In Transition

Apologies to regular readers for not posting in recent weeks, but as some of you know, I recently accepted a new job in another part of the country.  So, as my wife and I transition from Saint Louis back to my native stomping grounds of New England over the next couple of months, posts are likely to be few and far between.  Please be assured, however, that I intend to resume regular blogging at the earliest opportunity!

The Regressive Legacy of Reaganomics

Over at the New York Times, former Secretary of Labor Robert Reich has an excellent article on the current state of the middle class.  The points he makes are all worthwhile, but the truly killer element of his column is the accompanying chart.  I've written about this topic a number of times - most recently in Punishing Worker Success Doesn't Count - but as they say, a picture is worth a thousand words, and Mr. Reich's all-encompassing chart starkly illustrate the damage wrought by Reaganomics and its adherents.

Click on chart to view at full size.

Taxes, Debt and Welfare Queen States

Last Sunday, billionaire investor Warren Buffet caused a significant stir with an opinion piece he wrote for the New York Times entitled "Stop Coddling the Super-Rich".  In it, he noted that, since his income is generated through capital gains, even though he made nearly $41 million last year, he was taxed at an effective rate of only 17%.  Meanwhile, everyone else in his office - who performed actual labor - was taxed at an average rate of more than twice that much.  Mr. Buffett then went further, directly confronting the long-held, but factually unsupported talking point that somewhat higher taxes will broadly discourage investment:

Tax Burdens in the Developed World
(click on image to view at full size)

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine - most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone - not even when capital gains rates were 39.9 percent in 1976-77 - shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Mr. Buffett is completely correct.  Americans not only have one of the smallest tax burdens in the developed world, that burden is lower now than it was in 1965.  In fact, the entire notion that "confidence" about the regulatory and tax landscapes coupled with free cash flow create jobs is utter nonsense.  Demand is what drives the economy and spurs employment; always has been and always will be.  Investor confidence about regulation and taxes can tweak demand, but it can't drive it.

Federal Taxes Minus Spending
(click on image to view at full size)

But with regard to taxation, not only is there great disparity between economic classes, there are significant geographic differences in the flow of public funds.  Twenty-two states effectively support the other 28, sometimes to the tune of hundreds of billions of dollars.  Over the two decades from 1990 to 2009, for instance, New York paid nearly a trillion dollars more to the federal coffers than it received back.  Virginia, on the other hand, took in almost $600 billion more than it contributed.

Origins of U.S. Debt
(click on image to view at full size)

Of the 28 states that ran a transfer of tax funds deficit during this period, two thirds of them voted for John McCain and Sarah Palin in the 2008 election.  Assuming those ballots were cast because voters approved of Republican tax-cut policy and deficit spending, and opposed Barack Obama's "socialism", given the orgy of unfunded expenses incurred under President George W. Bush, perhaps there is a simple solution to the "debt crisis" which has become the obsession of both the political and chattering classes.

Maybe we could just take that whole issue off the table by having those states with a declared preference for "self-reliance" and an aversion to "government interference" pay their own way for a change.  That would free up cash flow to use in parts of the country that understand that there is a role for government in the economy - especially during recessions.

And no, this is not a serious policy proposal.

I'm kidding.

Mostly.

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On Thursday, in a truly outstanding segment, Jon Stewart ripped into the nonsensical idea that the rich are under siege, and thoroughly exposed the accounting double standards used by those advocating spending cuts and defending the failure to raise taxes on those who can afford it.

Things Just Got Dumber

One of these men is the aspiring leader of an increasingly desperate people whose culture is collapsing under the weight
of its own ignorance and short-sightedness.  The other is a character from the movie "Idiocracy".

If you believed the field of Republican president candidates was already about as venal, dumb, hypocritical and incompetent as it could get, you were wrong.  Texas Governor Rick Perry, a man who can best be described as George W. Bush for people who didn't think George W. Bush was George W. Bush-enough, has thrown his hat in the ring.

If the thought of fellow GOP contenders Michele Bachmann or Rick Santorum working to restore the American theocracy that never was, but which haunts their fever dreams, scares you, get ready for Mr. Perry, who is not only fresh from an organized prayer vigil for which he used state resources to publicize, but which is apparently his plan for when, you know, actual policy fails.

Unfortunately for the governor, at the same time that 30,000 conservative Christians showed up to all wish together that the historic drought plaguing their state would end and that things would get better, just down the road, more than three times that number of desperate Texans lined up for donations of school supplies, immunizations, fresh produce, and school uniforms.  If there is a better illustration for the leadership of Rick Perry, one would be hard-pressed to find it.

Still, what makes the chief executive of the Lone Star State so dangerous is that voters may be able to ignore his radical religious outlook, his contention that Medicare and Social Security are unconsitutional, or even his statement that perhaps Texas should secede from the United States, if the fairy tale of job creation within the so-called "Texas Miracle" gains any traction.  Texas has, in fact, added jobs even during the current recession, but at a terrible price: massive cuts to education coupled with the layoff of 100,000 teachers; the highest level of airborne carcinogens in the country; and sweeping empowerment of corporations at the expense of individuals.  Oh, and those jobs?  The majority are low-paying, low-skill, hourly positions. 

Today, despite all the hype, Texas is ranked dead last among states in health coverage for children; fourth in teen pregnancies; and again, dead last in the percentage of the population with a high school diploma.  The Texas Miracle is really a Texas Debacle, and a blueprint for winning a race to the bottom.  In a field of terrible candidates, Rick Perry may well be the worst.

Contemplating the Culture of Exceptionalism and Victimization

More quick and dirty posting while I remain focused on finding my next job. This is about a week old, but still well worth your time, as Jon Stewart absolutely demolishes the talking points around the right wing culture of exceptionalism and victimization that underpins so much of today's political discourse, and which has been especially abhorrent in the wake of the recent mass murder in Norway.

Five and Half Minutes of Truth-Telling

I know I wrote in my last post that I was going to take a break, but the following really is required viewing. On Wednesday, Bruce Bartlett, a former domestic policy adviser to President Ronald Reagan, as well as a Treasury official under President George H.W. Bush, appeared on Hardball for an interview with Chris Matthews.  In a five and a half minute conversation, the two men discussed the chart below, and Mr. Matthews, who is well-known for frequentlty interrupting his guests, sat back for a change, and let Mr. Bartlett speak freely. The result was a very concise explanation of exactly where our current debt problems originate, along with some particularly direct criticism for Republicans. 

Break Needed

I'm taking a break this week, and articles at Sensen No Sen may not be posted with their usual regularity in the next few months.  My current job is coming to an end in early August, and I am now in the thick of hunting for new employment.  That, along with some family illness issues, is creating enough stress that I don't have the focus to write constructively.  Hopefully I'll be through this stretch in a relatively short period, and will be able to give this blog the attention it deserves, but until then, stay cool and enjoy your summer!

A Handy Guide to Biblical Marriage

Just a quick thought to share today on the definition of "traditional marriage" - that favorite weapon of  the Christian right in their campaign to discriminate against same-sex couples. The graphic below provides a handy guide to all the types of marriage found in the Bible, and puts the lie to the argument that it's only ever loving matrimony between one man and one woman.

Click on image to view at full size.

Even a Stopped Clock Is Right Twice a Day

Over the past three decades, the Republican Party has spiraled from the center-right policies of Ronald Reagan - who, among other actions that would have him drummed out of his party today, tripled the debt, raised taxes 11 times, and expanded the size of government - to a tragically mis-informed extremism embodied by Tea Party zealots and a crop of erstwhile presidential candidates that features the likes of Michele Bachmann, Tim Pawlenty, and Rick Santorum.

During that same 30-year span, however, the Very Serious People in Washington - along with a lot of otherwise sensible GOP rank-and-file - pretended that this descent into venal arrogance and ineptitude was all OK; that the single-minded effort to continue dumbing-down the citizenry, the outrageous hypocrisy on everything from fiscal issues to "morality", the pride in ignorance, the demonization of government and taxation, and the culture of fear and victimhood that are the hallmarks of today's movement conservatism weren't core aspects of the modern Republican Party.  Instead, it was much more convenient to pretend that this race to the bottom was just another way of looking at things - the other side of the conversation, if you will - a manifestations of homespun Americanism resurgent against the repression of liberal elitism.

Last week, however, with the likelihood that the United States might catastrophically default on its debt looming increasingly large, cracks in that facade appeared, and there seems to be some genuine alarm now that there is clearly a faction of the Republican Party which genuinely believes it would be better to tank the U.S. economy than to raise taxes in any way, whatsoever.  The GOP has reached a tipping point of extremism, and so, apparently, have some of the Beltway opinion-makers who have made a career out of treating people like Mitt Romney and John McCain as if they were qualified, well-informed leaders who haven't sold their souls for the approval of an ever-more-radical right wing base.

It's hard to know if traditional GOP fluffers like David Brooks, Richard Cohen and Megan McArdle - Very Serious People, all - are genuinely shocked by what is going on and didn't see this coming, or if they have suddenly realized that the amusing, lucrative game they have been playing in which they lend legitimacy to right wing fanatics and corporate stooges isn't really a game, after all.  In the first instance, this makes them morons; in the second greedy hypocrites, but in either case - amazingly - they have all recently written columns that are, for a change, firmly grounded in reality.

A longtime darling of the center-right establishment, Mr. Brooks had this to say:

... The Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.

The members of this movement do not accept the logic of compromise, no matter how sweet the terms. If you ask them to raise taxes by an inch in order to cut government by a foot, they will say no. If you ask them to raise taxes by an inch to cut government by a yard, they will still say no.

The members of this movement do not accept the legitimacy of scholars and intellectual authorities. A thousand impartial experts may tell them that a default on the debt would have calamitous effects, far worse than raising tax revenues a bit. But the members of this movement refuse to believe it.

The members of this movement have no sense of moral decency. A nation makes a sacred pledge to pay the money back when it borrows money. But the members of this movement talk blandly of default and are willing to stain their nation’s honor.

The members of this movement have no economic theory worthy of the name. Economists have identified many factors that contribute to economic growth, ranging from the productivity of the work force to the share of private savings that is available for private investment. Tax levels matter, but they are far from the only or even the most important factor.

But to members of this movement, tax levels are everything. Members of this tendency have taken a small piece of economic policy and turned it into a sacred fixation. They are willing to cut education and research to preserve tax expenditures. Manufacturing employment is cratering even as output rises, but members of this movement somehow believe such problems can be addressed so long as they continue to worship their idol.

Meanwhile, Ms. McArdle, a prolific, if often logic- and fact-challenged, self-sytled libertarian conservative, made this cogent observation:

... I am getting the same sinking feeling that Brooks is having - that there is a sizeable faction on the right, and worse, in the GOP caucus, that is willing to default rather than make any deal at all. In fact, I think it's worse than Brooks suggests. It would be bad enough if these people were simply against higher taxes, because then you might persuade them by pointing out that if we default, we're probably going to end up with higher taxes, right now, in order to close the current gap between spending and tax revenue.

But when I point this out, the response in my comments and e-mail and twitter is "Fine, I'll accept higher taxes, as long as they come with radical changes in spending." The BATNA (best alternative to negotiated agreement) is default on either our debt, or entitlements like Social Security that people have planned their lives around; the Democrats properly view this as a disaster. But I'm hearing from people who seem to think that it's better than raising one thin new dime in taxes. This makes me very much afraid of where this is headed.

The political logic is infantile. The American public does not want you to cut Medicare, Medicaid, or Social Security. There is no monopartisan substitute for persuading people to agree with you...

Even the serially hackish Richard Cohen lifted his eyes from his navel long enough to point out what has been blisteringly obvious to anyone who has been paying attention since the installation of George W. Bush in the White House:

... The hallmark of a cult is to replace reason with feverish belief. This the GOP has done when it comes to the government’s ability to stimulate the economy. History proves this works - it’s how the Great Depression ended - but Republicans will not acknowledge it.

The Depression in fact deepened in 1937 when Franklin D. Roosevelt tried to balance the budget and was ended entirely by World War II, which, besides being a noble cause, was also a huge stimulus program. Here, though, is Sen. Richard Shelby mouthing GOP dogma: Stimulus programs “did not bring us out of the Depression,” he recently told ABC’s Christiane Amanpour, but “the war did.” In other words, a really huge stimulus program hugely worked. Might not a more modest one succeed modestly? Shelby ought to follow his own logic.

Something similar has happened with global warming. It has become a conviction of much of the GOP that you and I, with our cars and factories and leaf blowers and barbecue pits, are off the hook — innocent of cooking the atmosphere. That being the case, it therefore is not the case that anything has to be done about it. Only much of science, common sense and your average walrus differ, but the GOP soldiers on. This is a version of Nancy Reagan’s pledge: Just say no.
[...]
This intellectual rigidity has produced a GOP presidential field that’s a virtual political Jonestown. The Grand Old Party, so named when it really did evoke America, has so narrowed its base that it has become a political cult. It is a redoubt of certainty over reason and in itself significantly responsible for the government deficit that matters most: leadership...

It is rare indeed to survey the works of David Brooks, Megan McArdle and Richard Cohen and come away nodding in agreement at the sensible arguments they have made, but even a stopped clock is right twice a day. This moment of journalistic syzygy should be noticed not just for its rarity, however, but for what it portends for the Republican Party.  The GOP old money has painted itself into a corner with the Tea Party movement, and it is going to have to either double down on the crazy in order to keep the Teabaggers happy, or spend a lot of resources to rein in the monster it has created.

In either case, the ongoing debt ceiling crisis looks like it might be the beginning of the end of the Tea Party as an effective political entity.  Deeper extremism will only continue to make both it and its Republican parent less appealing to the electorate, and the alternative - ongoing internecine strife - is a recipe for rapidly diminishing influence.  As long as the grown-ups have enough leverage to keep the radicals from sinking the economic ship by way of default, what's on the other side of the debt ceiling crisis may actually end up being greener pastures for more rational politics.

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Bill Maher points out the role of ignorance, misinformation and wealth fantasy in supporting the Republican Party:

Mixed Message on Libya

In what has got to be one of the great political mixed messages of all time, the House of Representatives on Friday voted to deny congressional approval to extend U.S. involvement in Libya for up to one year, but then refused to deny funding to continue prosecuting our ongoing military activity in that country.  President Obama is already in violation of the War Powers Resolution, so it remains to be seen what effect, if any, this will have on American interventionism.  Perhaps the idea Ruben Bolling expresses below is what we need...

Object Lesson 9,568 on the Corrupting Effects of Power

The checks and balances that underpin the federal government - the system by which each of the legislative, executive and judicial branches limit the power of the other two - are crucial to the continued success, however occasionally wobbly, of representative democracy in the United States.

Under the Constitution, war powers are divided between the President and Congress. Congress may declare war, raise and support military forces, control war funding and make laws necessary to carrying out armed conflict. The President, meanwhile, is commander-in-chief of the military, with the power to repel attacks against U.S. territory, responsibility for leading the armed forces, and, as with all legislative acts, the power to veto acts of Congress, including declarations of war.

This fundamental structure was bolstered by the War Powers Resolution of 1973, which was passed in order to further restrain the president from taking the United States without the agreement of the legislature. The Resolution requires the President to notify Congress within 48 hours of committing armed forces to military action, and prohibits military forces from remaining in combat for more than 60 days (allowing an additional 30 days for withdrawal) unless Congress had provided an authorization for the use of military force or a declaration of war.

And there's the rub.  President Obama began providing military support to rebels in Libya fighting to overthrow Muammar Gadaffi well over two months ago, and while he duly informed Congress of this action, there has been no authorization for the use of military force or declaration or war from Capitol Hill since.  In other words, Mr. Obama's 60 days are up.  Congressman Dennis Kucinich, stymied in his attempt to advance a resolution in the House of Representatives demanding the president end his unconstitutional involvement of American forces in Libya, is leading nine other congressmen in suing Mr. Obama in federal court - along with Secretary of Defense Robert Gates - to end the U.S. presence in Libya.

Glenn Greenwald breaks down the ludicrous post-hoc legal contortions the White House is using to try and justify our continued involvement in The Illegal War in Libya, but while the jurisprudence surrounding armed conflict is indeed interesting, it this paragraph that is chillingly at the heart of the reasons why unilateral presidential war-making is of such concern:

It was equally clear from the start that this Orwellian-named  "kinetic humanitarian action" was, in fact, a "war" in every sense, including the Constitutional sense, but that's especially undeniable now.  While the President, in his after-the-fact speech justifying the war, pledged that "broadening our military mission to include regime change would be a mistake," it is now clear that is exactly what is happening.  "Regime change" quickly became the explicit goal. NATO has repeatedly sought to kill Gadaffi with bombs; one attack killed his youngest son and three grandchildren and almost killed his whole family including his wife, forcing them to flee to Tunisia.  If sending your armed forces and its AC-130s and drones to another country to attack that country's military and kill its leader isn't a  "war," then nothing is.

In my view, that is entirely correct, and while it may well be that there are very good reasons for supporting the rebellion against Libya's longtime despot, if they're not good enough to pass muster on the Hill, then, by law and by definition, they are not good enough to justify our continued military intervention.

Several years ago, Barack Obama at least purported to agree that constitutionally-unsupported military adventurism was beyond the pale.  In a speech in August of 2007, then-candidate Obama laid out the principles by which he stated he would operate if he were elected to the Oval Office:

No more tracking citizens who do nothing more than protest a misguided war. No more ignoring the law when it is inconvenient. That is not who we are. And it is not what is necessary to defeat the terrorists. The FISA court works. The separation of powers works. Our Constitution works. We will again set an example for the world that the law is not subject to the whims of stubborn rulers, and that justice is not arbitrary.

He followed up those broad strokes a few months later, with specifics in a Q&A with Boston Globe reporter Charlie Savage wherein then-candidate Obama was unequivocal in his belief that Congress must ultimately authorize long-term conflict:

The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.

As Commander-in-Chief, the President does have a duty to protect and defend the United States. In instances of self-defense, the President would be within his constitutional authority to act before advising Congress or seeking its consent. History has shown us time and again, however, that military action is most successful when it is authorized and supported by the Legislative branch. It is always preferable to have the informed consent of Congress prior to any military action.

What we are seeing with Barack Obama in office is a man not only diametrically different on the subject of war powers from the man who campaigned for the presidency, but one who has enshrined the worst civil liberties abuses of his predecessor despite speaking out against them in the past, and a man who is now bringing an unprecendented number of prosecutions against government whistleblowers.

To be clear, the problem is not with the Constitution, the law or with those who expose malfeasance, as hacktivist collective Anonymous warned NATO in a recent statement:

The government makes the law. This does not give them the right to break it. If the government was doing nothing underhand or illegal, there would be nothing "embarassing" about Wikileaks revelations, nor would there have been any scandal emanating from HBGary. The resulting scandals were not a result of Anonymous' or Wikileaks' revelations, they were the result of the CONTENT of those revelations. And responsibility for that content can be laid solely at the doorstep of policymakers who, like any corrupt entity, naively believed that they were above the law and that they would not be caught.

It is unclear whether or not Barack Obama was lying about his consitutional convictions on the campaign trail; it is perhaps more likely that someone or something convinced him to abandon his stated principles for the heavy-handed law-breaking and anti-civil-liberties practices of George W. Bush.  In any case, in the end, it simply doesn't matter; the president's job is not to "protect" us, but to uphold the Constitution - as he promised to do when he was sworn in - and even the administration's top lawyers have advised the President that he is violating the law with regard to Libya.

By continuing to maintain American military involvement in Libya without the approval of Congress, Mr. Obama is arrogating powers to himself that the foundational laws of this country do not grant him, violating his oath of office, and continuing the distractions that keep us from addressing the corruption and class warfare that continues to turn the once-proud United States into a banana republic kleptocracy for the benefit of a few.

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Senator John McCain today criticized the field of 2012 Republican presidential candidates for what he termed their "isolationism" in not strongly supporting involvement in Libya.  Bulletin to the senior senator from Arizona: if you want America to continue its intervention in Libya, get a declaration of war or an authorization for the use of military force.  We've had enough conflict without end, and so have the troops:

44th Annual Japan Karate-Do Ryobu-Kai International Tournament and Seminars

No post this week. I'm attending the 44th Annual Japan Karate-Do Ryobu-Kai International Tournament and Seminars. Time for some good clean martial arts fun!

Condemned to Repeat History

The big economic news of the past several days has been that our current slow, jobless recovery has gotten even more sluggish, with unemployment moving back up over nine percent, the stock market softening, consumer confidence eroding, housing prices continuing to crater, and growth in gross domestic product (GDP) dropping from over three percent to under two.  As alarming as all of this, it should surprise no one.

The reason that it should surpise no one is that the United States has been in this position before, and we are in the process of repeating the same mistakes we made then.  In 1933, when Franklin Roosevelt became President, the economy had been languishing for years in the wake of the Great Depression, which had begun under his predecessor, Herbert Hoover, with the stock market crash of 1929.  In response, FDR began implementing a set of programs and policies that, together, were known as the New Deal.  The New Deal utilized government spending - particularly around infrastructure and jobs creation - to kickstart the American economy, producing results with which it was hard to argue.

Once America's gross domestic product had surpassed pre-carsh levels, however, some of Rooselvelt's advisers advocated cutting back on New Deal initiatives, and their arguments would be familiar to anyone listening to the GOP's self-styled budget hawks of 2011.  Tremendous concern was expressed about the budget deficit, inflation and the national debt, with the result that government stimulus programs were sharply curtailed in 1937 in the name of a balanced budget.  The result?  One year after the U.S. GDP had climbed to a record high, it contracted sharply.  The reason?  The private sector had still not recovered from the damage wrought by the Great Depression, and the only player with the wherewithal to stoke the demand that drives the economy - the government - was no longer spending.

In a nutshell, this is very likely what we are seeing today, and it is potentially the beginning of, if not a double-dip recession, at least stagnation.  A number of leading economists - perhaps most notably, Paul Krugman - have been saying for a long time that a second stimulus package was probably needed, but that advice has been effectively buried under a blizzard of conservative opposition rooted in the belief that - despite the weight of history and basic economic principles - "the government cannot create wealth or value; only the private sector can", and therefore cannot help drive the economy.

Since that maxim is so often repeated, let me in turn reiterate the necessary response: that is utter and complete nonsense.  All economies - despite claims that we must do things like cut taxes so the wealthy can "creat jobs" - are driven by demand.  Period.  End of story.  No one in the private sector - and I do mean no one - creates a job unless he believes there is a demand for whatever the output of that job happens to be.   If the purchasing public doesn't have enough disposable income to buy a lot of new automobiles, no car company in the world is going to start adding to its workforce because it got a tax break and now has more cash on hand.  It just doesn't happen.  

Don't believe me?  Well, American companies are sitting on more cash right now than at any other time in history, but unemployment hasn't been below 7.4% since George W. Bush left office, and it's over nine percent right now.  Despite being highly liquid, and despite gigantic companies like General Electric paying an effective tax rate of zero - yes, zero - private sector firms simply aren't "creating jobs."  There's a very good reason for this: there isn't enough unmet demand to justify generating additional supply through hiring, and the consequences of over-staffing and creating excess capacity for a private sector company are compressed margins, losses, or even bankruptcy - none of which are desirable if you're a CEO.

If private industry isn't providing jobs, the only other mechanism capable of putting money in the hands of people who will spend it is the public sector.  This can be accomplished through a variety of tactics including social welfare payments, the creation of government jobs, and tax cuts.  The last, however, only make sense to pursue if private sector cash reserves aren't already at record highs.  Further, social welfare payments are quickly spent by their recipients - they need the money, remember - while tax cuts often result in saving or building cash reserves - as we see today - which do nothing to spark the economic engine.

Additional government spending will unquestionably increase the budget deficit and the national debt in the short term, but both of those are readily addressed once demand has been reignited, consumption resumed, and taxation of that economic activity commences.  Tax cuts, by contrast - even ignoring the cash currently being horded by non-job-creating "job creators" - take longer to work, and by their very nature, diminish the rate at which government debt and the budget deficit can be reduced because the government is collecting less revenue.  (There are still claims made that cutting tax rates raises aggregate tax revenues - i.e. although less money is collected on each transaction or from each individual or corporation, the volume of activity makes up for that fact - but there is no actual data whatsoever to support that contention.)

So, where does that leave us?  Well, until the news media, President Obama and Congress stop fixating on government debt and the deficit - or in the case of House Republicans, pretty much anything but jobs - and begin focusing on growing employment, exactly where we are today: limping along with a massive pool of unemployed workers and stagnating growth.

Get used to it, America; there are strong indications we're going to be here for a while.

Home and Away

Memorial Day weekend is traditionally regarded as the beginning of the summer season, but while barbecues, pool parties, picnics and time with family and friends are indeed wonderful things, it's important also to remember that the holiday is dedicated to the men and women who have died in service to our country.

With that in mind, please take a brief moment and click on the link below to visit CNN's excellent Home and Away site, which was set up to make sure that each of the more than 6,000 U.S. and coalition soldiers, sailors, airmen and marines killed in Iraq and Afghanistan to date are recognized as the living, breathing individuals they once were, rather than merely faceless numbers or names on a list of the dead.

Have fun this weekend, and enjoy yourselves, but please don't forget the men and women who have made the ultimate sacrifice.

Click image to visit CNN's Home and Away

Backing Bill O'Reilly in a Debate: Like Rooting for a One-Legged Man in an Ass-Kicking Contest

Click image to visit the Bill O'Reilly Poll Center.
The Jon Stewart poll can be found in the archive for May 16, 2011

Last week, I noted that Jon Stewart had accepted Bill O'Reilly's invitation to debate the faux controversy over rapper Common's invitation to a White House poetry slam. Mr. Stewart had earlier completely shredded Fox News Channel's choreographed hissy fit, and revealed it for the foolish manufactured outrage it was.  My hope was that, given what appeared to be genuine frustration on the part of the Daily Show host, there would be some fireworks, and Mr. Stewart didn't disappoint.

The "debate" on The O'Reilly Factor was over pretty much within minutes. Mr. O'Reilly tried moving the goal posts several times, but was countered by a persistent, fact-based, cohesive argument that left him nowhere to go. While he certainly didn't concede anything - he never does - he quickly tried to avoid further embarrassment by abruptly shifting to questions designed to try and paint Mr. Stewart as representing the "far left". How bad was it for the Factor host? He invited the audience to vote on who had the more persuasive argument, and 79% of his own viewers came out against him.

Enjoy...

More Fox News Channel Idiocy

The news of Osama bin Laden's death at the hands of a U.S. Navy SEAL team appears to have driven the hacks at FOX News Channel to new heights of ridiculousness in their quest to deflate the surge in President Obama's popularity.  Exhibit A was the thoroughly ginned-up faux controversy over First Lady Michelle Obama's invitation to rapper and poet Common to participate in a White House poetry reading, with virtually every single talking head on Rupert Murdoch's propaganda network churning themselves into self-righteous fits of indignation in which they described Common as everything from an anti-George W. Bush zealot to someone who favors violence in general and cop-killing in particular.

The only problem?  Well, if you guessed that the Common was pretty much the exact opposite of his portrayal by the likes of Sean Hannity, Karl Rove and Bill O'Reilly, you may not be a genius, but you're certainly familiar with the awfulness of FOX News.

Normally, this is the type of thing that makes someone like The Daily Show host Jon Stewart happy; his job just gets easier when other people essentially write his material.  This time seems a little different, however, as, after utterly destroying the FOX News smear efforts and calling it what it was: a desperate, sloppy, hypocritcal  attempt to tear down the president by any means available, Mr. Stewart seems genuinely frustrated at the lows to which FOX has sunk.  Bill O'Reilly invited him to debate the Common "controversy" on his show, The O'Reilly Factor, and the fact that Mr. Stewart accepted may well indicate fireworks to come.

One can only hope he will do to O'Reilly what he did to Crossfire...

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Punishing Worker Success Doesn't Count

 Admittedly a little dated now that President Obama has released his long form birth certificate, but... well, you get the point.

As the political and media classes continue to focus on the deficit rather than on creating jobs - or in the case of Republicans in the House, on ways to redefine rape to make it harder for women to obtain an abortion - there are essentially two methodologies for closing the budget gap under consideration, albeit with strikingly different levels of attention.

The first, represented by the GOP budget proposal from Wisconsin Congressman Paul Ryan, focuses on cutting government outlays by slashing social programs - while leaving defense spending untouched, no less - and claims reducing taxes further for the richest Americans will somehow create jobs, wealth and a larger tax base.  The second, represented by pretty much nobody with much power to do anything, centers on increasing revenues through tax increases on the wealthy.

Over the last 30 years, the top marginal tax rate has been cut and cut again, all in service to the ideology embodied by the Ryan plan, and the top tax bracket is now the lowest it has been in eighty years.  As a result, we have a substantial amount of data to use in evaluating these two approaches.

First, let's look at the history of the higest marginal tax rate.  As one can see, during the birth and growth of the American middle class in the first thirty years of the post-World War II era, the top bracket was at 70% or higher, and during the Eisenhower Administration, it was over ninety percent:

With the election of Ronald Reagan to the presidency in 1980, policy changed drastically behind the Gipper's pledge to "take government off the backs of the people."  Nobody likes to pay taxes, and that sounded great, especially when pretty much every one of us can share anecdotes of government malfeasance, bureacratic stupidity, or seemingly arbitrary decisions from on-high.  Since then, it has become an article of faith that government is always incompetent, universally inferior to the private sector, and incapable of maximizing our success as a nation.

So what's been the result of this change in philosophy and policy? As it happens, it has turned out pretty wretchedly for almost everybody.  Yes, there were boom periods, but there were tremendous busts as well, and what we've been left with is a plutocracy that has been institutionalized to funnel money from those with lower incomes to those with increasingly vast wealth.

If that sounds strident, the data shows otherwise.  In the years between World War II and Mr. Reagan's election, each year could generally be counted on to be better than the last with regard to wages.  The rich were still much richer than the poor, but everybody's lot was improving fairly constantly, and in much the same way; it was a classic example of a rising tide lifting all boats.  By contrast, Reaganomics ushered in our current era, in which the wealthy have continued getting wealthy, but everyone else's growth curve has dropped off considerably:

What happened?  Did the economy stop growing?  On the contrary, in the years following World War II, United States gross domestic product (GDP) climbed steadily, it's just that with the introduction of the tax-cuts-solve-everything-mentality, earnings for most people didn't didn't go up with it.  This wage repression is even more startling when one understands that the growth in GDP was fueled by ever-better productivity from American workers.

Up until the late 1970s, the growth in real wages grew alongside that steady rise in productivity, but after President Reagan took office, real wages actually declined for 20 years, and we transformed from a country in which the results of everyone's hard work were shared, to one where people were producing more than they ever had before but actually making less money than they used to:

To put it more precisely, from 1950 through 1980, the share of total income in the U.S. going to all but the richest increased from 64 percent to 65 percent, and since the country's economy was expanding steadily, the average income for the bottom 90% of American wage earners grew, as well.  Over that period, that 90% saw their pay balloon 75%, exploding from $17,719 to $30,941, as measured in constant 2008 dollars.

Since then, however, although our economy has continued to grow, only a small fraction of the population at the very top has benefitted. In the years after 1980, the average income for the bottom 90% went from $30,941 to just $31,244. That's right; after posting an increase of more than $13,000 from 1950 to 1980, from 1980 to 2008, income for all but the top 10% rose just a tick over $300.  Something drastic and deeply unfair had clearly occurred between those two periods, and that something is the now-ingrained belief that tax cuts are always a good thing.

Worse, the tragic side effect of this new inequity was that as workers made less money in real dollars, they were unable to save as much as they had in the past, putting them on much shakier financial ground, and leading directly to widespread over-leveraging, perhaps best exemplified by the recent mortgage crisis:

Gross domestic product grew - as it also grew under more progressive taxation - but that expansion has served as a smoke screen for some very real and destructive changes in American society.  GDP is a terrible measure of a nation's well being; it cares only for the aggregate number, and nothing about what underpins it.  If our 2010 GDP of $14.72 trillion were divided equally among all 313 million Americans, the way our country looks and functions would be much different than if 1 person held $14.71 trillion, and the remaining $10 billion was apportioned among everyone else.  Gross domestic product, however, would look exactly the same.

And, that's where we are today: Minimal savings, working harder than we ever have before for less money, and with steadily increasing disparity in the rewards we can expect.  As a country, we continue to flog the dead horse that tax cuts are the engine for society-wide growth, when even a casual glance at a few simple graphs makes it piercingly obvious that that is utter, complete nonsense without a shred of data to support it.

Simply put, in conjunction with meaningful efforts to reduce waste, it's high time to raise taxes on upper income brackets to help get the country back on its feet. Such a declaraion will inevitably engender cries that we are "punishing success," but the truth of the matter is that we are already punishing success for the vast majority of Americans; one look at the rise in productivity versus the rise in wages is all you need to know that's a fact.

Progessive taxation is, counter-intuitive though it might be, an engine for growth.  It creates an incentive for people to re-invest their money so the government can't get it, rather than to engage in the profit-taking and hording we see today.  If that sounds incredible, it isn't, but understanding this requires being prepared to draw conslusions from data rather than trying to fit facts into a predetermined worldview.  Investigating what has actually happened in the age of Reaganomics reveals some very startling things:

• Large income tax cuts are followed by a bubble and then a crash.
• High income taxes correlate with economic growth.
• Income tax increases are followed by economic growth.
• Moderate income tax cuts are followed by a flat economy.
• All of this is especially true as applied to the top tax rates, the amount paid on income that exceeds the highest bracket.

There is a vast and sensible middle ground in which some people pay more to create an environment in which everyone has a better shot at success, and such an environment is crucial to avoiding the stagnation of our society and encouraging upward mobility.  Success should be rewarded, but the plain fact is that, for most people, right now, it simply isn't.

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One of the most predicted side effects of raising taxes is that wealthy "job creators" will simply pick up and leave, whether that be to another city, another state or even another country. Unfortunately for those making that claim, a new study (PDF) by researchers at the University of Massachusetts at Amherst, reveals that that is simply not true. Certainly, some small number of people relocate to gain more favorable tax positions, but their number is insignificant and the vast majority simply do not move when taxes go up.

Gilded Age v2.0

This week, the Supreme Court handed down a 5-4 decision in AT&T Mobility v Concepcion that protects certain types of corporate wrongdoing from class action lawsuits by consumers.  As with Citizens United v. Federal Election Commission, it represents yet another blow to the rights of citizens, and one more step forward in what has clearly become a concerted effort to consolidate corporate power to the detriment of the individual.

Citizens United held that corporate funding of independent political broadcasts in elections cannot be limited, effectively giving those with the deepest pockets the loudest voice.  AT&T Mobility, meanwhile, essentially permits companies to break the law, as long as they only do it a little bit at a time.  Specifically, this finding allows corporations to use consumer and employment contracts to take away customer rights to join class-action lawsuits.  What this means is that, if you sign a contract with a service provider, and that company mistreats you, your only path of redress is through arbitration.  You cannot join other customers who have experienced the same problem in a class action to address what may be widespread, programmatic negligence, or even criminal activity.

Imagine, for instance, that your phone company illegally charges you and one million other customers $10 a piece. The company is now $10 million richer, but under the Supreme Court’s new ruling, the company can use an arbitration “agreement” hidden in the depths of the contract you signed with them to prohibit you from working with other customers to hold the firm accountable for its actions.  The fact is that almost no one has the time, the money or the expertise to take on an enormous corporation over ten dollars - or $100 or even $1,000 for that matter - and since customers must work separately to address this problem, the company is basically protected from having its widespread malfeasance stopped or even exposed.

Even if one considers AT&T Mobility a relatively small thing on its own (I don't), the fact remains that we are, by all manner of measure, witnessing a return to the worst excesses of the Gilded Age.  But where that period also saw the rise of unions in response to the untrammeled might of private, moneyed interests, todays titans of industry have been undermining their union counterweights in a three decades-long assault that is now reaching a fever pitch.  In New Jersey, GOP Governor Chris Christie has been attacking unions for some time now; in Ohio, Republican Governor John Kasich has signed anti-union legislation; his fellow party member, Michigan Governor Rick Snyder, has done the same and is now wielding flagrantly anti-democratic power.  Florida's Republican chief executive is pursuing the same course; and most famously, Wisconsin's GOP Governor Scott Walker has made crushing unions his primary focus.  Meanwhile, in Maine, the Tea Party-backed Governor Paul LePage is working to loosen restrictions on child labor, and of course, going after unions.

At the same time, Republicans in the House of Representatives have put forth a budget bill that would lower taxes on the wealthiest, end Medicare as a defined benefit program, expand taxes on the middle class, and maintain or grow what can only be described as our current insane levels of defense spending.  How out of whack, how tilted away from the needs of Americans and toward the aims of arms manufacturers and defense contractors are our current priorities?  So misaligned, in fact, that two men serving under the Joint Chiefs of Staff wrote A National Strategic Narrative (PDF), which brings us the remarkable sight of military personnel calling attention to the fact that the United States spends far too much on the military at the expense of everything else:

The term “national security” only entered the foreign policy lexicon after 1947 to reflect the merger of defense and foreign affairs. Today our security lies as much or more in our prosperity as in our military capabilities. Our vocabulary, our institutions, and our assumptions must reflect that shift.  “National security” has become a trump card, justifying military spending even as the domestic foundations of our national strength are crumbling. “National prosperity and security” reminds us where our true security begins.

There are signs that, having played a patient game of attrition for years, corporatists in the United States may have become impatient enough that, their goals in sight, they have begun overplaying their hand.  House Republicans are facing anger among their consistuents, and organized labor - particularly in the public sector - has won enormous support in the wake of the anti-union actions of demonstrably corrupt hacks like Wisconsin's Walker, but it has taken a long time for Americans to begin waking up to the bill of goods they have been - and are being - sold.  So far, there has been little sustained, organized resistance.

Make no mistake, this attack on individual rights to meet the needs of corproations and the richest among us is a concerted, sustained phenomenon, one that lurked beneath the surface of American society for decades and that began gathering momentum after World War II, picked up steam with the presidency of Ronald Reagan, grew into full-throated song in the wake George W. Bush's misrule, and continues today.  It's got to be stopped.

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Excerpts from President Dwight D. Eisenhower's farewell address, in which he remarks specifically and forcefully about the dangers of combined military and economic power:




The Daily Show's Jon Stewart explores the pitfalls of Citizens United v Federal Elections Commission: