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Economix Blog: Bruce Bartlett: When the Deficit Will Be Fixed

January 1, 2013 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

The Holy Grail for budget hawks is the “grand bargain” – some combination of tax increases and entitlement reforms that will get the deficit on a sustainable track, permanently. On paper, it always looks simple – relatively small adjustments to the growth path of revenues or big spending programs like Medicare or Social Security compound over time into big savings.

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The problem, of course, is getting Congress to act, because of what economists call a time-inconsistency problem. The Congress that raises taxes and cuts benefits will suffer politically, while the benefits of lower deficits will accrue to future Congresses.

Historically, what has moved Congress to enact big deficit-reduction packages was the prospect of quick improvement in terms of inflation, growth and interest rates. Given that deficit reduction today is very unlikely to improve any of these in the near term, deficit hawks lack any real payoff from a grand bargain.

The two problems most likely to result from budget deficits are inflation and high interest rates. Many economists believe that deficits are inherently inflationary; others believe that they inevitably put pressure on the Federal Reserve to “monetize” the debt by, in effect, printing money to pay for it.

High interest rates are even more easily blamed on the deficit. As Floyd
Norris of The New York Times recently recounted, so-called bond vigilantes terrorized Wall Street in the early 1980s. Economists including Henry Kaufman of Salomon Brothers and Albert Wojnilower of First Boston regularly issued apocalyptic warnings of doom unless drastic action was taken on the deficit immediately.

It was often said that the Treasury’s borrowing was crowding out private borrowers from the bond market, because the federal government is not constrained by the amount of interest it is willing to pay. It will pay whatever the market demands to sell all the bonds it has to sell that day. Private borrowers will pull back their borrowing if rates get too costly.

Economists worried that if private companies lacked access to the bond market they would reduce investment in new plants and equipment, which ultimately reduced productivity and economic growth. High interest rates also raised the “hurdle” rate of return, snuffing out investments that in the past would have been profitable.

Some economists disagreed on the mechanism by which deficits affected interest rates. They pointed out that expected inflation automatically raises market interest rates. Generally speaking, a rise of 1 percent in the expected rate of inflation will raise long-term rates by 1 percent.

Those of a more liberal persuasion often contended that the Fed was forced to run a tighter monetary policy when faced with large deficits in order to offset their inflationary effect.

The precise mechanism didn’t matter much for policy purposes, because each perspective came back to the idea that deficits had to be reduced to improve the economy. Lower deficits would simultaneously reduce crowding out and inflationary expectations and give the Fed room to ease monetary policy – a virtual trifecta of payoffs.

It’s worth remembering just how severe the problem was. According to Mr. Norris, the interest rate on the Treasury’s 30-year bond peaked at 15.21 percent on Oct. 26, 1981. That is a rate almost incomprehensibly high given that Treasury bonds are assumed to have zero risk of default. The rate on the 30-year bond today is about 2.8 percent, about half its historical rate.

Even taking into account the fact that inflation was a serious problem in 1981 – the consumer price index rose 8.9 percent for the year – the “real” component of interest rates was very high. The real interest rate is the market rate minus the expected inflation rate.

With the benefit of hindsight, buying bonds in 1981 was the profit-making opportunity of a lifetime. Just imagine being able to get better than 15 percent a year on an investment for 30 years at zero risk.

Of course, at the time bonds were toxic, which is precisely why rates were so high. But as time went by, the deficit improved, inflation collapsed and the Fed eased. But it didn’t happen all at once; the process was slow and painful, involving many budget deals that were extremely difficult, politically.

Perhaps the most difficult was the 1990 deal, in which President George H.W. Bush courageously bucked his own party and agreed to a small increase in the top tax rate in order to get spending cuts and tough budget controls that deserve much of the credit for the budget surpluses of the late 1990s.

Mr. Bush’s own party basically turned its back on him, and it cemented for all time the now universally held Republican idea that taxes must never be increased at any time for any reason. Even those Republicans still sane enough to know this is nuts live in fear of a Tea Party challenger in the next primary, underwritten by the vast resources of the Club for Growth, which helped torpedo John Boehner’s “Plan B” effort at a “fiscal cliff” deal because it would raise the top tax rate on millionaires.

It is an article of faith to Grover Norquist, of tax pledge fame, that budget deals involving higher taxes are always bad for Republicans.

A new study from the European Central Bank confirms that significant deficit improvement is usually driven by rising interest rates. However, by the time budgetary action occurs the rising cost of interest on the debt tends to overwhelm the adjustment.

According to the Federal Reserve Bank of Cleveland, none of the preconditions that historically are necessary for a significant budget deal are now present. Inflationary expectations continue to fall and real interest rates are very low. Hence, it is impossible for politicians to promise any benefit from large spending cuts or tax increases that would materially improve peoples’ lives. The benefits are purely abstract.

This suggests that we are a long way from meaningful legislative action on the deficit.

Article source: http://economix.blogs.nytimes.com/2013/01/01/when-the-deficit-will-be-fixed/?partner=rss&emc=rss

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Economix Blog: Bruce Bartlett: The Real Long-Term Budget Challenge

December 11, 2012 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

On Dec. 3, the Government Accountability Office released new estimates of the federal government’s long-term budget outlook. They show that our real long-term problem is quite different from the one constantly portrayed by congressional Republicans.

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As the table shows, spending is not out of control. Entitlement programs like Social Security and Medicare are rising gently as the baby-boom generation retires. All other spending, including that for the military and domestic discretionary programs, falls – with the notable exception of interest on the debt. Interest rises sharply as the deficit rises, principally because the G.A.O. assumes that revenue will not be permitted to rise above its historical average – as Republicans continually insist.

Government Accountability Office
Government Accountability Office analysis of Census Bureau data

Republicans demand that Social Security and Medicare be cut immediately to deal with the so-called fiscal cliff. Popular suggestions for doing so include raising the age of eligibility for Medicare and changing the indexing formula that adjusts Social Security benefits for inflation.

To be sure, some restraint is needed in federal entitlement programs. But the idea that we are facing a crisis is complete nonsense. Spending for Social Security, in particular, is very stable. Relatively modest changes, such as raising the taxable earnings base slightly, would be sufficient to put the program on a sound footing virtually forever.

As a Nov. 28 Congressional Research Service report explains, historically 90 percent of covered earnings was subject to the Social Security tax. In recent years, this percentage has fallen to 84 percent, as the bulk of wage gains has gone to those making more than the maximum taxable income, currently $110,100. Raising the share of covered earnings back to 90 percent would be sufficient to eliminate almost half of Social Security’s long-run actuarial deficit, according to the Social Security actuaries.

Frequently, Republicans assert that domestic discretionary spending is the major source of bloated government. These are basically all programs other than entitlements and interest on the debt outside the Department of Defense, which always needs more money in the Republican world view. These include agriculture, education, energy, science, law enforcement and many other programs that people take for granted and oppose reducing. Moreover, such programs have already been cut sharply by the Budget Control Act of 2011.

That leaves interest on the debt as the principal driver of long-term spending and deficits. As the G.A.O. projections show, net interest rises from 1.4 percent of gross domestic product this year to 3 percent in 2020, 4.9 percent in 2030 and continues rising astronomically thereafter as interest accrues on the bonds previously sold to pay interest on the debt.

Interest rises from 6.1 percent of the federal budget in 2012 to 12.9 percent in 2020, 21 percent in 2030 and eventually reaches 59 percent if current projections are maintained through 2082, the last year in the G.A.O. analysis. As a share of the deficit, interest would rise from 19.2 percent this year to 62 percent in 2020. In the long run, virtually all of the deficit is accounted for by interest on the debt.

These facts explain why the tax pledge that virtually all Republicans blindly support is ultimately self-defeating. Refusing to raise revenue automatically leads to higher spending for interest on the debt. However, Republicans routinely deny this, asserting that capping revenue at some arbitrary percentage of G.D.P. will somehow or other force huge cuts in spending that will prevent deficits from rising to inconceivable levels. Implicitly, they believe in a nonsensical theory called starve-the-beast that is totally refuted by the budgetary experience of the last 20 years.

The frightening thing is that the projections for interest on the debt assume that interest rates don’t rise in the near term and don’t rise at all even as the federal debt rises to 200 percent of G.D.P. in 2037 and to 885 percent of G.D.P. in 2082. The G.A.O. assumes that short-term rates on Treasury securities average 1.3 percent through 2017 and 3.7 percent in the long run, and rates on 10-year Treasuries will average 3.4 percent in the short-run and 5 percent in the long run.

These assumptions cannot be taken at face value. Federal borrowing of the magnitude projected would undoubtedly raise inflation and real interest rates, both of which would raise market interest rates far above those projected, sharply raising federal spending for interest. Rising inflation would also force the Federal Reserve to tighten monetary policy, which would also raise real rates.

In short, the G.A.O. projections are a best-case situation insofar as interest on the debt is concerned. It could get a lot worse very quickly, and at that point it is almost a certainty that taxes will rise far more than would be necessary to stabilize the debt-to-G.D.P. ratio and hence interest on the debt. Therefore, the absolutist position against raising revenue is essentially penny-wise and pound-foolish.

It’s too bad that misplaced fears about the fiscal cliff have taken off the table the option of simply letting all the automatic tax increases and spending cuts go into effect. While this would indeed reduce short-run growth, the Congressional Budget Office says the reduction in projected deficits would actually raise growth in the medium- and long-term (see pages 24-25 of the report).

Article source: http://economix.blogs.nytimes.com/2012/12/11/the-real-long-term-budget-challenge/?partner=rss&emc=rss

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Today’s Economist: Bruce Bartlett: Our Long-Term Fiscal Future Is Better Than It Looks

November 13, 2012 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

Despite Republican propaganda to the contrary, the long-term fiscal problem of the United States is principally that revenues are too low. If fixing this problem required a legislated tax increase, the nation would be in serious trouble, because Republicans will forever block it as long as they have the ability. Fortunately, they handed Barack Obama the power to permanently fix our fiscal problem if he has the courage and skill to use it.

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The core problem, from the Republicans’ point of view, is that they stupidly enacted temporary tax cuts during the George W. Bush administration. Their expiration creates a bludgeon that could eventually beat sense into them on the tax issue.

At the time the tax cuts were enacted, I recall arguing with my longtime friend Grover Norquist that temporary tax cuts were a really bad idea. Supply-side theory has always held that permanent tax changes are vastly more powerful than temporary changes, I told him. He didn’t disagree, but said the Bush tax cuts were de facto permanent because Democrats would never have the guts to permit them to expire; they would be renewed forever. People and businesses will know that, Mr. Norquist said.

That was a foolish position for political and economic reasons. People and businesses don’t make the sorts of changes in their behavior that would give the economy a supply-side boost unless they have confidence that today’s tax regime will be in place when the payoff from increased work, saving or investment is realized.

A perfect example is the research and development tax credit. Economic theory is clear that R.D. needs to be subsidized because the social benefits greatly exceed what businesses can capture from it, thus leading to less R.D. than necessary to sustain growth. For this reason, Congress created the R.D. credit in 1981.

But the credit has never been permanent. It has expired every few years and expires again at the end of this year. Academic studies show that even though it may be de facto permanent, the fact that it isn’t actually permanent in law greatly inhibits its effectiveness.

Corporations can’t risk taking it into account when calculating rates of return on planned R..D, for it might have expired when they need it down the road. The credit ends up being a bonus for what they would do anyway without the credit.

For this reason, Republicans and Democrats support making the R.D. credit permanent. Congress always refuses, because renewal of the credit is a great way to shake down corporate lobbyists for campaign contributions. The lobbyists don’t mind, because when the credit is renewed they can demonstrate that they have added to the company’s after-tax bottom line. In Washington, this is called a win-win – except for the economy, which doesn’t get the R.D. that it needs.

A key reason that the tax-rate reductions of the Bush administration failed to have any stimulative effect is because they came with expiration dates from Day 1. Republicans insisted on cutting them on a partisan basis, without negotiating with Democrats. Consequently, they lacked the votes in the Senate to overcome the so-called Byrd Rule, which limits legislation that raises the deficit to a maximum of 10 years when budget reconciliation procedures are used.

Republicans needed to use those procedures to enact their tax cuts, in order to overcome a Senate filibuster by Democrats. Permanent tax changes would have required bipartisanship, which the Republicans rejected.

In 2010, Republicans congratulated themselves that their strategy was working when they refused to negotiate with President Obama because he demanded that tax cuts for the rich be allowed to expire. Faced with an earlier “fiscal cliff” on Jan. 1, 2011, he caved to Republican intransigence and agreed to a two-year extension of all the Bush tax cuts. That extension expires at the end of this year, and President Obama has renewed his demand that taxes on the rich be allowed to rise.

Republicans like the House speaker, John Boehner of Ohio, are talking bravely about holding the line on taxes, and Mr. Boehner has dismissed the demand for higher tax rates for the rich.

But the economic and political dynamics this year are much different than they were two years ago. Then, Republicans were coming off a huge electoral victory; this year they have suffered a huge political defeat.

In December 2010, the economy was too fragile to take risks, even temporarily. President Obama had no choice but to cave. Today, the president’s hand is greatly strengthened, the economy is much stronger, and he is running out of time to get America’s fiscal house in order on his watch. Republicans are chastened by their defeat, and he will never hold a stronger hand against them than he does now. Therefore, taking the risks with the tax cuts, at least temporarily, is now a viable option.

If things go bad because of Republican inflexibility, the political dynamics change completely in January. At that point, Republicans have to accept whatever tax cut Obama is willing to support to replace the Bush tax cuts in whole or part. His veto pen would be enough to force Republicans to negotiate in good faith for a change, even if Democrats didn’t control the Senate.

Any 2013 tax cut that would offset the effect of allowing the Bush tax cuts to expire can easily be made retroactive. The Internal Revenue Service can delay changing withholding tables for average wage earners if it chooses, on the assumption that their tax cuts will be preserved under any possible compromise, thus forestalling any impact from the fiscal cliff on the vast majority of Americans.

And here’s the kicker. All President Obama has to do is insist that whatever retroactive tax cuts are enacted next year be temporary. Not only will this mitigate the impact of higher taxes for the same reason that temporary tax cuts are limited in their impact, but he will have another opportunity in a year or two to bludgeon Republicans back to the negotiating table, where their adamant opposition to higher taxes will again be negated by an automatic tax increase absent Congressional action.

Revenues are just 15.8 percent of gross domestic product, compared with a postwar average of 18.5 percent, which even Mr. Norquist accepts as a long-term goal. The sooner we get there, the sooner we can get the national finances on track toward sustainability.

Because Republicans now lack the power to prevent legislated tax increases, the nation is no longer held hostage to their stubborn opposition to any tax increase whatsoever, which has torpedoed every serious effort to reduce the trajectory of debt since 2010.

That is why I am optimistic about our fiscal future.

Article source: http://economix.blogs.nytimes.com/2012/11/13/our-long-term-fiscal-future-is-better-than-it-looks/?partner=rss&emc=rss

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Today’s Economist: Bruce Bartlett: Some Big Corporations Don’t Pay Taxes, Either

September 18, 2012 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

On Sept. 13, Harold Hamm, chairman and chief executive of Continental Resources, testified before the House Committee on Energy and Commerce about achieving energy independence. He said his company, an oil producer, could produce much more if federal policies didn’t hold it back. Among them is the tax system. Mr. Hamm said his company paid an effective tax rate of 38 percent.

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One often hears corporate executives make such assertions. Republicans always accept them at face value, because to them there is no public policy problem that isn’t caused by high taxes. Tax cuts are their solution to just about every problem. Cutting the corporate tax rate is among the key measures that all Republicans favor to stimulate growth.

One problem with the Republican theory is that many big corporations actually pay little, if any, federal income tax. For example, The New York Times has reported that General Electric, the sixth-largest corporation in the United States, earned $14.2 billion in 2010, but disclosed in federal filings that it had no federal tax liability.

This disparity between the high taxes that many people say they believe American corporations pay and the low rate they actually pay applies to Mr. Hamm’s business as well. Citizens for Tax Justice, a labor-backed group, looked at Continental Resources’ financial reports, where it must disclose tax payments, and found that in 2011 it paid a federal tax rate of 1.9 percent on profits of close to $700 million. Its average federal tax rate over the last five years was 2.2 percent.

According to Citizens for Tax Justice, G.E. paid a federal tax rate about the same as Continental Resources’ over the last 10 years – an average of 2.3 percent, including four years in which it received a net tax refund.

When poor people pay no federal income taxes and get a government refund because of such programs as the earned-income tax credit, Republicans are incensed, implying that if only the poor paid their fair share that the deficit would disappear. They never suggest that corporations like G.E. pay their fair share, even though the G.E. example is far from unique, according to Citizens for Tax Justice.

The complexity of the corporate income tax makes it easy to evade and avoid American taxes. Edward D. Kleinbard, a professor of tax law at the University of Southern California, points to the easy availability of tax havens, where corporations artificially book their profits and avoid taxation on them.

I had a personal experience with such tax havens recently. I needed a copy of Microsoft Word for a new computer and went to Microsoft.com to buy and download it. But my credit card company refused the charge. When I checked to see what the problem was, I was told that the credit card company was suspicious because the charge went to a company based in Luxembourg.

Luxembourg is, of course, a notorious tax haven. Arranging to realize its profits in such places has long been a tax-avoidance policy practiced by Microsoft and other big corporations. According to a July 22 report by the London-based Tax Justice Network, as much as $32 trillion of global financial wealth may be parked in the world’s tax havens.

Even without taking account of offshore tax havens and other aggressive tax avoidance activities, corporate taxes are grossly overrated as a cost of doing business in the United States. According to the Office of Management and Budget, the corporate income tax raised just 1.2 percent of the gross domestic product last year. Even in 2007, before the economic crisis, it raised only 2.7 percent of G.D.P. This is well down from the 1950s, when the corporate tax raised twice as much revenue as a share of G.D.P.

Republicans often point to the statutory corporate tax rate in the United States as evidence that American companies are overtaxed. Indeed, it is true that the United States has the highest statutory central government tax rate among members of the Organization for Economic Cooperation and Development. The combined statutory rate in the United States is 39.2 percent, including state taxes, compared with an average of 29.6 percent in the O.E.C.D.

However, as a Sept. 13 report from the Congressional Research Service explains, looking only at the statutory rate is highly misleading as an indication of the burden of the corporate tax. That is because it does not take account of the many tax expenditures that reduce the effective tax rate paid by American corporations. In 2011, they reduced corporate tax revenues by $159 billion.

As a consequence, the weighted effective tax rate – taxes as a share of profits – is 27.1 percent in the United States, which is below the 27.7 percent average rate of O.E.C.D. nations. The weighted average marginal tax rate on corporations – the tax on each additional dollar earned – is 20.2 percent in the United States, compared with 18.3 percent in the O.E.C.D.

For these reasons, the investor Warren Buffett says it’s “a myth that American corporations are paying 35 percent or anything like it.”

The Congressional Research Service report also notes that in the United States corporate taxes as a share of G.D.P. were the third lowest among all O.E.C.D. countries in 2009 – 1.7 percent of G.D.P. (including state taxes), compared with an O.E.C.D. average of 2.8 percent of G.D.P. Even Ireland, which conservatives often point to has having an exemplary corporate tax system, raised corporate taxes equal to 2.4 percent of G.D.P.

One continuing confusion in the corporate tax debate is who, exactly, pays it. Corporations, after all, are not entities separate from their owners (shareholders), employees and customers. They are the ones who pay the tax, but economists have been debating about who and to what degree for a century.

A Treasury Department report in May concluded that 82 percent of the corporate tax is borne by capital, with 18 percent borne by labor. Contrary to popular belief, none of the tax is shifted to consumers, which stands to reason because prices are set by producers that pay different tax rates or may even be tax-exempt.

The private Tax Policy Center published a study on Sept. 13 with similar conclusions. It estimates that 20 percent of the corporate tax is paid by labor, 20 percent is borne by the “normal” return to capital – roughly, the risk-free interest rate – and 60 percent by the “supernormal” return to capital. The latter is the extent to which the return to corporate stock has historically exceeded the risk-free interest rate.

One driving force for tax reform is a widespread belief, on both sides of the aisle, that the statutory corporate tax rate should be reduced. That is fine as long as the tax base is broadened by eliminating loopholes. But the idea that cutting the tax rate is a magic bullet to jump-start growth is nonsense, because corporate taxes are, in fact, quite low.

Article source: http://economix.blogs.nytimes.com/2012/09/18/are-corporations-overtaxed/?partner=rss&emc=rss

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Today’s Economist: Bruce Bartlett: Republicans Are Wrong on Call for Gold Standard

September 4, 2012 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

Last week, the Republican Party officially endorsed a platform suggesting that the nation return to a gold standard. The statement on Page 4 does not mention gold specifically but rather talks about “a metallic basis for the U.S. currency.” The meaning is clear; no one is talking about basing the dollar on iron, copper or tin. The platform calls for a commission to study the idea.

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This approach is very similar to that in the 1980 Republican platform, which also endorsed a gold standard without mentioning gold. It talked about a “monetary standard” and breakage of the link between the dollar and “real commodities,” which led to “hyperinflationary forces.” Of course, gold is the commodity that dollars were linked to before 1971.

According to an article in the July 31, 1980, issue of The Washington Post, the drafters of the 1980 Republican platform inflation plank included Representative David Stockman of Michigan, the Republican strategist Jeffrey Bell and Alan Greenspan, former chairman of the Council of Economic Advisers (and subsequently chairman of the Federal Reserve), who endorsed the gold standard in a 1966 article for the libertarian novelist Ayn Rand’s newsletter. The drafters were clearly contemplating a gold standard.

Today, the usual gold bugs – The Wall Street Journal opinion pages, Forbes magazine and conservative Web sites – are all very excited about the Republican endorsement of yellow metal in place of that paper junk we carry in our wallets. During the Republican primaries, both Newt Gingrich and Herman Cain endorsed a return to the gold standard.

Running parallel to work on the 1980 Republican platform, Senator Jesse Helms of North Carolina and Representative Ron Paul of Texas had an amendment attached to a bill regarding the International Monetary Fund that required establishment of a commission to study “the role of gold in domestic and international monetary systems.” It became law on Oct. 7, 1980.

By the time members of the commission were appointed, Ronald Reagan was president. The New York Times reported that he was sympathetic to a gold standard and that some of his economic advisers, including the economist Arthur Laffer and the businessman Lewis Lehrman, were keen on the idea. In an Aug. 17, 1981, column, Rowland Evans and Robert Novak reported that the Reagan administration “is filled with closet gold bugs.”

The Gold Commission issued its report in March 1982. It said that most members of the commission “believe that a return to the gold standard is not desirable.” Of the commission members, only Mr. Lehrman and Mr. Paul dissented and recommended its re-establishment.

Even before that, however, the Reagan administration had signaled its negative position on any return to a gold standard in the Economic Report of the President, issued in February (starting on Page 69). The gist of its objection was that while a gold standard provided stable purchasing power over long periods of time, that was only because inflations were subsequently offset with debilitating deflations. As a consequence, there were greater economic instabilities, higher unemployment and longer recessions during the gold-standard era.

Economists today generally believe that the gold standard exacerbated the Great Depression. They note that those countries that went off it first in the 1930s were the first to recover. A survey of a panel of 41 prominent economists earlier this year by the University of Chicago business school found no support for a gold standard, including by those who had served in Republican administrations, including Edward P. Lazear of Stanford and Richard Schmalensee of the Massachusetts Institute of Technology.

To be fair, the idea of returning to a gold standard in 1980 or 1981 was not absurd. The Consumer Price Index rose 13.3 percent in 1979 and 12.5 percent in 1980, before falling to a still-high 8.9 percent in 1981. Under extreme circumstances, radical solutions have to be considered.

But today, there is no inflation to speak of and what little there is is heading downward toward deflation, as James D. Hamilton of the University of California, San Diego, noted in a Sept. 1 blog post. Like me, he is puzzled that there is any support for the gold standard under current economic conditions.

I asked Maurice Obstfeld of the University of California, Berkeley, a noted expert in international economics, what he thought the consequences would be of returning to a gold standard today.

Professor Obstfeld pointed out that support for a gold standard, both in 1980 and today, appeared to be linked to a recent sharp run-up in the price of gold. But whereas the earlier run-up was clearly because of inflationary expectations, today’s is related to financial instability. This is important, because while gold might have helped reduce inflationary expectations, it would make financial instability worse. Professor Obstfeld says “it could be disastrous.” As he explains:

If financial distress continues to push the relative price of gold upward in the coming years – whether due to a euro collapse, Israeli strike on Iran, whatever – then the Fed, if on a gold standard, would have to engineer deflation to hold the nominal gold price constant.

Professor Obstfeld further notes the problem of huge capital flows, domestic and international, for a modern-day gold standard:

Because of both the sheer size and the array of securities now available in modern asset markets, the supply and demand forces the United States government might have to withstand to peg the price of gold are orders of magnitude greater than they were even a couple of decades ago, and certainly greater than in any other epoch when a gold standard was seriously entertained.

For example, speculators could take immense short positions against the dollar, in favor of gold, through highly leveraged derivatives contracts. To withstand this immense market pressure, the government would have to impose severe restrictions on asset markets – not just on international transactions, but on purely domestic transactions as well.

Furthermore, the government would not want to find itself in a position where a bear squeeze on speculators would lead to chains of counterparty failures that throw the financial system into crisis. So a broad range of financial activities might have to be more tightly regulated for this second, distinct, reason.

It would appear, therefore, that if the goal is to reduce governmental influence in monetary affairs and reduce financial instability, a gold standard would move in the opposite direction on both counts.

Article source: http://economix.blogs.nytimes.com/2012/09/04/the-gold-standard-is-not-ready-for-prime-time/?partner=rss&emc=rss

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Economix Blog: Bruce Bartlett: Cutting the Corporate Tax Rate Is No Economic Panacea

December 20, 2011 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of the coming book “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

Last week, a nice woman contacted me to see if I was interested in the work of a bipartisan coalition she worked for that was promoting a cut in the corporate tax rate. I told her that I was disinclined to believe that it would have much impact but didn’t take the time to explain why. This is why.

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First, insofar as taxes affect businesses, more than 90 percent of businesses are not really affected by the corporate tax. They are sole proprietorships, partnerships or S corporations that are essentially taxed only on the individual tax schedule.

The corporate tax affects only C corporations, legal entities separate and distinct from their owners, the shareholders. The income of C corporations is taxed twice – once at the corporate level and again when the corporation’s income is paid out to its owners.

Therefore, the tax burden on C corporations is a function of both the corporate tax rate and the personal tax rate on dividends. To be valid, an international comparison of corporate taxes must take both into account.

This table uses data from the Organization for Economic Cooperation and Development:

Organization for Economic Cooperation and Development

The inclusion of taxes both at the corporate level and on dividends changes our perspective on which countries are high tax and which are low tax. For example, Ireland has the lowest statutory corporate tax rate among O.E.C.D. countries, yet is still a relatively high-tax country because of the high tax rate it imposes on dividends. By contrast, Japan has the highest statutory corporate tax rate but only the 12th highest overall rate because it has one of the lowest tax rates on dividends.

Those advocating a cut in the corporate tax rate today generally ignore the tax on dividends, as well as many other provisions of United States and foreign tax law that may reduce the effective tax rate well below the statutory rate.

A recent study found that only 25 percent of the largest American corporations pay anywhere close to the statutory corporate tax rate of 35 percent on their earnings, while 40 percent pay less than half that rate.

Indeed, General Electric, the nation’s largest corporation, paid no federal corporate taxes in the United States in 2010, according to a report in The New York Times.

It is not as if advocates of reducing the corporate tax rate are ignorant of the impact of taxes on dividends in terms of the overall corporate tax burden. In 2003, they made much of the fact that taxes on dividends went as high as 39.6 percent, thus giving the United States a very high combined corporate tax rate.

As President George W. Bush explained in a speech on Jan. 7, 2003:

We can begin by treating investors fairly and equally in our tax laws. As it is now, many investments are taxed not once but twice. First, the I.R.S. taxes a company on its profit. Then it taxes the investors who receive the profits as dividends. The result of this double taxation is that for all the profit a company earns, shareholders who receive dividends keep as little as 40 cents on the dollar….

It’s fair to tax a company’s profits. It’s not fair to double tax by taxing the shareholder on the same profits. So today, for the good of our senior citizens and to support capital formation across the land, I’m asking the United States Congress to abolish the double taxation of dividends….

By ending this investment penalty, we will strengthen investor confidence. See, by ending double taxation of dividends, we will increase the return on investing, which will draw more money into the markets to provide capital to build factories, to buy equipment, hire more people.

In the end, even a Republican-controlled Congress balked at abolishing taxes on dividends, as President Bush demanded, and instead reduced the tax on dividends to a maximum of 15 percent, among the lowest rates in major countries.

Although one often hears conservatives say that cutting the corporate tax rate would jump-start growth, it’s worth noting that the original Bush proposal to sharply reduce the combined corporate tax rate by abolishing taxes on dividends would have been likely to have only a very modest effect on growth.

According to a report by the Council of Economic Advisers on Feb. 4, 2003, the original Bush tax package, which also included provisions intended to increase saving and investment, would have only raised the growth of real gross domestic product by 0.2 percent a year.

An article in the December issue of the National Tax Journal finds that the long-run effect of cutting the corporate tax rate to 30 percent would have a similarly modest impact.

It is extremely simplistic to look only at the statutory corporate tax rate in evaluating the economic effects of the corporate tax. Many other factors must be taken into consideration.

And while it may be a good idea to reduce the corporate tax rate as part of a tax reform package, the idea that this will jump-start growth is nonsense.

Article source: http://feeds.nytimes.com/click.phdo?i=014faab910482e7f46b9bbcfc6f3b93d

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Economix Blog: Americans Used to Be Much More Anti-Tax

November 30, 2011 by Leave a Comment

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

In addition to his Economix post, Bruce Bartlett also has a Tax Notes column today looking at public support for raising taxes (instead of or in addition to cutting spending)  to narrow federal deficits. He found dozens of surveys conducted over the last year showing that most Americans believe that taxes should be part of any deficit reduction package.

Incidentally, for an article (and related blog post) I wrote a while back on the evolution of deficit deals, I asked The Times’s polling department to see how American attitudes toward debt consolidation packages had changed in the last three decades. They pulled up the polls below.

As you’ll see, Congressional Republicans may have become more anti-tax in the last 30 years, but the American public has made the opposite transition: in March 1982, three-quarters of Americans said spending cuts alone should be used to reduce deficits; today, about the same share say tax increases should be included in any debt-reduction package. Remember, of course, that tax rates were much higher 30 years ago than they are today.

 

NBC News/Associated Press Poll, March 1982
In order to help reduce the federal budget deficit, which of the following would you prefer — federal income tax increases or federal spending cuts?

13% Tax increases
77% Spending cuts
4% Both (volunteered)
6 % Don’t know

Time/Yankelovich, Skelly White Poll, November 1985
What do you think should be done to reduce the federal deficit? Do you think we should: cut government spending, raise taxes, or both cut our spending and raise taxes?

54% Cut government spending
4% Raise taxes
36% Both cut our spending and raise taxes
6% Not sure (volunteered)

 

Gallup, May 1988
There are a number of ways to reduce the federal budget deficit, if the government decides to. Some people say we can reduce the deficit simply by cutting spending. Others say a combination of spending cuts and tax increases is required. Which of these views comes closer to your own?

47% Cutting spending
39% Combination of spending cuts and tax increases
2% Do neither (volunteered)
12% Don’t know/Undecided

 

Quinnipiac University Poll, March 2010
To reduce the federal budget deficit do you think there should be a combination of tax increases and spending cuts, or that only taxes should be raised, or only that spending should be cut?

42% Combination
4% Only tax increases
49% Only spending cuts
5% Don’t know/No answer

 

New York Times/CBS News, September 2011
Do you think any plan to reduce the federal budget deficit should include only tax increases, or only spending cuts, or a combination of both tax increases and spending cuts?

3% Only tax increases
21% Only spending cuts
71% Both
5% Don’t know/No answer

 

Time/Abt SRBI Poll, October 2011
Over all, what do you think is the best way to reduce the federal budget deficit — by cutting federal spending, by raising taxes, or by a combination of both?

29% Cutting federal spending
4% Increasing taxes
65% Combination
3% No answer/Don’t know

Article source: http://feeds.nytimes.com/click.phdo?i=35c3750de604145aa4836e101e88ff6c

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Economix Blog: Bruce Bartlett: Gingrich and the Destruction of Congressional Expertise

November 29, 2011 by Leave a Comment

DESCRIPTION

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of the coming book “The Benefit and the Burden.”

On Nov. 21, Newt Gingrich, who is leading the race for the Republican presidential nomination in some polls, attacked the Congressional Budget Office. In a speech in New Hampshire, Mr. Gingrich said the C.B.O. “is a reactionary socialist institution which does not believe in economic growth, does not believe in innovation and does not believe in data that it has not internally generated.”

Today’s Economist

Perspectives from expert contributors.

Mr. Gingrich’s charge is complete nonsense. The former C.B.O. director Douglas Holtz-Eakin, now a Republican policy adviser, labeled the description “ludicrous.” Most policy analysts from both sides of the aisle would say the C.B.O. is one of the very few analytical institutions left in government that one can trust implicitly.

It’s precisely its deep reservoir of respect that makes Mr. Gingrich hate the C.B.O., because it has long stood in the way of allowing Republicans to make up numbers to justify whatever they feel like doing.

For example, Republicans frequently assert that tax cuts, especially for the rich, generate so much economic growth that they lose no revenue. This theory has been thoroughly debunked, most recently by the tax cuts of the George W. Bush administration, which, according to C.B.O., reduced revenues by $3 trillion. Nevertheless, conservative groups like the Heritage Foundation (where I worked in the 1980s) still peddle the snake oil that the Bush tax cuts paid for themselves.

Mr. Gingrich has long had special ire for the C.B.O. because it has consistently thrown cold water on his pet health schemes, from which he enriched himself after being forced out as speaker of the House in 1998. In 2005, he wrote an op-ed article in The Washington Times berating the C.B.O., then under the direction of Mr. Holtz-Eakin, saying it had improperly scored some Gingrich-backed proposals. At a debate on Nov. 5, Mr. Gingrich said, “If you are serious about real health reform, you must abolish the Congressional Budget Office because it lies.”

This is typical of Mr. Gingrich’s modus operandi. He has always considered himself to be the smartest guy in the room and long chaffed at being corrected by experts when he cooked up some new plan, over which he may have expended 30 seconds of thought, to completely upend and remake the health, tax or education systems.
 
Because Mr. Gingrich does know more than most politicians, the main obstacles to his grandiose schemes have always been Congress’s professional staff members, many among the leading authorities anywhere in their areas of expertise.

To remove this obstacle, Mr. Gingrich did everything in his power to dismantle Congressional institutions that employed people with the knowledge, training and experience to know a harebrained idea when they saw it. When he became speaker in 1995, Mr. Gingrich moved quickly to slash the budgets and staff of the House committees, which employed thousands of professionals with long and deep institutional memories.

Of course, when party control in Congress changes, many of those employed by the previous majority party expect to lose their jobs. But the Democratic committee staff members that Mr. Gingrich fired in 1995 weren’t replaced by Republicans. In essence, the positions were simply abolished, permanently crippling the committee system and depriving members of Congress of competent and informed advice on issues that they are responsible for overseeing.

Mr. Gingrich sold his committee-neutering as a money-saving measure. How could Congress cut the budgets of federal agencies if it wasn’t willing to cut its own budget, he asked. In the heady days of the first Republican House since 1954, Mr. Gingrich pretty much got whatever he asked for.

In addition to decimating committee budgets, he also abolished two really useful Congressional agencies, the Office of Technology Assessment and the Advisory Commission on Intergovernmental Relations. The former brought high-level scientific expertise to bear on legislative issues and the latter gave state and local governments an important voice in Congressional deliberations.

The amount of money involved was trivial even in terms of Congress’s budget. Mr. Gingrich’s real purpose was to centralize power in the speaker’s office, which was staffed with young right-wing zealots who followed his orders without question. Lacking the staff resources to challenge Mr. Gingrich, the committees could offer no resistance and his agenda was simply rubber-stamped.

Unfortunately, Gingrichism lives on. Republican Congressional leaders continually criticize every Congressional agency that stands in their way. In addition to the C.B.O., one often hears attacks on the Congressional Research Service, the Joint Committee on Taxation and the Government Accountability Office.

Lately, the G.A.O. has been the prime target. Appropriators are cutting its budget by $42 million, forcing furloughs and cutbacks in investigations that identify billions of dollars in savings yearly. So misguided is this effort that Senator Tom Coburn, Republican of Oklahoma and one of the most conservative members of Congress, came to the agency’s defense.

In a report issued by his office on Nov. 16, Senator Coburn pointed out that the G.A.O.’s budget has been cut by 13 percent in real terms since 1992 and its work force reduced by 40 percent — more than 2,000 people. By contrast, Congress’s budget has risen at twice the rate of inflation and nearly doubled to $2.3 billion from $1.2 billion over the last decade.

Mr. Coburn’s report is replete with examples of budget savings recommended by G.A.O. He estimated that cutting its budget would add $3.3 billion a year to government waste, fraud, abuse and inefficiency that will go unidentified.

For good measure, Mr. Coburn included a chapter in his report on how Congressional committees have fallen down in their responsibility to exercise oversight. The number of hearings has fallen sharply in both the House and Senate. Since the beginning of the Gingrich era, they have fallen almost in half, with the biggest decline coming in the 104th Congress (1995-96), his first as speaker.

Brookings InstitutionAfter Newt Gingrich became speaker of the House in the 104th Congress, the number of hearings held there fell far more sharply than in the Senate.

In short, Mr. Gingrich’s unprovoked attack on the C.B.O. is part of a pattern. He disdains the expertise of anyone other than himself and is willing to undercut any institution that stands in his way. Unfortunately, we are still living with the consequences of his foolish actions as speaker.

We could really use the Office of Technology Assessment at a time when Congress desperately needs scientific expertise on a variety of issues in involving health, energy, climate change, homeland security and many others. And given the enormous stress suffered by state and local governments as they are forced by Washington to do more with less, an organization like the Advisory Commission on Intergovernmental Relations would be invaluable.

It is essential that Congress not cripple what is left of its in-house expertise. Gutting the G.A.O. and abolishing the C.B.O. would be acts of nihilism. Any politician recommending such things is unfit for office.

Article source: http://feeds.nytimes.com/click.phdo?i=a7507aa7b68f184d3be08141b882c13c

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Economix Blog: Bruce Bartlett: Balancing the Budget, for Real

November 22, 2011 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of the coming book “The Benefit and the Burden.”

Representative David Dreier, chairman of the House Rules Committee, was one of four Republicans to defy the House leadership and vote against a balanced budget amendment.Kevin Wolf/Associated PressRepresentative David Dreier, chairman of the House Rules Committee, was one of four Republicans to defy the House leadership and vote against a balanced budget amendment.

On Friday, the House of Representatives voted on a balanced budget amendment to the Constitution. At the last minute, the leadership substituted a straightforward version, H.J. Res. 2, in lieu of the spending limitation amendment reported by the House Judiciary Committee that I criticized last week.

Today’s Economist

Perspectives from expert contributors.

While I’d like to think that Republican leaders realized the folly of writing an inexact concept like gross domestic product into the Constitution, more likely the reason was that they hoped to attract the votes of “blue dog” Democrats by offering a less radical proposal.

In the end, the Republican ploy didn’t work, and the balanced budget amendment was unable to attract the necessary two-thirds vote. Only 25 Democrats joined almost every Republican in supporting the amendment.

Interestingly, four Republicans opposed the amendment, and one of them was Representative David Dreier of California, chairman of the powerful House Rules Committee. In this position, his job is to follow the dictates of the House leadership and ensure that the rules for debate are as favorable as possible to its wishes. In other words, Mr. Dreier is not a Republican dissident, but someone whose position requires that he be among the most loyal and dependable supporters of whatever his party favors.

For decades, virtually all Republicans have supported a balanced budget amendment. Indeed, Mr. Dreier himself long took that position and previously voted for a balanced budget amendment to the Constitution. So, it is remarkable that Mr. Dreier was among the “no” votes on the measure.

But on Thursday, Mr. Dreier told the House that he had changed his mind. Back in 1995, Mr. Dreier said he thought the budget would never be balanced without a constitutional requirement. But two years later, the budget was, in fact, balanced. As he explained:

I said at the outset that I believed when I cast that vote in January of 1995 in favor of a balanced budget amendment to the Constitution that it was the only way that we would be able to achieve a balanced budget. I was wrong. Two short years later, we balanced the federal budget, and that went on for several years. It went on until 2001.

Republicans seldom talk about the balanced budgets of fiscal years 1998 through 2001, because they happened on Bill Clinton’s watch. They either pretend they didn’t happen, imply they occurred through some sort of “immaculate conception” unconnected to Clinton’s policies or try to claim that the 1997 cut in the capital gains tax led to an outpouring of revenue that balanced the budget.

The truth is that the federal surpluses resulted from specific legislation enacted in 1990 and 1993 that virtually every Republican opposed. In particular, taxes were increased and tight budget controls were put in place that prevented taxes from being cut or spending increased unless offset by tax increases or spending cuts. These budget controls are commonly referred to as “paygo,” for pay-as-you-go.

What happened can be seen in Congressional Budget Office data. When the 1990 budget deal took effect in fiscal year 1991, federal spending was 22.3 percent of G.D.P. and revenue was 17.8 percent. The deficit was 4.5 percent of G.D.P. Revenue rose steadily to 19.9 percent of G.D.P. by fiscal year 1998 and spending fell to 19.1 percent, yielding a budget surplus of almost 1 percent of G.D.P.

Revenue continued to rise to 20.6 percent of G.D.P. in fiscal year 2000, and spending fell to 18.2 percent. The surplus reached 2.4 percent of G.D.P.

These results run 100 percent contrary to Republican dogma, which is that tax increases, especially on the rich, do not yield additional revenue because people will cease working and investing, and the economy will stagnate. Yet the hallmarks of the 1990 and 1993 budget deals were an increase in the top income tax rate; first to 31 percent from 28 percent, and then to 39.6 percent. Revenue clearly rose, as did the economy.

The hallmarks of the George W. Bush administration were large tax cuts almost annually. These were supposed to stimulate growth and lead to lower spending by “starving the beast.” Revenue fell more than 2 percent of G.D.P. by fiscal year 2007, which ended just before the recession began in December 2007. Spending rose to 19.6 percent of G.D.P. because of two unfunded wars, unchecked spending on earmarks by Republicans in Congress and creation of a new entitlement program, Medicare Part D. We went from a surplus of 2.4 percent of G.D.P. to a deficit of 1.2 percent.

In 2002, Republicans got rid of paygo so that they could cut taxes and increase spending without constraint.

Thus we have a perfect test of two economic theories: one that says raising taxes and imposing binding constraints on spending will balance the budget, which was successful, and another that says cutting taxes will starve the beast, which failed spectacularly.

And just for good measure, the former set of policies were far more stimulative to economic growth than the latter, as shown in the following table from the Congressional Research Service.
 

Congressional Research Service

In short, Representative Dreier was quite right to say that amending the Constitution was unnecessary to balance the budget; it required only the will to embrace tax increases. But this is anathema to Republicans, who preferred to allow the Joint Select Committee on Deficit Reduction to fail than to accede to any net increase in taxes.

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Economix Blog: Bruce Bartlett: I’d Rather Be an Unlucky Ducky

September 27, 2011 by Leave a Comment

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.

During Thursday’s Fox News debate among Republican presidential candidates, Representative Michele Bachmann of Minnesota was asked how much money people should be allowed to keep from their earnings. Here was her response, from a transcript of the event:

I think you earned every dollar. You should get to keep every dollar that you earn. That’s your money. That’s not the government’s money. That’s the whole point. Barack Obama seems to think that when we earn money, it belongs to him, and we’re lucky just to keep a little bit of it. I don’t think that at all. I think when people make money, it’s their money.

Today’s Economist

Perspectives from expert contributors.

Her response drew applause and cheers. While she acknowledged that some money needed to be given back to the government, the thrust of her comment was that taxation is essentially theft and the best government is one in which taxes are virtually nonexistent. None of the other candidates for the G.O.P. nomination disputed her view, during or after the debate.

I’m not saying that Republicans are anarchists, only that when it comes to taxes they talk as if they are. Their default position is that there is no level of taxation below which it would be unwise to go, no tax cut too large not to be taken seriously and no justification for a government any larger than one that could be drowned in a bathtub, as the Republican activist Grover Norquist once put it. The Wall Street Journal editorial page routinely refers to those who pay no taxes as “lucky duckies,” as if zero taxation is the ideal state of nature.

Oddly, one never hears Republicans praise those countries where people are lucky duckies — those where taxation is a small fraction of what it is here. Let’s take a look at some of the places.

Equatorial Guinea: According to the Republican-leaning Heritage Foundation, those who live in this small country in sub-Saharan Africa are lucky duckies indeed. Because of recently discovered oil deposits, the citizens of Equatorial Guinea pay less than 1 percent of the gross domestic product in taxes. The comparable figure for the United States is 26.9 percent of G.D.P., according to Heritage.

However, Equatorial Guinea doesn’t seem to be a very pleasant place to live. The people are poor and have little freedom. Heritage says that “persistent institutional weaknesses impede creation of a more vibrant private sector” and “the rule of law is weak.” This sounds suspiciously as if government is too small to do its job properly. But I’m sure that the citizens of Equatorial Guinea don’t mind having a dysfunctional government; after all, they’re lucky duckies.

Myanmar: The people who live in this small country in Southeast Asia are also lucky duckies, if not quite as lucky as those in Equatorial Guinea. According to Heritage, taxes in Myanmar are 3 percent of G.D.P.

Oddly, this also doesn’t sound like someplace one would want to live. Heritage says “longstanding structural problems include poor public finance management and undeveloped legal and regulatory frameworks.” Apparently, the government doesn’t protect property rights very well, the infrastructure is poor, and there is a lot of corruption. But at least the people get to keep almost all their earnings.

Libya: Why the people revolted in this North African fiscal paradise is a mystery. According to Heritage, government revenues are just 3.4 percent of G.D.P.

Chad: Heritage says the people of this African nation pay just 5.3 percent of G.D.P. in taxes. But for some reason, the nation is mired in poverty. Perhaps because, as Heritage says, “the efficiency and quality of government remain poor.” I wonder why.

Republic of Congo: The people of this country in Africa also pay 5.3 percent of G.D.P. to the government. But it is also very poor. Heritage says a key reason is “the government has failed to provide basic public goods and infrastructure.” This doesn’t really make much sense by the logic of Republican candidates, who seem to agree that all government spending is bad unless it goes to the Defense Department and that public works are nothing but worthless pork.

I could go on, but I’m sure everyone gets the point. Low taxes and small government are not the keys to prosperity. If they were, these five countries and many others where taxes as a share of G.D.P. are in the single digits would be magnets for immigration and investment.

Of course, there are a few countries in the Middle East with lots of oil where taxes are low and the quality of life isn’t so bad. But they tend to be choosy about whom they grant citizenship to, and they often enforce Islamic law. But who cares? The important thing is that you will be lucky duckies.

Personally, I would rather live in Denmark, where taxes are a confiscatory 49 percent of G.D.P., according to Heritage, but where the government works and people have considerably more business, trade, investment and financial freedom than in the United States, according to Heritage. It also says that the Danes have more secure property rights and freedom from corruption than Americans do.

For that, I think it would be worth being an unlucky ducky.

Article source: http://feeds.nytimes.com/click.phdo?i=ccd6a81a96d73991aa6668b8766bacf8

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