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The Man Behind No New Taxes, Apple Beats Exxon, Obama’s Lack Of A Plan: The Live Wire

| August 10, 2011

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Today’s Live Wire: Quick Links

The No Tax Man

From The Daily Beast: “The ATR pledge allows zero wiggle room. It commits members of the House and Senate to “ONE, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” State legislators promise to “oppose and vote against any and all efforts to increase taxes.” Governors, meanwhile, pledge to “oppose and veto any and all efforts to increase taxes.” […] Molding the GOP’s message has been central to Norquist’s strategy. “We have branded the modern Republican Party as the party that will not raise your taxes, and just like Coca-Cola, it has a brand, a trademark, and quality control,” Norquist told a group of conservative activists in Arlington, Va., the day after the president grudgingly signed the debt-ceiling deal into law. “But if you get home and two thirds of the way through your bottle of Coke you look down at what’s left and there’s a rat head, you do not say to yourself, ‘I’m thinking I may not finish this particular bottle of Coke tonight.’ You in fact wonder if you will ever buy Coke in the future. You call your friends and tell them about it, you go on local TV and show them the cool rat head. And Coke has a big problem because it damages the brand for everyone else. […] Not surprisingly, Norquist has enemies—not only among members of Barack Obama’s party but also among members of the Republican establishment  who resent (and fear) his iron-fisted inflexibility on matters of antitax doctrine and his readiness to punish heretics, sometimes by running ads against them in Republican primaries. Oklahoma Republican Sen. Tom Coburn, a member of the bipartisan “Gang of Six” that was considering revenue increases along with entitlement reform in trying to cobble together a deficit-reduction deal, was widely praised for his “courage” in the past few months when he defied Norquist’s orthodoxy and tried to eliminate a $6 billion tax break for the ethanol industry. Coburn’s crusade won 34 of 47 Senate Republican votes, but faltered in the end after an intense ATR lobbying campaign. “We cannot allow one individual to have that kind of power over a vote that can help fix the country,” Coburn told The Washington Post last month—never mind that he, too, is a signatory to the pledge.” Read the full article here.

Let it be noted that the main economic reason the S&P gave for the debt downgrade was the fact that the Bush tax cuts were not allowed to expire.

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Rebuilding Ground Zero

Via The New York Times: “If you have not laid eyes on the World Trade Center site for a while, the view now is nothing short of astonishing. It looks like a space for human beings. Much of the plaza has been set up; swamp oaks have been planted; fountains are running inside the two giant squares that were the footprints of the towers destroyed 10 years ago; the names of the dead are inscribed along the borders of the squares. Every week, a new floor rises at the main skyscraper, 1 World Trade Center. As of Tuesday, it stood 78 stories tall, on the way to 104. Not long ago, the 16 acres of ground zero seemed hopelessly lodged in the permafrost of 9/11. Now the first great public works project of the 21st century in New York is emerging. We live in an age in which some things do actually get done. In 2008, a man named Christopher O. Ward, who had held government jobs in New York for 25 years, once ran a stevedoring business, and had a master’s degree in theological studies from Harvard, took over the project; he was named executive director of the Port Authority of New York and New Jersey by Gov. David A. Paterson. He began by tearing up the existing schedules and budgets and told the governor that the project would cost $3 billion more than originally estimated. He stopped calling the main skyscraper the Freedom Tower, a name used by Gov. George E. Pataki.“We were free before 9/11, we were free after 9/11,” he said. “New Yorkers don’t need a tower named ‘freedom.’ New Yorkers need to know that we built it, that there’s a place to go and work.”” The entirety of the story can be read here.

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Straight To The Top

From The Economist: “By any standards it is a remarkable achievement. In the space of 14 years, Apple has transformed itself from a computer firm on the brink of bankruptcy into a stockmarket superstar. During trading on August 9th its market capitalisation even surpassed that of Exxon Mobil for a time, though by the end of the day the oil giant had reasserted its position as America’s biggest publicly quoted firm with a closing value of $348 billion compared with Apple’s $347 billion. It may not be long before the tech giant is hogging the top slot. Apple’s stellar rise is a testament to the growing influence of the digital world in the global economy. Oil remains a vital raw material, but bits and bytes have become one too. Apple’s ascension is also a sign of changing times in the technology industry. On its way to the top of the valuation stakes, the company, which focuses primarily on consumer technology, has leap-frogged more business-oriented tech giants such as Microsoft and IBM. It has been able to do so thanks to a new, global breed of consumer who loves to snap up the latest gizmos displayed in the firm’s alluring stores. Every few months, Apple stages the technology equivalent of a fashion show, where Steve Jobs, its iconic boss, teasingly unveils the latest collection of iPhones and iPads. (The next version of the iPhone is eagerly expected in the autumn.) True, Apple’s relative success is partly due to a dip in the oil price, which has pummeled Exxon’s shares, and to the volatility that swept through stockmarkets this week. But it is also due to investors’ confidence in Apple’s business model: last month the firm revealed that in its latest quarter its profit more than doubled, to $7.3 billion, while its revenues rose 82%, to $28.6 billion.” Read the full post here.

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The Media Mafia

From AdWeek: “In my biography of Rupert Murdoch, I referred to News Corporation as Mafia-like, provoking the annoyance of my publisher’s libel lawyers. I explained to them that I did not mean to suggest this was an organized crime family, but instead was using “mafia” as a metaphor to imply that News Corp. saw itself as a state within a state, and that the company was built on a basic notion of extended family bonds and loyalty. But just because it’s a metaphor doesn’t mean it isn’t the real thing, too. Well-sourced information coming out of the Department of Justice and the FBI suggests a debate is going on that could result in the recently launched investigations of News Corp. falling under the RICO statutes. RICO, the Racketeer Influenced and Corrupt Organizations Act, establishes a way to prosecute the leaders of organizations—and strike at the organizations themselves—for crimes company leaders may not have directly committed, but which were otherwise countenanced by the organization. Any two of a series of crimes that can be proven to have occurred within a 10-year period by members of the organization can establish a pattern of racketeering and result in draconian remedies. In 1990, following the indictment of Michael Milken for insider trading, Drexel Burnham Lambert, the firm that employed him, collapsed in the face of a RICO investigation. Among the areas that the FBI is said to be looking at in its investigation of News Corp. are charges that one of its subsidiaries, News America Marketing, illegally hacked the computer system of a competitor, Floorgraphics, and then, using the information it had gleaned, tried to extort it into selling out to News Corp.; allegations that relationships the New York Post has maintained with New York City police officers may have involved exchanges of favors and possibly money for information; and accusations that Fox chief Roger Ailes sought to have an executive in the company, the book publisher Judith Regan, lie to investigators about details of her relationship with New York police commissioner Bernie Kerik in order to protect the political interests of Rudy Giuliani, then a presidential prospect.” The rest of the story can be found here.

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“No Plan” Tactics

From the blog of Robert Reich: “Americans are deeply confused about why the economy is so bad – and their President isn’t telling them. In fact, the White House apparently has decided to join with Republicans and blame it on the long-term budget deficit. Before I turn to the President, though, let’s be clear: The lousy economy is due to insufficient demand. Consumers – who are 70 percent of the economy — can’t and won’t buy because they’re running out of cash. They can’t borrow against homes that are worth a third less than they were five years ago, and most consumers are bad credit risks anyway because they’re losing their jobs and their wages are dropping.  They also have to start saving for the kids’ college or for retirement, which will cut their spending even more. Without enough consumers, businesses won’t hire enough people and pay them enough to reverse the vicious cycle. So we’re dead in the water. Even the stock market has caught on to the truth. Which means government has to step in to boost the economy – as it has every time the economy has fallen into recession over the last eight downturns. Include the massive spending on World War II that lifted us out of the Great Recession, and it’s nine. The Fed can help, but it can’t do it alone. And it’s least helpful after a huge asset bubble has burst because the financial system won’t channel low interest rates where they’re most needed – to small businesses and average consumers. This time we tried one stimulus that was way too small relative to the size of the falloff in demand that started in 2008 — especially given that states and locales cut their spending by almost as much as the federal government increased it.” The rest of his post can be found here.

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China Gets An Aircraft Carrier

From the blog of Matthew Yglesias: “Andrew Erickson has a very informative analysis of what we’re likely to see during its maiden voyage. But I think the key thing a generalist needs to know is that one question about the ship is “Will PLAN Aviation attempt to land aircraft on the ship at sea?” In other words, just because you’ve gotten your hands on a 25-year-old Soviet aircraft carrier doesn’t mean you actually know how to land planes on it without killing everyone! The basic issue here is that the learning curve at the initial stages of carrier operation is extremely steep. Not only is it difficult and expensive to build a working aircraft carrier, but if you don’t already have a fleet of working aircraft carriers, you don’t have pilots and flight crews who can reliably operate it. And if you don’t have pilots and flight crews, you don’t have experienced people who can train new pilots and flight crews. What’s more, the United States got to go through this bootstrapping phase decades ago when ships and planes were simpler. Then we had a solid foundation of human capital to go through the process of building more advanced hardware. But if you want militarily useful equipment for the 21st century, your human capital gap is much bigger than any that we ever faced. This is all just to say that while China is rapidly closing certain gaps in material production capabilities, a lot of aspects of both military and economic life have important human elements. The United States really does have the best-trained, most knowledgeable military in the world, and that human element is going to be very difficult for anyone else to match. The full post.

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A Few Good Links

–Edited by Kyle Russell

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