Wednesday, December 15, 2010 Julian Lim
Theme: PURPLE HAZE ALL IN MY BRAIN! (This will become clear later.)
16. Words of protest : WHAT'S THE BIG IDEA? Sarcasm - the idea isn't big at all. I heard this so many times when I was kid!
21. King's memorable words : I HAVE A DREAM. One of the most famous quotes of the 20th century, from a speech on August 28, 1963 by the Reverend Martin Luther King, Jr, who really did have big ideas.
33. Lennon's last album released before his death : DOUBLE FANTASY. Not familiar with it. Three weeks after it's release in 1980, John Lennon was killed on my birthday.
49. Pensive state : DEEP THOUGHT. Also, the mega computer in the Hitchhiker's Guide to the Galaxy. At the time, it was a play on "Deep Throat."
And, of course, the unifier: 55. Sports psychologist's mantra ... or what can be said about the last word of 16-, 21-, 33- or 49-Across : IT'S ALL IN THE MIND. Like a purple haze.
Hi gang, it's JazzBumpa, able to spend some quality time at The Corner and devote what's between my ears to puzzledom, now that the December performances are in the past tense. Rather a rich musical sub-theme to this puzzle, too as we'll see and hear. Is it in tune? Let's find out.
ACROSS
1. 2007 Oscar winner (Best Original Screenplay) about a pregnant teenager : JUNO. Didn't see it.
5. Greenish-blue : AQUA
9. Astronaut's thumbs-ups : A-OKS
13. "Gimme __": "Be right with you" : A SEC. Short for a second, of course. Someone who wants to take a little longer might say, "Gimme some secs."
14. Turn one's nose up at : SPURN. Hell hath no fury like a woman who has been turned down, or whose nose has been turned up. Yes, I know that's SCORNED not SPURNED, but - hey - close enough.
15. __ the fat : CHEW. To CHEW the fat is to engage in idle chatter. Does anyone know the origin of this interesting expression?
19. High nest : AERIE. I never know how to spell this word, so it always gives me an eerie feeling.
20. Very capable : ADEPT. Like some left handed guitarists.
26. Sound during a massage : AAH. Or, perhaps, "OOF!" That depends on how deeply she's digging into my levator scapula.
27. Do a goalkeeper's job : DEFEND. In soccer or hockey. Get the puck out of here! If you combined soccer with hockey, would it be sockey or hocker?
28. Island in the French West Indies, familiarly : ST. BART'S According to Wikipedia, "officially the Collectivity of Saint Barthelemy (French: Collectivité de Saint-Barthélemy), is an overseas collectivity of France. Often abbreviated to Saint-Barth in French, or St. Barts in English, the collectivity is one of the four territories among the Leeward Islands in the northeastern Caribbean that comprise the French West Indies, along with Guadeloupe, Martinique and Saint Martin." And, to complete our Caribbean holiday,
42. Island nation west of Haiti : JAMAICA. JAMAICA is due south of Cuba, ST. BART'S is in the island chain due east of Puerto Rico.
30. Hockey great : ORR. Bobby ORR was a Boston Bruin for many years. He was a defense man, but not a goalkeeper. If it's hockey and 3 letters, fill in ORR and move on. I wonder why we never see Borje Salming in X-words?
31. Elect : VOTE IN. You can be disappointed right away if your candidate loses, or later on if (s)he wins.
39. Uses a LaserJet : PRINTS. Sadly, mine went kablooey last week, after 14 years of faithful service.
40. "Oh, what a tangled __ we weave": Scott : WEB. " . . .When first we practise to deceive!" From Canto VI, XVII of Sir Walter Scott's epic poem, Marmion: A Tale of Flodden Field. I can't wait to see "XVII" so clued!
45. Mineral used in glassmaking : SILICA, better known as sand. Common window glass is called soda-lime-silica glass, after it's major components. Attempts to substitute lemon for the lime have never been successful. Soda - lime- gin in a glass is almost, but not quite, a gimlet.
48. "... man __ mouse?" : OR A. The first of two really awkward partials. A sour note, in my opinion.
52. Nairobi is its capital : KENYA. A country in East-central Africa.
54. Kingdom : REALM. Literally, the dominion of a king, from the old French reaume.
61. Time for lunch : NOON. Synonymous, more or less.
62. Machu Picchu's range : ANDES. The mountain range forming the backbone of South America.
63. Theater honor : OBIE. Off-Broadway theater awards.
64. Instrument in a Chinese temple : GONG. I wanted to link to a YouTube vid, but they all seem to be several minutes long. More long GONGing than I'm wanting.
65. Makes slick, in a way : OILS. Lubricates with oil.
66. Letters at the end of a love letter : XOXO. Hugs and kisses - retro textese. Sok Csok in Hungarian.
DOWN
1. Boxer's target : JAW. Occasionally, they seem to be made of soda-lime-silica.
2. Escort to a seat, in slang : USH. Ish - a back formation: to this way of thinking, an USHER is one who USHES; until the house falls, I suppose.
3. Cultural funding gp. : NEA. The National Endowment for the Arts.
4. C to C, e.g. : OCTAVE. Sadly, your resident trombonist need perp help for this one. And I just improvised 16 measures against a C7 chord Monday night - using the G diminished scale. Sounded weird, even to me.
5. Nuisance to gardeners : APHID. Yesterday we had ant lions, today we have ant cows.
6. Kooky : QUEER. Strange, odd, outre, out of the ordinary. "This is the rather old-fashioned and only slightly pejorative sense of the word," Tom said, gaily.
7. Suffix with sub : URB. According to Wikipedia a SUBURB can be a residential area within a city. I have never heard it used that way. In my experience, a SUBURB is a residential area within commuting distance of a city. Also, the best place for a dressmaker's shop: on the outskirts of town.
8. Singer/songwriter DiFranco : ANI. I guess this song is about Howard Johnson.
9. Low-pH substance : ACID. If you must know, pH is the negative log of hydrated hydrogen ion concentration. The scale runs from 0 to 14, with smaller number indicating higher acidity. The neutral point is 7, and numbers between 7 and 14 are alkaline. I'll let Al decide if there's going to be a quiz.
10. "Goodness!" : OH, DEAR, what can the matter be?
11. Try and try again : KEEP AT. My motto is, If at first you don't succeed, the hell with it!
12. Mowed strips : SWATHS
14. Pricey strings, for short : STRAD. A Stradivarius violin. These instruments made by members of the Stradivari family in the late 1600's are valued in the millions. You can get a decent used trombone for a few hundred bucks.
17. Witnessed : SEEN. "I was witnessed," not "I witnessed.' Passive voice is used in a tricky way here.
18. Chess sacrifice : GAMBIT. Not exactly. A GAMBIT might involve a sacrifice, or just be a tricky move that presents your opponent with a bewildering array of alternatives.
21. Altar words : I DO. The LW and I spoke these words at the Court House in Dearborn. Not the best decision we ever made. The venue, I mean. The decision to get married was one of our best.
22. Gnus' group : HERD. Heard of Gnus? Could there be a wilder beast? That is one tough mama!
23. Hairstyle for Hendrix : AFRO. "Excuse me while I kiss this guy," and the explanation for today's theme.
24. These, in Juarez : ESTAS. I wanted ESSOS. Another spelling conundrum.
25. "... two fives for __?" : A TEN. You decide if this is a good trade.
29. Prefix with gram : ANA. Aha! - An Anagram! Jerome, we need you . . .
31. __ cavae: large blood vessels : VENAE. Collectively, these are the superior VENA cava and inferior VENA cava, large veins that carry deoxygenated blood into the right auricle of the heart.
32. Frequently, to a bard : OFT. "Often" is OFT thusly truncated - or so they would have us believe.
34. Dance-storm link : UP A. The second awkward partial. Which do think is superior or inferior?
35. Like some showers : BRIDAL. The BRIDE-to-be is showered with gifts. This is neither a rain storm not a wet t-shirt contest.
36. Wingless parasites : LICE. I will not link. The ant lion was bad enough.
37. Gulp from a flask : SWIG. "Pass the paper bag that holds the bottle."
38. "Gross!" : YECH. You might want to wipe it off before taking a SWIG.
41. Creature that "sees" using echolocation : BAT. The "blind as a BAT" creature uses it's own natural sonar to navigate.
42. Pulling one's leg : JOKING. Another curious expression.
43. Schoolyard argument retort : ARE TOO. You are one. You and I are too!
44. Controversial rocker Marilyn : MANSON. Not his real name, and not worthy of link.
45. Old Persian rulers : SHAHS.
46. Heracles' beloved : IOLE. No idea.
47. Klutz : LUMMOX. The origin of this clumsy word is unknown. But it did lead me here. Has anyone used this site?
50. Gearshift letters : PRNDL. Acronym of Park, Reverse, Neutral, Drive, Low, pronouced "prindle," almost like ersatz potato chips.
51. Heads, to Henri : TETES. Alliteration suggests a foreign word, Henri suggests that it's French. And inside those TETES is another possible connection to the theme.
53. Partner of yin : YANG. Each completes the other. "Within their closed circumference one can find/ Two curves in perfect fit, his YANG, her yin/ That in each cycle once again begin/ To cluster into love's sweet spiral bind." AHH - poetry!
56. __-tzu : LAO. A mystic philosopher of ancient China, author of the Tao Te Ching, who also exists in many variant spellings.
57. Pasta ending : INI. An interesting non-self-referential affix clue. An example would be ROTINI, since we were speaking of spirals.
58. Native of Nigeria : IBO. The IBO, IGBO or IBOE are largest ethnic group in Nigeria.
59. Prohibit : NIX. This comes to us from the German word "Nichts" meaning "nothing." It is also a treatment for 36D (the answer, not a lingerie reference.) Ixnay on the icelay!
60. "Gloria in Excelsis __" : DEO. Glory to God in the highest. "And peace to his people on earth," the words continue. A prayerful and joyous end to today's puzzle.
There you have it folks, a nice Wednesday puzzle, fun to solve and fun to write up. Hope you enjoyed it.
Cheers!
JzB (who really does know it's "kiss the sky.")
Cross-posted at the Corner.
Wednesday, December 15, 2010
Monday, December 13, 2010
Quote of the Day - Krugman on the Tax Deal
Krugman usually editorializes in the NY Times on Monday and Friday. Here is an excerpt from today's entry.
He goes on to note that deleveraging is working - household debt is down to 118% of income.
H/T to Thoma, who has an overlapping, but more extensive quote, which includes PK's final paragraph, and that is the really crux of this bad deal - it will all have to be played out again in 2012, with the backdrop of an election year.
I continue to become more pessimistic.
.
The root of our current troubles lies in the debt American families ran up during the Bush-era housing bubble. Twenty years ago, the average American household’s debt was 83 percent of its income; by a decade ago, that had crept up to 92 percent; but by late 2007, debts were 130 percent of income.
All this borrowing took place both because banks had abandoned any notion of sound lending and because everyone assumed that house prices would never fall. And then the bubble burst.
What we’ve been dealing with ever since is a painful process of “deleveraging”: highly indebted Americans not only can’t spend the way they used to, they’re having to pay down the debts they ran up in the bubble years. This would be fine if someone else were taking up the slack. But what’s actually happening is that some people are spending much less while nobody is spending more — and this translates into a depressed economy and high unemployment.
What the government should be doing in this situation is spending more while the private sector is spending less, supporting employment while those debts are paid down. And this government spending needs to be sustained: we’re not talking about a brief burst of aid; we’re talking about spending that lasts long enough for households to get their debts back under control. The original Obama stimulus wasn’t just too small; it was also much too short-lived, with much of the positive effect already gone.
He goes on to note that deleveraging is working - household debt is down to 118% of income.
H/T to Thoma, who has an overlapping, but more extensive quote, which includes PK's final paragraph, and that is the really crux of this bad deal - it will all have to be played out again in 2012, with the backdrop of an election year.
I continue to become more pessimistic.
.
Talking About Taxes
Niklas Blanchard finds it hard to discuss taxes. Not I! Prior to this post, a check of my blog labels in the right hand frame reveals 21 posts with that tag.
The problem Niklas has is that discussing taxation moves him out of his libertarian comfort zone. My view on libertarianism is that it is a fantasy based on survival concepts that only make sense in a depopulated world. Libertarianism is thus incompatible with civilization, where one must share the planet with hordes of other people, many of whom never bathe nor brush their teeth.
Niklas:
Niklas confronts the essence of the libertarian problem: "But that was before I learned how the world works." But stops short of finding his way out of the fog: "It is entirely obvious that starve the beast can only work in the most excruciating circumstances."
No, Niklas, it is entirely obvious that "starve the beast" is an insidious form of grotesque fiscal irresponsibility promoted by ideologically-blinded zealots that can never work, and will always and necessarily result in the most excruciating circumstances. Everyone else, please click the world works link, and see what Reaganite supply-sider Bruce Bartlett has to say about "starve the beast.”
Here is the (I hope) wise council I offered Niklas in comments to his post at MB.
The problem Niklas has is that discussing taxation moves him out of his libertarian comfort zone. My view on libertarianism is that it is a fantasy based on survival concepts that only make sense in a depopulated world. Libertarianism is thus incompatible with civilization, where one must share the planet with hordes of other people, many of whom never bathe nor brush their teeth.
Niklas:
I find it very hard to discuss taxes. I actually don’t like it, when I have to do it in person, or on a blog…it rankles me into a defensive mode immediately. Let met explain.
I’m a right-wing, mostly libertarian. I’m for efficient taxation to satisfy social goals…and that is the problem. Social goals are always changing. Unlike railing against stupid market inefficiencies like barbers licenses and land use, this involves a revenue calculation, and not one that is straightforward.
Back when I was a “wet behind the ears” libertarian person, I took the efficacy of “starve the beast” seriously. But that was before I learned how the world works. It is entirely obvious that starve the beast can only work in the most excruciating circumstances…and I don’t want humans to have to deal with pain, I just don’t want them to have to deal with stupid government.
Niklas confronts the essence of the libertarian problem: "But that was before I learned how the world works." But stops short of finding his way out of the fog: "It is entirely obvious that starve the beast can only work in the most excruciating circumstances."
No, Niklas, it is entirely obvious that "starve the beast" is an insidious form of grotesque fiscal irresponsibility promoted by ideologically-blinded zealots that can never work, and will always and necessarily result in the most excruciating circumstances. Everyone else, please click the world works link, and see what Reaganite supply-sider Bruce Bartlett has to say about "starve the beast.”
Here is the (I hope) wise council I offered Niklas in comments to his post at MB.
Niklas -
Like you, I was a right-wing quasi-libertarian in my callow youth. As I matured and learned the facts of life on this planet, I came to know better. If you are genuinely open to understanding how the world works, you will gradually and steadily give up your right-wing libertarian fantasies.
“Free markets” are a myth.
“Small government” is not a principle, it is a particularly vacuous ideological talking point.
Government is the only entity with enough size and power to be able to counter the might of trans-national corporations. OTOH, the alignment of government and corporations leads to the control of government by corporations – the very definition of fascism (per Mussolini.) This, alas, is where we are headed.
Stupid inefficiencies are galling, and they provide colorful examples for cherry-picking right-wing ideologues. But in the grand scheme of things (i.e the real world) are a small price to pay for effective government, and often have actual benefits that libertarian critics either downplay or deny..
Taxation is not only necessary to fund vital government programs, it is necessary to counter the redistribution of wealth from the have-nots to the haves that has occurred over the last 30 years.
http://www.politifact.com/truth-o-meter/statements/2010/dec/10/bernie-s/bernie-sanders-viral-speech-says-top-1-percent-ear/
In fact, because taxation is not sufficiently progressive, far too much wealth is concentrated at the top, and the current malaise is the direct result of that economic disparity.
http://jazzbumpa.blogspot.com/2010/12/effective-tax-rates.html
http://jazzbumpa.blogspot.com/2010/10/us-economy-is-dying.html
You might also note that social programs have NEVER made a significant contribution to federal deficits. These ALWAYS result from military programs and starve-the-beast tax policies.
http://jazzbumpa.blogspot.com/2010/12/history-of-federal-deficits.html
The modern road to serfdom is not paved by progressive taxation, effective regulation, nor entitlement and transfer programs (vital government actions)- it is paved by the greed of soul-less multinational corporations with no loyalty to anybody nor anything.
The modern corporation thrives on monopoly power, hates competition and is the enemy of real capitalism. This is what made me a progressive. The anti-trust movement of 100 years ago was the hall mark of early 20th century progressivism. As the age robber barons has repeated itself, we can now see why.
May the scales continue to fall from your eyes!
Cheers!
JzB
Sunday, December 12, 2010
Mellow Yellow Monday - Au Fromage Edition
Cheese Heads to the Rear of me.
Cheese Heads below me.
Opening kickoff -- Into the Cheese Head Breech!
Cheese Heads below me.
It was truly grate:
Lions shred the Cheese-Heads, and
Have fondu-ing it!
In Which I Berate a Columnist - AGAIN!
It's been almost a year and a half since I last felt the need to eviscerate award winning columnist and author Mitch Albom. Maybe I need to read his columns more often. By no coincidence whatsoever, the subject is again the same, and Albom once again makes the inexcusable error of conflating marginal and effective tax rates, in an article titled "Tax Cut Debate is Missing the Point."
In a quixotic fit of disgust, I sent him this email today.
In a quixotic fit of disgust, I sent him this email today.
Mr. Albom -.
The one who misses the point is you. Your column "Tax Debate is Missing the Point" is fundamentally wrong - overall, and in nearly every detail. It displays a level of ignorance that is at the tea party level. For a professional journalist this shameful and irresponsible.
You ignore the difference between marginal and effective tax rates, so everything you say about tax liabilities is wrong. You do not realize that the effective rate paid by the top 1% - actual millionaires - is less than 20%, and even less for everyone else. Nobody pays the 40% rate you used in your horribly misleading example. You compounded the error by citing a family of four, but using single filer rates; and you got the bracket limit wrong - by over $120,000!
For your convenience, here are the actual bracket limits, which took me 10 seconds to find using Google.
http://www.bargaineering.com/articles/federal-income-irs-tax-brackets.html
Before you comment on taxes again, please take the time to understand what the brackets are, how they work, and what the effective rate means.
I spent a good chunk of yesterday graphing effective rates since the Reagan administration, with data from the Tax Foundation. You can see the results here.
http://jazzbumpa.blogspot.com/2010/12/effective-tax-rates.html
Unless and until you can get the facts right, you are abrogating your responsibility as a journalist by expounding on a topic about which you have no knowledge or understanding. Please do the minimal amount of research it will take to get your facts straight - and I would be more than happy to help you with that - and issue a retraction of today's disastrous column.
You see, if the history of taxation proves anything, it is that taxes haven't been lower since before the Great Depression, and that continuously lowering taxes has led to stagnation in the economy, and enormous deficits. Make no mistake - the deficit is the direct result of tax rates being too low, especially for top earners.
http://jazzbumpa.blogspot.com/2010/10/us-economy-is-dying.html
http://jazzbumpa.blogspot.com/2010/12/history-of-federal-deficits.html
And, by the way, letting the Bush tax CUTS expire - according to law - is eliminating cuts, cuts so irresponsible and ill-considered that even supply-sider Bruce Bartlett didn't like them.
http://www.frumforum.com/bruce-bartlett-bush-tax-cuts-a-flop
Stop calling it "raising taxes."
Best regards,
JzB
Sunday Music Blogging 12/12
We performed this piece at our concert on Friday. I've never seen the movie, but this strikes me as music with a lot of emotion. Nice performance by a group of young musicians. The cute girl with the long hair in the middle of the trombones is playing my part, and doing a fine job of it. Very important moving line at 5:57 to 6:06. Brava!
Saturday, December 11, 2010
Effective Tax Rates
With all the brouhaha over the expiration - or not - of the Bush tax cuts, it will be helpful to look at the actual effects of tax policy changes. Tables of effective tax rates from the Tax Policy Center only go back to 1979, so this view is from the Reagan administration forward. The TPC breaks it out a number of ways including income tax and FICA (which they call social insurance tax) by quintile, and with finer cuts for the top 10, 5, and 1 percent. The also have a table for Total Federal Effective Tax Rate, which includes attributions of corporate taxes and federal excise tax, as follows.
To my way of thinking, this gyration makes no sense. In my estimation, they are attempting to make the tax code look more progressive than it actually is. Total federal taxation actually paid by PEOPLE is the sum of federal income tax and FICA (Social Security + Medicare.)
Here is a look at the reality of tax policy changes. The first graph shows the effective average rate by income quintile. The blue box highlights the Clinton administration. Clinton effectively adjusted the tax burden upward by relieving the lowest two quintiles at the expense of the top quintile. This is the essence of progressive taxation. Note also, the negative taxation on the lower two quintiles - the net effect of transfer programs.
Here is a finer break down of the top quintile.
Though the effective rates for lower quintiles were flat or down during the Clinton administration, the average for all quintiles crept up, because the top quintile - in all of its divisions - paid more. Here's my narrative: Clinton changed the top marginal rate from 32 to 39%, and the threshold for the top bracket from under $100,000 to $250,000. This pretty much eliminated bracket creep for the middle class, and put it at the top, where it belongs. The net effect was a big tax reduction for the bottom two quintiles, little net change for quintiles 3 and 4, and a tax boost for the wealthiest. The result was improved GDP growth - four straight years at over 4% - reduced poverty and a balanced budget - rather sweet, wouldn't you say?
In conversations about tax policy, the FICA portion - known as the payroll tax - is often overlooked. Let's not do that.
There are wheels within wheels here, so let's do some dissection. From the beginning of the period, through 1990, there were annual increases in either the percentage paid in or the ceiling on which payments were based. Frequently, they both went up. You can see this effect most clearly in the bottom four quintiles, who always paid proportionally more, as a progressively larger chunk of their earnings was subject to withholding. Also, the effect on the top tiers was minimal, as most of their earnings was above the ceiling.
During the Clinton years, the burden on quintiles 3 and 4 was close to level. Quintile 2 saw an increase as the rate was constant while the ceiling continued to creep up (ceiling eliminated for the medicare portion in 1993.) For upper income earners the effective rate dropped, as greater portions of their income were above the ceiling. Note that this was minimal for the upper 1%. Such a huge proportion of their earnings is above the ceiling that rate and level changes are insignificant to them.
The odd looking line is the red one, for the effective rate of the lowest quintile. That continues to increase until the millennium, before leveling off. How can we explain this? Here is my guess: During the 90's, hundreds of thousands of jobs were added every month. This allowed people in the lowest quintile to either find work, or find better work, so that they paid a constant rate on increasing wages. This is also consistent with the slight dip and recovery that occurs in the early 2000's, with the recession of '01-'02 and jobless recovery, followed by the housing bubble.
Unfortunately, the data set ends with 2006. I'm sure the story since then would be very interesting.
To wrap things up, let's have a look at total taxation - the sum of income and payroll (FICA) taxation, as it changed over time.
Only during the Clinton administration is there a spread in the top quintile, where the top 1% pays (a tiny bit) more than the 90th (or 80th) percentile. To emphasize the political perspective, here it is by president.
Reagan - higher taxes for the lowest quintile; some wiggle, but not much change for the 2nd quintile; a step down, then close to flat for quintiles 2 and 3, a drop for the top quintile, until a jump up in 87.
Bush I - Poppy Bush had the misfortune of governing during a recession. Growing deficits forced him to accept a tax increase, in a compromise with the Democratically controlled Congress. But, he did shift some of the tax burden from the bottom 40% to the top 1%. Did you read his lips?
Clinton - Increased taxes at the top, and reduced at the bottom. For the rest of us, not much change.
Bush II - Lowered taxes for everyone - but - the biggest benefits, on a percentage basis, and even more so on a dollar basis, went to the top.
Letting the Bush II tax cuts expire will cost everyone something. But the cost to lower quintiles is not much.
The right solution is to keep tax cuts for the lower and middle classes, let them expire for the top two quintiles, and forget the horrible idea of a social security defunding payroll tax holiday.
What do you think?
.
Corporate income taxes are attributed to households according to their share of capital income. Federal excise taxes are attributed to them according to their consumption of the taxed good or service.
To my way of thinking, this gyration makes no sense. In my estimation, they are attempting to make the tax code look more progressive than it actually is. Total federal taxation actually paid by PEOPLE is the sum of federal income tax and FICA (Social Security + Medicare.)
Here is a look at the reality of tax policy changes. The first graph shows the effective average rate by income quintile. The blue box highlights the Clinton administration. Clinton effectively adjusted the tax burden upward by relieving the lowest two quintiles at the expense of the top quintile. This is the essence of progressive taxation. Note also, the negative taxation on the lower two quintiles - the net effect of transfer programs.
Here is a finer break down of the top quintile.
In conversations about tax policy, the FICA portion - known as the payroll tax - is often overlooked. Let's not do that.
There are wheels within wheels here, so let's do some dissection. From the beginning of the period, through 1990, there were annual increases in either the percentage paid in or the ceiling on which payments were based. Frequently, they both went up. You can see this effect most clearly in the bottom four quintiles, who always paid proportionally more, as a progressively larger chunk of their earnings was subject to withholding. Also, the effect on the top tiers was minimal, as most of their earnings was above the ceiling.
During the Clinton years, the burden on quintiles 3 and 4 was close to level. Quintile 2 saw an increase as the rate was constant while the ceiling continued to creep up (ceiling eliminated for the medicare portion in 1993.) For upper income earners the effective rate dropped, as greater portions of their income were above the ceiling. Note that this was minimal for the upper 1%. Such a huge proportion of their earnings is above the ceiling that rate and level changes are insignificant to them.
The odd looking line is the red one, for the effective rate of the lowest quintile. That continues to increase until the millennium, before leveling off. How can we explain this? Here is my guess: During the 90's, hundreds of thousands of jobs were added every month. This allowed people in the lowest quintile to either find work, or find better work, so that they paid a constant rate on increasing wages. This is also consistent with the slight dip and recovery that occurs in the early 2000's, with the recession of '01-'02 and jobless recovery, followed by the housing bubble.
Unfortunately, the data set ends with 2006. I'm sure the story since then would be very interesting.
To wrap things up, let's have a look at total taxation - the sum of income and payroll (FICA) taxation, as it changed over time.
Only during the Clinton administration is there a spread in the top quintile, where the top 1% pays (a tiny bit) more than the 90th (or 80th) percentile. To emphasize the political perspective, here it is by president.
Reagan - higher taxes for the lowest quintile; some wiggle, but not much change for the 2nd quintile; a step down, then close to flat for quintiles 2 and 3, a drop for the top quintile, until a jump up in 87.
Bush I - Poppy Bush had the misfortune of governing during a recession. Growing deficits forced him to accept a tax increase, in a compromise with the Democratically controlled Congress. But, he did shift some of the tax burden from the bottom 40% to the top 1%. Did you read his lips?
Clinton - Increased taxes at the top, and reduced at the bottom. For the rest of us, not much change.
Bush II - Lowered taxes for everyone - but - the biggest benefits, on a percentage basis, and even more so on a dollar basis, went to the top.
Letting the Bush II tax cuts expire will cost everyone something. But the cost to lower quintiles is not much.
The right solution is to keep tax cuts for the lower and middle classes, let them expire for the top two quintiles, and forget the horrible idea of a social security defunding payroll tax holiday.
What do you think?
.
Friday, December 10, 2010
QE II and interest Rates
There seems to be broad-based confusion on the effects of QE II, as indicated by the movement in long bond rates. David Beckworth takes a stab at explaining it, using a chart of this year's changes in 10-year Treasury yields.
I'm not convinced. Markets move to their own rhythms, and attributing this rise or that drop to some exogenous event is often playing a game of post hoc. I want QE II to work as much as anybody, but I don't expect it to do a lot, with the M1 multiplier below 1, and the money disappearing into bank vaults.
Look at a longer time frame on the yield chart for 10-yr treasuries. Chart is from Yahoo finance. I've added parallel trend lines to highlight the 30-year long trading channel.
The recent activity looks like just another tooth in the saw blade. In fact, current yield is about in the middle of the trend channel. It's hard for me to get excited until something dramatic happens, and this is a long way from it.
.
I'm not convinced. Markets move to their own rhythms, and attributing this rise or that drop to some exogenous event is often playing a game of post hoc. I want QE II to work as much as anybody, but I don't expect it to do a lot, with the M1 multiplier below 1, and the money disappearing into bank vaults.
Look at a longer time frame on the yield chart for 10-yr treasuries. Chart is from Yahoo finance. I've added parallel trend lines to highlight the 30-year long trading channel.
The recent activity looks like just another tooth in the saw blade. In fact, current yield is about in the middle of the trend channel. It's hard for me to get excited until something dramatic happens, and this is a long way from it.
.
Numbers
Stat Counter just hit 18,000.
I still think most of the hits are from people who land here looking for something else.
But some of you actually read something.
Occasionally there's a comment.
If I'm wrong, tell me.
Thanx!
.
I still think most of the hits are from people who land here looking for something else.
But some of you actually read something.
Occasionally there's a comment.
If I'm wrong, tell me.
Thanx!
.
What The Hell?!? Friday - Pachelbel - What the Hell?!? Edition
Take about 21 minutes to listen to all of these. It will make your day in many ways.
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