Elizabeth Warren Exits | Purgatory & US Tax Policy | Red & Blue State Economics

Boys Club

Purgatory & American Tax Policy

Fiscal indulgences The Economist

Getty ImagesThe Economist brings us Michael Munger’s essay ‘A pious Congress, shilling indulgences’ in which he compares Martin Luther’s revolt against the Vatican to America’s tax code policies. The main objection to the Vatican’s way of doing business was ‘the hypocrisy of secular dispensations or indulgences’.

Indulgences were “get out of purgatory free!” cards. Of course, it was the church that had created the idea of purgatory in the first place. Then the church granted itself the power to release souls from purgatory (for a significant fee, of course).

As Luther put it, in his Thesis No. 27, “as the penny jingles into the money-box, the soul flies out.”

Munger cites both Democrats and Republicans — and President Obama — in their failure to take action around the ‘indulgences’ in the form of a repeal of America’s tax code. Why, he asks, do we continue to subsidize the sugar industry, when it’s clear that America consumes too much sugar? Why should American taxpayers subsidize the soft drink industry?

It was some of the most egregious of these indulgences that were targeted by the Bowles-Simpson Budget Commission. We let people out of tax purgatory if they own large houses, if they receive expensive health insurance from their employer, if they produce sugar or ethanol, or any of thousands of special categories. These categories have nothing to do with need (is there a national defense justification for a protected sugar industry?), but instead depend on how much these sinners are willing to pay to members of Congress.

Bitter End of Tombstone Trio

Elizabeth Warren bids adieu to the Consumer Bureau The Hill

Elizabeth Warren ended her tenure as acting head of the Consumer Financial Protection Bureau on Friday. Warren, who built the organization from the ground up, sent a long letter to her staff on Friday before returning to Harvard University where she is a professor.

Republicans refused to confirm Warren as a permanent head head of the agency — detesting her in public — is the only way to describe the situation.

“I leave this agency, but not this fight,” she wrote in a letter, a copy of which was obtained by The Hill. “The issues we deal with — a middle class that has been squeezed and business models built on tricks and traps — are deeply personal to me, and they always will be.

Facts are that the Girls Club isn’t doing very well in Washington.  Just 15 months ago In may 2010, Time Magazine’s cover story was The New Sheriffs of Wall Street: The women charged with cleaning up the mess.  That reform-minded powerhouse is no more.

Only SEC chairman Mary Shapiro remains. Sheila Blair left her five-year appointment as the 19th chairman of the Federal Deposit Insurance Corporation on July 8, 2011. Now Warren exists stage left.

Is it a simple fact that America cannot reform itself in any way that protects its middle class? Consumer protection is typically referred to as nannygate. The best place to study the opposing views is to study the libertarians.

The Libertarian View

Libertarians on Consumer Protection Libertarianism

The free market incentivizes safe products.  In fact, a competitive market system gives incentives for entrepreneurs to develop answers to safety problems that are faster, cheaper, and more effective than anything the slow-moving government can.

Licensing and regulation often serve the vested, corporate interests of by limiting innovation and blocking competition from the marketplace.  In doing so it not only keeps poor people from working, but it also endangers consumers by increasing the costs much higher than the benefits.

Robert Poole of the Reason Foundation adds a sensible note of caution to libertarians who argue that most regulation should be abolished. “We are a long way from gaining widespread understanding of that notion, so I advise libertarians to propose serious reform, rather than abolition, of such federal agencies.”

Blue States Subsidize Federal Government

The Red/Blue Paradox Reason.com

So much for state governments walking their own talk. As Veronique de Rugy points out:

When you compare the 50 laboratories of democracy after sorting them based on how their citizens voted in November 2008, only 10 Democratic-voting states are net recipients of federal subsidies, as opposed to 22 Republican states. Only one red state (Texas) is a net payer of federal taxes , as opposed to 16 blue states. One blue state (Rhode Island) pays as much as it gets.

If the mortgage deduction tax were to go away, blue states would be even bigger contributors to the federal treasury. High income earners are more likely to be Republican, but those living in blue states are more likely to be Democrats. Does this fact tell us anything about different values among the rich?

In a true twist of irony, the biggest perpetrators of the end of big government will lose the most revenues if they succeed in winning their argument. Pure self-interest logic suggests that the blue states should just let red carry the day — even if they are in for a rude awakening.

Republican voters want to reduce federal spending only if it means cutting other people’s handouts. That would explain why elected Republicans in red states, such as Sen. Charles Grassley (R-Iowa), don’t let their limited-government rhetoric get in the way of voting for farm subsidies.

The Preeminent Blue Newspaper Goes Profitable

The Kingdom and the Paywall NY Magazine

The NYTimes has taken a stand on quality content and the paywall.

The internal projections have been closely held, but several people have confirmed that the goal was to amass 300,000 online subscribers within a year of launch. On Thursday, the company announced that after just four months, 224,000 users were paying for access to the paper’s website. Combined with the 57,000 Kindle and Nook readers who were paying for subscriptions and the roughly 100,000 users whose digital access was sponsored by Ford’s Lincoln division, that meant the paper had monetized close to 400,000 online users. (Another 756,000 print subscribers have registered their accounts on the Times’ website.)

Many of those subscribers are “in” at an annual cost of $.99 — an early offer to online Times readers. But the overall prognosis of this in-depth story on the NYTimes is that the Sulzberger family is more committed to high-quality journalism than ever.

In recent years, the family has forgone financial returns in order to build the franchise into a 21st century content powerhouse. With Rupert Murdoch’s empire under fire, is there a bigger bonanza in the future?