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Koch and the Met
January 15, 2013 at 9:34 am
A genuine, non-sarcastic tip of the hat to Carol Vogel and her editor at the Arts, Briefly column for managing to write an article about the Metropolitan Museum of Art's renewal of its plaza and fountains along Fifth Avenue, along with the renaming of the area as "The David H. Koch Plaza," without any snide or irrelevant references to Mr. Koch as a corporate polluter or funder of right-wing causes.
Congress Work Week
January 15, 2013 at 9:22 am
From an article in the National section about members of Congress trying to improve their reputations:
These members of Congress, who were brought together by the group No Labels, which calls itself a bipartisan citizens' movement, have plenty of serious ideas about how to address these problems. For example, they would require Congress to work a five-day week instead of their customary three or four.
It seems to me this could be a bad idea. First of all, very few members of Congress, if any, actually work only three or four days a week. That part of the Times article is inaccurate. What does happen is that they spend three or four days a week in Washington meeting with lobbyists and with their congressional colleagues, voting, and attending hearings. They spend the other three or four days a week back in their districts attending events, raising money, and meeting with constituents. The idea that Congress would become more popular if the members spent more time in Washington hanging out with lobbyists and passing onerous laws, and less time back in the rest of the country keeping in touch with their constituents, seems questionable, at best. In fact, other proposals for reforming Congress ("Cut their pay and send them home") have focused on reducing the amount of time that lawmakers spend in Washington, making them more into part-time citizen-legislators.
Taxes of the Times
January 14, 2013 at 6:52 am
An editorial in today's New York Times calls for imposing even higher taxes on capital gains and dividends:
Tax breaks for dividends and capital gains, however, are not counted as shelters subject to the A.M.T. As a result, the wealthiest Americans — who reap the lion's share of such investment income while enjoying the low tax rates that go with them — are less likely than not-so-wealthy filers to fall into the A.M.T. Income-tax rates on capital gains and dividends top out at 20 percent, compared with a top rate of 39.6 percent on salary and wages. The saving to investors is roughly $90 billion a year. The upshot is that a professional couple with three children in New York City earning $250,000 is more likely to pay the A.M.T. than someone with no dependents in Florida who makes millions a year from a tax-favored stock portfolio.
It's funny how the Times' hypothetical Florida investor is making millions from "a tax-favored stock portfolio" rather than from municipal bonds on which the interest is tax exempt. In fact, the entire Times editorial calling for higher taxes on investment income makes no mention whatsoever of municipal bond interest, which, unlike dividends and capital gains, is entirely tax exempt. It's almost enough to make one think that what the Times is opposed to isn't tax savings for the wealthy, but the idea of investing in the private economy rather than lending money to the government.
Separately, the Times' claim that "Income-tax rates on capital gains and dividends top out at 20 percent" ignores the new ObamaCare tax. Even the center-left Tax Policy Center, which is a favorite Times source for tax information, refers to "the new 23.8 percent rate (which includes the surtax for healthcare) on capital gains for high-income households."
It's one thing to be in favor of higher rates; it's another thing inaccurately to understate the existing rates to try to prop up the argument for higher rates.
Conservative Cato
January 11, 2013 at 6:51 am
An article by Rick Gladstone runs under the headline "Iran Finding Ways to Evade Sanctions, Treasury Department Warns." The article has at least two problems.
First, there's a reference to "Steve H. Hanke, a Johns Hopkins University economics professor and senior fellow at the Cato Institute, a conservative Washington research group, who has been following Iran's case, said the official inflation rate reflected what he called the Central Bank's 'habit of failing to release useful economic data, and what it does release often has what I would describe as an 'Alice in Wonderland' quality.'"
The Cato Institute favors gay marriage, drug legalization and cuts to defense spending, and it tends to oppose American military operations abroad along with the national security apparatus at home that supports the war on terror. It's not a "conservative" group; it's a libertarian group. I believe the Times has run corrections on this point in the past. It's not a difficult point to grasp, that there are some people who aren't big-government liberals but who also aren't conservatives, but for some reason the Times has a hard time with it. The correct descriptor for Cato isn't conservative, it's libertarian. Conservative is an inaccurate descriptor. That's not a criticism of Cato, which is an admirable institution in many ways and which works with conservatives often on issues such as reducing government spending, opposing campaign speech limitations, and getting tort reform.
Second, there's this bizarre and clumsy formulation, on Iran's nuclear program: "Iran says the program is for peaceful use, while Western nations and Israel suspect it is meant to develop the ability to make nuclear weapons."
I'd argue that Israel is a Western nation. It's a member of the OECD, and it sided with America in the Cold War. One can argue that geographically it's in the Middle East. But there are plenty of other nations that are not geographically in the West but that nonetheless suspect Iran of building nuclear weapons, and that are not mentioned in the Times article. A 2010 U.N. Security Council resolution imposing sanctions on Iran for its nuclear program, for example, was approved on a vote of 12 to 2, with one abstention. Among the countries voting with America in favor of the resolution were Japan and Uganda. Israel has a special stake in the matter because it is the country that Iran's leaders have vowed to wipe off the map. But it's not as if Israel is some sort of outlier among nations, pushing a highly controversial theory about Iran's nuclear program. It's a view that is widely held, even outside "Western nations and Israel."
Humiliating Iran
January 11, 2013 at 6:42 am
David Brooks has a column on how insights from "behavioral research" can be brought to bear on public policy questions such as "How do we structure sanctions against Iran to cause the greatest psychic humiliation?"
It's not entirely clear to me that achieving "the greatest psychic humiliation" should be the goal of our Iran sanctions policy. How about a goal of getting Iran to drop its nuclear weapons program, its support for terrorism, and its human rights abuses? Some people say there's a better chance of achieving that goal if you stop short of complete psychic humiliation of Iran, or at least offer an alternative to the humiliation. In other words, behavioral research is nice, but it also matters how the policymakers, or journalists, frame the questions that the behavioral researchers are supposed to help them answer. If you ask the wrong question, you still may get the wrong policy.
Detachable Penis
January 10, 2013 at 9:55 am
You might have thought you'd never see the day, but here it is: the phrase "detachable penis" appears in the New York Times. The link is here, if you are interested in that sort of thing.
Wall Street Outsider
January 10, 2013 at 9:52 am
"Treasury Nominee Is Wall St. Outsider" is the headline over the New York Times article on the business section front about President Obama's choice of Jack Lew. Inside the paper, the jump headline says, "Obama Picks a Wall St. Outsider to Lead Treasury."
As the Times article itself makes clear about 14 paragraphs down, Mr. Lew's job before joining the Obama administration was at Citigroup, "first as managing director of Citi Global Wealth Management, and then as chief operating officer of Citigroup Alternative Investments." If that's a Wall Street "outsider" by the Times' definition, one wonders what a Wall Street "insider" looks like.
It looks like some Times editor agreed with me that this was a bad headline and ordered it changed. The print edition headline I am quoting was replaced in the online edition with a less opinionated, more accurate headline: "Obama's Pick for Treasury Is Said to Be His Chief of Staff."
Health Care and Profits
January 9, 2013 at 9:34 am
"Health Care and Profits, a Poor Mix" is the headline on a column by Eduardo Porter, which argues that "improving the delivery of social services like heath care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation."
He writes that "handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly."
At least two responses come to mind. First, if Mr. Porter is so certain that direct government delivery of social goods is better than than private enterprise when it comes to health care and pensions, why stop there? Journalism is a social good, providing citizens with the information and context they need to make judgments in a democracy. Wouldn't it be cheaper and better to eliminate the profits of the shareholders of the New York Times (meager though those profits may be) and of other American news companies, and to just have all the journalists work for the government, which would pay to deliver the news to everyone?
Second, Mr. Porter's health-care examples contrast for-profit and church-affiliated non-profit nursing homes, or nonprofit hospitals that switched to become profit-making. But there's a different between an independent nonprofit and a service delivered directly by the government. Just ask anyone who has a choice in the matter whether they'd rather end up at non-profit New York Presbyterian Hospital on Manhattan's Upper East Side or at government-run SUNY Downstate in Brooklyn, or at non-profit Cedars-Sinai in L.A. or government-run L.A. County Medical Center. And there's plenty of profit being made at the non-profits, it's just being paid out in the form of physician and executive salaries.
Health Care Costs
January 8, 2013 at 5:54 am
A report by Reed Abelson that "Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers" got front-page play in Sunday's Times.
A report by Robert Pear that "The rate of increase in health spending, 3.9 percent in 2011, was the same as in 2009 and 2010 — the lowest annual rates recorded in the 52 years the government has been collecting such data," got buried inside today's national section.
The Sunday report made a brief reference to the overall trend — "The double-digit requests in some states are being made despite evidence that overall health care costs appear to have slowed in recent years, increasing in the single digits annually as many people put off treatment because of the weak economy," it said. But it left the overall impression that health care costs are soaring, an impression contradicted by the Tuesday article.
There's an overall tendency in news — not just at the Times — to focus on the bad news rather than the good news. The two articles might have been combined into one that said, "The rate of increase in health spending is slowing to historic lows even as some small businesses or individuals purchasing health insurance are seeing increased premiums." But that might not have been attention-grabbing enough to make for a front-page news article.
The danger, however, is that commentators and policymakers see the front-page Sunday article and miss the inside-the-paper Tuesday article, and then use the headlines to draw conclusions governing everything from tax rates to defense spending. For an example of that, have a look at David Brooks' column. It appears under the headline, "Why Hagel Was Picked," but it's really a third article about health care costs, arguing that the defense budget will have to be cut because of the inexorable rise of federal health costs. "As the federal government becomes a health care state, there will have to be a generation of defense cuts that overwhelm anything in recent history," Mr. Brooks writes. He writes:
the line tracing federal health care spending looks like the slope of a jet taking off from LaGuardia. Medicare spending is set to nearly double over the next decade. This is the crucial element driving all federal spending over the next few decades and pushing federal debt to about 250 percent of G.D.P. in 30 years.
Alas for Mr. Brooks, but fortunately for the federal government, there actually is a line-chart tracing health care spending that goes along with Mr. Pear's news article. The topmost charts the "annual increase in national health expenditures," not the expenditures themselves (the difference is worth thinking about), but the important point is that the slope of the increases looks less like the slope of a jet "taking off from LaGuardia" than the slope of a jet coming in for a bumpy landing at LaGuardia.
Maybe instead of slashing the defense budget on the predictions of health care spending "over the next few decades," we should watch and wait and see what happens. We might be pleasantly surprised that growth in health care costs won't be as bad as predicted. It wouldn't be the first time that an alarmist prediction about something 20 or 30 years down the road turns out to be false. That's not to say that the government shouldn't do what it can immediately, within reason, to keep down expenditures on either health care or defense, and to avert a debt crisis in the future. It should. But it is to suggest that, contrary to the Times' decision on front-page placement, the bigger story here may be the one about slowing costs, not about rising costs.
Taxes of the Times
January 7, 2013 at 5:55 am
An editorial in today's New York Times calls for "significant" tax increases in addition to those already imposed. "Caps on deductions, higher taxes on investment income and a financial transaction tax are worth fighting for, as are broader tax reforms, like a carbon tax and a value-added tax, that could take effect as the economy recovers," the Times says.
Yet in an editorial yesterday about the French economy, the Times criticized the government of France for "the same flawed policies of higher taxes and flat or lower spending that has hindered growth in other European economies." (For subject-verb agreement, it should be policies...have, but the main point here is the lack of agreement between the two tax editorials, not the lack of agreement between subject and verb in this sentence of one of the two editorials.) That Times editorial criticized the French government for "a controversial increase in the marginal income tax rate to 75 percent, from 41 percent, on incomes of more than a million euros (about $1.3 million)," which the Times said "generates too little to have any meaningful effect on the government's finances."
So the same higher taxes that the Times finds undesirable in Europe because they hinder growth are somehow desirable here in America? Maybe there is some way to reconcile these two positions with logical consistency, but the Times doesn't even try, instead issuing them on successive days as if readers of the second one would not remember the one from the day before.
Paul Ryan's Pragmatism
January 7, 2013 at 5:34 am
From a New York Times article about Paul Ryan's vote in favor of the tax bill that preserved some of the Bush tax cuts while raising some rates, particularly for upper-income earners:
Mr. Ryan's vote, which lent support to Mr. Boehner, also places him squarely in a role he has long found comfortable: that of the dutiful Republican soldier. Mr. Ryan voted in favor of many large and contentious issues — the Medicare prescription drug plan, the bank and auto bailouts — and in the process cast aside conservative orthodoxy to support his party's leadership.
Now that the 2012 presidential election is over, the Times finally discovers that Paul Ryan makes a habit of casting aside conservative orthodoxy. Funny, I don't recall reading much about that in the Times during the campaign. When Mitt Romney picked Mr. Ryan as his running mate, the main Times news article described Mr. Ryan as "one of the party's young conservative leaders" and "he chief architect of the Republican Party's plan for tax and spending cuts and an advocate of reshaping the Medicare program of health insurance for retirees." A companion article said Mr. Ryan's budgets "have defined nothing short of a conservative reordering of the nation's tax and spending priorities for the 21st century." It's almost as if now that Mr. Ryan has lost the election, the Times finally feels as if it is safe to share with readers the idea that he's not as conservative as they made him sound during the campaign.
The other odd thing about the Times's formulation is that in categorizing the reasons for Mr. Ryan's departures from conservative orthodoxy — "dutiful Republican soldier," "support his party's leadership" — the article doesn't seem to consider the possibility that Mr. Ryan might actually have been backing in each case what he thought was the best policy for the country.
National Editor's Brother Figures in CIA Leak Case
January 6, 2013 at 8:18 am
The Sunday Times fronts a largely sympathetic article about John C. Kiriakou, described by the article as "the first current or former C.I.A. officer to be convicted of disclosing classified information to a reporter."
From the article:
F.B.I. agents discovered that a human rights advocate hired by the John Adams Project, John Sifton, had compiled a dossier of photographs and names of the C.I.A. officers; that Mr. Sifton had exchanged e-mails with journalists, including Matthew A. Cole, a freelancer then working on a book about a C.I.A. rendition case in Italy that had gone awry; and that Mr. Cole had exchanged e-mails with Mr. Kiriakou. The F.B.I. used search warrants to obtain access to Mr. Kiriakou's two personal e-mail accounts.
According to court documents, F.B.I. agents discovered that in August 2008, Mr. Cole — identified as Journalist A in the charging documents — had asked Mr. Kiriakou if he knew the name of a covert officer who had a supervisory role in the rendition program, which involved capturing terrorism suspects and delivering them to prisons in other countries.
Mr. Kiriakou at first said he did not recall the name, but followed up the next day with an e-mail passing on the name and adding, "It came to me last night," the documents show. (Mr. Sifton, Mr. Cole and federal prosecutors all declined to comment.)
The national editor of the Times, Sam Sifton, confirmed to me in a tweet last night that the John Sifton who figures in the story is his brother.
The connection is not disclosed to Times readers in the article. I'm not arguing it should have been. Maybe the Times would have learned of the story, and featured it just as prominently and sympathetically, without the family connection. The Times article is an interesting story that deserved telling regardless of the family connection. But for readers wondering how it ended up in the Times rather than, say, the Washington Post, or the Wall Street Journal, or Politico, knowing of the family connection makes it make some more sense. Editors have family, and sometimes the family members are sources of inspiration, even when they officially "declined to comment."
A Bad Iran Deal
January 4, 2013 at 9:12 am
The Times op-ed page has an article by Seyed Hossein Mousavian and Mohammad Ali Shabani under the headline "How To Talk To Iran." It says, "We believe Iran would be open to new measures regarding the transparency of its nuclear program, and would agree not to pursue any capability to enrich uranium beyond that needed to fuel atomic power plants, if its legitimate right to enrichment under the Nuclear Nonproliferation Treaty was recognized and if an agreement to remove sanctions was reached."
What the op-ed does not say is that the sanctions America has on Iran are not solely related to the Iranian nuclear program, but are also related to Iran's support for terrorism and its poor record on human rights. According to the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, Public Law 111-195, which was signed into law by President Obama, for example, Congress found, "The Government of Iran continues to engage in serious, systematic, and ongoing violations of human rights, including suppression of freedom of expression and religious freedom, illegitimately prolonged detention, torture, and executions. Such violations have increased in the aftermath of the fraudulent presidential election in Iran on June 12, 2009." The law also says that "international diplomatic efforts to address Iran's illicit nuclear efforts and support for international terrorism are more likely to be effective if strong additional sanctions are imposed on the Government of Iran." [emphasis added] Likewise, a second law, the National Defense Authorization Act for 2012, which imposed additional sanctions, speaks of "the illicit activities of the Government of Iran, including its pursuit of nuclear weapons, support for international terrorism, and efforts to deceive responsible financial institutions and evade sanctions." [emphasis added].
Dropping the sanctions in connection with a deal on nuclear issues alone, leaving Iran free to support terrorism and abuse its own population, would be a huge win for the Iranian government and a significant change to bipartisan and longstanding American policy. It's not surprising that that is what the Iranian government would ask for. But it's not clear that such a deal would advance American interests, or the interests of global peace and security, or the interests of the Iranian people. In fact, it probably would not.
Apple's Taxes
January 4, 2013 at 6:12 am
The Times business section carries an article by Charles Duhigg and David Kocieniewski that is skewed to argue that Apple doesn't pay as much American tax as the Times seems to think it should pay.
Here is the way the Times article frames it: "Apple's domestic tax bill has drawn the interest of corporate tax experts and policy makers because although the majority of Apple's executives, product designers, marketers, employees, research and development operations and retail stores are in the United States, in the past Apple's accountants have found legal ways to allocate about 70 percent of the company's profits overseas, where tax rates are often much lower, according to corporate filings."
What the Times article doesn't report is that, according to Apple's annual report for 2012 (See "Note 8"), of the company's total net sales for 2012 of $156,508 million, $60,949 million were in the United States, while $95,559 million were in China and other countries. In other words, 61% of Apple's sales were overseas.
Another thing the Times article doesn't report is that in 2012 (See "Note 5" of the annual report), Apple's provision for U.S. income taxes was $13,317 million (about $12 billion federal and about $1 billion state). Its provision for foreign taxes was $713 million.
In other words, here is a company that is doing 61% of its business overseas, but only paying 5% of its taxes overseas. It's doing 39% of its sales in the United States, but it's paying 95% of its taxes in the United States. And the complaint of Senator Carl Levin, Democrat of Michigan, echoed in a New York Times front of the business section article, is that Apple is underpaying American taxes? It's ridiculous. If anyone has a justifiable complaint here, it's the foreign countries, who might reasonably argue that Apple is paying too great of a share of its taxes in the United States, and not enough in the other places it makes money.
The only human being identified in the Times article other than Senator Levin is Martin A. Sullivan, identified by the Times only as "a former Treasury Department economist." Mr. Sullivan worked at the Treasury Department from 1986 to 1988. That's two years, 25 years ago. What he's done for the past 17 years is work at a firm called Tax Analysts, which because it's organized as a non-profit, is tax exempt at the corporate level even though it rakes in lots of money by operating a publishing business selling high-priced subscription-only newsletters to tax lawyers. Mr. Sullivan, like Senator Levin and, apparently, the Times reporters, seems to want Apple to pay more in U.S. taxes.
The article includes a quote from Apple saying the company pays a lot of taxes, but Apple, unlike Senator Levin, doesn't get the benefit of quote in the article from an economist cheering on its point of view.
Correcting a Correction
January 3, 2013 at 6:16 am
A correction in today's Times says "An article on Wednesday about additional economic hurdles facing investors in the new year misstated the payroll tax increase approved by Congress on Tuesday. The payroll tax will increase to 6.2 percent, from 4.2 percent. It will not rise by 6.2 percent."
This fixes one aspect of the problem covered here yesterday, but it repeats the more significant error of underestimating the total payroll tax.
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