Ezra Klein

APPLES, ORANGES, AND HIGH EUROPEAN TAX RATES.

Writer goes to the Netherlands. Writer notices 52 percent tax rate. Writer freaks. Writer finds out that the situation is rather more complicated than all that: [W]hile the top income-tax rate in the United States is 35 percent, the numbers are a bit misleading. “People coming from the U.S. to the Netherlands focus on that difference, and on that 52 percent,” said Constanze Woelfle, an American accountant based in the Netherlands whose clients are mostly American expats. “But consider that the Dutch rate includes social security, which in the U.S. is an additional 6.2 percent. Then in the U.S. you have state and local taxes, and much higher real estate taxes. If you were to add all those up, you would get close to the 52 percent.” Yep. There's a tendency to run straight comparisons of federal income tax brackets in the United States and Europe. But the United States raises a lot of money outside the income tax. On the other hand, European countries use VATs and gas taxes and so forth...

THE STRESS TEST LEAKS.

Felix Salmon wonders "who would be so foolish as to leak these things?" But this seems an inevitable result of Treasury's decision to delay the results so banks can argue "for a more lenient approach." (The fact that we know this is a pretty staggering leak in and of itself.) As Brad DeLong argues , that's bad optics. "The banks should not be negotiating with the government over this." More to the point, the government , at this juncture, should not be negotiating with the banks. But it's more than bad optics. Now the stress tests have a range of potential outcomes and various actors will take to the press to make their favored outcome more likely. Which is exactly what's happening. Bank of America has denied that it needs more capital. "People familiar with the matter" have leaked that Bank of America in fact needs more than $10 billion. And so on. It's a bit like Gov. Paterson's dumb decision to consider Caroline Kennedy but leave ample time for her supporters and opponents to try...

WHY IS STEVE JOBS SO EVIL?

Scott Sumner makes a (mostly) interesting point here . Bill Gates essentially taxed middle class consumers all over the developed world, and is giving almost all of the money to the disadvantaged in poor countries. That's something governments don't do, and yet for his "monopoly profits" he is despised by many on the left. Putting aside the weird shot at the left (should we really permit monopolies on the hope that the monopolist will eventually prove philanthropic with his gains? does anyone currently loathe Bill Gates?), that seems like a fair description of the situation. Gates, however, isn't quite the shadow taxer that Warren Buffet is: His decision to donate the vast majority of his fortune to the Gates Foundation amounts to a tax on wealthy investors on behalf of the developing world. And Steve Jobs? The guy has dedicated his life to further impoverishing struggling Africans. Bastard.

WHAT IF THERE HAD BEEN NO HOUSING BUBBLE?

James Surowiecki does a nice job making a point I've been hearing occasionally. Most bubbles leave the country with something of worth. The tech bubble, say, gave the country the tech sector. The initial enthusiasm leaves the country with a bit of a hangover, but you've still got a pocket of phone numbers from the night before. It was worth it . This is all very predictable in mathematical simulations: Economic changes almost always produce bubbles. The weird thing about the housing bubble is that it was effectively worthless . Surowiecki explains : There have been three big banking booms in modern U.S. history. The first began in the late nineteenth century, during the Second Industrial Revolution, when bankers like J. P. Morgan funded the creation of industrial giants like U.S. Steel and International Harvester. The second wave came in the twenties, as electrification transformed manufacturing, and the modern consumer economy took hold. The third wave accompanied the information-...

CAN BETTER DATA SAVE US?

Barry Eichengreen has a long piece in the latest National Interest arguing that economics didn't miss the financial crisis so much as the relevant folks engaged in "a partial and blinkered reading of [the] literature" in order to ignore results that would cut against them making more money. As the old saying goes, it is difficult to get a man to understand something when his income depends on his not understanding it. But Eichengreen looks towards the future with hope: Bigger computers with more memory will mean more economics based on large data sets and less theory. "The top young economists are, increasingly, empirically oriented," enthuses Eichengreen. "They are concerned not with theoretical flights of fancy but with the facts on the ground. To the extent that their work is rooted concretely in observation of the real world, it is less likely to sway with the latest fad and fashion." I'm less convinced by this. You can pick and choose data sets as easily as you can pick and...

DOES BEING HEALTHIER LOWER HEALTH CARE COSTS?

I'm a little bit loathe to enter this subject because I'm finishing up an article on a related topic. But suffice to say that even though the data on whether being healthier would make health care cheaper is pretty mixed, we can still be pretty sure it's a good thing. Paul Campos offers the standard argument against assuming that better health means lower costs: Not smoking makes you healthier. But refusing to die young makes you more expensive because you have more time to develop Alzheimer's after you've already developed diabetes. Ergo, not smoking does not make you cheaper . Dying young makes you cheaper. True enough. On the other hand, not being obese probably does make you quite a bit cheaper. The thing about chronic illnesses like diabetes is they require a lot of upkeep . It's not like dropping dead of a cardiac arrhythmia. It's frequent, sustained, and costly stays in hospital rooms. And as we get better and better at keeping diabetics and heart disease patients alive, they...

A VERY WEIRD FORM OF CONSISTENCY.

Not to fill the blog with Arlen Specter related content this morning, but this bit from Meet the Press deserves to be quoted. MR. GREGORY: Do you support taxing the value of, the value of employer-provided health care for workers? SEN. SPECTER: No, I'd be very reluctant to do that. Health care provided by employers, which is deductible for them and not added on as income to the recipient, has been the mainstay of health coverage for millions of Americans, and I'd be very reluctant to abandon that. MR. GREGORY: So the health care reform you would like to see is what? SEN. SPECTER: I would, I would like to see all Americans covered. I've joined with the Wyden-Bennett plan, has 14 co-sponsors. The thing about the Wyden-Bennett plan -- the aspect that actually makes it different from virtually every other plan on offer -- is that it ends the tax deduction for employer-provided health care. Come to think of it, though, supporting the Wyden-Bennett plan while opposing its key features is...

WHY DID ARLEN SPECTER BECOME A DEMOCRAT?

"I did not say I would be a loyal Democrat," insisted Arlen Specter on Meet the Press. "I did not say that." And it's true, he didn't say that. But people about to compete in a Democratic primary in a blue state tend not to spend a lot of time trumpeting what loyal Democrats they aren't. It's a pretty simple principle. Lots of guys are bad, inattentive, boyfriends. But they don't announce it on the first date. Meanwhile, Congressman Joe Sestak -- a Blue Dog Democrat, to be sure, but still a recognizable Democrat -- has $3 million in the bank, booked a meeting with Andy Stern over the weekend, and made the rounds on Firedog Lake. He's been pretty clear about his intention to primary Specter. Which makes Specter's continued declarations that he's a not-loyal Democrat who will not support Democratic priorities like a public insurance plan and card check and the president's budget all the odder. Specter is facing a primary filled with Democratic voters who have spent a good chunk of their...

WHY THE BOSTON GLOBE MIGHT SHUT DOWN.

It's a little dizzying to read that The New York Times is on the verge of shutting down the Boston Globe . And here I thought bloggers were the scoundrels killing the newspapers. Turns out it's...other newspapers. And that's true not just in the sense that the Chicago Tribune is wrecking the Los Angeles Times , which it owns, or the New York Times is threatening to shutter the Boston Globe . It's true because readers of the Boston Globe can now read the Washington Post or the Guardian right there on the internets. Newspapers from different regions didn't compete with each other 30 years ago. They do today. They didn't compete with Craigslist 30 years ago. They do today. Large regional newspapers once had near-monopolies over both news and advertising in a region. They've lost both. That's why they're failing. Not bad management. Which is what makes insider accounts of "what went wrong" so unsatisfying. David Warsh is very convincing in his argument that the New York Times has...

DE-STRESSING.

The administration is expected to release the results of the stress tests this week. According to David Leonhardt, no banks will be judged insolvent. But some will be judged insufficiently capitalized. In other words, sick, but not dead. And the Obama administration means to heal them without returning to Congress. One of the ways they'll do that is to encourage quick payback of taxpayer money from those banks that aren't underwater: Banks that are deemed to be healthy would be given the chance to repay the money they borrowed from the government last year if they met certain conditions. The conditions could include showing that they would still be healthy after the repayment; could issue long-term unsecured debt without government guarantees; and could raise money in equity markets. Repayment would allow the Treasury to reuse the money to help weaker banks. It certainly appears to be the case that Congress's skepticism towards further TARP appropriations has generated a lot of...

BEN NELSON AND ARLEN SPECTER OPPOSE THE PUBLIC PLAN. SHOULD ANYONE CARE?

I understand why people might be angry over Ben Nelson's decision to come out against a public insurance option in health care reform. But not why they'd be surprised. Nelson, after all, voted to cut the stimulus, voted against the budget, is fighting to retain the breaks to student loan middlemen, is loudly broadcasting his skepticism with cap and trade legislation, and has been cool to the very idea of health care reform. He's been about as kind to Obama's agenda as the critics have been to the new Wolverine movie. There was, in other words, simply no precedent for him to support the most progressive element of the overall plan. In fact, there's no precedent for him to support the plan itself. The question is really whether he'll be able to force a substantially more conservative "compromise" plan, as he did with the stimulus. Similarly, it's no surprise to see Arlen Specter come out against the public insurance option, as he did on Meet the Press yesterday. When I say the guy was a...

TAB DUMP.

• Ben Nelson comes out against a public plan. Will try and lead a group of Democratic senators to do the same. • Time for bank creditors to share the pain? • Warmer weather makes people believe in global warming. • Condi Rice denies torture, condescends to college kids.

AND WALDO. I DEFINITELY SEE WALDO.

"From my misspent years in DC," writes James Fallows, "I believe I can identify every person in this photo." He's better than me, then. From left to right, I see Austen Goolsbee, Tim Geithner, Larry Summers, Peter Orszag, and Jared Bernstein. Beyond that, I'm stumped.

WHEN FINANCIAL COMPANIES STOP BEING POLITE AND START TRYING TO KICK THE HELL OUT OF EACH OTHER.

Noam Scheiber has an interesting story in this week's New Republic tracking the effort by the banks to screw over the professional investors. The very short summary is that the banks wanted a "safe harbor provision" that would give them legal immunity from investor lawsuits if they modified mortgages. This has, in turn, generated a massive counter-lobbying campaign from the hedge funds and other types of investors. "Think of the new dynamic as a kind of Iran-Iraq war come to Capitol Hill," writes Scheiber. "Where there are no obvious good guys, the next best thing may be two powerful rivals beating each other to a pulp."

OBAMA ON THE FLU.

Obama just exited a cabinet meeting and gave a couple of quick remarks on the flu. I've attached his remarks beneath the fold, but in particular, I thought he offered a clear discussion of why this flu strain is different than the seasonal flu strains: somebody asked, why is this different from other flus? We don't know for certain that this will end up being more severe than other seasonal flus that we have had. It's been noted I think before that you have over 36,000 die on average every year from seasonal flus; you've have 200,000 hospitalizations. It may turn out that H1N1 runs its course like ordinary flus, in which case we will have prepared and we won't need all these preparations. The reason that people are concerned is -- the scientists are concerned -- is this is a new strain. So what happens is, is that Americans and people around the world have not built up immunity in the same way that they've built up immunity to the seasonal flus that we're accustomed to. Those seasonal...

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