Tuesday, August 30, 2016

The Most Historic Climate Decision Yet

For the first time, the federal government has put a price on carbon dioxide and it’s bound to transform how we fight global warming.


By Jay Michaelson 
The Daily Beast
August 30, 2016

One of the most significant court cases about climate change was decided earlier this month by a federal appeals court in Chicago. Given that it was steeped in the enervating context of refrigerator regulations, you may have missed it. But amid the stultifying discussions of compressors and insulation foam was a crucial advance in our nation’s belated attempts to forestall global climate catastrophe.

It all comes down to a new phrase: the Social Cost of Carbon.

Here’s why it’s important. By law, government agencies—in this case, the Department of Energy—are often required to show that the benefits of a proposed regulation exceed the costs. Sometimes this is straightforward: if it costs industry $100 million to prevent pollution that will do only $10 million in damage, the government (usually) can’t force them to do it.

Sometimes it’s downright Solomonic. If that pollution regulation can save a single life, is that worth $100 million in industry costs? You might say yes, but usually, the government says no. In fact, we “price lives” all the time—by requiring some safety protections but not others, by building roads the way we do, and in a thousand other ways.

But what about climate change? The costs of a particular regulation—in this case, covering refrigerators—are sometimes easy to assess. But how do you capture the “benefits” of preventing cataclysmic climate change?

Beginning in 2010, a group of economists and scientists set about answering that question. They tried to calculate the likely future costs of shifting climate zones, agricultural disruptions, more extreme events like Superstorm Sandy, more outbreaks of disease, and the many other effects of climate change.

The result is the Social Cost of Carbon (SCC), which, long story short, was calculated to be $36 per ton. That figure, while admittedly an approximation, is the best estimate that the government has put forward so far.

That’s why the Department of Energy used it in its refrigeration regulations—and that’s why some industry groups sued, alleging that the SCC is no better than a guess.

In Zero Zone v. Department of Energy, two conservative judges on the Seventh Circuit Court of Appeals disagreed, upholding the use of the SCC and the regulations based on it.

“They did not equivocate,” said Daniel Esty, professor at Yale Law School and the Yale School of Forestry and Environmental Studies, and, from 2011-14, commissioner of the Connecticut Department of Energy and Environmental Protection.

When he worked at the Environmental Protection Agency under President George H.W. Bush, Esty was part of the team that implemented similar economic analyses in the context of regulating acid rain. Since then, he’s worked on incentive-based ways to address environmental problems—like the “Cap and Trade” approach to climate change. His name is frequently bandied about as a possible director of the EPA in a Hillary Clinton administration.

“Putting a price on pollution in general, and carbon in particular, is the best strategy for motivating change in behaviors that cause harm,” Esty told The Daily Beast. “It’s been hard to figure out the right price… but the judges in this case made clear that this was a serious and thoughtful exercise… It wasn’t an eyeball guess.”

Indeed, while most industry groups have opposed the idea of an SCC, Esty said that having the SCC ratified by a federal appeals court (review by the Supreme Court is possible, but unlikely) will help companies who have already made commitments to sustainability.

“There are a number of companies, after last year’s Paris Agreements, who are beginning to think about how to prepare for a world—not yet in place in the U.S. but in place in Europe—where there is a price on carbon,” he said. “Many large companies are thinking about what internal price for carbon they should use. The Social Cost of Carbon can be a rallying point for them, for investment planning and decisions on energy projects… the [$36 per ton] price can be taken up by companies in their internal analyses.”

On the other hand, some environmental scientists have argued that the $36 per ton price is far too conservative.

For example, a study published last year by two Stanford University scientists arrived at a price of $220 per ton. One of them, Frances Moore, told The Daily Beast that “the current models used in the government’s SCC essentially assume that climate change will not affect economic growth,” she said. “They assume climate change will have effects in some specific sectors, but the effect is not big enough to substantially alter the trajectory of economic development.”

This, Moore said, is a flawed assumption.

“There are some econometric studies that … find the effects of climate change on economic growth in poor countries could be large. Our paper simply incorporates these statistical findings into the model.” Moreover, Moore told The Daily Beast, “because impacts to economic growth compound over time, even small impacts to the growth rate have very large implications for total climate damages. This is why our value of $220 per ton is so much larger than the U.S. government’s value.”

Esty replied, “getting started with some kind of price is much better than no price. As the science gets better, we’ll have more clarity about what the harms are, and the costs of harms will be more clear. But having some price is critical and that’s what this case really does.”

From this point on, government agencies can rely upon the existing SCC, pointing to the Zero Zone case as a significant ratification of the SCC in principle, and this figure in practice. Ironically, its next challenge may come from the left rather than the right: Moore told The Daily Beast that the National Academy of Sciences is reviewing the government’s methodology and may well recommend a higher figure.

But in the meantime, this obscure case could well mark a turning point in the way the government includes climate change related damages in its rulemaking.

“When companies undertake activities and have harm that they’re not paying for—because they’re sending them up a smokestack or down an effluent pipeline—there is going to be an assessment of those costs that are thrown onto society,” Esty said. “It’s only one step beyond that to make companies pay for harm they are causing. That’s where we’re headed over the next decade.”

“The world,” he said, “is turning.”


Article Link To The Daily Beast:

Nobody’s Buying Donald Trump’s Immigration Lies

The words and positions Trump used to win over the enraged white people who put him over the top in the GOP primary aren’t flying with Americans now.


By Michael Tomasky
The Daily Beast
August 30, 2016

Surprising election indeed: Joe Scarborough has made an actual contribution to our national discourse. His “Amnesty Don” zinger Monday morning was great. He even aped Trump’s favored trope of assigning the appearance of this sobriquet not to himself, but to the same unspecified “people” Trump is always citing: “A lot of people are calling him Amnesty Don. People are saying it.”

It’s been a delicious spectacle these past few days, watching Trump try to say he didn’t really mean all that nasty stuff he said back when. It’s interesting too because arguably it’s a bit early for the pivot, or the “softening,” as he calls it—the move to the middle for the general election. Shouldn’t happen until after Labor Day. Mitt Romney waited until the first debate, which wasn’t until early October 2012, barely a month before the voting.

Do you remember? Boy, that was a shocking night. Romney had given absolutely zero indication up to that point that he had the remotest interest in pivoting. Zero. But he spent two hours doing exactly that, simply pretending that he’d never taken anything like those old, primary-era positions on immigration and taxes and the rest. He was amazingly smooth. And President Obama, of course, was disengaged and cranky that night, like he was pissed off that he was missing a game on TV or something.

It was a terrifying night for liberals, Democrats, and Obama supporters of all stripes. I remember being in the Beast’s offices that night. Andrew Sullivan was there. After it ended he stalked around the place like a man possessed by demons, caterwauling at the top of his lungs: “WHAT IS HE DOING? THAT WAS AWFUL! HE’S THROWING THE BLOODY ELECTION!”

Here’s what really made it scary, though, and why it’s relevant today: You had the feeling while watching it that Romney was finally saying what he believed. He was always a moderate-to-conservative man who wasn’t consumed with rage and who was obviously just saying that crap about “self deportation” and being a “severely conservative governor” to get on the good side of the red-hots. He seemed free. Finally, he seemed to be thinking, this is who I am, who I’ve wanted to be all along. I can say what I actually think, and it’s even good for me politically.

And it most certainly did work. It was the only moment in the race when he pulled ahead of Obama for a short period.

Now, with Trump, it’s just the opposite. He meant what he was saying then. Mexican rapists, deport them all, waterboard their asses...he quite obviously meant every coarse, sleazy, greasy, flatulent, and unconstitutional syllable. So now he’s lying, and now, unlike Romney, he looks miserable, not free. Just the way his face contorts when he’s forced to utter a word like “humane”…it’s obviously painful for him. And he’s fooling no one.

Except he is, perhaps, exasperating his base. Actually, you can read whatever you want to about that. Here’s one report on how his base voters are upset. Here’s another arguing that his base voters don’t seem to care.

Well, if they give Trump a pass on this stunning a flip-flop on the hard right’s core issue, these people are pathetic. My instinct is that they won’t, or enough of them won’t. None of these people will be Hillary voters, of course, but some may stay home, distraught that their hero caved into the very same dark forces he won their ardor by maligning. Illegal immigration is The Big Issue for the hard right. Has been for a decade. It was the No. 1 issue for Tea Partiers, despite much media misunderstanding about this; Tea Partiers viewed immigrants as a bunch of freeloaders.

If Trump drops deportation in his big speech Wednesday night, it’s hard for me to see how he doesn’t lose huge chunks of that base. Even if he speaks words something like “I’m not dropping deportation” but then proceeds to outline steps that smell like he’s dropping deportation, he’ll lose big portions of the base. And Clinton should be able to have great fun with it. This is a much grander flip-flop than anything John Kerry did in 2004, and it was the flip-flopper label that probably cost him that election.

During April and May, as it became clear that Trump was actually going to be the GOP nominee, I kept thinking to myself: Surely all these things he said that helped him in the primary have to hurt him in the general, right? Turns out I had no idea how much. Trump is getting pulverized among college-educated whites, who see him as the yahoo candidate.

Or let’s put the matter more bluntly: Every utterance and position that helped Trump win the primary is proving to be a complete and utter disaster for him in the general, because the voters who put Trump over the top in the primaries are a bunch of enraged white people with very deep suspicions and prejudices, while the bulk of Americans are fair-minded human beings who aren’t governed by fear and anger.

Romney almost convinced the latter group because, however conservative, he was fundamentally one of them. Trump is not.

Despite the fact that every word that comes out of his mouth is a lie, he nevertheless managed last year to tell us exactly who he is. We should believe him.


Article Link To The Daily Beast:

Stephens: ‘Who Did This to Us?’

Donald Trump asks that question. So do Putin, Erdogan and Black Lives Matter.


By Bret Stephens
The Wall Street Journal
August 30, 2016

Bernard Lewis once made the point that there are two basic ways in which people and nations respond to adversity and decline. The first, the great historian wrote in 2002, is to ask “Who did this to us?” The second is, “What did we do wrong?” One question leads to self-pity; the other to self-help. One disavows personal responsibility and moral agency; the other commands them. One is a recipe for economic failure and political squalor; the other for success.

Mr. Lewis, who recently turned 100, was writing about the Islamic world’s destructive habit of blaming its ills on imperialism, Jews and other assorted bogeymen. But his test also applies to other regimes and regions, not to mention political parties and movements, from Vladimir Putin to Black Lives Matter. So let’s take a tour of the world.

Begin with Turkey. The government of Recep Tayyip Erdogan is again at war with the Kurds, thanks to Ankara’s violent crackdown on Kurdish protesters in 2014. It has a terrorism problem courtesy of Mr. Erdogan’s previous willingness to turn his country into a jihadist entrepĂ´t. And it recently had a coup attempt, the result of Mr. Erdogan’s suppression of his erstwhile fellow travelers in the Gulenist movement.

But don’t expect Mr. Erdogan to offer up any mea culpas. He’s conducting the greatest political purge of the 21st century, and has released 38,000 convicts from his prisons to make room for his political enemies. Ankara’s incursion into northern Syria—supposedly to fight ISIS—has become an opportunity to expand the war against the Kurds. The Turkish media is abuzz with “reports” that assorted American military men were behind the coup.

Mr. Erdogan is a “Who did this to us?” man, and it shows in Turkey’s fast descent from beacon of Muslim secularism and democracy to another paranoid Middle Eastern regime. It’s the same story in Iran and Russia, which was to be expected, but also increasingly in China, which wasn’t.

The post-Maoist regime inaugurated by Deng Xiaoping understood that the People’s Republic had been brought to ruin by its own Great Helmsman. By contrast, the post-Dengist regime of Xi Jinping is on a constant hunt for scapegoats. Last year’s stock market crash was blamed on short sellers and Tibetan separatists. China’s maritime aggressions against the Philippines, Vietnam, Japan and Indonesia are the result of the U.S. “stoking tensions.”

Such rampant political blame-shifting is a more telling indicator of long-term decline than any reading of Chinese economic data, much of which is largely bogus anyway.

But “Who did this to us?” is not just a phenomenon of the developing world. June’s Brexit vote was based on the view that the root of the U.K.’s problems lay with the bureaucracy in Brussels. That’s false. It’s Westminster that’s to blame for Britain’s high taxes, rising home prices, mediocre social services and, if you consider it a problem, growing number of immigrants (the bulk of whom are Chinese, Indians, Australians, Spaniards, Poles and Americans, in case you’re wondering).

Or take the United States. The Black Lives Matter movement, ignited by the small fable of Michael Brown’s innocence, has metastasized into the big lie of America, land of the irredeemably racist. For BLM and its cadres, there is no moral agency in the black community, no choices African-Americans can make for themselves to shape their own destiny for good or ill. There is merely a nonstop conspiracy by the structures of white power to keep black people down.

Now it’s almost amusing to hear the same BLM sympathizers react indignantly to Donald Trump’s recent suggestion that black lives are as hellish as BLM says they are, and that blacks would have nothing to lose by voting for him. What about the huge black middle class? What about black political empowerment and cultural influence? What about black leadership roles in the police, the military, academia, corporate America? The myth of victimization survives only as long as the myth’s propagator believes he’s at no risk of becoming a genuine victim.

Which brings us to America’s newest victim class: the Trump voter.

When the history of Mr. Trump’s candidacy is written, historians will marvel at how so many people rallied to a candidate intent on treating them as losers. Losers in war and peace, losers on trade and immigration, losers to China and Mexico, losers to “the establishment” and “the globalists.” Mr. Trump’s political ideas may vary from day to day, but his consistent message is that Americans are one giant victim class. Like Mr. Erdogan or Mr. Putin, he asks not “What did we do wrong,” but “Who did this to us?” It is every demagogue’s favorite question.

It used to be that Americans looked askance at people who pointed fingers at everyone but themselves. It used to be, too, that Republicans had no time for Democrats who tried to impose a victimization narrative everywhere they looked. Not least among the outcomes of this election season is that America, too, may yet fail Professor Lewis’s timeless political test.


Article Link To The Wall Street Journal:

Black Lives Matter To Donald Trump

The Republican says every child—in Chicago, Detroit, Baltimore—should be able to walk to school safely. For that, he’s called racist.


By Heather Mac Donald
The Wall Street Journal
August 30, 2016

Hillary Clinton tried to tar Donald Trump as a racist last week by associating him with the “alt-right.” Yet it is Mr. Trump who has decried the loss of black life to violent crime—and has promptly been declared biased for doing so. Whether intentionally or not, Mr. Trump has exposed the hypocrisy of the Black Lives Matter movement and its allies.

Speaking in West Bend, Wis., on Aug. 16, only days after the recent riots in Milwaukee, Mr. Trump observed that during “the last 72 hours . . . another nine were killed in Chicago and another 46 were wounded.” The victims, as in other cities with rising crime, were overwhelmingly black.

Bringing safety to inner-city residents should be a top presidential priority, Mr. Trump said: “Our job is to make life more comfortable for the African-American parent who wants their kids to be able to safely walk the streets and walk to school. Or the senior citizen waiting for a bus. Or the young child walking home from school.” Mr. Trump promised to restore law and order “for the sake of all, but most especially for the sake of those living in the affected communities."

The reaction was swift. The progressive website Crooks and Liars deemed Mr. Trump’s speech a “mashup of Hitler and George Wallace.”On CNN the activist and former Obama adviser Van Jones called it “despicable” and “shocking in its divisiveness.” Historian Josh Zeitz told USA Today that “the term law and order in modern American politics is, ipso facto, a racially tinged term.”

Mr. Trump’s acceptance speech in July at the Republican National Convention provoked similar dismay. “Young Americans in Baltimore, in Chicago, in Detroit, in Ferguson,” he said, have “the same right to live out their dreams as any other child in America.”

This defense of black children was too much for Alicia Garza, a co-founder of the Black Lives Matter movement. “The terrifying vision that Donald J. Trump is putting forward casts him alongside some of the worst fascists in history,” Ms. Garza said. The executive director of the Advancement Project, Judith Browne Dianis, complained that “the speech lends itself to be interpreted as isolating and scapegoating of communities of color.” Political commentator Sally Kohn wrote in Time that Mr. Trump “has basically recycled Richard Nixon’s version of dog whistle racism by insisting he is the ‘law and order candidate’—implicitly protecting White America.”

Why this frenzied effort to demonize Mr. Trump for addressing the heightened violence in inner cities? Because the Republican nominee has also correctly identified its cause: the false “narrative of cops as a racist force in our society,” as he put it in Wisconsin.

Ever since the Black Lives Matter movement burst onto the national scene in 2014, following the fatal police shooting of Michael Brown in Ferguson, Mo., violent crime has surged in urban areas. In America’s largest 56 cities, homicides rose 17% last year, the largest one-year increase in more than two decades. In Washington, D.C., homicides jumped 54%; in Milwaukee, 73%; in Cleveland, 90%.

The reason is a drop-off in the proactive policing that activists and academics denounce as racist. While cops continue to rush to 911 calls in minority neighborhoods, they are making fewer pedestrian stops and engaging in less public-order enforcement. Backing off such activity is presumably what Black Lives Matter supporters, including President Obama, want.

Yet the victims of the resulting crime surge are almost exclusively black; whites have largely been unaffected. In Baltimore, 45 people were killed in July 2015, 43 of them black. In Chicago, 2,460 blacks were shot last year, lethally or non-lethally, according to the city’s police department. That’s nearly seven a day. Seventy-eight white residents were shot in 2015, though the white share of the Chicago population is about the same as the black share. Blacks in Chicago were 18 times more likely to be killed last year than whites, up from eight times more likely in 2005.

Police shootings are a minute fraction of this carnage. So far this year in Chicago, they account for about 0.5% of all shootings. Four studies published this year alone have further undercut the claim that we are living through an epidemic of racially biased policing shootings. Harvard economist Roland Fryer, for example, examined data from Dallas, Austin, Houston, Los Angeles and six Florida counties. He found no evidence of racial discrimination in police shootings; officers in Houston were nearly 24% less likely to shoot blacks than whites.

When Mr. Trump pledges to restore law and order, he is not promising to “protect White America,” in Sally Kohn’s words. He is addressing a problem that whites could easily ignore, if they were the bigots that the Black Lives Matter movement and nearly the whole of academia make them out to be.

Strangely, it is Mr. Obama and Black Lives Matter sympathizers who have turned their eyes from the rising black victimization. FBI Director James Comey warned last October that the “chill wind blowing through American law enforcement” was leading to a “huge increase” in urban homicides and shootings. Mr. Obama promptly accused him of “cherry-picking data” and having a “political agenda.”

After Mr. Trump drew attention in his convention speech to the rising urban violence, President Obama again dismissed the casualties as merely an “uptick in murders and violent crime in some cities.” It is hard not to translate this is as: white lives matter; black lives, not so much.

Mr. Trump’s call to restore law and order recognizes the right of inner-city residents to enjoy the same freedom from fear that the rest of America now takes for granted, thanks to the 20-year decline in crime brought on by the proactive policing revolution of the 1990s. Mr. Trump has issued a much-needed warning that the anti-police narrative is putting black lives in jeopardy and undercutting the foundation of a civilized society. It is a message he should amplify.


Article Link To The Wall Street Journal:

Why The Affordable Care Act Is Anything But Affordable

By Rich Lowry
The New York Post
August 30, 2016

For years, ObamaCare supporters have been telling critics of the law to shut up and fall in line. Now, they are urging them to come to its rescue.

A key part of President Obama’s domestic legacy is sputtering so badly that even the law’s boosters are admitting that the federal government needs to do more to prop it up.

The ObamaCare exchanges were supposed to enhance choice and hold down costs — and are doing neither. Abandoned by more and more insurers, the exchanges — once billed as robust “marketplaces” — are becoming pitiful shadows of themselves.

In most or all of the following states — Alaska, Alabama, Arizona, Florida, Missouri, Oklahoma, North Carolina and Tennessee — probably only one insurer will offer insurance through the exchanges next year, reports The Wall Street Journal. One large county in Arizona may have no exchange insurer at all. An analysis by the Kaiser Family Foundation finds that 31 percent of US counties will have one insurer and another 31 percent will have just two.

It isn’t Republicans hobbling the law. It isn’t the greedy insurance companies, who were overly optimistic about the exchanges at the outset and are now paying the price. It is fundamental economic forces that the law’s architects blithely ignored. But economic incentives will not be mocked.

ObamaCare regulations make health insurance more expensive and keep insurers from conducting their business on a rational basis. This means the exchanges are less attractive to younger and healthier people and therefore less economical for insurers.

The mandate was supposed to force healthier people to buy insurance anyway, but it has proven too weak, and subsidies were supposed to cover the higher costs for poorer people, but they’re only a band aid on spiraling costs.

The exchanges have created perverse insurance products that feature the worst of all worlds: They have high premiums, and high deductibles and co-pays, and limited networks of doctors. No wonder the exchanges have attracted half as many people as they were expected to. Leave it to the federal government to create a market so unappealing that it is border-line unsustainable.

When Aetna announced it was exiting all but four state exchanges about two weeks ago, liberals charged that the company was exacting revenge on the Obama administration for blocking its hoped-for merger with Humana. But what accounts for UnitedHealth pulling back, and all the other exoduses? All these insurers made a go of it on the exchanges, before reality slapped them in the face.

Insurance companies may be as malevolent as their fiercest critics depict them, but one can’t really begrudge them needing to make some money. If the Department of Health and Human Services can spin and obfuscate, these companies can’t ignore the bottom line. Analysts expect the insurers remaining in the exchanges to ask for big premium hikes next year.

The answer to this turbulence, the law’s supporters say, is yet more subsidies. They’re paying an inadvertent obeisance to the old Ronald Reagan quip that the government’s view of the economy is: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

ObamaCare’s boosters are loath to admit that there might be something wrong with the structure of a law they’ve celebrated as a glorious success from the day it passed.

Instead, they’ll now argue Republicans are sabotaging it by declining to double down on its subsidies.

But it obviously makes no sense for the government to make a product more expensive with one hand and then to subsidize its cost with the other. This was pointed at the time the law was being debated.

But the Obama administration and its allies were too transfixed with “making history.” And so they did — by passing an Affordable Care Act that’s one of the great misnomers in the history of major America legislation.


Article Link To The New York Post:

Anthony Weiner Has Bored Us With His Predictable Sexts

By Kyle Smith
The New York Post
August 30, 2016

Anthony Weiner, New York can forgive you for being a pervert. What we can’t forgive is being boring.

We’re now in the fifth year of Weiner weenie scandals. No, really: This one-man sausage party has been playing in public since the spring of 2011. The leg warmers in the costume closet at “Cats” aren’t this stale.

It could have all been different for Anthony. As the beginning of this year’s brilliant documentary “Weiner” illustrates, when the disgraced ex-congressman appeared in public life again in 2013, two years after his first sext scandal, he was leading Democratic primary polls to be mayor. The Democratic primary in 2013 was tantamount to the general election.

Ecstatic crowds cheered him in the street. As sex scandals go, Weiner’s had done little harm — he apparently was never even in the same room with the women to whom he sent his crotch shots — and it delivered limitless mirth.

Sure, you can’t spell humiliation without H-U-M-A, but that was none of our business. Anyway, in Huma Abedin’s defense, being utterly shameless seems to be a requirement for anyone connected with Hillary Clinton. No doubt the two women shared some great stories behind the scenes.

This ain’t Topeka. New Yorkers not only forgive quirks; if anything, we celebrate them. This is the city where “Dog Day Afternoon” robber John Wotjowicz became a folk icon after trying to knock over a Brooklyn bank in 1972 to pay for his lover’s sex-change operation.

We at The Post played along with all our “Weiner’s Second Coming” panache. Who doesn’t love a new twist?

But then came Dong Day Afternoon.

On July 23, 2013, it emerged that Weiner was still sexting, this time under the name “Carlos Danger.” Major points for the colorful name, but nobody likes a summer re-run.

Except, it appeared, Huma Abedin. As the “Weiner” documentary shows, she gritted her teeth and looked displeased but apparently dug in. Though she didn’t show up for his election-night party as he finished dead last in the Democratic primary in September, she had a baby to think about, and a lot of road time coming up thanks to her position as Hillary Clinton’s consigliere.

So she hoped for the best even as it became obvious that Weiner, far from being just an unusually vain horndog, really does have some strange serious psychological problem.

Would you want a guy with frayed internal wiring anywhere near your Gmail password, much less granted access to the powers that go with being a congressman or mayor?

You certainly wouldn’t let this guy baby-sit your kid. He can’t be trusted to baby-sit his own kid, as his wife discovered.

Men who stray from the hearth may sometimes get away with it, but those who drag their obsessions into bed next to a sleepy toddler are lighting a match in the vicinity of some immensely combustible feminine force of nature. “You sexted next to OUR CHILD?” or some variant would have been the theme of whatever Huma said to Anthony when she gave him the news that they were, finally, finito.

Alas for Huma, as with everything Hillary-related, booting Anthony out of bed raises a perfectly reasonable follow-up question: Since Bill Clinton’s transgressions were far worse than Weiner’s, why on earth has Hillary continued to stand by her man?


Article Link To The New York Post:

Why Americans Can’t Agree On Basic Economic Facts

By Ian Anson
The New Republic
August 30, 2016

Back in 1992, Democratic strategist James Carville uttered his famous recommendation to Bill Clinton ahead of the 1992 election: “It’s the economy, stupid!” Political scientists beat Carville to the punch, though: As far back as the 1950’s, scholars were uncovering evidence that presidential candidates of the incumbent party tend to win when the economy is strong on Election Day.

Presiding over a gloomy economy, in contrast, will guarantee a tortuous uphill climb for parties vying to maintain their place in the White House.

After more than 50 years of scholarly research on this seemingly straightforward relationship, new insights from political psychologists have shaken the field. Their central finding should be apparent to anyone who remembers the last time their fiercely Republican aunt sat down to Thanksgiving dinner with her staunchly Democratic brother-in-law. Heading into the 2016 election, Aunt Reba the Republican is convinced the economy is in utter shambles, while Denny the Democrat is steadfast in his economic optimism.

As Donald Trump and Hillary Clinton trade economic talking points on Twitter, partisans’ beliefs about past and present economic conditions appear to be worlds apart.

These disagreements have alarmed people concerned about accountability in electoral politics. How can Americans reward or punish incumbents for their performance in office if they can’t agree on the basic economic facts?

In two recent papers, I take up this question by investigating how biased economic perceptions are formed and maintained. The results do not paint a particularly rosy picture of the future of economic accountability, for two reasons.

One is that contemporary partisan media play a subtle yet powerful role in forming these biases. Another is the discovery that partisans perform Simone Biles-esque mental gymnastics to maintain biases in their economic beliefs – even when they know things about the economy that go against their favorite partisan talking points.

How Media Bias Economic Judgments


Partisan disagreement about the economy is just one example of a broader phenomenon in contemporary party politics, known as “partisan motivated reasoning.”

It’s been described as “the depressing psychological theory that explains Washington” by columnist Ezra Klein – a description that doesn’t stray far from many scholars’ own appraisals. Essentially, Republicans and Democrats think differently about prevailing conditions because they are motivated to see the world in ways that help them feel good about the performance of the partisan “home team.”

Ideological media sources, in turn, gain popularity among loyal partisans when they provide audiences with a version of reality that jibes with this “partisan preferred world state” – the way the world should work given partisan assumptions. “Republicans are good economic managers, Democrats are not,” surmises Reba the Republican, while Democrat Denny believes the opposite.

The 2016 election has witnessed this media phenomenon at every turn. The return of 2012’s “unskewed polls” debate is a prime example of this form of biased reasoning. Republicans are less likely than Democrats to tout polls that tell them their candidate is losing. Similarly, Republicans are less likely to entertain evidence that the economy is strengthening, while Democrats are dismissive of more worrying indicators.

Just The Facts?

In a recent paper published in Political Research Quarterly, I tested competing expectations about the ways media can convince partisans to engage in motivated reasoning. The study examines the conditions under which partisans internalize their preferred “facts.”

The Cooperative Congressional Election Study is a massive survey project put together by more than 50 research teams nationwide. I presented survey-takers with one of five randomly assigned articles about the economy during the 2014 wave of the study. These stories were designed to mimic the type of content they might see when visiting a partisan news source. Some of the articles presented readers with “just the (congenial) facts”: these survey-takers saw a news story showing either optimistic or gloomy economic data. Others saw stories that presented these facts paired with statements blaming or praising President Barack Obama for the trend. These latter treatments make survey-takers highly aware of the agenda of the story’s author – especially if they identify as partisans.

Just as expected, Republicans and Democrats in the study were most likely to learn from the news story when it reinforced their own worldview. Republican Reba believed the bad news, while Denny the Democrat believed the good news.

The surprising finding was that this pattern only held for the “just the facts” news stories – not the overtly partisan ones. In other words, partisans enjoy cheerleading for their party but are even more strongly affected by news stories that appear to be highly objective. When asked to report whether they thought the economy in the past year had gotten better or worse, partisans in these treatment conditions were significantly more likely than others to give the party-congenial response.

In the 2016 campaign, we have seen plenty of examples of overt partisan jeering when pundits discuss economic conditions. The study’s results suggest that people are actually not very likely to digest economic information from such overtly partisan reports. Instead, the most powerful tool for affecting how we perceive the economy is the subtle process of agenda-setting.

As studies of media slant have reliably shown, agenda-setting is widespread in today’s media marketplace. By consistently presenting economic facts that agree with the partisan narrative, free of any overt partisan language, slanted sources can subtly adjust citizens’ beliefs about the way the economy is going.

That’s Not How It Works!


Partisans may not see eye to eye on the state of the economy for this reason, but surely they can agree on some of the most basic economic facts, like whether the stock market has gone up or down in recent months.

In a second paper recently published in the Journal of Elections, Public Opinion and Parties, I show that this is indeed the case: An analysis of a large number of public opinion polls reveals partisans tend to agree on the state of the stock market. The ubiquitousness of this economic indicator allows it to bypass even the most intense agenda-setting efforts.

We would normally expect partisans to feel the mental discomfort known as cognitive dissonance when knowledge of stock market performance conflicts with their biased economic judgments. As the stock market soars to record highs, this news conflicts with the idea that the economy is still stuck in post-Great Recession doldrums. Partisans should adjust their beliefs.

However, to echo the title of a recent paper by Danish political scientist Martin Bisgaard, I nevertheless show in survey analyses that “bias will find a way.” Partisans perform mental gymnastics by changing the way they think the economy works. When stock market performance runs in conflict with the partisan economic narrative, partisans become less likely to say the stock market matters at all for the broader economy.

Which Economy?

These studies help us to understand how partisans acquire and maintain biased economic judgments. While the subtle power of agenda-setting could mean that future partisans might possess very different sets of facts about the state of the economy, the latter study joins others in showing that Republicans and Democrats may share more knowledge about the economic fundamentals than they may otherwise let on.

The real concern, then, lies not only in the selective presentation of economic facts by news media. A seemingly more intractable issue is that when they learn “inconvenient facts,” Americans seem to be more than willing to revise their underlying understanding of the world to accommodate the new information in line with the partisan narrative.

Rigid in party loyalty, yet limber in mind, Republicans and Democrats can deftly vault past disconfirming information to land in vastly different economic realities. In 2016 and beyond, then, we shouldn’t be surprised if economic accountability lies just out of reach.


Article Link To The New Republic:

A Putin-Sponsored October Surprise?

By Dana Milbank
The Washington Post
August 30, 2016

The Russians have just given us an August glimpse of a potential October surprise.

We learned earlier this summer that cyber-hackers widely believed to be tied to the Kremlin have broken into the email of the Democratic National Committee and others. The Post’s Ellen Nakashima reported Monday night that Russian hackers have also been targeting state voter-registration systems. And, in an apparent effort to boost Donald Trump’s presidential candidacy, they’re leaking what they believe to be the most damaging documents at strategic points in the campaign.

Last week, we learned something else: The Russians aren’t just hackers — they’re also hacks. Turns out that before leaking their stolen information, they are in some cases doctoring the documents, making edits that add false information and then passing the documents off as the originals.

Foreign Policy’s Elias Groll reported last week that the hackers goofed: They posted both the original versions of at least three documents and their edited versions. These documents, stolen from George Soros’s Open Society Foundations, were altered by the hackers to create the false impression that Russian anti-corruption activist Alexei Navalny was funded by Soros. A pro-Russian hacking group, CyberBerkut, had inserted Navalny’s name, bogus dollar amounts and fabricated wording.

This raises an intriguing possibility: Are Vladimir Putin’s operatives planning to dump edited DNC documents on the eve of the presidential election?

Perhaps they’ll show that the Clinton Foundation has been funding the Islamic State, or they’ll have Hillary Clinton admitting that she didn’t care about those Americans who died in Benghazi after all. Maybe they’ll show that she really did lose most of her brain function in that fall several years ago and is now relying on Anthony Weiner to make all of her decisions.

Russian “dezinformatsiya” campaigns such as this go back to the Cold War; the Soviet portrayal of AIDS as a CIA plot was a classic case. But this type of cyberwar — email hacking and, now, the altering and release of the stolen documents — is a novel escalation. It’s tempting to wonder how differently the Cold War might have gone had there been cyber-hackers back then. We’ll never know, of course, because the Soviet Union crumbled before Al Gore invented the Internet.

But it’s clear that Russia’s disinformation wars are as active as ever. On Sunday, Neil MacFarquhar wrote in the New York Times about Russian attempts to undermine a Swedish military partnership with NATO. The campaign is spreading false information that there’s a secret nuclear weapons stockpile in Sweden and alleging that NATO soldiers could rape Swedish women with impunity. This Russian use of “weaponized information” helped cause confusion in Ukraine in 2014, when conspiracy theories spread by the Russians about the downing of a Malaysian Airlines jet helped Russians justify their invasion of Crimea.

So does this point to a Putin-sponsored October surprise?

Putin has meddled in domestic politics in France, the Netherlands, Britain and elsewhere, helping extreme political parties to destabilize those countries. He appears to be doing much the same now in the United States, where, in addition to the DNC and state voter system hacks, there have also been reports this summer about Russia hiring Internet trolls to pose on Twitter and elsewhere in social media as pro-Trump Americans. Trump and Putin have expressed their mutual admiration, and even after the departure of Trump campaign manager Paul Manafort, Trump and several top advisers have close ties to Moscow.

The hyper-competitive American media environment is vulnerable to the sort of technique the Russian hackers used in the Soros case — stealing documents, altering them, then releasing them as the original. If Putin’s hackers were to release such a doctored document smearing Clinton in, say, late October, it’s likely that competition would lead outlets to report on the hacked documents before they had a chance to see whether and how they were altered.

We don’t know what, if anything, Putin’s hackers have planned for this fall. But the doctored Soros documents could be a clue.


Article Link To The Washington Post:

Please Don’t Tell Anyone, But Tax Cheating Is About To Rise In The U.S.

By Catherine Rampell
The Washington Post
August 30, 2016

I shouldn’t tell you this. Publicity will only make the problem worse. But you deserve to know: Tax cheating is about to rise in the United States.

Today, Americans are among the most law-abiding taxpayers in the world, by which I mean they lie to the taxman much less than people in other countries do. Today, about 82 cents of every dollar owed in U.S. taxes gets paid voluntarily, which is high.

Here are six reasons that number is going to fall:

1. Congress has gutted Internal Revenue Service enforcement.


The most important determinant for tax cheating is: Can I get away with it?

The answer, increasingly, is yes.

Thanks to budget cuts, audit rates have plummeted, especially for the biggest corporations, with armies of sophisticated tax preparers. Criminal tax prosecutions have nose-dived, too.

In some districts, the IRS has openly acknowledged that scofflaws owing under $1 million will get a free pass because the agency no longer has the resources to go after them.

That acknowledgment is bad, as is the fact that I’m drawing attention to it. Tax cheating is more dependent on perceived probability than actual probability of getting caught.

2. Budget cuts have also hurt IRS customer service.

Wait times on the IRS’s toll-free phone lines are finally down, but the agency still will answer only “basic” questions (i.e., the ones you can Google yourself), not the complicated ones taxpayers actually need help with. Don’t be surprised if some who are trying to pay their taxes honestly get frustrated and simply give up — and do whatever seems cheapest.

3. The growing perception that everyone else is doing it.

Both left and right are mad that certain populations don’t pay their “fair share.” Conservatives, stoked partly by Mitt Romney’s infamous “47 percent” comments, believe the poor pay too little. Liberals, stoked partly by the low tax rates paid by the likes of Romney, believe the rich pay too little. And a growing share of Americans overall think their own tax bill is “too high” and “unfair.”

In other countries, this (often well-founded) belief that everyone else is shirking has led to cascading tax evasion.

“My sense in Greece and other areas that have low compliance rates is that people look around and say, ‘Why should I be a sucker and be the only one who actually pays?’ ” IRS Commissioner John Koskinen told me in a phone interview. (Which is another reason a column predicting more tax cheating could become a self-fulfilling prophecy.)

4. Declining trust in government.


A troubling working paper, by economists Julie Berry Cullen, Nicholas Turner and Ebonya Washington, suggests that tax evasion rises when taxpayers are not in “political alignment” with the government. That is, Democrats cheat more if a Republican holds the White House, and vice versa. Earlier research has also shown that general distrust in the government reduces compliance.

Now consider the long-term downward spiral in trust in the U.S. government and the democratic process; the fact that politicians on both sides of the aisle preach that the political system is rigged; and Americans’ increasing perception that their partisan opponents are not only wrong but also immoral and malevolent.

All these trends will make shortchanging the government even more attractive.

5. The tax code gets more complicated every year.

This results in more opportunities for innocent error; increased perception that rich people with fancy tax preparers get away with murder; and, again, more people simply giving up on calculating their tax bills accurately.

6. The rise of the “gig economy.”

People rarely cheat on their taxes if they know there will be substantial third-party reporting and withholding, as is the case with traditional, W-2 employees. Ninety-nine percent of these taxes get paid voluntarily. But for income subject to little or no information reporting — such as income from odd jobs — only about 37 cents of every dollar owed gets paid.

In addition, lots of self-employed “gig economy” workers, such as Uber drivers, probably don’t realize they’re supposed to be making quarterly estimated tax payments and paying both parts of their payroll taxes. That means they may get hit with an unpleasant surprise come April 15 — increasing their incentives to fudge the numbers.

Now, there are at least two counterarguments to my dire prediction: Fewer business transactions are done in cash today, so they’re harder to hide; and, relatedly, in the era of “Big Data,” there’s more third-party information for the IRS to check to figure out if people are cheating.

There’s also plenty politicians could do to prove me wrong — by, for example, simplifying the tax code, or adequately funding IRS enforcement, or stopping actively delegitimizing the government.

I’d be thrilled if they did, but I wouldn’t bet my tax refund on it.


Article Link To The Washington Post:

Modesty Could Have Averted The Anguish Of Obamacare

By Megan McArdle
The Bloomberg View
August 30, 2016

The last few weeks have featured a great deal of news for Obamacare, most of it bad. Insurers are pulling out of the exchanges and premiums are rising. Coverage has been expanded, but it increasingly looks as if that coverage will mostly consist of companies taking their Medicaid managed care plans and repackaging them for private customers. Call it “Medicaid with premiums.” Or worse, that the exchanges will enter into a cycle of premiums rising and healthier customers dropping their insurance, until some markets have no insurance available at all.

Six and a half years into Obamacare, it seems worth asking, “Was this inevitable?” And, if so, “Was there a better alternative?”

I think the answer to the first question is “Yes.” And I think the answer to the second is, “Yes, there is something Washington could have done, and it probably would have been better than what it did.” I’m not talking about pie-in-the-sky reforms, like my proposal to replace all government health care with a progressive catastrophic government plan that covers all expenses that exceed a certain percentage of income.

I’m talking about something that President Barack Obama’s White House and a Democratic Congress could have enacted in 2010 that would have achieved comparable coverage at roughly comparable costs. Instead, they overreached, trying to gut-renovate the American health-care system even though they didn’t really have the political tools to get the job done.

But to explain why they should have done something else, I should first explain why I think that what we’re seeing now was predictable. The answer is that long before the exchanges opened, many critics warned that its weak mandate – the fines for failing to participate are modest -- would result in rampant gaming of the system by people who signed up only when they got sick.

The weakness of the mandate, like other flaws in the law, was politically necessary because the law was already quite unpopular, and its supporters couldn’t afford to alienate a single other voter. So they passed what they could and hoped to fix it later. However, the unpopularity of the law meant that there was a strong risk that they wouldn’t be able to fix it later, and indeed that is where we now find ourselves.

I don’t mean to suggest that the law has been an utter failure by the standards of its architects. They have not achieved anything close to universal coverage, but they did manage to reduce the number of uninsured people by somewhere between a quarter and a third.However, I think that if they had been a little less stuck on the idea of attacking every problem at once, they might have passed a less ambitious plan that would nonetheless have expanded coverage substantially, with far fewer risks to either the system or the Democratic Party.

Here’s my radical plan: If the Obamacare exchanges are going to result in, at best, people being able to buy Medicaid-style plans with limited choices and benefits, then why not just eliminate the middleman and give them … Medicaid?

In 2013, the last year before Obamacare took full effect, there were approximately 42 million uninsured people in the country, according to the Census Bureau. A little over two-thirds of those people, about 28 million, had household incomes below 250 percent of the federal poverty line (this year, that’s about $60,000 for a family of four).

Those people account for the bulk of the coverage expansion that we’ve seen from the Affordable Care Act, partly because low-income people were more likely to be uninsured, but also because people under that line get enough subsidies to give them relatively comprehensive coverage at little or no cost. People who have to pay substantial premiums to get high-deductible insurance that covers only a limited number of doctors and hospitals have largely declined to buy exchange policies. But for people with incomes below 250 percent of the poverty line, Obamacare is a pretty good deal.

Now, a substantial minority of uninsured folks are illegal immigrants who wouldn’t have been eligible for insurance under any politically plausible program. But by my calculations, insuring the rest would result in roughly the same coverage improvement — about 5 percent of the American population — that we’ve seen since the Patient Protection and Affordable Care Act took effect.

What would this have cost? I did some admittedly rough calculations, using the Kaiser Family Foundation’s estimate that Medicaid spending on non-elderly, non-disabled people (the elderly and the disabled already get coverage) was $4,141 for adults and $2,492 for children. Children made up about 15 percent of the uninsured population in 2013, which gives us a total cost of about $90 billion a year.

That’s around what the Congressional Budget Office projects will be spent in 2016 on Medicaid and various exchange subsidies combined. And that assumes that every single person signed up who was eligible and uninsured in 2013 — that the number of uninsured wouldn’t have gone down at all as the economy improved and that the Supreme Court would not have intervened to allow states to opt out of the Medicaid expansion.

There are objections to this. One is simply that my calculations are rough, as indeed they are. Another is that this offers nothing to the middle class. Which is true — but Obamacare offers little to middle-class people now, and in fact, has angered a lot of them by cancelling their insurance and forcing them to buy something both more expensive and less generous. It looks to me as if Democrats could have gotten pretty much all of the effective benefit with a Medicaid expansion plus some sort of high-risk-pool program for the truly uninsurable, at a fairly comparable cost.

In fact, I might argue that the political calculus would have been easier for at least some sort of Medicaid expansion, even if a retreat to such a staid incrementalist goal would have been temporarily embarrassing for the Obama administration. Establishing a program, and then gradually expanding it, has long precedent in American politics. Social Security, for example, was transformed over decades into the system we know today from the comparatively bare-bones pension that President Franklin D. Roosevelt signed in the 1930s.

But if the CBO did a more thorough version of my rough calculations and came back with a number that made it too costly to include all those earning up to 250 percent of the poverty line, then the administration could have started smaller, insuring only those earning 200 percent of a poverty income, or 175 percent. And then gone back for more later.

Given the concentration of the uninsured at the bottom of the income distribution, this would have focused on the neediest consumers without all the anguish that came out of the attempts to reform the individual market. Think of the debacle of the exchange rollout; the exposure of “If you like your plan you can keep it,” and, “If you like your doctors you can keep them,” as falsehoods; the controversies over forcing employers to provide contraception services that violated their religious beliefs; and, of course, the current embarrassment of insurers fleeing the exchanges. Nor would it have posed the risk we currently face that the individual market will eventually become less rather than more functional than it was before Obamacare.

So why wasn’t this on the table? In part because winning the Democratic primary meant promising some sort of European-style universal coverage. It was perhaps not obvious to the wonks and politicians just how politically impossible this would be until we were well into the process. But it was certainly clear by the time we had bills on the table, and at that point, instead of retreating to something less risky, they opted for a program that sounded like European-style universal coverage but was missing a lot of the features that make those systems work, such as a strong mandate and price controls.

Progressives may argue that I’m actually agreeing with them that we need such a system or, better yet, a single-payer arrangement of government insurance for all. But if so, that’s an argument for doing nothing in 2010 because those things were simply not on the table. Nor are they on the table now.

Thanks in no small part to the decision to steamroll ahead with a bill that had little political support outside the Democratic base, conditions are less favorable to serious reform than they were six years ago.

But I don’t think doing nothing was the only alternative. I just think policymakers needed to do something less disruptive than what they chose. This should be a lesson to all reformers, on both sides of the political aisle.

As Republicans discovered in Iraq, and Democrats are now learning from Obamacare, it’s easy to see what things ought to look like in a better world. It’s a lot harder to make them that way over the objections of a fractious populace. Grand plans are far more appealing to legacy-hungry politicians and technocratic wonks than boring incrementalism. But unlike revolution, incrementalism rarely leaves piles of rubble in its wake.


Article Link To The Bloomberg View:

Is Europe Overreacting To Terror?

By Peter Apps
Reuters
August 30, 2016

The streets of France have been subdued this summer. Tourism is down. Public events have been canceled or curtailed. Red-bereted paratroopers patrol through crowded streets, assault rifles held at their sides.

The soldiers are unmistakably ready for trouble. Many wear armored gloves in the mid-summer heat, ready to grapple with any knife-wielding attacker. Body armor and webbing pouches are stuffed with ammunition-heavy magazines.

It’s now well over a month since the July 14 Bastille Day truck attack in Nice killed 86 people – and there is a clear sense of relief that Europe has been spared an attack on that scale since. Still, the continent remains distinctly on edge – and in the background, what feels like a never-ending series of smaller attacks unsettle populations and continue to destabilize already messy politics.

Indeed, the last few days have seen alarming signs that the political reaction to the attacks might yet prove more destabilizing than the attacks themselves. No one questions that Europe is under threat. In tempo and scale – and most notably in the number of casualties – the successive attacks over the last 18 months far outstrip anything seen on the European mainland even in the days of France’s long war in Algeria or Germany’s militant outrages of the 1970s. But there is a very real risk of overreaction.

Last week, Muslim women were confronted by armed police on southern French beaches as they enforced a local ban on the full-body “burkini” swimsuit. Local officials have described the garments as showing “allegiance to a terrorist group.”

Witnesses say several women were issued with on-the-spot fines. Some French beachgoers apparently cheered the police action and shouted “go home” at nearby Muslim migrants.

On Friday, France’s highest court declared the various local burkini bans unconstitutional and illegal. Several local mayors, however, said they would continue enforcing it anyway. The issue now looks set to drag into France’s presidential election next year, with former president Nicolas Sarkozy calling last week for nationwide criminalization of the garment.

In many ways, what happened on the beach at Nice is exactly what groups like Islamic State want – to deepen divisions within society.

Europe’s recent political polarization is about much more than terrorism. It’s about wider popular discontent with the unprecedented levels of migration of the last two decades, of moves to multiculturalism and fear of more change to come.

But it is the visceral fear of attacks – arguably out of all proportion to the risk, even with recent events – that seems to now be really driving the wider backlash.

Much of what France and other European countries have done since recent attacks is eminently sensible. Most have beefed up the size of their emergency response SWAT-style police or paramilitary units, allowing them to flood heavily armed officers to the scene of any Paris-style assault.

France, for example, has scaled up both the number of elite GIGN and RAID counterterrorism units as well as the number of offices and firepower within each individual team. Germany is looking at tweaking legislation to allow military units to back up police for the first time since World War Two.

In Germany, however, government officials have been criticized for a report suggesting householders should stockpile several days’ worth of food and water in the event of some kind of crisis. German authorities are also considering whether the country should re-introduce conscription, abolished in 2011.

Those steps are not just related to the fear of Islamist militant attacks – indeed, the documents in question make it clear they are also a response to worries over potential cyber or “hybrid” attacks, phraseology which seemingly points to worries over Russia.

All of this adds to an ever more febrile environment on social and mainstream media. It increasingly seems to become less relevant whether an attack – such as the gun attack in Munich which killed nine, or last week’s stabbing of an Orthodox Jew in France, or a machete attack on a bus in Brussels – is directly related to a militant group like Islamic State or not. Providing a migrant or someone of migrant descent is involved, it all feeds into the same divisive narrative.

Good intelligence is key to preventing attacks – and that means authorities having good relations and deep contacts with the populations in which militants want to hide. As distrust grows, that may become more difficult.

It’s not entirely a negative picture. Many French Muslims made a point of attending Christian church services as a show of solidarity after the beheading of a local priest in July. The French government is aiming to work with moderate Muslim groups to tackle the growth of what they say are extremist mosques often funded from groups and individuals in Saudi Arabia and the Gulf States.

The social divisions in France, however, predate recent attacks and have been quietly growing for years. France’s 4.7 million Muslims comprise 7.5 percent of the population and often live in distinct and much poorer neighborhoods on the outskirts of cities. Crime is high and policing relatively weak there, despite attempts at changing that in the aftermath of major riots in 2005.

In general, opinion polls suggest citizens in those countries with the largest Muslim populations in Europe – France, Germany and the UK – view Muslim migration less negatively than those countries in Eastern Europe that are home to very few. Even last year’s Paris attack did little to immediately shift those numbers.

This year, however, the constant drumbeat of stories of large and small attacks has begun to have an effect. And while attacks themselves have been carried out by a very small number of people, there is little doubt that popular discontent is often aimed at entire Muslim populations.

A poll in April showed 47 percent of French respondents viewing Islam as “a threat” to national identity, up from 43 percent in 2010. Two-thirds said they felt it was “too visible”. In Germany, where reports of sexual assaults conducted by migrants over New Year’s Eve received hefty media coverage, 43 percent said they viewed Islam as a threat.

That shouldn’t be a surprise. But it may yet prove a self-fulfilling narrative.


Article Link To Reuters:

Tuesday, August 30, Morning Global Market Roundup: Asia Stocks Bounce, Investors No Clearer On Fed

By Wayne Cole 
Reuters
August 30, 2016

Asian shares bounced modestly on Tuesday as doubts the Federal Reserve would hike interest rates next month restrained the dollar, while investors continued to count on more policy stimulus elsewhere in the world.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent, recouping around half of Monday's loss. Stocks in South Korea .KS11 added 0.4 percent and Australia 0.3 percent.

Futures pointed to similar gains for German and French bourses and a dip for London, while EMini futures for the S&P 500 .ESc1 barely budged.

Japan's Nikkei .N225 went flat as the yen stopped falling following a sharp drop late last week.

A raft of Japanese data, from unemployment to retail sales, mostly beat analysts' forecasts but did nothing to change expectations the Bank of Japan would eventually have to ease further.

Markets are less sure when U.S. policy might change after Fed Chair Janet Yellen on Friday said the case for a rate increase was strengthening, but provided little clarity on when it would next move.

Vice Chair Stanley Fischer suggested a hike was possible as soon as September. Fischer is set to appear again later on Tuesday.

Yet while the initial market reaction was to push up the probability of a September hike to 44 percent, investors quickly had second thoughts and by Tuesday the implied chance was back at 36 percent <0>.

Dealers also reported talk the August payrolls report on Friday might miss expectations and make it that much harder for policymakers to contemplate a September tightening.

On Wall Street, the Dow .DJI ended Monday up 0.58 percent, while the S&P 500 .SPX added 0.52 percent and the Nasdaq .IXIC 0.26 percent.

Financials .SPSY were the best performer on the S&P 500, with Wells Fargo (WFC.N) up 2.2 percent.

The sector typically rises with talk of higher rates, on the expectation that banks' income could rise as they charge more for loans. However, the correlation is not direct as it requires the yield curve to steepen and, so far, it is not obliging.

Lower, Naturally


Indeed, longer-term yields fell further than the short end on Monday, in part because much of the market suspects any Fed tightening would lead to even lower inflation over the long run.

Figures out Monday showed the Fed preferred measure of core inflation stuck at 1.6 percent for a fifth straight month.

The San Francisco Fed underlined the subdued outlook for inflation and rates in a research note.

The "natural" rate of interest - the real rate consistent with full use of economic resources and steady inflation near the Fed's target level - was near zero and would rise to only 1 percent over the next decade.

"If these projections are accurate, then a monetary policy designed to track the rise in r-star (natural rate) would imply a very gradual normalization of the federal funds rate," the note said.

The retreat in Treasury yields restrained the dollar, which held at 95.754 against a basket of currencies from a two-week top of 95.834 .DXY.

The dollar likewise ebbed to 102.15 yen JPY= from a peak of 102.39, while the euro was a shade firmer at $1.1171 EUR=.

In commodity markets, oil steadied after falling by around 1 percent on Monday. Oversupply remained a major concern with U.S. crude stockpiles forecast to have risen by 1.3 million barrels last week, a Reuters poll showed. [O/R]

Brent crude futures LCOc1 were up 17 cents at $49.43 a barrel, while U.S. crude CLc1 added 21 cents to $47.19.


Article Link To Reuters:

Japan's Suga Signals Readiness To Stem Yen Gains

By Leika Kihara
Reuters
August 30, 2016

Japanese Chief Cabinet Secretary Yoshihide Suga said on Tuesday the government is watching market moves carefully and is ready to respond "appropriately", when asked whether Tokyo could intervene in the currency market to stem excessive yen rises.

Suga, the government's top spokesman, also defended the Bank of Japan's controversial negative interest rate policy, saying that such steps would benefit financial institutions if they help improve the economy.

"The Ministry of Finance, the Financial Services Agency and the BOJ now hold regular meetings on markets," Suga told Reuters in an interview.

"Through the meetings, the government will closely watch market moves and respond appropriately," he said when asked whether Japanese authorities could intervene in the currency market if the yen spikes abruptly.

Japan's economy ground to a halt in April-June and analysts expect any rebound in the current quarter to be modest, as weak global growth and the yen's 20 percent rise against the dollar this year have hurt exports and capital spending.

The BOJ's decision in January to adopt negative interest rates has failed to arrest unwelcome yen gains and instead drew market criticism for hurting financial institutions' profits.

Suga said the BOJ's policies will give financial institutions "huge" benefits if they successfully boost the economy, adding that it was up to the central bank to decide on specific monetary policy steps.

Asked whether Japan could resort to "helicopter money", or direct central bank underwriting of government debt, Suga said there was no clear definition of what helicopter really meant.

He added that it was important for the government and the BOJ to work closely together to beat deflation, while respecting the central bank's independence from political interference.

"The BOJ decided to expand purchases of exchange-traded funds (last month). Shortly after that, the government announced its economic stimulus package," Suga said.

"I'm confident that we will see results if the government and the BOJ coordinate policies."


Article Link To Reuters:

In Asia, Obama Faces Trade Pact Test Amid U.S. Opposition

By Roberta Rampton and David Brunnstrom
Reuters
August 30, 2016

When President Barack Obama travels to Asia next week, he will try to reassure leaders in the region that he still has the clout to deliver U.S. approval for the sweeping Trans-Pacific Partnership, even though the two candidates vying to succeed him and a congressional leader have said the 12-nation trade deal should not move forward.

The trade pact is the economic pillar of Obama's broader plan to shift U.S. foreign policy toward Asia and counter the rising economic and military might of China.

"It would be a real setback for Obama's legacy and for the rebalance strategy if TPP were not to be ratified," said Matthew Goodman, a former Obama foreign policy adviser now at the CSIS think-tank in Washington.

Domestic politics have put the deal's future in doubt. U.S. Senate Majority Leader Mitch McConnell said on Thursday the Senate would not vote on the pact this year, punting it to the next president, who will take office on Jan. 20.

Both Republican Donald Trump and Democrat Hillary Clinton have said they oppose the TPP, citing past trade deals that have cost Americans jobs. As Obama's Secretary of State, Clinton backed the Pacific trade deal.

Obama has said the TPP will boost labor and environmental standards - fixing some of the problems seen in past trade deals like the North American Free Trade Agreement - and give both large and small U.S. companies access to the world's fastest-growing markets.

The White House said failure to approve the TPP would hurt U.S. interests in Asia, where some leaders made politically tough decisions to advance the deal.

"In this part of the world, which is the largest emerging market in the world, TPP is seen as a litmus test for U.S. leadership," Ben Rhodes, Obama's deputy national security adviser, told reporters on Monday.

"We would be stepping back from that leadership role, we would be ceding the region to countries like China who do not set the same types of high standards for trade agreements were we to not follow through with TPP," Rhodes said.

Estimates of the potential economic impact of TPP vary, but most show little meaningful growth for the U.S. economy. Estimates from the Peterson Institute, an economic think-tank in Washington, suggest that TPP would raise growth by 0.5 percent after 15 years.

Even those estimates, which amount to a rounding error in U.S. economic output, have been criticized as being too optimistic due to their treatment of so-called non-trade measures that are included in the analysis.

But White House spokesman Josh Earnest said polls shows most Americans support the deal, creating "a path for us to get this done" before Jan. 20.

In an interview, Former U.S. Trade Representative Susan Schwab described the odds of the TPP passing as slim, but not impossible.

"There’s history of candidates criticizing previous administrations’ policies on trade and then having to figure out how to live with them in office, and they include presidents Obama and (former Democratic president Bill) Clinton,” said Schwab, who served as trade representative under former Republican President George W. Bush.

Obama arrives in China on Saturday where he will meet President Xi Jinping and attend the G20, and then travel to Laos for two additional regional summits, returning to Washington on Sept. 9.


Article Link To Reuters:

A Real Loser Of A Tax

The IRS forces taxpayers to shell out for imaginary gains on commodity sales


By Richard W. Rahn
The Washington Times
August 30, 2016

Would you be in favor of a tax that loses money for the government, and penalizes entrepreneurship, job creation and economic growth? Only muddy-brained or mean-spirited people would favor such a tax — yet many such people are found in the Internal Revenue Service and Congress. The tax that I am referring to is the capital gains tax, and even more specifically, the capital gains tax as it is applied to the sale of commodities.

A capital gains tax liability occurs when you sell an asset for more than you paid for it. The asset could be stocks, bonds, real estate, art or gold and other commodities. There are many problems with the capital gains tax, and one of them is that it taxes inflation (which is a change in the price level caused by government monetary authorities) rather than income. Assume that in 1989 you bought a small Florida orange grove for $120,000, and this year you sold it for $180,000 (after maintaining it and replacing old or damaged trees). The IRS would say you have a $60,000 capital gain, and demand that you pay tax on it. The price level has doubled since 1989, so now you would need $240,000 to have the same purchasing power as $120,000 had in 1989. In real inflation-adjusted dollars, you suffered a $60,000 loss, not a gain — but many folks at the IRS, having little in the way of an ethical compass, will insist on taxing you on the imaginary gain — which is really a loss. (Note: There is no law requiring the IRS to tax imaginary capital gains; it was an administrative decision.)

It gets worse. Most commodities decline in real price over time, as the technology for producing them improves. The real price (inflation-adjusted) of wheat and corn is roughly one-sixth, and cotton one-tenth, of what it was a hundred years ago. The same is true with most metals, despite endless doomsayers claiming we are going to run out of this or that. The real price of aluminum is roughly one-fifth of what it was a hundred years ago. Even the price of oil has not increased — the current real price is close to what it was in 1920, despite the world having consumed hundreds of billions of barrels of the stuff. In 1920, many thought the world would run out of oil by 1930; instead, oil reserves have been growing much faster than consumption and no one alive today, or even their grandchildren, will see a world without oil at a reasonable price.

Given that the real price of most commodities tends to fall over long periods of time (with many ups and downs), the only way government can obtain tax revenue is by taxing the non-real gain due to inflation and restricting the deductibility of losses (which they do), since there are more real losses than gains. Most commodity prices have fallen, after reaching a cyclical high at the beginning of the Great Recession, which means, even in nominal terms (not-inflation-adjusted), the capital gains tax on commodities is a net revenue loser for the government.

The issue is of renewed importance because of the rise of new, private digital-like monies (e.g., bitcoin). In theory, all of those who use bitcoin and its competitors for purchases of real goods and services have to keep records of their acquisition price for each bitcoin they buy and the dollar equivalent price of each item they purchase with a bitcoin. They then have to calculate their capital gain or loss on each transaction, no matter how small. This task is so complex, costly and time-consuming, and virtually no one is likely to do it. As the use of private digital currencies expands, more and more people will be in violation.

Back in 1981, I wrote an article for The Wall Street Journal arguing that the capital gains tax on commodities trading was destructive, and a long-term money loser. At the time, Congress had established a “Gold Commission” to recommend whether gold ought to have a greater role in the U.S. monetary system because of the double-digit inflation the United States was experiencing at the time. Since 1977, it has been possible to make legally enforceable contracts for payment in gold. A major reason why private gold contracts have not become common is the capital gains tax on such transactions.

The IRS does have many tools that make avoiding the capital gains taxes on physical commodity trades very risky. However, it is very hard — almost impossible — for the IRS to monitor all of the bitcoin transactions because of the use of blockchain and other largely anonymous systems. The smart people are in the private sector — not at the IRS— developing alternatives to government monopoly money.

The solution is obvious — stop losing tax revenue, squashing economic growth and liberty, by trying to apply the capital gains tax to commodity and foreign currency transactions, including intangible commodities like bitcoin. Many countries do not apply capital gains taxes to commodity transactions, and a number of very economically successful and sensible countries, such as the Netherlands, South Korea, Luxembourg and Switzerland, do not even have a capital gains tax.


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Oil Prices Rise As Dollar Comes Off Two-Week High

By Roslan Khasawneh
Reuters
August 30, 2016

Oil futures edged up on Tuesday as the U.S. dollar backed off a two-week high hit the day before, although doubts that crude producers would agree next month to an output freeze continued to drag on prices.

The U.S. dollar has retreated from Monday's peak as investors look ahead to jobs data this week that Federal Reserve Vice Chair Stanley Fischer has said will be important to whether the U.S. central bank raises interest rates soon.

A weaker dollar makes oil purchases cheaper for buyers using other currencies, potentially spurring demand.

Yet doubts of agreement in talks on an output freeze among members of the Organization of the Petroleum Exporting Countries (OPEC) continues to weigh on prices.

"There's a feeling that the OPEC production freeze talks might result in something positive, but it's just talk," said Robert Nunan, risk management director at Mitsubishi Corporation.

Brent crude futures LCOc1 were trading at $49.38 per barrel at 0505 GMT, up 12 cents from their previous close.

U.S. West Texas Intermediate (WTI) crude was up 17 cents at $47.15 a barrel.

Saudi Arabian Energy Minister Khalid Al-Falih told Reuters last week he does not believe an intervention in oil markets is necessary since the "market is moving in the right direction".

This was followed by the United Arab Emirates energy minister Suhail bin Mohammed al-Mazroui saying OPEC's current share of the oil market is "at a good level".

As well, Iraq - which increased crude exports this month from its southern ports compared with July - will continue ramping up output, its oil minister said on Saturday.

"Either way, despite some increases in Saudi Arabia and Iraq, OPEC production seems to be flattening with the outages in Libya, Nigeria and Venezuela, knocking out some 3 million barrels of daily production and no one is holding their breath they'll return soon," said Nunan.

In addition to output disruptions stemming from years of conflict, budgetary delays from Libya's new government are now also undermining oil production, said the head of the state energy company on Monday.

Meanwhile, a Nigerian militant group has said it has ended attacks on the nation's oil and gas industry that have reduced the OPEC member's output by 700,000 barrels a day to 1.56 million bpd.


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