Bah?

Well, first is today's column by Paul Krugman, in which he points out some of the humbug (false statements peddled as the truth): The Humbug Express.

Next, and last: Happy Holidays and New Year to all the readers of this blog (and most everyone else, for that matter).

More "blowback" in the works?

According to the website TPM:

"This Wednesday, a group of prominent Bush-era Republicans, including former NYC Mayor Rudy Guiliani [sic], former Homeland Security Secretary Tom Ridge, former White House adviser Frances Townsend and former Attorney General Michael Mukasey, flew to Paris to speak in support of an Iranian exile group there -- one that's been designated a terrorist organization by the U.S. "

(Here is the article.)

This group, Mujaheddin-e Khalq or MEK, is an Islamic, militant, quasi-Marxist and strongly anti-Ahmadinejad organization, which has been on the U.S. terrorist list for a number of years. It is certainly ironic that Giuliani, Ridge and Mukasey, long identified with the regime of George Bush, would advocate for this group, and ask that it be removed from the terrorist list. However, the history of the U.S. in Iran, Iraq, Afghanistan etc. is one of supporting nearly any and all groups that oppose regimes it doesn't like. This has resulted in support for the Shah against the democratically elected Mohammed Mosaddegh in Iran, support for the Taliban and (indirectly) Al-Qaeda when they opposed the U.S.S.R. in Afghanistan, and alternating support for Ayatollah Khomeini and Sadam Hussein when Iran and Iraq fought each other. (This in addition to the monsters America backed in Central and South America, solely on the basis of their "anti-communism".)

Who knows where this will lead? The law of unintended consequences has not been kind to this sort of foreign policy, and we may yet reap more unanticipated blowback. (See the late Chalmers Johnson's excellent trilogy on this subject, whose first volume is entitled Blowback. If you don't have time to read the whole trilogy, I recommend the last volume, Nemesis, which pretty much encapsulates his arguments and examples.)

Manning's prison conditions

Robert Mackay, writing in the NY Times Blog "The Lede", reports on the conditions facing Bradley Manning, the Army private in solitary confinement who is suspected of downloading the "secret" documents released by WikiLeaks. Here is the link.

The conditions are not good; so bad, in fact, that Manning is being given anti-depressants to prevent him from going nuts. It seems to me that he is being softened up so that he will testify -- truthfully or falsely, who knows? -- against Julian Assange. This sounds more and more like the Bush Justice Department redux.

Manning being "nudged"

Yesterday I suggested that Bradley Manning, the army private who may have been the source of the WikiLeaks documents, is possibly being put under pressure to testify that Julian Assange was involved in the "theft" of the documents.

There is now some corroboration for this. Glenn Greenwald reported yesterdayin Salon (click HERE) that Manning is being held in very inhumane conditions -- solitary, no pillows or blankets, no exercise -- even though he has yet to be charged with a crime, much less convicted. This sounds like an attempt to "soften him up" so that he will play ball with prosecutors trying to get Assange on conspiracy charges.

This is beginning to smell like a real scandal -- if the mainstream press will pick it up. It's a good time to write to local newspapers about this very nasty behavior occurring on St. Obama's watch. I've already written to the Boston Globe.

Mischief in progress regarding Assange

Apparently the US Justice Dept is looking into the possibility that Julian Assange was part of a "conspiracy" to steal the documents that Wikilinks went on to publish. While Army private Bradley Manning is widely believed to be the actual thief, conspiracy indictments simply require some evidence that others either took part in the theft, or encouraged Manning to steal the documents.

It is common for prosecutors to offer a defendent in a criminal case a reduced sentence (or even no prosecution) in exchange for incriminating others -- especially others that the prosecutors are more interested in prosecuting. In this case, I wouldn't be surprised if the Justice Department offered Manning such a deal in exchange for testimony involving Assange. At this point, Assange and WikiLinks are far bigger thorns in the side of the US establishment than is Bradley. It would be very easy for Manning to "bend" the truth a little, since he is young and faces serious prison time.

Thus we see the Obama administration trying to take down its perceived enemies using the so-called "Justice" Department. Once again, our Democratic president is acting in a way strangely reminiscent of his Republican predecessor.

Of course, the irony is that, while Obama is acting more and more like an establishment figure, WikiLinks is looking more and more like the original Tea Party.

Jon Kyl: senatorial material

Senator Jon Kyl (R, AZ) claims that Harry Reid is showing disrespect for Christians by scheduling Senate business during the week between Christmas and New Years Day.

Apparently he thinks that the week in question is a paid holiday for Christians. I imagine that this is news to US Christians whose bosses have scheduled work during this period.

Do Jews realize that they have a paid holiday from Rosh Hashana to Yom Kippur? Do Moslems know that they have the same perk during Ramadan?

The poor Christians haven't been so oppressed in their own country since the Romans fed them to the lions.

The local record for stupidity was being held by the idiots who think that Australian Julian Assange should be tried for treason in the US; now Jon Kyl shows that his head is even more screwed on backwards.

Ethanol: Facts and Fictions

I recently read that the Obama tax "compromise" includes another giveaway: the extension of tax incentives and tariff protections for the ethanol industry. My first reaction was to "recall" that ethanol, which is simply pure alcohol obtained by fermentation, uses more energy to produce than it yields as a fuel. Since I am suspicious of most things that I haven't verified recently (or think I remember), I figured I'd do a little research on ethanol production. I was not anxious to read obvious hype from either the ethanol industry or its logical opponents (e.g. the American Petroleum Industry or "knee jerk" opponents of anything corporate or industrial). So I started with a short Business Week article: Ethanol: Myths and Realities (May 2006). I also read the report by the Union of Concerned Scientists: The Truth About Ethanol. Finally, I read two other pieces, one giving a view from an organic farming perspective: JourneyToForever, and the other a fairly long libertarian/conservative analysis from the Cato Institute: The Ethanol Boondoggle.

Here is what I learned. First of all, by most recent accounts, production of ethanol has become much more efficient in the last 20-30 years. The original article (1998) attacking ethanol for consuming more energy to produce than it yields were from Cornell Professor David Pimentel, and apparently was based on data about production dating from the '70s and '80s. Subsequently, his analysis was challenged by M. Wang and D. Santini of Argonne National Labs, who wrote:

"Prof. David Pimentel's 1998 assessment of corn ethanol concluded that corn ethanol achieved a negative energy balance (which is usually defined as the energy in a product minus energy used to produce the product). Unfortunately, his assessment lacked timeliness in that it relied on data appropriate to conditions of the 1970s and early 1980s, but clearly not the 1990s... With up-to-date information on corn farming and ethanol production and treating ethanol co-products fairly, we have concluded that corn-based ethanol now has a positive energy balance of about 20,000 Btu per gallon."

This, in fact, seems to be the concensus of analysts now, although the process of making this kind of assessment is very tricky, since a lot of factors must be taken into account to cost out both ethanol expense as well as the true costs of the oil-based energy needed to produce it. For example, because it easily picks up harmful impurities, ethanol can not be mixed with gasoline in pipelines, but must be shipped separately by tankers (car, rail, ship).

There are other issues as well, the foremost being land use. In the U.S., ethanol is fermented from corn (mostly the kernels and cobs). Corn is not only a big consumer of fertile land and nitrogen fertilizers, but is also itself consumed by people: directly as corn meal and as a vegetable, but mostly as animal feed and sweetener (the much-maligned "high fructose corn syrup" used in highly processed junk foods). It has been demonstrated that the ethanol fuel program has increased the price of foods dependent on corn. It will never be possible to grow enough corn in the U.S. to allow ethanol to replace petroleum-based fuels -- there simply is not enough arable land. Furthermore, taking land out of forest and grass in order to grow corn will increase the net amount of greenhouse gasses emitted into the air.


On the other hand, ethanol is a relatively "clean" fuel: it's main combustion byproducts are water and a small amount of carbon dioxide; it does release some other chemicals as well (mostly due to organic impurities), but not as much as gasoline or diesel fuel. By volume or weight it is less efficient energy-wise than gasoline, but it can -- and does -- replace some gasoline in powering vehicles, and thus reduces total harmful emissions. Currently, ethanol is required by (federal) law to make up 15% of the fuel sold at "gas" stations. Engines have accordingly been modified to allow ethanol to be burned at this concentration. Some vehicles and other machines have even been modified to burn pure ethanol.


Ethanol needn't be fermented from corn. Brazil has a very large ethanol industry -- heavily government subsidized (see below) -- which is derived from sugar cane. It is also possible to distill ethanol from a "mash" of cellulose instead of corn or cane; in fact, various "trash" plants can be used, including crop wastes, weeds, brush etc. For a technical article on this kind of ethanol, see this article from the AAAS. This kind of production requires more raw materials, but avoids some of the problems of planting, cultivating and harvesting corn. The ethanol from any source can also be obtained by using enzymes instead of traditional fermentation. This is discussed in the AAAS article just cited.


So, it's a mixed bag. The organic farmers point out that locally-grown ethanol can be used more efficiently if grown locally with natural fertilizers. This reduces the transportation costs and makes it a good source of energy for modified farm equipment. It can also be produced, as I just mentioned, from various farm wastes instead of corn . They also note that the subsidies that the government now pays go mostly to the big producers of ethanol, such as Archer-Daniels-Midland and Monsanto, instead of "family" farms.


I found the article from the Cato Institute (http://www.cato.org/) to be quite interesting. They point out that the government can promote a product in several ways: by providing direct subsidies -- in the form of tax credits, for example -- or by requiring its use, or by protecting it with tariffs. In the case of ethanol -- uniquely -- the federal government is doing all three. The Cato report argues that none of these supports is justified by the practical benefits of ethanol use. Incidentally, the tariff support is designed to hinder the importation of Brazilian ethanol, which is, as I said previously, heavily subsidized by that country's government. (One might also suspect that Cuba, which also has a large sugar cane crop, might also be in the sights of the tariff makers.) Cato points out that the amount of ethanol that we can produce will hardly make much of a dent in the global warming problem. Cato also wonders why the big agribusiness companies that make most of the ethanol need subsidies when the government requires the use of ethanol -- originally justified to make it a substitute for the gas additive MBTE, which turned out to be a serious groundwater polutant.

The Union of Concerned Scientists piece contains the following critique of the tax credits:

"Today’s biofuels tax credits are expensive and ineffective. They cost taxpayers more than $5 billion per year, yet they have no effect on biofuels production. In fact, the tax credits do not even benefit biofuel producers or farmers, but instead the money goes to oil companies to simply comply with the Renewable Fuel Standard.
The Billion Gallon Challenge shows how a different type of tax credit – a Biofuels Performance Tax Credit – would be more effective in jumpstarting the advanced biofuels industry. A performance-based tax credit would:

• Reward biofuel producers for performance improvements. The amount of the tax credit would be based on the emissions improvement over today’s conventional biofuels. The greater the emissions improvement, the higher the tax credit.


• Clean up all types of biofuels. Since both conventional and advanced biofuels are eligible for the tax credit, both would have an incentive to reduce emissions.


• Save billions of taxpayer dollars and spur investments in biofuels-production technology."

I highly recommend the papers cited here, especially the UCC and Cato reports. Their conclusions suggest that adding ethanol incentives and tariff renewal into the Obama tax-cuts-for-the-rich deal is simply throwing good money after bad. It is clear that the move is simply a way of attracting farm-belt votes to the president's odious "compromise".

Obama's Rich Man's Express

Since I've actually had to argue this point with some Democrats, I'd like to explain why I find Obama's "deal" with the Party for The Rich (PTR, formerly the GOP) so contemptible.

I was an Obama supporter for a long time. I stated many times in this blog (here, e.g.) that one should support his health care plan even though it had a lot of deficiencies. Like the original version of Social Security, it was far from perfect, but was such a large step in the right direction, and had such potential for becoming widely (and even wildly) popular as it was improved, that it should be enacted while it was still possible to do so. The same was true for the financial protection bill drafted by my congressman Barney Frank.

This latest deal with the PTR, however, is another beast altogether, since it is positively harmful and bows to extremely bad ideas and precedents. Let me be specific.

1. Extension of tax cuts for the very wealthy is unneeded and costly and hypocritical; it also violates one of Obama's campaign promises. First of all, people in the highest tax brackets should never have gotten such a sizable tax cut in the first place. Since everyone else -- those in lower brackets -- had gotten a cut in their taxes, the high income folks already benefited by having their taxes cut on the part of their income falling in these lower brackets.

It goes roughly like this (I'm working from the most recent tax tables for married filing jointly, and comparing them with the tables from before the Bush cuts; I've also rounded the figures a bit).

Bracket (in thousands of $$)
0-17    17-68   68-137  137-208  208-372  372-on up
Before Bush:
15%     15%      28%      31%      36%      39.6%

Bush Rates:
10%     15%      25%      28%      33%       35%

You may wonder where Obama's original $250,000 cut-off came from. That's about what the income would be before the allowance for dependents and other exemptions are taken out, in order to land a taxable income of around $208,000. If the Bush cuts are allowed to expire, those earning below this level would keep their rates (last line of the table) while those earning above would see their rate revert to pre-Bush cuts (i.e. 36% or 39.6% as per the middle line of the table).

NOTE that people earning above $250,000 (or $208,000 after exemptions) would STILL GET the cuts on that part of their income below that amount. This would come to:

5% of (17000) + 3% of (137000 - 68000) + 3% of (208000 - 137000)

= $5050.

In dollars this is more than people in the lower brackets would be saving. Of course, as you can see from the table, the higher income people were making out far better under the Bush plan (that's why they love it). These same people, less than 2% of the population, have enjoyed these cuts on their high incomes for nearly a decade, and are also far less likely to experience financial difficulties now (their unemployment rate is less than 1/4 of the national average). Furthermore, these high income people have a much greater disposable income -- i.e. money above food and shelter and medical expenses, available for spending on "fun" things and luxuries.

Of course, the Republicans claim that these wealthy people "create jobs" with their extra money. As far as I can see, there is not one iota of evidence to suggest that their extra money has any correlation with employment or economic expansion. We had plenty of economic expansion in the more than half-century before Bush II, when the upper-bracket people paid much higher tax rates (even under St. Reagan); inversely, we are very much worse off now, with much higher unemployment and a shrinking economy, after 8 years of Bush tax cuts. Tax cuts for the rich do not help the economy. All the facts and our experience tell us that the Republican claims are sheer nonsense.

Everyone agrees that extending the Bush tax cuts to those making over a quarter million dollars a year will be very costly to the Treasury. Since the effect on jobs and the economy in general will be minuscule if even measurable, it would, in fact, be totally counterproductive to proceed with them as Obama has agreed to do.

2. Cutting the Social Security Tax (FICA) by 2%, while definitely helping middle-class wage earners, is a very bad idea for other reasons. The main argument used by those who want to kill the Social Security program -- or at least severely reduce its benefits -- is that it will run out of money soon anyway. The Social Security Trust fund is owed billions of dollars which the government has "borrowed" from it in order to pay for unfunded (by Congress) wars and other undertakings which were not accompanied by honest and direct appropriations. Cutting FICA will simply make it easier to push this argument. The fact is, the problems of the Social Security system are easily solved simply by raising the income limit on which FICA is applied. The same wealthy people who have benefited most from the Bush tax cuts also pay no Social Security tax on the money they earn over about $106,000 dollars. I have discussed this in previous blogs (here, for example), so I won't repeat the argument again. Since neither Obama nor his commission to solve the "budget crises" (you remember, Erskine Bowles, BS from Morgan-Stanley, and Alan Simpson, ex-senator from Marlboro Country) pushed for this cap removal, Obama's proposed cut in SS tax can only damage the program. It is a stalking horse of those who would destroy one of the most popular and helpful programs ever undertaken by this country.

3. The radical changes in the inheritance tax is yet another sop to the very rich. This is a tax on hereditary wealth that comes directly from the ideals of the Founding Fathers of this country. Those who must pay it on part of their multi-million dollar estates is a tiny tiny percentage of the population -- and its most affluent. If you have merely a couple of million dollars the Inheritance Tax simply doesn't apply to you. Billionaires Warren Buffet and Bill Gates think that the tax is reasonable and oppose lowering it. Obama, though, has agreed to reducing it far beyond the wildest dreams of most Republicans. Even the otherwise wimpish Democratic caucus was appalled. This will cost the Treasury big bucks; yet, the supposed deficit hawks don't seem to be perturbed at all. That's because deficit hawks are not really guardians of the public weal, but rather the front guard of the class war on the middle class.

4. Extension of unemployment benefits is the excuse that Obama gives for throwing more money at the rich. This is an example of an issue that should have been taken to the people and should never have been on the "negotiating" table at all. Those people who lost their jobs in the still-continuing recession did so because very wealthy speculators and banks oversold subprime mortgages and mortgage-backed securities and greedy but ignorant traders misplayed their bets on derivatives based on these securities. A lot of these folks were bailed out by the government in the TARP program, conceived and designed by Wall Streeters, mostly during the Bush years. While the government has recovered most of its TARP money, it didn't recover all, and, in principle, the idea of socialism for wealthy gamblers is not what we generally consider the American Dream. What happened to bailing out those who don't own luxury condos and luxury cars, yet suffered the consequences of the bursting speculative bubble? Obama never should have even considered trading help for them for handouts to those who made out like...how should I put it ...bandits. Whatever happened to that wonderful "soaring rhetoric" of Obama the campaigner. Why the backroom deal with McConnell and Boehner, when he should have gone on national media and demanded help for the unemployed? This was a strong hand that the president folded before a single bet was made.

Obama started out seeking bipartisanship -- a foolish and naive position. The Republicans mostly ate his lunch, even declaring right out in the open that their one and only priority was to make him a one-term president. This outrageous statement went largely unchallenged, though it indicated a degree of cynicism and disregard for the good of the country that is truly radical and unprecedented in its brazenness. Even after all this, Obama is still taking about bipartisanship. Meanwhile, the PTR is eating his lunch on tax equity. When you don't learn from people repeatedly punching you in the face, you are either arrogant or a fool.

Scott Brown: Beneath Contempt (of course)

Just when you think a Republican might rise from Beneath Contempt to merely contemptible, Scott Brown displays his true colors. After saying he supported the termination of Don't Ask Don't Tell, he voted to retain it by agreeing to a filibuster of the Military Appropriations Bill.

His reason: He supports his party's position that they will allow no legislation to pass until millionaires are granted their tax breaks.

Why aren't the (merely contemptible) Dems publicizing this with TV spots NOW? Why will they wait to engage the PTR until the eve of the next election? 'Cause they're wimps and patsies. Just as I predicted, fighting John Kerry has already hopped on board Obama's Rich Man's Express. But, of course, Kerry is a (very) rich man. I wonder what Teresa Heinz's position is on tax breaks for people like her and her husband? I've always considered her to the left of Kerry.

(Actually, the Republicans' love affair for the wealthy has become embarrassing even for some of the million/billion-aires.)

WikiLeaks and Obama sell-out.

I've decided to send some money to WikiLeaks, but haven't determined what method to use. You might consider doing the same.

Here is an interesting article on the subject from the NY Times "Opinionator".

I also have written to my Rep (Barney Frank) and Senators (Kerry, Brown) asking them to vote against the extension of the Bush Tax Cuts to rich people. Since I wrote, Frank announced his opposition. Kerry, of course, is on all sides of the issue. I imagine he'll go along with Obama's sellout. The Republican Brown will not oppose his party on this -- though, to his credit, he has come out for the elimination of DADT.

More about this later.

From the horse's (Forbes') mouth

Forbes magazine, a Capitalist Tool (their motto) if there ever was one, has a post about the power of Internet transparency: Check it out.

WikiLeaks: let no good deed go unpunished

Of course it had to end this way. No big bully country could allow anyone to publish its dirty secrets. So the US is putting the screws on WikiLeaks in every way it can. PayPal just announced that is will not enable contributions to WikiLeaks. Amazon had previously announced that it had pulled WikiLeaks off its servers -- possibly at the request of our good friend Joe Lieberman (you remember him: the former VP candidate who supported John McCain for president last election).

Although I know no particular facts about the sex charges against WikiLeaks founder Julian Assange, I am predisposed to believe that the U.S. government and the U.S. corporate world couldn't be happier that Sweden has decided to go to InterPol to track him down. (Readers of the Swedish "Millenium Trilogy" shouldn't be surprised that Sweden is playing the heavy in this case.) Under the circumstances, we should consider Assange innocent until proven guilty. I have heard that no formal charges have even been made against him; this seems incredible, but so are lots of things that turn out to be true. In any case, I am inclined to root for anyone that Bank of America, the Republicans, and Joe Lieberman don't like.

Also, of course, it is not clear what real harm to the U.S. has resulted from the various installments of WikiLeaks. The U.S. needs some serious ventilation of its secrecy. This is the same secrecy that shrouded the war in Vietnam (and Laos and Cambodia), the support for murderous dictators in South and Central America, and the phony war in Iraq.

Anyway, there will be more serious blogging when the sequence of holidays (Thanksgiving, Channukah, Christmas and New Years) is over.

Enjoy, and root that WikiLeaks will continue its good deeds.

Thanksgiving etc.

My best wishes for the holidays to all blog readers.

BTW: Please forward the URL of this blog to anyone you think would enjoy reading it. Readership has been pretty much stagnant for a year now...

Please appreciate Tom Delay's discomfort while it lasts: it's something we can all be thankful for.

Couldn't have happened to a nicer guy

Good news for Thanksgiving: Tom DeLay was found guilty of money laundering. The case seemed clear: DeLay and his associates collected $190,000 from corporations to contribute to Republican candidates throughout Texas. However, Texas law limits the amount of p0litical contributions corporations can give. So DeLay and his pals shipped the money off to the national Republican party, and received, in return, a check for $190,000 (coincidence!) that supposedly came from individuals, not corporations. This is classical money laundering. DeLay and his lawyers claimed that since the original $190,000 was collected legally (corporations are allowed to give money, so each each corporation gave its share legally), he was not guilty. Apparently the jury didn't buy this; they realized -- as would any reasonable person -- that DeLay and cronies (and probably the corporation honchos as well) knew exactly what was going to happen to the money.

Any way, all's well that ends well. DeLay is one of the more unsavory people around -- right up there with the vile Newt Gingrich. Let's hope some Republican appeals court judge doesn't let him escape prison time.

Also, for good holiday reading, you might want to check out, online, the article "What Good is Wall Street" from the latest New Yorker. Talk about parasites (as I did in a recent blog): these people are worse than bedbugs.

In their desire to protect the Wall Street greed-mongers, the Republicans once again show why they have won so many "What part of beneath contempt don't you understand?" awards.

Rolling Stone article on bank foreclosures

A.B. sent me the following article by Matt Taibbi from Rolling Stone magazine:

Courts Helping Banks Screw over Homeowners.

The investment banking industry is quite rotten to the core. More of it will hit the fan before too long, since not every state is willing to sell its residents down the river the way Florida is.

A supporting opinion on financial parasitism

To echo yesterday's blog, here's an article entitled: "Can Wall Street Justify Its Existence?"

It's a hopeful sign that this issue is being discussed more openly each day. Not by the the PTR (Party for The Rich, formerly the GOP) of course.

The Parasite Tax

When I learned about economics in high school, we were told how the stock market works and why it is good. Inventors and entrepreneurs who had good ideas about new and useful products could form companies and issue stock. Investors who thought these ideas or products were promising could take a risk and invest in the stock, thus becoming part "owners" of the company. The money they paid would be used by the company to grow and develop its products. If all went well, the company would thrive and the investors would be rewarded for the risk they took. Sounds wonderful. Like so much of capitalist theory.

But that's not quite the way it works, especially these days. There are still people who buy stocks based on the "fundamentals" of the companies: the management, ideas, and products. These are the true investors. However, most of the trading of securities these days is based on speculation. This is not speculation about the fundamentals of the company, but speculation about how the market and other investors will behave. Probably most stocks (and bonds) are not kept for months and years, but are traded monthly, weekly, daily, and even by the minute and second (see the insider newsletter Zero Hedge for some estimates). Sophisticated computer programs can use statistics and mathematical modeling to estimate small-scale fluctuations in segments of the market and relate that to the second-by-second behavior of particular stocks. Lightning fast buying and selling programs can trade thousands of stocks a second based on these analyses. All this computer power is available to trading companies and their best and wealthiest customers. Often a trading company (Goldman Sachs is a notorious example: see this blog) will pit their best customers against their less-favored customers.

There are tens of thousands of individual "day-traders" who do similar things on their own or are the favored customers of the big brokerage houses.

Make no mistake about it:

These People And Brokers Are Social Parasites.

They serve no useful purpose and do what they do solely out of greed. They are responsible for a lot of the volatility of the market. The tiniest bit of news or financial gossip can set off flurries or cascades of day-trading and computer sales that account for big fluctuations in the daily indices. No wealth or products or innovation or anything of social value is produced. The stock market is already very liquid (i.e. it's easy to pair buyers and sellers), so what these parasites do is create "churning" or "hyperliquidity": meaningless buying and selling that enriches only speculators. Responsible investors such as pension funds, hospitals and schools end up, more often than not, as victims of these irrational market swings.

Now add in derivatives: side bets on the performance of bundles of stocks and bonds; even bets on the financial indices themselves. Sometimes these bundles are only theoretical, as is the case of synthetic CDOs (Collateralized Debt Obligations) which may not actually contain anything more than a list of securities that one bets on. Or consider the trading of Credit Default Swaps, which are like "insurance policies" on securities. The whole setup has absolutely nothing to do with the fundamentals of capitalism, and everything to do with wild speculation and gambling.

It is universally acknowledged now that this gambling culture on Wall Street is responsible for the recent economic collapse and resulting unemployment. Unlike other ruined gamblers, however, the big players here -- investment banks (Citi e.g.) and insurance companies (AIG e.g.) were bailed out because their excesses threatened our entire economic system. Not only are many of the villains in this debacle now taking home huge annual bonuses -- often more than the average family's life savings -- but the Republicans and the woefully ignorant Tea Screamers think that we need fewer regulations of Wall Street.

(Gambling behavior by banks was forbidden after the Great Depression by the Glass-Steagall Act. This worked to prevent a major market crash for more than 60 years. It was repealed by a Republican Congress helped by then President Bill Clinton. For more, see my blog about it.)

The time has come to make Wall Street start paying. One effective way to do this is to enact recently proposed legislation to tax stock and bond sales. This has just been done in Europe and, in fact, there was such a tax in the U.S. from 1914 to 1966.

Yes, Virginia, it's true that we all pay sales taxes on purchases, except the gunslingers on Wall Street.

They can trade a hundred million shares in a day and not pay a dime in sales tax, while you and I fork over 5% or 6% or even more on back-to-school supplies and lawnmowers.

The idea of a Speculation Tax is simple and fair and necessary. Each time a stock is traded, the buyer and seller each pay a small tax -- about 1/4% in some plans. This is a tiny amount: $25 on $10,000 worth of stock, or about what you'd pay in sales tax on a $500 stove. It is absolutely no burden whatever on a long-term investor or conservative pension fund, or hospital or university. It does amount to a burden -- and rightfully so -- on people who make massive and frequent computer trades to take advantage of tiny point fluctuations in securities. It could also be called a Parasite Tax. Conservative estimates say it would bring in at least $100 billion a year in tax revenue (e.g. see Robert Kuttner's article). This revenue could be used constructively to undo some of the bad things that Wall Street has done to us.

Here is a fairly extensive article on the Parasite Tax (a.k.a. the Financial Transactions Tax or Tobin Tax) from SourceWatch and some other articles from the AFL-CIO and The Hill. Google it yourself to find out more.

Another important thing we can do is to make stock and bond traders' profits subject to regular income tax, not just the capital gains tax. But that will be the subject of another blog.

The important thing is: Make Wall Street Pay.

Write your rep about it.

How I would "fix" the budget deficit

I haven't heard from anyone yet about their plans, but here is what I would do, following (mostly) the NY Times choices mentioned previously.

1. Domestic programs and foreign aid.

I would leave foreign aid largely in place, though I am sure that some of it is too heavily tilted toward the military. The US gives far less than its share, in terms of the size of our economy, to programs that really aid people and not police forces.

I certainly would not cut budgets for national parks and aid to states. These are programs which actually benefit the non-rich: people who don't have vacation homes or villas or yachts. The current pre-occupation with so-called "earmarks" is simply neurotic. Most earmarks are programs and financial support for highly worthwhile projects such as libraries and museums, as well as construction projects which can help put people to work at a time of high unemployment. In any case, the amount of money to be saved by axing all earmarks is too small to be significant.

Reduction of the Federal workforce is another "stalking horse" for Republican plans to make government ineffective and prevent regulation of industry. As usual in these things, the employees who are most likely to be cut are people like meat plant inspectors and employees of the EPA. The brothers-in-law of political hacks are probably the last to be canned. Let's not be fooled by this. Contrary to the right-wing propaganda, the Federal government is far more efficient that almost any large corporation like Citibank or General Motors, or Halliburton/Brown&Root.

There are two things I would cut in this category: farm subsidies and government contractors. As even the International Business Times points out almost all of this subsidy goes to huge agribusiness concerns, not to family farms. These companies simply do not need the subsidies, since they are quite profitable, busily using vast amounts of petrochemicals and energy to produce excesses of fattening and otherwise unhealthy products (e.g. high-fructose corn syrup). Presumably this would also eliminate any kind of subsidy for the production of ethanol, a worse than useless boondogle if there ever was one.

As far as government contractors go, the system is so unbelievably corrupt that it would be wise to start over by eliminating it completely. There is no evidence that privatization saves any money. It might if there was universally and tightly controlled competitive bidding, but this is hardly the case (see this study, for example). I don't personally believe that eliminating all these contractors will save the huge amount of money that the Times claims, since the products and services will have to be provided in other ways in most cases. But the current system is very much subject to the "revolving door" syndrome, where people shuffle back and forth between government agencies and private enterprise. (If you have access to the Washington Spectator, the Nov. 15 issue has an article documenting several egregious cases of this in the military sphere. We all know about $600 toilet seats of course.)

2. The military

I chose to make every one of the cuts offered by the Times. The military budget has become obscenely large yet curiously ineffective. We are buying planes, tanks and boats to meet non-existent threats. In fact, some of the programs the Pentagon doesn't even want. The reason these programs are financed is that they bring money to the districts and states of our reps in Washington. Now I'm not against employing people, but military spending is an inefficient way to go about doing it: see this article from Zero Hedge. This is not a new observation. Also, the "Star Wars" anti-missile program is another project that is immensely expensive, guards against a no more non-existent enemy, and is considered by most scientists to be nearly impossible to perfect. (Dr. Theodore Postol has published a lot of damning evidence to show these programs are frauds; here is one.)

The wars in Iraq and Afghanistan are losers and must be ended ASAP. People who voted for Obama and the Democrats a few years ago expressed the majority view then, and it is still the majority view. The more we use the military to fight terrorism, the more it costs us. The same was true for "insurgency" in the last round of wars in Indo-China. We can expect very little truth to come out of the government concerning how these wars are progressing, so it is wise not to fight them. Ending the permanent state of war will save lives and money, and may even make us more secure. Much can be said about this, but I will resist now.

3. Health care.

Most of the industrialized world spends far less on health care than we do, and achieves better results. Obama's recently enacted plan is barely a beginning. We should have had single-payer, but what was passed is still is a good step. We need to train more family doctors and we need to have a rational policy emphasizing preventative care and rational cost-containment. We still have healthcare rationing by income or good fortune. We need "Medicare for all." What we don't need is healthcare according to the medical and insurance lobby, which is what the Republicans want. Increasing the Medicare age to 70 is simply an attack on the non-rich and elderly -- it's just the opposite of what must be done. I don't think that simply capping Medicare growth to a percentage point above GDP growth can solve the problem unless there is a clear way of implementing this cap without simply denying people the medical care they need. The doctors lobby (which actually favors Obama's plan) is too powerful to fight on salaries, while Big Pharma also will effectively resist caps on their huge profits. Thus, a cap simply means more and more of the healthcare rationing we have right now.

We have to face the reality that providing for the "common good" includes providing healthcare for everyone, and this will necessitate sharing of the expenses. This will mean shifting some of the burden to those who can most afford it: people with large disposable incomes. We have to increase the Medicare and Social security tax base and make the taxes that finance it more progressive.

4. Social Security.

This is really easy to fix: tax all income. I repeat, ALL INCOME. At the moment all we tax is earned income up to about $106,000. The current rate is 12.4%, split between employer and employee, plus another few points for Medicare. We can keep these rates, but should apply them to all income, including stocks, bonds, dividends, capital gains etc. etc. This will solve the Social Security problem, without any need for means testing or raising the retirement age. In fact, Social Security already has some means testing, since retirement income becomes taxable at certain rates for higher income retirees. Eliminating the income cap on taxation will also add to this form of means testing.

5. Estate taxes.

The Founding Fathers were very clear on the need for preventing massive hereditary wealth. (See this article in The Economist.) We should have steep estate taxes, while providing a reasonable initial exemption of several million dollars. If you want to make multi-millionaires of your children, do it while you are alive. There is a lot of nonsense about family farms and small businesses, but this is baloney statistically. Almost no privately-owned "family" farms and small family businesses are worth more than a few million dollars (few are worth even that) so there really is no problem. Let's be clear about this: the people who are bent out of shape by the inheritence tax are rich people who want to pass on vast inherited wealth to those who didn't earn it.

6. Capital gains and dividend taxes.

Beginning in 2011, capital gains taxes will rise 5% (to 20% on higher income taxpayers), and dividends will be taxed at whatever the marginal (highest) tax rate is for the taxpayer. I favor keeping these higher rates. No one should pay lower taxes on some incomes -- especially "unearned" income such as stock speculation and investment dividends. This is an insult to working people whose incomes derive from salaries. To add to the Times' choices, we should tax stock and bond traders' incomes as regular income, not as capital gains as is now the (disgraceful) case.

7. Other income taxes.

I favor letting the Bush tax cuts, which primarily favor the wealthy, expire; actually, I favor allowing the tax cuts for personal income above say $250,000 to expire. I'd even let that go up a bit to say $500,000. People making this kind of money made out very well during the Bush years, but enough of that. Percentages are a bad way of evaluating incomes in any case, since it is the disposable income that really matters: the amount a person makes above the reasonable costs of living. I also favor imposition of some sort of surtax on incomes over 1 or 2 million dollars. Why? Because I believe in transfer of wealth (oh horrors) from the very wealthy to the much less well off. At one time the story of Robin Hood made him a widely admired fictional character; since Reagan and the Wall-Street disco years of "greed is good" we have lost a lot of that sense of fairness. I personally believe that the vast majority of people who make over $500,000 a year are overpaid (unless their profession is very dangerous), and those who earn less than $40,000 are probably underpaid.

For reasons explained above, I also favor collecting Social Security (and Medicare) taxes on all incomes, with no upper limit.

8. Tax "reform"

I don't think the corporate tax is really an issue, since it gets passed on eventually. Ending the deduction for home mortgages for second and vacation homes is a good idea, as well as some sort of limit on the deduction for very expensive mortgages. The problem here is geographic. If you live on one of the coasts, especially in the San Francisco-LA or Boston-Atlanta areas, even modest homes are very expensive. Any upper cap on mortgages should take the mean -- not the median -- home price in the area into account.

9. Other new taxes.

For many reasons I favor a carbon tax -- with tradeable carbon "credits". I also favor taxing banks that engage in risky speculation. Actually, I favor a new Glass-Steagall act to prevent banks from taking these risks in the first place. Glass-Steagall prevented bank meltdowns for all the years it was in effect; it was repealed with Clinton's blessing, and look at the mess we're in now.

The Times didn't allow me to opt for another tax which I consider a very fine and fitting idea, and which will bring in lots of revenue. It's the "Make Wall Street Pay" tax on stock and bond transactions: 1/4% on each side of every sale (buyer pays 1/4%, seller pays 1/4%). I will discuss this in a later blog. Real investors will hardly notice it, but day traders and other speculators will have to pay for churning the market.

You fix the budget!

The NY Times offers an interactive questionnaire enabling you to eliminate the budget deficit by selecting a series of tax increases and spending decreases. It's simple-minded, true, but nevertheless gives you a feeling for the amounts of money in play.

Here is the URL.

Have fun. I'll share my plan in a future blog. Please send me your ideas in the comments section below.

Trip and new AP poll

No blog till next week: will be away on a fact-finding tour -- i.e. facts about the starry night skies over Vermont.

Note that a very recent AP poll supports what I've been saying about healthcare reform: the public supports it. In fact, 53% want to keep the law or strengthen it. The PTR is, as usual, talking nonsense about widespread rejection of the plan and of the Democrats. In fact, the poll shows that the PTR is no more popular than the Dems.

Well, bye for a few days.

Preliminary report of the "debt" committee

The co-chairs of the president's appointed "debt" commission have come out with some preliminary recommendations that should be taken with extreme skepticism. First of all, this was not a committee report in any sense, but just the work of the chairs Erskine Bowles, Clinton's former Chief of Staff and graduate of Morgan-Stanley U., and Alan K. Simpson, one of the least significant Senators in recent (non) memory, representing Marlboro Country in Wyoming. It's hard to understand how important matters were entrusted to these lightweights, but better go ask Obama for reasons.

Anyway, their personal report calls for lots of spending cuts -- mostly for socially useful programs, but even in the military (which will never happen) -- and some of the usual silliness about tax cuts. There's a little of a lot of stuff, but the axe will, as usual, fall on the middle class. Tax rates for the wealthy will be cut the most, of course: from a max of 35% to a max of 23% (way, way below Reagan-era rates). The comparable figures on the low end are 10% down t0 8% on those who spend nearly all of their money on necessities. This could only have sprung from the brow of Homer ... I mean Alan Simpson.

The plans for Social Security are worse. First of all, Social Security, contrary to popular rhetoric, is already means tested: up to 85% is subject to tax for higher income levels. However, money "earned" from investments is not subject to Social Security tax, nor is income in excess of$106,800. Bowles and Simpson are suggesting some sort of further means testing as well as reduction in cost of living adjustments. What can be the logic of not adjusting people's retirement income to compensate for a decline in the value of the dollar? Punish people who collect social security? They further suggest that the retirement age be increased to 69. That may be fine for people like them: lawyers, consultants, CEOs, professors; it's not so great for people who really get worn down working tough jobs: brick layers, construction workers, public school teachers, fishermen, etc. Frankly, I never heard of a "burnt out" investment banker -- did you?

Also, it is well-known that the problems of Social Security can be fixed very easily and elegantly by simply removing the cap on the income subject to the SS tax. This would guarantee life to the system for another half century at least, be a built-in means tester, and eliminate the need for lowering of benefits and raising the retirement age. Too bad that so many people who can afford to pay it -- that natural constituency for the eponymous Party for The Rich (formerly the GOP) -- oppose the idea.

I don't see any mention of a tax on individual stock transactions. What could be simpler than a flat tax -- like a sales tax -- of say 1/2 % on the market value of stocks bought/sold? True investors would hardly notice it. Furthermore, it just might reduce, if only slightly, the "churning" of the market caused by day traders and other social parasites who are trying to make quick bucks on non-productive speculations.

The "plan" of Messrs Bowles and Simpson should be DOA. Let's see what the Committee as a whole can come up with.

Obama comes up a loser again. When will he begin to take his job seriously?

Goozner: strategies to defend healthcare reform

In his very informative healthcare newsletter GoozNews, Merrill Goozner discusses the various threats and strategies arising from the Republican control of the House. He makes the very provocative point that supporters of the the Healthcare Bill should be willing to throw out the so-called "Individual Mandate" (IM) which requires that everyone have health insurance. This is the centerpiece of the opposition and the subject of the main legal challenge (lawsuits by around a dozen state Attorney's General) to the overall bill. Goozner reminds us that the IM was initially opposed by Obama when he campaigned (and was supported by Clinton), and was thrown in mostly to appease the Insurance Industry. Since this industry was among the many that helped campaign against Democrats -- and hence against the bill -- in the last election, they are hardly owed any loyalty.

If the Dems join the PTR (Party for The Rich) to jettison the IM, then the Insurance Industry will have to go through 50 state insurance "exchanges" in order to obtain premium relief to pay for those with pre-existing conditions who buy insurance -- which the companies are mandated to sell -- only when their conditions warrant it. This would be a nightmare for the companies since they would have to publicly display their costs and policy specs.

Goozner also has a discussion of this, as well as "defunding" issues, in the latest Fiscal Times.

Two more issues where the people are with Dems

There are a few other issues where a clear majority of people support the position of the Democratic Party, though they may not know it since the the Dems are so cautious.

The first is the egregious Supreme Court decision in the "Citizen's United" case. Here, a huge majority in a fairly recent poll agreed with most Democrats (and even a few Republicans, though it helps the PTR) that the decision was a bad one: Citizen's United.

Another issue is the regulation of Wall Street. Once again the population at large supports strong regulation, as do the Dems but not the PTR: Regulate Wall Street.

Once again, it's the terrible Democratic propaganda machine, not Nancy Pelosi, that is hurting them. Is there no talent out there on the Left?

Reid's campaign

Thanks to Maxine for pointing out to me this interesting article about Harry Reid's campaign, which appeared in today's Las Vegas Sun.

This is an example of the Democrats' need for a highly talented "minister of information" (or "propaganda"). Reid's campaign was prepared from before day one. They had material on all prospective opposition candidates and were able to use it to help the Republicans select the stupidest and least disciplined, Sharron Angle. Then they blasted her early and often with The Truth: her own words and her own idiocy. This wasn't a smear of the type Republicans trot out, but a simple presentation of things she herself had said and clearly believed.

Are the Dems doing THIS RIGHT NOW? Or will they wait, as usual, for the Republicans to set the agenda and phraseology for the 2012 election? We are already reading in the press nonsense about how there is a historic rightward shift in the electorate, and how people are against Obama and, in particular, his healthcare plan. This is all baloney.

Yes, people are unhappy with the recently passed healthcare bill. But they are not unhappy with the actual provisions in the bill itself. The very effective Republican propaganda machine has tied the bill and Obama to socialism and high unemployment. Americans are conditioned to hate and fear both. Since they largely don't understand what's in the bill, they now hate and fear the bill. Already they are blaming it, totally irrationally, for the bad behavior of the economy. Yet, when polled on actual provisions of the bill -- for example, forbidding denial of coverage for pre-existing conditions or caps on coverage, and an expanded drug coverage (elimination of the "doughnut hole" -- a still substantial majority effectively favors the bill. Here are a few of these poll summaries: an old one and a newer one. AARP, the largest and most effective senior citizen lobby, also supports not only provisions of the bill, but the bill itself.

What this indicates is that the Democrats are losing the propaganda war. They haven't been able to convince people that the bill that was passed embodies many of the things that people want and still support. Also, many people feel that the bill that was passed doesn't go far enough. The so-called "public option" is still as popular as before, even though Obama and many Dems made sure it was deep-sixed long before the bill was voted on.

This past election was not a referendum on what is actually good for this country. It was a referendum on which propaganda machine was most effective. As usual, the Democratic effort was largely fact-based on most issues: healthcare, economy, climate-change; yet it was unskillful and unprepared (see the Reid article cited above for an exception). The Republican effort was, as usual, untruthful and fact-avoiding, yet extremely effective given the economy and joblessness in particular.

The election was unfortunate in that people with no program and no desire to face difficult and complicated facts were elected. But it was not particularly historic, and hardly an indicator of the path that is objectively best for us to pursue.

Schoolkids: Teacher, is our class Easter Bunny a girl or a boy?
Teacher: Well class, why don't we take a vote?

Bill Maher

This is worth watching and listening to.

Krugman on Obama

Might as well check out Krugman's as usual right-on-target column. He, also, says that now is the time for Obama to get together some fight and not concede anything to the conservatives.

The conservatives have been wrong on economics for a long time now. Their power was consolidated for many of the years when they controlled both houses of Congress during Bush's presidency. They got what they wanted -- tax cuts and de-regulation -- and failed. Economics may not be a science, but it doesn't take an Isaac Newton to recognize when a theory does not pass the test of experiment in the real world. Now they have regained a lot of power -- at least negative, program-killing power. What do they want? More tax cuts and deregulation and repeal of healthcare reform. They failed to destroy the economy first time around. Now they have another chance.

Jon Stewart made a good point the other night. Why would the Republicans want to offer up any sort of plan to help the economy? Suppose they do nothing. If the economy rebounds, they will claim that their recent control of the House led to the improvement. If the economy remains bad or tanks further, they will continue to blame healthcare reform and other Democratic programs. It has become clear that truth or reason have very little to do with who gets praised, blamed or elected these days (goodbye Russ Feingold).

Too bad we don't have a party willing to fight them. Nice that Obama is chatting them up.

Now what?

Supposedly Obama is inviting Boehner and other Republicans to the White House for dinner or some such. The rags say he's trying to work out a compromise with them (LOL). Some people never learn. They already said that they want to make his Presidency a failure and have shown that they mean it.

Truman presided over an even bigger Democratic loss in 1946. He came out swinging. There are lots of things a president can do that don't require Congress. For example, gearing up enforcement agencies (like NLRB) and giving directives to the IRS. The Attorney General has some clout that doesn't require Congress. (Yeah, like he set the AG to argue for retaining Don'tAskDon'tTell -- just a little longer.) But mainly, he has to come out swinging. Get on TV and name names of obstructionists and what they are obstructing. There are a lot of unemployed people out there whose benefits will run out under Republican control of the House. Is it too much to ask of the feeble Dem propaganda machine ("DemProp"?) that they make it clear what is happening and who's screwing them? It seems just as likely that the Republicans will successfully blame the Democrats when unemployment benefits lapse.

I simply don't understand why the Dems can't find someone like Karl Rove to handle their strategy and message; to head up DemProp. Why don't they advertise for someone: "Needed: smart person to handle propaganda for major political party. Must be as smart and effective as Karl Rove. Astronomical salary for the right person." They have to start their PR NOW NOW NOW. They always wait too long; I've been saying this for years -- I'm sure you can find it in an old blog. The progressive message is not as simple-minded as the conservative one, and requires preparation.

Alas, they're already caving I'm afraid. I hope Obama has a pleasant dinner with the people who will soon finish cutting his throat.

Election results

Well, not as bad as it could have been.

It was nice to see awful candidates lose: Sharron Angle in Nevada, Christine O'Donnell in Delaware, Carl Paladino in New York, and Carly Fiorino in California. Both Angle and O'Donnell are true Tea-Screamer religious loonies -- not part of the reality-based community. Fiorino is a rich contemptuous corporate has-been, and Paladino an outright thug. Hope we never see any of them again.

It was terrible to see Russ Feingold lose -- and hard to understand. If ever there was a senator who voted from principle and often against the wishes of his party, it was Feingold. His defeat was emblematic of the sheer idiocy of the "vote out all incumbents" position. And I was just beginning to think that Wisconsin might actually be a non-coastal state with a reasonable voting population...

Generally speaking, the distribution of intelligent voting in this election reinforces my sports-rooting algorithm: North over South, Coastal over Central and (for a tie-breaker), East over West. (The World Series SF Giants over Texas Rangers was a no-brainer, even considering my ex-New Yorker sensibilities against the renegade Giants and Dodgers.)

Here in New England, sanity generally prevails. In fact, with the exception of the Senatorial race in NH, Republicans did very poorly, as they ought. Deval Patrick, the mediocre Governor with a heart of gold beat Charlie Baker, the rather effective ex-healthcare administrator with a heart of ... well, whatever stout Republican hearts are made of. Baker turned around Harvard-Pilgrim Health Care (HPHC) when it was on the brink of financial disaster. People who worked for HPHC seem to be impressed (which is more than the folks at HP were with Carly Fiorina). However, his prescription for Massachusetts was the usual Republican tax-cut & trim waste, less regulation less government spending baloney.

Barney Frank was also re-elected, in spite of his screw-up over Fannie Mae and Freddie Mac (he thought they were in fine shape until they collapsed). This lapse is more than made up for, in my opinion, by his generally good work for his constituents (ranging from upper middle-class professionals in Newton to people in the fishing industry at the other end of his district) and his recent efforts on behalf of consumer protection in the recently passed financial regulation legislation.

We still don't know whether Lisa Murkowsky will win in Alaska. I for one don't care: Alaskans are, generally, both greedy and not too swift. They get far more than they deserve or contribute in federal funds, yet maintain that they are "independent" and don't need government. This is typical swinish behavior. Most states where voters complain about "big government" get more from the feds than they contribute in taxes. Murkowski will do her best to continue this; her Palin endorsed opponent (Miller) may try to as well. Since the Democrat McAdams will not win, one can only, perhaps, hope Murkowsky's write-in win would discredit Palin -- whatever discrediting Sarah Palin might mean at this point.

All in all, it could have been worse.

Understanding the financial mess

Several months ago I read another informative, amusing, and at times exciting book by Michael Lewis: The Big Short. This is all about the economic crisis brought about by the securitization of subprime mortgages. It describes how a handful of people saw through the fraud and instability of the new financial "derivatives" and were able to make a lot of money by betting against most of Wall Street -- mostly by using Credit Default Swaps. (These are akin to insurance policies on securities, and were disastrously issued by companies like AIG.)

Mr. Lewis is the author of other enjoyable and instructive books on finance, including MoneyBall and Liar's Poker. I highly recommend them.

Also, today's NY Times has a column by Yves Smith pointing out that it is the self-inflicted wounds of Wall Street and investment banking -- in particular, the rapacious mortgage and mortgage securitization profiteers -- that is largely responsible for the current skyhigh unemployment rate. Big money apologists have been trying, as usual, to "blame it on the victims" by declaring that the unemployed are simply unqualified to hold down jobs in the "new economy." This invention of "structural unemployment" is as phony as a $3 bill as Mr. Smith points out.

Diane Ravitch on Charter Schools

This is one of the best articles on education and schools I've read in a long time: Diane Ravitch writing in "The New York Review of Books": The Myth of Charter Schools. Read it and share it!

Obama on the Daily Show

I watched Obama on the Daily Show, and thought that his appearance pretty much highlighted what is good about him, but also what is very disappointing and harmful to his administration.

First of all, he is well-spoken and reasonable. That, combined with the disillusionment (to put it mildly) of the electorate with the Bush administration, enabled him, and an unusual number of Democrats, to get elected in 2008. Also, this large Democratic majority enabled the passage of some really good legislation including the Children's Health Insurance Plan, many parts of the healthcare reform bill, and the consumer protection bill for investors.

But the outlook soon became much grimmer, and Obama is at least partly to blame.

Jon Stewart accused him of being "timid." I'm not sure whether this is the correct word; I think I would say "not sufficiently aggressive" to the point of seeming naive. Nowhere in his interview with Stewart would he come out and say that the Republicans have savaged him and his adminstration at every turn -- even as they said they would do. Early on they made it clear that they would do all they could to make his presidency fail. And they have done exactly that. This includes voting pretty much unanimously, in both houses, against not just his programs, but against many of his appointments requiring confimation. They have held up ambassadorships and judgeships, and have threatened to filibuster every piece of his legislation. Yet, Obama couldn't seem to say anything negative about them. He kept saying that the Democrats did this and did that, and that the "system" in Washington, which includes the filibuster, is not conducive to progress. But: he couldn't bring himself to attack the Republicans by name and call them out (as he did John Boehner a few weeks ago).

This is not the way FDR would have played it. In a speech he made in Portland Oregon in 1932, he said:

"To the people of this country I have but one answer on this subject. Judge me by the enemies I have made. Judge me by the selfish purposes of these utility leaders who have talked of radicalism while they were selling watered stock to the people and using our schools to deceive the coming generation".

Obama could have said this quite aptly to Jon Stewart and the nation. The financial crisis he inherited was not some natural phenomenon, but was the result of greed and deliberately lax federal regulation of investment banking. The same people who created the crisis mostly came away rich, and are using their wealth to bankroll Republicans and Tea Screamers. Not a word of this from Obama. Some of the biggest advocates for investment banking, in fact, found their way into the Obama adminstration.

Here Stewart got in his one zinger. He began with a quote from Obama himself:

"[You said:] we can't expect different results with the same people. And I remember when you hired Larry Summers, I remember thinking, well that seems like the exact same person."

Obama replied that [we were able to ] "stabilize the system, stabilize the stock market, stabilize the economy," and "in fairness Larry Summers did a heckuva job."

With the audience already laughing as they recalled Bush's praise of his FEMA buddy "Brownie" (Michael Brown), Stewart advised: "You don't want to use that phrase, dude" !!!

(What a straight line from the President!)

BTW, speaking to Obama's timidity: A recent survey of the armed forces indicates that soldiers and their families are OK with serving side-by-side with gays. Yet the Obama administration was quick to appeal a federal court decision declaring DADT unconstitutional. Why? They claim they were worried that allowing openly gay soldiers would upset the very people that the poll indicates are OK with it. Even the troops are ahead of the government on this issue. Harry Truman didn't have a problem with anyone's sensibilities when he unilaterally integrated the armed forces by executive order in 1948. But, then, Truman, like FDR, was a real fighter.

ROTC banned?

Many of us believe that ROTC was "banned" or driven out of elite northeast colleges -- mostly Ivy Leaguers -- because of principled opposition to the military. This is not the case, as a recent NY Times Op-Ed points out. In fact, schools may not boot out either ROTC or military recruiters without facing legal consequences, including lawsuits. None of the Ivies presumed to have thrown out the military have, in fact, been sued by the military. ROTC was mainly discontinued because the Defense Department expected it to get academic credit without meeting the standards that other departments and courses of study have to meet. In fact, universities have offered to allow ROTC as an extra-curricular activity when it doesn't meet strict academic standards; the Defense Department has rejected this, and itself removed the program from schools.

There is a lot to be said for requiring academic recipients of federal dollars to allow a military presence on campus. We have to have an army which is competent, intelligent, and subject to civilian control. To the extent that ROTC and military recruiting are non-coercive, they are, it seems to me, not necessarily undesireable. To the extent that they are coecive, it is because the economic opportunity afforded many students is insufficient, and they turn to the armed forces as employers out of necessity. Finally, to the extent that the military is not competent, not intelligent, and not subject to adequate civilian control, the causes are certainly not college hostility, but lie with the military itself or with the improper relationship between Congress and the military.

More documents from WikiLeaks

The Times described and quoted from more documents released by WikiLeaks about the fighting in Iraq. Here is link.

As usual it is the civilian population which pays the greatest price in a war. This has been the case throughout recorded history as the ubiquity of the hymn text "Dona nobis pacem" bears witness. The great lesson is that war is almost always bad, and those who advocate it usually lie. In America those who oppose war are suspect and the burden of proof somehow rests on them -- exactly the opposite of what should be the case. It is very likely that had actual votes been taken -- either here or abroad -- the large majority of people polled would have opposed intervention in the most recent wars.l Because of this, Americans (and others) are not allowed to vote on wars. Our Constitution requires a declaration of war by the Senate, but that hasn't happened since WWII (after Pearl Harbor).

I think it is safe to say that, except for WWII, there has not been anything close to a morally justifiable war that the U.S. has fought -- since the Civil War. I am not a pacifist, but my standard reaction to calls for deployment of U.S. troops is "NO: you are lying." This reaction has been the correct one during my lifetime...

(During the Vietnam War the military published "body counts" which recorded the number of "Viet Cong" killed. In the recent wars in Iraq and Iran they're called "insurgents." How do they know that the bodies that are retrieved fit these descriptions? Do they find ID cards that say "Communist" or "Insurgent"? Who checks on the accuracy of these designations? In other words, how do we know that they weren't and aren't lying? In fact, all evidence suggests that these counts were and are mostly lies -- or, to be charitable, pretty inaccurate.)

Why workers dump Democrats: Part II

The second reason that Democrats are unpopular is that they have no real message or ideology, and hence no unified propaganda. With the Republicans it is easy: they represent the interests of the rich, but they uniformly put on a "populist" face, saying that they are against big government and for the ordinary guy: "Joe Sixpack". That this is a lie is patently obvious to anyone who takes a moment to analyze what they have voted for and against, and who their big contributors are; yet, many people don't spend even ten minutes putting two and two together.

The Democrats, on the other hand, don't even have a uniform ideology or story, whether fact or phony. They trot out programs maybe, but no real principles. For example, Harry Reid in his Nevada campaign, seems incapable of defending the elimination of Bush tax cuts for the wealthy, or healthcare reform, in terms of any general principles such as fairness or defense of the middle or working classes. He can't seem to talk about who is to blame for our recession, other than Bush -- as if Bush did what he did for himself and his family alone. While the Republicans and Tea Screamers decry the "socialist" Democrats, the Democrats can't seem to bring themselves to call the Republicans what they are: the Party for The Rich.

The Republicans had their Contract for America (Gingrich) and their new something-or-other. The Democrats have ... nothing. They don't talk about the New Deal anymore, or the Fair Deal, or any kind of Deal.

The Democrats aren't really a party. Although they were outmaneuvered by the Republicans at the time of Nixon and gave up the South (good riddance to the Dixiecrats!), they still have too big a tent, one which includes Ben Nelson, Joe Lieberman (who supported George Bush), Blanche Lincoln, Mary Landrieu and the Blue Dog caucus in the House. These people are far less likely to take a progressive stance than, say, the two Maine senators are to hew to obstructionist Republican positions. When push comes to shove, Olympia Snowe and Susan Collins vote with their party.

Maybe it was the decades of red-baiting, or the loss of the racist Dixiecrats, or the pervasiveness of corporate money, or simply a failure to think about basic issues and discipline. Whatever, the Democrats don't really stand for anything. They simply can't defend their disorganized stances on taxes (when ane why are they good?), healthcare (remember the jettisoning of the popular "Public Option" ?) or the military (did the party every object to a war? Why can't it end DADT?) in terms of any general principles.

Every movement, in order to become a "mass movement", must have some easily described overall belief or ideology; it must also be able to sell that ideology with a decent propaganda machine. For all its supposed connections with Hollywood and with artists, the Dems simply can't mount a good PR campaign. The Republicans have had the best films and ads and one liners. Remember Dukakis and the tank? Remember John Kerry the windsurfer? (Perhaps the most effective and brilliant political video ever.) Remember Sarah Palin saying "How's that Hopey Changey stuff workin' out for ya?"?

Many were excited when Obama was elected president. It has now become clear that although his excellent organization was an important factor, an even more important reason for his success was the total unpopularity of George Bush after 8 years as President. Yet: we still have Don't Ask Don't Tell; we still have Gitmo, we still have Wall Street traders getting rich(er), and we have the Republicans escaping to once again become a ruling party. The Democrats could never point out exactly what and why the PTR (formerly the GOP) did wrong, because the Dems either didn't know or couldn't bring themselves to say it.

A lot of folks are scared (with good reason). A lot of folks didn't and don't pay attention. A lot of folks have very short memories. And: a lot of folks are kind of dumb and don't read and don't think. But that's what we have to work with. The Democrats don't seem to get this and can't seem to work with this. Maybe it's impossible for reasonable, sympathetic and well-meaning people to retain power in this country (or any country). Solutions to complex problems are pretty hard to explain in simple terms, after all. That's why the conservative movement is so successful: it's answer to these problems is Guns, Gays and God -- and Tax Cuts of course. Can't the Dems come up with something?

Wiki leak wasn't all that bad after all

The Pentagon, according to the AP, has concluded that "No US intelligence sources or practices were compromised by the posting of secret Afghan war logs by the WikiLeaks website."

The Obama adminstration, including Defense Secretary Robert Gates, was all worked up over the leaks when they first appeared. Standard Operating Procedure for this adminstration is that the point of view of the usual powers-that-be is given, least initially, more credence than the views of non-establishment people: exactly the opposite of what Obama promised would happen when he campaigned. This behavior is also evident with the DADT policy against gays in the military. The administration has been distressingly quick to appeal a court decision declaring the policy unconstitutional -- even though Obama campaigned against Don't Ask! No Republican administration would have ever compromised its stated principles in this way. That's another reason why the Democrats are so despised. (See the next installment on why we dump on Democrats, coming soon).

Why workers dump Democrats: Part I

Recent polls claim -- and I have no reason to doubt them -- that the Democratic Party is being hammered by white working-class Americans. This has happened before, most notably in the early 80's with the "Reagan Democrats" and in the late 80's with the same folks going for Bush Sr. Interestingly enough, the same voters returned to the Democrats and "Bubba" Bill Clinton (Rhodes Scholar; Yale Law 1973).

Why have these voters periodically dumped the Democrats in favor of the Party for The Rich? Much has been written on this subject, for example Frank's "What's the Matter With Kansas."
I'd like to summarize some of the reason that the Republicans have been so successful in getting American workers to vote for them, in spite of the fact that the Republicans represent the elite wealthy classes.

This installment (more next week) gives what I think is the most important reason: The Democrats have been so sorely red-baited that they are incapable of talking about the most important issues of Economics and Class. Everyone knows that the Republicans are the party of the wealthy. This has been true almost since their creation, when they split from the Whigs in mid 19th century. They favored railroads, banks and northern commercial interests and this became even more pronounced during the 20th century. The Democrats, with the longer history dating back to Jefferson and colonial times, generally represented rural/agricultural interests (definitely anti-banker). After the Civil War they became the natural party of the South since the Republicans were still associated with the hated -- by many whites -- Abraham Lincoln. Below the Mason-Dixon line the Democratic Party represented raw racism and segregation.

At the end of the 19th century came the fierce labor struggles, with Grover Cleveland calling out the National Guard in 1894 to break the Pullman strike, and then the presidential election of 1912 with E. V. Debs getting over 900,000 votes on the Socialist ticket. (He did it again in 1920 while a prisoner in a federal jail for his outspoken agitation against America's participation WW I.) The success of the Communists in Russia made the elite classes in America and Europe very nervous indeed; so did the growth of their homegrown labor movements. The result was the beginning of their desparate attempt to fight the unions and the socialist party: the beginning of the perpetual "Red Scare" acknowledged a threat to them far more serious than "Reefer Madness", contraception, or even Women's Suffrage. Thus was born red-baiting, the main tool that the Republicans, the party of the wealthy, wielded in its attempt to retain power in American political life.


While the captains of industry hated unions and fought them by all means available, including force, the U.S. government itself was not neutral, but sided with the the anti-union forces time and again. -- I've already cited Grover Cleveland's actions above. I don't have time to go into details; there are hundreds of books on labor history available: a new one is called "There is Power in a Union." I haven't read it yet but there is a favorable review here: In These Times.


On the other hand, the various socialist and anarchist parties in the U.S. as well as the Communist Party U.S.A. were whole-heartedly in support of the union movement. This enabled the anti-labor forces to tie the unions to the socialists and communists. In fact, they did the same for anyone who made pro-union statements; this is what red-baiting was and still is about: a way to fight proponents of social justice by smearing them with charges of pro-communism.

With the failure of Republicans Coolidge and Hoover to stem the Great Depression, the labor movement and even socialism became more significant factors in the U.S. Whatever his other motivations were, F.D.R., unlike the Republicans and even most Democrats, realized that government opposition -- legal and military -- to workers' rights might be seriously counter-productive. With the New Deal, Social Security, and the National Labor Relations Act (1935) Roosevelt instituted some of the basic worker-friendly institutions to American life, and may even have saved the capitalist system here. Unfortunately, he also gave the wealthy elite and its Party the opening to apply red-baiting to the Democrats (and any party or group that supported New Deal-like social programs).


One of the great faults of the Democratic party (and parts of organized labor) is that it never had the guts to come to terms with red-baiting. In fact, it periodically tried to purge itself of members who were "too left." That was one of the raps against Hubert Humphrey and George Meaney (of the AFL). Instead of pointing out proudly, over and over, what America gained from the militancy of the labor unions (child labor laws, 8 hour day, workplace safety, end of sweatshops etc.), and attacking labor's foes, it shamefully tried to point out over and over that it hated commies and socialists as much as the Republicans did. This defensive strategy never worked, and over the years working people forgot what the labor movement had accomplished, but carried the association of Democrats with defensiveness weakness -- especially after Roosevelt and Truman were gone. On the other hand, Republicans never disavow their friends, no matter how greedy, racist or homophobic. The result is that everyone knows, especially working people, that the Dems are wimps -- even if they can't exactly remember why.

(Here's a typical example of Democratic wimpiness. In the first presidential debate of 1988, Bush Sr. complained that Michael Dukakis -- his very forgettable opponent -- was a "card-carrying member" of the ACLU. The moderator probably recalling the old Joe McCarthy line "card-carrying member of the Communist Party", questioned Bush on what was wrong with that. Bush simply listed positions of the ACLU with which he disagreed, throwing in a lot of references to porno and X-rated movies etc. Dukakis was given time to comment. He spent all his time saying how what a loyal American he was etc. etc., and never once mentioned the ACLU and why he supported it. You can read it here.)

Acceptible Republicans?

There is no such thing as an "acceptible" Republican. Yes it's true that the positions of a few members of PTR (formerly the GOP) on a few issues are comparable to those of a few Democrats; e.g. I think of the two Republican senators from Maine. However, when push comes to shove they tend to vote with their party. For example, both Maine senators opposed the healthcare reform bill and the bill to make corporations and other large sponsors of ads identify themselves (in the wake of the Supreme Court's decision in the Citizens United case).

Furthermore, any Republican rep or senator could be the one that puts the PTR over the top and gives it control of one or both houses of Congress.

The PTR has been a force uniformly supporting big business over small business and workers, an unstinting opponent of regulation, a consistent opponent of science and friend of the religious right, a consistent climate-change deny-er. Also, it has claimed to be against big government and for the rights of individuals, but in every case, when push comes to shove, it has voted exactly the opposite. Every Supreme court justice nominated in recent decades by the Republicans has favored big companies over individuals and oppressive laws over the rights of individuals (though not the "rights" of corporations). It has consistently thrown money at the military, even for programs the military doesn't need and doesn't want.

Over the last few decades the history of the party on minorities has been terrible. It has consistently opposed gay marriage and cozied up to fundamentalist religious sects that believe homosexuals are sinners and will be damned; it has endorsed the worst of the Tea Screamers and their extreme no-nothing positions on immigration and government. These anti-people attitudes as well as the racist and homophobic rants of people like Rush Limbaugh (effectively the offical spokesman for the PTR and right-wing) have created a climate of hate that enabled recent physical and cyber attacks on gays and the verbal and even physical abuse of perceived liberals (including a few members of Congress).

While the Democrats are not, in general, great bargains, their hearts are in the right place; this cannot be said of the Party for The Rich. There is no excuse for voting for any of them.


BTW: Russ Feingold of Wisconsin needs all the support we can give him; we just sent him some money. He is the real thing (though I don't agree with him 100%).

Friedman and Krugman: 2 third-party visions

Last week (9/28) Tom Friedman's column discussed the desireability of a true third party in the U.S. He said that the will was there, and that all that was needed was a leader who could capture the imagination of all the disgruntled "citizens from centrist Republicans to independents right through to centrist Democrats". Poor Tom: as usual his heart is sort of in the right place, but his brain is not fully activated. It was that way when he supported Bush's war in Iraq: all that was needed was for U.S. troops to install democracy in one state -- Iraq -- and the rest of the middle-east would soon come around. He knows: he heard it on the (Arab) "street" (as he put it). (Does Friedman actually speak Arabic?)

Today, (10/3) Paul Krugman brings us down to earth. He points out that with an easy flick of its wrist, the billionaire's club called the "conservative movement," spearheaded by the Koch family and presented by the Fox ministry of propaganda, easily took over the Tea Screamer movement. The so-called "centrists", who have discovered their anger but not books and newspapers, and never seem to master the history of events even as recent as a few years ago, easily became opponents of Social Security and healthcare reform and proponents of tax breaks for multi-millionaires and de-regulation. So much for third party viability.

Consumers and "comparative effectiveness"

Merrill Goozner's GoozNews, a healthcare letter I've recommended before, reports that the GAO has appointed the 17 representatives to the advisory board that oversees Comparative Effectiveness Research on drugs. The 3 so-called "patient and consumer representatives" are not exactly that. One has strong ties to the insurance industry and the other two have been advocates for "fast tracking" of medicines. It seems almost impossible for the Washington establishment to actually include real consumer advocates on any bodies that have real power. It would have been nice to see at least one rep from, say, the Center for Science in the Public Interest (CSPI) or some other group that actually represents consumers' and not industrial or insurance interests.

Harrassment, suicide and the right wing

The recent suicide of Tyler Clementi, and the previous one of Phoebe Prince were both associated with "cyberbullying". However, using computers and the Internet are just means for the harrassment of defenseless individuals by groups that consider themselves in the majority or in the "mainstream."

I blame a lot of this harrassment on the "social conservatives" and their party of choice, the Republicans. The P.T.R. and the conservatives have time and time again taken anti-gay and anti-privacy positions, legislatively, judicially, and verbally. They have fought against and derided equal employment laws -- equal pay for equal work -- and against anti-discrimination statutes. They have mocked the women's movement and gays consistently, and have supported fundamentalist positions denying personhood to gay people and limiting women to subservient social and economic positions. (I'm not even going to talk about slimeballs like Rush and Newt and the talk radio jerks, who personally bully people every day from their positions of power.)

Even while they have denied this, right-wingers have refused to repudiate bullying attacks on individuals and certain minorities since the groups advocating these positions have been major partners in their electoral and financial coalition. When a single major party effectively denies equal protection to a group of Americans, they must be held responsible for those who follow their hint and attack these people, whether physically, verbally, or economically. Of the political parties, the Republicans and only the Republicans must take a large portion of the blame for the cruel and un-American acts daily perpetrated on our fellow citizens who happen to be powerless and/or belong to minority groups.

Just listen to their sneering references to "do-gooders" and "bleeding hearts" and "PC police." That's where they're coming from, and their disdain provides the cue for the vile actions we read about with increasing frequency.