AMT--How Soon We Forget

The Alternative Minimum Tax is an orphan these days, no friends at all. Allan Sloan in the Post is just the latest:

A Right and Wrong Way to Kill the AMT: "The hideously complex AMT was added to the tax code in 1969 to stop a few rich people from avoiding taxes entirely. But this year, it will afflict 3.6 million families, according to the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution. Next year, 18.9 million. In 2010, 30.9 million. That's not a handful of tax dodgers; it's the masses. "

But there was a reason for the AMT, based in bureaucratic facts. The truth is that no single scheme (nod to Brits) can enmesh reality. The mind of man the rulemaker cannot encompass all possibilities, so there are ways ("loopholes") to get around every tax law. Because there are, the rich have long evaded taxes. After all, they have every incentive to act "rationally" in an economic sense, to become "freeloaders". Every tax dollar they save is a net gain. All this leads to the situation where very rich people, wealthy either in terms of income or of assets, pay no taxes. A democratic country considers that to be wrong, particularly in a time when people are dying to protect the rich. (Isn't that what our troops are doing in Iraq--dying to benefit us, including the rich?) Hence the AMT in 1986. Hence the idea of doing away with the AMT strikes me as base and immoral.

Let me offer a counter suggestion: Many discussions of the AMT point out that it was never "indexed" for rising levels of income, which brings more and more people within its scope as time goes by. Given that fact, we could "fix" AMT by retroactive indexing--jigger its parameters to gradually reduce its scope over the next 10 years until it gets back to where it was in 1990. That would solve the "freeloader" problem. It would leave the Bush problem in plain view; the Bush problem being his erosion of the tax structure to the point where it doesn't support the government, certainly not Sen. Stevens' "Bridge to Nowhere".

What Fearsome Government?

Two items today that show the weakness of the government, ironically both from relatively conservative commentators:

One is Sebastian Mallaby, writing an op-ed in the Post on the problems of preparing for a flu pandemic:

A Double Dose of Failure: "Like Hurricane Katrina, the preparations for avian flu expose the weakness of American government. Pressing dilemmas get passed back and forth between executive and legislature, and between federal government and the states; lobbies get multiple chances to confuse and paralyze policy. Flood walls don't get built. Flu preparations don't get done. Government lets people down, and people don't trust government."

The other is Diane Ravitch, writing an op-ed in the Times on the problem of assessing students progress:

Every State Left Behind - New York Times: "WHILE in office, Presidents George H. W. Bush and Bill Clinton both called for national academic standards and national tests in the public schools. In both cases, the proposals were rejected by a Congress dominated by the opposing party. The current President Bush, with a friendly Congress in hand, did not pursue that goal because it is contrary to the Republican Party philosophy of localism. Instead he adopted a strategy of '50 states, 50 standards, 50 tests' - and the evidence is growing that this approach has not improved student achievement. Americans must recognize that we need national standards, national tests and a national curriculum."

(Incidentally, GAO just did a report on the problems the Department of Education is having in standardizing data elements across the country so they can pull educational data into a national system.)

Of course, the founding fathers didn't want the government too powerful. See Federalist 10. The problem is that, if we can agree on a goal, the government can work. See the military knock off opposing military. But if we don't agree, as Ravitch and Mallaby find, the government does not work well.

Is Rational Evaluation Possible?

Read a piece in the Times yesterday that confirmed my prejudices, but which I forgot to link to. It was on conglomerates, saying that academic research says that conglomerates don't do well because the management tended to allocate capital more evenly among subsidiaries than they should, based on potential returns on investment. In other words, instead of rationally assessing the situation, these ruthless economic men {sic} tried to avoid hurt feelings and conflict by spreading the money around.

Use that as background for the ongoing controversy over performance evaluation plans in the federal government (see here for Wash Post article today). Unions and employees fear that bosses will play favorites; the other reality is that they won't bite the bullet and reward performance adequately. In my experience, the second is the reason that the Carter civil service reforms failed. (There's a notable failure by the current administration to examine those lessons.) Favoritism played a factor in the special awards but spreading the money around was the rule in handling the within-grade increase money.

Meeting and Bureaucracies and Nazis (Wannsee)

Bureaucrats are supposed to love meetings. By this criteria, Simon Ramo, a major figure in aerospace who has written a book on meetings reviewed in the LA Times is no bureaucrat.

"During his 69 years in the aerospace industry, Simon Ramo figures he's attended more than 40,000 meetings — an average of two or three per workday.

About 30,000 of those meetings could have been shorter or not held at all, he laments."

By bureaucratic criteria, the Nazi's Wannsee meeting, which is dramatized in the HBO movie "Conspiracy", which we watched last night, was very effective. Of course in a tyranny a man like Heydrich (played by Kenneth Branagh) can bribe and threaten to get a bunch of bureaucrats to agree on a course. What was interesting, and effective, in the movie was the differing perspectives brought to the movie by the various participants (the lawyer (Colin Firth) who'd done the original Nazi race laws, with their careful and bureaucratic categorizing of Jews and near-Jews, was especially interesting. What was horrible was the duality: on the one hand watching the tactics and concerns of the bureaucrats; on the other remembering the reality behind the bureaucratic language--that all of this led to 6 million dead.

Good News from Iraq--It's About Time

I learned in the 60's not to overestimate the military's intelligence. This piece in today's Post is good news (note the past tense), but it's rather late. You'd think Rummy and Victoria Clarke would have figured out that the single bit of evidence most useful to those who oppose the Iraq venture was the fact it wasn't safe to drive this highway.

Easy Sailing Along Once-Perilous Road To Baghdad Airport: "BAGHDAD -- It used to be the most dangerous highway in Iraq, five miles of bomb-blasted road between Baghdad International Airport and the capital cityscape. It was a white-knuckle ride, coming or going. To reach Baghdad or leave it, you had to survive the airport road first."

Why Does Time Switch Screw Up Traffic?

Mickey Kaus in Slate posts on the idea that:

"traffic in Los Angeles (and, perhaps, elsewhere) gets horrifically jammed every year right after the switchover from Daylight Savings Time. What's interesting is that this seems to be a purely sociological phenomenon rather than a technological one. As best as I can figure it out, what happens is roughly this: [some people get up by the clock; some by their body rhythms. That results in a changed distribution of drivers, meaning jams.]

As a retired bureaucrat who no longer drives in rush hour traffic and who lives 2500 miles away from LA, I'm well qualified to correct Kaus' answer:

It's also the strangeness. People get used to driving under certain conditions--the amount of sun in your eyes, the glare, the general ambience. Changes to and from DST upset that comfort level--all of a sudden the sun is in your eyes, you slow down as you flip the sun visor down. In near saturation traffic, it requires only the smallest disturbance in traffic flow to upset the whole deal. Change will do that.

Fat Epidemic--Challenges to Conventional Wisdom

MSNBC.com cites a study of the ratio between waist and hip, which correlates to heart risk. Buried in it is a possible indication that we aren't as fat as conventional wisdom says:

"Overall, waist measurements recorded by the researchers were about 90 percent of the hip measurements. People in China scored best at 88 percent, followed by 89 percent in southeast Asia, 90 percent in North America, 92 percent in Africa, 93 percent in the Middle East and 94 percent in South America."

LA Times has a review of a new book that also challenges the conventional wisdom. But I prefer to trust my eyes and my memory--Americans are getting heavier.

Michael Brown's Dogs

Both Times and Post report on the release of some of Michael Brown's emails yesterday, which show he was concerned about his image on and about a dogsitter (apparently for the time he was going to be in Louisiana for Katrina).

It's easy to mock, but, as a great President used to say, the easy course would be wrong. Bureaucrats are people, too, and have a private life. In other contexts people who try to balance their work life and their home life would be praised, not mocked.

Usually workers have spouses who can handle dog care, as my wife has handled cat care over the years. Brown could be criticized for not having planned ahead, or not having previously had the occasion to go out of town to a disaster (that's assuming his spouse wasn't out of pocket or that he was recently separated). Certainly the teams that FEMA and the Red Cross put in the field in response to disasters should be expected to make provision for pet care and house sitting. And true that the head of FEMA should be a model for employees. By that standard, Mr. Brown fails, but not in love for his dogs.

We Expect Republicans to Govern Well?

Jeff Birnbaum had a column in the Post on the process of filing Lobbyist Disclosure Act data with the House and Senate. It seems both places have or are moving to an all-internet process, but with incompatible requirements and software. He then had a discussion on the Post website today which included the following:

Lobbyists' Disclosures Via the Internet: "If the Senate already had a user-friendly LDA disclosure program, why didn't the House leadership confer with them and coordinate a 'joint but separate' type of system? I heard that the Senate even offered to work with the House on that very point but was rejected early on.

Don't you think that the separate filing points lend confusion to the process?

Jeffrey Birnbaum: Thank you.

I also heard that the Senate offered to work with the House to make all this right, but for whatever reason, nothing much has happened.

I don't know who's right or wrong, but I think that the lack of cooperation could lead to a breakdown in a system that already is pretty crippled."

Remember, both houses are controlled by the Republicans, which is the party that believes in efficiency in government.

The Advantages of Confusion--Greenspan

Confusion and ambiguity in the style of Chairman Greenspan has its advantages, so the forthcoming change to Dr. Bernanke with its gain in clarity, as described in the NYTimes, may not be totally advantageous.

What's the advantage to ambiguity? Perhaps several, but the one I'd point to is flexibility. One thing we can be sure of is the the Fed board is going to be wrong at some point. Unfortunately we Washingtonians, unlike the rest of the country, usually respond to error by repeating our error, by coverup and concealment. See our current (and past) President for proof. It's a human thing--in times of uncertainty (and error equals uncertainty) you (I) seek the security of the known.

Unfortunately sometimes the world gets locked in feedback cycles, in vicious circles so we need what the great liberal and bureaucrat J.K. Galbraith called "countervailing power". In sailing terms familiar to readers of Forester and O'Brian, it's "coming around on the opposite tack".

So, if a change of course is needed to break a vicious circle who is more likely to do so: someone who has staked out a clear position and rationale and committed to a model supporting the position, or someone who operates behind a smokescreen (forgive the mixed metaphors)?