Thursday, May 26, 2011

Some old issues reviewed

Of course, Medicare is the real problem. Nevertheless, it's still good to remember that Social Security is quite easy to fix: raise the cap on wages subject to the FICA (Social Security) Tax. This would create a mild tax increase on high-income Americans, but they would still be in much better shape, taxwise, than they were a mere two decades ago (before they were helped so disproportionately by the Bush tax cuts).

The facts and figures can be found here: Dollars and Sense.

Meanwhile, why not ask your Senator or Representative why people who buy and sell stocks don't have to pay any sales tax. Such a Financial Services Tax (FST) of a mere 1/2% on buyer and seller, could generate $100 billion a year, and would have a negligible (1/2%, after all!) effect on only massive speculators -- not on investors or pension funds etc. These massive speculators are social parasites, so I call this tax the Parasite Tax. Any plan for a national sales or Consumption Tax which doesn't contain an FST (and none of them do) is a total fraud and a regressive attack on all middle-class and poor Americans.

Wednesday, May 25, 2011

"Inside Job"

Over the past few years I have read several books and dozens of articles on the recent financial crisis. I just saw the film "Inside Job" which, while somewhat less technical than some of my reading, gets the facts straight about this disaster, and presents them in a compelling manner. It won this year's Academy Award for Best Documentary -- and well deserves the honor. (Ebert's review can be found here, many others, of course, are available; they all seem favorable.)

The film is dramatic, true, but it is completely non-fiction. All scenes are either live interviews or newsclips; assertions are all documented, and match up with what I've read in books and newspapers. It also shares the blame pretty widely: banks, professors, advisors, CEOs, and politicians of both parties, from the Reagan administration through the Obama adminstration.

Go see it if you haven't already: it's on DVD and I got it from Netflix. It's a small miracle that it was made and that it received the recognition it deserves.

Still beneath contempt

We were all watching the special election in New York's 26th congressional district yesterday. There is a limit to how much you can abuse people's self-interest, and the Republicans have reached that limit. Democrat Kathy Hochul defeated Republican Jane Corwin for a seat once held by conservative Jack Kemp.

Republican leaders have hinted that the Party for The Rich may have somewhat (just a tiny little bit) misinterpreted or exaggerated the support for Paul Ryan's budget, with its destruction of Medicare (one of Americans' favorite programs); they may even have misinterpreted the results of the 2010 off-year elections. Just a little bit.

It is really beneath contempt -- as usual -- how the Republicans have misunderstood so much. Every poll on taxes, deficits and health care reform have shown that people are uneasy because they fear the effects of these issues on them; however, when asked about specific provisions of the tax code or of the healthcare reform bill, they support nearly all of the progressive parts -- taxing the wealthy, and universal health care. They don't like the "individual mandate" because they don't want to be forced to do anything -- a longstanding and traditional American position. Of course, there is no hope of universal health care if people are allowed to wait until they get sick to take out insurance, or if the uninsured can get cheap care at an emergency room at the expense of everyone else. Americans, while tending to believe the lies about "death panels" (they only have them in Arizona I think), also have very mixed feelings about extending life too far.

In other words, after spending many millions of dollars in opposing everything that Obama and the Democrats have proposed, the PTR has not obtained anything like a clear mandate from the people for this obstructionist policy. The same is true for the anti-union moves typified by what went on in Wisconsin.

When the Republicans, with not just a little help from many Democrats, pushed deregulation of the banking industry, and when this deregulation led to the disastrous Great Recession of 2008, people responded by giving Democrats control of the presidency and both houses of Congress. The Republicans never acknowledged this a Democratic mandate. When, as a result of high unemployment (hardly caused by the Democrats, whose policies were just beginning to take effect) and disgust with the toothless bailout of too-big-to-fail banks, the Democrats lost the House in 2010, the PTR convinced itself it had a mandate to achieve its goal of dismantling many parts of the very popular programs instituted by the New Deal and the Great Society. In doing this, their overstepping has become clearer and clearer.

Yes, it's true that people don't want to be pushed around; that they think (and hope) that they may be rich some day; that they have succumbed to the myth that government is the problem (though that belief is, curiously, held mostly in states that are willing to accept Federal funds in excess of the taxes that they pay in); that they can be persuaded temporarily to buy into new wars and other military fund raisers. Nevertheless, they eventually see through a lot of the nonsense that the advocates for the wealthy and privileged spew out. When they are warred on enough times by the upper class, they will begin to fight back and -- gasp -- engage in a little class warfare of their own. I think we are beginning to see that.

One other thing: the Republicans are really bent out of shape that there is finally a modest law that protects people from the predatory financial policies of banks and investment houses. They don't want explanations of the fine print, restrictions on what credit card issuers can do, and regulation of super-risky speculation in mortgage-backed securities and derivatives. If, as they claim, they have the interests of ordinary Americans at heart, how can they explain their boot-licking advocacy for the small percentage of people who control and profit from ownership of a vast plurality of American wealth? They really hate Elizabeth Warren and the financial protection and reform that she represents. About what you'd expect from the Party for The Rich.

After all these years, still beneath contempt.

Monday, May 23, 2011

New book on Goldman-Sachs

The Huffington Post has published an interesting except from a new book (to be published tomorrow) on the role of Goldman-Sachs in the recent financial meltdown. You can find it HERE. I have blogged about this several times already, and I still recommend The Big Short by Michael Lewis, which is now a NY Times paperback best seller.

It's past time for some folks to go to jail for this; unfortunately, metastases from G.S. permeate the highest reaches of government and the financial community. The Attorney General for New York State is investigating wrongdoing of major banks -- we'll see. (This would have been a good project for Eliot Spitzer -- you remember him, client #9?)

Sunday, May 22, 2011

What an economist says

In yesterday's blog I explained why the Bush tax cuts mattered. As I said, I am not an economist, so here is an article pretty much supporting what I wrote, except written by an actual expert in the subject: William G. Gale is a senior fellow at the Brookings Institution and co-director of the Urban-Brookings Tax Policy Center, and this article appeared in the Washington Post:

Saturday, May 21, 2011

Why the Bush tax cuts will matter more

Anonymous posted the following good question in the Comments section of yesterday's blog:

Please explain this to me - tax cuts were implemented in the early 2000's and by 2007 our deficit was only roughly $160 billion. So how could the same tax rates today that we've had for a while now account for such a large percentage of the deficit going forward? The massive increases in the annual deficits to over a trillion a year are in large part due to the Bush tax cuts when in 2007 we had much smaller deficits and the same rates? Doesn't make sense to me. Something else must have changed which caused the deficit to increase so much.

I think this is an important point. In the early 2000's there was not much of a war in Afghanistan and just the beginning of the war in Iraq (in other words, no "surges"). The second lie the Bushies told was that the war in Iraq would "pay for itself" out of oil revenues. (The first was the WMD nonsense.) This never happened and, in fact, the war was basically off-budget. In other words, bookkeepers never let the expenses appear as items in Bush's budget and they were never voted on. Money was shifted or borrowed from various accounts (probably Social Security, e.g.). The full fraud involved here is only now beginning to surface. The official deficits at this time were artificially low -- just like the official value of subprime mortgage-backed securities.

In addition, tax revenues from all sources, even taking into account the Bush tax cuts, were still reasonable, since the U.S. had just come out of a recession that was part of the usual business cycle -- even though this recovery, as I've pointed out, was less robust than previous ones, due to the tax cuts.

In any case, the situation was altered radically by the speculation-induced Great Recession which started around 2008. Business did poorly and many people lost their jobs; even rich folks had diminished incomes. The economic contraction was such that the Bush tax cuts were less significant since general income and wealth was in a severe downturn, so nearly everyone paid less taxes. As Anonymous pointed out, things began to change after 2007.

In the past year or so, as we started to recover from this recession, the incomes of wealthy folks started to take off again. (Not so the incomes of the non-rich, unfortunately). Now the effect of the Bush tax cuts becomes significant again, since the rich are getting richer once again, and we are not collecting the money we need from them. Down the road, as the economy rebounds, this will be even more the case. Since the experience of the past half century is that, in what now passes for a "healthy" U.S. economy, middle-class wealth and income is basically static, but upper class income increases, we see that the significance of the Bush tax cuts for the wealthy will be more and more significant down the road.

I am a mathematician not an economist, but this is my understanding of the situation. I encourage any economists reading this to post comment on this topic. Thanks to "Anonymous" for raising this point.

Where the debt will come from

The Center on Budget and Policy Priorities has a chart that shows where the projected budget deficits will come from in succeeding years. It suggests that the Bush tax cuts will be the largest factor and, when they are combined with paying for the unbudgeted wars in Iraq and Afghanistan, will account for more that half of public debt. Check out the chart HERE.

Latest score: Science 1, Nutjobs 0

Checking out the various timezones this morning, I see no signs of a rolling rapture anywhere.

So the reason-based community has an unblemished record against conservative ideology, Tea-screamers and religious loonies in the prediction department.

It is virtually impossible to prove that a theory is true, since contradictions to it could arise at almost any time, especially as observation methods become refined. However, it is possible to disprove a theory by seeing if its predictions come to pass. This is how theories are tested.

So far, no form of theorizing has turned out better than observation, reasoning and mathematics. Not only that, but science acknowledges its failures and readjusts its theories when fundamental contradictions arise -- though, admittedly, the recalibration may take some time.

What will the end-of-time folks do now? Probably nothing. Those who got rid of their houses and their children's college savings will have to wander around aimlessly; unfortunately, a new crop of religious loonies will spring up to take their place, with even more bizarre predictions of the end of the world, based on the same biblical number silliness that has led their ilk astray for millenia.

Okay, okay, I know: What part of beneath contempt don't I understand?

(On a different scoring note: Too bad for the Cubbies, who hadn't played at Fenway Park for nearly a hundred years: they lost to the Red Sox 15 - 5 last night in Boston. I actually feel sorry for them...)

Friday, May 20, 2011

Lies conservatives tell: Part 329

Well, they're wrong again. Conservatives/Republicans berated Obama's efforts to revive the economy, especially his bailout for the auto industry. They claimed it would hurt the economy and be "anti-capitalist". Yet, Detroit has undergone a big turnaround, especially Ford and General Motors, which have seen several profitable quarters now after being on the verge of bankruptcy. Many thousands of jobs were saved, with the prospect of many jobs being added as well.

The proof of the pudding is in the eating, as they say.

For more details, see today's NYT column by Paul Krugman.

Do the conservatives have any track record for predictions? They were wrong about de-regulation, they were wrong about tax cuts producing prosperity. They were wrong in Texas and wrong in Alaska. They were wrong about Iraq.

They are like the rapturists who keep predicting the end of days every year, and are left high and dry in this world. (Check out tomorrow, another rapturous day BTW.) Next year the Mayans (if there are any left) and their followers will have their turn to join the right-wingers in the predictions-that-don't-come-true department.

Wednesday, May 18, 2011

Newt and Network "news"

Last Sunday on Meet the Press, Newt Gingrich commented on Rep. Paul Ryan's budget plan, which would turn Medicare into a voucher system:

"I think that that is too big a jump ... it's right-wing social engineering [which is not] any more desirable than left-wing social engineering."

This criticism was, of course, big news, coming from a long-time right-wing ideologue, former Speaker of the House and current presidential aspirant (and lifelong sleaze). It was obviously a candidate for a major story on network "news" programs.

So, on Monday, I watched NBC "news". The thrust of their story was that Republicans were outraged at Newt's disloyalty to the party, with many predicting that his remarks would doom his candidacy for president in 2012. Several huffing and puffing muck-a-mucks were interviewed, as well as a rank-and-filer who accosted Gingrich after one of his public appearances.

What was missing was any sort of analysis or commentary on why Gingrich had made this remark or what it might even mean. What does "social engineering" entail, and how does transforming Medicare into a voucher system qualify as social engineering? What part of Medicare is "left-wing social engineering"? In other words, Brian Williams and company had no interest in this story in terms of issues -- it was simply a part of a big gossip trot-out involving, as usual, personalities: Gingrich vs. Ryan, McConnell vs. Reid etc. What this had to do with health care or budget reform was never mentioned, nor even the obvious question of how the Democrats might use this.

That's why network "news" is so unbearably superficial. It's transmitted from uncritical reporters to their studios to our tubes on a binary signal that's all zeros.

Tuesday, May 17, 2011

The more things change ...

We're back from up-country (central Maine): sent packing by cold, damp weather and black flies. Got the early spring garden in: peas, onions and other root crops, broccoli and its cousins. Also, took a chance on half the early corn and some beans: I'm not optimistic, but we'll see.

The more they remain the same. Huckabee and Trump are out. But who cares, really?

Huckabee is a strange guy. He seems sincerely religious and, at least verbally, conscious of the economic difficulties of a lot of Americans. Yet, he seems not to understand anything about economics. It's as if people are hurting without any real reason: maybe an act of god. He's against a graduated income tax and for a sales tax; in other words, he's against taxation that might iron out some inequalities, and for taxation that is the worst possible for the non-rich (see my Consumption Tax blog). What is it with these born-again types? Is it that they are stupid, or just so sure of themselves that they don't want to learn anything?

And then there's Ross Douthat, the NY Times libertarian columnist. In last week's essay "A Requiem for Huckabee", Douthat tells us how much he liked the candidate; however, he can't find much positive to say about Huckabee's understanding of the country's problems. He ends with the following curious words:

Still, his candidacy illuminated a path that more politicians should take. We live in an age of economic stagnation and social crisis, and the two are intimately connected. The collapse of the two-parent family and unfettered low-skilled immigration have made America more stratified. The Wall Street-Washington axis really did drive the country into a ditch.

For all his faults, Mike Huckabee knew how to talk about these problems. Now we need leaders with ideas for what do about them.

I love that: Huckabee could talk about these problems: "Those poor poor people; how I feel sorry for them. Wish I could help. Maybe a sales or VAT tax? Something. Tsk, tsk."

But then the realist Douthat knows what's wrong: The Collapse of the Two-Parent Family and Unfettered Low-Skilled Immigration. Wow, talk about cloud cuckoo land. It's almost as if Douthat had never heard of the subprime mortgage debacle, or AIG, or unregulated derivatives or banking crisis, or Wall Street greed. Ten years ago the economy was doing just fine with lots of people employed; yet, there were just as many single-parent families and just as many low-skilled immigrants. Was he sleeping through the Great Recession and bank bailout?

Single-parent families didn't cause the mess we're in; if anything, the economic strain of the great American Inequality, stagnation of middle class wages, and the inadequacy of the single-parent income helped do in the two-parent family. I don't think immigrants are more unskilled now than before, but American corporations have exported jobs and job incentives in their quest for lower labor costs and higher profits. The wage gap in our society has never been greater -- at least since the Robber Barons. A succession of unbudgeted and undeclared wars has transferred the money needed for education to the Pentagon, leaving countless school districts in desperate need. (The Republican response has been: Teachers, like other public employees, are enemies of the economy -- hell, they're job killers.)

Douthat seems constantly on the verge of breaking through. He has admitted that there is unacceptable inequality of wealth in this country, and he realizes that the Republican "budget" slopped together by Congressman Ryan is bad. Yet, he snatches defeat from victory over and over by falling back on the same discredited conservative rhetoric ("immigrants" "incentives" "job-killer" blah blah). Just admit you were wrong, Ross, and throw off the joke of silly conservative "philosophy", with its voodoo economics, faith in Big Business, and reverse Robin Hood ethics.

Oh yes, the other news: Trump is not running. I came back from Maine to hear the crushing news. It seems The Donald really does need the money from his TV show to prop up his mighty empire. Too bad: he was doing so well among the discerning Republican voters. Well, at least he saved the country by getting Obama to show his birth certificate. Republicans love this stuff.

Tomorrow: Newt and the Networks.

Thursday, May 5, 2011

The death of Osama bin Laden

I've been thinking a lot about Osama bin Laden in the past few days. I wanted to write something about the celebrations of his death, since I felt much of it was unseemly. Yet, I myself am glad that he is no more, since his life was one of violence and murder directed at not only his enemies but at many innocents who happened to surround his enemies. His claim that his faith justified this bloodshed was, of course, directly in the mainstream of religiously inspired violence that has flowed down through recorded history.

At the same time, he and his major enemies, the U.S. and the former U.S.S.R., are bound together in a kind of triangle of dualities whose pairings raise some of the most fundamental questions of morality: ends and means, evil and innocence, faith and cynicism.

It all starts with the cold war, the political and military division of the world into "East" and "West", and the Manichean division of the world into "Good" and "Evil". There is no doubt of the cruelty of Stalin and his successors, but the U.S. side also installed and supported numerous bloody dictators in South and Central America. And of course the nuclear and thermonuclear arsenals of both sides made "Mutual Assured Destruction" a very real possibility for decades.

In 1979 the Soviet Union invaded Afghanistan, shortly after the Islamic revolution in Iran deposed the Shah (a U.S. puppet himself) and installed Ayatollah Khomeini, a theocratic tyrant.

At this point Osama bin Laden, who had been studying radical Islamic theology in Saudi Arabia, moved to Pakistan and started to assemble the jihadists who would become the anti-Soviet mujahideen in Afghanistan and later al-Qaeda. As the scion of a Saudi family made wealthy through its construction company, he was able to use his business connections and organizational skills to create an effective military force to attack the Soviets across the border.

Also around this time the U.S., through the CIA, made contact with the mujahideen. Steve Coll, reporting in the Washington Post, writes:

"In March 1985, President Reagan signed National Security Decision Directive 166,...[which] authorize[d] stepped-up covert military aid to the mujahideen, and it made clear that the secret Afghan war had a new goal: to defeat Soviet troops in Afghanistan through covert action and encourage a Soviet withdrawal. The new covert U.S. assistance began with a dramatic increase in arms supplies -- a steady rise to 65,000 tons annually by 1987, ... as well as a "ceaseless stream" of CIA and Pentagon specialists who traveled to the secret headquarters of Pakistan's ISI on the main road near Rawalpindi, Pakistan. There the CIA specialists met with Pakistani intelligence officers to help plan operations for the Afghan rebels."

These supplies were merged with those provided by Osama and others, and used by the mujahideen to kill Soviet troops. Money to buy more arms was also provided by the drug (heroin) trade. Charles Cogan, former CIA director in Afhanistan, writes:

"Our main mission was to do as much damage as possible to the Soviets. We didn't really have the resources or the time to devote to an investigation of the drug trade,'... `I don't think that we need to apologize for this. Every situation has its fallout.... There was fallout in terms of drugs, yes. But the main objective was accomplished. The Soviets left Afghanistan."

Basically, over the next few decades, and especially after the withdrawal of Soviet forces from Afghanistan, the mujahideen moved on to other countries including Macedonia, Chechnya and the Balkans. In Afghanistan they morphed into the Taliban and, still using support supplied covertly by the CIA, established a severe and brutal rule -- one that the U.S. publicly denounced only years later.

Thus, when it suited the needs of the U.S., Osama bin Laden and his jihadists received cash and arms to wage terror on the Soviets. The Chechen rebels, among others, are actively terrorizing Russians through bombings in major cities. It is likely that they are still using some equipment and arms provided by the CIA.

Thus, in the 1980s Osama bin Laden was being supported by the CIA to do to the Soviets what he would later do to us.

Meanwhile, the U.S. was sending more and more technical and military support to prop up the corrupt regime in Saudi Arabia, which had (and maybe still has) the largest proven oil reserves in the world. The presence of "infidel" troops in the holy cities of Medina and Mecca caused Osama to transfer his attention from the departed Soviets to his previous benefactors: the U.S. His strict Wahabi version of Islam caused him to redirect his jihadi efforts against American troops and Americans in general. This led to a series of terrorist attacks against U.S. troops and civilians throughout the world: in Sudan, Somalia, Saudi Arabia, Kenya and Yemen (U.S.S. Cole). He formed al-Qaeda and set up its training camps in Afghanistan, then under Taliban control.

These efforts culminated in the attacks of September 11, 2001.

At this time the Bush administration was already looking for a pretense to attack the regime of Saddam Hussein in Iraq: the timing couldn't have been better for them. (A good account of this can be found in Against All Enemies, a best-selling book by Richard Clark, national security adviser to Reagan, Bush senior, Clinton and the junior Bush).

Of course, the U.S. had not been sitting idly by. When Saddam invaded Kuwait in 1990, with little initial discouragement from Bush Sr., the U.S. launched an attack on Iraq, sometimes referred to as the "First Gulf War." This was all about oil. The result was a massive defeat for Saddam and the slaughter of perhaps 100,000 poorly trained and conscripted or reluctant Iraqi troops at the hands of the very hi-tech U.S. army. No American had been threatened by Saddam previous to this undeclared war, and American casualties were very light. The American invasion stopped short of Baghdad. Many felt that Bush Sr. didn't want a populist government to arise if Saddam were toppled at that time; the U.S. had been playing off Iraq against Iran ever since the Shah was deposed.

In any case, the pretext of 9/11 enabled G.W. Bush, in the face of massive domestic and international popular opposition, to invade Iraq and overthrow America's sometime ally Saddam Hussein. Heavy U.S. bombing destroyed much of Iraq's infrastructure (water, power, transportation) and opened a hornet's nest of partisan and religious violence. This has resulted in at least 100,000 civilian (non-combatant) documented deaths. Most of these were from terrorist activity, but many resulted from errant U.S. ordinance -- the so-called "collateral damage".

Thus, two needless wars produced over 200,000 unnecessary deaths in Iraq alone; thousands more have died in Afghanistan: most also from terrorist activity, but also thousands from collateral damage from American bombs and drones.

By contrast, about 3000 died in NY on 9/11. Several thousand American soldiers have been killed and many more thousands wounded. The late Osama bin Laden had a lot of blood on his hands, but so do we and the Soviets and the various murderous despots that we, the Russians, and the terrorists supported and opposed at various times.

So, while it is good that Osama has been "neutralized", it is hardly a cause for much self-congratulatory celebration. There has been too much killing and enough blame to go around.

(Our President seems to be a generally peace-loving person, who favors humanistic government policies; so, if anything else is good about Osama bin Laden's death, it is that it strengthens Obama's political standing.)

In balance, then, quiet reflection seems to me to be the best stance at this time.

(Most information about Osama bin Laden's history was gleaned from articles in The Boston Globe and CRG (Centre for Research on Globalisation).

Monday, May 2, 2011

Osama: part II

The Big Lie in action:

Bush on bin Laden

(These guys think that no one is paying attention. Why didn't Kerry follow up and nail him on this?)

Osama part I

I've been reading a lot of blather about how the killing of Osama bin Laden will take away the Republican's talk about the President and his party being weak on defense.


What does any particular fact about Obama or the Democrats have to do with what Republicans say or believe?

1. The Republicans never disavowed the "birthers" and still haven't -- they've been using them as yet another tool in their arsenal, and will continue to do so (see my blog Taking his word).

2. They are still blaming Obama and the Democrats for the economic disaster of 2008 and the bailout, in spite of all the facts to the contrary.

3. Many Republicans state and may even believe that "Obamacare", as they derisively refer to it, is responsible for the deficits and high cost of medical services.

I predict that not one single Republican will in any way withdraw any criticism of Obama or the Democrats for being weak on national defense, and very few (if any) will give him credit for killing Osama bin Laden. I imagine there will be some who'll want to see the "long form" of the death certificate or the DNA test, or who will claim that the unit that found and killed him was actually set up by Bush. If I am wrong about this, you can write to me on this site.

Remember that it was Republican Minority Leader Mitch McConnell who said, near the beginning of Obama's presidency, that: “The single most important thing we want to achieve is for President Obama to be a one-term president.” Apparently this was more important to McConnell and his party than employment, peace in the middle east, energy independence or national security. Their words and actions certainly don't belie that.

As long as people and the news media have a memory not exceeding 6 months, the Republicans can and will say anything that they want, and simply repeat it over and over until it wipes out any vestige of what is true or what actually happened.