Obama’s Attack On Romney Enters Phase II

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Elias Isquith

Elias Isquith is a freelance journalist and blogger. He considers Bob Dylan and Walter Sobchak to be the two great Jewish thinkers of our time; he thinks Kafka was half-right when he said there was hope, "but not for us"; and he can be reached through the twitter via @eliasisquith or via email. The opinions he expresses on the blog and throughout the interwebs are exclusively his own.

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118 Responses

  1. Avatar Don Zeko says:

    Nice post. Not only do I agree with your horse-race take, but it warms my liberal heart to imagine Romney trying to defend the Ryan budget in the debates.Report

  2. Avatar Tom Van Dyke says:

    President Obama on Wednesday plans to attack Mitt Romney’s tax plan as benefiting wealthiest Americans at the expense of middle class families.

    That’s just more Phase I, same ol’, same ol’. Obama wants to tax the rich. Romney is Emmanuel Goldstein.

    As noted elsewhere, Obama’s paralyzed his presidency with the “tax the rich” stuff though it would raise only $60-100B out of a $trillion-plus deficit. It’s ideology.

    Now he’s staked his candidacy on it. Bill Clinton would never have given that “you didn’t build it” speech, first of all because as a neo-liberal, it’s not him.

    “What I would like to say to the president and Speaker Boehner is, O.K., you both have your deal. Go work it out. Meanwhile focus on putting American back to work because it just confused Americans. Americans lost the fact that whatever you feel about this millionaire surcharge, it won’t solve the problem.”

    “The bottom line is, things start growing more unequal again. In general that has not sparked riots in America. We don’t have a lot of resentment against people who are successful. We kind of like it, Americans do. It’s one of our best characteristics. If we think someone earned their money we do not resent their success. That’s why there’s been very little class conflict in American history.”

    That’s the winning rap, and why Bill Clinton won a second term. Obama’s trying to fan an outrage at the better-off that’s just not there.Report

    • Avatar greginak in reply to Tom Van Dyke says:

      So tell us more about Ryan’s budget plan and how that is a winning argument.Report

      • Avatar Don Zeko in reply to greginak says:

        Heh. I’m sure that when Romney campaigns on gutting Medicare to finance even more tax cuts for the rich, we’ll see exactly how much Americans like inequality and successful people.Report

        • Avatar Tom Van Dyke in reply to Don Zeko says:

          How many times over has Obama spent the $80-100B that raising taxes on the rich would bring? Today it’s the sequester defense cuts.

          As for running against the Ryan budget, I agree it’s worth a try. Whether he should bind it with this “screw the rich” jihad, I dunno, for reasons given.

          As for the Ryan plan, sorting through the demagoguery hasn’t been worth it. We’ll be hearing but plenty about it. CATO’s not terribly impressed with either one, but a substantive debate instead of the current chickenspit would be welcome.

          “The United States is teetering on the edge of Greek-style bankruptcy. Our total indebtedness, including the unfunded liabilities of Social Security and Medicare, could run as high as $130 trillion, more than 900 percent of GDP. In the face of this looming crisis, Obama and Ryan have presented two distinct visions of the future. The president offers a bigger government, paid for with more debt and higher taxes. Ryan’s vision may be maddeningly timid and vague in places, but it takes important steps toward a smaller, less costly, and less intrusive government.

          If that’s the debate that President Obama wants to have, let’s do it.”

          http://www.cato.org/publications/commentary/obamas-paul-ryans-conflicting-budget-visionsReport

          • Avatar Don Zeko in reply to Tom Van Dyke says:

            The Cato Institute thinks that the public will love the Ryan plan? Oh jeez, we Dems must have made a huge mistake. Please Mitt, don’t throw me in that briar patch.Report

          • Avatar Bad-ass Motherfisher in reply to Tom Van Dyke says:

            “The United States is teetering on the edge of Greek-style bankruptcy. Our total indebtedness, including the unfunded liabilities of Social Security and Medicare, could run as high as $130 trillion, more than 900 percent of GDP.

            And how, exactly, will lowering the top marginal tax rates contribute to solving this problem?Report

            • Avatar Stillwater in reply to Bad-ass Motherfisher says:

              Underpants gnomes?Report

            • Avatar James Hanley in reply to Bad-ass Motherfisher says:

              Don’t you know that every tax cut always has and always will more than pay for itself through increased economic activity? Eventually we’ll get the tax rate down to zero, and the revenues will be so abundant we’ll be able to pay off all the government debt in the next Republican administration so just vote for us already.

              That particular version of the famous diagram is known as the Laugher Curve.Report

            • Dunno. Haven’t seen the whole Ryan picture. But Obama’s already spent the “tax cuts for the rich” money ten times over. Just spent it again today on the defense cuts.

              http://www.examiner.com/article/unready-hollow-military-force-exaggeration

              I think Ryan was crazy to give Obama something concrete to snipe at. I have no idea what’s true and what’s not in Obama’s attack backed by a left-wing “non-partisan” think tank [The Tax Policy Center].

              I’m back here with Elias, just watching the horserace. Dems should hope Pase II works better than Phase I, although I think it’s mostly just more of the same.

              Al Gore was winning in 2000 until he started going all class warfare. It’s all Obama has left because the economy’s in the crapper, but what disturbs me is that he’s really into this eat-the-rich thing. It’s all he talks about.

              I didn’t vote for him, but I was fine with Bill Clinton’s re-election, for reasons given above. I am not good with a second Obama term, for the same reasons. I think he’s divisive and bad for our country technocratically, philosophically, and spiritually.Report

              • Avatar Stillwater in reply to Tom Van Dyke says:

                I think Ryan was crazy to give Obama something concrete to snipe at.

                He offered the plan during the budget “debate” in oh-10, I think, and did so because the Dems, the indies, the media and even some conservatives wanted to know why the GOP was obstructing all the time if they didn’t have a plan of their own.

                Ryan, to his credit, actually proposed an alternative. Now, tho, it is what it is.Report

              • Avatar James Hanley in reply to Stillwater says:

                Eh, the old tension between doing what’s politically expedient and doing what is good for democracy. It’s a bit depressing to see someone here unabashedly rooting for pure political expediency.

                By the way, Still, nice gravatar. Canyonlands?Report

              • Avatar Stillwater in reply to James Hanley says:

                I think if Ryan laid off of tax cuts for the wealthy a bit his plan wouldn’t be so politically toxic. Especially when you remember that the GOP stalking horse at the time was balancing the budget. Why cut taxes on the wealthy and undermine the central justification of the proposed plan? Bad politics, it seems to me.

                The picture is actually from Colorado – BLM land off the Colorado river near the Utah line. About two miles up Mee Canyon.Report

              • Avatar James Hanley in reply to Stillwater says:

                Near Utah, so I wasn’t too terribly off base, at least. Beautiful landscapes out in the SW.Report

              • Avatar Kris in reply to Tom Van Dyke says:

                Short term spending in this recession is good. Obama’s spending is good.

                Obama has offered long term deficit reduction as long as increased revenue (at more Clinton-esque levels) is part of the solution.

                I am losing hope that this blog has an intersting discussion.Report

              • Avatar James Hanley in reply to Kris says:

                Do you mean losing hope that we’ll all join your chorus?

                I know that’s ungenerous, and I hope you can persuade me it’s just wrong. I think you make good contributions here, but it’s a place where there’s a variety of viewpoints, and what makes it interesting is that whatever you say you’re likely to get someone challenging it, whether you say deficit spending in a recession is good or whether you say it’s bad.Report

              • Avatar Kris in reply to James Hanley says:

                What will be the fruitful discussion?

                Whether I appreciate and agree with Beria the murderous Stalinist? Whether I am pro murder because I supported Clinton and the Vince Foster murder?

                Whether I think that Jay Bird likes to harrass his employees, personally. Him. Not his views on what should be legal and whether they accord with general libertarian principles?

                Whether the US is in danger of Greek default? (Hahahahaha)

                Whether Obama is a secret socialist unlike Clinton?

                Whether Obama will spend (doesn’t Congress determine spending?) all the money and why this shows revoking the Bush tax cuts on the wealthy (back to the more socialist levels of revenue of that non-Socialist Clinton) is a bad idea?

                Limbaugh will be more interesting.

                We can do better.Report

              • Avatar James Hanley in reply to Kris says:

                Well, if you want to cherry pick the worst of the threads, I guess you’ll make sure you’re not satisfied.

                As to who determines spending, you might want to be cognizant of the fact that A) Congress statutorily requires the Executive to submit a budget (General Accounting Act of 1921), so that the Prez gets first crack at setting spending levels, and B) the Constitution gives the Prez this thing called the veto, that he can use to help shape legislation.

                I really do think you have contributed worthily here, and encourage you to stick around, but it’s a bit much for someone who thinks Congress is the sole determinant of spending to criticize the level of debate, no?Report

              • Avatar Jaybird in reply to Kris says:

                If you’re familiar with the golden rule, you should know that you should treat others the way you wish to be treated.

                If you open with “Libertarians support threatening employees with being fired if they won’t put out”, you shouldn’t be surprised to have people run with the golden rule and wonder aloud whether you’d be one of the statist boot-lickers who colluded with the Stasi in the name of the glorious collective.Report

              • Avatar Kris in reply to Kris says:

                Jaybird,

                Are you that obtuse?

                I argued -and this is a common argument- that the libertarian principle that government shouldn’t interfere in what contracts we form with each other (that’s too nanny-ish) implies that it should be legal to offer “sleep with me or be fired” contracts. I did not say, nor did I imply that libertarians think that sort of behavior is morally acceptable. I didn’t claim that libertarians support that behavior. Indeed, I am hoping that their revulsion at that behavior will help them conclude that it should be illegal. If its illegal, we need government to be a nanny at least in one case. So the question becomes how else and how often should the government be paternalistic. (This is the central question of contemporary liberalism, IMO.)Report

              • Avatar Jaybird in reply to Kris says:

                You said, and I’m cutting and pasting here, “Libertarians are still wrong to assert that it should be legal for employers to tell their employees “have sex with me or be fired.””

                If you did inform on your neighbors, would you be an informant who donated the money you got back to the state or would you see it as money you had earned fair and square?Report

              • Avatar Kris in reply to Kris says:

                Yes, they are wrong to claim that it should be legal. I doubt many of them think it is moral. Libertarians do not “support” sexual harrasment in the sense of being morally approving of it. I’m sure the opposite is true. But if you accept that government can and should restrict what contracts we enter into, that makes you more of a liberal than a libertarian. That’s the whole point. Not Beria. Not Clinton. Not anything else.Report

              • Avatar Jaybird in reply to Kris says:

                And we’re back to my pointing out that Liberals are wrong to point out how secret police and a network of informants are necessary to a properly communal society.Report

              • Avatar BobbyC in reply to Kris says:

                Short-term spending is good eh? Does it matter what it is spent on? Or as Paul Krugman said on Charlie Rose, it doesn’t matter … just spend and the economy will get better.

                I get it that Obama is very reasonable and bipartisan in his own mind. And I understand that the Tea Party is this scary, angry-to-be-out-of-work populist movement to people like Harry Reid and maybe Obama too. But I’m afraid the President has really underestimated the anti-govt, anti-Washington sentiment in flyover country. I look at the electoral results from the 2008 Democratic primary and it reminds me that Obama never did really connect with those people.

                The interesting question is whether people are so upset about Obama’s failure to “get it” on the role of govt issues that they elect a really unlikeable rich guy who wants to bomb Iran and Russia more than he wants to enact fiscal reforms. If the Republican party cannot defeat Obama in 2012, then the prospects for the party look dim to me (that is until they compete for social liberals with a more libertarian, less evangelical and less old-white-guy social policy.Report

              • Avatar Don Zeko in reply to BobbyC says:

                Of course it matters what you spend money on; different types of spending are more or less legitimately useful and have larger or smaller multipliers. But the point is that you need to spend in this situation. I respect critiques of the Krugman line much more when they come from people who sound like they have ever actually read anything Krugman wrote.

                Also, Obama can’t compete in flyover country? Is that why he won primaries in Wisconsin, North Dakota, Montana, Idaho, Utah, Wyoming, Colorado, Iowa, Nebraska, and Kansas, or perhaps why he carried New Mexico, Colorado, Iowa, and Nevada in the general? The demographic that Obama didn’t impress was white people in Appalachia and the South. Hell if I can’t figure out why, though.Report

              • Avatar BobbyC in reply to Don Zeko says:

                My objection to the Krugman argument is that he is ignoring the real economic adjustments that need to happen. We need to reallocate labor between sectors and probably reprice certain professions following a very distortive bubble. To enter that economy and argue, as Krugman has, that the govt can solve the unemployment and suffering by passing very large stimulus is wrong. Of course we can reduce unemployment by employing everyone, but this is insufficient to make it a good idea. We need to allow the pattern of demand to reflect sustainable, recurring demand, not short-term stimulus. Now maybe it makes sense to time-order some necessary federal spending to offset slack in the private sector demand, but that’s a minor point. Krugman, and even Larry Summers to a lesser extent, are arguing that the basic problem is a lack of aggregate demand, the govt can fix that by spending, and voila we’re good (or better at least). That’s wrong. There is plenty of demand, in fact essentially unlimited demand, but not for the goods and services the economy is producing. Krugman probably thinks the output gap is order of $1tr and he wants to fill it out some way or another. But Americans would happily buy $1tr more of homes and cars and iPads and steak dinners at the right price. Instead we are trying to save more given current prices and our income expectations. Krugman wants to have the govt dissave those resources in order to make the labor market clear without have to have an adjustment of relative prices. That is horrible and prevents the economy from fixing the actual distributional problems we are facing. Sure we can rehire 1m construction workers to make more houses by offering home buying credits and 3% mtge rates, but then my cousin will go back to working in construction rather than figuring out how to do something else. He’s not rocket scientist, but he is young and can learn to do plenty of other work.

                Unemployment is a serious problem, a tragedy for many, but human labor is valuable and there is demand for it at a price. That adjustment is truly painful and there is a role for fiscal policy to cushion that process (eg unemployment insurance of a limited duration). But we need to stop acting like jobs are valuable and people are worthless – it’s quite the opposite.Report

              • Avatar BobbyC in reply to Don Zeko says:

                Oh, I didn’t mean to duck the Obama and flyover thing. My point was that Hillary killed him in the less urban parts of every state, while he won the cities. I would have to perform a Google search to justify that claim, but from recollection the county-by-county results were shocking. I should have said that. The flyover thing confuses / mistates what I was trying to say. And I don’t think the issue is just racism, although it’s hard to say. I thought it was more of a distrust of him as a naive, book-smart elite. But maybe it’s just racism and dudes in Missouri think Obama is swell. Maybe.

                Then again, he definitely doesn’t understand the Tea Party, as is clear in his comments, esp following the 2010 election (which he willfully misread).Report

              • Avatar BobbyC in reply to Don Zeko says:

                Here’s what I’m talking about with Hillary vs Obama in 2008: http://en.wikipedia.org/wiki/Ohio_Democratic_primary,_2008

                It’s pretty shocking, to me at least.Report

              • Nob Akimoto Nob Akimoto in reply to Don Zeko says:

                For the most part, the gap in spending is showing up most in state budgets where there’s a lot of spending cutting (and almost no revenue raising) going on. You’re seeing a lot of state governments shed payroll to meet their constitutional obligation of balancing their budgets, even states with substantial rainy day funds.

                This is leading to a lot of cutbacks in basic services that are more the result of a temporary fall in tax revenues based on the structural adjustments you’re describing as much as anything else. Counter-cyclical spending should be used as a means to keep that sort of fluctuation minimal.Report

              • Avatar Don Zeko in reply to Don Zeko says:

                Bobby-

                The trouble with this theory of what’s wrong with the economy is that it implies predictions about the shape of the downturn that haven’t been borne out. If the trouble is that we’re misallocating resources, then we’d expect to see very high unemployment in the sectors of the economy that we’ve overallocated to and very low unemployment in those sectors that we’ve underallocated resources too. But while unemployment is higher in construction and manufacturing, where one could conceivably make a case that we’ve overallocated resources, it is also high in basically every other sector. Where exactly are the parts of the economy starving for productive resources?

                This all strikes me as an awful lot of work to think your way around a fairly obvious truth. We have lots of productive resources, primarily people who were perfectly employable 5 years ago, sitting on their asses and doing nothing of value to anyone. This inaction is both causing immense human suffering, it’s also making these productive resources less productive as skills are lost, equipment goes to rust, and so forth. We also have a government that can borrow at negative real interest rates and plenty of public spending that we are overdue for, primarily in terms of upgrading public infrastructure. In what universe is it a good idea to have those idle resources continue to sit idle?Report

              • Avatar BobbyC in reply to Don Zeko says:

                Nob – that is actually Krugman’s new twist, namely that we don’t even need to worry about the federal govt buying the wrong things with the stimulus because they can give them money to the states to reflate state and local budgets with the majority of it. Again, the point is that we need to reallocate labor. So Krugman argues that because we’ve reduced govt sector employment by 600k or so, it actually should have grown 1m, so we can borrow money to give it to states and go hire 1.6m people into the govt sector. I don’t dispute that this would reduce unemployment, but I see it as counterproductive if the adjustment that we need to make is to reduce govt employment!

                Viewing the reduction in state and local budgets as artificial, because tax revenues have fallen and they don’t deficit finance (or not explicitly in most cases), is wrongheaded. The reality is that we can provide basic services with less labor and less cost – it is in recessions when business and govts economize and drive productivity. Ultimately it is those reallocations and increases in productivity that create real growth and rising real incomes. Krugman wants to fix it fast, but my objection is that the fast fix is just the fast and not the fix.Report

              • Avatar Don Zeko in reply to Don Zeko says:

                What on earth is shocking about seeing one candidate outperform another in urban areas while losing in rural areas, or vice versa? Generally speaking, most rural counties in a given state won’t be that far apart from each other, as they are more or less demographically similar, and the same is true of the cities. So in a close race, one candidate’s demographic mix might mean that he wins every urban area by 5 points or so while losing every rural area by 5 points or so. That’ll produce a map like the one you linked to, but will it actually say anything dramatic about who supported that candidate?Report

              • Avatar Don Zeko in reply to Don Zeko says:

                Bobby –

                If your argument relies upon the notion that we need to adjust the allocation of resources in the economy, why don’t you provide some evidence that this is actually the case? It seems to me that Krugman has a model, in which the recession is caused by inadequate demand as a result of the collapse in the velocity of money and an increase in savings rates, which produces various predictions about the shape of the world and various policy recommendations. You’re putting forward another model with its own predictions and policy recommendations, but you’re not providing us with any evidence to prove that your model is a superior representation of how the real world works.Report

              • Avatar BobbyC in reply to Don Zeko says:

                Don – you may be overestimating the lesson that I take from the 2008 primary results. My point is just that it’s easy to think that Obama won and was really popular with Democrats and had broad appeal with average voters. In the general, I think that was true. But he lost to Hillary outside of urban areas pretty uniformly. Maybe the urban / non-urban demographic divide is more intuitive to you, which would explain why I find the county level chart shocking (Obama lost nearly all of Ohio on a geographic basis!) while you do not.

                Maybe I overstated the point by saying it shows that he “never connected” with those people, but I do think it reminds us that Obama has problem demographics, including among his base. It’s relevant. And in my view his dismissal of the Tea Party as radical-angry-populists is only going to hurt him with these voters more so.

                Do you disagree that he has misread the zeitgeist of the anti-govt protest movement in America? Do you think it won’t hurt him at the polls?Report

              • Avatar Don Zeko in reply to Don Zeko says:

                Land doesn’t vote, people do. An urban/rural voting dichotomy is exactly what happens every election cycle in the general election, because cities are demographically distinct from rural areas. It’s basically a truism that in any given 2-candidate race, one candidate will do better in the cities and worse in the country and produce a map that’s pretty similar to what you linked to. it doesn’t really mean anything, though.

                As to the anti-government zeitgeist, I think that you’re the one who is misreading things. The American People didn’t discover a new libertarian spirit in 2009; the economy sucked and the more pro-government party was in power, so the anti-government party was successful at the polls. That’s the whole story.Report

              • Avatar BobbyC in reply to Don Zeko says:

                Don – I agree that to disprove Krugman’s whole book I would need to offer more than the sketch of my viewpoint that I offered. That’s totally fair. But I’m not really going to do the work to make such a detailed case – just not what I’m after in exchanging views here.

                I’m happy to tell you what I think the empirical case looks like – (1) look at housing starts and employment in construction (we had too many appraisers and real estate agents and construction workers and the whole bloated supply chain to that sector), (2) look at financial sector profits as a share of GDP (it was crazy high in 2005-2007 and many of those workers now have unneeded skills and need to be reallocated), and (3) look at the govt sector, not so much employment but the percentage of GDP running through govt (which has drifted up over time and Krugman wants to use to push up agg demand but it’s hard to argue that the govt sector is where the slack is – and in fact I think there are a priori reasons to want it to come down).

                There are other less direct measures of the fact that our problem is not aggregate demand as in the simplistic Krugman model – one key piece of evidence is the structural aspect of unemployment. If we just had too little aggregate demand but the problems was not a matching problem of workers to skills-needed, then there is little reason to expect the huge rise in structural / long-term unemployment. There is reasonable literature suggesting that the labor mkt is dysfunctional and not clearing normally. Some may be the extensions of unemployment insurance. The existence of underwater mtge debt is also probably hampering labor mobility – relocations across states hit like 50y lows following the crisis, which is abnormal and not simply aggregate demand – you don’t go take that job in Atlanta if you cannot sell your home at an acceptable price / above your mortgage.Report

              • Avatar BobbyC in reply to Don Zeko says:

                Regarding the unemployment problem, I don’t mean to say it isn’t a problem. But saying we should fix it by reflating state and local budgets is a net harmful response in my judgement.

                Regarding the possibility of public infrastructure, here the case for counter-cyclical spending is very strong and I support this idea. I would have preferred Obama to do much more of this in 2009 than he did, and not to have let Pelosi/Reid draft the bill. I gather Summers felt the same way and was one of his beefs with the Obama White House (up there with the Chicago crowd manning the inner circle).

                You claim that unemployment is not concentrated in certain sectors. That is interesting and I will look into that. It may be that the way we look at sectors masks the pattern of unemployment. I’d expect construction and financial services to need to shed workers (and govt too, esp following the census but generally as well). Shouldn’t we look at the labor force and employment by sector, not the technical unemployment, which is impacted by participation and the definitional stuff?

                Last, even if we just had uniform widespread senseless unemployment, so that I agreed that it was just intolerable even in the short-run, then I wouldn’t want to use govt stimulus to fix it. I would prefer that we send a check to every citizen to stimulate demand. Or put in a national negative sales tax, or accelerate depreciation schedules (which we’ve done I think), or have a tax holiday (I love the payroll tax holiday by the way). My issue is not just ideological with Krugman, although it is also ideological. I really think that he completely underestimate the distributional problems with govt stimulus, both out of ideological bias but also because he measures against a baseline which is the peak GDP distribution, exactly the distribution of economic resources which broke down and led to recession. Whatever the answer, it should not be measured against the status-quo-ante-recession.Report

          • Avatar Stillwater in reply to Tom Van Dyke says:

            The president offers a bigger government, paid for with more debt and higher taxes.

            That’s actually false, according to the CBO: the Ryan plan lowers taxes but actually increases the debt over a ten year time-line. Is there another source than the CBO Cato is using to justify that claim?Report

            • Dunno, Stillwater. CBO hates Obamacare too, and Obama’s budgeting*. I’m not going to cede the discussion to merely deflecting attacks on Ryan, and OTOH am not going to do all the homework to attack Obama’s budgeting—all to no avail in a comments box.

              So what I am saying is I agree with the Obama strategy of attacking the Ryan budget and saddling Romney with it. I do not agree that Obama sticking with his eat-the-rich obsession is a good idea. He’s starting to get real Captain Ahab about it and I hope it turns normal people off like it does me.

              _________________
              * http://thehill.com/blogs/on-the-money/budget/216397-obama-budget-adds-35-trillion-in-deficits-cbo-finds
              President Obama’s 2013 budget would add $3.5 trillion to annual deficits through 2022, according to a new estimate from the Congressional Budget Office (CBO).

              It also would raise the deficit next year by $365 billion, according to the nonpartisan office.

              The CBO estimate is in sharp contrast to White House claims last month that the Obama budget would reduce deficits by $3.2 trillion over the next decade.?Report

              • Avatar Stillwater in reply to Tom Van Dyke says:

                That’s a fair enough critique of things Tom. I think it’s incumbent on Romney to forcefully make that argument, tho, if that sentiment is gonna move the dial. Part of the problem he’ll face is that Obama can hit him with advocating that policy out of self-interest. I think R is in a bit of a pickle on this issue. (Don’t you?) That’s not to say he can’t get out of it, acourse.Report

              • Stillwater, I don’t think “Romney wants tax cuts for himself” plays. Took a pay cut to run for office in the first place.

                Bill Clinton: “We don’t have a lot of resentment against people who are successful. We kind of like it, Americans do. It’s one of our best characteristics. If we think someone earned their money we do not resent their success. That’s why there’s been very little class conflict in American history.”

                I keep saying nice things about Bill Clinton lately, but I’ve been saying them for years. Clinton gets America, always did. And we might all agree that Clinton would beat Obama, Romney or both at once were he running.

                What does Romney need to do to win? In my view, perhaps nothing except avoid trainwrecks, and deflect, deflect, deflect. I think he’s crazy if he stands and fights any of these BS attacks. Bain is bullshit, the tax returns are bullshit, and the competing Ryan and Obama budgets are [charitably speaking] equally insufficient for dealing with our problems.

                Hence, I think it’s silly for Romney to let the Ryan plan take all the heat and let the equally bad [or worse] Obama plan get a free ride. Now, the press is gonna do just that, but again, Romney’s best strategy is not to stand and defend, but shift the spotlight back on the incumbent.

                As long as the Obama attacks are blahblah about numbers nobody’s listening to, and the ol’ granny down the stairs crap, Romney slips the noose. Only by standing and defending does Romney call down closer scrutiny onto the Ryan plan.

                From the first, the polls say Obama loses to a Generic Republican, and so I think Romney should not deviate from his so-far successful policy of strict non-specificity.Report

              • Avatar BobbyC in reply to Tom Van Dyke says:

                I agree that Romney has to keep it about Obama’s policies and failures to lead. That plays. But there is a really good chance Romney self-destructs and has a macaca moment.

                Regarding the Clinton point about how Americans have traditionally viewed wealth as merited, that is really under attack now. And for good reason. The examples of unmerited wealth, mainly from financial services where normal-greedy, normal-talented guys are making big money performing so-so in demanding but not crazy-skilled jobs. That undermines popular belief in the American system and threatens political upheaval. My hope is that the response to someone earning an excess income via corruption of the laws will be to fix the laws, not to reroute those excess incomes back into the political process – if a guy is making $6m/yr and not adding value because some policy creates that opportunity (say making interest rates zero so that savers have to pay someone to do better for them), then let’s fix the problem and not act like it’s sufficient to tax the guy making $6m at $2.4m rather than $2.1m. That’s just ridiculous.Report

              • Avatar Tom Van Dyke in reply to BobbyC says:

                BobbyC, I’m a Romney man. He says things wrong but doesn’t say wrong things. The dude’s solid. He keeps forgetting that his enemies in the other party and in the press [but I repeat myself] are going to douchebag what he says, but he’s getting it.

                Because the UK did screw up their Olympic organizing, the Palestinian culture does blow donkey dick [esp compared to the Jewish/Israeli one] and I’m sure they douchebagged him for something he said in Poland, but Lech Walesa, who helped save the world from the boot of Sovietism, just gave Mitt a big thumbs-up.

                Solid, if unspectacular. And I don’t want a “spectacular” president. I want an competent wonky technocrat with no ideological ax to grind, and that’s Mitt.

                That’s not Barack Obama, and that’s the name of the 2012 tune.

                IMHO, of course. 😉Report

              • Avatar BobbyC in reply to BobbyC says:

                I think Obama and Romney may run neck-and-neck for “wonky technocrat” honors. My primary objection to Romney is that he is a hawk. That may be his most sincere political viewpoint in fact, that he wants the American military to underwrite global security. He sees it as the basis of our economic strength and the current geopolitical order. At heart, I think he is more mercantilist than liberal; that may sound strange given he is a successful capitalist who clearly understand globalization. My views are primarily based on his book, in which he really sees the world through the lens of national rivalry. And he makes some really, truly misguided things about history and national strategy. Not dumb, but deeply misguided.

                So it’s Gary Johnson time!Report

              • Avatar Tom Van Dyke in reply to BobbyC says:

                Sounds fair and well-considered, BobbyC. Exc Barack Obama is incompetent as a technocrat. Where’s that trillion we gave him to spread around? Must be around here somewheres…

                But if you think Romney’s a hawk, then it’s fair to go the other way. Reagan was a “hawk” too, though, and I believe he killed fewer jerkfaces than Obama has with the drones and bombs and shit. Anybody got a head count?Report

            • Dunno, Stillwater. CBO hates Obamacare too, and Obama’s budgeting*. I’m not going to cede the discussion to merely deflecting attacks on Ryan, and OTOH am not going to do all the homework to attack Obama’s budgeting—all to no avail in a comments box.

              So what I am saying is I agree with the Obama strategy of attacking the Ryan budget and saddling Romney with it. I do not agree that Obama sticking with his eat-the-rich obsession is a good idea. He’s starting to get real Captain Ahab about it and it’s unnerving.

              _________________
              * http://thehill.com/blogs/on-the-money/budget/216397-obama-budget-adds-35-trillion-in-deficits-cbo-finds
              President Obama’s 2013 budget would add $3.5 trillion to annual deficits through 2022, according to a new estimate from the Congressional Budget Office (CBO).

              It also would raise the deficit next year by $365 billion, according to the nonpartisan office.

              The CBO estimate is in sharp contrast to White House claims last month that the Obama budget would reduce deficits by $3.2 trillion over the next decade.?Report

              • Avatar greginak in reply to Tom Van Dyke says:

                Key graf from TVD’s link
                “The differences between the estimates from CBO and the White House budget office are attributable to different baselines and economic assumptions, and a big reason CBO expects the deficit to spike sharply under Obama’s budget is that CBO’s baseline assumes all the Bush-era tax rates will expire at the end of 2012.

                Obama wants to continue the middle-class tax cuts, something reflected in his budget. ”

                CBO “likes” tax cuts going bye-bye. It doesn’t like keeping taxes where they are which O wants and also R’s want. In fact R’s seem to want more tax cuts. I wonder what CBO would say about more tax cuts.Report

          • Avatar greginak in reply to Tom Van Dyke says:

            Claiming the US is on the brink of a Greek style bankruptcy is outrageously silly. Someone at CATO is indulging in some drug use, which allthough it should be legal, leads to craptastic reports. Save it for Hannity or Rush.Report

            • Avatar wardsmith in reply to greginak says:

              What makes the USA immune to fiscal crisis Greg? Our great institutions? Our easily counterfeited money? Our incorruptible government employees? We’re borrowing 42 cents out of EVERY dollar we spend. Obama’s budget (such as it is, no one ever actually voted on it) increases that amount regularly and goes out to a future that is completely fictitious. His budget continues to pretend that ACA will be free instead of adding a trillion in new unfunded liabilities on the government.

              If you HAVE to borrow money to meet your current obligations your creditor has your ass over a barrel. We’re lucky as a country right now because our currency appears safer than the Euro but at some point banks aren’t going to be willing to lend to a deadbeat who needs NEW loans to pay off OLD interest on loans. Put another way, would you loan Stillwater $100 so he can pay you back that $100 interest he /already/ owes you?

              Today the Fed is simply printing money that gets “loaned” to the government in a fictional semblance of legerdemain called quantitative easing. Where does this end? Oh but you’re right it is silly to pretend the music EVER stops. Party on!Report

              • Avatar greginak in reply to wardsmith says:

                Despite your litany of problems it is ridiculous to say we are on the verge of a Greek style bankruptcy. Just plain silly. Of course we need to fix the budget, i completely agree that doesn’t mean i agree with CATO’s stupid claim.

                Um no nobody claims the ACA is free.

                So the house of rep’s doesn’t have control over the pursestrings and hasn’t appropriated money???Report

              • Avatar wardsmith in reply to greginak says:

                Imminent is one crisis away. We don’t always see the crises coming. Sometimes it starts with a small domino elsewhere.

                Obama’s budget claims ACA is “revenue neutral” doublespeak for no cost. If you truly want to compare budgets, let’s compare budgets

                The Congress, which consists of the House AND the Senate has control over the purse strings. The House has passed a budget dozens of times and the Senate under Reid never gets a chance to vote on it whatsoever. Admittedly the system is broken. Remember the budget crisis last year? Entirely political and yet real nevertheless. But what do you expect when the actors make statements like this?

                Treasury Secretary Timothy Geithner, speaking on behalf of the Obama White House, to Rep. Paul Ryan: “You are right to say we’re not coming before you today to say ‘we have a definitive solution to that long term problem.’ What we do know is, we don’t like yours.Report

              • Avatar Don Zeko in reply to wardsmith says:

                No, “revenue neutral” is not code for no cost at all. It means that it’s revenue neutral. The ACA included funding sources: new taxes and cuts to existing programs.Report

              • Avatar greginak in reply to wardsmith says:

                Ward, its clear you don’t know what the word imminent or the phrase revenue neutral mean. They don’t mean what you think they mean. Imminent means its going to happen really really soon. There is no Greek debt crisis anywhere in the foreseeable future. RN does not equal free. It means costs equals revenue that is raised.Report

              • Avatar Simon K in reply to wardsmith says:

                1. The US is currently immune from fiscal crisis because people are paying the federal government to borrow their money. They’re doing so because its one of the few perceived safe stores of value. In other words, because they perceive no risk of fiscal crisis.

                2. Government debt is not like personal or corporate debt, at least not usually. Its extremely unusual for it ever to be paid off. Its almost always rolled over and generally this is just fine with the people doing the lending, because states (at least stable ones) are immortal and their income (GDP) keeps rising. In effect a state has a constantly improving debt to income ratio and no deadline by which is has to pay, so why not keep rolling debts over? As a matter of fact, were it not for the recession, the US debt would be perfectly sustainable.

                3. The Fed buys bonds from the public, not from the government. The point of doing so is to increase the money supply, not to fund government operations, and the size of the purchases is miniscule compared with the debt. The Fed holds $2 trillion of long term securities (not all of it T-notes), and currently isn’t buying any more. That’s less than 2 years worth of deficits.Report

              • Avatar Wardsmith in reply to Simon K says:

                simon your comment deserves a reply. Even tho I’m handicapped by trying to type on a smartphone.
                1) Granted, but the rate is /not/ a market rate in the true meaning. In fact it is highly manipulated. QE is real and pernicious. The “public” is largely “absent” from these auctions. Therefore our numbers are more manipulated than Libor ever was.
                2) We’re not rolling over debt we’re continually adding to it. There is a difference.
                3) we haven’t seen the last of QE.
                More when I have a keyboard.Report

              • Avatar Simon K in reply to Wardsmith says:

                That’s not correct, ward. The market for US treasury debt is enormous and extremely liquid and the vast majority of debt, especially longer term debt, is in private hands. The Fed deliberate manipulates the short term rate, but not the longer term ones.Report

              • Avatar BobbyC in reply to Simon K says:

                Well articulated. Don’t agree.

                1 – Negative real rates do not make the US immune from a sovereign debt crisis. It may make sense to say that by definition a country borrowing at negative real rates must be very far from such a crisis. That’s also not true. At our level of debt/GDP and at our current deficit, we are quite at the mercy of expectations. That is to say that an expectation of a default by the US would be sufficient to cause it to happen (or the equivalent of a default, ie a massive inflation or monetization by the Fed).

                2 – sovereign debt is unusual but not because it rolls. Corporate debt rolls as well. The main difference is that a sovereign cannot be effectively enforced against. If you lend IBM money and they don’t pay, then IBM’s assets go to its creditors under well-established law. If Portugal doesn’t pay, good luck. Now the US borrows in its own scrip, so it can monetize/inflate, but this is indistinguishable from a haircut of the debt if done severely in a short period.

                3 – this is really a distinction without a difference. You should not accept the notion that the Fed buying US govt bonds is not fiscal financing / debt monetization because they buy it in the secondary market and say they will sell it eventually. Even if you believe that the current Fed Governors truly would behave that way, they are only in charge when it doesn’t really matter. In a true run on the US Dollar, Congress controls both monetary and fiscal policy. Fed independence is a reality only when it doesn’t matter. If we face a real calamity, the politicians are in charge, just as we are seeing in Europe right now. The Fed exists by Congressional statute and we have Congressional money, not some private money run by private institutions and backed by real resources/assets/claims.

                As for a US default, suppose we end up in 2019 and we have $22tr of debt and $16tr of GDP and a $1tr deficit and zero inflation. If we’re there, I’m advocating for a haircut on the debt (or significantly raising the inflation target and openly debasing but in a controlled way). Really it would be better to preserve the US dollar as hard-money, but just default on the sovereign debt. Forget the hysterics about unfunded entitlements – just the existing debt stock and a handful of bad years put us in a place where a US default is a socially-optimal choice. At that point we are Italy, and we will say what the Italians are saying which is that it makes no sense to pay 5% on their debt when inflation is 1% and they are not running large primary deficits. Default becomes rational.Report

              • Avatar Simon K in reply to BobbyC says:

                Also, well articulated, Bobby. I don’t agree either 🙂

                1. Yes, expectations matter, but I don’t agree that this is a major risk. Expectations are unstable only in bubble situations where the fundamentals don’t justify the price (in retrospect). This isn’t true of treasury debt, because the fundamentals are okay. The US is at no risk of not being able to pay current liabilities, and the high demand arises from a global need for more safe assets, not from unrealistic expectations. What risk there is is political risk of not being able to raise taxes to pay for (or avoid) future borrowing, not risk of not being able to pay for current borrowing, even if its rolled over indefinitely.

                2. Corporate debt also rolls over, that’s true, but corporations rarely grow indefinitely where sovereign economies do. So sovereigns can afford to keep rolling over and increasing debt indefinitely, where corporations can’t. I agree that default also works differently, but the way this works is interesting. Corporate default is generally strategic, the consequences are paid immediately, and the long term impact is low. Sovereign default has no immediate consequences (at least for large powers), but the long term impact is huge.

                3. I don’t see what you’re arguing. Yes, in a real calamity all kinds of weird things could happen. I mean, last year the Fed looked as if it might take control of Euro monetary policy for an instant. But what we’re discussing is whether there’s any real prospect of a calamity, not what would happen if there were one.

                4. No, that doesn’t make us Italy. Italy has to pay 5% on its debt even with 1% inflation because the markets do not believe Italy can reliably collect taxes or control spending. Historically this is borne out more times than there were zeros on lira notes. The US has always, historically, paid its debts before pandering to domestic constituences. The only thing that would ever change that is the political risk of congress being taken over by loonies. While we may be closer than we’re been for some time, we’re not there yet.Report

              • Avatar BobbyC in reply to Simon K says:

                We really see this differently. I realize your view is prevalent and normal while mine sounds suspiciously like a gold-bug or conspiracy theorist or crazy. Pls forgive me my bedfellows.

                1 – I think you are begging the question here. Aren’t you acknowledging that the US debt would be unsustainable at higher real rates, but that won’t happen because the US debt is sustainable at low real rates? I don’t think that is how credit analysis works.

                2 – Corporations and sovereigns are different, as you note, and we shouldn’t press the analogy too far. But it’s surprising to me how you see the differences, particularly that corporates default with little long-term impact while sovereigns are more impacted in the long-run by default. Corporate default is not normally strategic at all! The equity holders are in charge and they generally get wiped out in default – some strategy! As for sovereigns, I’d note that the academic literature considers the basic question about sovereign credit to be “why do they repay ever?” Isn’t the historical record that sovereigns can default, keep their assets and control of their country, and even in many cases return to the debt markets during the lifetimes of the same investors (eg Russia, Argentina, Greece)? Arguably there is a higher societal stigma to sovereign default than corporate default, but I see that explaining in part why sovereign repay when the consequences of nonpayment are so minimal compared to the financial gains involved.

                3 – I’m arguing that Fed independence is a mirage. That is relevant because if it is true, then the odds of a calamity are higher (because the risk of political co-option of monetary policy is higher than you and most mkt participants recognize).

                4 – I really shouldn’t compare the US to Italy, nor would I as an investor. If you look at what I wrote, what I’m trying to say is that IF we get to 2019 without addressing our problems or growing out of some deficits, then our debt accumulation will put us in a place where Americans may rationally look at our financial situation much as the leadership of Italy is starting to look at theirs – namely, “this debt service cost is a bad deal for us.” For me that is a fundamental question for bond mkt participants, ie how many years of inertial US fiscal policy is required before it becomes sensible to contemplate strategic default by the US. In the dollar world we live in, few questions are more basic to prudential wealth management.

                As for Congress being “taken over by loonies” – isn’t it already! Joking a bit, but compared to how we would expect Bernanke or really any Fed Governor to conduct monetary policy, the prospect of political co-option by Congress is scary. I may fancy considering Janet Yellen as the Nancy Pelosi of the Fed, but in reality comparing the two is even more absurd than equating US creditworthiness to that of Italy.Report

              • Avatar Simon K in reply to Simon K says:

                Hi Bobby,

                I think I see the key point of disagreement here, and it rests on the question of why people buy T-bills to begin with. They’re almost all purchased as an alternative to holding cash, not as an investment in themselves. Its logistically difficult to hold very large sums of money as cash – you can’t get a checking account for 5 billion dollars. No institution has the resources to hold that much with the risk of instant withdrawal. You also shouldn’t keep it as stacks of bills in the basement like Henry Ford did, for reasons that should be obvious (in his case, it got eaten by rats). But if you might need to spend it, you can’t invest it in anything illiquid or with any actual risk. So you buy T-bills. They’re incredibly easy to sell, the price is very predictable, and people will hold onto vast numbers of T-bills for you in a brokerage account, where they won’t hold onto cash. They don’t pay any real interest, but neither does a checking account, and you can earn more than their face value by lending them to people to use in repo transactions. So for banks, Google, Chevron, China and anyone else with vast amounts of dollar “cash” they need to stash away, T-bills are how you do it.

                For these purposes, there is actually a shortage of T-bills. That’s why you can earn more than their face value by lending them out. It has nothing to do with a burning desire to subsidise the US deficit and everything to do with being a close cash substitute. UK gilts and Japanese bonds have similar roles in their smaller, but equally sophisticated financial systems, which is why they’re similarly able to run apparently gravity-defying deficits. And this demand for debt grows during recessions, when for various reasons people with very large amounts of money are even less willing to place it in actual investments, and especially during financial crises where previously safe-seeming assets suddenly look risky. Which is convenient, of course, since government deficits look worse in both absolute and relative terms during recessions. Interest rates will rise, but they’ll rise when all that cash goes back into investments with yield, and that won’t happen until there’s some growth and/or inflation, and growth and/or inflation will make the debt/GDP ratio look better.

                This doesn’t mean the US can keep borrowing indefinitely. There does come a point where the taxes needed for debt service would be genuinely onerous (38% is not onerous, 15% certainly isn’t), and that carries political risk. There are also genuine but confused Jeffersonians in congress who oppose the entire project of high finance, national debt and imperialism. That’s a political risk too, albeit a fairly incoherent one right now. Only if one or the other of these effects actually became influential would there be a real risk. At that point, the financial system would try to move away from T-bills and you might well see a real crisis, since there’s basically nothing else to fall back on, but this is a distant prospect. The S&P downgrade last year was based not on spending being too high, but on a perceived possibly political risk from the Tea Party. Its fairly obvious, though, at this point that that risk was overestimated.Report

              • Avatar BobbyC in reply to Simon K says:

                I don’t think that our key point of disagreement is over the issue of T-bills, how they are used as cash substitutes and the role they play in our financial system. I could nitpick and find small points to disagree about (like whether China holds T-bills because Citi won’t let them have a 100bn checking account or whether in fact it’s because China prefers the sovereign credit risk to Citi risk). But really, I think we see the role of T-bills as a cash equivalent the same way, for foreign central banks as well as domestic banks and money market funds and really any financial institution.

                Where I see us disagreeing is that I am questioning the creditworthiness of the US, based on the debt, deficit, and politics. You are looking at the cost of debt service in relation to US national wealth and income, especially at current rates. You wrote that the US is “immune” from sovereign default, while I see that as relying on the assumption of low interest rates. Even Bernanke said that if the US doesn’t address its fiscal issues, then the Fed will not be able (ie willing) to keep interest rates down in a true run on the dollar. Holders of US govt debt expect that their real purchasing power will be roughly preserved (and maybe decline a bit) – that’s the promise that US debt represents to its investor base. I see material risk that that promise will be broken, either by default or devaluation.Report

              • Avatar Kimmi in reply to wardsmith says:

                NUCLEAR WEAPONS.
                go to hell, ward, where my proof lies. Deep in the grave with Nixon.
                capiche?Report

          • Avatar Kolohe in reply to Tom Van Dyke says:

            “The United States is teetering on the edge of Greek-style bankruptcy. ”

            Um, no it’s not. Otherwise real interest rates on Treasury instruments wouldn’t be negative up to 20 years out.
            http://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/textview.aspx?data=realyieldReport

            • Avatar James Hanley in reply to Kolohe says:

              Christ, that’s scary.Report

              • Avatar North in reply to James Hanley says:

                I concur though it’s an interesting exercise to consider why.

                Globally we have the EU market/currency which could metastasize into a hyper valuable German currency and a basket of worthless periphery currencies any moment. That takes Europe out of the running for a risk shy investor. Then we have China and their financial system which is more akin to a dilapidated 1940’s rickshaw constructed entirely out of party officials and cronies stealing everything they can touch. You’d have to be insane to put any huge amount of money in China if you’re risk averse. Russia’s economy is shrinking along with their aging alcohol poisoned population. Currently it swings about with gas prices making Uncle Vladmir’s economy the worlds largest petrostate with a side of asset seizure and minor China style corruption. Not a good place for money.

                Tottering in between these big rotten economies is poor mother Britain. Good generally secure financial industry (despite LIBOR) but the economy is just staggering under an austerity government and the pound economy isn’t that huge outside of finance to begin with.

                On the other side of the ledger you have the well run transparent safe countries. Mostly these are neoliberal economies: Brazil, Israel, Scandinavia, Canada, New Zealand, Australia (really just about all the Anglo former colonies). Economies are doing well, secure reliable currencies. Just what the doctor ordered except they’re so small and everyone and their dog is crowded in.

                So finally we have America. Sure compared to the well run risk free nations we’re profligate but compared to the big economies we compare pretty well. The financial system is a bit fishy but it mostly screws over small investors and borrowers; the big ones haven’t suffered much here. The deficit and currency could be a concern but honestly that danger is mostly hyperbole: the economy is huge, tax evasion is low and the government is collecting very little revenue (historically little; you probably can’t even see the laffer curve from where we are at right now) which means an austerity government could raise taxes and cut spending very easily (financially, not politically) if the currency was in any actual danger. Really of the big economies America’s doing pretty good. Russia and China have serious structural and fundamental problems (and worse they’re opaque so you don’t even know for sure what all their problems are). Europe has structural and political problems but America really only has political problems.

                Nope from an economic comparison standpoint America’s the place to be.Report

              • Avatar Scott Fields in reply to North says:

                Thanks for this assessment, North. It makes sense of something I was having a hard time getting my head around.Report

              • Avatar North in reply to Scott Fields says:

                No problem. Keep in mind also that on the other side of the ledger there’s a lot of money out there. It’s not just people in the stable states that are looking for safe places to park their assets. You have the petrostates sovereign wealth funds; the various global rich poobahs (looters) of any given poorly run third world state; as well as the pension funds, corporations and investors of the stable economic world. None of these people want to invest in risky failing economies. Ironically the US is in the catbird seat right now, people are very literally paying the US government to borrow their money (negative interest rates). This makes now a really good time to run deficits and do some buying/investing on a national level. But the long term fiscal issues: pensions, Medicare, structural deficits etc have to be addressed now or else eventually when the rest of the world gets its act together there’ll be hell to pay.
                Europe especially will sort out exactly what is what sooner or later. No one wants to be in the EU when it blows but after it does if it’s viable the party in the US will be over.Report

              • Avatar BobbyC in reply to North says:

                The negative real rates are still crazy. I understand the aversion to equities on some level – you really do have earnings risk so equity risk premium could evaporate just by a big fall in corporate profits. But why not buy high yield corporate bonds? They yield 7%. The amount of defaults that you need to fail to outperform US Treasuries at that rate is simply not going to happen. I understand investors fancy themselves risk averse, but buying 5yr US govt bonds at 0.60% when you can buy US high yield bonds (who lose their assets if they don’t pay unlike the US sovereign) at 7% is simply irrational, not risk aversion in any rational-defensible way.Report

              • Avatar North in reply to North says:

                And yet BobbyC the market says you’re wrong on this. A real headscratcher that.Report

              • Avatar Simon K in reply to North says:

                A lot of the time people have to buy treasuries. Several reasons:

                1. Basel II capital adequacy standards count them as cash equivalent so banks have to buy them if they’re bordering on being too highly leveraged, which they are.
                2. The overnight repo market can only use extremely safe assets as security. For a while they used MBS, but for understandable reasons, its now almost all treasuries.
                3. Money market funds are subject to special priveleges relative to other mutual funds, and in order to get them have to invest only in extremely safe assets. Again, this mostly means treasuries.
                4. Foreign central banks that buy a lot of dollars to prevent their own currency appreciating need to buy something with those dollars, and can only buy near cash assets. Again, treasuries.

                Basically, treasuries are the life blood of the dollar financial system, which is the largest part of the world financial system by a long way. They’re really not an investment, but rather an alternative to cash that has some yield, rather like a checking account (those also pay less than inflation). No-one will give you a checking account to keep billions of dollars in, but you can buy as many treasuries as you like.

                For a private investor with risk tolerance, private sector debt is where you want to be right now, but that’s different.Report

            • Avatar Kolohe in reply to Kolohe says:

              And if a Cato analyst of all people doesn’t believe in markets and the information they transmit, well, fish.Report

    • Avatar joey jo jo in reply to Tom Van Dyke says:

      tvd, master of the pivot. maybe 2nd pest to sarah p.Report

    • Avatar Kazzy in reply to Tom Van Dyke says:

      Where in this speech did Obama say “tax the rich”?Report

      • Avatar James Hanley in reply to Kazzy says:

        He was actually karaoke’ing Motorhead’s “Eat the Rich.”Report

      • Avatar Stillwater in reply to Kazzy says:

        I think it’s pretty clearly in the background, innit? Obama wants tax rates on the wealthy to go back to pre-Bush levels. That’s the policy he’s getting on about, no? The politics is on another level.Report

        • Avatar Kazzy in reply to Stillwater says:

          Well, yea. But here is what I don’t get, and I think Tom exemplifies this perfectly…

          Folks seem to be simultaneously arguing that Obama wants to take all the rich people’s money and foist there taxes into the stratosphere AND that taxing the rich will be ineffective since it would only raise a small amount of revenue. It is impossible for both of those points to be true. Yet they are both utilized by the fear mongers.

          Sort of like those who insist that Obama is simultaneously an incompetent buffoon who couldn’t string a sentence together without a teleprompter AND a secret Muslim socialist mastermind who has a plot to turn the world into his communist empire. Guh?

          The “tax the rich” meme conjures up images of Obama turning rich people over and shaking their pockets empty. Returning the top bracket to pre-Bush levels would amount to an increase in that bracket of about 3%. Not nothing, but not the image most people think of when they hear “tax the rich”… which is exactly why folks like Tom use the phrase so often.Report

          • Avatar North in reply to Kazzy says:

            Kazzy:
            “Folks seem to be simultaneously arguing that Obama wants to take all the rich people’s money and foist there taxes into the stratosphere AND that taxing the rich will be ineffective since it would only raise a small amount of revenue. It is impossible for both of those points to be true.”
            Granted first off the right is being disingenuous on the subject and I hate to be argumentative but these are not actually incompatible points. The top 1% of the country, even if we somehow could tax them at 100% simply don’t have enough money to balance the deficit let alone pay down the debt. The money simply isn’t there. If we’re hunting for the big majority of the dough you have to get out of the top classes of society and level your sights on the upper middle and middle class. These groups of people have less money than the top 1%, (a lot less) but there are a lot more of them (a really large amount more) and that’s where most of the money is.

            So these points aren’t contradictory. A revenue-increase-only deficit plan (*note* No Democratic party member and especially not Obama has ever proposed such a plan) would have to increase taxes on much more than the wealthy in order to balance the budget. So in theory Obama (or anyone) could tax the wealthy like crazy and still end up with tons of debt. There isn’t a contradiction there.

            The sad fact is that the problem is far bigger than can be solved by simply “taxing the rich”. Obama and his peers in the party know this which is why they kept proposing mixed strategies involving both tax increases and spending cuts. It’s important to keep in mind that only one side in the debate has ruled out one entire half of the deficit balancing equation and it hasn’t been Obama.Report

            • Avatar Tom Van Dyke in reply to North says:

              I dig source documents.

              Dear [Generic Democrat]–

              In just a few hours, Speaker Boehner, Eric Cantor, and House Republicans are holding a vote to extend the Bush tax cuts for the rich.

              Will you help us reach 250,000 signatures on our petition calling for an end to these reckless tax cuts for the wealthy?

              Add your name here >>

              Thanks to your unprecedented grassroots support, we’re holding House Republicans accountable for putting millionaires and billionaires ahead of the middle class.

              – Yesterday, you helped break our all-time record for online donations in one day! Over 25,000 of you stepped up to help us win a Democratic majority for President Obama. Watch one of our new ads you helped make possible >>

              – Last weekend, our field organizers and volunteers went neighbor-to-neighbor and house-to-house to alert voters about Republicans’ latest plan to put tax breaks for millionaires ahead of the middle class. Check out some of the photos — and sign up to volunteer in your area >>

              We can’t thank you enough for making this all possible. Onward to a tremendous Democratic victory!

              Nancy [Pelosi]

              http://www.powerlineblog.com/archives/2012/08/the-obama-campaign-like-demagoguery-only-dumber.phpReport

            • Avatar Kazzy in reply to North says:

              North-

              Noted, though we’re wading a bit into how we’re using vague terms. You are right that taxing the rich 100% wouldn’t solve the deficit. But Tom’s point was that we’re raising a paltry sum of $80-100B. And on that point he’s right. Bt the reason the sum is SO paltry is because the increase is not the mammoth shakedown it is being painted as. A massive shakedown would still be insufficient and wrong on a number of levels, but it’d raise more than $80-100B.Report

          • Avatar BobbyC in reply to Kazzy says:

            Obama always wants to address the effect of different policies on how much more or less taxes different income groups will pay. He has not addressed the absolute numbers, which is the intellectually honest approach. Democrats want to campaign against Republicans on taxes, but they won’t go beyond saying it’s time to pay “their fair share” which goes undefined. Why is 40% fair and 35% is unfair? Why is the income tax fair at all (it isn’t)? Why don’t we tax wealth (since at least that matches ability to pay)? Why don’t we tax consumption (since that is the only way the rich actually direct resources away from the broader society)?

            We have a country that defends the rich guy’s right to drive a Ferrari, eat caviar, own five homes, and a yacht with a full-time staff, but thinks he is threatening our democracy if he gives money to political campaigns or wants to pass his wealth to his children. That is flat out ridiculous and diverts attention from the real threats posed by income inequality, which are the distortions of luxury consumption and political instability when wealth is undeserved (and inherited wealth is just by the way).Report

            • Avatar Annelid Gustator in reply to BobbyC says:

              Lots of assertions. Can you unpack?
              What about income tax is unfair?
              What about consumption by the rich directs resources away from the broader society?
              What makes wealth deserved or undeserved? Do you think “the other side” sees a connection between unlimited political purchases and undeserved wealth?Report

    • Avatar Mo in reply to Tom Van Dyke says:

      Bill Clinton raised top tax rates, lifted the cap on Medicare taxes, increased corporate taxes and increased gas taxes. Raising tax rates on the rich is exactly what Clinton did.Report

  3. Avatar Stillwater says:

    Well done, Elias. I agree with Chait and Sargant (and you as well) that phase I was about pinning down Romney on Bain with phase II employing the Ryan Plan as a cudgel. I also agree that Obama is effectively making this campaign about the next four years rather than the last four by going on the offensive. We’ll see if Romney can push back.

    Should be interesting.Report

  4. Avatar North says:

    It looks like Obama’s running a decent campaign but it remains to be seen what the outcome will be. If the economy chugs even a little bit more he should be sitting awful pretty but if it keeps sputtering it’s going to be a nail biter.

    It’s good, incidentally, to see Obama can be a partisan fighter. The curmudgeon in me says that it’s a pity it took two to three years of him playing bipartisan and taking it in the balls for the GOP to bring it out of him but the psychoanalyst in me says he needed to do it that long before he was convinced that it was their fault he was playing no more Mr. Nice Guy.

    A thought that occurred to me a little while back. Did Obama et all screw the pooch by proposing PPACA right off the bat? They essentially poached the default GOP position and thus the GOP simply moved further right (though that was not predictable admissably). Would a better strategy have been to make a play for single payer and then when the GOP proclaimed their opposition and suggested something PPACA like Obama could have simply jumped aboard with both feet?Report

    • Avatar Scott Fields in reply to North says:

      It’s good, incidentally, to see Obama can be a partisan fighter. The curmudgeon in me says that it’s a pity it took two to three years of him playing bipartisan and taking it in the balls for the GOP to bring it out of him but the psychoanalyst in me says he needed to do it that long before he was convinced that it was their fault he was playing no more Mr. Nice Guy.

      Obama sold himself pretty strongly as bipartisan during the 2008 campaign and that was a big appeal to many independents, so I think he had to at least try that approach first and he had to stay with it for some time. I’d agree he should have gotten wise sooner. But, by giving the bipartisan approach every opportunity to succeed, he bought himself more space to be the partisan fighter now.Report

      • Or, BHO’s vicious partisanship undermines the only reason we elected him in the first place.Report

        • Avatar greginak in reply to Tom Van Dyke says:

          Maybe he should have incorporated some conservative ideas like a mandate and state level insurance exchanges in his HCR. I’m sure that would have helped.Report

          • Avatar Don Zeko in reply to greginak says:

            He could have also backed off of his more liberal campaign promises on foreign policy, or perhaps offered a debt reduction package strongly tilted away fro0m tax increases and towards spending cuts, or even passed a raft of temporary tax cuts to stimulate the economy. So many missed opportunities, so many….Report

        • Avatar North in reply to Tom Van Dyke says:

          Good of you to make Scott’s point for him Tom. Obama playing the bipartisan wuss for over half his first term is why assertions like yours get pretty much zero traction outside of your party.
          Personally I am doubtful it was worth it but Obama evidently thought otherwise.Report

  5. Avatar Scott says:

    I guess Barry is so desperate he has to try to paint Mitt as a felon in his newest ad. The whole Romy, Bain and taxes thing will get old after a while, especially when folks realize that there is nothing else to his re-election campaign. What is even more sad is that he Barry promised he wouldn’t run attack ads back in 2008. I guess you change your tune when you get desperate.Report

    • Avatar Kazzy in reply to Scott says:

      I’m excited to write my post on the idiocy of folks like you who insist on calling President Obama by a name that he wouldn’t answer to.

      Also, cite for your claim about his latest ad…?Report

        • Avatar Kazzy in reply to Scott says:

          You understand how this whole argument thing works, right? When YOU make a claim, the onus is on YOU to provide the evidence to back it up. It is simply silly to make a claim without citation and respond to a request for citation by insisting the other person should have found it.

          As for the criticism itself, you did actually WATCH the ad, no?

          The claim being made is that the words “felon” and “tax records” were on the screen together at the time. And they were. Using a clip from a Fox News post-debate analysis that looked at the Twitter response to Romney, highlighting two dips in the graph that correlated with the mention of the words “felon” and “tax records”, which seemed to happen some time apart in the actual debate.Report

          • Avatar James Hanley in reply to Kazzy says:

            When YOU make a claim, the onus is on YOU to provide the evidence to back it up. It is simply silly to make a claim without citation and respond to a request for citation by insisting the other person should have found it

            Do you think we could get Erik or Mark to add that to the commenting policy? Maybe simplify it to a commandment: “Thou shalt not expect others to do your homework for you.”Report

            • Heh. Perhaps we could make it such that a target’s failure to abide by this commandment constitutes an absolute affirmative defense to what would otherwise be a comment policy violation?Report

              • Avatar Jaybird in reply to Mark Thompson says:

                I’ve seen such rules abused in very, very wicked ways.

                Person A: “The Masons have ruled this country since 1580.”

                Person B: “How in the world have the Masons ruled this country since 1580?!?”

                Person A: “I’m not going to do your homework for you!!!!”

                Now, I’ve been in communities where Person A had a posse (or Person B was generally disliked) and situations far sillier than this example turned into battles royale.Report

              • Avatar James Hanley in reply to Jaybird says:

                I think if you just say the person who makes the claim bears 100% responsibility for supporting it, and questioning an unsupported claim does not require support.

                Of course I don’t really think it should be a formal rule; just part of the local culture. Most people here are pretty good about it, anyway, with a very few noticeable exceptions, and they tend to take some abuse for it.Report

              • Avatar Mark Thompson in reply to Jaybird says:

                I assure you that this is largely tongue in cheek. I’m with Hanley that this ought not be a formal rule.Report

              • Avatar BobbyC in reply to Mark Thompson says:

                There’s a comment policy?Report

          • Avatar Scott in reply to Kazzy says:

            You asked I and provided it. I thought it had been widely discussed in the media but then I forgot that the main stream media would not carry a story like that.

            So you think the two words appearing on the screen at the same time was just a happy coincidence? I guess so but that doesn’t surprise me. Isn’t that a bit low even for the Dems? This is a rhetorical question given that just the other day Harry Reid said that Mitt’s dead father would be embarrassed by Mitt’s not releasing his tax returns. (or rather the number of tax returns that Dems deem necessary)

            Here is the linky for you:

            http://www.foxnews.com/politics/2012/07/31/reid-suggests-romney-not-releasing-tax-returns-would-have-embarrassed-late/Report

            • Avatar Kazzy in reply to Scott says:

              You should have provided it in the first place. And responding to me pointing out your error should not be to mock me. That’s silly. Accept you fished up and we can move on.

              If Obama is guilty of making the “felon” “tax records” connection, than we most also indict FoxNews as well, since without their graphic, Obama would not have had the ammo he needed to make the point you insist he is making. And, even if the connection was deliberate, why exactly is that a problem? Last I heard (and I’ll fully confess to not following the story too closely because I think the tax record thing is all a bit silly in the big picture), there are legitimate questions as to whether or not Romney hid assets overseas to avoid paying taxes on them, which I believe qualifies as a felony. So, if there is a legitimate question as to whether or not Mitt is guilty of felony tax evasion, it seems perfectly reasonable for Obama or anyone else to bring it up; if that question has been answered, then obviously that changes things.

              Regardless, we’re back to the whole “This guy is such an incompetent fool that I won’t even call him by his real name BUT OH MY GOD look at this tricky subterfuge subliminal messaging he’s using! WHAT AN EVIL GENIUS!”Report

              • Avatar Scott in reply to Kazzy says:

                I shouldn’t mock you? Really, considering the childish names you called me in to the other gun control thread you’re lucky I’m this polite. Should I provide the link to those comments? Not to mention your moronic comment about your next front page post, which was immature.

                If Barry and his ilk want to make accusations then make them up front like honest folks. Oh wait, Stephanie Cutter, an Obama deputy campaign manager, said that Romney is either a liar or a felon last month. She backed off that claim rather quickly.

                Funny that you mention subliminal messages, as the same Weekly Standard article mentions that the Dems complained when a Bush ad seemed to call them rats.Report

              • Avatar Pat Cahalan in reply to Scott says:

                Your entry posts to the various threads in which you choose to participate are either deliberately written to engender the least charitable possible reading (in which case, you’re good at it), or you have some other motivation, or you’re a bad writer.

                If you want people to engage you more charitably, I suggest an alternative writing style. If you don’t, don’t complain when they don’t. Even if they should.Report

              • Avatar Scott in reply to Pat Cahalan says:

                Pat:

                When have I called another poster on this blog childish names as Kazzy did to me on the gun control thread I mentioned? If Kazzy objects to me calling him Barry fine, but I hardly see how that entitles him to call me childish names. If you’d like I can post a link to the thread so you can read that exchange. I can understand why Kazzy might like to downplay or forget that exchange, I really thought it was beneath the level of discourse expected here but clearly he feels it was justified.Report

              • Avatar Mark Thompson in reply to Scott says:

                Seriously, Scott, if you want people to treat you charitably, you have to be willing to treat others charitably. This you have proven singularly unwilling to do over the years. I frankly can think of exactly one other commenter in this site’s history who has been less willing to treat others charitably. I can think of exactly zero other commenters who have been less willing to acknowledge errors or mistakes or who disappear/obfuscate more quickly and consistently when his errors are demonstrated.

                You get what you give. Sympathy and empathy aren’t exactly amongst the things you give; it shouldn’t be a surprise that you get none in return.Report

              • Avatar Kazzy in reply to Scott says:

                Link away, brotha.Report

              • Avatar Patrick Cahalan in reply to Scott says:

                Basically, What Mark Said.

                I’m not going to play link war with you, Scott, I’m totally disinterested in proving to you that you come across as particularly trollish, mostly because I don’t really find almost anything you say to be substantive (unlike Wardsmith, with whom I frequently disagree), and you’re not even occasionally funny (like Duck, with whom I almost always disagree).

                You open almost every conversation by rhetorically thumbing people in the eye, and your followup on those threads usually reinforces that you’re either doing this on purpose, or you’re just a jackass. I can’t honestly say recalling a moment where you’ve said, “My bad” or “Sorry, I went over the line there” or “You’re right, that’s a bad generalization” or any other comment that would reflect that you’ve ever even had pause about what you’re saying and to whom you’re addressing it.

                In other words, I don’t think you come here to learn anything about your own positions, or about anyone’s, really. You’re here to reinforce your beliefs, and one of your beliefs is that you’re unreasonably persecuted… which you buttress up by being a general unapologetic ass and then pointing out whenever anybody does it to you. Which, to be honest, they do… but with an order of magnitude less frequency than you do it.

                Hey, maybe that’s just confirmation bias on my part. But I doubt it.Report

              • Avatar Kazzy in reply to Scott says:

                When you call others by appropriate names, I’ll resist the urge to call you names. Goose, gander, etc.

                His name is Barack Obama. Or President Obama. Or Obama. Or Barack. Or Mr. President. Not Barry. Insisting on Barry tells me you don’t think calling people by their real name is important.Report

              • Avatar BobbyC in reply to Scott says:

                Is the Barry thing a shit-disturber thing with you? I’m seriously curious.

                I mean you can call the dude a socialist bastard who ran for Senate to prove to his wife that he isn’t a chump. Or mention that he doesn’t understand economics. Or that he has basically admitted that the last four yrs were sort of a learning process that he couldn’t just give speeches and expect the bipartisan spirit to sweep the capitol out of love of and awe for his persona.

                My point is that I’m not Obama sycophant, but I don’t go around blogs calling him Barry to distract everyone from my sincere views. Why do you?Report

            • Avatar Kimmi in reply to Scott says:

              Fox news routinely characterizes Republicans as Democrats if they do something wrong. Just watch the print.
              Media Matters talks about this a lot.Report

      • Avatar Will Truman in reply to Kazzy says:

        Kazzy, here is what I kind of find funny about the “Barry” thing… people who seem to go to great lengths to point out Obama’s otherness are the same ones that anglicize his name. I’ve never quite gotten that. It would make more sense if he went by Barry and they kept calling him Barack (emphasizing the otherness). Or going out of your way to mention his middle name. Or like some Democrats did with Bobby Jindal (calling him by by his given Indian name). But… to take a foreignish sounding name and change it to a very American name? It’s just odd.Report

        • Avatar Kazzy in reply to Will Truman says:

          For a while, many did do the Hussein thing. Many others still do BHO even though he uses BO (I realize some do this because of the bad association with body odor and were well-intentioned). But your point is one I didn’t consider and is actually hilarious. It’s as if there desire to disrespect him and otherize him are having a fight!Report

        • Avatar Kris in reply to Will Truman says:

          Now we’re debating this Barry thing?

          Rush Limbaugh does better.

          The Vince Foster Murder and Birtherism and Weiner’s weiner, discuss.Report

        • Avatar Annelid Gustator in reply to Will Truman says:

          Maybe they’re still “otherizing,” but in an even nastier way: “boy”izing him.Report