
The president's budget proposal includes the expected Chained-CPI cut. (AP Photo/Manuel Balce Ceneta).
President Obama released his proposed 2014 budget Wednesday morning, and it included a hugely controversial provision: a switch to a Chained-CPI formula for calculating inflation.
Many different government programs—most notably Social Security—calculate benefits based on the rate of inflation, so that benefits don’t lag behind an increased cost of living. The IRS uses similar formulas to ensure that people aren’t pushed into a higher bracket simply because of inflation.
As Dylan Matthews explains here, the government uses several different formulas to do this, and the administration is proposing to unify them all into one formula, called Chained-CPI-U. It purports to be a more accurate measure of inflation by controlling for “substitution effects.”
Current formulas might, for example, rate an increase in the price of beef as inflation, but not consider the fact that people might start buying chicken instead. Chained CPI aims to control for the choices people make in the face of rising prices, and so the inflation it calculates naturally rises more slowly.
Generally this means fewer benefits would be paid out, and people would be pushed into higher tax brackets more quickly—and both result in more money for the government, and thus more deficit reduction. The White House estimates this approach would save $230 billion over ten years.
Seems sensible: but there are a lot of hidden dangers, both on policy and politics, and the White House and its defenders aren’t always forthright about them. Here are the top five myths about Chained-CPI.
1) It’s not a benefit cut, nor a tax increase
A recent briefing paper from the Bowles-Simpson “Moment of Truth” group (citing the economist Robert Greenstein) asserts “this change should not be regarded as a benefit cut or a tax increase. It should be regarded more as a technical change to achieve Congress’s stated goal of keeping pace with inflation in as accurate a way as possible.”
Similarly, the White House shies away from calling this a benefit cut: in Obama’s budget, for example, it’s depicted as a “more accurate” formula that “will reduce deficits and improve Social Security solvency.”
We’ll get to the accuracy argument next, but there’s no debating these simple points: Chained-CPI is both a benefit cut and a tax increase.
The average earner retiring at age 65 would lose $658 each year until they turned 75 under Chained-CPI, and a $1,147 cut by 85. This really adds up—the cumulative cuts to people on Social Security reach $28,000 by the time a retiree is 95, as this chart from Social Security Works shows:

Bowles-Simpson has what’s called a “birthday bump” in their Chained-CPI formula: an increase in benefits in the 20th year to help offset the cuts, something the White House endorses. But this still fails to make up for the benefit cuts. Here’s Social Security Works again:

Chained CPI also has the effect of raising taxes by pushing people to higher marginal rates. It’s not a huge effect, but one that’s quite regressive: middle-income earners are hit the hardest. Here’s a chart from Dylan Matthews:

Matthews notes that “[t]he group getting the biggest tax hike is families making between $30,000 and $40,000 a year. Their increase is almost six times that faced by millionaires.”
2) It’s a more accurate measure of inflation
Proponents of Chained-CPI rebut the benefit cuts by making an accuracy argument—suggesting that beneficiaries are getting an unfair windfall from current inflation formulas that are over-compensating for inflation.
There’s no doubt that, economy-wide, Chained-CPI is a more accurate measure of growth in living standards. But that just doesn’t hold when applied to seniors on Social Security.
The argument for Chained-CPI is that average consumers replace items in their “basket” of goods when something gets too expensive. But seniors have quite a different basket of goods—namely, a lot of out-of-pocket spending on health care, which outpaces inflation and is also extremely hard to replace. (In fact, even the current formula for calculating Social Security benefits probably understates the real cost of living for seniors.)
The Economic Policy Institute has the numbers here:
In short, the 65-and-older households spend roughly three times what the rest of the population does on health care, measured as a share of total spending. Further, between 1989 and 2007,prices for health care have risen nearly twice as fast as overall inflation—growing 100% over that timespan, compared with 53% growth in overall prices of consumption goods.
Seniors spend a lot of money on health care, and just aren’t able to buy different, cheaper drugs when the price of their medication goes up—so the Chained CPI argument just doesn’t work here. And the price of those drugs is going up much faster than the prices of most consumer goods, and the same is true of Medicare premiums.
EPI concludes that “In short, rising health care costs and falling incomes already provide large pressures on Social Security beneficiaries’ incomes as they age. Reducing the [cost-of-living] adjustment would just apply one more economic pressure that grows over their retirement.” They advocate switching not to Chained-CPI-U, but CPI-E, which measures cost-of-living increases among the senior population.
Note, too, that these seniors are the ones bearing most of the brunt from switching to Chained-CPI government-wide: about $115 billion of the $230 billion in estimated savings comes from Social Security.
3) We can enact Chained-CPI still protect veterans and the most vulnerable
The White House says that it will insist on protections for the most vulnerable and for veterans under any Chained-CPI plan. (This is, by the way, already a tacit admission that Chained-CPI isn’t truly more accurate—if it was, and all it was doing was removing an unnecessary windfall to beneficiaries, why does anyone need protection?)
The administration proposes the aforementioned “birthday bump,” which as we noted still doesn’t make up for the benefit cut. They also advocate protecting lowest-income seniors and people with disabilities by exempting Supplemental Security Income from Chained-CPI.
But here’s the problem: SSI is already too small, and doesn’t reach enough poverty-stricken seniors. In fact, there are 9.4 million poor or near-poor people who receive Social Security, but not SSI—so they still get hit. In addition, there are 2.8 million “dual-eligibles”—people who are on SSI but also receive some Social Security benefits. They’d be hit as well.
While the administration laudably wants to protect various veteran’s benefits programs from Chained-CPI, 9.3 million veterans are on Social Security, which is one in five Social Security beneficiaries. So they still won’t be totally insulated from the Chained-CPI cuts either.
4) It will help achieve a deal with the GOP
Obama argues that Chained-CPI isn’t what he wants, but what he feels he must to do get a deal with the GOP. “I don’t believe that all these ideas are optimal, but I’m willing to accept them as part of a compromise,” Obama said in the Rose Garden Wednesday.
But he proposed Chained-CPI during the debt-ceiling talks in 2011, and the GOP did not accept his grand bargain. He proposed them as part of a deal to avert the sequester earlier this year, and the GOP did not accept the deal. Now he’s proposing them in his budget. Is the result any different?
Well, no. Paul Ryan rejected the idea that Chained-CPI would make a deal with Obama viable. “I don’t see this as fundamental entitlement reform as much as clarifying a statistic which does happen to save money,” he said Wednesday.
No Republicans in the House or Senate have yet said they were interested in Obama’s budget, and the prospect of them doing so is non-existent.
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In fact, Obama may be unintentionally strengthening the Republican’s hand in this debate by validating their theory of deficit reduction.
The Obama approach during the 2012 campaign was that the deficit should be addressed by a sensible mix of spending cuts and new revenue, and that the safety net should be protected. These Democratic Party priorities were reflected in the Senate Democrats’ budget, which did not contain Chained-CPI. The Republican approach, meanwhile, is that deficit reduction should consist of cuts and cuts only, and “serious entitlement reform.”
Instead of battling the GOP on the idea that cutting the safety net is a bad way to reduce deficits—particularly Social Security, which doesn’t even contribute to it—Obama has endorsed the GOP approach by agreeing to Chained CPI. And don’t think they won’t point that out—and use it to advance the ball on cutting entitlements.
Here’s Mitch McConnell Wednesday, after the Obama budget was released:
“The President seems prepared to finally concede this time that at least something needs to be done to save entitlements from their inevitable slide toward bankruptcy. I’m glad to see him begin to come to grips with the math here. It’s well past time for reform, and it’s something the President ought to want to do because he presumably cares about saving entitlement programs – not just because he wants yet another excuse to raise taxes.”
Here’s House Speaker John Boehner:
“[Obama] does deserve some credit for some incremental entitlement reforms that he has outlined in his budget. But I would hope that he would not hold hostage these modest reforms for his demand for bigger tax hikes. Listen, why don’t we do what we can agree to do? Why don’t we find the common ground that we do have and move on that?”
Think of this phase of the sequestration and budget fight as an election—where each side tries to convince the public that their approach is optimal. Winning means the other side is under the gun of public opinion and comes to the table ready to deal.
Endorsing the other side’s ideas during this phase is not terrific strategy. Might Obama have to accept some Republican ideas in the final agreement? Sure, but the GOP has shown absolutely zero desire to reach an agreement, so prematurely endorsing their approach is explicitly counter-productive.
Defenders of the White House strategy theorize this approach is helpful for public opinion because it highlights that the GOP is unwilling to compromise.
But what’s the added value of highlighting what virtually everybody in the country who follows this debate understands? As Matthew Yglesias writes: “To any reasonable person, the fact that the GOP ran in 2008 and 2010 and 2012 on a platform of all-cuts deficit reduction makes that clear. If you need further evidence you can look at the GOP's negotiating strategy during the 2011 debt ceiling battle, during the fiscal cliff in the 2012 lame duck session, and all throughout the sequestration controversy. You can ask John Boehner. Or Eric Cantor. Or Mitch McConnell. There's a lot that's murky in American politics, but it's incredibly clear that the reason we don't have a grand bargain on the budget is that Republicans don't want one.”
5) It won’t hurt Democrats in 2014
A key argument against Chained-CPI that progressives have made for months is that Republicans would use it to slam Democrats in the 2014 midterms, just as they did with the Medicare cuts in Obamacare.
And just on cue, the head of the House GOP re-election committee appeared on CNN yesterday and said that Obama’s budget “lays out a shocking attack on seniors.” He continued:
“I’ll tell you when you’re going after seniors the way he’s already done on Obamacare, taken $700 billion out of Medicare to put into Obamacare and now coming back at seniors again, I think you’re crossing that line very quickly here in terms of denying access to seniors for health care in districts like mine certainly and around the country.”
The White House pushback is twofold. First, point out this isn’t what Obama really wants. “This is a Republican proposal,” White House press secretary Jay Carney said on Thursday. Actually, it’s in Obama’s budget, so good luck with that defense.
Meanwhile, senior White House officials ultimately think this line of attack won’t be effective in 2014. “The White House…feels it can win any political fight on entitlements…after the successful test case of the 2012 campaign, when Republicans tried to make an issue of the $700 billion in Medicare savings contained in Obamacare, but didn’t land any body blows,” Alex Seitz-Wald reported after a briefing from administration officials.
That’s wrong for a couple reasons. For one, the $700 billion in Medicare cuts were largely sensible and did not depress the Democratic base nor divide the party, as the push to cut Social Security will. (Every major progressive group has blasted Obama’s Chained-CPI approach, gathered petitions, and even threatened to primary Democrats who vote for it.)
Two, one can’t take an extremely reductive approach to the 2012 election: just because Obama won, every attack Romney and Ryan wasn't per se ineffective. The ferocity and frequency with which they attacked the $700 billion in cuts suggests they had data showing it was costing Obama votes. Just because it didn’t cost him enough votes doesn’t mean it’s a bad strategy.
Moreover, polls show that Chained CPI is horribly unpopular:
The AARP reveals that 70 percent of voters age 50-plus oppose the use of the chained CPI to cut benefits, and two-thirds of them – including 60 percent of Republicans — say they would be “considerably less likely” to support a congressional candidate if he or she backed a new way of calculating consumer prices. And 84 percent of voters over 50 say Social Security has no place in budget-deficit discussions, since it is self-financed.
You can’t just brush that off by saying “Obama won in 2012.”
George Zornick last wrote about another new proposal in Washington that has left much of the country disappointed: the gun control package.

Harry Reid is beginning debate on a gun control package that would create universal background checks. (AP Photo/Susan Walsh).
Senate Majority Leader Harry Reid announced Tuesday afternoon he would file for cloture on a comprehensive gun control package that would create universal background checks, dramatically stiffen penalties for straw purchases and gun trafficking, and fund improvements in school safety.
Reid will move to begin debate on the bill Tuesday night, and so that vote will occur Thursday. Many Republican Senators have said they are willing to at least allow debate on the gun control package as long as they can offer amendments, which Reid will allow—so Thursday will probably see over 60 votes to kick off debate on the bill.
But a contentious Senate floor fight lies ahead. On Wednesday morning, a deal to loosen some of the background check language will be announced. Is it enough to placate far-right conservatives (and some Democrats, like perhaps Montana Senator Max Baucus)? This group might still be able keep the Senate debate from ending and thus prevent a final vote if they can win over just a small handful of allies. What other provisions will be weakened, if any?
Reid initially moved ahead with the uncompromised bill containing all the language of the Senate Judiciary Committee. (There are no measures on banning assault weapons or limiting magazine clips, however—though Reid will allow separate votes on both as amendments.) Now, presumably the language will be amended to reflect the Toomey-Manchin compromise.
Here’s a comprehensive guide to what’s in the bill the Senate will now consider, with special note of where Senators really want to make changes.
Universal Background Checks
Right now, FBI background checks are only required for commercial sales—meaning that people can make purchases at a gun show or online and avoid any kind of background check.
The marquee feature of this gun control package is to require a background check for virtually every gun transaction: commercial, private, online, or in person, with very narrow exceptions. Only these private transfers of weapons wouldn’t be subject to a background check:
“bona fide gifts” between immediate family members or grandparents.
A transfer of a gun from a decedent’s estate, pursuant to a legal will.
A temporary transfer, but only ones that last less than seven days and where the gun doesn’t leave the licensed owner’s home or property.
Temporary transfers a shooting range or shooting competition, so that customers or competitors don’t have to bring or buy a gun.
Between individuals while hunting or trapping, provided it’s happening in-season and the transferee has any necessary hunting licenses.
How many more gun purchases would now be subject to a background check, where they weren’t before? The statistics are fuzzy. President Obama and gun control advocates claim as many as 40 percent of gun sales don’t pass through a background check, but as it turns out that’s based on a 1994 study of 251 people, and included three years where background checks weren’t even required. Controlling for gifts and inheritances, which are still allowed under this bill, the number in that study drops to 26.4 percent. More recent, conservative estimates say somewhere between 14 and 22 percent of gun purchases aren’t subject to a background check but would be under the new law.
The bill also requires records of these transactions to be kept. Proponents argue this is the only way to ensure the checks are happening: the FBI already must delete background-check requests within 24 hours, so if dealers don’t keep records themselves, there’s no way to verify checks are actually being performed. In addition, it gives law enforcement the ability to track guns used in crimes.
But pro-gun Senators like Orrin Hatch are fear-mongering about the record-keeping: “When you start saying people all have to sign up for something, and they have a database where they know exactly who's who, and where government can persecute people because of the database, that alarms a lot of people in our country, and it flies in the face of liberty,” he said in February. Others contest enforcement could still occur without records, through spot checks and post-facto prosecutions if someone who bought a gun without submitting to a check commits a crime.
On Wednesday morning, Republican Senator Pat Toomey and Democratic Senator Joe Manchin, who both have 'A' ratings from the NRA, will announce a compromise that seems pretty decent from a gun control perspective. Crucially, they agreed to allow record keeping, and to expand background checks to gun shows, online purchases, and any other commercial sale that advertises. It appears they will propose language that widens exemptions for personal and family sales, however, to go far beyond the narrow restrictions described above.
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The gun control package also aims to boost state participation in the background check system: a recent Mayors Against Illegal Guns report shows that 21 states have reported fewer than 100 mental health records to the FBI’s National Instant Criminal Background Check System (NICS). There are significant Constitutional questions about whether the federal government could compel states to submit this mental health data, as it might violate the Tenth Amendment, so the bill uses carrots and sticks to get it done.
The bill would increase funding for states to build systems to comply with the law, authorizing $100 million each year until 2018. It would also increase penalties for noncompliance: in the first two years of the bill, the Attorney General could withhold up to 3 percent of federal crime control funds if the state provides less than 50 percent of the records required; after three years, states muse provide at least 90 percent of the required records or face up to a 5 percent loss of funding. Also, within one year the Attorney General would be required to create a public website that ranks each state by their estimated compliance ratio, and to update it every year thereafter.
In addition, the background check section of the bill makes it a federal crime for any person to fail to report the loss or theft of a gun within 24 hours after discovering the loss--something Republicans like Senator Chuck Grassley are already blasting.
It would also clarify that federal court records should be fed into NICS, which is expected to be non-controversial.
Tougher Approach to Gun Trafficking and Straw Purchases
Even if a completely universal background-check system is achieved, there’s one problem: people who know they would fail the background check, but obtain guns through traffickers or straw purchasers that won’t.
Law enforcement officers have frequently complained that straw-purchasers undermine gun laws and flood the streets with weapons, and there’s little recourse: today, if you make false statements in relation to a firearm purchase the most you can be charged with is a federal paperwork violation.
The Hadiya Pendleton and Nyasia Pryear-Yard Anti-Straw Purchasing and Firearms Trafficking provisions of this bill would make it a felony to be a straw purchaser, meaning that a person buys or even conspires to buy a firearm for someone other than him or herself who is prohibited from owning it. It would subject that person to up to 15 years in prison, or as high as 25 years if the straw purchaser knows or should have “reasonable cause to believe” that any firearm will by used to commit a violent crime.
The measures are named after two recent teenage victims of gun violence in Chicago and New York City, respectively. Pendleton was the young girl who was killed only days after performing at Obama’s second inauguration. There are very narrow exemptions for people buying guns to give as gifts, or for use in a contest or raffle—but the recipient must still pass a background check.
Similarly, gun traffickers face much tougher penalties under the legislation. A person who transfers or receives two or more weapons if he or she “knows or has reasonable cause to believe” that the weapons would result in the violation of any federal law that is punishable by a prison term exceeding one year, would themselves be charged with a felony and face up to 15 years in prison. And once again, if the trafficker knows or should know that the gun will be used in a violent crime, the penalty goes up to 25 years.
In all cases, the legislation would allow the federal government to confiscate the straw purchaser or trafficker’s firearms and ammunition upon conviction. As a result of the Fast and Furious fiasco, the bill also forbids the federal government from setting up any kind of sting operation where straw purchasers are used or allowed unless the Attorney General expressly authorizes it in writing.
These provisions were long seen as the “low-hanging fruit” of the gun control debate; Republican Senator Susan Collins is a co-sponsor of the original legislation and even Senator Charles Grassley, the ranking Republican, voted for it during Judiciary Committee debate.
But the NRA has since demanded that the legislative language be weakened: they want to criminalize only straw purchases where authorities can prove the straw purchaser knew the customer wouldn’t pass a background check or was going to commit a crime. Mayors Against Illegal Guns has said that’s a “ridiculous” standard that would keep many straw purchasers from being prosecuted. The NRA also wants to scrap the provisions on confiscation of any weapons belonging to convicted straw purchasers or traffickers.
While Grassley voted for the provisions in committee, he hasn’t committed to voting for them on the Senate floor. Without naming the NRA objections in particular, he told The Hill that “that there were changes that needed to be made before I would support it on the floor.” With the NRA whipping against the provisions, they could be in real danger.
Increased School Safety
These are the truly non-controversial parts of the package among Senators: they passed the Judiciary Committee 14-4. If enacted, the bill would re-authorize through 2023 a Justice Department program that expired in 2009, which gave school districts grants to develop security plans.
It would provide $40 million annually for school districts to develop and implement safety plans, up from $30 million the last time the program existed. (Senator Barbara Boxer, the author of these provisions, originally wanted $100 millon annually but pared it back to win over Republicans.) It doesn’t mandate that school districts hire armed guards, as the NRA has demanded with much fanfare, but would allow school districts to use portions of the money to do so.
Two additions to the previous program are worrisome: specific language allowing the purchase of “surveillance equipment” by school districts, and money for the establishment of “hotlines or tiplines for the reporting of potentially dangerous students and situations.” Some civil liberties and youth justice advocates are decrying these little-noticed provisions, but it’s unlikely there are enough votes—or any, at this point—to remove these provisions.
Beyond that grant program, the bill would also create a brand-new National Center for Campus Public Safety, which would be run by the Department of Justice and focus on security at colleges and universities. The center would help train police officers on college campuses, foster research about campus safety, and promote information sharing about best protocols and practices between colleges and various government agencies.
This post has been updated to reflect evolving language in the gun control package.

Demonstrators protest the Keystone XL Pipeline in 2011. (AP Photo/Evan Vucci.)
When the Exxon Pegasus pipeline ruptured Friday in Mayflower, Arkansas, tens of thousands of gallons of diluted bitumen were sent forth into a residential neighborhood, and 22 homes had to be evacuated. Since this is the same sort of oil that would be carried by the Keystone XL pipeline, were it to be built, the Arkansas spill is appropriately spurring a conversation about safety. Is Keystone also going to lead to more spills? (There have been twelve on the completed portions of the pipeline already.) And how dangerous is this stuff spilling all over the ground?
But this conversation must start with a simple fact: There are too many known unknowns about diluted bitumen. We don't know exactly what's in it, and the government hasn't fully studied how safe it is to transport.
Bitumen is a form of petroleum that occurs in a solid, or semi-solid, state: It can be sludgy or even be brittle, like rocks. That’s what is buried deep in the Canadian oil sands. In order to transport this bitumen through thousands of miles of pipelines so that it can be refined, it has to first be diluted, so it flows like a liquid.
That diluent is usually a natural gas liquid—but we don’t know for certain what it is. The industry considers its diluent formulas proprietary information and won’t share it with regulators.
When the State Department released its first Environmental Impact Statement on Keystone XL, the EPA gave it an “inadequate” rating in part because it didn’t have any specific information on diluents. “We believe an analysis of potential diluents is important to establish the potential health and environmental impacts of any spilled oil, and responder/worker safety, and to develop response strategies,” the EPA said at the time.
Yet, the second and final Enviromental Impact Statement of Keystone XL released recently by the State Department still had no specific information on dilbit diluents, and evaded the question with some generalities:
The exact composition of the dilbit is not publicly available because the particular type of bitumen and diluents blend produced is variable and is typically a trade secret. The bitumen diluent mixture with bitumen from the oil sands is generally similar to heavy sour crude. […]
Although reported information on dilbit releases is scarce in the literature, once diluents and bitumen are mixed together to form dilbit, they behave as a conventional crude oil. Therefore, this assessment has focused on the impact of crude oil in general, but when applicable, evaluated the specific characteristics (i.e. viscosity) of dilbit. The degree of impact can vary depending on the cause, size, type, volume, location, season, environmental conditions, and the timing and degree of response actions.
Researchers and regulators know roughly what’s in dilbit—just not enough. “I think what they don’t know are what the specific chemicals are in any pipeline or any batch, because companies could use different chemicals at different times, depending on what’s cheapest at hand at any one moment,” Carl Weimer, the executive director of the Pipeline Safety Trust, told The Nation.
The composition of those chemicals could greatly influence how the dilbit behaves once spilled—whether it sinks or floats in water, for example. In an emergency clean-up situation, that’s really good information to have.
And what we do know about the danger of tar sands oil is already disturbing. The State Department’s report does focus on the damaging properties of benzene, and notes that “[b]ecause the diluted bitumen crude oils have a significant amount of lighter hydrocarbons added, they tend to have higher benzene concentrations than many other heavy oils.” Benzene, the report states, “was determined to dominate toxicity associated with potential crude oil spills.” Benzene is an unusually toxic chemical that was found in the air after the Enbridge tar sands spill of 2011, and can cause a wide range of severe physical damage to animals, plants and humans.
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So the government doesn’t really know what’s in the dilbit once it spills—but it also knows shockingly little about how to prevent these accidents to begin with. Many conservation groups contend, with ample evidence, that tar sands oil leads to more spills because it is “highly corrosive, acidic and potentially unstable."
The chief regulator of pipelines is the Pipeline and Hazardous Materials Safety Administration. In 2011 Cynthia Quarterman, the agency’s director, appeared before Congress and admitted under questioning from Representative Henry Waxman that her agency had no idea whether dilbit is more dangerous to transport than normal crudes, and had not even studied the question:
REP. WAXMAN: Ms. Quarterman, when PHMSA adopted its basic safety requirements such as establishing maximum operating pressures or setting integrity management requirements, were many US pipelines transporting diluted bitumen? And were any of your regulations developed with the properties of diluted bitumen in mind?
MS. QUARTERMAN: When the integrity management program requirements were first put in place on the hazardous liquid side, I think it was 2000, 2002, there were pipelines in existence that transport diluted bitumen. I don't believe any study was done at that time of the characteristics of the crude.
REP. WAXMAN: Were your regulations developed with the properties of diluted bitumen in mind?
MS. QUARTERMAN: I don't believe it was a part of the equation, no.
REP. WAXMAN: Have you received [sic] your regulations to assess whether they adequately address any risks specific to diluted bitumen?
MS. QUARTERMAN: We have not done so.
Since that exchange, Congress passed the Pipeline Safety Act, which was panned by many environmentalists as too weak. The bill didn’t update any regulations to include dilbit transportation, but did mandate that PHMSA study the problem and act, if needed.
The National Academy of Sciences is currently working on that study, and will release its findings this summer. If they find that diluted bitumen is abnormally dangerous to transport, as many other independent researchers have, they will recommend new regulations.
But for now—and for the next several months, and probably years—the government is flying blind about how to transport diluted bitumen. It also doesn’t even know what’s in the stuff once it spills.
That’s crucial context when considering whether to build Keystone XL, which would carry millions of barrels of dilbit across the entire country.
Read George Zornick on new details from the Newtown and Tucson shootings showing how assault weapons and high-capacity magazines increase body counts.

Law enforcement agents respond to the shooting in Newtown. (AP Photo/Jessica Hill.)
As Washington gears up for the big Senate floor debate on gun control, two disturbing reports about the mass shootings in Tucson and Newtown have underscored the urgent need for a ban on assault weapons and semi-automatic magazines.
True, it seems unlikely that the Senate will pass a ban on either: Dianne Feinstein’s bill, which would ban at minimum 157 semiautomatic weapons and magazines that carry more than ten bullets, will not be included in the big gun control package the body will take up next week. Senate Majority Leader Harry Reid says there are not even forty votes to pass Feinstein’s bill, though it will come up for a vote as an amendment.
That means tragedies like Tucson are all to likely to be repeated. Thousands of new police documents concerning the shooting were released on Wednesday, and for the first time we know how quickly Loughner was able to carry out his attack:
About two hours later, he had apparently used some of that ammunition, emptying a 33-round magazine in about 19 seconds, and killing, among others, a federal judge and a 9-year-old girl and seriously wounding Ms. Giffords, who was shot in the head at close range.
That’s an astounding amount of carnage for nineteen seconds. The documents indicate police officers arrived only “moments” after the shooting, and bystanders already had Loughner pinned down—yet, he was able to shoot nineteen people.
Loughner was using a Glock 19 semi-automatic pistol. Feinstein’s office told The Nation that gun wouldn’t be banned, though many other semiautomatic pistols would be. But there’s no question Loughner’s 33-round magazines would have been illegal. (Note that the documents also confirm Loughner bought those magazines at Walmart, the country’s largest gun seller.)
On Thursday, extended police reports from the Newtown shooting were released, and contained similarly shocking numbers: Adam Lanza fired 154 rounds in the 300 seconds before police arrived, killing twenty children and six adults. That’s one shot for every two seconds, but they no doubt came faster: that 300 seconds includes the time it took Lanza to move around throughout the building.
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Both the Bushmaster rifle and the high-capacity magazines would be banned under Feinstein’s bill. Recall, too, that in Aurora, James Holmes shot seventy-one people in ninety seconds—even though his gun jammed.
The grim shots-to-seconds ratio underscores some basic facts: police officers respond remarkably quickly to mass shootings, and the more quickly the gunman can fire bullets, the more people die. Even a brief pause for reloading—which would also enable bystanders to attempt to restrain the shooter—means some lives are likely spared.
Some well-meaning arguments against the assault weapons and high-capacity magazine bans assert that they aren’t responsible for a very large percentage of gun crime, but that’s a misdirection: The issue is that, when they are used in a crime, the carnage is disproportionately bad.
And bans do work: A Washington Post analysis earlier this year found that during the last assault weapons ban, “the percentage of firearms equipped with high-capacity magazines seized by police agencies in Virginia dropped, only to rise sharply once the restrictions were lifted in 2004.” They’re now double what they were in 2004. Also, researchers at the University of Pennsylvania found that the use of assault weapons in crime dropped by about two-thirds nine years after the ban was enacted.
Sadly, it’s probably certain that there will be another mass shooting in America. If the shooter is using high-capacity magazines, it’s just as certain that more people will die than otherwise would even with a normal gun. Senators should keep that in mind next week.
Read George Zornick on a new government study that calls for the military to crack down on sexual assaults within its ranks.

A woman Marine recruit. A new report has concluded that officials need to do more to prevent sexual assaults in the military. (Flickr/Expert Infantry.)
Female veterans who suffered a sexual assault in the military are nine times more likely to develop post-traumatic stress disorder compared to other female veterans, and military officials must do more to prevent these assaults—these are the conclusions of a gripping new government report on the hardships faced by troops returning from Iraq and Afghanistan.
Mandated by the 2008 National Defense Authorization Act, the 794-page study from the Institute of Medicine is a product of over four years of intense research into what troops face as they return from Iraq and Afghanistan. It’s a gripping portrait of post-traumatic stress disorders among some troops, along with traumatic brain injuries, barriers to healthcare, and problems re-adjusting to family and society.
We will be diving into many aspects of this report in the coming days and weeks, but conclusions about military sexual assault were remarkable.
The study found extremely high rates of military sexual trauma, both in men and women. About 48,100 women and 43,700 men reported suffering military sexual trauma, the authors note.
These relatively even numbers are a useful reminder that sexual assault in the military happens not only to women, but men—as was demonstrated at a powerful Senate hearing last week. But women comprise only 14 percent of active-duty military, so even raw numbers don’t reflect the fact that women, in much greater proportions, are the victims of military sexual assault. Over 21 percent of female troops reported military sexual trauma, compared to under 2 percent of men.
And many more assaults no doubt go unreported. The study points to research suggesting as much as 45 percent of female troops experience military sexual trauma. Elsewhere, the Department of Defense estimates that 86.5 percent of violent sexual assaults go unreported.
The study focuses on what these traumas mean for female veteran’s health: as noted, it concludes that women who have suffered a sexual assault in the military are nine times more likely to develop PTSD than female veterans with no history of sexual abuse. Female victims are also at much greater risk for a wide variety of other problems upon return: anxiety, depression, substance abuse and family troubles.
These results explicitly control for other factors that lead to PTSD. Contrary to many conservative talking points when Obama lifted the restriction on women in combat, the research cited in this study found that women handle combat-related stress just as well as men—military sexual trauma is a singular factor bumping up the prevalence of PTSD among women:
Controlling for prior-life trauma and sexual harassment, the authors found only one statistically significant difference that suggested that men may be more likely to suffer substance abuse after exposure to combat. However, the effect was small and considered clinically insignificant. They concluded that the effects of combat-related stressors “may be more similar than different for female and male US service members” and that female OEF and OIF “service members may be as resilient to combat-related stress as men.” A study of UK military men and women (Woodhead et al., 2012) concluded similarly that their investigation showed “little evidence of gender differences in the impact of exposure to combat on mental health.”
PTSD then leads to a whole host of other problems, the study found. Veterans with PTSD are four times more likely to have suicidal thoughts, for example, and suffer disproportionate amounts of depression, anxiety, and difficulty readjusting to family and society. (Interestingly, the study found that women with PTSD are more likely to report health problems and feel depressed, where men are more likely to report feeling more anger.)
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So what should the military do? The report recommends instituting a zero-tolerance attitude towards military sexual assault by developing new policies, more strongly enforcing current policies and making effective handling of sexual assault complaints a mandatory part of all performance reviews and promotion systems.
The report comes amidst increasing Congressional focus on military sexual trauma. Senator Jon Tester (D-MT) and Representative Chellie Pingree (D-ME) introduced a bill last month that would make it easier for victims to receive treatment—the law would force the Veteran’s Affairs Department to accept a soldier’s word that his or her disability is related to a sexual assault or rape in the military, barring evidence clearly pointing to the contrary. Titled the Ruth Moore Act, it’s named after a Navy veteran who struggled for twenty-three years to receive full disability benefits for trauma suffered after two military rapes—one of which was allegedly in retaliation for Moore’s reporting of the first assault.
Pingree told The Nation that she welcomed the study, but that it was past time for military leaders to act. “I’m glad we are getting some hard data from this report, but honestly the evidence that sexual assault in the military has been a huge and pervasive problem has been ignored for a long time. This report identified many stressors that come with being deployed in a war zone, but only one—sexual assault—is completely avoidable and has nothing to do with fighting a war,” she said.
“We will probably never be able to completely eliminate the trauma of going to war, but we cannot and should not tolerate any sexual assault within the military,” Pingree continued. “I do not think that commanders will be able to prevent every case of sexual assault, but I do agree that we should examine how they address this issue within their units.”
Senator Kristen Gillibrand (D-NY), meanwhile, explored the idea of independent prosecutors for military sexual assault claims during a Senate hearing last month, and Senator Claire McCaskill (D-MO) will soon introduce a bill that would change the Uniform Code of Military Justice to make it impossible for military commanders to overturn military jury verdicts—as they sometimes do in cases of sexual assault.
Read George Zornick on how Democrats and Republicans worked together … to repeal a sensible tax on medical devices that would have raised $30 billion for healthcare reform over ten years.

A 2.3 percent tax on medical devices, such as MRI machines, has senators of both parties up in arms. Photo credit pennstate via Flickr.
It’s not often one finds bipartisan agreement in the Senate, but Thursday night seventy-nine senators joined to symbolically repeal the medical device tax provision of healthcare reform—a 2.3 percent levy on medical device companies that is projected to raise $30 billion over ten years to help finance the new law.
The vote brought together every Republican in the upper chamber plus thirty-three Democrats, including liberal stalwarts like Senators Elizabeth Warren, Al Franken and Ron Wyden. The vote was symbolic because it was a non-binding amendment to a budget resolution that also isn’t binding, but it does represent a serious bipartisan desire to get rid of the tax.
Opponents claim the tax will push medical device manufacturers overseas, costing a substantial amount of jobs, and will also stifle innovation, hurt small businesses, and cause increased costs for healthcare consumers.
The problem, however, is that virtually none of this is true. And the bipartisan push to repeal the tax—driven in large part by fealty to medical device companies in senators’ home states, which can be generous campaign contributors—underscores the many landmines that await if Congress takes up comprehensive tax reform at some point this year.
Closing loopholes in the tax code is easily said, but much harder to do when big-money special interests are involved, and the public isn’t really watching.
* * *
The chief attack on the medical device tax, which applies to everything from bedpans to MRI machines, is that it will cost jobs—a potent claim given the country’s high unemployment. “A 2011 study by the Hudson Institute found that the device tax threatens nearly 43,000 jobs nationwide, and will cost 3.5 billion in wages,” Senator Kelly Ayotte said during floor debate Thursday night. Members of Congress who oppose the tax frequently cite those numbers.
But that’s not really a Hudson Institute study—it was conducted by a senior Hudson fellow and a senior Manhattan Institute fellow, but financed by Advamed, a medical technology industry group.
The job loss claims fall apart upon even brief inspection. The tax applies on medical devices sold in the United States, not manufactured here—so moving a plant to Mexico doesn’t change anything. Medical device companies would have stop selling their products in the United States to escape the levy, which is simply unbelievable. The American healthcare market is by far the most lucrative in the world, as the country spends more on healthcare than any other by many orders of magnitude. No company is likely to leave the American market or even to reduce sales in order to avoid a 2.3 percent tax.
An analysis by Bloomberg Government found that the Advamed study’s job-loss figures—which were not supported by empirical evidence but simply industry claims—“conflict(s) with economic research, overstate companies’ incentives to move jobs offshore, and ignore(s) the positive effect of new demand.”
Indeed, demand is an important part of this equation. Medical device makers are likely to come out ahead as a result of healthcare reform. The law is projected to expand coverage to 33 million more Americans, so that’s a lot of extra medical devices. That was the original rationale for taxing the industry: the law is a huge boon to medical device manufacturers, so they should kick in a rather small tax to help fund the law. Now the industry is trying to wiggle out of the tax to come out even more ahead.
Other claims about the tax are fairly easily refutable, too. The industry claims it will “hurt innovation,” but it’s hard to see how. Analysts at PricewaterhouseCooper have concluded the Affordable Care Act will increase innovation by mandating more cost-effective ways to deliver care. And innovation is the bread-and-butter of any industry: if a medical device company for some reasons sinks less money into research and development because of a 2.3 percent tax, it would likely find itself outpaced by companies that don’t take the same route.
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On the score of “hurting small businesses,” there isn’t much evidence there either. Bloomberg Government notes that the largest ten medical device makers in this $116 billion industry account for 86 percent of sales, and thus would be responsible for about 86 percent of the taxes.
The industry also claims costs would be passed onto customers, which would cause demand for medical devices to fall. But this isn’t how the healthcare markets work. They are very inelastic, meaning that when prices go up demand falls by only a fraction. (Few people, if any, would not get a prosthesis or not use a bedpan because of a small marginal increase in cost.) Health care economists estimate that a 10 percent increase in healthcare costs results in only a 2 percent drop in demand. The Advamed study assumes a much stronger relationship and “is off by as much as a factor of 10,” says Bloomberg Government.
**
So why do so many Senators want the medical device tax gone, especially Democrats who strongly support Obamacare? The answer is simple: in most cases, they have large medical device companies in their state that are often are generous campaign contributors.
Medical supply company contributions skyrocketed in 2012, the highest year ever, as Congress focused its attention on repealing the tax (via OpenSecrets):

Many of the large donors to this cause are located in states of Senators pushing for repeal (via OpenSecrets):

Number two on the list, Boston Scientific Corp., is located in Elizabeth Warren’s state, and she voted for repeal of the tax, as did Senator Mo Cowan, the placeholder in John Kerry’s former seat. Direct Supply Inc. is located in Wisconsin, and Republican Ron Johnson and Democrat Tammy Baldwin both voted for repeal. (Number one, Masimo Corp., is located in California—though Senators Barbara Boxer and Dianne Feinstein both laudably voted against repeal.)
In 2012, Senator Scott Brown was the top recipient of medical supply funds, followed by Republican Senator Orrin Hatch and Democratic Senator Amy Klobuchar. Not incidentally, the amendment passed yesterday was the Hatch-Klobuchar amendment. (via OpenSecrets)

Of the top ten recipients of medical supply money, a healthy bipartisan group indeed, every single one except Senator Max Baucus voted for repeal. (Baucus was one of the chief legislative architects of Obamacare and strongly opposes repeal of the medical device tax.)
* * *
Though Thursday’s resolution was non-binding, the medical device industry is hoping to make it official during any upcoming tax reform, where analysts say the $30 billion would barely be noticed. “The industry has a fighting chance of getting the tax moderated or eliminated as part of a much larger tax reform bill, where the device levy becomes a rounding error,” Paul Heldman, a policy analyst at Potomac Research Group, told Reuters.
So this week’s vote is then a disturbing, cautionary tale. In the supposedly ideal scenario that ends the sequester, Republicans and Democrats join together to slash safety net programs in exchange for revenue raised through tax reform—closing loopholes and such.
But as the medical device tax saga shows, cutting loopholes is really hard to do in practice. They were likely put there to benefit specific industries, which can often be quite powerful and influence even stalwart liberal Senators who claim to want new revenue sources. Many progressives thus fear that the loopholes most likely to be closed are the ones that benefit people without lobbyists—middle-class wage earners and homeowners, students, and the very poor.
And even if the loopholes are removed—in exchange for safety net cuts that likely remain permanent—they can be added back to the tax code very quickly thereafter, as demonstrated by Senators who enthusiastically voted to create the medical device tax three years ago by approving Obamacare and now are voting to remove it.
Republicans are already fighting Barack Obama’s EPA head nominee Gina McCarthy, but the issue is mostly that they just hate the EPA, George Zornick writes.

Gina McCarthy, Barack Obama’s nominee to head the EPA. (AP Photo/Alex Brandon)
Well, that didn’t take long: A Republican Senator has already placed a “hold” on the nomination of Gina McCarthy to head the Environmental Protection Agency. Senator Roy Blunt of Missouri announced the move Monday, and cited delays in EPA approval of the St. John’s Bayou and New Madrid Floodway Project in the southeast part of his state.
This is more bluster than anything else—holds are simply a notice of intent to filibuster, and Majority Leader Harry Reid is free to ignore them. McCarthy hasn’t even had a hearing before the Environment and Public Works Committee in the Senate, much less received a committee vote, so Blunt is really jumping the gun here.
But his is the opening salvo in what’s sure to be a long war. Republicans detest the EPA—remember, in the 2011 primary debates six Republican presidential candidates called for either a moratorium on all EPA regulations or an outright elimination of the agency—and Blunt’s hold is a variant on their standard attack. In right-wing mythology, the EPA is an out-of-control bureaucracy that’s either wildly incompetent or specifically designed to suffocate private enterprise in order to please radical environmental groups.
The thinness of these attacks is evident when one examines the record of Obama’s EPA. From yanking planned smog rules to repeatedly delaying greenhouse gas emission rules, the agency has been if anything too sluggish and cautious. This, of course, is the Republican game: By painting a relatively moribund federal agency as out-of-control, they help redefine the Beltway debate.
Blunt’s objection here is a good case study. The St. John’s Bayou–New Madrid floodway project is so objectionable that if the EPA didn’t stop it, it would stop nothing. It’s a project that is so bad that in 2007 a federal judge not only ordered it stopped, but ordered the Army Corps of Engineers to dismantle the $7 million of work it had already done.
Michaela Grunwald of Time magazine is the guru of myth-busting this particular project, having wrote about it extensively in 2000 and 2007 as an poster child for wasteful Army Corps of Engineers projects designed more to please Congressional big-shots than to actually improve infrastructure. “In the pantheon of dumb Army Corps of Engineers boondoggles, a $112 million flood-control scheme in Missouri’s southeast boot heel ranks among the dumbest,” Grunwald wrote.
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In short, there is a vast flood plain in this region of Missouri, where the Mississippi River stops and creates wetlands larger than the District of Columbia. The proposed project would wall off the Mississippi from this flood plain—the last surviving one if it’s kind—ostensibly to protect the downstream community of East Prairie.
There are just a few problems: one, as Grunwald reported, a Corps official has admitted under oath that building a levy around East Prairie would be more effective and cost one-tenth as much. Two, there would be huge environmental consequences: the wetlands are a haven for millions of fish, birds, and other animals that would be devastated if the area was drained.
Even the Army Corp’s top lobbyist, in private e-mails, called the project “an economic dud with huge environmental consequences,” and was angered he was being tasked to push for such “swine.” The reason members of the Missouri Congressional delegation are pushing so hard for it, Grunwald surmises, is that a small number of very wealthy and powerful farmers would benefit from having the land drained so they could use it for crops.
A federal judge halted a previous iteration of the project, and ordered that all the work done on it to that point be demolished. But the project persists, with some tweaking, and the EPA is supposed to be evaluating the new plan. The agency missed a deadline on March 15 to produce another Environmental Impact Statement, thus invoking Blunt’s anger. (Senator Claire McCaskill is also strongly supportive of this project, though she has not placed any holds.)
The EPA should naturally strive to meet deadlines, but taking a project that even its proponents admit privately has “huge environmental consequences” and making it the poster-child for regulatory overreach is audacious, to put it generously. This almost certainly won’t be the primary cudgel the GOP uses against McCarthy, it’s more just Blunt fluffing those farmers back in Missouri—but it channels the basic GOP complaint with the EPA. They would just prefer it not exist.
Read George Zornick on the Congressional Progressive Caucas’s budget proposal, which would increase spending on jobs while decreasing the public deficit.

Keith Ellison, the co-chair of the Congressional Progressive Caucus. (AP Photo/Haraz N. Ghanbari.)
Paul Ryan’s recently released budget will not become law—at least not any time soon. The Democratic Senate would never pass it, President Obama would never sign it. Ryan surely knows this, and his proposal is a fantasy budget: more an ideological argument than genuine attempt at legislating.
That hasn’t stopped widespread media coverage of Ryan’s proposal, and that’s fine: he’s a leading thinker of the conservative movement, with real power. But corresponding attention should also be paid to the opposite ideological vision sketched out by the Congressional Progressive Caucus in the “Back to Work” budget proposal, released on Wednesday.
As the name suggests, the CPC budget puts a priority on job creation—something no current proposal currently does. Ryan’s doesn’t even make an attempt at immediate job creation, but just posits that a decade from now, a smaller national debt will nudge Gross National Product Forward. The Senate Democratic budget has a relatively weak $100 billion infrastructure proposal tucked in amidst $960 billion in budget cuts; that’s nice, but clearly not a priority of their plan.
The “Back to Work” Budget contains a $544 billion increase over current spending on public investments and job creation in the first year, including $75 billion for an infrastructure program, $155 billion for a public works program and aid to distressed communities, $80 billion for hiring teachers and $92 billion for reinstating the Making Work Pay tax credit. It also expands unemployment insurance, sends more money to the states and undoes the sequester cuts.
The CPC estimates this will create $7 million jobs in the first year—and over the next ten years, the budget would spend over $4 trillion more on job creation and public investments.
But this massive spending is offset by a number of crucial revenue measures: The “Back to Work” budget increases taxes on millionaires and billionaires, taxes investments at the same level as wages, closes corporate tax loopholes, enacts both a financial transactions tax and a carbon tax, and introduces both a public option and government negotiating for drug prices to Medicare. In addition, the budget finds savings by cutting Pentagon spending back to 2006 levels.
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In short, they sketch out the opposite vision of Paul Ryan: reduced military spending, robust public investment and a strong safety net.
Moreover, the budget actually reduces public debt over the next ten years compared to both current law and current policy, as this table from the Economic Policy Institute Policy Center Shows:

You can find the full EPI analysis of the budget here and the CPC executive summary of their budget here. It’s certainly a vision that merits broad public discussion. And since it’s the only budget with a sincere focus on getting people back to work, instead of obtuse debates about the long-term federal deficit, it ought to attract some real attention.
Although Barack Obama is ready to negotiate over Chained CPI, senate democrats haver tested him on the benefit-cutting measure, George Zornick writes.

Senate Majority Leader Harry Reid. (AP Photo/Susan Walsh.)
President Obama visited Capitol Hill on Tuesday afternoon in an effort to get Senate Democrats on board with his sequester replacement plan, which contains some tough sells for the caucus—particularly on Chained CPI, a new and less generous way to calculate government benefits.
When Senate Democrats proposed their sequester replacement last month, it didn’t have Chained CPI, and many members have openly spoken out against it. Accordingly, Obama was repeatedly pressed on the issue—and appeared to hold firm in his position.
Senator Bernie Sanders described the exchange to The Nation on Tuesday afternoon. “The issue came up. The president raised his concerns about the long-term sustainability of programs like Social Security, and indicated that he believed something like Chained CPI is an effective way—what he considers to be [an effective way], to protect the program,” said Sanders.
On that, Obama got pushback from multiple senators. “Some of us suggested there are other ways to address the problem in terms of the long-term solvency of Social Security, such as doing what he proposed in 2008, which is to lift the cap of taxable income,” said Sanders.
Indeed, Obama’s preferred approach in 2008 was to move the ceiling on FICA taxes, which fund Social Security, to $250,000. (It is currently around $113,000.) He briefly raised this on the campaign trail in 2012 in an appearance before AARP members, but also embraced the general goals of the Simpson-Bowles deficit reduction plan during his acceptance speech at the DNC, and is now calling for Chained CPI.
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After getting pushback, Obama mainly stuck to his position, according to Sanders, though he sense a little bit of daylight. “I think the president, while he continues to voice his support for the Chained CPI, I think he does understand that there are other ways to tackle this problem, and I think he left the door open a little bit to hear other points of view.”
Other press reports indicate that another Senator pressing Obama on Chained CPI was Tom Harkin, who told reporters outside the meeting that Obama was warned “We don’t want to start whacking away at Social Security … or Medicare or things like that, which we have pathways to get out of this one without putting it in some kind of a grand bargain that pulls the rug out from our elderly or our sick, our needy.”
Beyond Social Security, Sanders said he specifically highlighted to the president what Chained CPI would do to veterans. According to the Congressional Budget Office, the new formula would cost a veteran who began receiving benefits at 30 $1,425 at age 45 and $3,231 at age 65.
“I just don’t think that this president should develop a legacy to be the guy who cuts back on benefits for people who lost their arms and legs in Iraq and Afghanistan, or widows who lost their husbands,” said Sanders. “So there was a discussion.”
Meanwhile, Democrats have indicated they'd be willing to lower top tax rates—for something in return, George Zornick writes.

Paul Ryan’s budget proposal leaves room for negotiation on tax rates for high earners. (AP Photo/J. Scott Applewhite.)
President Obama started off his second term with a major victory: getting Congress to pass a bill eliminating the Bush tax breaks for individual earners making over $400,000 per year.
This was a progressive goal nearly from the moment the Bush tax plan was passed; John Kerry railed against Bush taxes in 2004, and ending the high-earner tax breaks was a central part of Obama’s 2008 and 2012 presidential campaign. (For obviously good reasons: the Bush rates eased taxes paid on the rich at the expense of middle-class taxpayers, and studies show that when top marginal tax rates are higher, American economic growth tends to be higher.)
But will that victory survive the end of this Congress? It’s quite possible it won’t. The administration, though not eager to make a big public show of it, made it known from the beginning that it would be willing to lower the top rates again during comprehensive tax reform that closed loopholes for the wealthy elsewhere. Treasury Secretary Jack Lew made this explicit before the Senate Finance Committee last month.
Now, the budget plan released today by Senate Democrats indicates for certain that they, too, are on board. As Sam Stein reports:
The budget, unlike Ryan’s, doesn’t close the door on going beyond the fiscal cliff deal either; it calls for the continuation of current tax rates for middle and lower class Americans but does not specify whether current rates should be protected for high-end earners.
A top Senate Democratic aide said that the specifics—including where rates should be set, which loopholes should be closed, and which expenditures should be ended—would be left to the Senate Finance Committee.
This is a clear roadmap to a scenario in which the top marginal rates are once again lowered in exchange for new revenue from closed loopholes and exemptions elsewhere.
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Paul Ryan’s budget map, also released today, might actually complement this approach. Ryan’s budget has two tax brackets, at 10 and 25 percent, but importantly only the 10 percent rate is locked in—the 25 percent bracket is just a “goal.” The cynical reason Ryan did this is that it makes his tax plan impossible to score, but what if it’s also because he’s playing footsie with Democrats on the top marginal rate? In other words, what if Ryan is willing to negotiate the 25 percent bracket upwards?
This is a situation progressives inside and outside Congress will no doubt watch closely. There’s certainly a case to be made that lowering the top rates again is acceptable if, at the same time, many other wealthy tax breaks are ended. Say, for example, if the Buffet Rule is enacted, which limits the deductions the wealthy can take; capital gains and dividends are taxed at an even higher rate than they were under the fiscal cliff deal; the S-corporation loophole is closed; the estate tax is raised and broadened to more wealthy families, and so on.
But Republicans are deeply averse to many of these things, and the congressional sausage factory might grind out a bill that either doesn’t end many of these loopholes or does so in an easily avoidable way—yet, the top rates would still be lowered. This is the danger of rate-lowering tax reform. Progressives can’t bank a victory on tax equity just yet.
Big business has jammed up the fight for paid sick leave at the federal level, but local governments are making progress, George Zornick writes.



