Let's run the numbers

The President doesn't have time to listen to stuff he doesn't agree with U.S. Insiders Say Iraq Intel Deliberately Skewed A key target is a four-person Pentagon team that reviewed material gathered by other intelligence outfits for any missed bits that might have tied Iraqi President Saddam Hussein to banned weapons or terrorist groups. This team, self-mockingly called the Cabal, "cherry-picked the intelligence stream" in a bid to portray Iraq as an imminent threat, said Patrick Lang, a former head of worldwide human intelligence gathering for the Defense Intelligence Agency, which coordinates military intelligence. The DIA was "exploited and abused and bypassed in the process of making the case for war in Iraq based on the presence of WMD," or weapons of mass destruction, he added in a phone interview. He said the CIA had "no guts at all" to resist the allegedly deliberate skewing of intelligence by a Pentagon that he said was now domina...

I'm still mad at Colin Powell He may have gotten bad intelligence too. But he got up there in front of the TV and told the world that Iraq had something. I watched his presentation, as did some of my friends. I was the only one who said that it wasn't enough. His "evidence" was sheer speculation. My other friends thought it was just me being a leftist contrarian.

We found weapons? Not Exactly... Why does anyone believe this guy? Washington Post, May 31, 2003 KRAKOW, Poland, May 30 -- President Bush, citing two trailers that U.S. intelligence agencies have said were probably used as mobile biological weapons labs, said U.S. forces in Iraq have "found the weapons of mass destruction" that were the United States' primary justification for going to war. In remarks to Polish television at a time of mounting criticism at home and abroad that the more than two-month-old weapons hunt is turning up nothing, Bush said that claims of failure were "wrong." The remarks were released today. "You remember when [Secretary of State] Colin Powell stood up in front of the world, and he said Iraq has got laboratories, mobile labs to build biological weapons," Bush said in an interview before leaving today on a seven-day trip to Europe and the Middle East. "They're illegal. They're against the United Nati...

In training... I'll be away for a few days in training. Will get up to date when I get back.

William Gale on washingtonpost.com Speaking of the Urban-Brookings Tax Policy Center, William Gale, senior fellow at Brookings, did a webchat earlier on washingtonpost.com . I have no idea how long this link will be active, but I'll repair it if it breaks. He does some really good armchair explanations of why the "jobs and growth" tax cuts recently passed and signed by the only president we got will not provide us with either jobs or growth. Also explains to several questioners that the Laffer curve is an idea that doesn't hold up in practice. What's the old joke? "An economist is a person who sees something work in theory and wonders if it will work in practice." Shameless self-promotion: I should remind my gentle readers that I mentioned that the tax cut wouldn't help jobs or growth earlier .

Additions to the analysis section I added two new datasources to the analysis section. Paul Krugman recommends them on his website, and I think my readers, all three of you, might find them useful as well. Its one of those funny things. Whether you're on the left or the right, as long as you are willing to use honest economics and honest statistics, you'll both come up with the same answer. Or, as Krugman said, Again, the orientation is Democratic - Republicans think that it's evil even to ask such questions - but the work is impeccable. Now you, too, can do the math.

Villagers with Torches and Pitchforks I read this somewhere recently, and cannot find where it came from. To paraphrase, it was that taxes pay for a civilized society. Rich folks wouldn't have been able to get rich without the rule of law, or rule of force. So, instead of paying to keep troops and a few knights to lead them, they pay taxes so that the villagers do not show up with pitchforks and torches. So, when we tax income progressively, we're just making the rich pay for the service of more knights and troops. Villagers are more likely to show up on the doorstep of Bill Gates with pitchforks and torches, because he has the money, instead of on the doorstep of your local Datanerd.

Tax cut, part 2 So, why does this matter? Because the administration is being dishonest about how much stimulus the tax cut will provide. The tax cuts are going to increase the deficit. The increased deficit will be a drag on the economy, and an obstacle to funding Medicare and Social Security for the coming baby boomer retirements. Why, in that case, do we keep voting for these losers who are deceiving us? I don't know. Brad DeLong cites Max Sawicky in another case of the administration playing fast and loose with numbers.

On the tax cut One little-noticed bit about the tax cut. I don't think it will have much stimulus effect. Follow me through this thinking experiment. The rate cuts are biggest in the top brackets; the top rate is cut from 38.6 to 35 percent, where people are more likely to save the money than spend it. (Econspeak: Their marginal propensity to consume is lower than that of the lower income people.) Likewise, the dividend tax cuts go to people who are more likely to save the money than to go out and spend it. (Higher income people are more likely to hold stocks outside of tax deferred accounts; the middle class typically holds its stocks in 401(k)'s and IRA accounts.) So, in general, what happens is that the investment in savings by these higher income people will be offset by the borrowing (dis-saving) by the government. Not a stimulus. The child tax credit increase is more likely to provide some stimulus. Likewise, the rate cuts on middle-income people, and in...

FCC vote on media ownership June 2 And I hope all of my readers have signed the petition linked below to ask the FCC and your elected representatives to not roll back the rules regarding ownership any more. One of the big responses to the wailing about media ownership concentration is that new technology has made this fear obsolete, because of the options available on the web and on cable. First, the cable operations are owned by big corporations, who own several channels, or own cable channels and other big media outlets. MSNBC? CNN (AOL Time Warner)? Even FOX? They take their promenence in another media and extend to cable. There really isn't a diverse marketplace of ideas. And on the internet? Nope. Wendy Grossman has a good column in The Inquirer , a tech news site written in the style of the British tabloid papers. Advertisers like massed ranks of eyeballs, not little niche markets, at least online. This may of course change as advertisers become more so...

Jobless report Jobless Claims Rise in Latest Week I had read the consensus estimate was 408,000. 428,000 is quite a few more. I feel for them, having been there before. The American Prospect has a good piece on the economy under Bush, and Steven Roach had a good one yesterday on deflation. Rule #1: Don't listen to the monetarists.

Missed me? I'm back. Finished my reading on media criticism, didn't get to American Imperialism. Media is either conservative (small c) or establishmentarian. We'll talk more about that later.

Bloggorhea Hopefully I'm not overwhelming the readers, but I'll be away Thursday until Tuesday, so I'm getting everything written now. Going on a extra long weekend vacation, and carrying a pile of books on media criticism, American imperialism, and the world's most dangerous places. And a fishing rod.

FCC Proposal Eases Media Ownership Rules This is one of my hobby horses. I'm going to ride. I've been seeing stuff about this for the past few weeks, and I've neglected my obligations. I'm signing the petition . I'd recommend it to you as well. Hopefully this will help slow the aggregation of local outlets into media conglomerates, and keep local news local. And keep local DJs local, and keep music people actually want to listen to on the radio.

You know, rolling your eyes is good exercise What in the high holy fish farking hell is the speaker of the Texas state house thinking? AUSTIN, Texas - State troopers and the elite Texas Rangers were ordered to track down and bring in 59 Democratic lawmakers who brought the Texas House to a standstill Monday by going into hiding. The quorum-busting boycott capped months of tension between Democrats and the newly-in-control Republicans, and occurred as the chamber was scheduled to debate a congressional redistricting plan opposed by Democrats. The parties have also clashed over a bill to limit lawsuits and a GOP budget that would avoid new taxes but make deep spending cuts. GOP House Speaker Tom Craddick locked down the House chamber so lawmakers who did show up Monday morning could not leave. After a roll call, he ordered the missing lawmakers arrested and brought back to the chamber. "It is a disgrace to run and hide," Craddick said. (snip) However, U....

Sources for analysis I've added an Analysis section to my links on the left side of the page. The Morgan Stanley Global Economic Forum helps me a lot. You might find it especially important to pay attention to Stephen Roach's writings about global disequilibrium, with regard to the U.S. balance of payments and exchange rates. Just check them out, frequently. Their archive holds the past year's worth of digests as well, so you can follow back references.

Some stimulus with that tax cut, sir? Richard Berner has a nice piece on the Morgan Stanley Global Economic Forum site on the various tax cut/stimulus packages winding their way through the congress. His recommendation: to stimulate job creation, cut payroll taxes on both employees and employers. It's easy to understand why headline writers latch on to the ten-year price tag; after all, it's the only common metric across the proposals. Comparing the four plans that are now on the table is difficult because they differ significantly in magnitude, timing, and composition. Three of the four plans would accelerate -- retroactive to January 1, 2003 -- individual tax rate cuts currently slated for 2004 and 2006. They would also provide some form of dividend tax relief, and accelerate in varying degrees the already-enacted expansion of the 10% and 15% tax brackets, marriage penalty and alternative minimum tax (AMT) relief, and the child credit to $1,000 per child. The tw...

The ratio of the deficit to GDP My father was watching one of the talking-head shows on TV this past Sunday, and saw the Secretary of the Treasury, John Snow, talking about the deficit as a percentage of GDP, and wondered why he was doing that. He e-mailed me and asked. Then this morning I happened to be reading an article on the Morgan Stanley Global Economic Forum site, which mentioned deficits and the GDP. I'll be posting a link to this in a little bit. In the meantime, though, it’s time for a short economics lesson. The theory is that as long as the deficit is small in relation to the GDP, it will not introduce distortions into the economy. For example, say you make 40,000, and have a deficit of 1,000. Your deficit/product ratio is 2.5 percent. Assuming that this threshold is 2.5 percent or less, you're ok. The true deficit/GDP threshold is harder to gauge, and subject to much interpretation, but my reading leads me to think it is in the 3% range. Higher tha...

Part 2, deflation I should include a "yaagh!!!" tag here. I cannot believe how the Bush administration has managed to come up with so many economists who will work for them and recite the supply side bullshit, and find ways to pervert economics to serve their purposes. It is hard to find an economist who would, without extreme financial or political incentive, corrupt his or her professional standing to peddle this twaddle and claptrap.

deflation It was amazing yesterday that the Fed included in its report the possibility that we might enter a deflationary period. Granted, it's a fairly remote possibility, but I've thought for a while that a deflation-recession spiral is a possibility, mainly due to the Japanese example. Also, at this point I believe we are in the liquidity trap, where the cuts in nominal interest rate will not stimulate the economy. At this point, monetary policy ceases to be effective. Only fiscal policy will be able to pull the economy out of the liquidity trap, because monetary policy is effectively "pushing on a string". Right now we are approaching an effective zero percent short-term interest rate. The only government action that can help is fiscal stimulus through spending or tax cuts. Preferably, through increased spending in that this creates a greater multiplier effect for the stimulus. Unfortunately, the administration is not interested in fiscal stimulus. I...

Mr. Cohen answers himself Richard Cohen writes in his column today about "Blame America First" . Below the surface of this reasoning seethes a perplexing animosity toward the United States -- not the people but the government and the economic system. Possibly it has its roots in the Great Depression, when capitalism seemed kaput and socialism so promising, and the government an adjunct of moneyed interests. At the same time, of course, governments on all levels -- federal, state and local -- were unabashedly racist. Almost none of that still applies -- although money still talks. Yet the impulse to blame America first lingers, an atavistic reflex that jerks the knees of too many on the left and has cost the Democratic Party plenty over the years. Jeane Kirkpatrick, a former Democrat, put her finger on it 19 years ago. It's about time the Democrats listened to what she had to say. Here's a good response to this: But we have an understanding in this cou...

Still around... I've taken a longer break than I should have from this. I've been working out, 3-4 times a week. Starting to feel some results. Had a nice Kentucky Derby party this weekend as well, complete with mojitos. I don't particularly care for mint juleps, though I am game to try them again. I'll probably take a early afternoon sometime and head down to the Round Robin Bar at the Willard Hotel, the place where Henry Clay introduced the mint julep to Washington, DC. Anyway, I'll be putting up something tonight about liquidity traps, deflation, and Paul Krugman. If you want to get the jump on your reading, check out his article about Japanese deflation and liquidity traps here .