27 Mar 2009 10:57 Filed in: Weekend Reading
Reading: The Tired Donkey suggests you read this NYTimes Magazine profile of one of the great scientific minds of our age, Freeman Dyson, who happens to believe that global warming is nothing to be worried about. The Tired Donkey is not now nor will he ever take a position on global warming this blog, but it is always important to at least take notice of serious outliers from the conventional wisdom. The Tired Donkey notes that Galileo was one of those, too. To get a flavor of some of the anger at Professor Dyson, see the links in Andy Revkin’s blog post here. For a shorter—but still entertaining—profile of Dyson, see here. And, sticking with a theme from last week, the Tired Donkey really wishes this photo was in color because that jacket Professor Dyson is sporting is quite groovy.
Watching: This one is self-explanatory.
Off topic: We have spent some time in the past this week, so here are some atomic brands and atomic toys for your enjoyment, all from the Oak Ridge Associated Universities Health Physics Historical Instrumentation Museum. This place is apparently a lot more fun than it sounds, and the Tired Donkey would be interested in interviewing anyone who has eaten Radium Brand Creamery Butter; unfortunately, he doubts that any of them are still around. The Tired Donkey does not want to interview anyone who has used a Radium brand condom as he is afraid their story would be too sad to bear.
26 Mar 2009 16:09
The Tired Donkey is on a plane on his way to New York as he writes these words. He is going to that sad epicenter of our current crisis to do the kind of business that donkeys do, but the trip is also making him consider the good that may emerge from New York’s brutal humbling. Now—you may ask yourself—what good could the Tired Donkey possibly see coming out of this time of troubles? Is he friends with someone who got an AIG bonus and wants to blow it on a gluttonous, hedonistic dinner in the Tired Donkey’s honor? Is he staying at a luxurious, over-the-top hotel almost for free because no one can afford to travel anymore after paying for the AIG bailout? To these three questions, the Tired Donkey answers, in order: (1) he will tell you below, (2) no (but—he promises you—he will be eating well) and (3) yes.
On, then, to the good that can come from our current suffering. You may have read various paranoid commentators who have asserted that Great Donkey Ronald Reagan ran up huge deficits on purpose so that the federal government would be forced to get smaller by virtue of not having enough money to feed its massive bulk. The Tired Donkey—while paranoid at times—is not one of these commentators. Great Donkey Reagan ran up those deficits to destroy the Soviet Union without having to fight a war with them, and the Tired Donkey thanks him for it. But that is neither here nor there; there is a point to all this. A deficit is an increase in the nation’s debt, and that debt must be repaid. With money. And the government is soon going to run out of that unless the tax base gets broader. There is simply not enough donkey money in the United States to pay for everything Myrmidon Donkey Obama wants to do and—at the same time—pay the vig on all this new debt. In short, our economic woes have finally done what the paranoid commentators have always accused Great Donkey Reagan of doing: they are making our national debt so huge that we may crumble under it. And the tax reform discussion has already begun.
Just yesterday, the Tired Donkey heard a piece on NPR in which a very bright woman from the Tax Policy Center made exactly this point: MD Obama’s administration is going to have to start thinking about broadening the tax base because they have no choice but to think about it. Having read this last sentence, you may feel a vague sense of dislocation and unease, as if something is not quite right with the world. The Tired Donkey understands, and he will help you. You feel strange because that quote is from a program on National Public Radio, the propoganda arm of the Freeloaders and home to many Stockholm Donkeys. And you may now be saying to yourself, “My God! If NPR is having a discussion about broadening the tax base—even a short discussion—a crisis must be brewing, a fiscal crisis that is going to force the country to inject some fairness into the tax code.” You would be right to say this to yourself. But not too loudly. There are still many miles to go before we sleep, and we don’t want the Freeloaders to recognize that the tide has turned until it is too late.
Robert Reich, Magical Bearded Gnome and former Clinton Administration Secretary of Labor, declared on the Marketplace Morning Report today that Reaganomics is dead. It has, apparently, been supplanted by Obamanomics. Magical Bearded Gnome Reich is crafty with his use of statistics, but the Tired Donkey urges you not to be fooled. Magical Bearded Gnome Reich uses two faulty assertions as his central thesis: (1) that the Reagan tax cuts of 1987 began a period of relative wealth transfer to the already-wealthy at the expense of the poor and middle class, and (2) that deregulation is bad. The Tired Donkey disagrees with both, and he will now explain why; what he is about to tell you will make some of you mad. Too bad.
President Reagan’s policies which both flattened the tax code and championed deregulation were proper and ushered in a long era of prosperity. Unfortunately, the people who championed Reagan’s ideas after he was gone were idiots, and—as idiots often do—they carried things too far. There was too much regulation in the 1970s. The Tired Donkey can’t even locate a Stockholm Donkey who argues otherwise. The problem came later when dim-witted Republicans began arguing that constant deregulation is a good thing, an idea so dumb that only people running for elective office could champion it. Allow the Tired Donkey to state the obvious for a moment: too much regulation is bad and so is too little. That is a piece of why we are in the mess we are in right now. But there is another piece to this puzzle, and the Tired Donkey will now return to the tax question.
You may find yourself asking, “Tired Donkey, if Magical Bearded Gnome Reich is wrong, what did cause the wealth transfer and the terrible economic state we are in right now?” Here is the answer: changes in the treatment of capital gains. As you can see at the link, in 1997—during the Clinton administration—the capital gains tax rate changed dramatically. Prior to 1997, capital gains were taxed as about the same rate as other income; after 1997—particularly for donkeys who made enough that most of their income was taxed at the highest marginal rate—the gap between long term capital gains taxes and the highest marginal tax rate was as high at 19.6%.
Now donkeys are not idiots, at least not most of them. So what did they do? They began shifting all the income-making activity they could into the stock market. And they were willing to take big risks to do it because a 19.6% tax gap can cover a lot of risk. This activity led to (1) the wealthiest of donkeys being taxed at rates much lower than the less well-healed donkeys; (2) the incredible stock runs of the past ten years; and (3) the long-term trend of the rich donkeys getting richer (which—were it not caused by stupid tax polices that messed up the country—would be fine with the Tired Donkey). And so—at the risk of alienating his readers—the Tired Donkey will once again state the obvious: a tax incentive to take obscene risks in the stock market combined with deregulatory zeal beyond all reason will lead to disaster. So here we are. And here is what is going to make you mad: the Tired Donkey declares that capital gains taxes need to be raised at the same time as the Freeloaders begin contributing to this country again. Don’t like it? Send the Tired Donkey an email; there’s a link at the bottom of the page.