Category Archives: politics

John Kasich’s blue collar roots

From today’s NYT profile of John Kasich:

As the people of Ohio already know — and Republican voters elsewhere are just beginning to find out — Gov. John R. Kasich grew up in working-class McKees Rocks, Pa., the son of a postal worker and the grandson of a coal miner. His grandfather was so poor, Mr. Kasich recently told voters in New Hampshire, that he would bring home scraps of his lunch to share with his children.

“They would even be able to taste the coal mine in that lunch,” Mr. Kasich said. “Some of you can relate to that.”

As a congressman and as governor, Mr. Kasich has made hardscrabble stories of life in McKees Rocks a cornerstone of his political biography.

Another kind of politician would have as cornerstone of his political biography: “My grandfather was a coal miner and was miserably poor, but my father was able to get a stable, well-paying job with the federal government, which is a big part of the reason I was able to get out of McKees Rocks and go to Ohio State, major in political science instead of something practical, and become a state senator when I was 26.”

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More is less: Ted Olson on Citizens United

I saw Ted Olson and David Boies talk about the Citizens United decision at the Aspen Ideas Festival a couple of months ago.  Olson likes the decision, and he was passionate and funny in its defense.  “The more speech we have, the better,” he said.  And who can disagree?  The antidote to bad speech is good speech, marketplace of ideas, etc.

It wasn’t until I was on my way home, esprit de l’airplane, that it occurred to me to think about the followup case, Arizona Free Enterprise Club vs. Bennettdecided a year after Citizens United with the same five justices in the majority.  In that case, the Court found unconstitutional an Arizona law that provided government funds to publicly funded candidates allowing them to match any spending by a self-funded candidate exceeding a specified cap.  Here the Court managed to reason that adding more speech, funded by the state, added up to less speech.  They argued that a wealthy candidate whose every ad was matched by an equally well-funded opposition ad would refrain from campaigning at all — the self-funded candidates so inconfident in the strength of their ideas, apparently, as to prefer silence to both camps getting equal time.

It’s pretty starkly different from Olson’s let-a-hundred-flowers-bloom philosophy.  The Court called the Arizona law a “burden” on free speech, though of course it in no way prevented self-funded candidates from spending and speaking.  Unless you take the view that free speech responded to is effectively cancelled or suppressed, precisely the opposite of Olson’s attitude.  I wonder what he thinks about this decision?  Is the right to free speech a right to be heard, or a right to drown out?

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The dime of America

I take it as a near-certainty that, assuming we’re still using physical currency throughout my life, some denomination of that currency will eventually feature Ronald Reagan.  But where will he go?  You can’t really evict Jefferson or Washington or Lincoln.  Alexander Hamilton and Andrew Jackson seem more vulnerable, but somehow it’s the coins that really read as “inner-circle President” — would Reagan’s boosters really settle for grubby green pieces of linen, that get filthy and torn?

But here’s what would work.  Put Reagan on the dime.  Instead of Roosevelt?  No — in addition to Roosevelt.  Nobody cares about the shrubbery on the back of the dime.  Roosevelt on the obverse, Reagan on the reverse.  The two radical revisions of the American idea that shaped the 20th century, separated only by a thin disc of copper.  A government big enough to crush Hitler versus a government small enough to drown in a bathtub.  Now that’s a coin.  Flipping that coin has stakes.

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Rolling the dice on Iran

David Sanger in today’s NYT on the Iran deal:

Mr. Obama will be long out of office before any reasonable assessment can be made as to whether that roll of the dice paid off.

Which is true!  But something else that’s true: not having a deal would also be a roll of the dice.  We’re naturally biased to think of the status quo as the safest course.  But why?  There’s no course of political action that leads to a certain outcome.  We’re rolling the dice no matter what; all we get to do is choose which dice.

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The soundness of the Wisconsin Retirement System

A while back I was talking to some hedge fund dudes with tangential involvement with institutional pensions, and I asked them, “hedge fund dudes, how come the Wisconsin Retirement System has done so well through the crisis while other state pension systems are colossally FUBAR?” and they said “the real reason is that decisions about the pension aren’t made by a bunch of legislators with political commitment, there’s a non-political board and most of the important decisions are made by financial professionals.”

This week the state legislature tried to replace that board with one composed solely of legislators.  The change, after public outcry, has now been rolled back.  Yay for my retirement, I guess?

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Should we fire people who pick the wrong Final Four?

A thought experiment touched off by Cathy’s latest post on value-added modeling.

Suppose I’m in charge of a big financial firm and I made every trader who worked for me fill out an NCAA tournament bracket.  Then, every year, I fired the people whose brackets ended up in the lowest quintile.

This makes sense, right?  Successful prediction of college basketball games involves a lot of the same skills you want traders to have:  an ability to aggregate information about uncertain outcomes, fluency in quantitative reasoning, a certain degree of strategic thinking (what choices do you make if your objective is to minimize the probability that your bracket is in the bottom 20%?  What if your fellow traders are also following the same strategy…?)  You might even do a study that finds that firms whose traders did better at bracket prediction actually ended up with better returns 5 years later.  Even if the effect is small, that might add up to a lot of money.  Yes, the measure isn’t perfect, but why wouldn’t I want to fire the people who, on average, are likely to make less money for my firm?

And yet we wouldn’t do this, right?  Just because we think it would be obnoxious to fire people based on a measure predominantly not under their control.  At least we think this when it comes to high-paid financial professionals.  Somehow, when it comes to schoolteachers, we think about it differently.

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More pie than plate, Dane County edition

One chapter of How Not To Be Wrong, called “More Pie Than Plate” (excerpted in Slate here) is about the perils you are subject to when you talk about percentages of numbers (like “net new jobs”) that may be negative.

Various people, since the book came out, have complained that How Not To Be Wrong is a leftist tract, intended to smear Republicans as being bad at math.  I do not in fact think Republicans are bad at math and it sort of depresses me to feel my book reads that way to those people.  What’s true is that, in “More Pie Than Plate,”  I tear down an old Mitt Romney ad and a Scott Walker press release.  But the example I lead with is a claim almost always put forward by liberal types:  that the whole of the post-recession rebound has accrued to the 1%.  Not really true!

Long intro to this: I get to polish my “calling out liberal claims” cred by objecting to this, from the Milwaukee Journal-Sentinel:

UW-Madison, the fourth-largest academic research institution in the country with $1.1 billion of annual research spending, has helped spur strong job growth in surrounding Dane County. In fact, employment gains there during the last 10 years far outstrip those in any other Wisconsin county, accounting for more than half of the state’s 36,941 net new private-sector jobs.

I’m pro-UW and pro-Dane County, obviously, but people need to stop reporting percentages of net job gains.  What’s more — the reason job gains here outstrip other counties is that it’s the second-biggest county in the state, with a half-million people.  Credit to the Journal-Sentinel; at least they included a table, so you can see for yourself that lots of other counties experienced healthy job growth over the decade.

But just as I was ready to placate my conservative critics, Rick Perry went to Iowa and said:

“In the last 14 years, Texas has created almost one-third of all the new jobs in America.”

Dane County and Rick Perry, you both have to stop reporting percentages of net job gains.

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Ordinary business expense

From today’s NYT:

But even if Hyundai is eventually forced to pay the full amount of the damages, the punishment could be substantially reduced through a tax loophole that permits the company to save millions of dollars by deducting any court-ordered punitive damages as an ordinary business expense. The result, critics say, is that taxpayers are in effect subsidizing corporate misconduct.

What’s terrible about this isn’t that companies are allowed to claim the fines they pay for malfeasance are an ordinary business expense.  What’s terrible is that it’s true.

Update:  I misspoke, as a commenter points out.  A “fine” — that is, a penalty you pay to the government — is not deductible.  What may be deductible are punitive damages, paid to people you injured or whose river you despoiled.  Prepare your return accordingly!

Full professors make more money than bus drivers

Former Republican Congressional candidate and current UW-Madison history professor John Sharpless stands up for us against the Governor:

He said he arrives no later than 9 a.m. and leaves no earlier than 5 p.m. During that time, he said he’s either teaching, preparing lectures, doing research, attending required committee meetings, advising students and managing teaching assistants. Sharpless added that he often spends his evenings reading and grading papers.

“None of this seems like work to a guy like Walker because he lives a different life,” he said. “And I’m not going to make fun of what he does. I’m sure being a governor is a lot of work. He has to spend a lot of time in Iowa and South Carolina and North Carolina and courting other Republican big-wigs. That taxes the man horribly.”

But just to make it clear he’s still on board with GOP, he drops this in:

“I will retire with a salary that’s less than a Madison bus driver,” he said.

UW-Madison salaries are public records, so I can tell you that Sharpless’s is just under $80,000.  In 2012, only 9 employees of Metro made more than $70K.  And the ones who made that much, I’m pretty sure, are the ones who worked tons of overtime.

In other words, what Sharpless said is likely true in the strict sense of

“There exists a Madison bus driver whose salary this year exceeds mine”

but gives the wrong impression about typical full professors in the history department and typical bus drivers.

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Death to the 529 / long live the 529

Obama flip-flops faster than I can blog!  Prezzo has already walked back his proposal to change the 529 college-saving tax break, but I have a post about it queued up, and by gum I’m gonna publish it.

Here’s the plan that just got shelved.  From now on, capital gains on contributions you stow in a 529 plan won’t be tax free anymore — they’ll just be tax-deferred, as with a retirement plan.  In essence, it takes away a tax break whose benefit flows predominantly to high-income families (some 529 money is held by middle-income parents, but under Obama’s plan the $500 or so they’d lose on their 529 was more than offset by an AOTC expansion.)

OK, this Congress is as likely to roll back a tax break for high earners as they are to rename Reagan National Airport after Pete Seeger, so this isn’t actually happening, but I’m just saying, that’s the plan.

People are mad, and feel like they’ve been bait-and-switched. My FB feed, populated by dutiful savers like me, is full of ire. Mark Kantrowitz, in the New York Times:

He went as far as saying that the proposal could be characterized as a broken promise. “People saved money in 529 plans because of the expectation that the favorable tax treatment would continue,” he said.

But why does the New York Times let Mark Kantrowitz say this when it’s plainly not true? I saved money in a 529 plan. And the favorable tax treatment for that money will continue. When I take it out, I won’t pay a dime on any capital gains.

For money I put in later, it’s another story. But so what? If something’s on sale today, nobody’s breaking a promise to me when it’s not on sale tomorrow. I guess it’s strictly true that the proposal “could be characterized as a broken promise.” But it would be better to say it “could be characterized as a broken promise by people who don’t mind characterizing things as different things.”

A broken promise would look more like a state government defaulting on money it owes the thousands of middle-class taxpayers whose pensions it mismanaged.


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