S&P Blames GOP

Interesting insight in a quote from the S&P Ratings Board on why they downgraded US Treasury debt - "Compared with previous projections, our revised base scenario now assumes the 2001/03 tax cuts, due to expire, now remain in place. We have changed our assumptions because the majority of Republicans in Congress continue to resist any measure that would raise revenue."

Strangely, that hasn't been getting much press. I would have guessed the liberal media would have heavily promoted that. And, it looks like a moot point anyway, because in the sell-off investors continued to go to T-bills, even though other countries still have AAA-ratings. Guess we still are the big dog. At least the market got up today and regained some sanity. Overall, the Dow has way too much influence on our psyche anyway. Even as the market moves along - fast or slow - wild swings in daily trading bring about talk of doom and gloom. And even as the Dow was rising the last two years and companies were posting record profits - which in turn drove up their stock prices - unemployment and the misery index remained high.

Thus, I am curious the proposal to put a minor - like .0025% - tax on stock transactions? Some are proposing it as a way to cut down on speculation and the wild swings in the market. It could raise some revenue at the same time it regulates the uncertainty. Ultimately, it'll be a no-go - but it's a reasonable idea.

Wisconsin Explanation

The problems in Wisconsin are based on ignorance and ideology. It's worth looking at the data behind the alleged budget mess Wisconsin got itself into:

The Fiscal Implications of Recent Wisconsin Policy Measures

From the Legislative Fiscal Bureau, roughly analogous to the Congressional Budget Office, an assessment (p.11) that notes the tax revenue implications of three bills implemented under the current Administration:

Our estimates include the impacts of all law changes enacted in prior years and three of the January 2011 Special Session bills: (a) SS SB 2, which federalizes the treatment of health savings accounts; (b) SS AB 3, which would create an income and franchise tax deduction or credit for businesses that relocate to Wisconsin; and (c) SS AB 7, which would create an income and franchise tax deduction for businesses that increase employment in the state. SS SB 2 has been enacted into law as 2011 Act 1. The other two bills have passed both Houses of the Legislature, and the Governor has indicated that he will sign them. It is estimated that, together, these three bills will reduce general fund tax collections by $55.2 million in 2011-12 and $62.0 million in 2012-13.

This means approximately $117.2 million of any shortfall over the next two fiscal years is a direct consequence of measures that have just been implemented by the current Administration.

More on this from Forbes.

I am bothered by the blind ideology that is driving much of the change happening at the election box and legislatures nationwide. The dangers of oligarchy are far more significant in this country than tyranny ever has been. Thus, when the rights of workers are weakened as they lose economic clout, there is potential for a serious decline in national standards of living and the clout of the republic.

"Guvmint" and the Bogeyman

A quick thought:

As I've noted before, the big problem for voters these days is manipulation by metonymy - that is substituting a term for that which it is closely associated. For example, "Bush invaded Iraq" or "The White House said .."

The biggest metonymic bogey-man is "the government." That is an abstraction. People can't or shouldn't complain about or be mad at or blame "the government." They can criticize a law or a congressman or a president or even a ruling and action by an agency. "The guvmint" can't and doesn't do anything. People do.

But, as I've noted with the budget initiatives in Colorado, interest groups have manipulated voters into enigmatic criticism of "the government." That is integral to the problems we have in American society. Voters in Colorado vote to restrict taxes and spending based on some "ambiguous" ideal that "government is too big" and government spends too much" when the voters are unaware of congressman granting the very expectations of their constituents.

"Government" didn't do it. Voters and their elected representatives did. Don't criticize "too much spending" - pick a specific expenditure. Don't criticize the "government" - pick a specific agency or act or bill or congressman.

Just saying.

Nudge - Libertarian Paternalism

Certainly, the most important quality of the American spirit and American culture is a self-reliance and a rugged individuality. However, it is unreasonable to conclude that people always, or even often, make the decision that is in their own best interest. In fact, recent developments have shown that markets are not inherently rationale, and people will vote and act in direct conflict to the own self interest - often for simple reasons of inertia. For this reason, we have laws and regulations - speed limits are a good example.

An excellent analysis of this situation, as well as a practical position on what "government" could and should do, is the new book "Nudge: Improving Decisions about Health, Wealth, and Happiness" by Richard Thaler and Cass Sunstein. The government, as well as society, should not seek to force or mandate good behavior, but there is much that can be done to encourage and offer incentives for behavior that benefits the individual as well as society. One of their most basic examples is a hypothetical description of how cafeterias offer food. While not limiting choice and freedom at all, authorities can encourage people to make healthier choices simply based on arrangement of food.

It's an interesting and pragmatic blend of conservative and liberal approaches which they call "libertarian paternalism." I recommend checking it out.

Mis-education of Sean Hannity

“The government has ruined the education system.”

Sean Hannity made this claim during a series of rants the other day as he argued down another liberal who was foolish enough to call in and debate him.

Ruined? The system may be troubled, inconsistent, inefficient, faltering, even damaged – but ruined? I have to disagree, and it’s not just because I’m a teacher. As for the government being responsible, I was surprised by Sean’s focus, as he usually blames the teachers and the unions.

The word “ruined” implies that at one time it was in good, even excellent, condition, but it no longer has any redeeming qualities. Both aspects of that assertion are flawed. In regards to past success, remember that Rudolph Flesch wrote “Why Johnny Can’t Read” in 1955. Additionally, Harvard researcher Dianne Ravitch has documented the perpetual ups and downs of public education in “Left Back: a Century of Failed Public School Reform.” Certainly, many schools in America have problems, and far too many inadequately educate their students. But ruined? No redeeming qualities? To quote Bill O’Reilly, “that’s ridiculous.”

There are countless examples of excellent public schools that are accomplishing more today with their students than I ever could have fathomed as a student twenty years ago – about the same time as the publication of that dire education warning “A Nation at Risk.” I know this because I teach at one. Cherry Creek High School in Greenwood Village, Colorado, is regularly ranked as one the top high schools in the nation. Cherry Creek has an incredibly successful student population. Its large percentage of students in Advanced Placement classes, for which many teachers have pass rates on the national exam of 90% or more, regularly accomplish tasks I didn’t see until graduate school. Sean might want to take a look at the AP Calculus or European History exams before he decides that the system is in a state of “ruin.” Another example – a couple years ago two students at Cherry Creek were featured on ABC News for their work on a new treatment for muscular dystrophy. Their education is hardly in a state of “ruin.”

If you ask parents who send their children to Stevenson High School or New Trier High School in Chicago, Scarsdale High School in New York, Bellevue International School in Seattle, or Stanton College Prep in Jacksonville, Florida – not to mention others regularly ranked on Newsweek’s list of the Best 100 Schools – you will find people who are extremely satisfied with public education. Descriptions of the accomplishments of students at these schools are truly staggering, and they give me great hope for the future. Perhaps Sean might want to do some research into the successes of this “ruined” system.

At the same time that Sean was declaring public education “ruined,” Mort Zuckerman’s column in U.S. News and World Reports noted that “education is another great American success story.” According to Zuckerman, “nearly 90 percent of adults today complete high school compared with 33 percent in 1947.” Additionally, nearly 30 percent of the American population today has a college degree compared with 5 percent in 1947. That seems like some rather impressive progress. It’s hardly a ruined education system. While Americans regularly cite concerns about public schools, Gallup polls show seventy-five percent of Americans are “satisfied” or “very satisfied” with their children’s school. An even greater percentage of Americans (85%) are satisfied with their own education. So why all the criticism? Well, they’re obviously talking about other people’s schools. This disconnect is similar to the contrast between the low approval ratings of Congress and the regular re-election of incumbents.

Certainly, many teenagers can’t name the three branches of government or complete higher-level math. But how many could in 1947 when only 30 percent completed high school? While many adults are aghast at the students’ lack of knowledge, the kids aren’t much worse than some adults who end up as jokes on Jay Leno. These kids are often surprisingly knowledgeable in other areas, such as information technology, and they may very well acquire the historical information when they’re older. Keep in mind, they’re only seventeen, and there are many things they value more than the exact date of the Civil War. I’m not justifying the ignorance, just understanding it.

For someone who is regularly critical of people who hate America, Sean reveals a sad lack of faith in America’s youth, parents, teachers, communities, and the freedom the American government offers its schools. There are certainly failing schools in this country. Without doubt there are ineffective and even bad teachers who do nothing for their students. However, the failing schools and the ill-prepared students are as victimized by a myriad of socio-economic issues as they are by “the government.” Student performance is as affected by parental involvement and a neighborhood’s economics as it is by government policies. Does the education system have problems? Of course. But it’s far from ruined. When listening to Sean, I need to keep in mind that he also claimed the government has ruined the health care system, even though he regularly argues that America has the greatest health care system in the world. I guess the lesson for callers is that it’s a waste of time to argue with irrational people, or at least with “info-tainers” who make a living off of erroneous, inflammatory claims.