A Few Pertinent Items

From: The Economy Does Much Better Under Democrats. Why? – The New York Times

“A president has only limited control over the economy. And yet there has been a stark pattern in the United States for nearly a century. The economy has grown significantly faster under Democratic presidents than Republican ones.”

“It’s true about almost any major indicator: gross domestic product, employment, incomes, productivity, even stock prices. It’s true if you examine only the precise period when a president is in office, or instead assume that a president’s policies affect the economy only after a lag and don’t start his economic clock until months after he takes office. The gap “holds almost regardless of how you define success,” two economics professors at Princeton, Alan Blinder and Mark Watson, write. They describe it as ‘startlingly large’.”

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” . . . if the causes are not fully clear, the pattern is. The American economy has performed much better under Democratic administrations than Republican ones, over both the last few decades and the last century.” 

From: AOC isn’t going to forget about the insurrection and move on – The Washington Post

“Alexandria Ocasio-Cortez says she was told that trauma victims should ‘tell their stories’ as a part of their healing. And that is what she did Monday night . . . The New York congresswoman initiated a live stream on Instagram and . . . recounted what had happened to her during the violent invasion of the U.S. Capitol on Jan. 6.’

“She talked about flattening herself behind her bathroom door as someone entered her office, screaming, ‘Where is she? Where is she?’ It turned out to be a police officer, but until she learned that, ‘I thought I was going to die’.”

“She talked about eventually escaping to the office of Rep. Katie Porter (Calif.), where the two Democratic congresswomen rifled through staffers’ gym bags, searching for sneakers they could change into in case they needed to jump out a window or run. . . .” 

“Ocasio-Cortez, her voice wavering, revealed during the live stream that she was a survivor of sexual assault, something she said many people did not know, because there were only so many times she’d wanted to tell that story. But she was mentioning it now, she said, because of its relevance to the attack at the Capitol.”

“Almost immediately after Jan. 6, she said, people began implying . . . that reconciliation depended on ‘moving on’. Those words, she said, were the tactics of ‘an abuser’.”

“She compared it to a sexual harasser telling his victim that the quickest path to normalcy would be her forgiving him. Or to parents telling the child they once abused that the mistreatment had happened in the past. . . .”

“There needs to be accountability, she said, because forgiveness does not happen when a perpetrator wants to move on. It happens when a victim is ready. . . .”

From: It’s Marjorie Taylor Greene’s Party Now – The New York Times

“Some decent Republicans imagine they’re in a battle for their party’s soul. Representative Adam Kinzinger, who . . . voted to impeach Txxxx, recently started a PAC devoted to fighting the forces that led . . . the Capitol rampage. “The time has come to choose what kind of party we will be,” he said in an introductory video. The thing is, Republicans already have chosen.

Just look at the party’s state affiliates. On Jan. 4, the Arizona G.O.P. retweeted a “Stop the Steal” activist who’d pronounced himself willing to “give my life” to overturn the election. Said the party’s official account: “He is. Are you?” An Arizona lawmaker has since introduced a bill that would let the Legislature, controlled by Republicans, override the presidential vote of the state’s increasingly Democratic citizenry. The Oregon Republican Party approved a resolution suggesting that the Capitol siege was a “false flag” attack. The Texas Republican Party has adopted the QAnon slogan “We are the storm” as its motto, though it insists there’s no connection. . . . 

[QAnon supporter Marjorie Taylor Greene] is not the outlier in this party. Kinzinger is.

“American conservatism — particularly its evangelical strain — has fostered derangement in its ranks for decades, insisting that no source of information outside its own self-reinforcing ideological bubble is trustworthy.”

“If you’re steeped in creationism and believe that elites are lying to you about the origins of life on earth, it’s not a stretch to believe they’re lying to you about a life-threatening virus. If what you know of history is the revisionist version of the Christian right, in which God deeded America to the faithful, then pluralism will feel like the theft of your birthright. If you believe that the last Democratic president was illegitimate, as Trump and other birthers claimed, then it’s not hard to believe that dark forces would foist another unconstitutional leader on the country.”

“There was a moment, after the Capitol riot, when it seemed as if a critical mass of the Republican Party was recoiling at what it had created. But the moment passed, because it would have required the party’s putative leaders to defy too many of their followers.”

From: More than two-thirds of Americans side with Biden on COVID relief — and most support the rest of his agenda – Yahoo News/YouGov Poll

“When asked about the 20 policies that define President Biden’s agenda, more Americans support than oppose all 20 of them, according to a new Yahoo News/YouGov poll.”

“The margins are decisive. The majority of Biden’s proposals garner at least twice as much support as opposition. Nearly half are favored by more than 60 percent of Americans.”

Let Them Eat Cake, But Raise Their Taxes

Newly-elected Alexandra Ocasio-Cortez (aka AOC) is the youngest person in Congress. She is becoming very well-known. Last week, she was asked about funding the Green New Deal, the plan to eliminate U.S. carbon emissions and move away from fossil fuels within ten years. This is what she said:

Once you get to the tippie-tops, on your $10 millionth dollar, sometimes you see tax rates as high as 60% or 70%. That doesn’t mean all $10 million dollars are taxed at an extremely high rate. But it means that as you climb up this ladder, you should be contributing more.

Right-wingers immediately screamed that a tax rate that high would be the equivalent of slavery. They didn’t bother to point out that she was referring to the “marginal” tax rate, the percentage at which income over a certain threshold is taxed. That’s very different from taking 60% or 70% of someone’s entire income.

The economist Paul Krugman explains why the 60% or 70% marginal rate is an excellent idea:

The right’s denunciation of AOC’s “insane” policy ideas serves as a very good reminder of who is actually insane.

The controversy of the moment involves AOC’s advocacy of a tax rate of 70-80 percent on very high incomes, which is obviously crazy, right? I mean, who thinks that makes sense? Only ignorant people like … um, Peter Diamond, Nobel laureate in economics and arguably the world’s leading expert on public finance…. And it’s a policy nobody has ever implemented, aside from … the United States, for 35 years after World War II — including the most successful period of economic growth in our history.

To be more specific, Diamond, in work with Emmanuel Saez — one of our leading experts on inequality — estimated the optimal top tax rateto be 73 percent. Some put it higher: Christina Romer, top macroeconomist and former head of President Obama’s Council of Economic Advisers, estimates it at more than 80 percent.[

Where do these numbers come from? Underlying the Diamond-Saez analysis are two propositions: Diminishing marginal utility and competitive markets.

Diminishing marginal utility [i.e. the value of something at the margin] is the common-sense notion that an extra dollar is worth a lot less in satisfaction to people with very high incomes than to those with low incomes. Give a family with an annual income of $20,000 an extra $1,000 and it will make a big difference to their lives. Give a guy who makes $1 million an extra thousand and he’ll barely notice it.

What this implies for economic policy is that we shouldn’t care what a policy does to the incomes of the very rich. A policy that makes the rich a bit poorer will affect only a handful of people, and will barely affect their life satisfaction, since they will still be able to buy whatever they want.

So why not tax them at 100 percent? The answer is that this would eliminate any incentive to do whatever it is they do to earn that much money, which would hurt the economy. In other words, tax policy toward the rich should have nothing to do with the interests of the rich, per se, but should only be concerned with how incentive effects change the behavior of the rich, and how this affects the rest of the population.

But here’s where competitive markets come in. In a perfectly competitive economy, with no monopoly power or other distortions — which is the kind of economy conservatives want us to believe we have — everyone gets paid his or her marginal product. That is, if you get paid $1000 an hour, it’s because each extra hour you work adds $1000 worth to the economy’s output.

In that case, however, why do we care how hard the rich work? If a rich man works an extra hour, adding $1000 to the economy, but gets paid $1000 for his efforts, the combined income of everyone else doesn’t change, does it? Ah, but it does — because he pays taxes on that extra $1000. So the social benefit from getting high-income individuals to work a bit harder is the tax revenue generated by that extra effort — and conversely the cost of their working less is the reduction in the taxes they pay.

Or to put it a bit more succinctly, when taxing the rich, all we should care about is how much revenue we raise. The optimal tax rate on people with very high incomes is the rate that raises the maximum possible revenue.

And that’s something we can estimate, given evidence on how responsive the pre-tax income of the wealthy actually is to tax rates. As I said, Diamond and Saez put the optimal rate at 73 percent, Romer at over 80 percent — which is consistent with what AOC said.

An aside: What if we take into account the reality that markets aren’t perfectly competitive, that there’s a lot of monopoly power out there? The answer is that this almost surely makes the case for even higher tax rates, since high-income people presumably get a lot of those monopoly rents.

So AOC, far from showing her craziness, is fully in line with serious economic research. (I hear that she’s been talking to some very good economists.) Her critics, on the other hand, do indeed have crazy policy ideas — and tax policy is at the heart of the crazy.

You see, Republicans almost universally advocate low taxes on the wealthy, based on the claim that tax cuts at the top will have huge beneficial effects on the economy. This claim rests on research by … well, nobody. There isn’t any body of serious work supporting G.O.P. tax ideas, because the evidence is overwhelmingly against those ideas.

Increasing marginal rates as income rises is called “progressive” taxation. It’s fair and practical. Republicans are against it, preferring a “flat” tax, where all income is taxed at the same rate. A flat tax let’s the rich keep more of their income. They say it’s fair and simple, but that’s not why they’re for it.