On Ending/Lowering Corporate Taxes

Lately there has been a bit of a stir over Rep. Louie Gohmert's proposal to eliminate corporate taxes as a single solution to fixing the economy:

Republican Congressman Louie Gohmert of Texas introduced legislation to the House of Representatives on Wednesday that would drop the corporate tax rate to all the way down to zero.

It should be noted that lowering or removing the corporate tax is actually a bi-partisan idea. Moreover, as Harvard Economist Robert Barro pointed out:

"the inefficiency is magnified here because of double taxation: the income is taxed when corporations make profits and again when owners receive dividends or capital gains"

However, unlike Barro, I do not think Austerity will save the economy:

"Although advanced economies need medium-run fiscal consolidation, slamming on the brakes too quickly will hurt incomes and job prospects"

And unlike Gohmert, I do not think lowering the corporate tax rate is sufficient to get us out of the recession

"Corporations are already sitting on trillions in cash, so cutting their taxes would likely do very little to help the economy,"

Nonetheless, it is definitely something that should be included in any serious jobs bill as it is sure to help increase business investments once demand has increased to the point where businesses actually want to invest again:

According to a 2008 study by the Organization for Economic Cooperation and Development, “Corporate taxes are found to be most harmful for growth.” Tax reform that reduced the burden on capital income and shifted it toward consumption would improve prospects for long-run growth and, in so doing, encourage greater investment today.

Weely Roundup - Eyewitness Testimony, Strong Currency Problems, Fair Taxes, and Portal-Mario (4/4/11-9/10/11)

Welcome to another edition of my Weekly Roundup, a collection of some of my favorite Facebook posts from this last week. I understand I post a lot of things Facebook and, for anyone who is interested but doesn't have the time to read them all, this will give them a chance to see what I consider to be the most important. I will also get a chance to elaborate a bit more on certain posts. I will try to do this on a weekly basis but we will see if it works out. I am busy with school so I may not get a chance to do this every week.

Eyewitness testimony is UNreliable

NPR: "Reliability Of Eyewitness Testimony Under Scrutiny":
Yet more evidence of the unreliability of eyewitness testimony. It turns out that, contrary to the opinion of the Supreme Court, witness certainty can be a very good indicator of the unreliability of an individuals eyewitness testimony.
Just how aware are you?
More on the unreliability of eyewitness testimony


Damn that economy!
What seems to be the biggest issue of the day? First Switzerland showed us that having a strong currency can actually make you quite weak. Paul Krugman complained about the changing political discussion in Washington. David Brooks challenged some uses government spending meant to "fix the economy." Finally, I took a look at a few articles dealing with the economic plans of both Obama and Romney.

NPR: "Switzerland: Too Strong For Its Own Good":
Conservatives often speak of the evils of inflation, mainly accusing inflation of destroying people's savings. However, there is another side to inflation. Harvard Economist Ken Rogoff has previously pointed out that inflation can ease the burden of household debt, a major factor in our current recession/contraction. Now Switzerland is showing the world that a strong currency can also hurt a country by reducing demand for exports. In the US this would surely exacerbate our already large trade deficit as well as reduce demand for US products overseas, which is currently around one tenth of our GDP (exports are nearly half of Swiss GDP).

Skeptoid: "Wi-Fi, Smart Meters, and Other Radio Bogeymen":
Brian Dunning takes on the claim that radio waves can be harmful. As the World Health Organization classifies them, one should take an equal amount of precaution with coffee and the earth's gravitational field (good luck on that one!)

Paul Krugman: "The Fatal Distraction":
Krugman makes the case he's been making on his blog for quite some time, only now in a concise manner in an op-ed. The focus on Austerity (in the short term) is demonstrably crippling the economy. Conservative theories about regulation and tax fears are unfounded. Consumer demand is down and savings are up. How much more evidence to they need?
Krugman points out where he thinks the stimulus was inadequate, also noting the dramatic increase in consumer savings.
Krugman also shows that there is currently a de facto policy of austerity.

David Brooks "Where The Jobs Aren't":
David Brooks challenges the perceived efficiency of the government attempting to directly create private sector jobs. I do not agree with much of what he says. However it is an interesting read.
On the success of renewable energy
On the calculations of cost per job analysis of government spending on jobs
On The effectiveness of capital gains taxes
The overall effectiveness of government spending

Eric Levine: "Obama versus Romney on Jobs":

"Recently, both Obama and Romney have basically given what may turn out to be competing economic plans in 2012 (As of the date of this post, I have yet to see a serious economic plan from Rick Perry). Obama released his plan during a speech on Thursday night (9-8-11). Mitt Romney has already released his plan on his website. This post is a collection of a few articles on those plans."

Fodder for climate skeptics
Of course I cannot go a week without posting at least a few articles on climate change. NASA explained a dip in sea level rise that will surely show up on a few climate skeptic blogs. I summarized the ongoing controversy over the Spencer paper. Finally, Skeptical Science released a booklet detailing an often uncovered effect of climate change.

NASA: "NASA Satellites Detect Pothole on Road to Higher Seas":
NASA comments on the recent temporary decrease in global sea levels. It is due to La Nina, not due to the "end of global warming."

"while 2010 began with a sizable El Niño, by year's end, it was replaced by one of the strongest La Niñas in recent memory. This sudden shift in the Pacific changed rainfall patterns all across the globe... So where does all that extra water in Brazil and Australia come from? You guessed it--the ocean... [Sea] level drops such as this one cannot last, and over the long-run, the trend remains solidly up."

Skeptical science also explains the situation.

Eric Levine: "Climate Change "Skeptics" Climax Too Early... Again":

"Yet another story of climate change "skeptics" getting excited about something that turns out to be nothing. Here is a summary of the latest story in the ongoing novel of climate-change-skeptic-sensationalism..."

Skeptical Science: "OA not OK: Booklet available":
With all the media attention given to global warming, we often forget that more dangers exist from climate change other than just rising temperatures.

"In July and August 2011 we posted a long series to introduce the chemistry of ocean acidification. We have lightly edited and compiled the posts into a booklet."

Political differences abound
Politics! Dear Gawd when will it stop! Ezra Klein took a look at a possible case of Republican hypocrisy. Gregory Mankiw cleared up a liberal misconception about taxes and the rich. I reviewed Paul Krugman's answer to Barry Goldwater's book. Politifact took a look at tax loopholes for outsourcing. Finally, Jed Graham covered an "ingenious" plan to fix Social Security.

Ezra Klein: "Why did the GOP turn against stimulus? Ask a psychologist.":

"The bottom line is this: Until quite recently, both parties supported the idea that you combat bad economies with stimulus spending. Now, during an extremely bad economy, the Republican Party has completely abandoned that position."

Greg Mankiw: "Fair Taxes? Depends What You Mean by ‘Fair’ ": Harvard Economist Greg Mankiw points out that, although some billionaires like Warren Buffet can write their way out of a hefty dose of taxes, most millionaires still pay a larger percentage of their incomes in taxes (30%+) than do most Americans. Whether or not this is fair is mostly a philosophical question. Politifact also points out that the "Warren Buffet" phenomena only really applies to the "mega rich." The highest income earners still pay the lion's share of taxes. David Frum also points out that a much better "sacrifice" for the rich to make would be supporting inflation as a method to help the economy recover.

Eric Levine: "Book Review: Krugman's Rallying Cry to Liberals":

I just finished Paul Krugman's 2007 book, The Conscience of a Liberal. I actually liked this book much more than I initially expected. It is a very entertaining and mostly easy read (I actually listened to the audible audio book). Paul Krugman details America's transition from the "Long Gilded Age" (pre-New Deal) to the "Great Contraction" (post New Deal til 1980s) when America's income distribution became more egalitarian. He then details the switch back, starting in the late 1970s, when the top income earners saw large gains in real income while mid and lower income earners saw only modest gains, if any at all. This was due primarily to the growth of "Movement Conservatism." He then makes the case that it is now (back in 2007) possible to once again to work towards closing the income gap.

Politifact: "Did Republicans oppose closing corporate tax loopholes for outsourcing?":

"The SEIU is correct that Republicans did fight against Democratic plans to close tax loopholes on multinational corporations.... The link between the multinationals' tax status and their outsourcing of jobs is not direct, and that's an important distinction."

Jed Graham: "AARP Sees ‘A Better Way To Approach (Social Security) Benefit Changes’":
The AARP has long been thought of as the group that opposes practically every proposed solution to the problems of Social Security. This is mainly due to the fact that they do not want any changes to hit current retirees. It is also due to the fact that most of these plans also "cut the safety net where it needs to be strongest — in very old age." However, John Rother of the AARP has now embraced a plan that should help fix the problems with social security, as well as increase worker efficiency.


Can they really do that?!
So long as they don't sell it for money..

kottke: "A Super Mario Bros version of Portal?!":
Yes, this is an actual game being developed - it is not a mod of any existing one.

Obama versus Romney on Jobs

Recently, both Obama and Romney have basically given what may turn out to be competing economic plans in 2012 (As of the date of this post, I have yet to see a serious economic plan from Rick Perry). Obama released his plan during a speech on Thursday night (9-8-11). Mitt Romney has already released his plan on his website. This post is a collection of a few articles on those plans.

Obama's Jobs Bill:

Paul Krugman shared his thoughts on Obama's new jobs bill in a New York Times Op-Ed. It is not as big as Krugman wants and also focuses too heavily on tax cuts. However, it is bold and would surely make significant progress towards ending this financial crisis. However, it is also surely DOA in the house and filibuster-bait in the Senate. Also, Krugman shared his thoughts on Romney's jobs bill, which he described as "as 59 bullet points with nothing there".

Self-proclaimed "Stimulus Skeptic" David Brooks also shared his thoughts on Obama's new jobs bill as well. Due to the real threat of a double dip recession, he conceded that the "president has earned a second date. He’s put together a moderate set of stimulus ideas. His plan may not be enough to jolt prosperity, but it might maintain its current slow growth.


The Brookings Institution has also chimed in on the jobs bill, pointing out how most of the President's proposals are bi-partisan (many coming from the Conservative US Chamber of Commerce). They also applauded Obama for including both short term stimulus and long term deficit reduction in the plan. In addition, they provided a few recommendations for additional bi-partisan plans to aid in recovery. However, they also pointed out that, while the president's speech was eloquent, the jobs bill may not be enough to really heal the economy.


The AP pointed out the challenges of using future deficit reduction to pay for a current plan in an informal "Fact Check." However, as Brookings has pointed out before, such a plan may be the only real viable solution to both the US' economic and fiscal crises. The AP also reiterated the same problem that Krugman pointed out: the plan has little chance of success. As for the last fact check in the article, the AP provided practically no context as to how much of the plan will be dedicated to the proposed national infrastructure bank.


The Washington Post Fact Checker, Glen Kessler, noticed that a lot of the plan seemed a bit too familiar (flashback to 2009). He even ended the article with a fun little quiz.

Update 9-12-11: FactCheck shows that not all of Obama's ideas have had Republican support in the past.


Romney's Economic Plan:

Romney's economic plan gives us a good look at the political limits of what the best Republican economic plan can do. Romney's plan does a good job focusing on long term growth, which is generally a Republican strength. However, as Frum points out, Romney's plan is generally quiet about how to get us out of our current recession. In fact, his ideas will likely exacerbate the problem. This is a major Republican handicap since we will likely be stuck with over 10 million unemployed/underemployed in 2013, when a Republican could potentially take office.

Greg Mankiw, adviser to Presidential candidate Mitt Romney, presented his ideas for recovery. He suggested focusing not just on our short-run problems, but on our long-run problems as well. However, as David Frum and Paul Krugman have already pointed out, Romney's economic plan seems to focus exclusively on long-run issues.