Wednesday, June 10, 2015

What A Real Purge Looks Like





In an article posted on CNN's website, former House Repub Leader Eric Cantor is giddy about using the phrase "civil war," using it three times in the text of his piece.  "Spend just a little time watching what has been described as a "civil war" within the Democratic Party over the issue of trade policy and you get a real sense of the predicament Hilary Clinton finds herself in," writes Cantor as he links to a Politico article in which the term is used only once, and that in the headline.

More significantly, however, Cantor employs "free trade" twelve times, such as when claiming

Today, the ascendant progressive elements of the Democratic Party are working overtime to purge the remaining pro-free trade faction of the party both in Congress and in the contest for the presidential nomination. If they are successful, this will have a profoundly negative impact on America's ability to be a reliable advocate for free trade.

Unfortunately for the country, the Trans-Pacific Partnership, which Cantor lustily supports, is not a free-trade agreement. Dean Baker explains

The Trans-Pacific Partnership (TPP) is often referred to in the media as a "free-trade" agreement. This is not true. Most of the pact is about putting in place a business-friendly regulatory structure, not reducing trade barriers. Perhaps more importantly, the deal will explicitly increase protectionist barriers in the form of stronger and longer copyright and patent-related protections.

These forms of protection impose the same sort of costs as any other form of protection. Markets are not smart enough to know that they aren't supposed to create distortions for protections that our politicians like (e.g. copyrights and patents) as opposed to the protections they ostensibly don't like (tariffs and quotas).

These distortions are likely to be large since copyrights and patents raise prices by many multiples of their free market price. For example, the patent protected version of the Hepatitis-C drug Sovaldi sells for $84,000 for a treatment in the United States. A high quality generic version is sold in India for less than $1,000. This gap implies that the patent would have the same effect in creating distortions as a 9000 percent tariff. Since the TPP would strengthen such protections, we can assume that the resulting distortions would increase.

Details, details. More interesting, though, is Cantor's statement  "In the current debate over Trade Promotion Authority in Congress, lack of trust in President Obama seems to be a more animating factor in Republican concerns than any animus towards free trade."

"Animus" is a derogatory term, particularly compared to the far more positive "lack of trust in."  Further, the remark is preceded by  "As Republican districts have become more conservative overall, Republican officials have less to fear politically from an anti-trade Democratic challenger."     Cantor is defending his GOP colleagues when he ascribes "Republican concerns" to a lack of trust (otherwise known as "animus") in the President rather than principle, which he calls "animus toward free trade.

In a bizarre twist, Cantor remarks

Today, the ascendant progressive elements of the Democratic Party are working overtime to purge the remaining pro-free trade faction of the party both in Congress and in the contest for the presidential nomination. If they are successful, this will have a profoundly negative impact on America's ability to be a reliable advocate for free trade.

If progressives are trying to "purge" any group from the ranks of their Party, they are late to that party, as events in Louisiana recently, and in Iowa four years ago, illustrate. According to The Associated Press

The proposal’s been called a sham, a fake, a gimmick, even money laundering. It’s also become the linchpin of a budget deal between lawmakers and Gov. Bobby Jindal’s administration. And it’s all about protecting Jindal’s record as he eyes a presidential campaign.

Without it, a financing proposal that shields public higher education and health care services from deep cuts could go down in flames.

The dispute centers on a bill by state Sen. Jack Donahue, R-Mandeville, chairman of the Senate Finance Committee, that would create the Student Assessment for a Valuable Education, or SAVE, tax credit.

Only it wouldn’t lessen anyone’s taxes at all.

The proposal would involve raising a new “assessment” on college students. The students wouldn’t actually pay the fee because it would be covered by the state through the tax credit, paid directly to colleges.

It’s a pass-through that doesn’t provide any net new revenue to the state or to colleges.

If no one pays the new fee and no one actually gains any new revenue from the tax credit, what’s the point of the bill?

Creating a tax credit — at least on paper — can be used as an offset to count against tax increases used to generate new money for the state’s budget, like a cigarette tax hike.

And that matters very much to Gov. Bobby Jindal, so he can claim Louisiana didn’t raise taxes to balance the budget.

Jindal, expected to announce his White House bid in New Orleans on June 24, won’t support any tax changes he — or national anti-tax activist Grover Norquist — considers a net tax increase.

Oh, but that's only Bobby Jindal, Eric Cantor might say.   However, when moderating a presidential debate (excerpt below) in Iowa on August 11, 2001, Fox News' Brett Baier

phrased it this way: “I’m going to ask a question to everyone here on the stage. Say you had a deal, a real spending cuts deal, 10-to-1, as Byron said, spending cuts to tax increases…. Who on this stage would walk away from that deal? Can you raise your hand if you feel so strongly about not raising taxes, you’d walk away on the 10-to-1 deal?”

All eight candidates raised their hand. Literally all of them, if offered a debt-reduction deal that’s 10-to-1 in their favor, would simply refuse.

Republicans don't have to purge their ranks of candidates who don't "work overtime" to lower the taxes of the wealthy and pad their accounts. They've already done it.











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