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July 08, 2010

Comments

There are always policy decisions taken which, especially in retrospect (think off-shore drilling) were less than optimal. But sometimes they have advantages in other places.

In a lot of these cases (and the retention of Gates as Defense Secretary, which you don't mention) Obama was visibly trying to work with the Republicans. He has gotten thoroughly snubbed for his efforts . . . but that doesn't mean that they were unsuccessful. Because having your opposition helpfully brand itself as being against anything you do, no matter if it was their idea originally, makes them far less popular than they might be otherwise. As in most mid-term elections, especially when the economy is hurting, the President's party will lose seats in Congress. But a lot fewer than they would have if they hadn't been allowed the opportunity to shoot themselves in the foot so effectively.

Great post.

Especially the tax bit.

If Americans don't want to be talked to like they are idiots, then they need to be told they (all of us) are going to pay higher taxes.

Now, if they all quit their jobs and stay home and whine and vote for Sarah Death Palin, they've proven their idiocy and we can all go back to talking to each other like idiots.


" your children will get to go to college without bankrupting you,"

Just curious how this follows higher taxes?

Taxes -> Pell Grants
Taxes -> State budget supports -> State college budgets -> Lower tuition fees

"Taxes -> Pell Grants
Taxes -> State budget supports -> State college budgets -> Lower tuition fees"

I am thinking, mixed with all of your good points, this is just wishful thinking. IMO.

Because having your opposition helpfully brand itself as being against anything you do, no matter if it was their idea originally, makes them far less popular than they might be otherwise.

this only works if you stand up and call attention to nature of the opposition loudly enough and often enough that people hear you and understand what you're saying. the Dems, of course, have done a terrible job of it. nobody but political junkies know what's going on. as usual.

i've noticed that NPR is slowly dropping vague hints about GOP obstruction. but they're neither forceful enough nor explicit enough for anyone to learn from them what's actually going on.

the Dems totally suck at politics.

I am thinking, mixed with all of your good points, this is just wishful thinking.

Is it wishful thinking that state's might raise their taxes when the feds reduce their contributions to state budgets because of a shortfall in federal tax revenues? Or that states will (pretending it hasn't already happened or isn't now happening) reduce their subsidies to state colleges and universities, which will in turn raise tuition and fees? Is this really so fanciful? And haven't you heard of Pell grants?

I fear that the coming bipartisanship push to save Social Security by destroying it is going to make Jacob's list look positively quaint before too long.

But then, should that actually come to pass, will it qualify as an "error" on the part of the Obama administration, or merely a case of center-right policymakers making center-right policy choices?

For that matter, is it correct to describe any of Jacob's "errors" as such? I mean, is it really that hard to believe that they promised not to raise taxes on the wealthy, not as part of some complex political maneuvering, but because they don't want to raise taxes on the wealthy?

I should know better than to let this frustrate me. I learned during the Clinton years that no matter how long a Democratic president pursues the policy agenda of an old-school moderate Republican, two things simply will not change:

1) a substantial number of people on the right will continue to believe that he's really a Marxist who's going to turn the country into North Korea as soon as he gets a chance;

2) an equally substantial number of people on the left will continue to believe that he's really a "progressive" at heart who's either stymied by circumstances, surrounded by the wrong people, or keeping his powder dry until the perfect opportunity arises...

Plus ça change...

not state's, but states (Why can't I let things like that go?)

Taxes need to be higher to pay for all the things we need. ???

I got a A.B. from George Washington University and an M.S. from Georgetown University. My parents were long deceased at that time and I had no inheritance from them. I had no education derived debt after getting these degrees. I paid the college education costs for three children, leaving no education derived debt for them or me. I have no debt now, save a mortgage loan, and I have never taken bankruptcy. How have I managed this seemingly impossible task?

A better question perhaps is, what happened to our educational system? What is offered in the educational process today that is so much more valuable than when I was educated that the ordinary citizen cannot get there without incurring debt that can never be repaid? Or, alternatively, what is missing in the approach individuals take to accomplishing the task of gaining an education?

Certainly those are bad, but I'm surprised that the worst offenses didn't make the list, namely the preservation and extension of the worst Bush-era policies on state secrets, civil liberties, and torture. These have all been well-cataloged here and elsewhere, so I don't think the details need to be rehashed. But in the long run I'll bet that detaining individuals without trial, permitting the assassination of American citizens, and further consolidating the power of the executive branch to act without checks or oversight will look a lot worse than approving those offshore drilling permits.

I got a A.B. from George Washington University and an M.S. from Georgetown University. My parents were long deceased at that time and I had no inheritance from them. I had no education derived debt after getting these degrees. I paid the college education costs for three children, leaving no education derived debt for them or me. I have no debt now, save a mortgage loan, and I have never taken bankruptcy. How have I managed this seemingly impossible task?

By having done it while it was still reasonably feasible, perhaps?

"People were so sick to death of Republicans by 2008 that you could have told them you were going to take all their stuff and make them work in a labor camp and they'd still have voted for the Democrat. "

Probably not so: When a professional politician decides to utter a campaign lie, it's generally a good bet that he's doing so because, in his professional judgment, the lie is necessary, or at least helpful.

'By having done it while it was still reasonably feasible, perhaps?'

Would this be called begging the next better question that was posed? In other words, what happened to make it not reasonably feasible?

My take is that what one receives today as higher education is not substantially different from fifty years ago, so why should it cost an arm and a leg to get it?

dweisk, it's not an exhaustive list, more a work in progress. The emphasis of this list is on things that are going to be politically damaging to Obama in the short term because they tie him to very unpopular policies without appreciable benefits, or without even paying off a particular interest group with a meaningful reward.

The too-small, too-tax-cutty stimulus ought to have made the list, although the consequences haven't become completely clear yet.

I got a A.B. from George Washington University and an M.S. from Georgetown University. My parents were long deceased at that time and I had no inheritance from them. I had no education derived debt after getting these degrees.

Good work.

These days the cost of attending GWU for a year approaches $50K.

Do you think you could get an AB there today without borrowing any money?

The emphasis of this list is on things that are going to be politically damaging to Obama in the short term

OK, that clears up a lot.

GoodOleBoy:

Good question(s).

The price of an education (tuition, room and board) at a good, mid-range private college in 1973 was roughly $4000. I didn't pay the full freight (relatives did), but I worked summers and much of the time in the dorm dining halls during the college year. Minimum wage, mostly, $1.60 an hour.

The same college today costs roughly $40,000, ten times the 1973 price. Almost as much as the $35,000 price tag for my son's university today. He worked minimum wage last summer: $7.25 (?) an hour, roughly four and a half times the 1973 wage. He has a better job this summer at $13 an hour, but still, if he directed every cent of that money toward defraying the cost his Mom and I are paying (via money we saved, roughly one year's cost) and the amount of his student loans, it would make a mere dent.

He buys his own bread -- average cost $2.50 today vrs 10 cents in 1973 -- 25 times.

He buys his own gas -- average cost $2.75 vrs 38 cents in 1973.

I don't know how anyone does it.

I don't know how anyone does it.

Feh, we have the best higher education system in the world!

GOB: How have I managed this seemingly impossible task?

Through the generosity of others, congrats.

anyone know what %age of students pay full tuition ?

Actually, it's almost $60K. Tuition, room, and board are over $50K. My mistake.

In other words, what happened to make it not reasonably feasible?

I can't say for sure, but that's what happened.

If I had to guess, I'd say that enrollment rates have been rising steadily, at least partly due to less work opportunities for young people with just high school educations. There are probably more kids from lower-income families going to college than in the past, which is a good thing. But, if there isn't sufficient funding for them from outside the institutions, tuition goes up to cover the shortfall.

There also may be more kids going to college who wouldn't have been able to get in for purely academic reasons in the past, requiring more resources if graduation rates are to be maintained (while providing a real education).

I don't know if it comes off as elitist to say that some people are more academically inclined than others, but I think that is the case. From my standpoint, I don't consider that elitist because I don't think academic inclination is the same thing as overall intelligence or cognitive ability. I've always been academically inclined and never had to put much effort toward learning whatever it was I was supposed to be learning in school. But I know people who never did well in school who can figure out, seemingly with little to no effort, things outside of academic settings that confound me. Some people are marvelously talented in ways that aren't traditionally considered to be academic. If we culturally had greater appreciation for people's abilities outside of writing papers or solving math problems, we'd probably be better off.

Whether it's better work opportunities or other venues for nurturing people's talents after (or even during) high school, something is lacking, and it's driving the cost of higher education up faster than broader inflation. (Somehow, I don't see a private, market-based solution to such a problem.)

/speculation

John Tullen:

Thanks for the serious response that rarely comes my way. I agree that the numbers you provided explain some of the differences but isn't it also true that recent increases in higher education costs have rivaled health care cost increases?

Part of the reason I was able to handle my own education costs was that I was working full time and doing education part time so it took me a lot more than five years elapsed time. Also, housing, food, healthcare, and education came first and 'discretionary' spending (what's that) next. Is any of this recognizable in today's environment?

One of my daughters attended and was graduated from GWU in the late eighties and I'm recalling that the tuition and related expenses ranged between 10 and 15 thousand annually.

I'm still puzzled by what this means: 'Taxes need to be higher in the long term to pay for all the stuff we need.'

The cost to get into a college football game ranges from $20 to $40 a pop today from a few bucks in 1973, if not free because you were a student. Cripes.

My son can't get into a dorm for his junior year, so he's renting a house with six guys.

The rent is roughly eight to ten times higher than it was when I rented back in the day.

I don't know. What happened?

You would think private landlords would have kept prices at a steady level since they hate inflation and higher prices so much.

I think what happened was that everyone went to business school, got an MBA, and learned how to maximize profits.

But I suspect others will default to blaming the government.

Under Exchecquer Necker (funny name, that) the price of flour for making bread was deregulated leading up to the French Revolution, causing higher prices for bread, but lowering the price of decapitation.

Bush was taking the hit for this. McCain was busy grandstanding without having the faintest idea what was going on. Obama could have easily disavowed or at least disparaged the specific bank bailout that was passed while still endorsing the general idea that urgent action needed to be taken

I don't know about this one; yes, ideally Obama could've picked a more nuanced message, but I would have worried that it would've made the bailout into (more of) a political football. What we needed to avoid disaster was everybody pulling in roughly the same direction, if it had dissolved into bickering about exactly what the bailout should look like maybe we would've had got the bailout at all, or had it watered down to appease one group or another.
That is, there are times when Obama's conciliatory nature is advantageous, and to me that seemed like one of those times.

4. Escalation in Afghanistan.

Obama's worst tendency is to choose middle-of-the-road solutions without considering whether they make sense. One doctor says the leg needs to be amputated. Second doc thinks he can save the leg with a radical dangerous new treatment. Doc Obama says "Take the leg off at the knee and give him a half-dose of the new drug"...

My take is that what one receives today as higher education is not substantially different from fifty years ago, so why should it cost an arm and a leg to get it?

Couple of possible answers:
1)at many places, it's subsidized less that it used to be
2)The Baumol Effect
3)increased wealth stratification and decreased savings make similar expenditures harder on the middle class

"I think Barack Obama was clearly the best choice of the Democratic primary candidates,"

Well you must have been snoozing at the wheel on that one...

The Clintons were the better choice... Smarter, quicker on their feet, and experienced, they would have hit the ground running once in office, and "we'd be in a much better spot now."

"Taxes need to be higher in the long term to pay for all the stuff we need."

In the LONG TERM, yeah. But in severe recessions you don't raise taxes, you need liquidity to keep consumers buying, to pump up the economy and create JOBS--. And you don't cut back on stimulus programs either, because that also keeps the money flowing through the system. But when you have rock-heads in both political parties you get a tug of war between ideological IDIOTS, pulling slaunchways, in opposite directions, like a bunch of one legged men at a butt-kicking contest, falling down all over each other, making things worse.

"the BP spill demonstrating that the oil industry is still the oil industry"

Now with the entire fleet of Bubba Gump Shrimp boats sitting idle in the Gulf, Forest Gum is reputed to have contacted President Obama for help skimming away oil accumulating over the shrimp beds by allowing international assistance offered by numerous foreign nations with ships equipped to do the cleanup. But Obama refused to waive the 1920s Jones Act, which requires vessels operating in American waters be built and owned and manned by Americans, and instead told Forest, with existential commiseration, "Shit Happens... take it up with BP, they caused the spill, they're responsible for the cleanup."

To which Forest is reputed to have mumbled: Stupid is as Stupid does... whereas a slew of heady entrepreneurs rushed to manufacture automobile stickers emblazoned with the statement, printed over a photo of You-Know-Who. One small step for the economy, one giant step for the next election.

Also, housing, food, healthcare, and education came first and 'discretionary' spending (what's that) next. Is any of this recognizable in today's environment?

If I can go the route of anecdota, it seems that when I visit the alma mater, the kids have a lot more money, nicer cars and clothes than when I was in school. There are way more upscale places to eat and drink than in my day. We scraped together a couple of bucks for slices at Greasy Tony's (a real place back then). These kids are drinking lattes (damned liberals) and eating, I don't know, fancy French-sounding pastries or big, overpriced bran muffins or something (salads 'n sh1t).

"These kids are drinking lattes (damned liberals) and eating, I don't know, fancy French-sounding pastries or big, overpriced bran muffins or something (salads 'n sh1t)."

And spending half their day on iPhones and Droids texting each other at monthly service fees more then you paid for a half-a-year's worth of Greasy Tony's pizza... and spending more for a music concert than the cost of your books for a semester.

GoodOleBoy:

That last comment of mine (snarkier than the first) was crossposted with your last.

"Taxes need to be higher in the long term to pay for all the stuff we need."

Well, it might mean that all of the engineering students, for example, went to school, got an education, and got jobs in the defense industry and designed more elaborate and expensive weaponry and called it the "stuff we need".

We have MBA (again with the education) grads salted all through business spending their every waking hour devising higher margin products which they advertise as the stuff we need.

Thus the paying part.

Which doesn't stop the former engineering students, now engineers, from complaining about their portion of the paying part, despite the fact that we're paying them.

George Bernard Shaw said "every profession is a conspiracy against the laity".

We keep our knowledge, talents, and information close to the vest -- the better to raise the price.

I'd be happy to provide what I know for free and everyone could call it an education. But there is the matter of paying for the bread, and the gas, and the rent, and the effing football game.

What do ya wanna know? I'll send you a price list.


I'm still puzzled by what this means: 'Taxes need to be higher in the long term to pay for all the stuff we need.'

Don't be puzzled, GOB. "The stuff we need" is a matter of taste. We can get by with a lot less "stuff". We could cut the federal budget substantially, no problem.

The problem is that you and I probably do not agree about WHICH federal spending is on "stuff we need", and which is "an investment in extravagance", to quote my favorite line from The Simpsons.

Multiply you and me by 150 million, and you have a country full of people who all have a complaint to make, but no agreement on what their complaint is.

As for this raising-taxes-on-everybody business:

Let us first pay homage to the FACT that it was Republicans (using reconciliation in the Senate, no less) who explicitly voted for Dubya's first massive tax cut to expire next year. Yeah, yeah, we know: they didn't really MEAN it, but that's what they voted for. Puzzling, eh?

More important: let's stop pretending that the DISTRIBUTION of tax increases is less important than the LEVEL of tax increases. In a country where tax "progressivity" ends at about 6 times median income, but where a few people make 60 or 600 or 6,000 times the median income, the notion that we can't raise tax rates on CEOs or hedge fund managers without also raising taxes on software engineers and plumbers is ridiculous.

--TP

PhillyCheesesteak: Forest Gum is reputed to have contacted President Obama for help skimming away oil accumulating over the shrimp beds by allowing international assistance offered by numerous foreign nations with ships equipped to do the cleanup. But Obama refused to waive the 1920s Jones Act

Word of sincere personal advice: stop watching Fox News, it's bad for you. What you say is reputed to have happened didn't happen. Nobody even requested a Jones Act waiver, and the attack on the Jones Act is part of a longstanding conservative dislike for it, they just found a convenient time to get in a cheap shot. Are factually false cheap shots what you want to put out there under your pseudonym? There's plenty of stuff to get mad about in the aftermath of the oil spill, but not that particular lie.

But Obama refused to waive the 1920s Jones Act, which requires vessels operating in American waters be built and owned and manned by Americans

And, at least afaict, the Jones act only applies to the carrying of cargo between American ports (both from Jacob's link and from wikipedia).
What you said should've have been obviously untrue, even if you have virtually no acquaintance with the shipping industry- believing that no vessels can *operate* in US waters unless they meet those restrictions is, well, profoundly gullible and silly.

I don't know, when the plumber shows up in that brand new 50 foot long 4 X 4 and is already collecting $75 for the ride over, I'm thinking he could use a tax increase.

Yup, that 2011 expiration of the Bush tax cuts Republicans crafted reminds me of the War of The Worlds, wherein the aliens bury their weaponry for the future assault on the baby in the bathtub.

An ounce of pot was 25 bucks in 1973, I think, though I'm having trouble remembering for some reason.

Now, it's what?

College students face financial pressures we can only imagine.

Part of the reason I was able to handle my own education costs was that I was working full time and doing education part time so it took me a lot more than five years elapsed time. Also, housing, food, healthcare, and education came first and 'discretionary' spending (what's that) next. Is any of this recognizable in today's environment?

If you want future generations to learn the lessons you learned, why didn't you make your kids pay for their own schooling?

Tony P said much of what I would have about the need to raise taxes. We spend a lot of money on public goods at the federal level. We aren't going to stop spending very much of that money no matter what. We can either pay for it by printing money or by taxing but one way or another it's going to get paid for. (Inflation is just a different sort of tax.) It's not even just a case of "Name what you'd cut", although that's one problem, but as Tony says, we don't agree on what should be cut, or even whether cutting is a good idea.

I think one very big trend in higher education costs is that the infection of Ivy League colleges with the greed-is-always-good mantra allowed them to excuse themselves for neglecting their primary function - education - and instead using their status as a ticket to an elite job to extract from students as much as possible of the future earnings that said elite job might produce. Entry to a high-end school has always been a ticket to a lifetime of high earnings, but has always been underpriced, with large positive social benefits, until the MBA crowd ended up in charge. And every other college followed suit.

Several big problems with that: one, even private colleges benefit from substantial government subsidies in all kinds of ways; two, the more you charge for entry, the less effective you can be as a filter for high performance students, but it takes a while for everyone else to catch on and in the meantime you're sending out duds into the world as if they were stars, and failing to match the very best students with the best faculty; and three, the knock-on effects and norm-setting spread over to public colleges as well. All of that means that a lot of the surplus social value that was produced for free goes away and the rationale for supporting the system is reduced.

Expectations of higher living standards for students are probably one part of it, but they can't account for the very high tuition fees. CW has some other good causes, especially the Baumol effect (which I hadn't heard of before, but explains something that I think is apparent in the world).

In California it's pretty straightforward to identify why the public universities are expensive. They don't get as much state money as they used to, because California is chronically unable to raise money through taxation because of the poison-pill of Prop 13. It's a disaster. Now that's state-level, but similar problems have arisen in many other states and I think some federal help is probably going to wind up being involved.

The program to make the country ungovernable and discredit government by allowing political minorities to block legislation in both state and Federal legislatures has been quite effective, unfortunately. It's a weird nihilistic exercise, if you ask me.

"The program to make the country ungovernable and discredit government by allowing political minorities to block legislation in both state and Federal legislatures has been quite effective."

Yes. It turns out my votes count for nothing when I'm on the losing end and now they count for nothing when I'm on the winning end. No matter the Democratic majority, the Republicans remain in the majority.

It reminds me of elections under Ferdinand Marcos wherein his opponents received zero votes and if some snuck through, the opponents ended up dead.

We might as we'll just have a King for all my vote counts. I think I'll stop voting and look for other remedies.

The Baumol Effect.

I love the idea that economists point out it takes the same number of musicians to play a Beethoven String Quartet as it did two hundred years ago -- thus no productivity rise.

I'm sure Sharron Angle, Rand Paul, Erik Erickson, Sarah Death Palin, George Will, and the other big thinkers have solutions to this fraud, waste, and abuse.

They could play faster, thus providing more music in shorter amounts of time. You could get two string quartet performances in half the time, for example- a two-for-one deal.

Fire one of the violinists and force the remaining one to do twice the work, a violin in either hand with perhaps an automated bowing system. After all, if Ted Nugent can play guitar while balancing automatic weapons on either hip, think of the savings.

Lower the barriers to entry (Milton Friedman woulda been a fiddler if he's been given a chance) -- why do these people need all of that expensive training at the conservatory? If Jack Benny, Henny Youngman, Victor Borge, and Ian Anderson of Jethro Tull were allowed entry into this small circle of elitist toffee-nosed twits, think of the cost savings. Plus, free jokes to boot.

Lower overhead. Remove chairs. They can stand and play. No more fancy-schmancy tuxedos either -- have McDonald's design some cheap matching duds - and hey, enough with the expensive canapes during the intermission -- they can eat the same lentils we do. And, yes, flophouses while they're in town for the gig.

Finally, Stradivarious schmadivarious. Here's your Wal Mart viola. Shut up and play and pass the cost savings on to the discriminating public.

And, yes, postfinally, stop paying unemployment benes to out of work musicians. That'll enhance productivity.


Jeez, I was really hoping that would segue into something about the productivity of prostitutes servicing Republicans over the years. Oh, well...

hstd:

I think that's a demand-side problem.

The other thing I'd say is that figuring out the definition of "error" - and the question of how much of this reflects the actual policy desires of Obama or other Democrats - is part of the point of the exercise.

I think they're errors in the political sense because Obama's popularity is going to be driven by employment performance, just like every other President ever. The political performance of the Democrats matters even if they're blah, because the alternative is sort of terrifying.

I think they're errors in the policy sense because many of them don't really fit with the Democratic platform and whatever Obama personally feels, he's also a Democrat, and it's good for parties to try to deliver what they promise so that people have an actual choice at the polls.

And I say "unforced" errors because although wj has a point about them being part of outreach to Republicans, 10 minutes into this administration you could tell that outreach was not going to work, and none of these actions resulted in any gains for Democrat priorities whatsoever. The Republican votes for the stimulus were grudging and came at the price of watering it down substantially, and Republicans have not cooperated on anything else except maybe Afghanistan.

At the time a couple of them were made I didn't think they were enormously bad decisions, e.g. Bernanke and the offshore drilling plan. But just saying "Hindsight is 20/20" isn't good enough, you have to learn from your mistakes. The common thread in these is exactly that they were attempts to reach Republicans, but not as part of organized, give-and-take negotiations. They were gifts, and they've turned out to be very expensive gifts that pleased nobody and accomplished nothing. That ought to be something worth learning, although it's not clear that the White House is tuned into this, disastrously.

I am thinking, mixed with all of your good points, this is just wishful thinking. IMO.

What Jacob describes is exactly how I went to university. Pell Grant, some state money, low tuition at a state school, part time job to pay for personal expenses.

In other words, what happened to make it not reasonably feasible?

SUNY charges for in-state students are about 10x what it was when I went. Inflation since then is about 2.6x.

So yeah, the cost of going to college has risen a lot more than the rate of inflation.

If you were to ask me why that is, I'd say it's because what we think is important, where "important" is measured by "worth investing public money in", has changed.

The idea that people who live in the same town, state, and country share a common public life and have some obligation toward each other has, as far as I can tell, become as quaint a notion as quilting bees and barn raisings.

That's what I think is different.

I have two complaints with Obama. I won't call them "unforced errors" because I doubt he sees them as errors. They're just things he did in a way he thought was good, whereas I don't.

The first is what was, to me, his astounding deference to Wall St when he came into office following the various housing and financial meltdowns of 2008.

The second was his consistent refusal to clearly eschew, let alone prosecute, the civil and human rights violations of the Bush era, most notably the use of torture, aka "enhanced interrogation".

I think those were signal failures, and significant lost opportunities for leadership and positive change.

This, specifically, is manifestly untrue:

People were so sick to death of Republicans by 2008 that you could have told them you were going to take all their stuff and make them work in a labor camp and they'd still have voted for the Democrat.

Tell people in this country that we need to raise taxes, on anybody, in any amount, for any reason, under any conditions, and you and your agenda, along with whatever horse you rode into town on, are dead meat.

And that's not something you can blame on Obama. That belongs to all of us.

Let us first pay homage to the FACT that it was Republicans (using reconciliation in the Senate, no less) who explicitly voted for Dubya's first massive tax cut to expire next year.

Quite right. Why would they do such a weird and crazy thing?

1. It magically made the long term deficit numbers not quite such an obvious train wreck
2. "Kick the can". Make the next guy pay.

Seriously, people talk about "responsibility" and "conservative values", but it's hard for me to see Republican governance over the last 30 years as anything other than a con. The goal isn't governance, it's (a) break everything so that nobody else can govern either, and (b) do renumerative favors for your buddies.

They're crooks. Yeah, yeah, lots of Dems are crooks too, but with the Republicans it's their raison d'etre.

Carleton Wu: "the Jones act only applies to the carrying of cargo between American ports (both from Jacob's link and from wikipedia).
What you said should've have been obviously untrue, even if you have virtually no acquaintance with the shipping industry- believing that no vessels can *operate* in US waters unless they meet those restrictions is, well, profoundly gullible and silly."


You should take your own advice, Carleton, and think before you write, that way you'd be making a fool of yourself less frequently.

If the Jones Act applied only to ships carrying cargo between American ports, why are angry DEMOCRATS trying to get Obama to issue a waver to allow foreign skimmers closer access to the coast? If the law doesn't prohibit those skimmers from operating in Gulf waters, why does everybody but you think otherwise?

The Jones Act prohibits foreign-flagged boats and crews from doing port-to-port duty within 3 miles of the US coast. And to state otherwise is profoundly asinine.

The Baumol Effect.

OK, so I'd never heard of the Baumol effect, so I went and read the Wiki page. It includes this bon mot:

This goes against the theory in classical economics that wages are always closely tied to labor productivity changes.

Why is it that every time I read about a theory in classical economics, I am forced to conclude that classical economists' heads are irretrievably stuck up their hind quarters?

You have to pay people enough to live on. Otherwise they won't work.

If you want to hear Beethoven performed live, you have to pay musicians enough not just to live on, but to put up with the years of painstaking nonstop hard work it takes to perform orchestral music well. Otherwise they'll all go do something else.

Why? Because people have to freaking eat. That's why.

If hearing Beethoven live isn't worth that level of expense to anyone, they won't pay, and nobody will play it anymore.

And that is why, in most places of any size, you can hear Beethoven performed live, and conversely ensembles performing the works of, frex, Morton Feldman or Guy Lombardo are few and far between.

If people want something enough, they will pay whatever the cost is of having it.

Simple.

Whenever I hear "classical economics", I reach for my revolver.

russell: Tell people in this country that we need to raise taxes, on anybody, in any amount, for any reason, under any conditions, and you...are dead meat.

You may be right, but my question is: when was the last time anyone even tried this?

Candidate Obama did well talking to Americans like adults on a number of other issues, but never really tried on this. Maybe because you're right.

The alternative is either savage spending cuts that I truly think would obliterate the party or parties responsible, or debt monetization and inflation. If you're right, and maybe you are, I think the latter is the most likely way out. The debt markets don't seem to think so, oddly.

Whatever you think of the cost of a college education today vs two to four decades ago, take those cost comparisons and cut 10% straight off the top of today's costs to account for maintaining the school's technological infrastructure (probably higher for smaller schools).

For room and board at the dorms add in the higher cost of electricity for each dorm room that now has two computers, a printer and two cell phones at a minimum on top of the old utilities costs based on an average of only 7 small electrical draws in the old days. That old dorm of yours has been completely rewired since the 80s to increase the number of outlets and provide a LAN connection.

Once that is done we can go back to comparing costs.

what happened to make it not reasonably feasible?

I don't know if declining subsidies can tell the whole story. Private universities aren't hurt by these, are they? And they're going throughthe roof too. Here are some spitballs in addition to what's been mentioned above, offered without pretending to know the answer:

- People discovered there was money to be made in (ever more expensive) private student loans? I expect there's something here, but in that case, I keep wondering where does the cash from the tuition increases all go?

- Increasingly competitive alumni- and student-seducing eye candy? All that new ivy-covered architecture, those top-ranked sports teams, and sweet landscaping has got to come at a premium. And those attributes I'm sure get factored into the coveted 50-best lists. ("Preeminence" was the excuse both my alma maters gave to sinking so much cash into these projects.)

- Scientific research that requires big infrastructure? A lot of the stuff is government-funded mind you, and I have no idea how much of the bill the universities foot. But my god is the equipment expensive.

- Increasing academic salaries? I'm not sure how much the administrators make, but a professorship isn't terribly enticing compensation-wise. And they often seem to be laying off staff rather than hiring.

- A smaller student base to pay for the same service? Of course the total student population has only climbed. More colleges competing maybe then for the same pool, then? (Didn't find ready data for the trend in the number of universities.) That'd make it a special industry for which competition drives prices up. This one doesn't seem to compute.

- Collusion? A captive market? No one can get a job these days without a degree, and where else you gonna go? Then again, community colleges are having a hard time keeping costs down too. And once again, where does all the money go?

- Declining endowments? But tuitions went up with the investment bubbles, and they're going up as the bubbles deflate. Are the trustees a significant drain on the funds? Is more money directed to these vehicles?

PhillyCheesesteak, I'm not personally interested in spending a lot of time debating junk pulled from the fantastically-dishonest Breitbart site, but even the damn story you linked to contradicts what you're saying:

Deputy Maritime Administrator David Matsuda confirmed there has been one Jones Act waiver request for a foreign deck barge to operate within three miles of the U.S. coast. That request was denied because American vessels could perform the same functions. Matsuda defended the administrative waiver process, noting that case-by-case requests are handled within 48 hours.

So, there's been one (1) request for a waiver and it wasn't granted because other vessels existed that could handle the task.

There were no requests for waivers for skimmers. None. So waiving the act as a whole would have no effect.

If you want to be treated as someone involved in the discussion in good faith, pushing garbage stories like this is not the way to do it. If you're just playing concern troll, the appetite for that around here is fairly limited.

The alternative is either savage spending cuts that I truly think would obliterate the party or parties responsible

The big money is entitlements. Or, entitlements, debt service, and the DOD. Debt service is, correctly, more or less off limits. The DOD is off limits because it's the goose that lays the golden egg.

So, entitlements are where the cuts will need to come.

A significant number of folks in Congress and elsewhere are, right now, working as hard as they freaking can to convince us all that what we really need to do, ASAP, is start trimming SS benefits.

Means testing, raise the retirement age, etc.

Maybe that's the right thing to do, maybe it's not. But the propaganda is being catapulted, as of right now.

SS first. Then probably Medicaid, cause that's all poor people. Then Medicare.

First you lay the groundwork. Then you make the cut. If you get folks sufficiently freaked out, they'll take it and smile.

I appreciate your comment, Jacob -- it does help to clarify your post. And I'm pretty much in agreement. Even if one accepts the premise that Obama is basically a technocrat who would fit comfortably on the center-right in, say, just about any European country, there's still the question of execution, the basic political skills involved in selling one's decisions, and on that score this administration is really beginning to look pretty clumsy and inept. In that sense, "errors" is a perfectly appropriate word.

That said...

I think they're errors in the policy sense because many of them don't really fit with the Democratic platform and whatever Obama personally feels, he's also a Democrat, and it's good for parties to try to deliver what they promise so that people have an actual choice at the polls.

Now this I don't get really get. Without wishing to sound flippant, I honestly don't know what "being a Democrat" means anymore. I couldn't tell you what is in "the Democratic platform," much less pinpoint those areas where Obama has strayed from it. The party has gone from being a loose, wide-ranging coalition to flat-out incoherence. Maybe you could expand on this further.

If the Jones Act applied only to ships carrying cargo between American ports, why are angry DEMOCRATS trying to get Obama to issue a waver to allow foreign skimmers closer access to the coast?

They must be confused, because there are already upwards of 15 foreign vessels doing this absent a waiver of the Jones Act.

My guess is, given that your link comes from Breitbart's hack shop, that the Breitbart folks are misconstruing something, or the "angry Dems" are confused on this point.

JACOB: "when was the last time anyone even tried this?"

George Bush the elder.

Walter Mondale.

RUSSELL: We speak the same language, with a different dialect.

"Why is it that every time I read about a theory in classical economics, I am forced to conclude that classical economist's heads are irretrievably stuck up their hind quarters?"

You came close to answering this question on the other thread. When classical economists were young their pappies gave them this step-by-step piece of advice for getting on in the world:

1. Put on a pair of boots.

2. Lean over and grasp the straps.

3. Insert your head up your hind quarters.

Nothing in the world is impossible if you set your mind to it.

Having an economist explain things to me is like having Elmer Fudd explain the inputs and outputs of carrot production to Bugs Bunny.

There's going to be havoc in the carrot patch.

when was the last time anyone even tried this?

Well, in 1913 two thirds of Congress and three fourths of state legislatures passed the 16th Amendment, ushering in the income tax. Partly, that was needed because something like 40% of federal revenue back then came from excise taxes on alcohol, so the income tax had support from the Prohibitionists :)

--TP

Jacob: Word of sincere personal advice: stop watching Fox News, it's bad for you.


I don't watch Fox News, Jacob, I treat them with the same suspicious distaste I treat Mother Jones... both ideological shills proselytizing their political POV... both mouthing ideological platitudes of distortion...

"What you say is reputed to have happened didn't happen. Nobody even requested a Jones Act waiver."

Well there's those Democrats and Republicans I linked to above, in my Carleton Wu response... and tho I don't have time to locate them now, Bloomberg news interviewed corporate representatives last week from Greek shipping entities, and others, who said they had offered to send skimmers but were rebuffed by the US, citing Jones Act restrictions.

Why hasn't Obama waved it? Many nations have offered to send skimmers to help with the clean-up. As of last week, the US had received 107 offers of assistance from 44 countries and four international organizations, 68 of those government-to-government offers were for equipment or personnel, a substantial number of those including skimmers which could be deployed close to shore, to intercept spills before they reach it.

And those statistics don't come from Fox, but from one of last week's Coast Guard briefings, from the outgoing spokesman, Adm. Thad Allen. The Admiral also informed he was considering asking for a Jones Act waiver, to allow the four or five foreign vessels now assisting the Coast Guard outside the three mile boundary to come into port in the event of forecast hurricanes in the Gulf.

The oil is spreading. The Obama Administration continues to drag its ass.
Really, it should be doing better, but it's not.

UK: I couldn't tell you what is in "the Democratic platform"

From what they actually do I agree it would be hard to discern, but when I say platform, I mean platform, the one they ran on in 2008.

Good Jobs with Good Pay
Invest in Manufacturing and Our Manufacturing Communities
Restoring Fairness to our Tax Code
Reforming Financial Regulation and Corporate Governance
Stewardship of Our Planet and Natural Resources

I'm under no illusions about what motivates politicians, which I think in nearly every case is primarily "ego", secondarily "greed", with "pursuit of good policy" trailing far behind. But good policy is the only thing that really matters.

russell, I agree that they want to put SS on the block, and that there has been an amazing willingness on the part of the Democrats to entertain the idea of cuts or delays despite the politics of it. Especially amazing given the way that Republicans have successfully yanked their votes for other policy changes after compromising them significantly. Getting the Democrats to hold the bag for cutting SS would fit right in with that method.

I don't know why I'm doing your homework for you, but this is the Bloomberg story mentioning the Jones Act, and from that story the only sentence that actually describes why the one guy's scheme to use ships (including one Greek cruise liner) for skimming and crew berths does not say why his proposals were rejected:

Fred McCallister, an investment banker in Dallas with Allegiance Capital Corp., told a Senate Commerce Committee hearing today that his proposal to assemble a fleet of foreign ships for cleanup duty has been rebuffed by both BP and the Coast Guard.

Why has it been rebuffed? The story does not say. The owner implies but does not state that it is related to the Jones Act. But there are any number of other likely reasons why the proposal could have been rejected, and the article does specify. The proposal could have been overpriced, the capability could have been redundant or just unnecessary, the proposers may not be able to show that they would be able to deliver on the contract. Just because someone submits a proposal for a contract does not mean they are entitled to receive the contract even in times of great need. BP is not required to - nor would it be a good idea to - employ absolutely everyone who claims to be able to help clean up the spill.

Give me some actual evidence that it was the Jones Act that was responsible and that the guy can prove that his proposal was serious - not a story where nobody is actually willing to make that claim on the record- and I might give these claims some credibility. Until then, you're wasting everyone's time with this.

sandwich,
You should take your own advice, Carleton, and think before you write, that way you'd be making a fool of yourself less frequently.
The Jones Act prohibits foreign-flagged boats and crews from doing port-to-port duty within 3 miles of the US coast. And to state otherwise is profoundly asinine.

Ironically, sandwich's link also provides the info that, so far, exactly one waiver has been applied for, and it wasn't for a skimmer (it was for a cargo vessel). So if there are foreign skimmers waiting to work on the spill which cannot do so, they probly ought to apply for waivers. Especially since, absent some conspiracy theory, a waiver would almostly certainly be quickly granted.
Because, you know, that would actually be an interesting story- Obama turning down foreign skimmers- rather than one more addition to the mighty army of right-wing manufactured BS stories.

Following yet another link from your useful cite led me here:
Jones Act experts contend the law doesn't stand in the way of foreign vessels doing work in the Gulf. Because the law only covers a three-mile limit from the U.S. coast, foreign ships do not have to get a waiver to work near the site of the spill or other areas in need of skimming. In addition, the Oil Pollution Act gives the on-site coordinator from the U.S. Coast Guard the ability to use foreign skimmer vessels if "an adequate number and type of oil spill response vessels documented under the laws of the United States cannot be engaged to recover oil from an oil spill in or near those waters in a timely manner."

While we're at it, let's recall sandwich's original claim: the 1920s Jones Act, which requires vessels operating in American waters be built and owned and manned by Americans

That's worth a second chuckle. All vessels operating in American waters must be built, owned, and manned by Americans? Have you ever visited a major port city in your adult life?

Jacob--thanks for these interesting observations. A couple of thoughts:

1. Obama campaigned on Afghanistan as a war of necessity. Whether he meant it or not, if he hadn't gone with that, his credibility on WoT and national security would have been shot. Further, as I've written elsewhere, his approach is the least repugnant of the options available, if he can pull it off: make a splash with a pre-declared pull out date so that we have the propaganda fig leaf of saying that we are leaving on our own terms, not cutting and running. The big splash consists of attritting the extremists and leaving the clear impression that the US coming back is not what anyone wants. I am not saying this is a great outcome, just the least repugnant.

2. Tax increases across the board: well, the easy way to do this is juice FICA. A bad idea in my mind, but it's quick, administratively simple and might help 'save' SS. More to the point, as Russell notes, there will have to be some spending cuts. DoD is on the block IF we can determine an appropriate force level relative to PRC, N Korea, the Russians and the range of presently unknown but predictable conflicts that will arise. Entitlements will have to go under the ax and that includes HCR, which will likely not save money and likely not result in better health care for those who already have insurance, but that is for another day. As for taxing everyone for 'what we need', why not first determine what that is, on the national level? Maybe we can agree to get by on less? The budget is huge, surely there are some cuts somewhere?

3. Offshore Drilling--what about the little problem in the gulf? I don't see s**t from this administration on leadership. He made one speech, way late, and has now moved on. Like him or not, this is not leadership.

4. Bank bailout--I agree, he should have played that one differently.

5. Bernanke--couldn't say.

The oil is spreading. The Obama Administration continues to drag its ass.
Really, it should be doing better, but it's not.

PhillyCheesesteak is right. Obama should have seized the US assets of BP two months ago and focused all of them (men, machines, money, and "intellectual property") on containing the gusher. That's what a good commie fascist Muslim president would have done: given Joe Barton a real reason to apologize to BP. Right, Philly?

Parenthetically, if Breitbart would front me the money, here's what I'd do. I'd sew together a mile-long windsock-like thing. Maybe 100 feet across at the small end, 1000 feet across at the big end. Sink the small end over the gusher; float the big end at or near the surface. Oil floats; you don't need pumps to raise it to the surface. What you need is to contain the rising plume so it doesn't spread out all over creation by the time it gets there. When it does, suck it up, burn it, I don't care. This tremendous idea does not violate the Jones Act, as far as I know. Can I have a contract, now?

--TP

they want to put SS on the block, and that there has been an amazing willingness on the part of the Democrats to entertain the idea of cuts or delays despite the politics of it.

The game is: change the politics first, then the rest is easy. And the gold standard way to change the politics is to freak everybody out.

There are a lot of people who, for whatever reason, simply hate the idea that the government might take money from them and give it to somebody else. They hate, hate, hate it. Eighty years after the Great Depression and the New Deal, they hate the idea that the government ever got into the social insurance business. They'd like to see the entitlements annihilated.

First steps to doing that are (a) freak everybody out so that they accept cuts in the programs, then (b) use that to demonstrate that the programs aren't, after all, a reliable safety net, because the benefits were cut.

You paid in, but you aren't going to see what you expected to get when you paid in. You coulda done better by just putting all of that money in a 401K.

You was robbed!

If I'm not mistaken Jacob, you're from the UK. In the UK and Europe generally, the idea that government should be a vehicle for addressing general social issues is kind of normal. Even your conservatives have to give some kind of lip service to, frex, the NHS.

In the US it's far more controversial, still, even eighty years after FDR and over a hundred years after the Populist movement.

It's not that hard to sell people here on the idea that government is their enemy. Americans are deeply enamored of the idea that everyone should just stand up on their own two feet, and that any form of assistance is a "handout" best left to private charity.

The fact that SS is reasonably well funded, efficiently run, and in fact is quite useful to millions and millions of people is, or can be made, beside the point.

I've had conversations with people who advocate eliminating public libraries, the postal system, and basically every function of government other than national defense, maintaining public order, and enforcing contracts.

It's not a practical model of governance in the modern world, but it has a huge, huge following in this country.

Everybody wants to live on that rugged frontier. Hardly anybody alive knows what that actually entails, but they want it anyway. Everybody wants to believe that everything they have, they got themselves, through their own honest sweat and labor, with no help from anyone else, and if everybody else would just do the same there wouldn't be any problems.

People who receive their income directly from the federal government think this, in large numbers. It's some kind of weird cult.

Dumping the New Deal entitlements would be as profound a change for this country as, frex, the enclosure laws were in the UK in their day. Doesn't mean it won't happen.

All vessels operating in American waters...

... like the Swiss-owned, British-leased, Marshall Islands-registered vessel formerly known as "Deep Water Horizon" ...

--TP

Good Jobs with Good Pay
Invest in Manufacturing and Our Manufacturing Communities
Restoring Fairness to our Tax Code
Reforming Financial Regulation and Corporate Governance
Stewardship of Our Planet and Natural Resources

But those aren't policy proposals, Jacob; they're merely Good Things. There's nothing in that list that anyone could plausibly say they oppose (I'm sure the Republican platform pays lip service to "stewardship of our planet" in its own way). There's no commitment in that list to the specific actions that are going to get us from Point A to Point B, no overarching ideological guideposts, and thus nothing that would actually distinguish a Democrat from a Republican.

I was 4 years old when Nixon came into office, so the only Democratic president I've really "lived under" was Clinton -- and it seems to me that Obama is pretty much following Clinton's playbook. (Including the political ineptness-- Clinton's first big policy "achievement" was botching health care reform so badly that we had to wait 16 years for another go at it.) So the objection that he's not governing "like a Democrat" leaves me perplexed.

Shorter UK: Maybe this is what a Democratic presidency is supposed to look like.

Who wants to take the "no" side of the proposition that "PhillyCheesesteak" is "Jay Jerome?" Anyone?

there are any number of other likely reasons why the proposal could have been rejected, and the article does specify.

The initial package of ships offered were deemed by BP to be not big enough.

The chairman of the company involved, Allegiance Capital, has done jail time for theft and securities fraud.

No links for you, Philly, go look it up.

Who wants to take the "no" side of the proposition that "PhillyCheesesteak" is "Jay Jerome?" Anyone?

I'd prefer not to entertain that possibility, Phil. I'm a Philly boy myself, and I love my cheesesteaks.

I think the push should be to change the term "entitlements" to "insurance."

I want the benefits of my insurance. I want other people to get that benefit. Articles about insurance companies failing to pay is maddening.

Entitlements, on the otherhand, sound as though they are unearned. I don't like them.


And, for the most part, we are talking about unemployment insurance, social security insurance, and medicare insurance. Stuff you paid for already as part of apremium insurance package. It should not be that hard to call things what they are.

Jacob: "I don't know why I'm doing your homework for you, but this is the Bloomberg story mentioning the Jones Act, and from that story the only sentence that actually describes why the one guy's scheme to use ships (including one Greek cruise liner) for skimming and crew berths does not say why his proposals were rejected:"

Thanks for handing in the homework, but I'm only giving you a C- for it.

McCallister Says Jones Act Waiver Would Help BP Cleanup: Video
July 6 (Bloomberg) -- Fred McCallister, a vice president at Allegiance Capital Corp., talks about the need to waive the Jones Act, a 90-year-old maritime law that bars foreign ships from transporting goods between U.S. ports, to help fight the BP oil spill in the Gulf of Mexico.

The guy's saying the Jones Act is an impediment to the BP clean up, I don't understand why you have a problem with that, or why you're not in favor of lifting it temporarily. It might help, so why not temporarily suspend it? Then you could have the Coast Guard hand out exemptions, and direct the skimmers to more sites.

I think the push should be to change the term "entitlements" to "insurance."

Amen. Social Security and Medicare Part A are "entitlements" in the same sense that private retirement benefits and private hospitalization coverage are "entitlements": we pay our money for a specific purpose, and are "entitled" to what we paid for.

Social Security is not, strictly speaking, "government spending".

--TP

The guy's saying the Jones Act is an impediment to the BP clean up, I don't understand why you have a problem with that, or why you're not in favor of lifting it temporarily

I don't know why you think 'some guys said it' is the highest possible standard of evidence. Well, I have a theory, but it's not very polite.
This guy said that he brought his proposal to BP, but BP rejected the boats as not being useful. He thinks otherwise. Let's see: the Coast Guard and a gigantic oil company with tremendous expertise in drilling and cleanup operations and a huge stake in minimizing the damage versus an investment banker in Dallas.
Of course, if the boats are deemed useful to the cleanup effort by BP and/or the Coast Guard, then it'd be easy to apply for an receive a waiver. These boats aren't being held up by the Jones Act. They're being held up because the people in charge of the cleanup don't want them.

So far, evidence that suspending the Jones Act would be useful...

In favor: some people make this claim without substantiation.

Against: Lack of a single request for a waiver regarding a skimmer or other specialized cleanup vessel. Existence of regulation allowing for the use of foreign-flagged skimmers without a waiver if the need for such is determined by the Coast Guard coordinator. Existence of a quick process to grant waivers if any were to be applied for.

I think Jacob Davies writes great converstation sgtarters and I hope he will stick around and give us more posts!

what wonkie said. great post Jacob.

I don't know why you think 'some guys said it' is the highest possible standard of evidence.

Heh.

Not just "some guys" but "some guys with a vested interest said"...

There are a lot of people who, for whatever reason, simply hate the idea that the government might take money from them and give it to somebody else.

There are a lot of people who simply hate the idea that someone somewhere might be getting some marginal something that they might not completely 'deserve', even if the money for it *isn't* being taken away from them. It's not about money so much as resentment.

Agree that Jacob is a good addition to the mix here at ObWi. Nice post, although I think the list ought to be longer. For a supposed political wunderkind, Obama makes TONS of unforced political errors.

Thanks for the kind words. I'm sure I'll disappoint in short order by posting something so half-assed and offensively stupid that you will suspect that my account has been hijacked by zombies, but that day hasn't come yet. I'm reasonably serious about that though; one of the reasons I like writing about stuff is to try to gather together what I actually think and see if it makes sense or is full of fallacies and inconsistencies, which is also why I end up not posting half of the comments I write. But sometimes it takes someone else to point out where you're being an idiot. I'm okay with being an idiot sometimes, but I hope nobody is surprised when it happens.

McKT - on Afghanistan, you have a good point. I don't feel that he campaigned on this sort of escalation, and I don't think there was popular pressure to do what he did, rather the reverse. That it wouldn't work out too well (as it hasn't so far) was predictable given the failures of all previous similar efforts.

On taxes & spending, I would take to the DoD budget with a meat cleaver. I have some ideas about that that I would also like to get in another post. I think it's important that the US maintain a strong military advantage and be clear that it intends to continue to do so - not so much because I think the US has miraculous powers to "do good by force", but because it discourages arms races and because transitions in military dominance tend to be accompanied by horrific wars - but it doesn't need to spend as much as it does on series production of weapons systems, maintain the size of standing army that it does, and it certainly doesn't need to be ready at a moment's notice for foreign military adventures, let alone be involved indefinitely in two of them. The temptation to do so is a good reason to cut the standing army down in size by a substantial amount. So that's by far the biggest area that could be cut.

There is absolutely no reason to cut entitlement programs (although Medicare cost controls are worthwhile) because they are just intergenerational insurance transfers. They don't affect total investment or consumption spending at all, the administrative overhead costs are virtually nil, and economically they're stabilizing by ensuring a steady flow of cash whatever the employment market conditions. I have absolutely no idea why so many conservatives don't like them (not including anyone in particular here in that category), they are completely boring and their redistributive effects are minimal compared to the income or estate taxes. Putting them in a separate budget makes sense simply because they do not reflect government spending priorities at all, except in the way Medicare contracts for healthcare, but even there it is not really in full control. Cutting Social Security does nothing at all for long-term solvency unless you use the cuts as an excuse to default on the Trust Fund bonds, which would be unconscionable.

And that leaves very little in the federal budget worth cutting. The various regulatory departments, law enforcement, education, parks, whatever... they're all pretty minor.

Now one area of hidden spending is tax subsidies, and I think there are quite a few of those that could be removed to save some money. Yeah, that would technically be a "tax increase" for some companies, but I'm not sure what the real difference is supposed to be between a tax subsidy and a government purchase (other than that in the latter case the government actually gets something for its money). Tax subsidies shift the burden of paying for government to those industries that haven't bought their own loopholes. Time-limited subsidies for infant industries are supportable, but ongoing tax breaks are just handouts. If a business isn't profitable enough to invest in without a tax break, why should the government pay to make it look like it is?

But all of that is why taxes have to go up a little bit, because cutting spending is very difficult. The federal budget is huge because the US and the US economy are huge. In particular the difficulty in cutting defense means that taxes are going to go up one way or another at some point; I wish they had done so contemporaneously with the wars, because then maybe people would have realized that they were making a decision about a trade-off rather than acting like war spending was free.

I have absolutely no idea why so many conservatives don't like them

Seriously, see johnnybutter's 8:51.

It's got nothing to do with the facts or the pragmatics, it's an emotional thing.

And that leaves very little in the federal budget worth cutting.

How about 'defense'? Do we really *need* to spend quite so many multiples more than the rest of the world combined on the military? Even if you have a hawkish pov, is this kind of gargantuan spending really necessary? Of course it's hard, politically, to get cuts, but that isn't to say they're not worth doing.

omg Jacob, I completely skipped a paragraph in your comment (i.e. 'DOD...meat cleaver'). I don't know what's wrong with me. sorry.

jonnybutter, you're such a flip-flopper.

On debt service, what if we stopped issuing bonds on a dollar-for-dollar basis to cover deficits? I'm not financially astute enough to say that we should stop issuing bonds altogether, and my gut tells me that there is some need for them (e.g. current-account/capital-account balancing, low-risk savings method for individuals, SS trust fund). But I don't see why the government has to borrow the very money it created in the first place and pay interest on it, certainly not dollar-for-dollar, to cover some other money it created.

Some relevant Jones Act analysis:

Since BP’s oil gusher in the Gulf of Mexico began, a favorite right wing talking point has been that the Jones Act — a 1920 law stipulating that commerce between U.S. ports needs to occur on U.S. ships — has been hindering the cleanup effort by forcing the federal government to reject aid from foreign nations. Conservative lawmakers and pundits have been claiming that the Obama administration is refusing to waive the Jones Act out of deference to the will of labor unions.

Earlier this month, McClatchy demolished this meme, reporting that “maritime law experts, government officials and independent researchers say that the claim is false. The Jones Act isn’t an impediment at all, they say, and it hasn’t blocked anything.” But this hasn’t stopped the drumbeat from the right-wing, with Sen. John McCain (R-AZ) going so far as to say that aid from 17 countries has been rejected because of the Jones Act. “Due to the Jones Act, these vessels are not permitted in US waters,” he said.

Yesterday, on CNBC, Hans Bader of the Competitive Enterprise Institute repeated this talking point, claiming that there have been several rejections of foreign aid due to the Jones Act. However, he ran into a host who had done his homework, as CNBC’s Mark Haines noted that 68 different offers of foreign cleanup help have been accepted. Haines challenged Bader to cite examples of the Jones Act causing a problem, with predictable results:

HAINES: How many rejections under the Jones Act?

BADER: I don’t know how many.

HAINES: Excuse me, Senator McCarthy, you can’t tell us how many there are? I want the facts, give us hard facts, give us evidence, not innuendo, not baseless accusations, okay? It’s offensive to intelligence. The fact is sir, you have told us there are examples of rejections and you can not name a single one.

Bader eventually cited one Dutch ship that was supposedly turned back due to the Jones Act. So today, Haines was back on the case, pointing out that the Dutch offer had been made before the federal government even knew there was an oil leak, and the rejection was initiated by the EPA. “It was not because of the Jones act, it was not a conspiracy to protect the unions and sacrifice the environment,” he said.

I’m pretty tough on CNBC’s team for spending most of its time shilling for big bank bonuses, tax cheats, predatory lenders, and the ultra-wealthy, while falsely scaremongering about the effects of the Obama administration agenda. But, credit where credit is due, Haines was prepared to call this nonsense for what it is: an attempt to demagogue unions and score political points off an environmental catastrophe.

http://wonkroom.thinkprogress.org/2010/07/09/cnbc-jones-act/

jonnybutter, you're such a flip-flopper.

Call me anything, but don't call me that, HSH! I am tumescence personified!

Ironically the German social security etc. system was introduced by an arch-reactionary. He hated both the (then still revolutionary) left and liberal (mixed liberal and libertarian) leaning industrialists that had begun to establish an employer-based system (with the industrialist as a patriarchal father figure). Not to forget that the Roman Catholic Church tried to compete with the left out of survival instinct. O.v.B saw all of this as a threat to the traditional power base (his own Junker class) and had to find a way to keep the peace without really changing the status quo. Another of his strategic compromises that survived far longer than the system it was meant to uphold. In a way Roosevelt was in the same position. Either do something or risk a revolution. From the view of power it just got out of hand and the genie would not go back to the bottle after the crisis had passed. The conservatives of both ages were on average just too blind to see that an emergency vent was necessary. Unlike today bolshevism or something similar was not just a bogeyman to terrify your base. Modern conservatives of the US kind would willingly recreate the situation where the ghost could take on flesh again because they are either blind or confident enough that they could crush it should it arise.

On the cost of education, Victor is only 20 months old, so it's going to be a while before we really need to explore his options for college, (Maybe not so long, he's reading "Goodnight Moon" by himself already...) but I have been struck by how much more expensive it is today, than when I went to college in the 70's.

Really, since the teachers aren't being paid a fortune, and the buildings in which the education is actually taking place aren't palaces, it really leaves only one plausible explanation I can see: The students are being made to pay for a heck of a lot of stuff that isn't their own education. Research, sports, what have you.

Fortunately, there are still places where the schools spend the tuition almost entirely on the student's education, and so that education is quite affordable. Most of them just aren't in the US...

The students are being made to pay for a heck of a lot of stuff that isn't their own education [and was previously paid out of the public tax base]

You left out a clause...

Call me anything, but don't call me that, HSH! I am tumescence personified!

Hey man, if that goes on for more than four hours, you better call your doctor!!

I don't disagree about sports, although I don't know what percentage of the typical university's budget it represents. Research is another thing; I agree it should be paid for directly out of government budgets, but it does serve a function in education as well.

Charging some fraction of the future increased earnings that a degree brings you has a certain fairness to it, but it also discourages lower-income students and forces people to take on a lot of risk, since they don't know exactly which careers will be the ones that bring a lot of success.

Higher progressive taxation that supports college education has much the same effect, since higher earners tend to have gone to college. It's a clawback of the higher college tuition they didn't have to pay while they were in college. And that's exactly the system that operated in the US for a long time with the public universities, and it's why wealthy people refusing to pay a decent level of taxes annoys the hell out of me.

Maybe college should come with a lifetime tax penalty - you go to college, you pay a 5% higher tax rate for life. Of course your earnings will be a lot more than 5% higher on the average for having gone to college, so it would be a good deal.

No doubt after a decade or so of working nicely that would be eliminated too. It's not wise to underestimate the power of people to believe that they achieved their current position purely through their own hard work and grit...

Really, since the teachers aren't being paid a fortune, and the buildings in which the education is actually taking place aren't palaces, it really leaves only one plausible explanation I can see: The students are being made to pay for a heck of a lot of stuff that isn't their own education. Research, sports, what have you.

I spent some time discussing this with some professors at my school a few years ago. Their basic argument was that federal research money was effectively subsidizing the university and that when those dollars started to dry up, the difference had to be made up in tuition. On the other hand, there seems to have been a steady growth in non-teaching staff as well....

This Washington Monthly article theorizes that universities have systematically failed to apply productivity-improving technology to student education so as a result, their costs are going up. That makes some sense to me: airline prices have gone down in part because there are a lot fewer airline employees involved in moving any one passenger while the same is clearly not true for university employees and students.

By the way, a friend of mine has a really good plan for college educating his currently young children. He's going to send them to school in Canada. Apparently, in many parts of Canada, you qualify for in-province tuition if you don't live in any other province. That works for him because he's actually Canadian, but even if you're not, you can still benefit. One can get special pseudo-citizenship in Canada if one invests a significant chunk of cash in Canada. I don't remember the actual number, but it seemed to be about what it would cost to send one or two kids to private university in the US, with one big upside: when you pay tuition in the US, the money is gone, but you can recoup your Canadian investments....

I'm worried about contributing to a side-note, but the more taxes=cheaper colleges thing is at best a very mixed bag. There is a very good argument that a large reason that the cost of tuition has gone up so incredibly quickly compared to everything other than housing in the economy is that there are so many subsidies from the government, and that the subsidy money is being captured by the schools instead of the students. The argument that government subsidies (especially in the form of Stafford and similar student loans) have inadvertently but dramatically contributed to the increase in price is pretty strong.

The subsidies have been going up for decades, and only dipped very recently, so I'm not sure where the idea that subsidies [allegedly] for students have been going down came from. The price of college has been skyrocketing for about 3 decades too, which doesn't prove a linkage, but is at least worth considering.

OK, so I'd never heard of the Baumol effect, so I went and read the Wiki page. It includes this bon mot:

This goes against the theory in classical economics that wages are always closely tied to labor productivity changes.

Why is it that every time I read about a theory in classical economics, I am forced to conclude that classical economists' heads are irretrievably stuck up their hind quarters?

I wouldn't be surprised if the Baumol effect had something to do with it [and btw the Baumol effect has the distinguishing characteristic of being one of the economic concepts I often want to invoke, but can never remember the name of]. And it is, contra whatever wiki editor threw that in, a part of classical economics nowadays, and doesn't contradict the idea that wages are tied to productivity changes at all. In fact it reinforces it by noticing that in areas where productivity changes are much slower than the rest of the economy and/or impossible, the price goes up because prices are how relative inputs and demand desires get balanced--and the relative cost of producing the thing that suffers from the Baumol problem has gone up compared to other things that have benefited from productivity increases. That is classic economics 102 (maybe 103 I guess).

But I'm not convinced that the Baumol problem is a great explanation for college price increases. It probably contributes somewhat, but I doubt it is a major factor. Here's why: ginormous lecture hall teaching is way up so colleges are leveraging into a productivity increase from their point of view anyway (the students may or may not be seeing a quality decrease, but no one asks them anyway) and the price has gone up dramatically faster than other areas with Baumol's problem (college tuition went up more than just about any other regularly consumed good).

My guess is that college is NOT largely an educational good, but functions at least 50% (and frankly maybe much more) as a positional good that the rich use to differentiate from the middle class and that the middle class uses to differentiate from the poor. Positional goods often get bid much higher than their costs. College also tends to have high lock in costs which make it function as a monopoly once you're in, and as a tight monopsony while applying. But since it is seen as important educational good, it has tended to receive government subsidies without much oversight and without cost-controlling measures that sometimes come with government subsidies. Since it functions largely as a positional good, instead of lowering the prices, the government subsidy has over time largely injected more money to increase the positional bidding war.

That is all a tentative guess (and to be clear I think analyzing it as a positional good is more important to the analysis than the subsidy part), but it strikes me as at least as plausible as the standard explanations.

Easy to imagine that in a situation where college as a positional good is worth $X, adding subsidies just bids up the price for it to $X + subsidy. This is why I don't generally favor that sort of subsidy or loans and other indirect measures. (They have similarly perverse/regressive effects in housing and in industrial policy.)

College should be free to all and the state should pay for it directly, giving it a stronger ability to control costs than with loans and grants, and removing the bidding-up effect of having parents pay for it. You can't completely control that effect because the quality of preparation for college entry would still depend on the quality of high school, which is very income-dependent. But it would be more meritocratic, and if we're going to subsidize higher education we should be picking the most promising students to educate regardless of income status.

No chance of all of that happening, but given a choice to tilt the system one way or another, tilting it towards direct state funding and lower student contributions funded by progressive taxes that hit college graduates harder is my preference.

Turb -- from the article you cite:

Of course, every college has unique courses that can only be delivered by a live person to a small group of students. Liberal arts colleges that specialize in small classes taught by full professors are less likely to benefit from NCAT-style reforms. But the majority of students attend institutions where big lecture courses are the norm. Curricula are fairly standard at most colleges, particularly for lower-division courses—nearly everyone teaches calculus, economics, English comp, and psychology 101. NCAT estimates that just twenty-five such courses make up half of all community college enrollments and one-third of enrollments in four-year institutions. That translates into tens of millions of potentially transformable credit hours nationwide.

I'm all for using tech that makes sense in a college, but you have to look at the bigger picture in these. Tech courses only make sense where they can be standardized and subcontracted and writing is not one of those areas and I'm less than fully convinced that econ and psych qualify entirely here either. Having taken both an online and an in-person psych class I have to say that the online class didn't compare in terms of actual learning. It was good for clearing a requirement and nothing else.

And as a pro-tech college writing teacher I have to say that 1) writing classes can't be taught effectively through a large-enrollment content-delivery model because the most important content in any writing class is generated by the students themselves in the form of their own writing and 2) computer based writing courses are actually *more* work than standard writing courses in a classroom to teach the same content.

There are a lot of really good opportunities for using technology to improve student learning in the writing classroom, but none of them are going to reduce the need for small class sizes and intensive personal interaction.

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