Obama accepts Bush tax cuts

President Obama has agreed with Congressional Republicans to extend all of the  Bush-era tax cuts in exchange for extending unemployment benefits.  The package includes some other interesting details:

President Obama and congressional Republicans have reached a tentative accord on a far-reaching economic package that would preserve George W. Bush administration tax breaks for families at all income levels for two years, extend emergency jobless benefits through 2011 and cut payroll taxes by 2 percent for every American worker through the end of next year.

The scope of the agreement, announced by the White House late Monday, was far broader than lawmakers in either party had been expecting. The deal would extend a college tuition tax credit and other breaks for middle-class families that were due to expire New Year’s Eve. And it would revive the inheritance tax after a year-long lapse, imposing a 35 percent rate on estates worth more than $5 million for individuals and $10 million for couples.

The package would add more than $700 billion to the rising national debt, said congressional sources who were briefed on the deal. But with the unemployment rate at 9.8 percent, the White House was focused on winning a compromise that could boost the fragile recovery while preventing the economic damage that could result from letting the expiring tax breaks affect paychecks next month.

The payroll tax holiday, in particular, is striking for its universal application. Unlike most tax breaks, it would be available to taxpayers at every income level, letting consumers keep an extra $120 billion in their pockets next year. For a couple making $70,000 a year, the holiday would provide a tax savings of $1,400.

via Obama and GOP strike tax accord.

This description of the payroll tax, which goes for Social Security, is unclear.  It doesn’t cut them by a measly 2%, which would hardly mean anything.  Rather, it cuts the tax rate from 6% of the paycheck to 4%, so that all workers will get to keep a third of what they used to pay.  That’s a pretty significant raise.

Now all the President has to do is persuade the Democrats, many of whom are reportedly livid at the deal, which keeps the tax cuts even for those who make $250,000 and up.

U.S. test scores vs. China’s

International testing data shows that American high schoolers perform at a distinctly mediocre level in reading, math, and science.  Our future imperial masters, though, scored at the very top.

After a decade of intensive efforts to improve its schools, the United States posted these results in a new global survey of 15-year-old student achievement: average in reading, average in science and slightly below average in math.

Those middling scores lagged significantly behind results from several countries in Europe and Asia in the report from the Organization for Economic Cooperation and Development to be made public Tuesday.

South Korea is an emerging academic powerhouse. Finland and Singapore continue to flex their muscles. And the Chinese city of Shanghai, participating for the first time in the Program for International Student Assessment, topped the 2009 rankings of dozens of countries and a handful of sub-national regions.

via International test score data show U.S. firmly mid-pack.

The top five in reading:  (1)  Shanghai-China (2) South Korea (3) Finland (4) Hong Kong-China (5) Singapore.  The USA ranked 17.

The top five in math:  (1) Shanghai-China (2) Singapore (3) Hong Kong-China (4) South Korea (5) Taiwain.  The USA ranked 31.

The top five in science:  (1) Shanghai-China (2) Finland (3) Hong Kong-China (4) Singapore (5) Japan.  The USA ranked 23.

Would this not be evidence of American decline and Asian ascendancy?  (Also, I suppose, Finnish ascendancy?)  Any ideas about what we could do to become eduationally competitive again?  Keeping in mind everything that hasn’t worked?

Sex by surprise

It is being reported that Wikileaks founder Julian Assange has been charged in Sweden with rape.  Actually, that most tolerant of nations is charging him with having sex without a condom.  Under certain conditions, apparently, that is a crime in that country.  So says this report:

WikiLeaks founder Julian Assange is facing arrest for violating a Swedish law about sex without condoms, rather than a mainstream interpretation of “rape.” Yet that’s the charge reports often levy against him. Behold the smear campaign.

The New York Times wrote about the case on Thursday, noting that Swedish authorities were hunting Assange on charges of “rape, sexual molestation, and unlawful coercion.” It commented on the alleged offense, stating claims by two women that “each had consensual sexual encounters with Mr. Assange that became nonconsensual.”

The Swedish charges aren’t exactly new, though. Some of the media had reported “rape” allegations back in August, and the Daily Mail even asserted the first alleged illegal act occurred when a condom broke, and the woman concerned “whatever her views about the incident,” then “appeared relaxed and untroubled at the seminar the next day.” At this seminar, Assange met the second alleged victim and “a source close to the investigation said the woman had insisted he wear a condom, but the following morning he made love to her without one.”

Assange has questioned the “veracity” of the two women’s statements, as the Times report notes. Assange’s former lawyer yesterday “confirmed” the charges were to do with sexual misconduct concerning sex without condoms. Assange’s current lawyer then revealed Swedish prosectors had told him they were not seeking Assange for “rape” at all, instead the alleged crime is “sex by surprise,” which carries a penalty of a fine, although the details of the allegations haven’t been revealed yet.

Thanks to Webmonk for pointing this out. The cosmopolitan Australian is not being prosecuted for publishing classified documents or endangering American security, though the soldier who gave him the documents might be. At any rate, what intrigues me here is Swedish law. Does a country extradite someone for a misdemeanor? Or in Sweden’s legal system is this new crime of “sex by surprise” a felony, but a felony punishable only by a fine? This all seems exceedingly strange.

What should the government do?

Economics columnist Robert J. Samuelson points out that before we can cut government spending, we need to arrive at a philosophy of government:

Modern democracies have created a new morality. Government benefits, once conferred, cannot be revoked. People expect them and consider them property rights. Just as government cannot randomly confiscate property, it cannot withdraw benefits without violating a moral code. The old-fashioned idea that government policies should serve the “national interest” has given way to inertia and squatters’ rights.

One task of the National Commission on Fiscal Responsibility and Reform – co-chaired by Erskine Bowles and Alan Simpson – was to discredit this self-serving morality. Otherwise, changing the budget will be hard, maybe impossible. If everyone feels morally entitled to existing benefits and tax breaks, public opinion will remain hopelessly muddled: desirous in the abstract of curbing budget deficits but adamant about keeping all of Social Security, Medicare and everything else. Politicians will be scared to make tough decisions for fear of voter reprisals.

Unfortunately, Bowles and Simpson ducked this political challenge. They performed an accounting exercise to shrink the deficit without trying to define what government should do and why. . . .

It’s not in the national interest to subsidize farmers, because food would be produced at low cost without subsidies. It’s not in the national interest to subsidize Americans, through Social Security and Medicare, for the last 20 or 25 years of their lives because healthier people live longer and the huge costs make the budget unmanageable. It’s not in the national interest to subsidize mass transit, because most benefits are enjoyed locally: If the locals want mass transit, they should pay for it. As we debate these questions, groups will inevitably promote their self-interest. But in doing so, they should have to meet exacting standards that their self-interest also serves the broader national interest. . . .

The biggest blunder of their approach involved huge proposed cuts in defense, about a fifth of federal spending. National security is government’s first job. Bowles and Simpson reduced it proportionately with all other discretionary spending as if there’s no difference between a dollar for defense and a dollar for art subsidies. Nor was there much effort to identify programs that should be eliminated because they fail the national need test. . . .

This was a formula for changing government without a philosophy of government.

via Robert J. Samuelson – What the Bowles-Simpson plan left out.

OK, let’s help formulate a philosophy of government that could set some priorities and thus help us make decisions about the national budget.  (That’s what I have to as a college administrator, come to think of it!  We set priorities and then we work out the budget accordingly.)

What do you think the government should do?  What difference would that make in what gets budgeted and what gets cut?

Wikileaks’ head as James Bond villain

British police are reportedly closing in on Julian Assange, the man behind Wikileaks, with plans to arrrest him on Swedish sexual assault charges. But now Assange, playing the role of a James Bond villain, has devised a doomsday weapon set to go off if anyone interferes with his fiendish plans:

WikiLeaks founder Julian Assange has reportedly released an encrypted “poison pill” file that contains sensitive data related to Guantanamo Bay, Afghan military ops, Bank of America and the BP oil spill.

The file – known as insurance.aes256 – is locked-down with a 256-digit key deemed virtually unbreakable by even the US Department of Defense (DoD).

Assange, who is using the sensitive data to hold governments hostage, states: “We have over a long period of time distributed encrypted backups of material we have yet to release. All we have to do is release the password to that material, and it is instantly available.”

WikiLeaks threatens “poison pill” if site shut down Assange explains that if any government tries to stop WikiLeaks by downing the website or detaining him, he will disseminate the “poison pill” password, allowing anyone to access the highly-embarrassing documents.

Meanwhile, the leaks keep coming.  The latest goes far beyond diplomatic embarrassments.  It is a direct attack on U.S. national security tailor made for international terrorists:

A long list of key facilities around the world that the US describes as vital to its national security has been released by Wikileaks.

In February 2009 the State Department asked all US missions abroad to list all installations whose loss could critically affect US national security.

The list includes pipelines, communication and transport hubs.

Several UK sites are listed, including cable locations, satellite sites and BAE Systems plants.

BBC diplomatic correspondent Jonathan Marcus says this is probably the most controversial document yet from the Wikileaks organisation.

The definition of US national security revealed by the cable is broad and all embracing, he says.

There are obvious pieces of strategic infrastructure like communications hubs, gas pipelines and so on. However, other facilities on the list include:

* Cobalt mine in Congo

* Anti-snake venom factory in Australia

* Insulin plant in Denmark

In Britain, the list ranges from Cornwall to Scotland, including key satellite communications sites and the places where trans-Atlantic cables make landfall.

A number of BAE Systems plants involved in joint weapons programmes with the Americans are listed, along with a marine engineering firm in Edinburgh which is said to be “critical” for nuclear powered submarines. . . .

The geographical range of the document on installations is extraordinary, our correspondent says.

If the US sees itself as waging a “global war on terror” then this represents a global directory of the key installations and facilities – many of them medical or industrial – that are seen as being of vital importance to Washington.

Some locations are given unique billing. The Nadym gas pipeline junction in western Siberia, for example, is described as “the most critical gas facility in the world”.

It is a crucial transit point for Russian gas heading for western Europe.

In some cases, specific pharmaceutical plants or those making blood products are highlighted for their crucial importance to the global supply chain.

The critical question is whether this really is a listing of potential targets that might be of use to a terrorist.

via BBC News – List of facilities ‘vital to US security’ leaked.

Stimulus jobs are just about over

An illustration of the futility of creating jobs by just spending government money for construction projects.  Once the projects are finished, we are back to unemployment.  And all of those “shovel-ready” construction jobs are just about finished.  From The Washington Post:

The stimulus was here.

Those words should be embossed on a stretch of Route 29 outside of Charlottesville, where paver operator Clifford Carter poured hot asphalt one year ago.

The $885,000 project, funded by federal stimulus dollars, took two days in November 2009. A few weeks later, he was laid off – temporarily, he thought, until paving season resumed in the spring. But in April, he received his first permanent layoff notice. Without a job, he couldn’t afford to keep paying for life or health insurance, so he let both lapse.

“When they kicked me out the door, I lost everything,” he said.

The end of the stimulus – the $787 billion that Washington approved last year in an effort to forestall another Great Depression – is more than a year away. But for Carter and thousands of other workers in the road construction industry, it has already arrived.

Road construction workers were among the first to benefit from the 2009 American Reinvestment and Recovery Act, which pumped hundreds of millions of dollars into “shovel-ready” road resurfacing projects in order to save or create millions of jobs.

The bulk of highway-related work will be done within a year and more than half of the funds for it have been paid out, said Ken Simonson, chief economist for the Associated General Contractors of America, an Arlington County-based trade group.

But with the economy continuing to lag, private-sector work has all but disappeared, and many states have cut back on road work in an effort to plug gaping deficits.

Without the stimulus, thousands of workers who build and maintain America’s roadways could soon join the 1.6 million construction workers who are unemployed. The construction industry lost an additional 5,000 jobs in November, the latest U.S. Labor Department data show, bringing the sector’s unemployment rate to 18.8 percent.

via After stimulus, construction industry seeing private-sector and state projects drying up.


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