When President Obama is re-elected!!

[JimHow]

Even the CNN exit polls had it 50-50.
What a firestorm is coming this October/November.
It is going to be truly epic, truly horrible.
It will be like nothing even close to what we have ever seen before.

I too think it will be Rubio. Interestingly, with the possible exception of Loyd Bentsen, you have to go all the way back to 1960 and Kennedy/LBJ to find a vice presidential selection that was so heavily based on electoral votes. This includes both the winning and losing sides. That will change this year. It will be either Rubio or Portman because of the significance of Florida and Ohio.

[Bacchus]

I'm not sure who WeAskAmerica is either, but PPP (= Public Policy Polling) is highly reputable. They're here:
http://www.publicpolicypolling.com/

[JScott]

Bacchus, just to clarify, I was intending to imply you were tossing out lousy data; just saying I hadn't heard of them. The last two days news cycles have actually been busy with how badly most of the major pollsters missed this, at least with exit polling. To the point, actually, where I've heard theories that savvy voters are intentionally providing misleading data (I find this personally very tough to believe). Only point is that most missed this one pretty badly, and the data David cited above which had Obama comfortably ahead (9 points, I think I read ?) comes from the same polls! Assuming they missed by 7 points on Walker, crudely subtracting that from Obama's supposed 9 point lead makes the margin of error virtually a tie -- in Wisconsin! If Obama can't carry Wisconsin, this could indeed be a Carter-esque cratering.

[JScott]

Jim, no doubt Rubio is the bald political choice. You can bet that as we speak he's being grilled and examined, plumped and fluffed, to see if he's ready for prime time. He's telegenic and fairly well-spoken but not really tested. If he proves to be even a few steps ahead of Palin and Quayle they could be formidable. (What the hell am I saying? Quayle got elected - there's your bar, I guess). Trying to picture the Biden-Rubio debates. Could be ugly.....

[hautbrionlover]

I think the better choice for Romney is Portman.
I think Romney will win FL, even without Rubio. But I don't see how Obama wins the election without Ohio, and I think Portman will come across as more seasoned than Rubio, a master of fiscal policy, and very appealing to moderate, undecided midwesterners.
If I were advising Romney (and thankfully I am not), I'd tell him to go with Portman.

[JimHow]

Sigh, sadly I think you've summarized the situation well, HBL. I've seem him a few times but I don't know much about Portman. He seems to almost universally get high marks. Is he too boring? Or is his low key demeanor exactly what Romney needs in this election? I think you are right on as far as the whole Florida- Ohio thing. I think FL is a lost cause for Obama. But if he wins Ohio, I think he will be reelected. Thus... Portman.

As an Ohioan, JScott, what is your take on Portman?

[JimHow]

Is the best thing going for Obama in 2012 the fact that the unemployment rate in Ohio is like under 7%?

[DavidG]

I think the better choice for Romney is Portman.
I think Romney will win FL, even without Rubio. But I don't see how Obama wins the election without Ohio, and I think Portman will come across as more seasoned than Rubio, a master of fiscal policy, and very appealing to moderate, undecided midwesterners.
If I were advising Romney (and thankfully I am not), I'd tell him to go with Portman.

+1

People vote for President, not VP. But a favorite son in the VP slot in a close race would likely be an exception to this rule.

[Bacchus]

Oh, oh. Just in the wake of the hopeful polls I posted above come these less pleasant polls and in all the wrong states:
http://www.purplestrategies.com/uncateg ... urplepoll/

[JimHow]

He who wins Ohio wins the presidency.
If the Swift Boated John Kerry had won Ohio (which some think he did... myself, I don't completely rule it out), he would have beaten Bush in 2004.
It was Ohio that gave us the first sign of trouble that fateful night in 2000 after Gore had swept the east coast, including a supposed victory in Florida. Ohio was Bush's firewall on 2000. Virginia is important. But Ohio is everything. You have like a 36 electoral college vote swing when it comes to Ohio.

[JScott]

Ohio is really, truly a microcosm of the whole enchilada. There is the deeply conservative southwestern section and the progressive northeastern corner around Cleveland. There is almost a perfectly representative cross section of upper middle class professionals, blue collar union folk, farmers, urban, rural, fundamentalist, religious, Amish, you name it -- in proportions that actually closely resemble the country. That coupled with the significant population and corresponding electoral votes makes Ohio a true bellwether. (Here's a tidbit: there is an amusement park here that chose to locate in an area north of Mason, OH years ago, in what was at the time largely farmland, for one reason -- it is the perfect geographic center of the US population.) At this point, it still feels like a horse race here.

Portman is boring. Nothing wrong with him. Solid, smart, seasoned, steady as a rock. I can't say he's adored here. Respected, name recognition, but I'm not sure he alone would sway voters. No one dislikes him, either, but I just don't think he has enough interest even to engender any real animus. He's like your uncle's accountant or something. I'd bet 95% of the population couldn't pick him out of a lineup and I'm not sure I'd recognize his voice. Maybe boring is the right choice here. He's extremely safe. He will absolutely, positively not screw up. He knows policy as well as anyone. Look at his resume - the guy has been everywhere and done everything. He's frankly got a better resume in terms of experience than anyone who's run for President this year. He's boring. He will never win a national election on his own, but if you had the ability to hand pick, he's exactly the kind of guy you'd want a heartbeat away, as they say. I think it will come down to where the Romney team thinks they are. If they think they're in front, Portman is a safe choice; if they think they still need to make up ground, Rubio makes sense, not just in Florida. Remember, there is a significant Hispanic population everywhere, and he has much more charisma, but he's a bigger risk.

[Bacchus]

A new poll just released ranks the political issues most concerning to Canadians. Normally I don't mention Canadian polls on this site (for obvious reasons), but I thought it illustrates something of the difference between the two neighboring countries, and perhaps explains why I am sometimes perplexed at American politics. Drum roll: At 22.5% health care tops the list of concerns among Canadians. And in Canada that usually means people want the government to put more money into the system. Not far behind is the issue of jobs and the economy with 21.2% support (our economy suffered in 08, but didn't tank the way the American economy did). Way back in the #3 spot is education with 6.9% of Canadians expressing concern. And as is the case with health care, up here that usually means people want the government to put more into it. In the #4 spot at 6.2% is the environment. Interestingly, only 4.8% of Canadians see high taxes as an issue, and it sits in last place of the items mentioned in this particular poll (and our taxes are quite a bit higher than American levels, hence my envy of Bdx pricing in the States). So that proves it, as Rush suspected, we're nothing but a bunch of commies up here.

[JScott]

Bacchus, as an outside observer, my impression was that the main controversy regarding health care in Canada had to do with the proposed attempt to introduce private health care insurance. Certainly opponents would prefer that issues be resolved with more government spending, but proponents would seem to prefer quite the opposite.

I do think on the whole your point is well-taken, though. The majority of Americans still claim to be committed to individualism and independence and to prefer smaller government. What's fascinating is that this does not seem to jibe with reality. The crusty, conservative veteran who will claim to be fiercely independent will rage at the notion of anyone cutting Medicare, Social Security or VA benefits. The lower income worker who pays no income tax will complain about taxes. People like to think they're independent and self-reliant but few really seem to want to walk the walk.

Regarding taxes, I think part of the issue is perception. While tax rates are higher in Canada and Europe, the public generally feels like they're getting something in return, I think, more than they do here, and there may be some truth to that. The US has one of the most progressive systems in the western world (topped only by Ireland, I believe.) High wage earners are targeted here as "not paying their fair share" which of course begs the question what that share is. The top 1% of wage earners pay nearly 40% of income taxes. The bottom 50% pay no income tax and the bottom third or so receive a refund on taxes they didn't pay known as the Earned Income Tax Credit. While everyone pays Medicare and Social Security taxes, everyone who ultimately collects benefits (especially lower wage earners) takes out substantially more than they ever contributed. In fact, 70% of the country takes out more than they contribute all in. Additionally, the top earners who are paying the lion share of the taxes are not entitled to many of the benefits, unlike most other economies. Student loans, higher education, childcare, etc. etc. are all means tested and those in the higher paying brackets are not eligible, and almost certainly they will soon be ineligible for Medicare and Social Security as well. They get to pay for all those programs but participate in none of them.

I think part of the debate here is muddled. There is a difference between a high wage earner and "the rich." We don't really tax wealth here. The Occupy movement seems to be confusing this as well. Buffett, despite his proclamations, is not a "high wage earner" and neither is Gates (both pay themselves comparatively modest salaries), which is why they seem to get a pass on income taxes. It is not possible to raise significantly more revenue from high wage earners. If Obama got his demand and eliminated the Bush tax cuts on only that top group, it would take more than ten years just to recoup what was spent in the stimulus plan alone. If all the income of the multimillionaire earners was confiscated in a 100% tax rate (which is clearly unsustainable), it would run the government for a season or two.

Despite all of this, there is undeniably a growing chasm in wealth at the top and bottom. More of the money continues to be gradually concentrated at the top which is unsustainable as well. Again, the supposed solution to this is to ratchet up taxes on the top earners but this will not change the trend. The top 1-5% of earners isn't a static pool. Four years on, two thirds of those individuals in that group have changed - moved in or out of this group. It isn't as if there are a small group continuously taking all the wages. Most are small business owners, and many fail as new ones are established. The real transfer is among those who have essentially vaulted out of the system. Through a windfall (think Zuckerberg) or inheritance or whatever, they no longer earn a wage that can be taxed. They are immune to (and therefore often in favor of!) higher tax rates.

[Bacchus]

Well that was enlightening JScott. And from the tone of your 3rd paragraph, it sounds like you have issues with your tax system. Canada also has a progressive tax system. Looking at my tax form, I see 4 main brackets, dependent of course upon income level. And as you might expect, the tax rate increases as you go up through the brackets. The difference you comment on between earning a high income and being wealthy exists here too.

I guess Canadians do believe they get something for their tax dollars, especially in the areas of health care and education. The debate over the role of private health care hasn't been on the table that much lately. It was a hot topic in the 90s, especially in Alberta, but isn't heard from too often these days. Usually what people want these days, at least where I live, are expanded services, including increasing the number of health care providers, coverage of additional chronic conditions and/or experimental treatments, expanded and improved senior care, shorter wait times for specialty procedures and tests, and perhaps expanded coverage in the areas of dental care and/or prescription drugs. That said, the private sector has always played a role in Canada's health care system, although the degree of involvement varies from province to province. The areas in which private business offers services is actually quite long and includes things like medical labs and testing facilities, eye and ear care services, therapies of all sorts, pharmaceuticals, and extended insurance policies (I, for example, have a blue cross policy), to mention only those things that come immediately to mind. Although most Canadians feel the system needs tweaking, I think it's fair to say that an overwhelming number of Canadians support the system. If I recall a survey that was done a year or two ago, support for the system hovers around 90%.

[stefan]

In '02 the top 1% of earners paid 33.7% of all income taxes:

http://usgovinfo.about.com/od/incometax ... ysmost.htm

I thought it had gone down since then.

According to Wikipedia, the top 400 earners paid 16.6% of income in income taxes in 2011, while the top 20% paid 20.1% and the top 1% paid 20.6%. The lowest 20% paid 2%.

http://en.wikipedia.org/wiki/Income_tax ... _tax_rates

[DavidG]

We don't really know the "cost" of the stimulus package. We don't know what the economy would be like now if it hadn't been deployed. There is a tendency among Republicans to portray it as a failure, but they have no control group (not that anyone else does). All they can do is point to the continuing sputtering economy and high unemployment rate and say the stimulus failed. I don't have any more idea than the next guy if the stimulus actually prevented a more disastrous Armageddon, but things could have been a lot worse. Lessons learned from the Depression suggest that you feed a recession, not starve it. The Tea Partiers want to starve it. Is the game different today? I wonder what the economists will be saying 50 years from now about how all this was handled.

[JScott]

Stefan, data from the IRS website shows in '05 the top 1% paid 39.38%. (I would link it here but they put in spreadsheet form for some reason and Jim will kill me if I load the whole sheet!) I haven't found more recent data yet (still looking) but it may well be lower than that now. I have no idea what Wikipedia is referencing, but it seems clearly to be wrong or using some other data.

Bacchus, my point about the progressivity is the extent of it. Most countries utilize a progressive system; the difference is that virtually everywhere else everyone pays at least something in income tax whereas half here pay none and a third or so actually effectively pay a negative tax rate. And yes, I do have a problem with it! In a number of ways. First, I think everyone should have a chip in the game. Although it may seem counter-intuitive at first, I think it may well be part of what has led to such a wage discrepancy between high and low earners. Regarding Canadian health care, I seem to recall reading disputes about privatization as recently as a couple of years ago. I could be completely wrong. I also was under the impression that it was not permitted to buy private insurance, at least in certain Provinces. Again, maybe I'm mistaken

[DavidG]

those in the higher paying brackets are not eligible, and almost certainly they will soon be ineligible for Medicare and Social Security as well. They get to pay for all those programs but participate in none of them.

Scott, most of your post was very thoughtful and reasonable, but this bit, at least the part about Medicare, seemed a bit out there (so of course this is the bit I respond to!).

High earners pay taxes on Social Security benefits so that part is already, indirectly, sort of, happening.

What makes you think that means-testing for Medicare will be the solution to our burgeoning healthcare spending problem, and how do you think that will play out? Is there anything in PPACA that makes you see this coming? Not that PPACA is going to survive... Taxing the Medicare benefit? Replacing Medicare with vouchers to buy private insurance, with bigger vouchers for the poor and smaller (or nonexistent) ones for the rich? Where is this scenario coming from?

[stefan]

Scott, the Wikipedia figures are not inconsistent with the data you gave--it just says that the top 1% paid 20.6% of their income in income taxes. It could be that almost 40% of all income taxes is paid by the top 1%, although I would like to see the data. I don't know what per cent of all income is earned by the top 1%, but in 2006 the top 6.37% earned roughly one third of all income according to Wikipedia.

It is striking that those at the very top pay a lower percentage than those in the top 20%, and that graduation is non existent in the upper range (which means that the total federal tax rate goes down in that region because of reduced employment taxes and non medicare taxation of unearned income).

[JScott]

Great exchanges, gang!

David, the cost of the stimulus, in the strictest sense, is absolutely certain. It was roughly $900B. My point was that revenue raised from that top rate won't raise that number for a decade. Clearly the point you are raising is whether spending that trillion - and adding it to the deficit - may have saved far more than that by preventing a massive contraction. I find this argument to be very problematic. I could as easily say that it cost two trillion or more by interfering with what would have been a normal recovery. We know that this is perhaps the slowest recovery on record. Is that because it was that bad - or because policy interfered? The point is you can't argue a hypothetical. The facts we have are that the economic team said that if we spent that money unemployment would not go above 8%. It has not been below it. The administration declared long ago that the recession was over and we were in recovery. The fed is now contemplating QE III. One can only deal with the available facts and they are not pretty. It brings me no joy to say it. The administration is either guilty of mismanagement or miscalculation. Neither is a vote getter.

Regarding Medicare, it is obviously conjecture, but based on conversations and trial balloons already being floated. Didn't mean to imply that it had anything to do with PPACA. It has more to do with economics. Proposals in committee meetings have included means testing both SS and MC, which is to say that the benefit could be phased out based on income, though clearly the taxes still imposed. Who knows how they will choose to deal with it? The raw data is terrifying. The current unfunded obligation for SS alone is now approaching $25T. All unfunded mandates - what is already promised to current eligibles for SS, MC and MCAid - is anywhere from $65-100T. The total private wealth for the entire US is $38T. If we confiscated everything from everyone we might be a third of the way there. And it gets worse every day. The system will need to be radically changed and if it is to survive in any form resembling present day deep cuts and lots of revenue will be required. My own view is that the Supremes will likely strike the mandate (correctly, in my view) but tell congress to deal with the rest. They will say it isn't their job to write or fix the law. Sibelius says they have a plan but I can't imagine what it is.

[JScott]

Stefan, the Wiki data seems to be quite a bit different to me, by 100%! I am confident in the data I gave you from '05 ( as I said it comes from the IRS) but don't know the current numbers. Reading between the lines, I get the sense you're arguing that the percentage of tax paid should mirror the percentage of income garnered? That seems like a reasonable formula to me. I always hear people talk about what's "fair" but no one ever seems to want to put a number on it. I mentioned above the wage gap, which seems much wider here than in many other western economies. I wonder if the tax code plays a role. In an economy where taxes are broader based and include lower wage earners, the prevailing wage must necessarily take this into account. When the bottom third actually have income tax subsidized by the government, doesn't that put downward pressure on wage rates? It may not make anyone at the bottom better off in real terms, but the spread wouldn't look as ugly and business would be responsible for some of the deficit that government currently foots. Just a thought.

[JScott]

Also Stefan, at the very top of the wage scale you begin to see earned income replaced by capital gains, so the curve gets skewed. The problem is that raising the capital gains rate reliably lowers revenue and tends to inhibit economic activity. While it may make some feel better, we are all worse off and the top of the pool still isn't paying more. I don't have an answer here. It is an indictment of capitalism, frankly. I've always compared unbridled capitalism to Monopoly; at some point one guy ends up with everything. And then you have riots! To be clear, I still think its the best system for wealth creation and well being yet devised, but it needs some tweaking to be sustainable.

The other interesting part of this is how one defines poverty, but that's another conversation!

[Bacchus]

Indeed, this has become a hopping thread. The poor don't pay income taxes in Canada either, JScott, although I don't remember where on the income scale "poverty" is defined. I also don't know the number of Canadians who don't pay income taxes. If you can't earn an income, well then you're into the welfare system. Since health care is a provincial power (although cost-shared with the feds), it is possible that some interest group in some province brought up the issue of privatization at some time in the last number of years. But it isn't a big nation-wide issue these days. And I can't remember when private insurance hasn't been available. It's just that since so much of health care is covered by our government program, private insurers are left only to cover those things outside the government plan, or to add "extras" to the plan. For example, if you need a stay in the hospital, medicare in this province only covers the cost of a bed in a room of four beds. If you want a semi-private or fully private room, you will have to pay the difference in cost. My Blue Cross plan covers that difference. There are a number of items like this in the areas of dental care, eye care, pharmaceuticals, etc.

[JimHow]

I don't trust for one minute these polls that have Obama ahead. They don't measure the big money saturation bombing that's coming this fall. Still, I'd rather be up by five points in Quinnipiac, Gallup, NYT/CBS, NBC/WSJ than down by five. How is Obama still ahead? He's been skewered this past month, yet he still seems to be afloat. Maybe, just maybe, our salvation is that Romney, in the end, is just plain a schmuck? I mean, really, THIS phony as president? I get a kick out of the Republican cries of foul over Obama's Bain ads. This from the party that has given us Willie Horton, Swift Boat, and the Birthers. From what I've seen, those Bain ads are pretty devastating. Those images of Romney from 20 years ago have a darkness to them. They're almost sinister. And how in hell is Obama still leading in VA? In this crazy climate? Is it simply a matter of VA's demographics evolving into the Blue State column in the past ten years? If so, there's hope yet! I'm actually having a moment of optimism!

[DavidG]

The problem is that raising the capital gains rate reliably lowers revenue and tends to inhibit economic activity.

Is there data showing that raising capital gains rates inhibits economic activity that can't be explained by some other theory? The problem with all these economic arguments is that you can find an economics professor to support just about any position.

[Bacchus]

Today's polls show a really tight race, Jim:

General Election: Romney vs. Obama FOX News Obama 43, Romney 43 Tie
General Election: Romney vs. Obama Gallup Tracking Obama 46, Romney 45 Obama +1
General Election: Romney vs. Obama Rasmussen Tracking Obama 47, Romney 45 Obama +2
General Election: Romney vs. Obama Monmouth/SurveyUSA/Braun Obama 47, Romney 46 Obama +1

[JScott]

Bacchus, thanks for the clarification. Private insurance is permitted, but seeking care at a private clinic outside the government approved system is not, correct? I think that may be the source of my confusion. Of course I could still be wrong! I also recall reading that certain provinces were beginning to struggle with expanding costs. Is that trend still true?

[JScott]

David, very true, especially with economics you can find someone who has data to support anything! Capital gains is about as straightforward as it comes, though. Since tax revenue derived from capital gains is at its own rate and is therefore tracked separately, it is not difficult to see what happens to revenue generated in that category when the rate is raised. It uniformly always goes down, so far without exception. Is it possible that there is some other variable? Maybe, but I know of no one who argues this point. In fact, there is an interview with Obama and associated video (I could try to find it) a year or two back on this subject. He acknowledged exactly this, but said he would prefer to raise rates any way, even knowing that revenue generated would fall, because it is "fair." I must admit this kind of thinking drives me nuts.

[JimHow]

The poor, beaten down rich. Let's eliminate their capital gains taxes completely, I say! Let's give them NEGATIVE tax rates, because if we give them MORE money, everything will be ok! I say if they make a million dollars, let's not tax them, let's GIVE them a bonus! Oh wait... We're basically doing that now with the Geneal Electrics, and the oil companies, and the Wall Street bankers, and....

[DavidG]

Raise capital gains rates and people shift their investment strategy - so sure revenue from capital gains tax collections goes down. But you can't connect that to general revenues decreasing. Those investment dollars go somewhere.

[Bacchus]

Funny, when you grow up with a system and take it for granted, you sometimes don't realize that it isn't as obvious to others as it is to you. Private insurance is permitted for the sorts of things I described above. As far as the issue of "private clinics" goes, well it's a little more complicated. My family doctor, for example, is a partner with a number of other doctors who have a practice that they run out of a clinic a few blocks away from my home. The building is theirs as is the practice. They pay the operating costs of the building, and the wages of their receptionists, nurses, etc. In some sense, therefore, it's a private business. If I need to go to my doctor I can go anytime I want with no direct cost to myself. I will not get a bill. The doctor will bill the government for the visit. So the clinic is "private," but the billing is "public," if that makes sense. The government pays the doctors on a per service basis. Hospitals are another matter. Only the provincial governments mandate hospitals. They have them built when they're needed, and arrange for their management. Doctors then arrange to put on clinics through them, book operating time in them, visit their patients if they are in them, etc. Again, patients will not be billed for any visit to a hospital. The government system will pay the medical professionals for their services. The government also picks up the cost of the hospitals' operating costs. Private companies cannot build hospitals. Alberta came close to allowing private hospitals a decade or so ago, but in the end decided against the idea. If I understand the situation correctly, these hospitals, if they had gone forward, were going to be required to work within the same billing schedule established by the government for all other hospitals. They would not have been able to establish their own billing structures outside that approved by government. But in the end Alberta decided against the idea (with a bit of federal pressure as I recall).

[Bacchus]

Any interest in the States for shifting the major form of taxation from income taxes to consumption taxes?

[JScott]

David, I see where you're going with this. I don't know if there's a way to analyze that. One place those investment dollars could go is offshore. There is no good evidence that it generates revenue.

[JScott]

Bacchus, it's been discussed but is generally felt to be very regressive.

[Bacchus]

And yes, JScott, increasing costs are an issue in our health care system, pretty much in all provinces.

[JScott]

Bacchus, I think I get it. What's not permitted is a private clinic to establish it's own fee schedule, see willing patients and have them pay directly without involving the government. The truth is very little of that happens here, either, at this point.

Regarding rising costs, that seems to be a universal theme in every country.

[Bacchus]

I'm not an economist by any means, but I thought they felt that consumption taxes didn't affect economies in as negative a way as income taxes. I also thought consumption taxes might appeal to the American imagination since they can be conceived of as a user pay sort of thing. You don't want the stuff, you don't pay the taxes.

[JScott]

Okay I found a video on YouTube and I didn't really want to post it because it's all tagged up with a bunch of crap, but I found the underlying video compelling and can't find another version. Hold your nose through the obnoxious stuff. It was actually from the primary debates with Hillary. In addition to the capital gains discussion, he goes into some other stuff that in retrospect is interesting and that I suspect we might just see again going into the fall. I'm fairly sure he went through the capital gains again in a one on one interview but I can't find it right now.

http://www.youtube.com/watch?v=c4iy2OfScQE

[JScott]

Bacchus, I think the argument goes that consumption is more voluntary for some than others! If you imagine that some minimum consumption is mandatory for everyone, the wealthy will have discretionary money they can choose to sideline but the poorer will not. It could be solved by exempting certain purchases or amounts, but by the time you start applying all those rules it begins to resemble the mess of a system we already have.

[JScott]

Jim, I'm not sure if I'm over reading, but can we put you in the column in favor of increasing capital gains?