Tuesday, July 17, 2012

Republicans hate effective government

Please check out this entirely correct analysis of why the Republican Party is so pathologically opposed to the Affordable Care Act ("ObamaCare"),  posted at

Monday, July 16, 2012

"Discretionary" vs "Disposable" income

I admit to being careless in using these terms (taking them as synonyms), so I should clarify the distinction.


disposable income = total income - tax liability
discretionary income = disposable income - cost of necessities

The point of all this, of course, is that many people have little control or discretion about what they do with the money they earn, since there may be very little left after taxes and necessities such as food and shelter are deducted. This is main reason why we have a graduated rather than a flat income tax in this

Note that savings -- say for children's college tuition or job retraining -- is considered discretionary spending. So is medical and dental insurance.

In areas of the country (e.g. New England) where government services are good, tax money paid provides services such as medical care or transportation. Thus, though taxes may be higher, some expenses for necessities may be defrayed by public services. Or, discretionary spending may be freed up by taxpayer funded services such as public (higher) education.

Thus, without taking disposable and discretionary spending into account, as well as the tax structure, simple talk about income is largely meaningless.  Poorer people have little or no discretionary spending, while wealthy ones have great freedom in purchasing things. Adding even a little extra salary at the low income levels can boost discretionary spending many times, adding a great deal to a family's qualtity of life and to the economy as well.

I can't recall reading or hearing Republicans ever talk about this. Have you?

Sunday, July 15, 2012

Romney: Here, There and Everywhere

1. In 1999 Mitt Romney left Massachusetts, where he was a legal resident, to supervise the 2002 Winter Olympics, to be held in Utah. At the time he was president, CEO, and sole stockholder of Bain Capital. In this and several subsequent years, he listed his home in Park City Utah as his principal residence for tax purposes. This enabled him to qualify for a lower real-estate tax as a resident of Park City. It also enabled him to consider running for governor of Utah.

2. During the years 1999-2002 Romney and his company Bain Capital continued to file documents with the SEC, describing him as president, CEO, and sole stockholder of Bain.

3. Meanwhile, back in Massachusetts, Jane Swift was acting governor, taking over after the elected governor Paul Celucci left office to serve as ambassador to Canada. Swift was an inept politician and she and her administration were embroiled in several scandals; Republican insiders and power brokers wanted her out of the 2002 gubernatorial election, and Romney in. They got their way.

(On the Democratic side, the establishment supported state Treasurer Shannon O'Brien; Robert Reich, Bill Clinton's secretary of labor also had considerable support. At the nominating convention -- which we attended -- establishment forces, possibly under the control of the Boston Mayor, managed to get state rep. Warren Tolman's name on the ballot, to split the anti-establishment vote that would have gone to Reich. Thus, in the actual primary, O'Brien, a weak candidate, became the Democratic nominee.)

4. When Romney returned to Massachusetts as the (presumptive) Republican nominee, he was challenged by some Democrats over his residency, since Mass. law requires a candidate to have continuous residency there for 7 years before running for Governor. At some point Romney retroactively redid his tax filings to change his residency from his Park City home to his house in Belmont MA. (Romney has at least half a dozen different "homes".) The Election Commission, not wanting to appear partisan in a nominally Democratic state, bought this, and so Romney remained on the ballot and defeated Shannon O'Brian 50% to 45%.

5.  The story of Romney and Massachusetts politics doesn't end in 2002. In 2010, in a special election to fill the seat of the deceased Ted Kennedy, Romney boasted that he had voted for the Republican (and eventual winner) Scott Brown. Though Romney and his family were then living in another of their homes, this time in California, he claimed residency in the unfinished basement of his son's home in Belmont (he had sold his own home in Belmont about a year previous). Although this is as phony as a $3 bill -- Can you imagine Romney living in an unfinished basement? -- apparently it was unchallenged.

6. And so we come to the 2012 election. Romney's opponents have claimed that his company, Bain Capital, was a major exporter of American jobs. He countered by claiming that he was no longer running the company during the years 1999-2002 (see #1 above) when Bain was outsourcing. So what about the official and legal statements to the SEC about him being president, CEO and sole stockholder in Bain during these years? Basically, says Romney, these are just words: in actuality it was a committee of other Bain execs who were running the company, and that he was completely divorced from Bain in actuality. This was not what he was telling the voters and the Election Commission in Massachusetts when he wanted to be on the 2002 ballot.

7. Romney's tax returns for the years following 1999 will show, specifically, where he was claiming his legal residence to be, and also where and how much money he was keeping -- investing? -- in the U.S. and how much he was squirreling away in tax-avoidance havens overseas.

All of this is highly relevant because Mitt Romney's sole claim to high elective office is based on his supposed desire and ability to create American jobs. He has no evident expertise in any other aspect of economics or foreign policy, and his many live comments show that he has no conception of what it means to be a non-rich and non-privileged person in America. (He is like Bush senior who revealed in his campaign against Clinton that he had never seen a bar-code scanner in a supermarket.)

And so, the Romney candidacy must sink or swim with his record on jobs -- which is looking worse and worse each day.

(Thanks to Maxine for helping to recall a lot of our experiences with Mitt Romney here in Massachusetts.)

Wednesday, July 11, 2012

on vacation

Taking a vacation in Maine. Back around mid July

Wednesday, July 4, 2012

$3 billion? $9 billion? What next?

JPMorgan-Chase first announced a "relatively small" derivatives trading loss of, maybe, $3billion. Maybe. Now it looks like it may be around $9 billion. Yet, goes the conventional wisdom, this is small for a bank with around $75 trillion in "notional" value. (Notional value is the value of "leveraged" investments, which is much more than the actual or "owned" asset value -- click here for a useful discussion.) 

But conventional wisdom -- where the convention is what Wall Street would like us to believe -- is not always wisdom. This was quite sharply illustrated after the Great Collapse of 2008, when Alan Greenspan admitted that his conventional "wisdom" was in error. (Of course, he was one of many conventional Wall Street apologists who were dead wrong.)

For an interesting analysis of the threat of massive derivatives trading by banks, see this article by James M. Stone, former chair of the Commodity Futures Trading Commission, and commissioner of insurance in Massachusetts.