April 30, 2010
Sarah Palin at the Republican Convention, and the convention chants: "Drill, Baby, Drill"
Suddenly the word is all over the place that the Congress is not going to extend unemployment benefits further! It seems that the economy is booming (for Wall Street, top corporate executives, and Washington legislators) so it doesn't feel like there is a need to keep carrying these people.
Is the economy booming? Michael Moore's movie "Capitalism, A Love Story" brought attention to a concept known as "plutonomy," referring to economic growth that is powered and consumed entirely by the wealthy. The idea is that the world's economy no longer needs regular people or a middle class to keep it going. The thinking is that the rich at this point are just carrying them along for the ride - for now. And for sure, an attitude seems to have set in among the elites that they are carrying the rest of us, and we are a burden. Stock markets are up, bonuses are up, we're out of the woods. Next month the jobs report is expected to be 300,000 new jobs created. Problem solved. So why are we still acting like there's a problem?
A Bloomberg report yesterday that Congress won't be extending unemployment benefits reflects exactly this worldview, quoting Sen. Max Baucus,
Democrats who have pushed through the past extensions agree there’s insufficient backing to go beyond 99 weeks, largely because of mounting concern over the federal deficit, projected to reach $1.5 trillion this year.
“You can’t go on forever,” said Senate Finance Committee Chairman Max Baucus, of Montana, whose panel oversees the benefits program. “I think 99 weeks is sufficient,” he said.
“There’s just been no discussion to go beyond that,” said Senator Byron Dorgan, a North Dakota Democrat.
Some Republicans say cutting off aid will spur people to find work.
Goldman "designed to fail" Sachs is quoted seeing no "political climate" for helping the unemployed,
“The political climate is not as conducive to additional expansions as it had been last year,” a Goldman analysis said. “The result is likely to be a greater share of unemployed workers not receiving unemployment compensation.”
"Why don't they just give themselves million-dollar bonuses like everyone else does?" one expects to hear next.
The radio show Marketplace interviews Stuart Rothenberg, confirming that Congress actually might not extend benefits to the millions and millions of unemployed,
We just don't have the resources to do this. The money's not there, and we're already in debt. Everybody's fighting for every nickel, and so it would be difficult to extend benefits.
The Marketplace correspondent adds,
But there is an argument that paying benefits for longer actually keeps the unemployment rate high. That's because people who get a check don't search as hard for work. And they're picky.
"The money's not there." Maybe because we got tricked into giving it all to Wall Street?
So is it just a problem if people not wanting to get jobs? The Bureau of Labor Statistics publishes unemployment rates for metropolitan areas. Scroll down to number 209, Prescott, AZ, where the numbers first reach 10%, then scroll to the bottom where number 372, El Centro, CA is 27%. If any of those people in those 163 metropolitan areas do find a job all they are doing is taking a job from someone else, at a lower wage. (Which may be the objective of denying unemployment benefits, to drive wages down further.)
We have 6.5 million people who are long-term unemployed. The numbers jump each month. Even from Feb to March the number grew by 414,000 in just that one month. There are record-breaking numbers of people who have been unemployed for 6 months or more. If we cut off benefits we are hurting the people who are hurting the most and we will threaten the very fragile beginnings of the recovery that we are only just starting to see.
Among those politicians who are too sensitive to invoke the specter of hobos, there's still a widespread view that most jobless people so much enjoy living on benefits that they won't look for a job until the benefits go away. So, take the benefits away and, magically, everybody is employed again.Are they just engaging in magical thinking
Then there is the real world.
The Congressional leadership has to come out right now and tell us what they are doing about jobs. Are they or are they not extending unemployment, COBRA subsidies and COBRA itself? Are they supporting the Miller Jobs Bill? What about additional proposals? What about aid to the states? Like Nevada, New York, Virginia, New Hampshire, Connecticut, New Jersey, and that is just from 5 minutes of The Google.
You can help the Congress figure out if they should be helping the unemployed. You can call your own member of Congress and let them know your own thoughts on this.
April 29, 2010
This post originally appeared at Open Left.
If you are not familiar with the term "revolving door" it describes people who move from lobbying firms to government and back.
The Sunlight Foundation has just come out with Revolving Door From Capitol Hill to Big Banks,
Concerned about seeing their huge profits cut, six big banks are leading the charge to weaken or block new financial regulations being considered in the United States Senate. To push their cause these banks have hired 145 former government officials–congressmen, staffers and executive branch officials–to lobby on Capitol Hill and in the executive branch.
And they are spending a ton of money,
The top six bank holding companies engaged in lobbying on financial regulation include Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley. According to the Center for Responsive Politics, these banks spent a combined total of $23.8 million lobbying Washington in 2009.
Please go over to Sunlight and take a look at this.
The level of influence that the largest corporations have over our government is not a surprise to anyone. The way it works is we are supposed to have a marketplace that is a level playing field and our government officials make the rules of that playing field from a distance, uninfluenced. Companies then compete on that playing field, and the ones who best serve the public are rewarded.
But what happened is that the rulemaking was not kept apart from the players on the field. Imagine a player in a football game approaching the rulemakers in the middle of a game and offering $150K to change a rule. And obviously that player then gains from the change and the gain enables more resource for more and larger bribes. How fast does the playing field tilt completely to that player?
So what we have is the largest companies setting the rules of the playing field so that the game comes out in favor of ... the largest companies. Oil, tobacco, health insurance, we see it everywhere.
The solution? Prohibit company resources from leaking out of the company in any way that can influence the public or legislators. Company funds should be used to run the company only. Of course, the Supreme Court just did the opposite...
This post originally appeared at Open Left.
The disaster in the Gulf unfolds. It looks like this is worse than thought and is going to get a LOT worse.
A LOT worse: BP Oil Well Leaking Five Times Faster Than Estimated
A damaged BP Plc oil well in the Gulf of Mexico is leaking as many as 5,000 barrels of crude a day, five times more than previous estimates as the oil slick drifted the closest yet to shore, the U.S. Coast Guard said.
5,000 barrels is 210,000 gallons. This is turning out to be much, much bigger than the Exxon Valdez disaster.
How many times have you heard, "The private sector does everything more efficiently and effectively than government?" Right. Not this time. Leaking Oil Well Lacked Safeguard Device,
The oil well spewing crude into the Gulf of Mexico didn't have a remote-control shut-off switch used in two other major oil-producing nations as last-resort protection against underwater spills.
So once again the private sector screwed up and created a disaster that is way, way beyond private capabilities to fix things... and again it is government to the rescue: US military joins Gulf of Mexico oil spill effort. But government coming in after the fact to clean things up after the private sector created a major disaster is a very expensive way to do things. Maybe we ought to revisit that "government is bad" ideology that let's this kind of thing happen over and over again.
Anti-government ideology? Deregulation ideology? I wonder where it comes from? Well, all that Koch money you may have been hearing about, funding the Tea Party movement, funding the climate deniers, funding all that anti-government, anti-regulation crap -- that's oil money. Exxon, Schell and BP are in that mix as well.
This stuff follows a model developed by the tobacco companies to keep their franchise going after it became clear they were profiting from a product that was killing people. The model is to fund a political movement to throw as much smoke as possible in the air -- "doubt is our product" -- get people arguing about "personal responsibility" instead of our community responsibilities to each other, and turn people against government so it can't regulate. It works: tobacco still kills over 400,000 Americans a year and it's still legal -- and still very, very profitable. Revise and extend the model and you have today's conservative movement - a pay for play operation serving the biggest companies.
Meanwhile, here is one more reason the big corporations are opposing things like wind energy: Wind's latest problem: it ... makes power too cheap.
The key thing here is that we are beginning to unveil what I've labelled the dirty secret of wind: utilities don't like wind not because it's not competitive, but because it brings prices down for their existing assets, thus lowering their revenues and their profits.
Never forget the 11 workers who were killed.
April 28, 2010
This post originally appeared at Open Left.
Yesterday was the President's Deficit Commission and today is the Peterson summit. The very serious people (who didn't know there was a housing bubble) are telling us that our own government providing benefits to our people is baaaad and very unserious. (Military spending? What's that?)
As Paul mentioned here yesterday in a GREAT post, Campaign for America's Future is hosting a "Virtual Summit On Economic & Fiscal Responsibility (For People Who Did Not Wreck The Economy)". Mike Lux has pitched in there as well. Lots of great stuff.
So what about that deficit, and the Social Security crisis? Always, always keep in mind that the whole bruhaha over Social Security comes out of a strategic plan to get rid of it. As Paul pointed out in his post and as I have written about,
This strategy goes back to a larger Wall Street effort to get rid of Social Security. A 1983 Cato Institute Journal document, "Achieving a Leninist Strategy" by Stuart Butler of Cato and Peter Germanis of Heritage lays it out for us. The document is still available at Cato, and select quotes are available at Plotting Privatization? from Z Magazine. ...
[quotes from the Cato strategy document]
... Every time you hear that "Social Security is going broke" you are hearing a manufactured propaganda point. Every time you hear that "Social Security is a Ponzi scheme" you are hearing a manufactured propaganda point. Every time you hear that "Social Security won't be there for me anyway" " you are hearing a manufactured propaganda point.
Don't fall for it. If they can gut Social Security they stand to make a lot of money but you stand to lose your retirement.
AND never forget that the deficit was also manufactured on purpose, to defund government's ability to regulate business and protect citizens, and to force a shrinking of what the corporate right calls "big government." Government is We, the People making the decisions for ourselves, "big government" is We, the People making more decisions for ourselves. The only alternative is the wealthy and big corporations making the decisions for us instead. Don't fall for it. We didn't have deficits until we cut taxes on the rich.
At risk (and with full intent) of repeating myself allow me to offer these charts:
Dear Deficit Commission,
It's not hard to figure out why we have a huge deficit. It's so easy I don't have to use words. Here are some pictures:
Bill Clinton raised taxes on the rich. Bush cut them.
Now, about that huge national debt...
The second chart kind of explains itself. The third chart can help you find a place to get some money:
(Note: There is no more Soviet Union.)
In case that isn't clear enough, try this:
I'd like to add a chart from another post, 14 Ways a 90 Percent Top Tax Rate Fixes Our Economy and Our Country:
A consumption-based economy does better when consumers have more to spend. Perhaps not cause-and-effect, though I suspect so, but after FDR raised top tax rates the economy grew dramatically. The 90% top rate years under FDR, Truman, Eisenhower and the beginning of the Kennedy years were the years when we built the middle class. And remember, after Clinton raised top tax rates only modestly the economy grew. How's it been doing since Bush's tax cuts for the rich?
A look at economic growth rate charts shows a steady decline in the decades since top tax rates began to fall. Is it just a coincidence that the economy booms after tax increases that provide revenue to invest in new “seed corn,” and that the economy declines as we reduce taxes?
So that's my two cents...
Hey I forgot to mention that I am sitting in for Chris over at Open Left this week. I'll try to X-post but head over there for the full effect.
April 27, 2010
This post originally appeared at Open Left.
There is a big story out there, but not so big in the progressive blogosphere. For days now the Drudge Report has had a headline up, "OBAMA PLAYS RACE CARD". Initially the big headline (but no siren), it is still there as a smaller headline. The headline links to Politico: Obama seeks to 'reconnect...young people, African-Americans, Latinos, and women' for 2010
Of course, the Politico story makes no "race card" claim.
Turning out those so-called "surge" voters -- who turned out for the first time to back Obama, but who sat out gubernatorial races in New Jersey and Virginia last year -- has become the Democrats' central pre-occupation for the midterm elections, and the new Democratic effort to nationalize the election around Obama and his agenda mark an attempt to energize those voters.
Currently there are over 3000 comments to the Politico story, like:
"Pathetic...the very people who are his "base" are the ones who are the problem, the non-producers, the takers. These are the people who pay no taxes. Pathetic, absolutely pathetic."
Ahhh, the opening shot to garner the Hispanic vote as they work their amnesty legislative blitzkrieg through Congress, continuing their Socialistic attack on the Republic.
The racist president at it again. This white hating man should be thrown from power now, he does not reprent the American people, he represents hatred.
And 3000 more like those. Of course it's all over talk radio. Rush Limbaugh chimed in at length. And, of course, Fox News. Of course the RW blogs (scroll down to a list of other blogs just linking to this one post). Wash. Times.
So ... was President Obama "playing the race card" by appealing to those who were first-time voters in 2008? Are women even a "race?" Are right-wingers idiots?
Media Matters has more.
April 26, 2010
Can you spot the lie in this chart?
Answer is here.
A return to Eisenhower-era 90% top tax rates helps fix our economy in several ways:
1) It makes it take longer to end up with a fortune. In fact it makes people build and earn a fortune, instead of shooting for quick windfalls. This forces long-term thinking and planning instead of short-term scheming and scamming. If grabbing everything in sight and running doesn’t pay off anymore, you have to change your strategy.
2) It gets rid of the quick-buck-scheme business model. Making people take a longer-term approach to building rather than grabbing a fortune will help reattach businesses to communities by reinforcing interdependence between businesses and their surrounding communities. When it takes owners and executives years to build up a fortune they need solid companies that are around for a long time. This requires the surrounding public infrastructure of roads, schools, police, fire, courts, etc., to be in good shape to provide long-term support for the enterprise. You also want your company to build a solid reputation for serving its customers rather than cheapening the product, pursuing quick-buck scams, cutting customer service, etc. The current Wall Street/private equity business model of looting companies, leaving behind an empty shell, unemployed workers and a surrounding community in devastation will no longer be a viable business strategy.
3) It will lower the executive crime rate. Today it is possible to run scams that let you pocket huge sums in a single year, and leave behind the mess you make for others to fix. A high top tax rate removes the incentive to lie, cheat and steal to grab every buck you can as fast as you can. This reduces the temptation to be dishonest. If you aren’t going to keep the whole dime, why risk doing the time? When excessive, massive paydays are possible, it opens the door to overwhelming greed and a resulting compromising of principles. Sort of the definition of the decades since Reagan, no?
4) Combined with badly-needed cuts in military spending – we spend more on military than all other countries on earth combined – taxing the wealthy ends budget deficits and starts paying off the massive Reagan/Bush debt. This reduces and ultimately eliminates the share of the budget that goes to pay interest. The United States now has to pay a huge share of its budget just to cover the interest on the borrowing that tax cuts made necessary. Paying off the debt would remove this huge drag on our economy. (Never mind that Alan Greenspan famously called for Bush’s tax cuts by saying it was dangerous to pay off our debt – now that same Alan Greenspan says we need to cut benefits to retired people because our debt is so high.)
5) It will bring in revenue to pay for improvements in infrastructure that then cause the economy to explode for the better. Investing in modern transit systems, smart grid, energy efficiency, fast internet and other improvements leads to a huge payoff of increased prosperity for all of us – especially for those at the top income levels. Infrastructure improvement and maintenance is the “seed corn” of economic growth. We have been eating that seed corn since Reagan’s tax cuts.
6) (related) It will bring in revenue for improving our schools, colleges and universities. Not only will this help our competitiveness, but it will improve each of our lives and level of happiness.
7) It will boost economic growth and rebuild a strong middle class. A consumption-based economy does better when consumers have more to spend. Perhaps not cause-and-effect, though I suspect so, but after FDR raised top tax rates the economy grew dramatically. The 90% top rate years under FDR, Truman, Eisenhower and the beginning of the Kennedy years were the years when we built the middle class. And remember, after Clinton raised top tax rates only modestly the economy grew. How's it been doing since Bush's tax cuts for the rich?
A look at economic growth rate charts shows a steady decline in the decades since top tax rates began to fall. Is it just a coincidence that the economy booms after tax increases that provide revenue to invest in new “seed corn,” and that the economy declines as we reduce taxes?
8) It is good for business because increased revenue will enable increasing government spending for the benefit of regular people. This recirculates money into the economy more productively than the current system of putting huge fortunes into a few hands and hoping for a resulting consumption of high-end goods. The wealthy can only spend so muc h so more disposable income in the hands of regular people is good for business. Any business owner will tell you they want customers more than they want tax cuts. (Let’s wait until the top one percent no longer owns most of everything before we talk about whether there is an effect on investment.)
9) It protects working people. Exploiting workers with long hours, low pay or lack of pay increases, lack of worker protections, firing union organizers and schemes that call employees “contractors” will no longer pay off as it does today. The era of extreme union-busting came in at the same time as the tax cuts.
The chart shows the share of the richest 10 percent of the American population in total income – an indicator that closely tracks many other measures of economic inequality – over the past 90 years, as estimated by the economists Thomas Piketty and Emmanuel Saez.
10) It redistributes income and wealth in ways that help all of us. Currently a few people receive most of the income and own most of everything. A very high top tax rate reduces this concentration of wealth.
11) It fights the political instability that results from concentration of wealth. Great inequality in a society and the resulting loss of opportunity results in political instability that can lead to extreme ideologies, rebellion, etc. We are seeing all the signs of a resurgence of these problems today.
12) It will help rebuild our sense of democracy and belief in equality. As we have seen and are seeing, when too much is in the hands of too few, they have too much power and influence and use it to get even more.
13) It will strengthen the government that We, the People have worked hard to build, and strengthen its ability to enforce the laws and regulations that protect all of us and the resources we hold in common. It will increase its ability to provide all of us equally with the benefits of our joint efforts and our economy.
14) Finally, for good measure, increasing top tax rates will cause those affected to work harder to make up the difference. The Ayn Randians claim the very rich are the “producers” and all the rest of us are just parasites and slackers who feed off their “work.” So it will be very good for our economy to get them working harder by taxing them at 90%! You may have heard about those 25 hedge fund managers who brought in an average of $1 billion each last year – an amount that would have paid for 658,000 teachers -- while the rest of the country suffered through a terrible economy. If we had a top tax rate of 90% they would “only” take home $100 million or so each – in a single year. And we could have 658,000 more teachers. So it’s a win-win.
Taxes are how we all pitch in to enjoy the benefits and protections of modern society. Those benefits and protections are what enable people to become wealthy, and we ask that they give some back so others can prosper as well.
April 23, 2010
Watch as the most corrupt "Too Big To Fail" bank CEOs play a spirited game of "Taxpayer Hold 'Em" ... Not with their money ... but with yours! And sign our petition to send the message to Congress that it is time to put an end to taxpayer bailouts once and for all by breaking up the big banks and putting an end to "Too Big to Fail."
April 22, 2010
Conservatives just hate Europe. They think the US should be less like Europe. Its a thing with them.
So following along with this there was a big headline over at the conservative website Drudge Report the other day: "Even Obama's New $100 bill looks European".
Here's the thing. The Americans that conservative outlets like Drudge and Fox News appeal to with this sort of nonsense more than likely haven't been to Europe, so they don't know what European money looks like. If they had been to Europe they would also know a few other things about Europe:
* Europe has high-speed rail connecting major cities, and good transportation when you get there.
* Workers get 5-6 weeks vacation.
* Workers get generous pensions.
* People receive great medical care often completely covered by the government.
* Many countries offer paid parental leave.
* And more, leave a comment with your own additions.
And if you ask any conservative they'll tell you why these are bad things. Go figure.
I suspect that conservatives hate Europe because by comparison it shows off how badly America's conservative policies have failed us over the last 30 or so years!
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF. Sign up here for the CAF daily summary.
New video produced by the IBEW reveals the truth about what really happens when workers try to exercise their rights in the workplace: 78 percent forced to attend closed door meetings with management , 75 percent of employers bring in professional union-busters.
Its to time to fix our broken labor laws so all workers have the right to choose their future without fear of retribution or intimidation.
April 21, 2010
A regulator from the S&L crisis - when almost 2,000 people went to jail -- talks about the difference between then and now. You MUST watch this!
April 20, 2010
Conservatives claim that income from corporate dividends is "taxed twice" -- first when the corporation pays its taxes (if it does pay taxes), and then when the recipient of dividends pays taxes on that income.
They don't claim, however, that when you pay your plumber the plumber shouldn't have to pay taxes because you already paid taxes on your income. That's different, I guess, because you and your plumber both have to work. Income from working has no such considerations of favor.
This "taxed twice" argument was used by George W. Bush as a reason to reduce the tax rates on income received from corporate dividends. (He also said that taxing dividends is a tax on retired people. Heh.) This "taxing twice" is unfair, they say, even though owners of corporations receive many special advantages under our laws. One such advantage is limited liability, meaning that the owners are not liable to pay the company's debts, fines if the company violates rules or laws or court judgments if the company harms anyone. But Congress fell for it, possibly because of the amazing power of alliteration, and reduced taxes on the income from corporate dividends to no more than 15%. Fortunately this tax cut -- which mostly applies to the very rich -- expires soon.
Meanwhile the income that regular people receive from actually working is taxed at the rate of regular old income taxes. That's right, income from working is taxed at a higher rate than income from not working, with conservatives arguing that it shouldn't be taxed at all! In fact, in some areas they have completely succeeded; if your income comes from inheriting money in 2010 you won't pay any income tax at all!
Another huge tax break that is mostly just for rich people is the capital gains tax rate. The claim is that income that comes from selling an investment (rather than from working) should have a vastly lower rate as an incentive to invest. That rate currently tops out at 15%. There is no explanation why 15% is optimal for providing such an incentive, and not some other rate lower than regular income taxes, like maybe 5% less than your regular income tax. Apparently the reasoning is that only getting a 5% tax break if you make a fortune from an investment isn't enough to make the investment worthwhile. Of course potential huge profits from a successful investment are not sufficient reason to invest so the rich must be bribed further to open their wallets. (I guess the rich really are different from you and me.)
Tax breaks like these -- once again, only on income that is received for not working -- free the rich from concern and worry that they might be asked to pitch in and pay for the infrastructure that enabled their wealth -- and give them more energy to complain about the terrible budget deficits caused by people who worked for a living collecting the Social Security they paid into all of their working lives once they retire.
Republicans are accusing the Obama administration and the SEC of having a political agenda behind going after the financial companies that wrecked the economy, and are trying to warn them off from going after any more Wall Street firms.
Of course they have a political agenda. Fairly enforcing laws and regulations is good politics. Bringing Wall Street to justice is good politics. In a democracy it is the JOB of politicians to do the bidding of the public, which is to enforce the laws and protect consumers from fraud. Wall Street and Republicans don't like that one bit, and are doing what they can to stop the Obama administration from bringing Wall Street to justice.
See GOP seeks SEC records on Goldman, GOP probes whether Goldman charges were politically timed, Is the White House, SEC, and DNC Colluding to Destroy Goldman Sachs to Pass Financial Reform?, Hatch: Timing Of Goldman Lawsuit Is 'Very Suspect',
"This whole Goldman Sachs thing, isn't that a little odd that all of a sudden, right at the height of this legislative period, we suddenly have the SEC filing suit against Goldman Sachs?" Hatch asked..
"I think the timing is very suspect," he said
Bush ordered the SEC not to enforce regulations, not even against Bernie Madoff. It has taken time but the SEC has been rebuilt sufficiently to begin regulating again. Soon the Justice Department - ordered by Bush not to enforce any white collar laws at all -- will be back up to snuff and will be prosecuting as well.
The public wants these laws enforced, Wall Street doesn't and is paying the Republicans to front for them.
Please visit Campaign for America's Future's Virtual Summit On Fiscal & Economic Responsibility By People Who Did Not Wreck the Economy.
The Peterson Foundation is holding a summit on how to cut the deficit, and then comes the Obama Deficit Commission. But military spending is off the table, they aren't going to raise taxes on the rich and the direct target is Social Security. So Campaign for America's Future is holding an online counter-summit.
Start here: Lectured On Fiscal Responsibility By The Irresponsible By Dean Baker,
To kick off his deficit commission, President Obama is planning a big show on April 27 that will include a number of experts talking about the need to reduce the deficit. Not one person among this group saw the housing bubble and the risks that it posed to the economy.
The next day, billionaire Wall Street investment banker Peter Peterson is sponsoring a day-long deficit-fest. Peterson not only excluded all of the economists who had warned of the bubble, but his show actually features the leading villains in this story. Peterson has invited former Federal Reserve Board Chairman Alan Greenspan and former Treasury Secretary and Citigroup top honcho Robert Rubin to lecture the country on the need to tighten our belts.
Then take a look at Top 5 Things Deficit Hawks Don't Want You To Know About Social Security -- click through for video.
Also, Bill Scher's "Deficit Reduction Blindness" Syndrome Plaguing New York Times,
There's a strange affliction impairing several New York Times reporters, Deficit Reduction Blindness. The syndrome blocks your ability to see a government reduce a budget deficit without also seeing massive pain inflicted upon its people.
Reporters with DRB can easily spot deficit reduction when it involves shredding Social Security and slashing Medicare.
And, finally, reprinted here in full is my own Dear Deficit Commission, It's Not Hard:
Dear Deficit Commission,
It's not hard to figure out why we have a huge deficit. It's so easy I don't have to use words. Here are some pictures:
Bill Clinton raised taxes on the rich. Bush cut them.
Now, about that huge national debt...
The second chart kind of explains itself. The third chart can help you find a place to get some money:
(Note: There is no more Soviet Union.)
In case that isn't clear enough, try this:
Let me know if you still have any questions.
So go take a look. Any questions?
April 19, 2010
Here comes the corporate money and it is as bad as you can imagine. Lies, smears... Money is flooding in from Wall Street, smearing members of Congress who want to regulate Wall Street, accusing them of ... being on Wall Street's side.
In January and February she began tracking deceptive ads targeting Democrats in ten states that tie bank reform legislation to “Wall Street bailouts.”
One such television ad in Montana urges voters to contact Senator Jon Tester and tell him to oppose a “$4 trillion bailout” for Wall Street.
The ad, paid for by a group called the Committee for Truth in Politics, begins with ominous music as words appear on a black screen:
“Fat cat lobbyists. Special interests. Lining their pockets at our expense. HR 4173 already passed in the U.S. House.” Photos of House Democrats Nancy Pelosi and Barney Frank flash past. More words appear: “Soon to be considered in the Senate.” Photos of Harry Reid and Chris Dodd standing beside Frank and Pelosi pop up, followed by pictures that move almost too fast to follow: Wall Street, wads of cash, a man smoking a cigar and two men in suits shaking hands in front of the White House, scenes of people out of work, the word “foreclosure” and the figure $4,000,000,000,000. Then more words appear: “The Big Bank Bailout Bill. Lobbyists and Bureaucrats. They play. We pay.” (Photos of ordinary Americans.) “More taxes. Spending. Debt.” (A beleaguered-looking citizen in reading glasses, apparently doing his taxes.) “Call Your Senators” (phone numbers for Senators Max Baucus and Jon Tester). “We won’t be fooled again. EVER.”
HOW do we fight this?
A Pew Poll says Distrust in Government Skyrockets.
If you look at the poll you find that trust in government tends to drop through Republican administrations, and then rises through Democratic ones.
Also, there is a huge, well-funded anti-government effort out there with dozens of corporate-funded think tanks, an entire TV network, and all of talk radio. All the time, 20 hours a day, telling the public that government and democracy are bad, and corporations should run things. Marketing works, so I'm not surprised by these results.
One last point. Reading the poll - 142 pages - one thing runs through it. People don't see what government does for them anymore, and thinks that interests - especially the banks right now - are who the government is representing. I think some of that is people taking much of what the government does for granted, like roads, bridges, police, etc. I think some of it is that a huge amount of the spending is on things like military -- currently more than a $trillion for everything related to the military budget -- and interest on the Reagan/Bush debt.
April 18, 2010
It's American Idiot Week! over at Brilliant at Breakfast. First up is Bobby Jindal:
Our first Idiot, as Blue Girl reminds us, is Louisiana Governor Bobby Jindal, who just over a year ago, scoffed at the idea of volcano monitoring: Still think volcano monitoring is something to be mocked, there, Bobby? Here's something around which your greedy little Republican mind can perhaps wrap itself.
The figures below show the top 10% controlling nearly 70% of wealth. The bottom 50% of US citizens control just a little over 2% of the wealth.Then click through from there to this slide show of 16 slides about how much of our country's wealth has concentrated into just a few hands since Reagan.
50% of us together control just over 2% of all of the wealth in this country. A few at the very top control almost all of the country's wealth. They are at the top of the food chain and we are the food.
April 17, 2010
Now that the government has taken action against Goldman Sachs, maybe this case can be next? Stephen Friedman was Chair of the Federal Reserve Bank of New York as well as a Director at Goldman Sachs and made a killing on Goldman Sachs stock, while the NY Fed was involved in regulating the company, including the infamous AIG pass-through. And everyone knew it. Fed Had ‘Misgivings’ About Friedman’s Goldman Stock, Towns Says
The Oversight Committee will schedule a hearing “to learn more from Mr. Friedman and senior Fed officials about how he was permitted to make windfall profits by trading stock in a company he had a role in regulating,” the lawmakers said.
The Federal Reserve Bank of New York shaped Washington's response to the financial crisis late last year, which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after.
During that time, the New York Fed's chairman, Stephen Friedman, sat on Goldman's board and had a large holding in Goldman stock, which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy.
. . . Mr. Friedman also was overseeing the search for a new president of the New York Fed, an officer who has a critical role in setting monetary policy at the Federal Reserve. The choice was a former Goldman executive.
. . . Mr. Friedman, who once ran Goldman, says none of these events involved any conflicts. He says his job as chairman of the New York Fed isn't a policy-making one, that he didn't consider his purchases of more Goldman shares to conflict with Fed policy, and bought shares because they were very cheap.
He says he bought the shares because they were "very cheap." I guess everyone involved with the entire stock market was wrong because that is how shares are priced. It's called the "market price" which is the price, period, not too cheap, not too expensive. But this guy, who knew what moves the Fed was be making, knew something that no one else knew, and that is that they were too cheap. That is the very definition of insider trading and the very reason such things are considered a conflict of interest. And a crime.
See this, Friedmanism at the Fed,
... Stephen Friedman, the former chairman of the board of the New York Federal Reserve Bank and a member of the board of directors of Goldman Sachs. Through those two posts, Friedman may have had access to privileged information about the extent of Goldman's exposure to AIG and the opportunity to profit from the Fed's bailout of the beleaguered insurance giant. While he was serving on both boards, Friedman purchased 52,600 shares of Goldman stock, more than doubling the number of shares he owned. These purchases have since risen millions of dollars in value--and raised allegations of insider trading.
. . . Despite demands from Congress and the media, neither the Fed nor AIG disclosed the names of the banks or the amount of money each had received through the bailout until March 15, 2009, when AIG finally did so. While the public was left in the dark, Friedman nearly doubled his Goldman holdings by purchasing 37,300 shares for about $3 million. Friedman made that purchase on December 17, 2008, just over a month after the Fed decided to pay Goldman and the other banks full value for the insurance on mortgage-backed securities.
Insider trading is a criminal offense. The public deserves to know if that is what was going on here, and Mr. Friedman should be prosecuted if it was.
Here is a tax trick you hear all the time: we shouldn't tax corporations because they just "pass the taxes along to customers." Go to any of the usual anti-tax, anti-government sites and you'll see them trying to trick people with this.
First of all, if companies really did "pass taxes along to consumers," so what? Is that a reason not to pay for the roads, bridges, schools, courts etc., that enable the company to be profitable enough to pay taxes? But actually they don't -- because they can't.
This tax trick is based on a popular assumption that businesses can just raise prices whenever they want to. But a well-run business is already charging what they should charge for their product or service. If they have room to raise prices they should already have done so. But of course doing so this will cause them to lose sales to competitors.
Taxes are on profits, and profits are calculated at the end of a tax year by adding up all the revenue and subtracting all the costs. When a product or service is sold the company doesn't really know yet how much profit, if any, it will have at the end of the year, so it doesn't know what the tax will be, so how can it adjust prices? But if a company was able to just raise prices based on anticipation of profits, then the result would be that profits would be higher because of the higher price charged, which means taxes would be even higher, so the company should have raised prices even more, but that means the profit would be even higher, so they have to go back and charge more, but then ... I think you are starting to see how silly this idea of raising prices to cover taxes can get.
About those competitors - if one company is doing well and therefore making a profit, and another company is not doing so well, and therefore not making as much profit, and the first company raises prices to cover the taxes on the profit, then the second company has a price advantage so the first company loses sales and isn't going to have a profit after all so they really should put the prices back down, but then the other company's price advantage goes away and they are making a profit again so they should raise prices but ... Hey, this just gets silly, too!
Companies do not pass on taxes to their customers. So don't fall for this tax trick, it's just silly.
This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF. Sign up here for the CAF daily summary.
A look at conservative media, from Media Matters:
Note that the date on this is Saturday, April 17, one or two days after the New Orleans police said that much of what is in this never happened: Republican Officials Attacked and Injured in New Orleans - Townhall.com,
On the night of Friday April 9th, a petite female political operative and her boyfriend were attacked and seriously injured in New Orleans by a vicious group of crazed cowards who shrieked political insults while pouncing. After the pummeling, the petite female and her boyfriend were left, collectively, with a compound leg fracture, a concussion, a broken nose and broken jaw. No robbery occurred.
But wait!....Don’t waste your time--if you’re Googling for this item on CNN, New York Times, Wa-Po, MSNBC, Huff-Po, ABC, Salon, CBS, etc. --that is.
This story builds on the conservative resentment narrative - all those elites pick on people like me. It is very important for conservatives to feel they are victimized. The problem is that this is starting to incite actual violence.
Back in January, Frank Luntz wrote a memo saying that the best way to defend Wall Street from any new regulation was to spuriously characterize efforts at regulatory reform as leading to “endless bailouts.”
[. . .] [now] They claim that the bill “allows for endless taxpayer bailouts of Wall Street and establishes new and unlimited regulatory powers that will stifle small businesses and community banks.”
This doesn't quite capture the sense of that is happening.
Luntz said the way to kill financial reform was to characterize it as "endless bailouts" no matter what they propose.
This is how it works. You do a series of focus groups. You ask "if I told you so-and-so would that make you be against it?" If they say that if they were told that Democrats were stealing green cheese from the moon and forcing ducks to swim in it they would be against it - whatever "it" it - then you would start hearing from everywhere that Democrats were stealing green cheese from the moon and forcing ducks to swim in it. No. Matter. What. The. Truth. Was.
So yes, Republicans are going to say that the financial reform bill will lead to endless bailouts. It is what they were going to say -- all of them -- no matter what the bill has in it.
April 16, 2010
This post originally appeared at Speak Out California.
Many of us have wondered what conservatives mean by terms like "big government" and "freedom." Today the vice chairman of the California Republican Party gives us a hint. In Constitution guarantees freedom, not a cushy life, published in the Rev. Moon's Washington Times (do Christians know he's writing there?), Thomas G. Del Beccaro writes,
Today, politicians literally speak of the "rights" of people as they attempt to guarantee a certain standard of living for their constituent-subjects. Of course, most recently, the federal government took on the role of guaranteeing that Americans had a minimum standard of health care because, to the government, it was a right - however unenumerated.
Now, it would be one thing if a government could actually guarantee such standards of living, but it cannot. After all, before the Great Society was enacted to take on the War on Poverty, the government-measured poverty rate was 14 percent.The pre-Great Society federal budget was less than $130 billion.Since then, we have spent tens of trillions of dollars in good intentions and have a nearly $4 trillion budget, yet the poverty rate remains virtually the same 14 percent.
In the process, of course, we have diminished freedoms immeasurably - whether by forcing people to pay for those trillions or by being forced to be subject to government rules....
So "big government" means more rights for Americans, like the right to health care. And by "freedom" he means not being "forced" to help out other Americans. (Of course, the poverty rate was much lower before conservatives took over the government a few years back...)
Campaign for America's Future has a yearly conference in DC. It used to be called Take Back America. Now it is called America's Future Now and will be June 7-9.
Today is the last day that people can register for America's Future Now! and get Early Bird discounts. They are in effect until midnight ET.
Join progressive activists who are ready to turn Washington upside down.
Forge the strategy that will:
- Take on the corporate lobbies that stand in the way.
- Drive the movement for jobs NOW.
- Create the reform majority and challenge both obstructionist Republicans and compromised Democrats.
Join these speakers:
Van Jones, Phil Angelides, Arianna Huffington, Gov. Howard Dean, Deepak Bhargava, Anna Burger, James Rucker, Peter Lewis, Rep. Donna Edwards, Rep. Alan Grayson.
Here's one way that offshore tax havens work. You make an item in one country, and sell it at cost to a subsidiary that is based (post office box) in a tax haven country with no or low taxes. So there is no profit to report in the country that it was made in. Then, your company or another subsidiary buys it for import in the US, for a price near to the amount the product will be sold for here. So when it sells, there is no profit to be taxed here. All the profit occurs in the low-or-no tax country. We, the People collect no taxes with which to pay for the schools and roads that make our economy competitive.
This tax trick encourages companies to move offshore, closing factories, laying off workers, kill the local suppliers and force costs onto the community. So not only are we losing the tax base and suffering the loss of the jobs and factory, we're picking up many of the costs. When a company like Whirlpool says they have to close a plant and destroy a community for competitive reasons, it's because they can do it, and if they don't their competitors will. If their competitors do and they don't respond they lose out, even to the possible point of going out of business (and closing factories and destroying communities.)
Don't blame the companies. Companies do what we let them do. If you don't take advantage of this your competitors will. If your competitors gain enough advantage and you don't you even face going out of business -- and closing factories, destroying communities, putting the costs on the public etc. So by allowing this, Congress forces companies to do this. The word you hear is "encourages" but really, in a competitive environment, allowing it at all forces not encourages.
It is OUR job to set up the playing field on which these companies compete and to define the rules they will use. Zach Carter writes in 10 Ways to Force the Stinking Rich to Share Their Wealth,
According to the Government Accountability Office, 83 of the 100 largest American corporations (pdf) engage in this kind of tax evasion. All of those companies have lobbyists.These companies do it because we let them, which means we make them do it.
Congress: FIX IT!
April 15, 2010
How many ways can a person be out of touch with the things going on in America?
Good Lord, this guy should go talk to some actual working people in real America who are really struggling... I have an older friend in Palo Alto who still says housing prices always go up, because in Palo Alto they still do.
How many ways can people be tricked about taxes? Here are a few tricks I have come across.
* The rich already pay most of the taxes. You hear variations of this, most recently the news that 47% of Americans don't owe any federal income tax. But the fact is that the rich take in most of the income and literally own almost everything. You probably heard about 25 hedge fund managers getting $25 billion income last year? They get a special deal and don't pay income tax rates on that money. But regular people still pay Social Security, state and local and sales taxes on their income. In fact working people pay a higher overall tax rate than the super-rich, even if federal income taxes are not part of that.
One more thing - really, don't get me started - most income at the top comes from "capital gains" from things like stocks and property, but capital gains are taxed at a much lower rate than income that comes from from actually working.
* The new Tea Party Contract From America has as item 4: "enact fundamental tax reform; Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words -- the length of the original Constitution. (64.90 percent)."
Think about this. Since the rich pay most of the taxes, guess what happens to their taxes - and yours - if we move to a single tax rate for everyone. Clue: their taxes go way down and everyone else's go way up.
* Raising taxes on rich unlikely to cut deficit. You often hear stories like this -- that there just isn't enough money at the top to pay off the debt, so why bother? First, even if it doesn't completely close the budget gap, it sure would make a dent. Next, think about those 25 hedge fund managers who brought in $25 billion last year but don't even pay income taxes. That's a please to start right there, and it's just 25 people. Then think about the $140 billion Wall Street bonus pool that was paid out last year - a recession and bailout year. That all went to just a few more people. There's lots of money at the top.
* Taxes "take money out of the economy," or otherwise hurt economic growth. Where do they think the money goes? Taxing the rich might take money out of the economy of the Cayman Islands, but when used to fund investment in our economic future (roads, schools, R&D, etc.), it actually grows the economy.
Please let us know about some tax tricks you have heard, in the comments.
And finally -- Take a look at CAF's Taxes: Myths And Realities
April 14, 2010
A few weeks back I wrote about Whirlpool closing their Evansville, Indiana plant and moving the work to Mexico. I wrote about the lunacy of an economic system that encourages companies to destroy lives, communities and the very economy that the Whirlpools depend on. This company was taking stimulus dollars with one hand and laying people off with the other.
Whirlpool did this because they could do it, making a wealthy few a bit more wealthy, and because you and I - not Whirlpool - have to pick up all the costs. This is called externalizing costs. It means you and I pick up the costs and an already-wealthy, connected few pick up the cash. It's the way our system currently is designed.
A step toward a solution to this problem would be to require companies to start estimating the externalized effects of their actions. What is the cost of cleaning up all the discarded cigarette butts? What is the cost of cleaning up the trash near a McDonald's? What are the costs from the health effects of added salt or sugar? So how about requiring companies to just estimate externalized costs so that We, the People can start getting a handle on this problem. Just start Is that too much to ask?
Now there is a study of the ripple effects of the Evansville plant closing. The full study, Layoff at Whirlpool: Costs to the Evansville Metro Area and Indiana Taxpayers, written by Greg LeRoy, executive director of Good Jobs First, concludes that direct costs to the community (us) will include:
- An additional 1,536 “ripple effect” jobs, for a total loss of 2,502 jobs;
- The loss of $138 million in income, including about 90 cents in additional income lost for every dollar lost by a Whirlpool employee; and
- A decline in tax revenues of $17.7 million, especially property, sales and both personal and corporate income taxes.
But that's not all.
This taxpayer-cost estimate... does not include substantial lost federal revenues... Nor does it include social safety-net programs to assist the dislocated workers. However, for one such program alone we conservatively estimate that: - Unemployment Insurance Benefits for the dislocated Indiana Whirlpool workers will cost more than $4.15 million....
Combining tax losses with Unemployment Insurance costs generates a conservative taxpayer-cost estimate of more than $21.8 million—or $22,588 per worker dislocated in Indiana.
WE pick up those costs. A wealthy few get a bit wealthier. Welcome to the system.
But that's not all.
The surrounding retail stores, gas stations, and all other places these workers spend will see a drop in sales. Teachers, police, etc. will be under pressure as the local economy dries up. Homes will be foreclosed and property values for all will drop. The costs of those foreclosures will fall on others. Etc. All so a few already-wealthy will get a bit wealthier.
At least skim through the study to see all the ways the rest of us will be affected.
WE pick up those costs. A wealthy few get a bit wealthier. WE CAN CHANGE THE SYSTEM.
Past posts on Whirlpool's Evansville plant closing:
Whirlpool: Mexican Workers Paid $70/Week Can't Buy Refrigerators
Whirlpool Tells Callers: Call Congress. They're Right!
Whirlpool Exec Responds: The System Made Us Do It
Whirlpool Bites Hands Of American Taxpayers That Feed It
April 13, 2010
An important conference took place this week: Institute for New Economic Thinking. Go explore the website.
The job of the news media is supposed to be to inform, not misinform. But Tuesday's Washington Post story, Obama team points to smaller deficit numbers, makes this claim about the cause of the huge $1.4 trillion budget deficit for FY 2009.
The federal deficit was large when Obama took office, but it ballooned as the administration launched an ambitious stimulus program to soften the economic downturn, which was eating tax revenue and prompting increased spending on safety net programs.
But this just isn't the case, and it is vitally important that the public understand the real facts so they can make decisions about solutions. The New York Times, The Washington Post's competitor, offered a more honest explanation of the cause of the massive deficits, and even included a great chart. In last year's How Trillion-Dollar Deficits Were Created the Times pointed out that only $145 billion of the huge $1.4 trillion 2009 deficit was spending on the stimulus program and only another $56 billion was from other Obama programs. This is a fraction of that $1.4 trillion deficit of Bush's last budget year.
Obama did not "balloon" the deficit, as the Washington Post claimed. It was tax cuts for the rich, Iraq and military increases, Wall Street bailouts and other conservative policies and/or consequences of failed conservative policies.
Conservatives claim that President Obama "tripled the deficit" and point to the huge 2009 budget deficit as proof. The fiscal-year 2009 deficit, as reported in October was, indeed, about triple the prior year's borrowing. But the 2009 budget was the last budget year of the prior, conservative administration. It is just one more demonstration of the failure of conservative policies.My post used material from the conservative Cato Institute to back up the point.
Basic math: A budget year that ends 8 months into a President's first year wasn't that President's budget.
The public needs to know the real causes of the borrowing. If the cause was previous conservative policies, that leads to one set of solutions. If the public instead is led to believe the borrowing was caused by the incoming administration's efforts to solve that problem, they will be misled into possibly supporting policies that will just make the problem worse.
April 12, 2010
My wife's MacBook Pro has been having a problem ever since the most recent upgrade was downloaded: the cusor freezes for about 10 seconds every now and then. At first I thought it was maybe the hard drive, or something else. But after investigating online I find that a lot of people are reporting the same thing (8 pages of messages on that last one). They all say that after the 10.6.3 upgrade was downloaded and installed the trackpad, mice and keyboard all started having problems.
Has Apple heard about this? Why haven't they sent users a message explaining the problem? I'll bet a lot of people are spending money on "repairs," or new hard drives or all kinds of things. Why the silence?
When will it be fixed?
"China posted a $7.24-billion trade deficit in March, its first in almost six years"
The world is shocked by the announcement!
Last month I wrote that China was expected to report a trade deficit right about now, just before the Obama administration was scheduled to make a declaration on whether China is manipulating its currency or not, China's Coming Surprise Announcement And My Bridge On EBay,
On April 15 the Obama administration is required to officially declare whether China is manipulating its currency. SInce China is manipulating its currency there is a great deal of pressure on the administration to say so.
Surprise! On April 12 China is now said to be preparing to announce a trade deficit.
[. . .] Oh, by the way, I wanted to let everyone know that I will be selling a bridge on eBay, and invite you to bid. It's just coincidentally going to be auctioned just before the Chinese announcement.
And here we are, with the surprise announcement, and the statement that it means China doesn't need to adjust its currency, exactly as the administration takes the currency manipulation case to the G-20. China Says Trade Data Justify Its Yuan Policy
China ran its first monthly trade deficit in six years in March, data issued Saturday show, a development that, while likely temporary, was quickly seized on by the nation's commerce ministry to argue against the need to revalue the country's currency.
With imports of commodities surging last month, China swung to a trade deficit of $7.24 billion in March from a surplus of $7.61 billion in February, according to figures issued by China's Customs agency. Overall, imports were up 66% from a year earlier in March, with purchases of crude oil and copper at near-record levels in volume terms.
Note that the deficit comes after "[v]irtually all Chinese export factories closed for the last two weeks of February in observance of the Lunar New Year, which was unusually late this year" and is also because China's imports of raw materials surged. Raw materials. See if you can guess what a surge in imports of raw materials to a manufacturing engine means is about to happen? (Hint: it means a surge in manufactured goods is about to hit us.)
Of course, the Obama administration has put off their declaration. And China has hinted that they will increase the value of their currency a bit, so that their current pricing advantage of up to 40% will, in a year, be maybe ... 42%.
So things will get worse more slowly, just like the jobs situation. I guess everything is OK now.
Once again, Here is my 2010 midterm election prediction:
Gasoline prices are about to start climbing, and will continue to climb through the summer, and well into the fall. No one will be able to pin down exactly why.
April 11, 2010
From the people who brought you The Story of Stuff
If you want to know why Republicans are so nasty - and why it is so effective... I meant to point this out the other day, How Republicans Win,
... the Republicans believe they can reclaim the lucrative levers of national authority by making the country as ungovernable as possible while a Democrat is in the White House, essentially holding governance hostage until they are restored to power. Then, the Democrats are expected to behave as a docile opposition "for the good of the country" (and usually do).
The "destroy Obama" game plan tracks most closely with Newt Gingrich's strategy for undermining Bill Clinton 16 years ago. ...
[. . .] Having covered CIA destabilization campaigns in Third World countries, particularly Nicaragua, I was struck by the similarities. In the 1980s, the Reagan-Bush-41 administrations destroyed Nicaragua's leftist Sandinista revolution by systematically making the country ungovernable via a combination of economic dislocations, political/media propaganda, and paramilitary activities.
. . . By the second year of the Clinton administration, it seemed something similar was occurring in the United States, in part, because the Reagan-Bush-41 administrations had left behind not only a capacity for "information warfare" in the Third World but a domestic version of that propaganda infrastructure.
There is much more - it is an absolute must-read!
Have you seen
Media Behaving Badly | MediaFAIL?
Professional victimology. Inciting hatred. Racism. General nastiness.
This is as bad as anything you will find on any white supremacist site, but it's at Townhall: aka Republican Central.
Rather than repeat any of it, go read it for yourself.
April 10, 2010
Hey, big NY media is telling us to cheer up, the economy is doing great.
The employment report for March, released a week ago, was a milestone that has been little noted. The household survey, from which the unemployment rate is calculated, showed a gain during the first quarter of this year of 1.1 million jobs, the best performance since the spring of 2005.
Actually, that report showed that the economy still wasn't generating enough jobs to keep up with the number of new people entering the economy, needing jobs. Never mind the millions lost because of Wall Street. Never mind the people working part time because they can't find a good job. Never mind the loss of benefits, pensions and hope.
So here's the deal with news reports like this one. SOME people are doing really well. NY Times reporters are paid in the 6 figures, for example. I read this week that luxury goods are selling really well. The stock market is soaring. And we all know that Wall Street bonuses are the highest ever. So the nice restaurants that NY Times reporters go to are full of people with big salaries, sucked out of the heartland.
Of course, most people still working are are being told to work twice as hard and do it because they are terrified of being laid off or having their wages cut. A huge percentage of homes are "underwater" with the owners owing more than the house is worth. People are over their heads with credit card bills at 30% interest.
About that "owing" part - the people they owe it to are the people in those nice NY restaurants.
Right now hundreds of thousands of people are losing their unemployment checks every week because the legislators in Washington are ... spending their time in those nice restaurants instead of working to get jobs bills passed. They are also losing their health insurance because COBRA subsidies - and COBRA itself - are running out. People who managed to save money are getting almost zero interest, while the banks holding the money are using it to gamble the stock market ever higher.
There is a master class going to nice restaurants, blissfully spending the money sucked from the rest of us, and there is a worker class for whom the noose is just getting tighter.
"Why so glum?" the NY Times reporter asks, over a very nice dinner.
April 9, 2010
There are rumors that China will let its currency start to rise a tiny bit. China's currency undervalued by up to 40%, which means goods made there have as much as a 40% advantage coming out of the gate, even before their other rulebreaking trade schemes kick in. Since their currency should appreciate quite a bit from where it is now over the next year anyway a small rise in their currency actually does less than nothing. So for example, if they appreciate their currency 3% that means they start with a 40% advantage out the gate, and a year form now they’ll be at maybe 42%! It just means the situation will get worse more slowly.
From a NY Times story today, China Seems Set to Loosen Hold on Its Currency
The Chinese government is preparing to announce in the coming days that it will allow its currency to strengthen slightly and vary more from day to day, people with knowledge of the emerging consensus in Beijing said on Thursday. The move would help ease tension with the Obama administration about the United States’ huge trade deficit with China.
China, of course, has no intention of changing its mercantilist policies. Unfair advantages are bringing home the bacon (and cost us 2.4 million manufacturing jobs) and they want to keep it that way. Commerce Secretary Gary Locke says that their trade barriers might undercut any currency shift.
U.S. Commerce Secretary Gary Locke said China should allow the yuan to float, even though import barriers may undercut any boost for American exporters from a revaluation.
“Sometimes it’s like two steps forward and one step backwards, or two steps sideways” when dealing with China, Locke said in a Bloomberg Television interview. “They can revalue their currency, but if they still have market barriers or if they favor their domestic companies, then that revaluation of the currency will not make much of a difference."
Even this small currency change is is only being done to ease internal pressures, not to help ease the tremendous imbalances their policies are causing. From the NY Times story,
The move is being made for domestic policy reasons in China, primarily as an inflation-fighting tool, people with knowledge of the emerging consensus in Beijing said on Thursday. While any announcement could still be delayed, China’s central bank appears to have prevailed with its arguments within the Chinese leadership for a stronger but more flexible currency, these people said.
The internal pressure are rising because China is devoting a huge share of its GDP just to currency manipulation,
Holding down the value of the renminbi through huge currency market intervention has become an enormous expense for China. The central bank spent 9.2 percent of the country’s economic output last year on the purchase of foreign reserves, mainly Treasuries that are now paying low interest.
The NY Times asked a few economists to weigh in, in What China’s Currency Shift Could Mean. Take a look.
Call your representatives and tell them you demand that they take steps to fight Chinese trade rulebreaking. Keep up the pressure.
This weekend, CNN is giving four hours of free airtime to the leading propagandist fanning the flames of deficit hysteria, Pete Peterson, along with his lackeys. Bloggers and online activists are joining today to promote this action:
Click here to demand CNN stop giving free airtime to deficit crazies this weekend – And if they do go ahead with this programming, tell them to provide balance to Pete Peterson's deficit hysteria. Give equal time to defenders of Social Security, Medicare and public investment.
Roger Hickey discusses the CNN/Peterson Foundation deficit program with Dean Baker of the Center for Economic and Policy Research.
CNN plans to air Peterson's thoroughly debunked propaganda movie "I.O.U.S.A," – and then his acolytes will have free reign to spread their usual lies about Social Security, Medicare and government in general without any fiscal expert to challenge them and give a different point of view.
How do we know? Because CNN did the exact same thing with "I.O.U.S.A" last year. No debate. Just Peterson's propaganda.
Is this how "the most trusted name in news" should cover the debates on retirement security, job creation and fighting poverty?
We have just one day to get CNN to balance it's programming.
Whose voices will be shut out this weekend?
The nation's leading economists who are urging our government to use deficits today to invest in long-term prosperity – such as Paul Krugman, James Galbraith and Dean Baker.
The fiscal experts who have repeatedly said Social Security is sound and broader health care reform will protect Medicare.
All of you who voted for an active government to invest in our future.
While you are kept silent, who does CNN give the microphone to?
A multimillionaire Wall Street mogul who wants our government to slash investments while millions are losing their jobs. This guy had no problem taking tax cuts for the wealthy that caused our deficit problems – and his Wall St buddies crashed the economy.
NOTE: Peterson is holding an April 28 “Fiscal Summit” to once repeat his “way forward” out of the deficits caused by tax cuts for the wealthy and the financial crisis caused by Wall Street and the bankers. On the program: President Bill Clinton and former Treasury Secretary Bob Rubin, who deregulated the financial system, profiting Rubin’s Citibank – until the system melted down. Also on the program, Alan Greenspan, the former Fed Chief who presided over the deregulated banking system. These are the people Peterson chooses to lecture the rest of us about why we need painful austerity. This weekend’s CNN programs are just a setup for April 28.
We are in the midst of a great debate over the direction America should take.
"The most trusted name in news" should be the place where we have the debate, not where one opinion is deemed to be absolute truth.
We already have a cable news network that does that. We don't need another unfair, unbalanced channel
Speak out today. Don't let Pete Peterson take over the debate about our future.
I'll be on KIST progressive radio in Santa Barbara tomorrow (Saturday) a bit after 11am, maybe 11:15.
Click each picture to see who really said it.
April 8, 2010
I appeared on CNBC's Power Lunch today to discuss the trade imbalance with China. I was taking the position that we should be pushing for China to bring its currency into balance, and start following the trade rules, so that we can have a balanced and mutually beneficial relationship. Dan Ikenson, associate director of the Cato Institute's Center for Trade Policy Studies was on the show to argue the opposing view.
I was only on for about a minute, but here are the notes I had prepared:
The trade imbalance with China is huge. This imbalance is the result of rulebreaking that has created a bubble that is expanding beyond all safe margins. If we let it get worse it could lead to another worldwide economic disaster.
A study by the Alliance for American Manufacturing and the Economic Policy Institute found that 2.4 million (oops I said 2.8 on the show) American manufacturing jobs were lost between 2001 and 2008 due to unfair trade with China. The biggest share of those job losses was in technology by the way.
The solution – the way to bring the trade relationship back into balance – is actual free trade. That is trade that follows and enforces the rules and is not manipulated and is not exploitative. Actual free and fair trade lets companies and countries compete in a free, unmanipulated market that is on a level playing field with clear rules that benefit everyone.
But right now China is manipulating its currency to bring themselves a pricing advantage, some say by as much as 40%. This is NOT a level playing field, is NOT free trade, and is not following the rules of a FREE market! If they adjust their currtency by 5% over the next year, as rumored, they will start up and end up about 40% undervalued.
Some say we should be afraid to confront China. But China needs our market and they should be worried about taking this too far and the American public demanding action. And if China dumps their dollar holdings they would do it by selling dollars instead of buying them. Since buying dollars is how they have been forcing their currency down, selling them accomplishes the rebalancing we need. The dollar would drop against theirs, and our goods would be competitive. This is what we want to happen, not something to be afraid of.
Free Trade economists are also complaining about this manipulation. Here is Fred Bergsten, director of the Peterson Institute for International Economics:
“They clearly are manipulating. They're keeping their currency undervalued, somewhere between 25 to 40 percent. That has huge effects on the world economy, huge adverse effects on lots of other countries.”
Paul Krugman says it’s knocking 1.5% off our GDP, and "This is the most distortionary exchange rate policy any major nation has ever followed."
We want a level playing field, not manipulation of the rules. True free trade works for everyone and lifts everyone.
The main unfair and manipulated tactics China uses to its advantage are:
1) Currency manipulation. China "pegs" its currency at a very low, or "weak" rate, so goods from China cost up to 40% less than they otherwise should.
2) Labor-rights suppression has lowered manufacturing wages of Chinese workers by 47% to 86%.
3) There is massive direct government subsidization of export production in many key industries.
4) China allows environmental degradation that ends up affecting all of us.
5) Intellectual property theft and piracy mean that American products that could be sold are stolen instead.
6) China has a number of policies that block U.S. firms from market access.
The mission of Campaign for America’s Future is to build an economy that works for everyone. An unbalanced trade relationship creates an unsustainable global economy that works for the few.
Here is the segment. Let's see how those notes translate into a live segment:
So, I guess I told them a thing or two!
Well, at least they used a low-def camera for me. Things are generally better for everyone when they do that.
I will be on CNBC's Power Lunch today at approx. 1:15 Eastern, 10:15 Pacific, discussing trade with China.
I am told they're using a standard def camera, not a high def, so you don't need to keep the children away.
Update - Here is the segment:
April 5, 2010
Sara Robinson: None Dare Call It Sedition.
Want to have a little bit of fun and become absolutely outraged? Just go here and snoop around: Government Contracts - Defense Department, Federal Government Contracts
Try looking by zip code, like this one or any other in the DC area. Look at some of the companies and the amounts they are getting. Then try figuring out what they do. Try searching the address of companies getting defense contracts worth millions in Google and see who shares that address.
America's military spending is more than a trillion a year. More than all other countries on earth combined. It is just not possible to track all the little, tiny $20 million contracts awarded to political buddies, brothers-in-law, etc. And, of course, never forget that under Bush they made sure it went the right way. Click through to be reminded of just HOW corrupt Bush was.
While publicly saying that China is manipulating its currency -- a very big deal -- Treasury Secretary Geithner announced over the weekend the administration is getting around the problem of an April 15 deadline for declaring that China is a currency manipulator by ... pushing back the deadline. They are instead taking the issue to the G-20, beginning with meetings later this month in DC.
Geithner's official statement makes it clear,
China's continued maintenance of a currency peg has required increasingly large volumes of currency intervention. Additionally, China's inflexible exchange rate has made it difficult for other emerging market economies to let their currencies appreciate. A move by China to a more market-oriented exchange rate will make an essential contribution to global rebalancing.So there we have it: China is manipulating its currency and this is harming us and blocking badly-needed global rebalancing. Acknowledging the problem is the first step toward dealing with the problem.
Senator Grassley pointed out that story teaches us we just have to face up to it and deal with this. Grassley criticizes delay of Treasury report regarding China,
Sen. Chuck Grassley (R-Iowa) criticized Treasury Secretary Timothy Geithner for delaying the release of the Department's exchange rate report because it might strain relations with China.But this time the problem isn't denial it is action. Geither did cite China as a currency manipulator in his statement, but is not taking the official action of formally declaring them a currency manipulator.
. . . "If we want the Chinese to take us seriously, we need to be willing to say so in public," he said in prepared remarks. "The past few years have proven that denying the problem doesn't solve anything. The Treasury Department should cite China as a currency manipulator."
Fox News' take on it is different: "caving",White House Denies Charges of Caving to China on Currency. (Note that the story in no way mentions "caving", only the spin in the headline.)
The Way Forward
This is success. America's manufacturers, economists, unions and Main Street applied pressure demanding relief from China's assault on our economic base, and with this public acknowledgement have had some success. But not enough. The administration could not continue the pattern of years of denial.
So the question now is, what are we going to do about it?
News reports suggest that China is going to let its currency appreciate just a bit, maybe 5% over a year as a sop to placate the rest of the world. But this is an unacceptably small offering that does not even begin to address the magnitude of the problem and the damage being done. China currently enjoys a trade advantage of up to 40% because of their currency manipulation and continues to drain factories (and the accompanying knowledge and supply chains), jobs, markets, money and hope from the rest of the world. Productivity alone is rising enough to easily offset a 5% move. If this is the extent of China's response the imbalances and resulting tensions will only continue to worsen.
This is exactly the time to expand the challenge to the administration. The Graham-Schumer bill, S. 295, intends to "level the playing field" with China,
Specifically, the amendment allows for a 180 day negotiation period between the US and China to revalue its currency, if the negotiations are not successful, a temporary across the board tariff of 27.5% will be applied to all Chinese products entering the United States - a penalty that corresponds to their estimated currency advantage.
Beyond this one issue, there is a larger problem. What is America's strategy going to be, in a world that is half-mercantilist? Almost every other industrialized country is pursuing a national strategy. How are we responding? Until we have a national industrial/economic policy we remain at the mercy of "free markets" that are not free but are actually rigged against the American Main Street's economic interests.
April 4, 2010
Please read Only the truth has been changed to protect the guilty -- It's short and includes this great Rachel Maddow commentary:
April 3, 2010
Today's edition of "I used to be a Democrat, but..." nonsense:
"I was a card-carrying member of the ACLU, and I probably did inhale in college," Ducket said. Ducket, who is now an independent and did not vote for Obama, said the president has "carried things to an extreme."Uh huh. Right. Obama the socialist extremist. And this is a "Democrat." Right.
Follow the link to see why I am skeptical.
By the way -- Did you know that the Coffee Party has more members and more events across the country than the Tea Party people? The corporate media sure doesn't seem to know this.
Update - Ms. Ducket called me up to assure me she had been a Democrat, even marched for pro-choice, but was upset by new government regulations in the health reform bill. And that her name had been mispelled.
Take a look at this: Leadership, not Politics | Peter Schurman for Governor
The speech below by Rep. Paul Ryan lays out how the Republicans will campaign this fall. It is well-crafted propaganda, designed to get people to vote for what is really a corporate-run, privatized society replacing our democracy and distributing the benefits of everything that We, the People built over to a select few wealthy elites.
Lots and lots of people are buying it. There are a few reasons for this. I think the most important reason is that most people are not hearing anything else. There is nothing in any of the places where most people get information to counter this stuff.
Another reason people are buying it is that it draws on a few decades of trial-and-error narrative-building that has become a conventional wisdom. Many, many people actually believe now that cutting taxes increases revenue, taxes hurt and "take money out of" the economy, businesses always do things more efficiently and effectively than government, and the rest of the pro-corporate litany. Even our own Democratic leaders like President Obama frequently repeat this right-wing stuff, thereby destroying the credibility of progressive arguments.
The propaganda is backed by a rewriting of history that is taking place. Many people now think that Roosevelt's policies made the depression worse, etc. This is because the right is out there saying it over and over and no one is reaching the general public with anything to counter the lies. Today you can barely turn on a radio, open a newspaper, turn on the TV, go to most churches or go to many kinds of organized group activities like hunting groups, veterans groups, etc. without being blasted with this stuff.
Oh, and one more thing, you can't listen to any Republican, anywhere, talk without hearing the same points as you hear on the talk radio shows or read in the ubiquitous op-eds repeated almost word-for-word, driving the point home to people over and over from every direction. Imagine Democrats trying to drive a coherent, coordinated and repeated narrative. HA!
Those of us who believe in democracy need to come up with a public campaign to counter this stuff before it is too late. This requires a change in the way we think. Each of us must understand that our efforts have to start reaching out to the broad, general public, not just blog-readers, and make the case. The public out there beyond the blogosphere needs to hear reasons why one-person-one-vote democracy is better for them than one-dollar-one-vote "free market" corporatocracy or else they are naturally going to choose the latter. You can't blame people for making this choice if the only thing they are hearing out there in Kansas and Texas and Alabama is one side of the argument, and the other side isn't even engaging.
I'm saying we should start thinking about things like DailyKos and Firedoglake ads on the sides of buses. We should be thinking about putting up billboards that say "Government is We, the People making the decisions instead of big corporations making the decisions." We should be thinking about hosting public speaking engagements and getting our Fox-watching relatives to come.
So please read the following with the idea of how to counter it in mind. Instead of arguing with all the lies and distortions you are about to read, think about how to talk to regular people in ways that help them understand why democracy, taking care of each other, and our all-of-us-in-it-together progressive values benefit them.
For example, counter-arguments include informing people of the fact that government is "We, the People" making decisions for ourselves -- so "big government" really just means more control by the people over how our resources are used, and over our own lives. The tax burden rests on fewer people at the top because wealth is so greatly concentrated that a few people now get most of the income and control almost all of the wealth. And of course, much of what is complained about in the following was actually forced on us by Republicans, like the massive debt!
So here it is: Should America Bid Farewell to Exceptional Freedom? By Rep. Paul Ryan
Last week, on March 21st, Congress enacted a new Intolerable Act. Congress passed the Health Care bill - or I should say, one political party passed it - over a swelling revolt by the American people. The reform is an atrocity. It mandates that every American must buy health insurance, under IRS scrutiny. It sets up an army of federal bureaucrats who ultimately decide for you how you should receive Health Care, what kind, and how much...or whether you don't qualify at all. Never has our government claimed the power to decide when each of us has lived well enough or long enough to be refused life-saving medical assistance.
This presumptuous reform has put this nation ... once dedicated to the life and freedom of every person ... on a long decline toward the same mediocrity that the social welfare states of Europe have become.
Americans are preparing to fight another American Revolution, this time, a peaceful one with election ballots...but the "causes" of both are the same:
Should unchecked centralized government be allowed to grow and grow in power ... or should its powers be limited and returned to the people?
Should irresponsible leaders in a distant capital be encouraged to run up scandalous debts without limit that crush jobs and stall prosperity ... or should the reckless be turned out of office and a new government elected to live within its means?
Should America bid farewell to exceptional freedom and follow the retreat to European social welfare paternalism ... or should we make a new start, in the faith that boundless opportunities belong to the workers, the builders, the industrious, and the free?
We are at the beginning of an election campaign like you've never seen before!
We are challenged to answer again the momentous questions our Founders raised when they launched mankind's noblest experiment in human freedom. They made a fundamental choice and changed history for the better. Now it's our high calling to make that choice: between managed scarcity, or solid growth ... between living in dependency on government handouts, or taking responsibility for our lives ... between confiscating the earnings of some and spreading them around, or securing everyone's right to the rewards of their work ... between bureaucratic central government, or self-government ... between the European social welfare state or the American idea of free market democracy.
What kind of nation do we wish to be? What kind of society will we hand down to our children and future generations? In the coming watershed election, the nature of this unique and exceptional land is at stake. We will choose one of two different paths. And once we make that choice, there's no going back.
This is not the kind of election I would prefer. But it was forced on us by the leaders of our government.
These leaders are walking America down a new path ... creating entitlements and promising benefits that model the United States after the European Union: a welfare state society where most people pay little or no taxes but become dependent on government benefits ... where tax reduction is impossible because more people have a stake in the welfare state than in free enterprise ... where high unemployment is accepted as a way of life, and the spirit of risk-taking is smothered by a tangle of red tape from an all-providing centralized government.
True, the United States has been moving slowly toward this path a long time. And Democrats and Republicans share the blame. Now we are approaching a "tipping point." Once we pass it, we will become a different people. Before the "tipping point," Americans remain independent and take responsibility for their own well-being. Once we have gone beyond the "tipping point," that self-sufficient outlook will be gradually transformed into a soft despotism a lot like Europe's social welfare states. Soft despotism isn't cruel or mean, it's kindly and sympathetic. It doesn't help anyone take charge of life, but it does keep everyone in a happy state of childhood. A growing centralized bureaucracy will provide for everyone's needs, care for everyone's heath, direct everyone's career, arrange everyone's important private affairs, and work for everyone's pleasure.
The only hitch is, government must be the sole supplier of everyone's happiness ... the shepherd over this flock of sheep.
Am I exaggerating? Are we really reaching this "tipping point"? Exact and precise measures cannot be made, but an eye-opening study by the Tax Foundation, a reliable and non-partisan research group, tells us that in 2004, 20 percent of US households were getting about 75 percent of their income from the federal government. In other words, one out of five families in America is already government dependent. Another 20 percent were receiving almost 40 percent of their income from federal programs, so another one in five has become government reliant for their livelihood.
All told, 60 percent - three out of five households in America - were receiving more government benefits and services (in dollar value) than they were paying back in taxes. The Tax Foundation estimates that President Obama's budget last year will raise this "net government inflow" from 60 to 70 percent. Look at it this way: three out of ten American families are supporting themselves plus - through government - supplying or supplementing the incomes of seven other households. As a permanent arrangement, this is individually unfair, politically inequitable, and economically dangerous.
It raises a subtle but real threat to self-government when the few are paying more and more of the bill for government services and subsidies to the majority: "He who pays the piper calls the tune." The next chapter is the rule of "crony capitalism," where those who pay most taxes get the privileges, and government by and for the people is replaced by government by and for the few. The end of this story is soft despotism.
We already see enough of "crony capitalism." When government sends bailout money to Wall Street firms they label "too big to fail," that's "crony capitalism." When government buys shares in General Motors, names their management, and dictates their salaries, that's "crony capitalism." When big health insurance companies, instead of competing for market, team up with Congressional Health Care writers to order every individual to buy their products, that's "crony capitalism." When thousands of small businesses have to meet bottom lines with no government bailout, well, you're too small to succeed...good luck!
The Democratic leaders of Congress and in the White House hold a view they call "Progressivism." Progressivism began in Wisconsin, where I come from. It came into our schools from European universities under the spell of intellectuals such as Hegel and Weber, and the German leader Bismarck. The best known Wisconsin Progressive was actually a Republican, Robert LaFollette.
Progressivism was a powerful strain in both political parties for many years. Theodore Roosevelt, a Republican, and Woodrow Wilson, a Democrat, both brought the Progressive movement to Washington.
Early Progressives wanted to empower and engage the people. They fought for populist reforms like initiative and referendum, recalls, judicial elections, the breakup of monopoly corporations, and the elimination of vote buying and urban patronage. But Progressivism turned away from popular control toward central government planning. It lost most Americans and consumed itself in paternalism, arrogance, and snobbish condescension. "Fighting Bob" LaFollette, Teddy Roosevelt, and Woodrow Wilson would have scorned the self-proclaimed "Progressives" of our day for handing out bailout checks to giant corporations, corrupting the Congress to purchase votes for government controlled health care, and funneling billions in Jobs Stimulus money to local politicians to pay for make-work patronage. That's not "Progressivism," that's what real Progressives fought against!
Since America began, the timid have feared the Founding Fathers' ideas of individual freedom, so they yearn for Old World class models. Our Progressivists are the latest iteration of that same fear of the people. In unprecedented numbers, Americans are speaking out against the intolerable Health Care bill and irresponsible debt-ridden spending.
Does anyone recall Norman Rockwell's famous "Freedom of Speech" painting of an average working Joe standing and speaking his mind at a town hall meeting? Today's Progressivists ridicule average Americans speaking out at tea parties across the nation and denounce their criticisms as "un-American." Millions of average Americans reject their big government solutions, and that scares them.
Last January President Obama said: "There are simply philosophical differences that will always cause us to part ways. These disagreements, about the role of government in our lives, about our national priorities and our national security, have been taking place for over two hundred years."
He was right. So let's examine these "philosophical differences" of government. Progressivists say there are no enduring ideas of right or wrong. Everything is "relative" to history, so our ideas need to change. Progressivists say the Founders' Constitution including its amendments, with its principles of equal natural rights, limited government, and popular consent is outdated. We should have a "living constitution" that keeps up with the times. Progressivists invent new rights and enforce them with a more powerful central government and more federal agencies to direct society through the changes of history. And don't worry, they say. Bureaucrats can be controlled by Congressional oversight.
Would you like an example of how successful Congressional oversight is? Fannie Mae and Freddie Mac, the Government-Sponsored Enterprises (or GSEs), underwrote trillions of dollars in junk mortgages. Year after year their officials and others from HUD, Treasury, and other agencies who supervise them marched up to Congress for hearings. Red flags were raised. The oversight committees had other priorities and dismissed them out of hand. With the housing market already tanking, Financial Services Committee Chairman Barney Frank said: "This ability to provide stability to the market is what, in my mind, makes the GSEs a congressional success story." Less than 18 months later, the ‘market-stabilizing' GSEs went belly-up due to their shoddy business practices, collapsing the mortgage credit industry and sparking the worldwide financial meltdown. No one knows the ultimate cost to the taxpayers but it will be gigantic.
If Congress can't control what a few mortgage finance bureaucrats do with your dollars, why would anyone trust Congress to control what tens of thousands of bureaucrats will do with your health?
The Progressivist ideology embraced by today's leaders is very different from everything rank-and-file Democrats, independents, and Republicans stand for. America stands for nothing if not for the fixed truth that unalienable rights were granted to every human being not by government but by "nature and nature's God." The truths of the American founding can't become obsolete because they are not timebound. They are eternal. The practical consequence of these truths is free market democracy, the American idea of free labor and free enterprise under government by popular consent. The deepest case for free market democracy is moral, rooted in human equality and the natural right to be free.
A government that expands beyond its high but limited mission of securing our natural rights is not progressive, it's regressive. It privileges the powerful at the expense of the people. It establishes the rule of class over class. The American Revolution and the Constitution replaced class rule with a better idea: equal opportunity for all. The promise of keeping the earnings of your work is central to justice, freedom, and the hope to improve your life.
In their hearts Americans know this, but people were alarmed in 2008 by rising unemployment, falling home values, a credit crunch, and a financial meltdown.
They voted for a change of parties in the White House, and elected the largest Democratic Congressional majority in more than three decades. So overwhelming was their majority that the opposition is unable to do anything to stop them from running roughshod over our foundations. Harry Reid had a supermajority in the Senate that could not be filibustered. Still, the people's mandate for Congress and the new President was clear, simple, and unmistakable: get employment back on track ... get our economy growing again.
Americans have lost jobs nearly every month since these leaders took over the federal government in January 2009, more than 4 million at last count. The official unemployment rate hovers near 10 percent, but if we add in folks who have stopped looking for work due to lack of job prospects, the rate is a lot higher.
They began by passing the first Stimulus, a taxpayer giveaway to their favorite special interests. The price tag was $862 billion. They pushed through a second stimulus bill that cost you another $18 billion. Let's see: since 4 million Americans have been unemployed since they passed these "stimuli," that averages $220,000 per job lost. Think about that. Democrats can't even put people out of work without spending near a trillion dollars!
Just to return to where we were at the end of 2007, 8.4 million jobs have to be created. To reduce unemployment to its pre-crisis level of 5 per cent by the end of President Obama's term, our economy needs to create 247,000 new jobs per month. But we are headed in the wrong direction ... except in one field: the government is growing at breakneck pace in expanding federal payrolls.
Although millions of private sector jobs have been lost since the recession began, Washington is on track to add about 275,000 more people to the public payrolls - a whopping 15 percent increase. And we aren't talking minimum wages here. More federal workers make over $100,000 than those earning $40,000 or less. The average government worker's salary in 2009 was 21 percent higher than private sector salaries. The average federal worker's compensation package, including benefits, was nearly $120,000 in 2008, twice the private sector at $60,000. One study shows the private sector benefit package averages $9,900 while the federal package averages almost $41,000. Now the Administration wants Congress to privilege federal workers by writing off their unpaid student loans after ten years. People in productive private sector jobs would keep paying for twenty years. Progressivists would really like everyone to work for the government.
Has any Congress in history enacted, or tried to enact, so many foolish, squalid, and counterproductive programs?
It isn't good news when anyone losses his job. But I'll make an exception when the Speaker of the House and the Senate Majority Leader lose theirs in November!
As their first major item of business last year, these leaders pushed through a budget so bloated that it will double the federal debt in five years, and triple it in ten.
Now the Administration has sent Congress a budget that's far worse. The nonpartisan Congressional Budget Office [CBO] reports that 10 years from now, this budget will drive the federal debt burden up to 90 percent of the nation's entire economic production. It propels spending to a new record of $3.8 trillion next year [FY 2011]. It widens the annual deficit to a new record of $1.5 trillion this year [FY 2010], and raises $1.8 trillion in new taxes through 2020.
Two and a half years after this recession started, and no new private jobs? Think what these mind-boggling tax increases and mountain of debt are signaling to people who want to open or expand job-creating businesses. Congress keeps raising the barriers against work and production - that's your answer.
At a time when economic and job expansion should be Washington's highest priority ... and as if the multi-trillion dollar Health Care debacle were not enough, the Progressivist leadership in Congress are adding insult to injury by promoting their energy and climate agenda through their Cap and Trade plan. Put aside the fact that there is growing disagreement among scientists about climate change and its causes. This bill is a big mistake for other reasons.
CBO estimates that Cap and Trade's total cost is another near-trillion dollars. By one CBO estimate, the tax and energy cost bills for the average American household may grow by $1,600 a year. Other studies put this cost a lot higher.
If you don't believe me, let me quote a key Democratic Senator:
Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket. Coal-powered plants...natural gas...whatever the plants were, whatever the industry was...would have to retrofit their operations. That will cost money. They will pass that money on to consumers...So if somebody wants to build a coal-powered plant, they can; it's just that it will bankrupt them because they're going to be charged a huge sum for all that greenhouse gas that's being emitted.
That was Senator Barack Obama in January 2008, talking about what he would do as President. Don't say the man doesn't work to keep his promises!
Economists across the spectrum tell us that Cap and Trade would make our long-term national economic production fall below potential, causing higher unemployment. Federal spending is on an unsustainable path that can only get worse if this happens. There is general agreement that the environmental improvements from Cap and Trade are either nonexistent or too small to measure.
Congressional leaders are also pushing an unprecedented expansion of the Federal Reserve Board's regulatory powers over financial institutions under the belief that government must protect the people from themselves. This measure will direct federal agents to inspect, and at their pleasure object to, the wages and compensation which businesses on Main Street as well as Wall Street wish to pay employees. It puts bureaucracies in charge of deciding the type and line of credit which consumers and businesses will have access to when they shop for cars, homes, education, and expansion of facilities. The Fed has already failed the twofold assignment it has - keeping the economy and jobs growing, and keeping prices stable. It should return to its original mission of guaranteeing the long-term value of our dollar. Instead the same leaders who never knew the government mortgage giants were supplying credit for worthless mortgages now want Fed bureaucrats to regulate the businesses that supply personal and commercial credit? If that happens, economic recovery will be a longer time coming.
And now I want to return to the Health Care Frankenstein. Most Americans understand that government-run Health Care is not free, not cheap, and not compassionate. I think most Americans believe Congress has no idea of what the public demand will be for subsidized Health Care. They are correct. When Medicare was enacted, Congress guessed it would cost about 10 percent of what it turned out to be after 25 years. Heck, Congress couldn't even figure the cost of the 3-month long Cash for Clunkers subsidy last year, underestimating it on the order of 1 to 9. Most Americans know the Congressional majority are clueless about what their government-run Health Care system is going to cost.
The drama that brought this creature to life was unedifying ... part tragedy and part farce. Ethical categories went out the window. Never in history have the deliberations of Congress been subverted on this scale. The secrecy, the lack of transparency, the half-truths were stunning. The votes called at midnight ... the 2 and 3 thousand page bills members of Congress had no time to read before the votes ... the sordid backroom deals, the Cornhusker Kickback that shamed Nebraska, the Louisiana Purchase, the "Gator Aid" Medicare privilege for Florida, the additional Medicare dollars for states whose wavering representatives only yesterday were ferociously denouncing earmarks ... the federal judgeship dangled for one lawmaker's brother ... the raid on the Medicare piggy bank ... the lie that $250 billion for "doc fix" shouldn't count as a Health Care cost ... the double-counted deficit estimate scam that would land any accountant in jail ... the proposed Slaughter rule that Congressmen not record a vote on a bill their constituents hate, just "deem" it passed and vote on the amendments...and to complete the farce, the phony Executive Order pretending not to fund abortions when the Health Care bill, as "the supreme law of the land," does fund abortions. The level of political corruption to buy the votes for this debacle makes all past examples look penny ante by comparison.
Self-government stands or falls on integrity, not only in those who represent you but in the enactment of law. This indecency soiled our freedom and embarrassed the democracy we promote in other nations. And this may not be the last of it. To enact its transformative agenda, this leadership employs the Machiavellian saying that the end justifies the means. America was born in a revolution against that whole idea. Soon it will be the norm.
The Constitution and the consent of the people are all that stand between limited and unlimited government power. Zealous ideologues with the best of intentions brush aside the limits on power in order to get whatever they believe is good for the people ... no matter what the people believe. Our system of freedom can survive an assault, but it won't survive if the people are frightened, or angry, or asleep at the switch. A great Democrat, President Andrew Jackson, once said: "eternal vigilance by the people is the price of liberty." We can thank our current leaders at least for this: they have awakened the nation to the danger of taking self-government for granted.
Congress is not only enacting a social welfare state agenda over the objections of the people. It is failing to address the problems that threaten to engulf our country, principally economic decline and entitlement-driven debt crisis. The coming election will be a referendum on the agenda of our current leadership. Either it will give them a mandate that says "more of the same," or it will end the abuse of power and put America back on the path of growth and freedom.
Supposing the American people use their referendum in November to elect a new majority, what would the next Congress do?
The first order of business will be "repeal and replace." We will work to repeal federalized Health Care and replace it with a robust, competitive open market in health care that puts patients and their doctors at the center - not employers, not insurers, and not government agents. This takes at least two elections, and we must show our perseverance.
A new Congress will then turn to the great problem of our stagnant economy and the debt tsunami bearing down on us. The days of pretending not to notice are over. The next Congress will understand this threat and act after transparent deliberation and real debate.
I have put forward my specific solution, called "A Roadmap for America's Future," to meet this challenge. The CBO confirms that this plan achieves the goal of paying off government debt in the long run - while securing the social safety net and starting up future economic growth.
The problem in a nutshell is this: Medicare, Medicaid, and Social Security, three giant entitlements, are out of control. Exploding costs will drive our federal government and national economy to collapse. And the recession plus this Congress' spending spree have accelerated the day of reckoning.
Today, Medicare is $38 trillion short of its promised benefits. In five years, the hole will grow to $52 trillion. Your family's share of this gap is $458,000. Medicaid will add trillions more in state and federal debt.
Social Security's surplus is already gone, and its debt is mounting. Unless its finances are strengthened, the government will be forced to cut benefits nearly 25 percent or raise payroll taxes more than 30 percent.
Both Republicans and Democrats have failed to be candid about this. And we have only postponed the crisis by shaking a tin cup at China and Japan.
A new Congress could start by making you the owner of your health plan. Under my Roadmap reform, a tax break that now benefits only those with job-based health insurance will be replaced by tax credits that benefit every American. And it secures universal access to quality, affordable health coverage with incentives that hold down health-care cost increases.
Everyone 55 and over will remain in the current Medicare program. For those now under 55, Medicare will be like the health-care program we in Congress enjoy.
Future seniors will receive a payment and pick an insurance plan from a diverse list of Medicare-certified plans - with more support for those with low incomes and higher health costs. To reform Medicaid, low income people will receive the means to buy private health insurance like everyone else.
Under the Roadmap's Social Security proposal, everyone 55 and older will remain in the existing program with no change. Those under 55 will choose either to stay with traditional Social Security, or to join a retirement system like Congress's own plan. They will be able to invest more than a third of their payroll taxes in their own savings account, guaranteed and managed by the federal government. For both Social Security and Medicare, eligibility ages will gradually increase, and the wealthy will receive smaller benefit increases.
And we need to get this economy moving again, so the Roadmap offers taxpayers an option: either use the tax code we have today, or use a simple, low-rate, two-tier personal income tax that gets rid of loopholes and the double taxation of savings and investment. And let's replace corporate income taxes with a simple, competitive 8.5 percent business consumption tax. These low-rate and simple tax reforms would provide the certainty and the incentives for investors to open new enterprises and for workers to find a marketplace expanding in new jobs.
The Roadmap plan shifts power to individuals at the expense of government control. It rejects cradle-to-grave welfare state ideas because they drain individuals of their self-reliance. And it still honors our historic commitment to strengthening the social safety net for those who need it most.
I would welcome honest debate in the next Congress on how to tackle our fiscal crisis - and the larger debate on the proper role of government. It's time politicians in Washington stopped patronizing the American people as if they were children - deferring tough decisions and promising fiscal fantasies. Tell Americans the truth, offer them a choice, and count on them to do what's right.
A political realignment is on the way. Democratic leaders are staking their party's future on their ideological agenda. Financial Services Committee Chairman Frank candidly admits that his party "are trying on every front to increase the role of government." Former President Clinton told a Netroots convention last year that "We have entered a new era of progressive politics, which if we do it right could last 30 or 40 years."
The question is, do we realign with the vision of a European-style social welfare state, or do we realign with the American idea?
My party challenges the whole basis of the Progressivist vision of this country's future. We challenge their attack on American exceptionalism. We challenge their claim that bureaucratic centralization is the only way the US can meet the economic and social challenges of our time.
Those leaders have underestimated the good sense of the American people. They broke faith with independents, Republicans, and their own rank-and-file. They walked away from the foundational truths that made America the wonder and the envy of the world. The price of their infidelity will be high.
I hope you won't mind an aside. I absolutely love Oklahoma! As you may know, I married Janna Little, daughter of Dan and Prudence Little, from Madill. Well, Janna and I are planning on spending half of our year here in retirement. And I can tell you it won't be Summer...it's just gets too hot here for a Wisconsinite. We will be spending the Fall and Winter here. You see, I love to hunt and fish. Each year we come for deer, duck, and turkey season. Janna refers to these times as Thanksgiving, Christmas, and Easter. There's something about Oklahoma that is truly captivating. It's a beautiful, big, unconstrained country with great-hearted people who know what it is to live like free men and women.
Some of my friends in Marshall County have on occasion called me "yankee," which I find particularly disturbing. I have always thought a yankee is someone from the Northeast, not the upper Midwest. Needless to say, I am told this can be fixed if I include among my life's achievements the high and noble accomplishment of noodling a giant catfish from the banks of Lake Texoma. And so, I will be returning in early June, otherwise known as noodling season, to gain this rite of passage so that I may never be called yankee again, and also hoping I keep my ten fingers intact.
Knowing America, and Oklahoma as I have come to know it, I am confident that the American character is up to every challenge. America is not over. This exceptional nation will not go down the way of mediocrity. Ronald Reagan used to say: "Freedom is never more than one generation away from extinction ... It must be fought for, protected, and handed on for [our children] to do the same." We are that generation. The fight is our fight, and it begins now! The time is at hand to reclaim America for freedom.
Thank you very much.
Note: Congressman Paul Ryan delivered this speech to the Oklahoma Council of Public Affairs in Oklahoma City on March 31, 2010.
Paul Ryan represents Wisconsin's First Congressional District. He serves as ranking member of the House Budget Committee and senior member of the House Ways and Means Committee.
April 2, 2010
What will it mean to American businesses if - I should say when - Chinese imports cost as much as they should cost?
A currency and trade rebalancing is going to happen sooner or later because it has to. We can't run a trade deficit forever. If something is unsustainable it can't be sustained. Eventually we have to earn the money to pay off what we are borrowing and the only way to do that is with exports. The first step to that is to stop importing so much and at least make things to sell to ourselves.
This rebalancing could happen because China lets its currency approach market levels. Or, if China refuses to stop unfairly subsidizing their exports (their currency manipulation is just one piece of that) our government will have to impose tariffs on imports from China. There are other things that could change the current trade imbalance. The only thing that is for sure is that the current situation can't just continue. We can't just keep sending factories, supply chains, jobs, and dollars away. It's a bubble that has to pop. And it will. American business should be planning for this approaching new era of American manufacturing.
Once the Chinese import bubble pops new phrases will enter the lexicon, so start getting used to them. "Re-shoring," "on-shoring" and "insourcing" will replace "offshoring" and "outsourcing."
A week ago I wrote about a CNBC segment on this,
For many years we've been hearing about outsourcing and offshoring. President Obama has started taking steps to rebalance world trade and the pendulum is about to start swinging the other way. More and more often you'll be hearing new words: "insourcing," "on-shoring" and "re-shoring."
Watch this CNBC segment from Friday, Made in America Making a Comeback.
American businesses -- are you ready? It's coming.
P.S. Here's a stock tip: machine tools.
Update and P.S. --
Help bring manufacturing back to the U.S.!Click through!
At last somebody is doing something: the May 12, 2010 NTMA/PMA Purchasing Fair focuses on re-shoring. The $ is down vs. many currencies. JIT and R&D are best supported, and carbon footprint minimized, by local sourcing. The time is right for this effort to succeed.
Customers bring your off-shored work! Vendors bring your best technical ideas and sharp pencils! Learn More
I was about to get a netbook for travel, conferences, and things like that where I don't need all the functionality of a laptop and want something really light to carry around.
Now I'm thinking about an iPad instead. But all of Apple's usual shenanigans are putting me off. The lack of any way to add anything that can get around Apple making money off of you - no USB port or card slot, for example so you are entirely dependent on Apple accessories, memory, etc. The closed app market... The price is prohibitive - but it's early so it should go down later.
So my question is, does anyone know about anything coming that will compete with the iPad that uses Google's Android OS? Maybe even Palm's? The Android phones look like they will compete with the iPhone...
Update -- Take a look at this:
Employers added 162,000 jobs last month, and employment numbers in the previous two months were revised upward. Nationwide, the unemployment rate held steady at 9.7 percent.
. . .Nearly a third of the gains came from temporary hiring for the 2010 Census, which will continue over the next couple of months. The report was also complicated by a rebound from weather-related work stoppages in February.
. . . Because so many of the jobs created were part-time jobs for people who really wanted full-time work, the broader measure of unemployment and underemployment ticked up, to 16.9 percent, from 16.8 percent the previous month. And the number of people out of work for at least 27 weeks increased by 414,000 last month, to 6.5 million.
The economy needs to add somewhere between 200,000 and 300,000 just to stay even with the number of new people entering the labor force.
April 1, 2010
I have been helping out a bit with their new project, which was announced today:
$4.6 TRILLION IN FEDERAL FUNDS DISBURSED
New Tally Focuses on Expansive Role of Federal Reserve
Today, the Real Economy Project of the Center for Media and Democracy (CMD) released an assessment of the total cost to taxpayers of the Wall Street bailout. CMD concludes that multiple federal agencies have disbursed $4.6 trillion dollars in supporting the financial sector since the meltdown in 2007-2008. Of that, $2 trillion is still outstanding.
CMD's assessment demonstrates that the Federal Reserve has provided by far the bulk of the funding for the bailout in the form of loans amounting to $3.8 trillion. Little information has been disclosed about what collateral taxpayers have received in return for these loans. CMD also concludes that the bailout is far from over as the government has active programs authorized to cost up to $2.9 trillion and still has $2 trillion in outstanding investments and loans.
Learn more about the 35 programs included in our tally by visiting our Total Wall Street Bailout Cost Table, which contains links to pages on each bailout program with details including the current balance sheet for each program.
"While the Treasury Department is patting itself on the back for recouping Troubled Asset Relief Program (TARP) funds and allegedly making money off of its aid to Citigroup, our accounting shows that these programs were a relatively small portion of the federal funds that have gone out the door in support of the financial sector. Far more has been done to aid Wall Street through the back door of the Federal Reserve than through the front door of Congressional appropriations," said Mary Bottari, Director of CMD's Real Economy Project.
"The tally shows that more scrutiny needs to be given by policymakers and the media to the role of the Federal Reserve especially as the Fed has accounted for the vast majority of the bailout funds, yet provides far less disclosure and is far less directly accountable than the Treasury," said Conor Kenny, the researcher who collected the data on the bailout.
CMD has presented its work in a table that shows: funds disbursed, maximum funds that were at-risk at the height of the bailout, and actual funds still outstanding for each program. CMD is also making available a Financial Crisis Tracker, a widget for the table that can be downloaded to websites to get up-to-date numbers on the financial crisis and the bailout. The Wall Street Bailout table will be updated monthly and will be a tremendous resource for reporters and the public alike.
WALL STREET BAILOUT COST TABLE can be accessed here.
KEY FINDINGS can be accessed here.
FINANCIAL CRISIS TRACKER can be accessed here.
So when you hear from the Mercastus Center, Heritage Foundation, Cato Institute or a lot of other "think tanks" you're actually hearing from Koch Industries - a giant oil company.
A number of states are suing to block the health care reform's mandates, saying that the Federal Government isn't allowed to override the states, and just order people to buy a product from private companies.
As I see it, they are arguing against federal pre-emption of state laws.
Question - If they lose, what happens to various insurance, banking, consumer and other state regulations where the state rules are more protective of consumers than the federal rules?
I suspect the Supreme Court is going to knock this down, so we'd all better get ahead of this and just pass Medicare-Buy-In. This undoes their arguments, but keeps health care reform intact.
Our economy is not structured to produce enough jobs. Tomorrow's jobs report is expected to show as many as 200,000 jobs created in March, but a lot of that is temporary Census hires, and even 200,000 jobs created is still 2-300,000 fewer jobs than number of new entrants into the job market each month! So even a "good" report of 200,000 will be just another "economy still getting worse more slowly" story.
We need jobs, jobs, jobs and jobs, and we need them to pay people enough.
It's not just trade pressures that are keeping job growth from occurring, but trade pressures are a very big and very immediate part of the problem. Fixing the trade imbalances will be a great start and will give us a small bit of breathing room in which we will hopefully address larger structural problems.
Those trade pressures are not just destroying jobs, they are destroying wages and benefits, too. It's the way of the world; a business owner can't help but look at the legacy wages that built up and up and up during the competitive good times, and wonder why they're still paying those high wages during the bad times. If you have a company full of people making $80,000 or $100,000 and you see people accepting work in similar positions for $40,000 you are going to wonder how to reduce the amount you are paying people. One way is to make them work more for the same pay.
In yesterday's Washington Post, Holding back job growth? Workers' awesome output,
One of the great surprises of the economic downturn that began 27 months ago is this: Businesses are producing only 3 percent fewer goods and services than they were at the end of 2007, yet Americans are working nearly 10 percent fewer hours because of a mix of layoffs and cutbacks in the workweek.
That means high-level gains in productivity -- which in the long run is the key to a higher standard of living but in the short run contributes to sky-high unemployment. So long as employers can squeeze dramatically higher output from every worker, they won't need to hire again despite the growing economy.
[. . .] Fearful of losing their jobs, people seem to have become more willing to stretch themselves to the limit to get more done in any given hour of work. And they have been tolerant of furloughs and cutbacks in hours, which in better times would drive them to find a new employer. This has given companies the leeway to cut back without the fear of losing valuable employees for good.
It's not "awesome output" it is workers being squeezed to death. And it's the way our system is designed.
In Fixing Jobs: Normal Isn’t An Option I wrote that the way our current system is structured employers have every incentive to figure out how to eliminate your job or at least cut your pay,
The core of what needs to be restructured is that we have a system where people with power and wealth benefit when they figure out how to cause other people to receive lower pay and benefits -- or just lose their jobs. The incentives come down to this: if someone can figure out how to cut your pay and benefits or just get rid of you (“eliminate your position”) they get to pocket what you were making, and you get nothing. If you don't own the company you're out of luck.
Returning to "normal" is not an option now and it just isn't going to happen. We have hit the wall of the old economic paradigm. We need to start looking at new models for a sustainable, people-friendly economy that works for all of us, not just a lucky few.