US politics: Alabama Jones and the Temple of Moore

[Mlle. Zabzie]

45 minutes ago, Tywin et al. said:

You know more about this topic than I do, but it seems to me that Republicans are relying on an outdated method of creating growth that was always hit or miss to begin with. I never expected this tax cut to do anything more than create an environment for aggressive buybacks, as you laid out, and increased  incentivisation for offshore stashing.

Completely agree - though I'm not convinced that the Democrats have real and concrete plans with respect to tax reform either.  And there are actually non-terrible aspects to this proposal (IMO they don't outweigh the terrible aspects though).  To wit - they are trying to do something about offshore stashing.  There is a one-time hit on offshore earnings, and thereafter, the system is attempting to fight against base erosion out of the US.  

53 minutes ago, OldGimletEye said:

One of many problems I have with the Chamely-Judd model of capital taxation (which gets a 0% capital taxation rate in the long run at least), which there are many, is it’s perfect foresight assumption. The model assumes that owners of capital simply know or compute their consumption (or that of their descendants) over a very long time given a series of rates of return (which they can compute for a very long time).

And I think that is kind of hokey. Me thinks a bit of animal spirits is often in play.

And rational expectations as model of expectations isn’t often much better. Its often used because 1) yes people do take the future into account when making plans today, and 2) well because it’s simply a bit more mathematically tractable.

Rational expectations says something like:

I want to forecast the path of a variable lets say y(t) over a period of time y(t+1), y(t+2)…...y(t+n) where n is exceedingly large, then I do it on a set of conditional variables today like x(t), z(t) getting something like:

y(t+1) = Bx(t) + Cz(t) + e 

But obviously rational expectations has extremely strong informational requirement. Actors may not have an extremely strong handle on what the parameters (B and C in this case) of the system are or they might intuitively  know that B and C are can change and will change their estimates of B and C as new information comes in. (or at least don't do rational expectations with market clearing assumptions, by price. A deadly combination).

The upshot of this is that, it’s not surprising to me that in your experience business don’t forecast beyond 5 years. And secondly, business just may not see future demand conditions as being strong enough to justify future investment projects.

And as you say, if business have already decided to make investment projects today, a change in tax rates tomorrow likely isn't going to change their plans, as they have deemed those investments already profitable.

I think a lot of the additional money will probably just be used to do additional stock buy backs. Certainly, I think many CEOs have a financial incentive to do so, even if its not in the best interest of the company (where we get into principal agent issues). Plus the shareholder pressure you mentioned, at least those shareholders that aren’t acting on a very long horizon (the guy/gal that just wants to hold the stock for 35 or 40 years for retirement).

And finally, just as aside, I think macro is still fighting about how to model expectations correctly. I mean certainly expectations of the future influence people’s decisions today. So in some situations rational expectations may be better than nothing, but it’s not an optimal state of affairs. Personally, I’m a bit partial too this, but there is other learning approaches out there, but I'm probably getting a bit off topic.

Thanks - always learn a lot from your posts.  

[OldGimletEye]

23 hours ago, Mlle. Zabzie said:

Completely agree - though I'm not convinced that the Democrats have real and concrete plans with respect to tax reform either. 

I don’t think they do either. And I think this is something they need to really get on and get serious about. I mean I don’t think anyone really thinks our corporate tax system is good. And secondly, I believe in the welfare state. I want to maintain it. And I’d like the Democratic Party to explain how they are going to pay for it in the future. They need to start talking about this more.

[Mr. Chatywin et al.]

44 minutes ago, Mlle. Zabzie said:

Completely agree - though I'm not convinced that the Democrats have real and concrete plans with respect to tax reform either.  And there are actually non-terrible aspects to this proposal (IMO they don't outweigh the terrible aspects though).  To wit - they are trying to do something about offshore stashing.  There is a one-time hit on offshore earnings, and thereafter, the system is attempting to fight against base erosion out of the US.  

Thanks - always learn a lot from your posts.  

I was left with the impression after reading a few articles and listen to some stuff on NPR that the current legislation would actually increase the likelihood of offshore stashing in the future. Keeping it simple, it made it seem like they would kill one incentive and loophole and create three more. Is that incorrect?

12 minutes ago, OldGimletEye said:

I don’t think they do either. And I think this is something they need to really get on and get serious about. I mean I don’t think anyone really thinks our corporate tax system is good. And secondly, I believe in the welfare state. I want to maintain it. And I’d like the Democratic Party to explain how they are going to pay for it in the future. They need to start talking about this more.

I wonder if the problem isn’t the plan but the message. What sounds more effective to you, “We’re going to cut and simplify your taxes” or “We’re going to raise taxes on the super-rich?” IMO the former is more effective because it’s communicating a benefit to the target audience rather than suggesting that someone else will feel the burden (while also failing to communicate that the target audience will receive a benefit).

[Mlle. Zabzie]

FWIW, the lobbyist chatter I am hearing puts the percentage chance of what is basically the current Senate proposal for tax reform passing both chambers at 60+%.  If you don't like it, I'd start making phone calls now.  The lobbyists are basically saying the individual mandate thing was sleeves off their vest since they think the Executive Branch was just going to stop enforcing it, and so they might as well get the scoring credit.  They think that the weird sunset stuff isn't that important, and that there aren't enough blue state Republican congresspersons who really have the political will to stop this once it gets through the Senate.

[Manhole Eunuchsbane]

4 minutes ago, Mlle. Zabzie said:

FWIW, the lobbyist chatter I am hearing puts the percentage chance of what is basically the current Senate proposal for tax reform passing both chambers at 60+%.  If you don't like it, I'd start making phone calls now.  

You mean "if you don't make like 7 figures or own a large business".

[Ormond]

1 hour ago, OldGimletEye said:

And I think Ygelsias makes a good case that we (meaning liberals) need to really re-asses Bill Clinton’s Presidency.

https://www.vox.com/policy-and-politics/2017/11/15/16634776/clinton-lewinsky-resigned

 

Thanks for posting this. Yglesias makes makes just about the same arguments I was making myself back during the Lewinsky scandal. I thought Bill Clinton should have been impeached and convicted not for perjury, but for abusing his power in order to obtain sexual gratification. 

Already when the Lewinsky scandal broke it was the consensus that psychotherapists should not have sexual relationships with their clients, and most feminists and ethicists already thought it was wrong for college professors to have sex with their students or clergypersons to have affairs with their parishioners. It was also already clear that such behavior was wrong even if the student or client had made the initial sexual overtures, because of the power differential.

And yet most of my liberal feminist friends were willing to give Clinton a pass and ignore the fact that Lewinsky was an intern. I was teaching a professional ethics course in the psychological counseling program at my university at the time, and to me it was clear he'd done something much more problematic than just cheat on Hillary. But the general public and the media just weren't ready yet to see that. 

[Mlle. Zabzie]

Just now, Manhole Eunuchsbane said:

You mean "if you don't make like 7 figures or own a large business".

Actually lot of 7 figures people HATE it because of the SALT thing.  A person making 7 figures in NY/NJ/CA/etc. is looking at a tax increase of ~500 bps.  Those folks living in TX are laughing all the way to the bank.  And owning the large business - it depends.  It's honestly case by case.  The interest deductibility limitations are actually HUGE, and could take some folks with a lower effective tax rate up to the 20%.  And look, maybe that's not a bad thing, but this isn't one where there are clear winners (except real estate folks) or losers (except blue state high income service providers).

[IheartIheartTesla]

Except the opposition to the tax bill from liberal advocacy groups was tepid. Now that it is linked to healthcare reform, they will probably inundate the phones again, and begin fundraising campaigns big time. I still think it is a long shot to pass, those blue state Republicans are about to get an earful.

It also appears as if Susan Collins is becoming increasingly distant from the Republican party in Maine, so who knows what she is thinking long term. On the flip side she may not be as opposed to individual mandate repeal as the Medicaid stuff.

[Mlle. Zabzie]

12 minutes ago, Tywin et al. said:

I was left with the impression after reading a few articles and listen to some stuff on NPR that the current legislation would actually increase the likelihood of offshore stashing in the future. Keeping it simple, it made it seem like they would kill one incentive and loophole and create three more. Is that incorrect?

Really depends.  I think overall, offshore "stashing" (meaning never comes back to the US) is probably reduced, particularly as it is much easier for a foreign corporation to be treated as a "controlled foreign corporation" subject to anti-deferral rules because of the way they are changing the attribution rules.

[Ormond]

1 hour ago, Tywin et al. said:

IIRC, in person interview polling is the most accurate, but you’re correct to say that the methodology and sample size are imperfect. Still, I’m becoming increasingly pessimistic about Jones chances of winning. Far too many respondents are saying various forms of “What he did was wrong, but he’s still better than a Democrat.”

Oh come on. There is no "polling" in these journalists' impressions at all. What they are doing is not a "poll" in any scientific sense and the methodology and sample size are not just "imperfect", they are absolutely laughable. Even if doing a real poll by interview was most accurate (which I am not sure is correct), this is not any sort of interview poll because there is no "sampling" here at all. 

[OldGimletEye]

23 hours ago, Tywin et al. said:

I wonder if the problem isn’t the plan but the message. What sounds more effective to you, “We’re going to cut and simplify your taxes” or “We’re going to raise taxes on the super-rich?” IMO the former is more effective because it’s communicating a benefit to the target audience rather than suggesting that someone else will feel the burden (while also failing to communicate that the target audience will receive a benefit).

While I'm certainly no fan of cutting the taxes for the rich, long term all this stuff simply can't be payed for by just taxing the wealthy, I don't think. If you like your Social Security, and Medicare, and Universal Health coverage, chances are its going to require a bit more from most us. Now it's true that a lot of the future tax burden could be relieved if we are ever able to fix our god awful over priced healthcare system, and I'd hope we would continue to reform it, but simply taxing the rich isn't going to work. And some of the burden could be relieved if we get better wage growth, which we should pursue. Generally speaking, people in this country like Social Secrurity and Medicare. But, isn't going to come from the tooth fairy.

In 2045, the CBO predicts the debt/GDP ratio is going to be about 145%. Now, I have no idea whether that will be true or not. In fact, I don't even think its that scary. And I think we can run some kind of deficit forever, so long as G>R. And what is scary about 2045 is G<R, at least according to the CBO. Now that may not come to pass. But, I don't think we should wait and find out.

 

[Guest]

Susan Collins looks like a no on tax reform if it includes an individual mandate repeal.

“I am no fan of the individual mandate and I very much want to see tax reform,” she said slowly and carefully. “But I believe taking a particular provision from the Affordable Care Act and appending it to the tax bill greatly complicates our efforts. One of my concerns is that it will cause premiums in the individual markets to go up as healthier, younger people drop out.”

“I have new statistics,” Collins added, patting a thick black binder under her arm, “that show that for some middle-income people, it will cancel out their tax cut. The increased premium would be more than the tax reduction they would get from this bill.”

[Fez]

18 minutes ago, Mlle. Zabzie said:

FWIW, the lobbyist chatter I am hearing puts the percentage chance of what is basically the current Senate proposal for tax reform passing both chambers at 60+%.  If you don't like it, I'd start making phone calls now.  The lobbyists are basically saying the individual mandate thing was sleeves off their vest since they think the Executive Branch was just going to stop enforcing it, and so they might as well get the scoring credit.  They think that the weird sunset stuff isn't that important, and that there aren't enough blue state Republican congresspersons who really have the political will to stop this once it gets through the Senate.

Goldman Sachs had a memo putting it at 85%. Either way I think is too high. The odds do seem good that something passes, but anything close to this particular bill seems pretty dicey still. I was surprised that California House Republicans (other than Issa) are willing to suicide themselves on this bill, but with them on board the House will probably pass anything leadership provides. There aren't enough NY/NJ (or IA/OR/MN) House Republicans with high income districts to block this. But, I think the Senate prospects aren't great, even though no one has officially said they are a no vote yet.

[Mlle. Zabzie]

11 minutes ago, OldGimletEye said:

While I'm certainly no fan of cutting the taxes for the rich, long term all this stuff simply can't be payed for by just taxing the wealthy, I don't think. If you like your Social Security, and Medicare, and Universal Health coverage, chances are its going to require a bit more from most us. Now it's true that a lot of the future tax burden could be relieved if we are ever able to fix our god awful over priced healthcare system, and I'd hope we would continue to reform it, but simply taxing the rich isn't going to work. And some of the burden could be relieved if we get better wage growth, which we should pursue. Generally speaking, people in this country like Social Secrurity and Medicare. But, isn't going to come from the tooth fairy.

In 2045, the CBO predicts the debt/GDP ratio is going to be about 145%. Now, I have no idea whether that will be true or not. In fact, I don't even think its that scary. And I think we can run some kind of deficit forever, so long as G>R. And what is scary about 2045 is G<R, at least according to the CBO. Now that may not come to pass. But, I don't think we should wait and find out.

 

Yes - Democrats seem to believe that a magical pixie fairy will fill in the gaps once they tax the rich enough because taxation of the rich alone is enough to cause enough growth to fill in the gap.  So.much.magical.thinking.  And look, I'm not as bought in on the welfare state as you are.  I think that large parts of it as currently constructed are inefficient, counter-productive and create perverse incentives. That doesn't mean I think there should be NO welfare state, but I'm skeptical of it in its current form.

3 minutes ago, The Great Unwashed said:

Susan Collins looks like a no on tax reform if it includes an individual mandate repeal.

 

 

That's interesting.  So who else gets to be a no vote and are there too many?

[lokisnow]

TLDR, the Washington Post probably will get Moore elected by breaking this scandal and thus vastly increasing voter engagement, just like they helped Trump get elected by breaking the GTBTP scandal way too early.

in terms of human persuasion, partisan voters are about as likely to abandon Moore as partisan voters were likely to abandon Bill Clinton. Fundamentally, whether conservative or liberal, an attack on your in-group leader is going to result in you performing more extreme pro-group behavior and pro-group rationalizations.

To a certain extent, we can expect the scandal to somewhat energize the republican base to be aware of the election and be more likely to vote now--which is exactly what happened in Georgia, additional media attention energized the entire district, catapulting turnout to extremely high levels relative to expectations. And the end result was the democrat did not do as well as the fake-candidate that ran in the same district in 2016. the media attention won the race for the republicans.

The only real hope for Jones is in not losing because Moore loses x% of the white woman vote who abstain or stay home, this is how McCaskill won. But since the Washington Post has ensured that every white male republican in alabama is going to turn out and vote for Moore, any McCaskill effect is probably erased by the greatly increased turnout the media is causing.

Before the Washington Post, probably only 15% of voters in alabama knew there was an election and were definitely going to vote. Now probably more than 40% of voters are definitely going to vote. that means the democrats are definitely going to lose.

[IheartIheartTesla]

At this point Susan Collins should just join the Democrats. As I said, her politics are increasingly distant from LePage, who appears to be as terrible as Trump if not worse (if that is possible)

[Fez]

Just now, IheartIheartTesla said:

At this point Susan Collins should just join the Democrats. As I said, her politics are increasingly distant from LePage, who appears to be as terrible as Trump if not worse (if that is possible)

If the Senate is split 50-50 after the midterms, I could see her doing it, even though she'd be the most conservative Democrat by pretty wide margin (even compared to Manchin). But for now at least, she has far more influence staying part of the Republican majority.

 

On another note, I stand by my earlier comment that it's basically impossible for pollsters to predict the turnout for any special election, much less one as complicated as the Alabama senate race has become. That said, here's the poll that people were probably hoping to see after the Moore allegations started coming out https://www.politico.com/story/2017/11/15/roy-moore-doug-jones-poll-244937

Quote

 

Republican Roy Moore is trailing Democrat Doug Jones by 12 points in the Alabama special Senate election, according to a poll conducted by the National Republican Senatorial Committee after five women accused Moore of pursuing them as teenagers.

Jones led Moore 51 to 39 percent, according to the survey taken Sunday and Monday. The NRSC withdrew its support for Moore after the Washington Post published the first allegations against Moore on Thursday, and the group’s chairman, Sen. Cory Gardner (R-Colo.) said Moore should be expelled from the Senate if he wins on Dec. 12.

The poll shows a dramatic turn against Moore in Alabama: In early October, a committee poll had him leading by 16 points, and a survey early this month had him up by 9 points. Moore’s favorability numbers also tanked, from 49 percent in early October to 35 percent in the NRSC’s latest poll.

 

No guarantee that the NRSC has a better bead on the Alabama electorate than anyone else, but this helps explain why they were so willing to cut ties with Moore.

[Sivin]

8 minutes ago, IheartIheartTesla said:

At this point Susan Collins should just join the Democrats. As I said, her politics are increasingly distant from LePage, who appears to be as terrible as Trump if not worse (if that is possible)

I would happily make a deal not to run a Democrat against her if she became fully independent. Vote your conscience, vote your district, don't ruin the American people's lives. 

And according to Yahoo, the little rocket man has declared a 'Death Sentence' on Donald. That's it right? They are now an openly hostile state. 

[lokisnow]

1 hour ago, Ormond said:

Thanks for posting this. Yglesias makes makes just about the same arguments I was making myself back during the Lewinsky scandal. I thought Bill Clinton should have been impeached and convicted not for perjury, but for abusing his power in order to obtain sexual gratification. 

Already when the Lewinsky scandal broke it was the consensus that psychotherapists should not have sexual relationships with their clients, and most feminists and ethicists already thought it was wrong for college professors to have sex with their students or clergypersons to have affairs with their parishioners. It was also already clear that such behavior was wrong even if the student or client had made the initial sexual overtures, because of the power differential.

And yet most of my liberal feminist friends were willing to give Clinton a pass and ignore the fact that Lewinsky was an intern. I was teaching a professional ethics course in the psychological counseling program at my university at the time, and to me it was clear he'd done something much more problematic than just cheat on Hillary. But the general public and the media just weren't ready yet to see that. 

many years ago when this came up and your posts reasoning out the sexual harrassment angle, that was key to me changing how I understood the situation. Thank you for that. 

[Guest]

35 minutes ago, Mlle. Zabzie said:

Yes - Democrats seem to believe that a magical pixie fairy will fill in the gaps once they tax the rich enough because taxation of the rich alone is enough to cause enough growth to fill in the gap.  So.much.magical.thinking.  And look, I'm not as bought in on the welfare state as you are.  I think that large parts of it as currently constructed are inefficient, counter-productive and create perverse incentives. That doesn't mean I think there should be NO welfare state, but I'm skeptical of it in its current form.

That's interesting.  So who else gets to be a no vote and are there too many?

Re: the welfare state, at this point the argument is essentially keeping the welfare state as-is and figuring out how to pay for it, or scrapping it altogether.

If Republicans ever get over this decades-long obsession with slashing benefits to the poor while handing the windfalls to the rich, and if both sides can ever get over the obsession with perpetually growing military spending, we could maybe have a grown-up discussion about tax and welfare reform. Unfortunately though, too much has been confiscated from the little guy for the benefit of the very few, and we have to fight to keep even more of it from getting rolled back.

Re: Collins, I think Murkowski joins her. Both are from states with similar demographics and the mandate repeal would likely hit both's constituents hard. Beyond that...maybe Corker? He's been skeptical of the rosy growth predictions and he's a deficit hawk with nothing to lose. Who knows with McCain. I think Flake votes for the bill. Heller is a definite yes, or else he loses his primary next year.