Expanded Trade Adjustment Assistance Passed in House

Following on from my earlier post, the U.S. House of Representatives just passed the Trade and Globalization Assistance Act of 2007, although with insufficient votes to override a veto, as threated in yesterday’s Statement of Administration Policy (available here). The new legislation would roughly double the level of federal spending on the trade adjustment assistance program, by expanding the income and health care benefits to new categories of workers and increasing training (keep in mind this is the same program that the Government Accountability Office has admitted was “ineffective”).

TAA moves on to the Senate next, where we might see a bit more of a fight: the Chair and Ranking Member of the Senate Finance Committee are at odds over possible changes to the program.

[Hat tip: Our crack Government Affairs team.]

Rudy Was Right

Today’s Washington Post takes Rudy Giuliani to task for a radio ad in which he claims that the chances of surviving prostate cancer are roughly twice as high in the United states than under Britain’s system of socialized medicine. The Giuliani campaign cited as its source an article by Manhattan institute scholar David Gratzer, which the Post pointedly notes “provides no source for its assertion.” However five minutes of research might have shown the Post that the numbers actually come from a Commonwealth Fund study by Gerard Anderson and Peter Hussey.

Moreover, the Post’s own figures, using more recent numbers and a different methodology, show that the five year survival rate for prostate cancer to be 98 percent in the U.S. and 74 percent in Great Britain. Not quite as good as Rudy’s numbers, but still a clear advantage for the U.S.

The Post also suggests that the better U.S. outcome is a reflection of “different philosophies about how to treat the disease.” Indeed! I think that is Rudy’s point.

The one valid criticism of Rudy’s point is that prostate cancer might not be the best example of outcome disparities between the two systems. Because prostate cancer is a slow-growing cancer, the disparity may reflect more aggressive testing and screening procedures in the U.S. That is, we catch many cancers that would go undetected in other countries. As, Robert Ohsfeldt and John Schneider concede in their book, The Business of Health:

[Many] cancer survival rate estimates…do not adjust for cancer stage at diagnosis. This could result in survivor time bias – those with cancers detected at an earlier stage would exhibit longer post diagnosis survival times, even for cancers that are essentially untreatable.

Survivor time bias, however, should not be a significant concern for cancers that respond well to treatment if detected early. For such cancers, early detection makes a substantive contribution to survival time – the longer survival time associated with early detection thus is not a spurious effect of early detection. An example is thyroid cancer. In the United States, virtually all females with thyroid cancer survive for at least five years. The lower survival rates for thyroid cancer in European countries suggest some underperformance in either early detection or post diagnosis management in these countries. In contrast, the differences in survivor rates are less pronounced for cancers that are more difficult to treat, such as lung cancers.

U.S. outcomes beat the U.K not just for prostate cancer, but for a wide variety of cancers and other diseases, where survivor time bias is not at issue. According to a study published this year in the British medical journal, The Lancet, for all types of cancer, the U.S. ranks number one among industrialized nations: 62.9 percent of women with cancer survive for 5 years, 66.3 percent of men. Britain ranked 16th for women (52.7 percent) and 15th for men (just 44.8 percent).

Besides, one of the most common arguments for socialized medicine is that it would lead to more testing, screening, and preventive care. Proponents of government-run health care can’t have it both ways.

For this one, it looks like the Post deserves “four Pinocchio’s.”

So Write a Check and Shut Up, Warren

When billionaires piously say that they should pay more taxes, the rest of us should hide our wallets. Warren Buffett, the so-called “Sage of Omaha” says his tax rate is too low. That’s a strange attitude, to be sure, but if Buffett wants to write an extra check to the government, he should go right ahead. Heck, the Treasury Department even has a website with a mailing address for people who are foolish enough to flush more of their money into the Washington sewer. Unfortunately, Buffett’s real agenda is to agitate for higher tax burdens for the rest of us. As the UK-based Guardian reports:

The United States’ second-richest man has delivered a blunt message to the Bush administration: he wants to pay more tax. Warren Buffett, the famous investor known as the “Sage of Omaha”, has complained that he pays a lower rate of tax than any of his staff - including his receptionist. Mr Buffett, who is worth an estimated $52bn (£25bn), said: “The taxation system has tilted towards the rich and away from the middle class in the last 10 years. It’s dramatic; I don’t think it’s appreciated and I think it should be addressed.” … Buffett’s remarks drew a robust response from the US Chamber of Commerce, which said the top 1% of US earners accounted for 39% of tax revenue - and the highest earning 25% of the population delivered 86% of the tax-take.

The Chamber of Commerce correctly notes that the tax code already is heavily biased against rich people, and it certainly is true that higher tax rates will hinder economic performance and make America more like Europe (which would hurt receptionists more than billionaires). But the reporter should have done some simple fact checking and discovered that Buffett has no idea what he’s talking about regarding tax rates. I addressed this issue back in June, in response to another Warren-wants-the-rest-of-us-to-pay-more episode:

It is probably safe to assume that Buffett receives lots of dividend income and that he also declares a considerable amount of capital gains, both of which are subject to a 15 percent tax rate on an individual tax return. What he did not mention, however, is that corporations pay a 35 percent tax before distributing dividends to shareholders, so the actual effective tax rate on that portion of Buffett’s income is closer to 50 percent.

The capital gains tax is another example of double taxation. An increase in the value of a stock is a reflection of an anticipated increase in the future income stream from that stock. Yet that income stream will be taxed (usually two times!) when it occurs. The real effective rate on that portion of Buffett’s income is harder to calculate, but it certainly will be far higher than 15 percent.

Shifting gears, Buffett’s calculations almost surely include Social Security payroll taxes, which only apply to the first $90,000 of income in exchange for not providing huge benefit payments to rich retirees. Indeed, the overall program is highly progressive once benefit payments are added to the equation, so Buffett’s secretary gets a better deal than he does from Social Security (though both would be better off with a system of personal retirement accounts).

Tax-and-Spend or Borrow-and-Spend?

In Virginia,

Pat S. Herrity wants a new elementary school and middle school for southern Fairfax County. Douglas R. Boulter wants to hire more zoning inspectors. Vellie S. Dietrich Hall calls for more and better-paid police. Gary H. Baise promises roads, an expanded auditor’s office and the newly created post of county ethics officer.

And they all pledge to lower property taxes.

Meet the Republicans running for the Board of Supervisors on Nov. 6.

In Virginia, as in Congress, voters get a choice between tax-and-spend Democrats and borrow-and-spend Republicans. As I’ve argued before, there’s a bit of fat in the Fairfax County budget. It’s too bad that voters aren’t offered any candidates who would trim it.

Paul Krugman and the Unbearable Lameness of Partisanship

In a recent appearance on bloggingheads.tv with Mark Schmitt, I expressed disdain for the current spate of conservative-bashing books by Jonathan Chait, Greg Anrig, and Paul Krugman. Now don’t get me wrong: conservativism deserves some fairly spirited bashing these days. But what I objected to about these books was their crude partisanship – specifically, their grossly distorted, black-hats-versus-white-hats version of recent American political history.

I didn’t get a chance there to flesh out my criticisms in any detail, so I’d like to do a little bit of that here. And thanks again to bloggingheads.tv (if you’re not familiar with it, it’s really a terrific site), I’ve got an excellent jumping-off point: an interview of Paul Krugman by none other than Mario Cuomo. Cuomo, it turns out, is an excellent interviewer, carefully drawing out Krugman’s views and gently challenging him at a number of points. And the picture of Krugman that emerges is one of a man completely besotted with ideological enthusiasm.

You have to remember who Paul Krugman is, or at least who he was: an immensely talented economist, winner of the John Bates Clark medal, capable of analytical ingenuity at the most rarefied level and simultaneously a gifted popularizer of complex economic ideas. So how can someone with so much brainpower, with such talent for subtlety and insight, say something like this? Or this?

Let’s focus on these two snippets. In the first, Krugman says that the middle-class society he grew up in (i.e., the American political economy of the quarter-century after World War II) did not evolve by the invisible hand of the market; it was created by FDR and the New Deal. Meanwhile, the “second Gilded Age” we now live in (i.e., the American political economy of the past quarter-century) was created by Reagan and other right-wing politicians.

And in the second clip, Krugman defines liberalism as the idea that we are our brothers’ keepers, and that government needs to ensure a basic minimum for all citizens. Conservatives, on the other hand, believe “you’re on your own.”

In these clips we see, not subtlety or insight or analytical ingenuity, but the Manichean worldview of the true believer: one mass political movement, defined by its noble intentions, accomplishes unalloyed good, while a rival mass political movement, motivated by base and selfish values, works to undo that good.

For an alternative to Krugman’s stick-figure morality play, you can read my book on the coming of mass prosperity and its cultural and political consequences. For present purposes, though, note just a few things that Krugman’s FDR worship/Reagan demonization skips over:

  • the extent to which widespread prosperity was the result of impersonal market competition rather than benevolent politicians
  • the extent to which the “great compression” of the early postwar decades was created by the cataclysms of depression and total war
  • the extent to which the New Deal included policies that most economists today of whatever ideological persuasion would regard as utterly wrongheaded (e.g., the farm subsidies regime of the Agricultural Adjustment Act, and the industrial cartelization attempted by the National Industrial Recovery Act)
  • the heavy reliance of the New Deal political coalition on support from southern segregationists, and the consequences of that reliance for the shape of many New Deal policies
  • the fact that the postwar system of political economy led after a couple of decades to stagflation and a breakdown in productivity growth
  • the fact that one after another unionized American industry proved incapable of keeping pace with foreign competition during the ’70s and ’80s, and thus that business as usual was unsustainable
  • the fact that Great Society social programs were followed, not entirely coincidentally, by an explosion of crime, urban riots, family breakdown, and welfare dependency
  • the fact that Cold War liberal internationalism produced the Vietnam debacle
  • the fact that the New Left and the ’60s counterculture exerted powerful influences on reshaping the character of American liberalism, with important consequences for the appeal of that liberalism to traditionally Democratic working-class constituencies
  • the fact that the sweeping economic deregulation of the ’70s and ’80s enjoyed bipartisan support (much of it occurred during the Carter administration)
  • the extent to which the increase in measured income inequality reflects demographic rather than economic or public policy changes (e.g., more single-parent households, more dual-earner households, more immigration, older population, better-educated population)
  • the fact that, according to virtually every conceivable physical indicator, material living standards for Americans across the board have risen dramatically over the past quarter-century (i.e., the so-called “second Gilded Age”)

How can someone as intelligent and informed as Krugman concoct an interpretation of the post-World War II era that does such violence to the facts? How can someone so familiar with the intricate complexities of social processes convince himself that history is a simple matter of good guys versus bad guys? Because, for whatever reason, he has swapped disinterested analysis and scholarship for ideological partisanship. Here, in a revealing choice of phrase, he paraphrases Barry Goldwater’s notorious line: “Partisanship in the defense of liberty is no vice.”

To be a partisan is, by definition, to see the world partially rather than objectively: to identify wholeheartedly with the perspectives of one particular group and, at the extreme, to discount all rival perspectives as symptoms of intellectual or moral corruption. And the perspective Krugman has chosen to identify with is the philosophically incoherent, historically contingent grab bag of intellectual, interest group, and regional perspectives known as postwar American liberalism.

Of course, over the period that Krugman is addressing, the contents of that grab bag have changed fairly dramatically: from internationalist hawkishness in World War II and the early Cold War to a profound discomfort with American power in the ’70s and ’80s to a jumble of rival views today; from cynical acquiescence in Jim Crow to heroic embrace of the civil rights movement to the excesses of identity group politics to a more centrist line today; from sympathy for working-class economic hardship to hostility to working-class culture and back again. Yet with a naive zeal that leaves even Cuomo visibly nonplussed at several points in the interview, Krugman embraces the shifting contents of this grab bag as the one true path of virtue.

I understand the us-versus-them pleasures of ideological partisanship. In my younger days, I indulged in them with gusto. But at some point, ideology joined Santa Claus and the tooth fairy in my attic of discarded beliefs. Firm values, yes; definite points of view on contested empirical questions, to be sure – but to see a country as diverse, yet blessedly prosperous and stable, as this one as an ongoing war between angels and devils is to live in a fantasy world.

[cross-posted from www.brinklindsey.com]

In Utah, You Work for the UEA

On November 6, Utahns will vote on a referendum to decide the fate of a statewide voucher program passed by the Utah legislature and signed by the governor earlier this year. As anyone who knows anything about public schooling would have predicted, the major force fighting against choice has been teacher unions, with the National Education Association (NEA) having donated at least $1.5 million to date to the anti-choice cause. And, as this article in yesterday’s Salt Lake Tribune makes clear, defeating choice is an obsession for the state’s NEA affiliate, the Utah Education Association (UEA). Of course it is, because monopolists will stop at nothing to protect their monopoly. But this begs a question to which almost everyone must already know the answer, but many just won’t admit it: Who really works for whom? Do public school teachers work for the public, or does the public really work—and pay taxes—for the teachers?

The answer is all too clear, and that alone ought to make people in Utah, and around the country, support as much school choice as they can get.

Corporate Tax Cut Revolution Continues

From the Canadian Financial Post:

The Conservative government delivered a mini-budget yesterday that lowered the Goods and Services Tax for a second time and reduced corporate taxes by one-third over the next five years as part of a $60-billion multi-year package of tax cuts…Perhaps the biggest surprise was Mr. Flaherty’s commitment to cut the corporate income tax rate deeper than planned, from its current 22.1% to 15% in 2012.

To put this in context, $60 billion over five years means about $12 billion per year. Since the American economy is about 10 times larger, the equivalent cut here would be about $120 billion per year, which is pretty big cut.

The average federal/provincial corporate tax rate in Canada today is 36%. Thus, cutting the federal rate by 7 points should drop the average combined rate to about 29%. By contrast, the combined U.S. federal/state rate is about 40%.

Here’s the interesting political part:

Liberal leader Stéphane Dion said his party would not oppose the measures, ensuring they receive Parliamentary approval as early as today…The proposal comes as Mr. Dion toured the country arguing for lower business rates and promising, if elected, to take the general corporate rate lower than the 18.5% the Conservative government had initially proposed.

That’s the Liberal party leader, in a country where “liberal” used to mean left-of-center statist. It seems that everywhere but Washington, the times are a changin’.