It’s Tuesday, November 20th, 2012….and here’s The Gouge!

First up, the WSJ spares the MSM the time and preemptively nominates John Roberts….

Liberal Man of the Year

Chief Justice Roberts shares the dais with Lena Dunham.

No Supreme Court Justice has ever said “Live from New York, it’s Saturday night,” at least on national television, but give it time. This month Glamour magazine named Justice Ruth Bader Ginsburg one of its “Women of the Year.” And Justice Sonia Sotomayor recently told a muppet on “Sesame Street” that “Pretending to be a princess is fun, but it is definitely not a career,” which is true, unless you were born to the House of Windsor.

But none of his colleagues can compete with the media acclaim cascading over Chief Justice John Roberts after his solo decision upholding the Affordable Care Act this June. The editors of Esquire have included Chief Justice Roberts in their December “Americans of the Year” issue, praising his “nimbleness.” After the Citizens United decision on free speech and political spending, he found a way “to save the court’s credibility.”

Chief Justice Roberts shares the Esquire honor with Lena Dunham, the star of an Obama campaign ad and the creator and star of the HBO series about 20-something sexual angst called “Girls.”

For all tense and purposes, I did!

She and the Chief Justice also make the Atlantic Monthly’s list of “Brave Thinkers” of 2012, by which they mean thinkers who agree with the Atlantic’s liberal editors. Ms. Dunham is praised for taking “the soft glow off the ‘chick flick,'” for instance when her character acts “like an underage street hooker to turn her boyfriend on,” while the Chief Justice gets credit for “maintaining the Court’s legitimacy” with a ruling “both brave and shrewd.” President Obama probably has Time’s “Person of the Year” nailed down, but expect the Chief to finish a close second.

Such is the strange new respect a conservative receives for sustaining liberal priorities. Our own view is less effusive, and to expiate his ObamaCare legal sins, a fair punishment would be that he hire Ms. Dunham as a clerk.

We have another, far more painful expiation in mind: eternity with….

….the Liberal equivalent of 72 virgins.

And since we’re on the subject of things that don’t cut it….at least in the real world….the AEI‘s James Pethokoukis reports why a….

New study shows why heavily taxing the rich won’t work

It’s strange when you think about it. Not only is President Obama pushing the largest round of tax hikes in almost a generation, but those increases would come during the most anemic economic expansion since World War Two — or maybe ever in American history. Still, the White House appears not at all concerned that raising the tax burden and hiking marginal tax rates would make a sickly economy even weaker. Nor is Team Obama concerned, apparently, about the risk of raising the long-term tax burden at a time when demographic changes will begin making it harder for the US economy to grow as fast in the future as it has in the past.

How can Team Obama be so preternaturally carefree and nonchalant about its taxapalooza?

One big reason is research from two highly respected — and left-of-center — economists, Peter Diamond and Emmanuel Saez. (Diamond is a failed Obama nominee to the Federal Reserve Board, while Saez is perhaps best known for his work on income inequality with Thomas Piketty.) In their paper, “The Case for a Progressive Tax,” they contend that the top federal income-tax rate in the US could more than double to 73% from 35% today without hurting economic growth. To put it another way, the US is nowhere close to the top of the Laffer Curve, where higher tax rates start lowering tax revenues. If Diamond and Saez are correct, raising the top marginal rate to roughly 40% (actually closer to 43% when you account for other tax code changes), as Obama wants to, is no problemo.

Diamond and Saez summarize their findings in an April op-ed for The Wall Street Journal:

Thus we conclude that raising the top tax rate is very likely to result in revenue increases at least until we reach the 50% rate that held during the first Reagan administration, and possibly until the 70% rate of the 1970s. To reduce tax avoidance opportunities, tax rates on capital gains and dividends should increase along with the basic rate. Closing loopholes and stepping up enforcement would further limit tax avoidance and evasion.

Diamond and Saez, shorter: Let’s use an “all of the above” tax hike strategy to create a tax-hike “straitjacket” of higher rates and fewer tax breaks for wealthier Americans (and small business). The approach is the clear model for Obama-style tax reform.

But a new American Enterprise Institute analysis, published in Tax Notes, of the Diamond and Saez research suggests Obama might want to rethink his tax-hike strategy — or at least his cavalier attitude toward the potential risks it poses to US economic growth and job creation. In their paper “Should the Top Marginal Income Tax Rate Be 73 Percent?,” Aparna Mathur, Sita Slavov, and Michael Strain say they “do not believe that the [Diamond-Saez] model can be used prudently as the basis for the real-world public policy problem of determining the socially optimal top marginal income tax rate.”

Conducting the sort of deep dive that economic policymakers and pundits rarely make, Mathur, Slavov, and Strain highlight a number of questionable assumptions and choices made by Diamond and Saez:

1. Diamond and Saez assume that high-income taxpayers react to tax hikes more or less like lower-income taxpayers, meaning not so much. While there is no consensus here, studies focusing on high-income individuals tend to find much higher estimates of short-term responsiveness than studies of lower-income households. It makes intuitive sense: Wealthier taxpayers have a greater ability to alter how much they work, in what form they get their income, and fashion tax- avoidance strategies. “We do not believe that in the real world the top tax rate should be set under the assumption that tax avoidance and evasion behavior can be dramatically changed,” Mathur, Slavov, and Strain write.

2. Diamond and Saez assume sharply raising tax rates has zero, zilch, zippo long-term impact on taxpayer behavior and the economy since, well, those effects are hard to measure. But economists agree those long-term effects are important. America benefits greatly from people who take risks and make career choices in hopes of striking it rich. “Significantly reducing that possibility by hitting those individuals with extremely high income taxes is of first-order importance in determining the optimal top tax rate,” Mathur, Slavov, and Strain argue.

3.  Diamond and Saez have created a model — admittedly a lovely and elegant one — with a built-in bias that says more equality is better than less equality. Or, in other words, government should maximize the revenue it collects from high earners since they value each additional dollar of income less than lower-income earners. “Because the social loss from taking money from the rich is assumed to be zero and the social gain from giving money to the non-rich is greater than zero, society’s goal is clear: The government should take as much money as possible from the rich and redistribute it to the non-rich,” Mathur, Slavov, and Strain write. But is this really the role Americans want their tax code to play? The AEI economists:

Gregory Mankiw, a Harvard economist and former senior economic adviser to President George W. Bush, has said: “My sense is that people are rarely outraged when high incomes go to those who obviously earned them. When we see Steven Spielberg make blockbuster movies, Steve Jobs introduce the iPod, David Letterman crack funny jokes, and J.K. Rowling excite countless young readers with her Harry Potter books, we don’t object to the many millions of dollars they earn in the process. The high incomes that generate anger are those that come from manipulating the system. The CEO who pads the corporate board with his cronies and the banker whose firm survives only by virtue of a government bailout do not seem to deserve their multimillion dollar bonuses. The public perceives them (correctly or incorrectly) as getting more than they contributed to society.

A better criterion, according to Mankiw, would be: ‘‘People should get what they deserve.’’

Diamond and Saez’s academic work is filed with caveats and explanations not found in their work for public consumption, which is far more black and white. And to some degree that’s understandable. But a deeper reading leads Mathur, Slavov, and Strain to this conclusion:

Diamond and Saez ignore long-term behavioral responses, assume more equality is a better social welfare function, assign no social value to the marginal dollar of consumption for the rich, and use a short-run behavioral response predicated in part on less evasion and more enforcement to compute an answer of 73 percent. Consequently, we can be pretty sure that the answer is significantly less than that. Further, we find the suggestion that the government should take more than half of a citizen’s income in taxes to be unpalatable.

Cranking up taxes on the rich isn’t the free lunch or cure-all that liberals so desperately desire it to be. And anyway, the revenue-maximizing tax rate isn’t the same as the growth-maximizing tax rate. America needs a tax code that pays for the amount of government it wants in a way that is as efficient and least harmful to economic growth as possible while also broadly reflecting society’s sense of equity. Using a $15 trillion economy to run a precarious, ideologically-driven experiment to find the exact tax-rate tipping on the Laffer Curve of the current tax code — and thus temporarily avoiding politically risky entitlement and tax reform — is a terrible way to pursue public policy.

Been there, done that.  The bottom line remains taxing the “rich” at the level The Obamao currently recommends will only decrease the annual deficit by less than 10%.

Or, as this classic presentation from Bill Whittle confirms….

….ya cahn’t git thah frum heer!  Any question the definition of “rich” will be subject to downward revision….and that right soon?

Moving on to International News of Note, as Jonathan Tobin observes in CommentaryMagazine.com, Liberalism’s impression Islamic terrorists, Iranian, Palestinian or any other description, have the slightest interest in peace is a farcical fable:

Hamas and the Two-State Solution Myth

Since Hamas initiated the latest round of fighting in Gaza, Israel’s critics have been hard-pressed to criticize the country’s need to defend its people against a barrage of hundreds of rockets fired by terrorists. But that hasn’t stopped some of them from trying to use the conflict to claim that the only solution is to further empower the Islamist terrorist group that rules over Gaza with an iron hand. That’s the prescription for a new U.S. foreign policy coming from the Daily Beast’s Peter Beinart. Beinart thinks what America and Israel need to do is try and use a cease-fire agreement to co-opt the Islamists into backing a new peace process, along with their Fatah rivals of the Palestinian Authority, as well as to promote Palestinian democracy.

It is an article of faith on the left that the two-state solution, rather than Israeli military efforts, is the only answer to Palestinian terrorism. But though most Israelis, including the government of Benjamin Netanyahu, have accepted the idea in principle, the repeated refusal of even the so-called moderate Palestinians to negotiate have rendered the idea moot for the foreseeable future. But as unrealistic as calls for Israel to do something to boost the PA are at this moment, to imagine, as Beinart does, that Hamas can be co-opted into such a process by Western recognition demonstrates an astonishing lack of understanding of the situation.

Beinart is right when he characterizes the Israeli counter-offensive as merely a short-term solution rather than a long-term strategy. Many Israelis regard Operation Pillar of Defense in much the same way they saw the 2008 campaign called Cast Lead: as nothing more than a periodic effort to hamper Hamas’s military capability. The 2005 decision to withdraw from Gaza was a security disaster, but few Israelis want any part of governing the strip again. All they want is for it to be prevented from threatening their country, and to that end they back a regular “grass cutting” in Gaza that will make it harder for Hamas to terrorize millions of Israelis the way they have in the last week.

This Israeli consensus frustrates foreign observers like Beinart who insist they can solve a problem that citizens of the Jewish state see as having been proven to be intractable by 20 years of failed peace processing. They also understand that, contrary to Beinart, the last thing Hamas wants is either peace with Israel under any circumstances or democracy for the Palestinians.

Far from being tempted to bolster Abbas, the current Hamas campaign is intended to boost their own standing among Palestinians at Fatah’s expense. Moreover, Hamas’s leadership believes the support it has gotten from Egypt and Turkey renders Abbas obsolete. In a sense, they are right. Far from highlighting the need for a Palestinian state, the current fighting is a reminder that one already exists in Gaza and its leaders believe the Palestinian people prefer to be sacrificed on the alter of unending war with Israel than good government or peace.

Ending the West’s efforts to isolate Hamas won’t revive the two-state solution. What it would do is to legitimize a brutal, dictatorial Islamist regime in Gaza and encourage Hamas to think that they can eventually seize the West Bank as well.

Should his friends in the Obama administration heed Beinart’s point of view and the United States reward Hamas in this fashion, it wouldn’t just strengthen Hamas’s ability to withstand future Israeli counter attacks. It would also kill whatever slim hopes exist for democratization of the corrupt and violent Palestinian political culture.

Beinart concludes his piece by trotting out one of the oldest lamest arguments of those trying to revive hopes for peace with Israel’s foes. It is the old quote about the need to make peace with enemies, not your friends. But if there is anything Israelis have learned in the 20 years since Oslo, it is that you make peace with enemies who are willing to live in peace and give up the hope of your destruction, not enemies who merely wish to gain concessions prior to restarting the conflict on more advantageous terms. That’s the mistake Israel made with Yasir Arafat. It won’t make the same one with the Islamists of Hamas.

The fact that there is no long-term political solution available to Israel as it copes with a terrorist state on its doorstep is frustrating. But pundits like Beinart and the Obama administration need to be reminded that the choice facing Israel isn’t between peace and talking to Hamas. It’s between survival and death.

And as this video clip from Speed Mach confirms, it’s a fight to the death in which Israel cannot depend….

….on any help whatsoever from Team Tick-Tock.

Next up, today’s Money Quote, courtesy of the WSJ, and Stephen Asma’s thoughts on Progressivism’s “Everyone’s a Winner!” mantra:

“Our contemporary hunger for equality can border on the comical. When my six-year-old son came home from first grade with a fancy winner’s ribbon, I was filled with pride to discover that he had won a footrace. While I was heaping praise on him, he interrupted to correct me. “No, it wasn’t just me,” he explained. “We all won the race!” He impatiently educated me. He wasn’t first or second or third—he couldn’t even remember what place he took. Everyone who ran the race was told that they had won, and they were all given the same ribbon. “Well, you can’t all win a race,” I explained to him, ever-supportive father that I am. That doesn’t even make sense. He simply held up his purple ribbon and raised his eyebrows at me, as if to say, “You are thus refuted.” . . .

More troubling than the institutional enforcement of this strange fairness is the fact that such protective “lessons” ill-equip kids for the realities of later life. As our children grow up, they will have to negotiate a world of partiality. Does it really help children when our schools legislate reality into a “fairer” but utterly fictional form? The focus on equality of outcome may produce a generation that is burdened with an indignant sense of entitlement.“

Which is why, at least in the F-14 Community, they taught us there’s no points for Second Place!

On the Lighter Side….

Finally, in the “I Do What I Want And You Have To Live With It” segment, we learn a….

What is it that leads us to believe the “refusing to help pay or share in the communal meals at his Brooklyn firehouse” has far more to do with Harper’s ostracism than his diet?!?

Magoo