rates much too high would dampen economic growth and decrease future tax revenue, it’s just that my idea of “much too high” is very different from theirs.
I get what Kinsley is doing. He wants to disagree with Krugman to prove (once again!) that he is of no party or clique. This is an easy issue to do it with because the numbers are large enough that he can easily tart “a trillion dollars is a lot of money” up into something that passes as intellectual discourse, at least among readers of The Atlantic.
Kinsley’s closing makes absolutely no sense. He writes
The real contribution Boomers can make, Galbraith says, is to quit their jobs and get out of the way. Easy to say for a man with tenure.
Why would having tenure make it easier to quit your job? I realize that pundits like to play this game where they talk about how academics in their ivory towers don’t get how hard it is in the read world of journalism, how hard it is to spend all day polishing Marty Peretz’s and David Bradley’s knobs, but Kinsley is well into gold-plated diaper territory with this quip.
(via)
beltane
Is this the same Kinsley piece where he proposes lowering the estate tax and applying it to everyone? I read that one and have no intention of reading it again, especially as he confuses the “greatest generation” with the people who are in their seventies now, always a sign that someone has no idea what they’re talking about.
DougJ is the business and economics editor for Balloon Juice.
@beltane:
It’s part of the same dialog, I think.
Mnemosyne
Going by their logic, if the car you drive to work needs repair but you don’t have the cash on hand to pay for it, you should quit your job rather than put the repair on a credit card.
Karmakin
Wait wait wait, what’s wrong with Guy Ritchie? Lock.. and Snatch were really good movies. Yeah, he went through a really bad period, but Rocknrolla and Sherlock Holmes were really good.
In any case, what Kinsley wrote is a really good example of the essential radicalism and extremism of centrists. Where everything really is either black and white. There’s no concept of a good middle ground, and absolutely no intellectual or realistic concern about where that might be.
It’s really how we got to where we are, where inflation is being fought against at any cost. Mind you it’s no cost to them, but there’s a huge cost to millions upon millions.
FlipYrWhig
I would actually be curious to have that discussion. It seems a little like the discussion of what portion of a bank’s assets it should have on hand.
Culture of Truth
how hard it is to spend all day polishing Marty Peretz’s and David Bradley’s knobs
Well, when you put it that way….
Mnemosyne
@Karmakin:
Fix’d. I ended up liking Sherlock Holmes a lot more than I expected to.
JoeK
I don’t think he’s dense, he’s just playing to his audience. It’s another trap-door argument: “Deficit spending is a short-term necessity, but it has long-term consequences that can mitigate the debt problem” is just too complicated for most plain folk to understand, thinks the Conservative Pundit. But “Taxes bad! Deficits bad!” is easy.
Brachiator
Kinsley is almost as bad as Andrew Sullivan, who doesn’t understand economics, and almost as bad as Megan McArdle, who doesn’t understand economics at all but pretends that she does. This kind of thing makes me wish I had kept a copy of the episode of the Sunday ABC pundit show where Cokie Roberts and crew, exasperated at Krugman’s patient attempts to explain deficits and GDP, admitted that the Beltway crowd always got bored after talking numbers and would base their votes on what they really understood, raw, naked politics.
beltane
@DougJ is the business and economics editor for Balloon Juice.: Thanks. If this is what passes for serious thinking these days we are in bigger trouble than I thought; cliches, stereotypes and other forms of intellectual laziness are not the answer. My new pet theory for this is that an upper-middle class, mid-twentieth century upbringing caused a mild form of brain damage which has prevented its victims from fully engaging with reality.
neill
Leave poor Michael Kingley alone. He does so well given that half his brain is made up of phlegm.
Martin
Well, I think what Kinsley is struggling with (and struggling even more to articulate, which is semi-criminal given his job title) is that deficit spending of any kind requires budget surpluses somewhere down the line, without which any deficit spending becomes a permanent deficit and if permanent deficits are cool, why put a limit on them?
This is really the $9T question for Republicans. When we had a surplus in 2000, which should have been used to pay down the debt that previous temporary deficit spending created, the GOP immediately moved to not give that money to our creditors but instead to give it back to the taxpayers, thereby reinstating the deficit. IOW, permanent deficit is a GOP policy based on their actions between 2000 and 2008. We don’t even need to permit them to use 9/11 and Iraq and all that shit as a defense because it was put in motion before 9/11. The GOP policy is that the federal government should never run a surplus, should never balance the budget to a degree that our debt obligations are satisfied. Ever. So, a fair question to ask is ‘In exchange for this temporary deficit spending, when will politicians approve a policy of permanent surpluses to allow that deficit spending to be temporary.’ Democrats have an answer to that – Libertarians, Republicans, and teabaggers (and Galbraith) do not.
Amanda in the South Bay
Since I paint with a very broad brush and instinctively hate the generation, I think it may very well be difficult for boomers, (or the thirtysomething generation that came just on their heels) to really retire at a normal age, cause I certainly don’t associate financial responsibility with those cohorts.
flame away!
Culture of Truth
Mickey Kaus, Charles Lane, Gregg Easterbrook, and Megan McArdle
Speaking of inglorious bastards….
wasabi gasp
My eyes burn at the thought of Michael Kinsley showing up at Sadly, No! in a vacuum.
david mizner
Reminds me of the conservatives who say, if a minimum wage is harmless, why not make it fifty dollars an hour?
Nimm
…?
Isn’t there a very simple answer to this? If we don’t collect any taxes, we CAN’T “borrow the whole amount,” because nobody would lend to us (i.e., buy government bonds). Because without actual cash on hand, which you have from collecting taxes, you can’t make payments back to the lenders.
And who is going to lend if the government has no cash, and therefore makes no payments on its bonds?
It can’t be that simple, right? What am I missing?
The thing is, yeah, deficits do matter. The interest we pay on our debt is pretty big, and we could be doing a lot of good spending that money on something other than our credit card interest. But the harm from adding a bit more to our monthly interest payments is extremely heavily outweighed from the harm of…the economy staying dead.
Or am I missing something else there too other than the argument that stimulus spending doesn’t actually stimulate anything…?
Karmakin
@Martin: And the reason for that is to prevent future progressive governments from instituting policies and programs that would result in a better environment for the average joe.
It really is all about screwing the worker.
And Mnemosyne, that’s what I was thinking but I didn’t want to be THAT obvious :) Although to be honest I enjoyed Ricochet a lot more than most people did.
Martin
@Nimm: I think the argument is “If nobody is ever willing to talk about a policy for budget surpluses which would obviously necessitate a tax hike somewhere in the future, then it’s irresponsible to talk about even temporary deficits”
And to that I agree. You don’t give credit cards to people with no intention of ever getting a job, yet that’s the GOP economic policy – not as a temporary scenario, but permanently.
georgia pig
Kinsley’s really gone downhill, he’s like an old guy who can only remember the songs from the 30’s. All he has left is instinctual contrarianism. Some pundits are idiots to begin with, but I think punditry has a deleterious effect on your analytical skills and ends up doing in even the smart ones unless they have some other profession that keeps them smart. Full-time pundits get real lazy because they never are accountable for anything.
Midnight Marauder
It’s definitely not a “game” for these know-nothing pundits. This is who they fundamentally are and this is what they are fundamentally about.
Jewish Steel
Yes. I had this same argument with a supply side partisan and came to a point of contention about what is meant by “small business.”
If, as in his first example, he meant a schmuck with a landscaping business and a couple of employees then fuck yeah! Bless his grass stained soul and help him out. No payroll taxes for the first 20K or whatever. Incentives for more hiring! Great!
But when we are scraping the top end of what is considered a small business (less than $25 million and fewer than 100 employees) well, that’s something else.
NonyNony
@Nimm: You’re missing the fact that Kinsley has no idea what he’s talking about and as far as he’s concerned magical leprechauns are the ones who are buying the US debt.
You can tell because he throws the straw man right out there – there are very few people who would say “deficits of any size are harmless”. The only one I can come up with off the top of my head is Dick Cheney, and even that is if I give him the most uncharitable reading possible (which is more than he deserves).
Steve M.
A guy who was diagnosed with Parkinson’s eight years ago and who’s been able to change jobs as many times as he has since then without suffering a serious, financially devastating lapse in health care coverage, and who, in fact, was able to afford brain surgery for his condition, has a massive amount of gall accusing anyone else of living in an ivory tower and being out of touch with ordinary Americans.
Culture of Truth
Forget deficits – what about Rodents of Unusual Size??
ThatLeftTurnInABQ
Forget it Jake, it’s Atlantic-town.
Unabogie
OT, but I just got back from the gym where some stupid fucker insists on putting on Fox. They had a big Chyron that said “Woodward’s Book Says Obama May Put Politics Ahead of Soldiers”. Then they had John Fucking Bolton on to discuss. This went on for 15 solid minutes.
It prompted me to say out loud, in a crowded gym, “good god I hate Fox News!”
My only regret is that I used the word “news”.
DougJ is the business and economics editor for Balloon Juice.
@Culture of Truth:
Ha!
djheru
To be fair, Darth Cheney was talking about deficits not mattering in the context of elections, not economic policy.
FormerSwingVoter
I love how it’s literally impossible to get someone to argue against the actual positions liberals hold.
You want liberals to acknowledge that the debt is a problem in the long term? That it needs to get paid back at some point? Welcome to the entire argument about tax cuts for the wealthy. Glad you could make it.
Now please read the last year’s worth of debate on this subject and argue against our actual positions.
Fucking media. Fucking conservatives. Fucking everyone.
Violet
@DougJ is the business and economics editor for Balloon Juice.:
Asked this in a thread yesterday. DougJ, why are you now the “Business and Economics Editor” here? I was out of town and away from the computer and obviously missed something. Is there a link? Sounds like it has something to do with McMegan.
Fidus Achates
Kinsley’s a twit, but that’s not really the point. Guy Ritchie has produced a string of nuanced movies like the aforementioned Lock, Stock.., Snatch, and, I would add, Revolver, a great examination of his former wife and her ilk. Tarantino’s the Kinsely in this analogy, especially considering the crap he’s produced lately. Death Proof, which was outdone by Robert Rodriguez’ Planet Terror, and the unintelligible Inglorious Basterds are the work of a guy who’s given up.
Martin
@Violet: I think it’s recognition that DougJ is as qualified for the title as McMegan is. Fuck, Tunch is as qualified for the title as McMegan is…
Sentient Puddle
When your argument boils down to this…
…you’re basically saying “I got nothing.” I mean seriously, that’s practically admitting to making a straw man right there.
Besides, as you point out, the right has more to answer for on this. They’re the ones who has the guy who said “Deficits don’t matter.”
jl
Has Kinsley read James Galbraith?
Galbraith is the most extreme deficit anti hawk among the celeb economists giving policy advice now. He does not mind huge deficits at all, deficits larger than other economists would recommend. He does not represent a consensus among the Keynesian liberals.
But Galbraith readily admits such a policy will not be ‘free’.
The cost will be either higher costs of borrowing, currency devaluation, or inflation, or some combination of the those.
Galbraith thinks the best approach would be to effectively print money, and the costs would be currency devaluation and inflation. He thinks the benefits of deficit spending now for national productivity and increasing aggregate demand to meet what he thinks is potential aggregate supply outweighs the costs.
Galbraith has said this very clearly.
Kinsley is accusing Galbraith of something he never said, it seems to me.
People like Romer, Krugman, Stiglitz, and Shiller, would be much more cautious than Galbraith regarding deficit spending, even though they would be willing to do more than the Obama administration is.
Edit: the others have repeatedly warned that they think the costs of Galbraith’s recommendations may be larger than he thinks they are, and they have said so repeatedly and explained why.
And Kinsley thinks even a much larger temporary stimulus would mean anything compared to the structural deficit caused by the Bush tax cuts, long term foreign military interventions, and the growth in health care spending?
Earl Butz
And here you’ve bought into the supply-siders school of economic theory, hook, line, and sinker. You just “disagree on what the idea of too high is”.
90% marginal tax rates post-WWII didn’t “dampen economic growth” or decrease tax revenue – to the contrary, this nation enjoyed the best standard of living that it is ever going to experience. There is no such thing as “setting tax rates too high”, there is only determining the standard of living that you want your society’s wage earners to experience, and the amount of money you wish to divert from those wage earners into the pockets of those who will never experience want.
Mark S.
My God this is stupid:
Kinsley apparently thinks the only logically cohesive position would be to tax estates at 100%. Since that would be crazy, he’ll just settle for having no estate tax at all.
James E. Powell
The argument in favor of short term deficit spending during a recession is that it staves off things like
increased structural unemploymentfascist revolutions and thusboosts future tax revenuessaves thousands if not millions of lives, including Kinsley and his ilk.Dr. Morpheus
@Earl Butz:
But, but, but if the gubmint steals all our money and gives it to the lazy, unproductive nig-, I mean poor, then our whole society collapses and it’s chaos!
That and gay marriage, too, also…
Stooleo
@Earl Butz:
Violet
@Martin:
Yeah, I figured it was something like that. I was wondering what finally pushed DougJ over the edge. Did McMegan start talking about the jobs-creating benefits of using pink Himalayan salt or something?
Midnight Marauder
@djheru:
A distinction entirely without a difference for the modern Republican Party.
Paul Meli
Deficits don’t matter (mostly):
http://bilbo.economicoutlook.net/blog/?p=11587
see also Jamie Galbraith and Warren Mosler
At least they have coherent arguments why…
Paul
eemom
@Unabogie:
I have a similar problem at my gym. The teevee in front of the stairclimber I use is always tuned to fucking CNBC. Yesterday morning while various bobblebots were flapping their gums they kept flashing the, um, “question” being, um, “discussed”:
CAN THE TEA PARTY FIX THE ECONOMY?
It’s hard to climb steps when you’re banging your head against the wall.
fasteddie9318
Let’s see; Paul Krugman won the Nobel Memorial Prize in Economics, but on the other hand Michael Kinsley is a gadfly douchebag who’s spent his entire career either getting his ass handed to him by wingnuts on CNN or contributing to the downfall of one print media outlet after another, and he doesn’t actually understand Krugman’s position despite trying to argue against it. Gosh, I don’t know; they both have such compelling credentials, I just don’t know who to believe.
DFH no.6
Whaddya got against Guy Ritchie? Lock, Stock, and Two Smoking Barrels and Snatch were good, entertaining movies (among my favorites, in fact) and are really standout imitations of the Tarantino style (IMHO).
Sure, Swept Away sucked, but so did the original (just a crappy, sappy story). RocknRolla was ok (lotta great actors, anyway) and even last year’s Sherlock Holmes with Robert Downey and Jude Law was well-done and enjoyable in an updated Wild, Wild, West (old Robert Conrad TV series) sorta way. Unless, of course, you think Basil Rathbone is the only true film Sherlock (which I don’t).
But yeah, Kinsley’s being a douche here (no surprise anymore), playing the contrarian and feigning ignorance. There’s no way he’s this uninformed.
“I would just like to hear some sort of acknowledgement that it isn’t free…” Oh, go fuck yourself, Mikey, ya preening prick.
I have never seen a discussion of short-term deficit-spending Keynesian stimulus during a recession (not now, not years ago) that didn’t include much more than “some sort of acknowledgement” of the future paying-down of that debt (i.e., “it isn’t free”) via better economy thus higher tax revenue (and even, if it’s done like it’s supposed to, lower gov’t expenditures when stimulus is no longer needed). It’s the other side of the fucking equation!
For Kinsley to claim he needs “to hear” that (implying that it’s not been put forth) is utter bullshit.
Mark S.
@Stooleo:
My understanding is that there were a lot more deductions available and many of them did encourage people to invest. Maybe not always in economically sound ways, but to get a tax write-off.
DougJ is the business and economics editor for Balloon Juice.
@Violet:
It was when she called Sebelius a jack-booted thug.
Observer
“Reagan proved deficits don’t matter” refers to the politics rather than economics.
I.e. there is no political cost to running a deficit (if you’re a Republican).
Mark S.
@fasteddie9318:
Well, we’re out of time so we’ll have to leave it there.
PeakVT
25 years later, Kinsley is still the same grinning wienie Buckley brought on Firing Line for a nominally opposing viewpoint, trying to score a hit without looking too leftist to be brought back next week.
Mark S.
@Unabogie:
@eemom:
Well, it’s not as bad as Fox or CNBC, but my gym always has a TV tuned to Headline News, which has turned into a really idiotic tabloid network. It’s a shame, because it used to be good.
fasteddie9318
@eemom:
Oh, they’ll fix it alright. Make it squeal real pretty like.
sjcumbuco
Andy Xie pointed out in this article that there is a large amount of stimulus leakage in a globalized economy, which is one reason to rethink the ways we approach deficit spending to stimulate the economy:
There’s a lot to consider there, especially in our age of free trade dogma.
Personally, I think deficits do matter, and we should be addressing them by rethinking the defense/security state, repealing the tax cuts on wealthiest earners, etc. The higher the national debt goes, the more taxes will be imposed on everyone, and the more downward long-term pressure gets placed on the dollar.
KG
@Earl Butz: the post war period was unique, though. With pretty much every other part of the world in ruins, the US was in the perfect spot to be the mass production center of the planet (and we were). The GI Bill allowed a lot of people who otherwise wouldn’t have had it the chance to buy a house and/or go to college (keep in mind, we were fully mobilized for war so pretty much every able bodied male was able to take advantage of it).
We don’t have the manufacturing advantage that we did then (China and India have modernized, Europe and Japan have rebuilt their infrastructures, etc). Nor do as many consumers have some of the government subsidies (for lack of a better term) as they did then.
All that said, I do think tax rates matter, on a psychological level, at least… but not nearly as much as people think they do. It’s the effective rate, not the marginal rate, that matters. And I don’t think that the effective rate that most people pay in taxes has changed much in the long run (I could be wrong, been a while since I’ve looked at these numbers).
At this point, it’s a chicken/egg situation for our economy. People will spend money if they want/need/can. Businesses will spend money (hire people, buy more inventory, etc) if people are buying/spending. Banks will lend money if people and/or businesses are making money. Get any one of those three segments moving, and the economy will build on itself. Have all three stop, as they have the last few years, and it’s shit creek without a paddle.
Zifnab
@FormerSwingVoter: This.
I would love to have a conversation about deficits. I remember trying to have that conversation back in ’01, when Cheney calmly informed us that deficits didn’t matter. Or in ’05 when the war bills started getting into the hundreds of billions of dollars. Or even in ’08, when the Fed and the Congress cut trillion dollar checks to the big banks.
But when it comes to fronting an extra billion on food stamps, suddenly you can’t swing your elbow without hitting a deficit hawk.
Ailuridae
@FormerSwingVoter:
Not just tax cuts for the wealthy. It is also the non social justice part of the argument to reform health care. Health care’s rising costs, if resolved to the standard of the worst of our Western counterparts, immediately solves nearly all of the long term deficit issues.
CBPP deficit caluclator AKA Best internet toy ever
Davis X. Machina
Micro-Kinsleys are the bane of HS policy debate. They’ve been around forever — at least as long as Mike the K — running cute generic disadvantages on negative.
“But look! Reducing homelessness causes nuclear war — because it makes city real estate more valuable, which increases wealth, which leads to increased spending, which leads to increased beef consumption, which leads to environmental degredation, which leads to trade wars, increased international friction and NUCLEAR WAR!
So if you vote for the affirmative plan to build more homeless shelters, you’re actually casting a ballot FOR THE END OF THE WORLD AS WE KNOW IT!”
Even dumb-ass 9th grade novices know that’s a shuck, and the smart ones admit sheepishly in critique that ‘yeah, it’s a shuck, but the varsity does it, and we want to win sooooo bad…and besides, it’s less work running generics than actually refuting the aff case — to do that we’d have to listen to it….
Martin
@Stooleo: Effectively, yes.
The problem we have now is that we’re having an economic debate from two failed viewpoints. Democrats are saying we need to boost demand, from consumers, from government, but neither can afford to do that to any great degree, and neither is really in a position to take on additional future debt obligations (the whole economic mess we’re in is because consumers took on too much).
Republicans are saying if we allow the rich to keep more of their money they’ll spend it on creating jobs and such. Well, fuck, they wouldn’t be rich if they were off spending their money, now would they? They’re rich – either in net worth or cashflow because they don’t spend their money – they save and invest it, and those investments don’t necessarily give way to jobs and economic activity because the investments are profit motivated, and you don’t increase profits by hiring people. You increase profits by firing them.
Missing in all of this is the dynamic that existed in the 50s which was that hoarding of wealth was counterproductive because the government would tax the everloving shit out of it. That caused everyone to shift from profits and net worth to cashflow – increase your income but increase your expenditures proportionately so you have deductions against that income to keep your taxes low. How do you do that? You replace equipment, you hire people, you build factories, you spend it on things that boost the economy and earn those deductions. You keep that money in motion.
The Dow is only 20% or so off of it’s all-time highs. Corporate profits are doing quite well – worse in some sectors, better in others. There’s roughly $1T sitting in corporate coffers doing nothing. The profits that filled those coffers weren’t taxed at a particularly high rate, so there wasn’t a great incentive to spend rather than accumulate. Rather than the federal government dumping $1T in stimulus, we need to find a way to unlock that pool of money and get it working in the economy, we need to find a way to unlock the private accumulation of wealth to do the same thing. In the 50s the focus was on post WWII rebuilding and any loose change was going to that cause – either by taxing the fuck out of the people who refused to reinvest, or by giving them an incentive (high taxes) to invest of their own accord. There was a much greater focus on dividends (recurring income) rather than profit growth (capital gains) in the 50s. That’s the attitude we need to find, and I have no clue where to find it in this political environment.
sjcumbuco
Here is another excellent article on the potential dangers of excessive government debt, and the potential for hyperinflation
http://www.zerohedge.com/article/guest-post-how-hyperinflation-will-happen
But hyperinflation is not an extension or amplification of inflation. Inflation and hyperinflation are two very distinct animals. They look the same—because in both cases, the currency loses its purchasing power—but they are not the same.
“Inflation is when the economy overheats: It’s when an economy’s consumables (labor and commodities) are so in-demand because of economic growth, coupled with an expansionist credit environment, that the consumables rise in price. This forces all goods and services to rise in price as well, so that producers can keep up with costs. It is essentially a demand-driven phenomena.
“Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency.
“…But both the Federal government and the Federal Reserve are hell-bent on using the same old tired tools to “fix the economy”—stimulus on the one hand, liquidity injections on the other. (See my discussion of The Deficit here.)
“It’s those very fixes that are pulling us closer to the edge. Why? Because the economy is in no better shape than it was in September 2008—and both the Federal Reserve and the Federal government have shot their wad. They got nothin’ left, after trillions in stimulus and trillions more in balance sheet expansion—
“—but they have accomplished one thing: They have undermined Treasuries. These policies have turned Treasuries into the spit-and-baling wire of the U.S. financial system—they are literally the only things holding the whole economy together.
Mark S.
@Ailuridae:
Yes! I love that calculator!
Uh, do you want to go the prom with me?
Binzinerator
Stopped clock and all that…
asiangrrlMN
Love the title of the post, DougJ. I think it’s my favorite thus far, and I have to chime in with my own loathing for Guy Ritchie. Cannot stand him. As for Kinsley, I keep reading his name as Kinsey. This makes everything he writes so much more amusing to me.
MarkJ
@Stooleo:
I think it’s a function of what income that top rate applies to. If it applies only to money earned over, say, $1 million, it wouldn’t dampen growth, because very few people earn that much and they would have a low marginal propensity to consume with money over that amount. If it applied to all income over $250K, that would be another story. Back in the 90 percent tax bracket days we had higher tax brackets than the top one of $250K, but did away with them for dumb reasons.
The classic supply siders’ sleight of hand is to imply that this top marginal rate would apply to all of Mr. Millionaire’s income rather than only his income above the first million. In their fictional world Mr. Millionaire “creates” a million but only gets to keep $100K. He really gets to keep something like $650K, but they don’t want you to know it.
If all income was taxed at 90 percent (or even 50 or 60 percent) it would undoubtedly dampen economic activity. Tax rates have never been anywhere near that high though, so it is a complete hypothetical.
Violet
@DougJ is the business and economics editor for Balloon Juice.:
She did? Really? What in the world brought that on?
Punchy
Ruh roh, looks like the UN are just a bunch of anti-Semitic Nazis.
gex
@Stooleo: I’ve always felt that the taxes they paid were more than made up by the infrastructure investments and the educational investments this country made. The interstate system and public education were a boon to business. I really feel that the golden era for the US was when we invested in the nation as a whole instead of just the top 1%.
But what do I know? I’m just paying way too much for broadband because only one company can use the cables that are in the public right of way to provide service. The idea of publicly investing in fiber to the door and allowing competition amongst service providers who use that fiber seems more like a free market than the like it or lump it choice I have, but conservatives and libertarians disagree with me.
Davis X. Machina
@Violet: Wouldn’t that be ‘a jill-booted thug’ instead?
Or a ‘go-go booted thug’.
Or ‘an Ugg-booted thug’? — no, they’re in Dr. Seuss.
Martin
Fuck, who’s going to go over and punch Sully in the neck?
I assume he means Nevada, but how fucking unhinged do you need to get to think that Angle is more likely to get DADT repealed than Reid? He’s caught Firebagger Hemorrhagic Fever.
Face
Who wins between Glenn and Gregg in the “Extraneous Letters in Name Contest”?
Jewish Steel
@Martin:
Ha! That’s fascinating. I had no idea what fueled the boom in the 50s.
Your dividend based economy will never get any traction in a country that believes that the rich are just dying to do right by the economy rather than pinch the silver off of every dime that strays into their clutches.
gex
@Martin: No shit. He wants to punish the country with Sharon Angle because DADT repeal didn’t go through? Sure why not. Sully’s more apt to get his way with the Christianists in power. WTF?
Ailuridae
@MarkJ:
There is also the “pro athlete” principle when taxing income over a million dollars. Namely not a whole lot of people who earn more than a million dollars a year are doing it in salary. A lot of stuff gets taxed at capital gains and all sorts of different funky rates and very very little of it gets taxed at the top bracket unless you are a pro athlete, an entertainer etc.
This was the whole impetus behind Buffett’s challenge to other CEOs to demonstrate than any of them pay a higher effective public tax rate than their executive assistants.
Ailuridae
@Martin:
I assume he means Nevada, but how fucking unhinged do you need to get to think that Angle is more likely to get DADT repealed than Reid? He’s caught Firebagger Hemorrhagic Fever.
This feels like the match game from the 70s. Is the correct answer “As unhinged as Andrew Sullivan?”
beltane
@gex: Sharron Angle wants gays to get the Biblical treatment, but hey, at least it’s not a kabuki dance so it’s fine with him.
Woodrow "asim" Jarvis Hill
@Martin: This wouldn’t piss me off so much if he’d be consistent. That he’s supporting someone fueling Islamophobia while decrying DADT makes me want to hurl.
Sully’s “write from the hip” style needs to get curbed. It’s one thing to occasionally run off the rails; goodness knows Cole does it enough. It’s another to do it every other freakin’ month, and then have to run a “sorry, I need a vacation” post explaining why you couldn’t think through your latest outrage without a hail of “have you lost your mind?” emails resetting you back.
Chris
@Stooleo: A whole lot of it, for sure, yes.
I do think 91% is “too high” simply because it strongly encourages theft-by-conversion (the quite-certain reward for hiding income is too great, compared to the theoretical risk). The risk/reward ratio becomes more balanced somewhere between 50 and 70 percent, in my opinion. But it’s clear that there should be at least one additional tax bracket, on million-plus-dollar incomes perhaps, with the rate at 50% or more.
Silver
@beltane:
Sullivan is so fucking stupid he’d put himself on a train to the camps if he thought it would make Oakeshott smile.
DougJ is the business and economics editor for Balloon Juice.
@Violet:
She thought there was some conspiracy to intimidate the great patriots who run our insurance companies.
Sentient Puddle
@sjcumbuco: Jesus, that article makes me want to short gold.
I’ll take what he lays out as definitions for inflation and hyperinflation without argument, but beyond that, the train of logic appears to be citing debt and deficit figures that I’m pretty sure are wrong, then an anti-miracle occurs in a giant block of text that doesn’t seem to go anywhere, and then everybody loses faith in the dollar and it goes to shit in the fall of 2011.
Bullfuckingshit. But if he and others like him want to put their supposedly soon-to-be-worthless dollars where their mouth is, I’d be quite happy to bet against them.
Midnight Marauder
@Martin:
It really is one of the poorest displays Sullivan has put on in recent memory. So apparently, even though the Democratic majority in Congress has been working on getting DADT repealed this entire session and had 56-57 votes in the Senate in favor of repealing the law…it’s entirely their fault it collapsed in the face of unified Republican opposition, complete with several Republican senators who backtracked on their initial statements to not filibuster the defense appropriations bill (looking at you, Susan Collins and Scott Brown).
The guy is so obtuse it’s laughable. He would rather cast a vote for someone who has done and said all of the following:
because she would definitely be inclined to vote to repeal DADT and anything else that recognizes gays and lesbians as legitimate human beings entitled to the same rights as the rest of the citizens in this country?
Between this and how terribly conflicted he is defending the bigot Marty Peretz, Sullivan just keeps revealing that he’s a complete fucking joke as an intellectual.
Zifnab
@Chris:
I’m sorry, but that argument has always struck me as a little absurd. “We can’t make a law, because everyone will cheat it.” Really, now? I know a few friends who don’t mind driving while above the .08% alcohol limit and I know a few more that scored booze and cigs under the age of 18. Should we abolish liquor laws and DUIs now? Because, by golly, it’s just so hard to enforce.
I can understand a certain ethical dilemma about a 90% tax rate. 70% would be on my upper bound too. But if Paul Krugman wrote a column does a paper suggesting the ideal tax rate for millionaires is 98%, the “But everyone will just cheat!” brigade isn’t going to win me back.
Chris
@Martin:
Indeed. I have pointed this out myself before: I am relatively well-off not because I spend a lot but because I save a lot. Moreover, when the CNBC talking heads get excited about the “economy picking up” because merger-and-acquisitions are up, I get gloomier: the way a merger helps corporate profits is that the merged company “eliminates redundant costs”, which is mainly corporate-speak for “fires people”.
This is the fundamental problem that the Federal Reserve faces, in terms of lack of demand. They can print all the money they like, or lower interest rates to below zero (I was wondering about this based on Krugman’s descriptions of the Liquidity Trap, and it has apparently been done in other countries in the past), but no matter how much money they give out, if they cannot persuade people to spend it—if people mainly hoard it against potential future needs (which is entirely rational; it’s largely what I do for instance, in my own relatively small way, that involves numbers less than $1 million at a time)—then it simply sits in various kinds of pools, unused, affecting the overall economy little if any.
Zifnab
@Midnight Marauder:
I blame
archaic Senate procedurebacktracking Republican sell-outscowardly DINOsthose dirty fuckers that passed DADT back in the 90sthe Democratic Leadership.Also, I hear Mark Foley masturbated in front of a bus full of Catholic school boys. So Nancy Pelosi has lost my vote.
Ailuridae
@Sentient Puddle:
I’m not a trader anymore but by far the greatest non-trading investment I ever made was realizing that inflation was about a zero possibility of occurring in early 09 and acting accordingly.
The great thing about inflation proponents is that they can sing the same tune for decades and when they finally get it right once every twenty five years they scream “Look at me! Look at me!”
Sean
If Kinsley would stop being weaselly for a moment, he could do some research and see that Krugman has, in fact, opined on maximal deficit size. While I do not have a link handy, Krugman did not proscribe a certain size so much as state that a deficit equal to or even slightly greater than GDP is OK. Does Kinsley need an exact dollar amount, and if so should I round up or down?
Fuck Kinsley – he is a total fucking douche.
DougJ is the business and economics editor for Balloon Juice.
@Ailuridae:
What is the reason for all the fear-mongering about inflation in general? Is it that a lot of wealthy people don’t want to see the value of their money degraded and are willing to do anything to keep it from happening? Or is it more primitive than that?
Chris
@Zifnab:
If it were up to me, I’d ditch the liquor laws, yes, but not the DUI ones.
Again, look at risk-vs-reward. The reward for driving drunk is relatively small, regardless of the risk level. (It’s above zero though, and it has always struck me as completely absurd that in many major cities, the public transportation services shut down at midnight, and then the bars close at 2 AM. Keep public transit running all night, or keep the bars open all night, or close the bars before terminating transit services, or, well, at least something other than this particular craziness.)
In this case, assume for a moment that you’re a guy who takes home “total compensation” of $300 million per year, and that (via whatever miracle of tax law changes have occurred to capture the non-cash portions) the actual marginal rate on the last $299 million is 90%, so that your tax bill is $269.1 million on that $299 million (plus whatever on the first $1 million). If someone (you, or your shyster lawyer, or whoever :-) ) comes up with a way of squirrelling 100 million of that away tax-free somewhere in Europe, your reward is that you report marginal income of $199 million, on which you pay tax of $179.1 million, keeping $19.9 million locally plus $100 million elsewhere, perhaps converted to some other currency, or gold, or some such. If you don’t cheat, you keep $29.9 million locally, and have no secret stash elsewhere.
If you do cheat, one of two things occurs: you are caught, and you flee (almost certainly successfully given your resources) and have to live on the mere $100 million; or you get away with it, live on just under $20 million for now, and have $100 million to launder back in over time or live on when you go abroad or whatever.
Violet
@DougJ is the business and economics editor for Balloon Juice.:
Sheesh. McMegan is so dumb it’s almost comical. I never wish a dread disease upon people, but I sometimes wish they would have to experience one so they could see just how crappy our health insurance really is. She could wax lyrical about how fantastic the insurance companies are while they didn’t pay her bills. I’d love to see that happen. In theory. Again, not wishing anything dread on anyone.
Jay in Oregon
@asiangrrlMN:
And here I thought I was going to be the first, at around comment 90, to give him props for that title.
DFH no.6
@Amanda in the South Bay:
You know, Amanda, that’s seriously fucked-up of you to say that. So, here’s the flame you invited:
When I get some older asshole (like, say, my age) at work who starts in on the ancient complaints about the “younger generation(s)” being lazy, spoiled, slackers, etc., I always call them on their bullshit, because that’s what it is: bullshit. It’s ignorant and corrosive, just like all bigotry.
And that’s what you are, Amanda, a bigot. Hating an entire cohort of 70 million fellow-Americans based on their age and, by implication, some alleged common set of bad characteristics, is no different than some cracker fool hating black people, or a straight dude hating homosexuals. No different at all. And just as fucking ignorant.
By a combination of good fortune and my own efforts (I’ll give a vigorous nod to good fortune) I’ve been able to be financially responsible, and hope to remain so. I’ll do my part, but the good fortune – health, a decent job, etc. – will continue to play the larger role, of course. In my admittedly limited professional and personal experience, most of the fellow-Boomers I have known are much the same. Not all, of course, but most.
Almost all my generation were born working-class, or lower middle, and since we became adults we’ve gotten up every day and gone to work, saved some money (not so easy at the lower wage levels), put the kids through school, paid our taxes, been productive, contributing members of society. Again, not everybody between 46-64, certainly, but most of us – in fact, the vast majority. I personally don’t know a single Boomer who wasn’t working by age 18, whether or not they went to college. Not because Boomers are especially hard-working or any such thing (we’re not), but because the American economy (tough as it often was in the 70s) allowed for that. Part of that “good fortune” I mentioned.
Now, not so much. Which sucks badly for today’s kids, and it’s not their fault (as it’s also not the fault of “the Boomers” – just the cadre of powerful conservative pricks among them and the older generation who drove economic and political policy over the past 30 years). I feel for the generation coming of age today – they simply do not have the broad economic opportunity to start out that earlier generations still extant had.
Do yourself a favor, Amanda, and get some education on the different generations (arbitrarily-drawn as they are). It’s the surest antidote to bigotry. And it’s not cool going through life as a bigot.
Ailuridae
@DougJ is the business and economics editor for Balloon Juice.:
I think its more that banks don’t want to risk an upward push of inflation devaluing their balance sheets but I can’t really say. I have never met anyone who I believed to be a good faith inflation hawk as an adult (post 1992). If inflation starts we have an easy, proven strategy to kill it. Just jam the fed funds rate up until it stops. Its at ficking zero right now and should probably sit in normal times between 4.5 and 6 but YMMV there.
Stooleo
Wow, thank-you to everyone that took the time to answer my question. I think I have a better understanding now.
Gex
DFH#6 (sorry, no reply option on iPad today)
Well said. I do contest your opinion that you delivered “flame”
calling all toasters
If Michael Kinsley being stupid is harmless, why doesn’t he cut off his head?
LongHairedWeirdo
Well, you have to understand how “the economy” works.
See, each year, the economy *vanishes entirely* and is re-created, and it’s usually bigger. So, all this deficit spending to prevent “the economy” from shrinking (or failing to grow) is *stupid* because it’s going to *vanish entirely* next year.
Now, deficit spending *might* be useful if the economy was a continuous thing, that had to grow large enough to produce goods and services (and create jobs so people can produce those goods and services), but what kind of ivory tower ninny believes in bullshit like that?
sjcumbuco
@Ailuridae:
Dealing with an inflationary scenario through raising rates *may* work, but then again it might not, particularly if there is a crisis of confidence regarding the currency. Yes it worked for Paul Volcker, but this is not 1981, the economic situation, government balance sheet, and current wars adding a much greater drag on the Dollar. Volcker’s gambit worked because the economy was able to recover despite high rates. That might not be the case now. There is an economic cost to high rates. Furthermore, it’s not only a question of government debt, but also of Federal Reserve activity, since we are about to enter a new stage of quantitative easing. When you look at all elements of government policy, there is ample evidence that the policy is directed toward a weakening dollar. Certainly this will be good for the manufacturing sector, but the question remains as to whether too much has been done to undermine the dollar, potentially resulting in a crisis, and hyperinflation.
I’m not necessarily saying any of these policies are wrong, as they may be the best out of a variety of bad choices. It’s just that reading this board you get the feeling that everyone thinks it’s all so simple, and that one has to be a wingnut to be concerned about the national debt, printing tons of money, and the potential that inflation could be a significant future problem.
Wilson Heath
@Jay in Oregon:
Indeed, as said above, awesome titling. I’m nominating this for post title of the month.