Comments on FiveThirtyEight: Politics Done Right: Is the AIG Bonus Blowout Hurting Obama?

Jenny said... @GROGWell, atleast you didn't say Pa...

2009-03-24T08:38:22.948-04:00

Jenny said...
@GROG

Well, atleast you didn't say Palin.

But as for Newt, his personal life is worse than John Edwards.

Lets remember, Edwards cheated on his wife while she was recovering from cancer.

Newt served his wife with DIVORCE papers while she was STILL in the hospital recovering from cancer.

Plus, lets face it, if the country couldn't trust a 73 year old mccain at the held, they're not gonna take to a 69 year old, overweight Newt.

Kasich - ehhh, his personal life is a mess, including his association with Lehman Brothers.

March 23, 2009 5:23 PM

@GROG,
You see GROG,you were worry for nothing to tell your choice at loud.
Nobody argued too much with your choice.
So I recon ,Newt is way above Palin.
And this is the reason why GOP would never pick Him.
...sorry to say...
:)

Or maybe: What are we likely to get?Or: What do we...

2009-03-24T03:55:47.287-04:00

Or maybe: What are we likely to get?

Or: What do we need to get?
If Obama manages to swing nothing else in his entire 4 year term outside of:
1) avert the current potential financial train wreck
2) bring in new set of financial services regulations building on what we've seen go wrong
3) implement a quality national health care retooling

Then he'd coast into the history books as a top ten President. Just the potential economic payoff from those three is that big.

Whatever the math, the question now is: What can w...

2009-03-24T00:33:32.545-04:00

Whatever the math, the question now is: What can we get for the money?

Or maybe: What are we likely to get?

Or: What do we need to get?

I know what's on my list, but having voted for Obama, I hope he can deal with it.

@Mike in Maryland:If the interest is $67/month, th...

2009-03-23T23:15:36.569-04:00

@Mike in Maryland:

If the interest is $67/month, then double it and it will be paid in fifty years. not to mention, at a paltry 2% inflation rate, fifty years from now the payment will be $25/month. And if the money isn't just spent but is invested in infrastructure, schools, research and energy independence, it will pay for itself several times over in added productivity and the termination of oil profits to the middle east.

And I am sick of people talking about the poor kids. Kids don't pay taxes, adults pay taxes. Adults that can understand why there is debt and what purpose it served.

This is no fool's calculation, it is the right way to put the debt into perspective. It isn't that big, actually, and especially so if it is an investment and not a boondoggle like the war in Iraq.

That should read: Evidence of attempts to cover t...

2009-03-23T21:42:45.485-04:00

That should read: Evidence of attempts to cover that up is what, exactly?

Dwight said...It'll be interesting to see . . . if...

2009-03-23T21:41:39.056-04:00

Dwight said...
It'll be interesting to see . . . if AIG themselves come up with an alternate solution.

Mike in Maryland said...

Seems the only thing they're doing right now is trying to cover up that the $165 million was not the total of the 'bonus' money given out. There are reports that it might have been as much as $220 million, and maybe even more.

Those are prior bonuses. Evidence of current attempts to cover that up are?

Anyway it seems the message is getting through to some at the top end of the bonus pay list.

M in MAssuming the $67/mo interest is correct, it ...

2009-03-23T19:25:24.360-04:00

M in M

Assuming the $67/mo interest is correct, it would seem foolish to just pay out that amount forever, as you suggest. One would hope that the principal could be addressed over time as well.

Still, look at what the average person gets for their monthly health insurance premium, which is probably ten times that $67. The case could be made that some reforms just on that front could go a long way toward covering the cost of Obama's programs.

> If only the interest on that debt is paid, not t...

2009-03-23T18:42:19.768-04:00

> If only the interest on that debt is paid, not the debt itself, the debt will never be paid. In other words, it will be paid at infinity, and for infinity, the interest will continue to be $67 per month per taxpayer.

Which isn't such a bad deal when you realize that $67 to your grandson is going to be maybe the equivalent to $15 to you right now. If you actually manage to hold the line of the number for the total debt then over time even very moderate inflation brings the actual value of the debt goes down.

The tricky part is getting to and holding that zero budget deficit for an extended period of time ... without some bumpkin coming in and deciding that it's a great opportunity to regress income taxes and blow a huge wad on an ill advised war.

Tony C. said...So for the average taxpayer, the de...

2009-03-23T18:30:23.793-04:00

Tony C. said...
So for the average taxpayer, the debt is about 1 year's worth of income, and the interest is $800 per year, per taxpayer, which works out to about $67 per month.

A fool's calculation of the amount of debt owed per taxpayer. Similar to how many were hoodwinked into buying 'interest-only' mortgages, and then found themselves in trouble.

If only the interest on that debt is paid, not the debt itself, the debt will never be paid. In other words, it will be paid at infinity, and for infinity, the interest will continue to be $67 per month per taxpayer. Since people get old and die, and younger people who are not now taxpayers become taxpayers, they will eventually have to start paying that $67 per month for as long as they live, and then that $67 per month will start to be paid by their children when they become taxpayers, and then that $67 per month will start to be paid by THEIR children when they become taxpayers, and so on and so on until the actual debt, not just the interest, is paid.

@GROGWell, atleast you didn't say Palin. But as f...

2009-03-23T18:23:03.052-04:00

@GROG

Well, atleast you didn't say Palin.

But as for Newt, his personal life is worse than John Edwards.

Lets remember, Edwards cheated on his wife while she was recovering from cancer.

Newt served his wife with DIVORCE papers while she was STILL in the hospital recovering from cancer.

Plus, lets face it, if the country couldn't trust a 73 year old mccain at the held, they're not gonna take to a 69 year old, overweight Newt.

Kasich - ehhh, his personal life is a mess, including his association with Lehman Brothers.

Tony CThanks. I knew I was using extremely crude m...

2009-03-23T16:37:25.992-04:00

Tony C

Thanks. I knew I was using extremely crude metrics. Your post makes the point much more clearly.

Boing

Thank you too. Can I quote you on that? It will look good on my underground resumé. The "snowballing" is often the result of trying to stop before I've worn out my welcome, while wanting to rant on like a troll (though a droll troll).

In the case of that last post, I was getting angrier by the minute. I'd like to take every pothead out of prison and replace him with a neocon --thus giving the term a new meaning.

> Remember you are talking about rates the Govt mu...

2009-03-23T15:15:20.800-04:00

> Remember you are talking about rates the Govt must pay on bonds and T-Bills and international paper, not what consumers pay

A year+ ago it was 4-5%. We saw 13-14% on US T-Bills in the early 80's. I remember that period distinctly. I was young but my parents had one of their loans at 19%. That was a loan secured by land, not some unsecured Discovery Card or something. They were fortunate that most of their debt (starting out farming) was locked in lower through that period, not everyone one was and it was a really ugly time.

It isn't just a question of default. The T-bill buyer also must have confidence that the cash you get back out won't be devalued by inflation, and there has to be enough people out there with wealth to loan you. Part of the reason it's so low now is that it's a seller's market for T-bills, and the other is that there was some deflation going on (or disinflation, depending on what period you are looking over). You do NOT want to get into the buyer's market part of the curve, it gets really ugly.

In my opinion its not the center that has shifted ...

2009-03-23T13:38:12.479-04:00

In my opinion its not the center that has shifted in America, its the battlefield that is different. In 1964 how many people really cared enough about abortion to base political affiliation or choice of preferred candidate on that issue. It was possible to be socially conservative and be a Democrat. It was possible to be socially enlightened and be a Republican. Now I don't think it would be hard to imagine LBJ as a Republican (save for the Civil Rights Act) and Nelson Rockefeller as a Democrat say.

But Goldwater would still be a conservative, he might have a maverick reputation, like McCain, but he would still be a Republican conservative.

@Dwight:I am in Ciro Rodriguez's district; my neig...

2009-03-23T12:44:38.205-04:00

@Dwight:

I am in Ciro Rodriguez's district; my neighborhood leans slightly Dem.

Remember you are talking about rates the Govt must pay on bonds and T-Bills and international paper, not what consumers pay. Foreign countries think the chance of a US Govt default is zero, so their loan rates aren't high at all.

I would rather the Govt pay down the debt; if they do not and just print money to cover it, they create inflation. But the inflation is the equivalent of a flat tax (very regressive, because the less you make the greater the percentage of your income is spent and thus the more inflation affects you). The inflation won't be terrible; I'd give a number but I don't have the numbers on the current money supply and what portion $9T would be. And it depends on whether they just print money to cover the interest, or pay it down pretty aggressively.

GROG said...Do you think any democrats are to blam...

2009-03-23T12:02:55.354-04:00

GROG said...

Do you think any democrats are to blame for the economic situation we're in?

Absolutely, the Blue Dogs.

BTW Tony, $67/month is doable. The danger is in th...

2009-03-23T11:05:03.242-04:00

BTW Tony, $67/month is doable. The danger is in the interest rate. If gets pushed up, like it did late 70's/early 80's, it's small size means high multiplier for an otherwise moderate increase. I know you only have to worry at a given time about refinancing a slice of the debt as it rolls over, so a spike won't hit all at once. But a serious spike, over worse a prolonged rise, will smart.

The end-game to fighting this recession is likely inflation, and what is the traditional medicine for inflation? Only if you do that the government now either has to eat that debt in whole or risk fueling price increases if they pass on those increased interest payments directly. It is going to get ugly for a bit till things stabilize.

> but I wanted to send Texas a message that it was...

2009-03-23T10:40:29.632-04:00

> but I wanted to send Texas a message that it wasn't as red as it thought, and I wanted to join with my fellow Dems;

What corner of the state? It seems there are some decidedly blue regions (Austin for example). When I move in a few months it'll either be to Harris county (51% Obama) or Montgomery (%76 McCain). Montgomery is actually one of the reddest counties in the state, I believe McCain was actually down from 78% Bush in 2004.

P.S. I don't know if I'll have upgraded from Green Card to Naturalized by 2012, so I don't know if I'll be voting for Pres. Not sure if I'll be voting in the meantime either, apparently it varies state by state whether LPRs can vote locally and at a state level. I haven't seen that list and I'm not holding my breath that Texas is one of them.

@Statler:Is that settling for the best I can get i...

2009-03-23T08:33:12.261-04:00

@Statler:

Is that settling for the best I can get instead of supporting fringe candidates that stand no hope in hell of winning?

This behavior is not termed "hypocritical" but "pragmatic" or even "rational."

From a game theory perspective, you are maximizing a value. Voting for a known loser is generally a wasted vote; it only has value if you believe the act of voting or the tally of voting will change minds. Or if you feel morally obligated to cast the vote in spite of the impending loss; like losing a fight but going down swinging.

I voted for Obama in a state he would lose; but I wanted to send Texas a message that it wasn't as red as it thought, and I wanted to join with my fellow Dems; I take heart in knowing we are 45% blue and not completely surrounded by fools. And it worked, Chuck Todd on MSNBC told the nation Texas was trending blue and could be a close fight for Republicans in 2012 or 2016, and I hope he is right.

Helping to elect the candidate most likely to effect some changes you agree with is the right answer, not hypocrisy. That chance is their likelihood of legislating how you want, multiplied by their chance of getting elected at all. If the second is effectively zero, they are of zero value to you; unless you believe your vote or contributions will encourage them to continue promoting your issues and agenda to the public, in a way you cannot.

Hu Chi, i do enjoy your posts. They combine insigh...

2009-03-23T08:21:52.179-04:00

Hu Chi, i do enjoy your posts. They combine insight with a certain snowballing rhythm.

@Hu Chi:I believe the correct metric is taxpayers,...

2009-03-23T08:11:36.321-04:00

@Hu Chi:

I believe the correct metric is taxpayers, to exclude children. The relevant table is here.

There are 225M taxpayers over 18; thus on a $9T debt their average share is $40K. I think it is worth noting their average income (same table) is about $40K, and we can pay interest-only on the $9T at about 2%.

So for the average taxpayer, the debt is about 1 year's worth of income, and the interest is $800 per year, per taxpayer, which works out to about $67 per month.

Just so people have some perspective on it. $67/month is is a pain but affordable. It isn't going to bankrupt American or destroy the American way of life. The majority of college grads have at least this much debt when they graduate, at higher interest and with principle payments to boot, and they still manage to pay it off.

And guess what? They "borrowed and spent" their way to prosperity... :-).

matador:No matter who I list, it's like tossing up...

2009-03-23T07:21:13.266-04:00

matador:
No matter who I list, it's like tossing up a softball for you all to slam, but that's OK.

My first choice would be Newt Gingrich. Second choice would be John Kasich.

@Jenny:You are the one.@Grog:would You please asnw...

2009-03-23T07:06:35.881-04:00

@Jenny:
You are the one.

@Grog:
would You please asnwer to Jenny's question:

"...can you name your short list for 2012 or is the filed too embarrassing to list..."

@ grog"Most democrats supported invading Iraq,"No....

2009-03-23T06:19:10.708-04:00

@ grog

"Most democrats supported invading Iraq,"

No. A majority of democrats in congress (62% IIRC) voted No on AUMF. 98% of republicans voted yes.

The general AIG situation is both titanic and insc...

2009-03-23T04:33:59.970-04:00

The general AIG situation is both titanic and inscrutable, while the AIG bonus scandal, by comparison, is miniscule and relatively straightforward.

I'm convinced that the vast majority of Americans do not understand that a billion is a thousand million and that a trillion is a thousand billion. But they do get it that it's wrong to pay one executive a million dollars after he's helped destroy the whole economy. So that's what they get angry about. Emotionally, if not intellectually, logical.
___________
OK, let's say the big recovery number is nine trillion dollars, and the US population is 300 million. That's nine times ten to the twelfth divided by three times ten to the eighth. So we get three times ten to the fourth, or thirty thousand dollars for every American.

It's not a small amount, certainly. And maybe 9 trillion won't do it, but by one inclusive accounting, the Iraq war alone will end up costing three trillion by the time we're done caring for disabled soldiers and losing the labor they might have provided. That's ten thousand dollars for every person in the US--FOR NOTHING!

The GOP's predictions of doom from the Obama deficit are impossible to prove or disprove, but their willingness to throw trillions down the Iraq rathole, and kill tens if not hundreds of thousands of people in the process, should mark them as among the most savage and untrustworthy hypocrites imaginable.

However badly the Obama administration messes up, Republicans have no moral authority whatever. The AIG bonus furor hits Republicans where they live. The public could do much worse than to imagine that every undeserving AIG bonus recipient has a picture of Bush and Cheney on his wall. Thus always to the masters of the universe.

I was against this tax before I was for it. Then I...

2009-03-23T03:05:39.408-04:00

I was against this tax before I was for it. Then I realized that it won't affect anyone I know. Then I realized that it won affect anyone the people I know know. Then I realized that the people it will effect should have been taxed at a higher rate all along.