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David Brooks Think When Democrats Win Elections They Have to Give Everything to Republicans

3:29 am in Uncategorized by Dean Baker

David Brooks lectures at a podium

David Brooks offers Democrats the worst tax deal ever.

It’s fascinating to read David Brooks’ column today. He boldly argues that Republicans:

have to acknowledge how badly things are stacked against them. Polls show that large majorities of Americans are inclined to blame Republicans if the country goes off the ‘fiscal cliff.’ The business community, which needs a deal to boost confidence, will turn against them. The national security types and the defense contractors, who hate the prospect of sequestration, will turn against them.

Moreover a budget stalemate on these terms will confirm every bad Republican stereotype. Republicans will be raising middle-class taxes in order to serve the rich — shafting Sam’s Club to benefit the country club. If Republicans do this, they might as well get Mitt Romney’s “47 percent” comments printed on T-shirts and wear them for the rest of their lives.

Recognizing their weak position, he says that Republicans should be prepared to allow the top tax rate to rise to 36 or even 37 percent, but in exchange:

Republicans should also ask for some medium-size entitlement cuts as part of the fiscal cliff down payment. These could fit within the framework Speaker John Boehner sketched out Monday afternoon: chaining Social Security cost-of-living increases to price inflation and increasing the Medicare Part B premium to 35 percent of costs.

Excuse me, but what planet is David Brooks on? This would be comparable to Japan asking for Hawaii and parts of California as it was negotiating its surrender in World War II.

If nothing happens right now, the top tax rate goes to 39.6 percent on January 1, 2013. Let’s say that again just in case David Brooks is reading. If nothing happens right now, the top tax rate goes to 39.6 percent on January 1, 2013. There is nothing that John Boehner and the Republicans can do to stop this.

Furthermore, President Obama has a mandate to raise the top tax rate to 39.6 percent. Brooks probably missed this, but we just had a lengthy election campaign where taxes on the rich were the central issue. President Obama won.

Incredibly, Brooks’ proposal for “medium size entitlement cuts” would take a much bigger bite out of the income of retirees than his bold concessions on taxes would take out of the income of the rich. The cut to the cost of living adjustment would reduce lifetime benefits of seniors by around 3 percent. For the third of retirees that rely on Social Security for more than 90 percent of their income, this would be a cut in their income more than 2.5 percent.

In addition, Brooks want to raise Medicare Part B premiums by 10 percentage points of the total cost from 25 percent to 35 percent. With the per person cost projected to be average almost $6,000 a year over the next decade, this “medium size entitlement reform” would raise the cost to seniors by $600 a year. This is equal to 3 percent of the income of a senior with an income of $20,000, a figure that is somewhat higher than the median for people over the age of 65.

So Brooks is looking to cut the income net of Medicare expenses for the bottom half of Social Security and Medicare beneficiaries by almost 6 percent. And, his tax increases?

We don’t know exactly how Brooks would change the tax schedules, but let’s assume that the 35 percent bracket goes to 37 percent, Brooks’ higher number. And we’ll raise the 33 percent bracket to 35 percent. For a couple earning $500,000 a year, this would imply an increase in taxes of roughly $7,600 a year or 1.5 percent of their income.

So Brooks is proposing that as a starting offer (he wants bigger cuts on the table in the year ahead) moderate income seniors will see their income drop by 6 percent due to cuts in Social Security and Medicare, while the wealthy will see their income fall by 1.5 percent from tax increases. It’s interesting to think aboout what he would suggest putting on the table if the Republicans had won the election.

Dean Baker is co-director of the Center for Economy and Policy Research. He also writes a regular blog, Beat the Press, where this post originally appeared.

Photo by the Miller Center released under a Creative Commons License.

Brooks Complains About the Monomaniacs Who Insist Earth Is Round

5:53 am in Uncategorized by Dean Baker

David Brooks concludes a bizarre column explaining our love for the Olympics with the ability to keep contradictory ideas simultaneously in our mind. We admire both glory of the winner and also the nobility of the good loser.

Rocks move across the Death Valley's barren 'Race Track playa'.

Does David Brooks want us to reconsider Flat Earth theories too? (Photo: Marc Kjerland / Flickr)

He uses this observation to then criticize “monomaniacs:”

The world, unfortunately, has too many monomaniacs — people who pick one side of any creative tension and wish the other would just go away. Some parents and teachers like the cooperative virtues and distrust the competitive ones, so, laughably, they tell their kids that they are going to play sports but nobody is going to keep score.

Politics has become a contest of monomaniacs. One faction champions austerity while another champions growth. ….

The right course is usually to push hard in both directions, to be a house creatively divided against itself, to thrive amid the contradictions.

Obviously, the right course is usually to push hard in both directions. We should both use modern medicine to cure people of illness and also let them die because we believe the power of prayer is more important. We should both eliminate segregation and racial discrimination and preserve them because of the inherent superiority of the white race.

What the hell does Brooks think he is saying here? There are any number of issues where there is right and wrong and David Brooks believes that every bit as much as the monomaniacs he is criticizing. He has apparently decided that there is no right or wrong in the debate over fiscal policy.

That’s fine, we would then expect a columnist for the country’s most important newspaper to give us the evidence for this position, not to call people names because they believe that the evidence supports one or the other position. (It does support the case for growth.)

Oh well, at least the NYT is giving a job to a person without the skills to compete in the modern world economy.

Dean Baker is co-director of the Center for Economy and Policy Research. He also writes a regular blog, Beat the Press, where this post original appeared.

Educating David Brooks on the Budget

5:15 am in Uncategorized by Dean Baker

David Brooks: Math is hard

I enjoy teaching, I used to do it for a living. So I am happy to take on the job of teaching David Brooks about the budget so that he does not consistently embarrass himself in his NYT columns.

Today he is trying to give us a balanced assessment of President Obama’s case for his budget. He just puts the facts on the table. Brooks tells us, “I’m not going to pass my own comprehensive judgment on this here.”

The problem is that the facts are not quite as Brooks lays them out. To start with, Brooks seems more interested in scaring people than informing them. He tells readers:

I’ve based that argument on certain facts. President Obama’s 2013 budget will add roughly $6 trillion to the nation’s debt over the next 10 years. By 2022, Americans will be spending $915 billion on interest payments on the debt alone, a number far larger than that year’s entire defense budget.”

That sounds really really bad. After all $915 billion is a really big number, can we afford that? The way that you look to answer that question is by comparing the spending to the projected size of the economy. GDP is projected to be $24.7 trillion in 2022. The projected interest spending in that year is then 3.7 percent of GDP. That is somewhat higher than 3.3 percent of GDP we hit in 1991, but not hugely so.

Furthermore, if the Federal Reserve Board continued to hold the $3 trillion in assets it has purchased to boost the economy, much of this interest would be refunded to the Treasury. Currently, the Fed is refunding about $80 billion a year to the Treasury, or a bit more than 0.5 percent of GDP. Its interest earnings would be projected to rise when interest rates go higher. (The Fed could raise reserve requirements to offset the potential inflationary impact of the additional reserves in the banking system.)

[CORRECTION: David Brooks is actually right on this. He said "that" year, not "last" year.] Comparing projected interest payments in 2022 to last year’s defense spending is a joke. Serious people do not compare nominal sums that are more than a decade apart. This is because serious people have heard of inflation. Hey, we’re spending 8 times as much on the military today as we did at the height of World War II. This is true using nominal dollars, but obviously an absurd comparison.

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