Friday, November 26, 2010

Poll: Teabaggers are a definite minority

So what do we know? We know that maximum 40 percent of Americans are Tea Partiers. Meanwhile, 67 percent of Republicans support the Tea Parties.

We also know that 70 percent of self-identified "independents" do not support the Tea Parties.

What does it all add up to? A huge majority of the electorate whose interests are not being served. Obama, the Democrats, Mayor Bloomberg, or somebody ought to take notice.

By Alan Fram
November 23, 2010 | Huffington Post

Bloomberg: Conundrum for U.S.: efficiency = fewer jobs

U.S. corporations now "live in a perpetual state of recession," thanks to globalization. There is always an outlet in lower-cost markets for production.

In the U.S., American mangers are cooperating with the shop floor to minimize labor and maximize machines. Those few workers remaining on the payroll, scared s***less by the Great Recession, are only too happy to oblige their bosses. It's real cooperation to benefit the corporate bottom line.

"When the productivity growth comes, then watch out because that is when companies start not needing so much labor," Edmund Phelps, a Columbia University economist and Nobel laureate, said.

So which political party is going to be honest about this when they lament U.S. unemployment? Or will they keep saying that taxes and burdensome regulations are the problem?

What nobody will admit is that downsizing/efficiency projects are always an easy sell for middle-management, which is operating under assumptions of zero- or low-growth in consumer demand in the short term. Companies are basically making plans under the assumption that sales will be flat for the next few years. So of course efficiency projects are getting all their attention and capital investment.

Without color-coding, how can we regulate fear?

I disagree with this change by Obama. First of all, color-coding is easy to understand. Duh. Secondly, how am I to know how scared I should be from day to day?

I need Big Guvmint to tell me! I miss Dubya-Cheney!! I can't hack it in this new uncertain terror-stricken world!

By Eileen Sullivan
November 24, 2010 | AP

Monday, November 22, 2010

Johnston: Deliberate destruction of the middle class

One of my favorite financial journalists, David Cay Johnston, in this short interview describes how in the U.S. local tax breaks and subsidies are net "wealth destroyers" which do not abide by the rules of capitalism, i.e. raising funds on the capital markets, taking risks, and reaping rewards. Rather, these are special breaks given to politically connected companies and individuals at our expense.

All you fiscal conservatives and Tea Partiers, listen up! This is the real system of corporatism you should be fighting against, not "welfare" for erstwhile working people rocked by the Great Recession. He estimates that states spend $70 billion a year in subsidies, and the federal government spends about $1 trillion a year in subsidies to corporations and wealthy individuals with billion-dollar incomes.

Johnston asks simply, "Is that capitalism?"

Watch the interview!

By Peter Gorenstein
November 19, 2010 | Tech Ticker, Yahoo! Finance

Russia Today: U.S. taxes used to depose foreign gov't's?

Russia Today says that the U.S. has spent $9 billion on democracy promotion efforts over the past 20 years. According to RT, USAID and its grantees are all bad guys and a soft cover for the CIA's regime change efforts; moreover, Obama's "smart power" concept is just a continuation of a long-standing U.S. policy of regime change.

RT cites Americans like Ron Paul and Lawrence Wilkerson in criticizing U.S. democracy-spreading efforts. Said Paul to RT:

"It is particularly Orwellian to call US manipulation of foreign elections 'promoting democracy.' How would we Americans feel if for example the Chinese arrived with millions of dollars to support certain candidates deemed friendly to China?"

"I think it's terrible, we use taxpayer's money to go over and use our military and the CIA these programs that say 'this is what you outta do' and influence them. There is no authority for that, it doesn't work, it teaches a lot of people to despise us."

If it didn't work though, would it bother Russia so much?

Just interesting to read the official Russian state propaganda....

Democracy promotion: America's new regime change formula

November 18, 2010 Russia Today


Sunday, November 21, 2010

Dubya's tax cuts didn't boost growth

Just in case facts still matter....

By David Leonhardt
November 18, 2010 | New York Times

Liz Peek at congratulates me for writing about the importance of economic growth. So in the spirit of maximizing growth, I want to pose a question: Why should we believe that extending the Bush tax cuts will provide a big lift to growth?

Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed?  The decade with the slowest average annual growth since World War II.  Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7.

The competition for slowest growth is not even close, either. Growth from 2001 to 2007 averaged 2.39 percent a year (and growth from 2001 through the third quarter of 2010 averaged 1.66 percent). The decade with the second-worst showing for growth was 1971 to 1980 — the dreaded 1970s — but it still had 3.21 percent average growth.

The picture does not change if you instead look at five-year periods. Here's a chart ranking five-year periods over the past 50 years, in descending order of average annual growth:


Bureau of Economic Analysis, via Haver Analytics

I mean this as a serious question, not a rhetorical one: Given this history, why should we believe that the Bush tax cuts were pro-growth?

Is there good evidence the tax cuts persuaded more people to join the work force (because they would be able to keep more of their income)? Not really. The labor-force participation rate fell in the years after 2001 and has never again approached its record in the year 2000.

Is there evidence that the tax cuts led to a lot of entrepreneurship and innovation? Again, no. The rate at which start-up businesses created jobs fell during the past decade.

The theory for why tax cuts should create growth and jobs is a strong one. When people are allowed to keep more of each dollar they earn, they are likely to work longer and harder. The uncertainty is the magnitude of this effect. With everything else that's happening in a $15 trillion economy, how large of an effect on growth do tax cuts have?

Every available piece of evidence seems to suggest that the Bush tax cuts did little to lift growth. I have yet to hear a good argument to the contrary, but I'd be fascinated to see another blogger or an economist take a crack at it.

Update: A reader asks for statistics on real economic growth (that is, adjusted for inflation). The above chart is already adjusted for inflation.

Thursday, November 18, 2010

Urban Institute: Future of Social Security

This is an interesting brief report on how to fix Social Security's projected revenue shortfall.  The first major point we should remember is how successful Social Security has been at reducing poverty among older Americans:  "Between 1959 and 2009, the poverty rate for Americans age 65 and older dropped from 35.2 to 8.9 percent." 
Next, we must acknowledge that part of the "problem" with Social Security is that it is serving as an old-age pension for many recipients, instead of a buffer against poverty as originally intended.  States the report:  "Although the program was not designed to be the sole financial resource for retirees, in 2008 nearly a quarter relied on Social Security for 90 percent or more of their income."  Obviously, this is not the system's fault.
Today SS is what it is, and American rely on it and want to keep it.  Americans don't want it privatized.  Nevertheless, after 2015 the system is projected to collect less than it pays out for the foreseeable future, so it must be fixed.  There are 3 main fixes: 1) raise the cap on income subject to the payroll tax; 2) raise the retirement age; and/or 3) cut future benefits.  The last one, in my opinion, is a non-starter because benefits already are not so big.  (However, current retirees -- including mean, hypocritical welfare-receiving conservatives -- might support cutting the younger generation's benefits since it won't affect them.)
Regarding the payroll tax cap, the report states: "The share of earnings that falls under the taxable cap has declined from 90 to 84 percent over time as earnings have grown more unequal. Raising the taxable maximum to again cover 90 percent of earnings would reduce Social Security's 75-year deficit by more than a third."
Regarding raising the retirement age, the report states: "Increasing the full retirement age to 68 (for those born in 1960 or later) would eliminate over a quarter of Social Security's expected shortfall."
So, doing those two things could reduce SS's projected 75-year deficit by 60 percent
Finally, as Republicans in the House talk about SS in the context of the fiscal deficit, let's remember:  "Medicare and Medicaid are projected to rise rapidly from 5 percent of gross domestic product (GDP) in 2009 to about 10 percent in 2035. Social Security costs, in comparison ... are expected to go up from less than 5 percent to about 6 percent of GDP—not nearly as big a problem as ballooning health care costs or interest on the debt."
Congress hates to do hard things.  Compared to cutting M&M, cutting SS is "easy," but let's not miss the big picture: those two programs are still the beasts devouring our tax dollars.  If the teabaggers and fiscal conservatives are serious about the deficit and don't want to dance around the problem, they MUST confront M&M.
November 12, 2010 | The Urban Institute

Monday, November 15, 2010

Sirota: Dem leaders' predictable post-election blame of election-losing liberals

Can't believe I missed this one after the elections. Here it is. Sirota says it all.

By David Sirota
November 4, 2010 | Open Left

Like many of you reading these pixels, I've found myself in the last year burnt out on American politics, mostly because it has become a glorified red-versus-blue summer camp color war devoid of substance and logic. That kind of thing, which might have been fun as a kid in summer camp, is neither enjoyable nor mildly interesting as an adult muddling through day-to-day issues here in the real world. Sure, political junkies on cable TV, in the blogosphere and in the halls of power think the world revolves around political palace dramas, but as Jon Stewart so aptly put it, "Most Americans don't live their lives solely as Democrats or Republicans or conservatives or liberals -- most Americans live their lives that are just a little bit late for something they have to do."

The fact that so few in our political arena appreciate that truism is one reason I've really just had it. There's only a finite amount of time in a given day, and I -- like most Americans in the real world -- just don't have time or energy to contribute to the part of our culture that pretends D.C. gossip and the day's manufactured partisan controversies are monumentally important when, for the most part, they aren't -- at least not to those of us who are living here in a real recession-hammered world that both parties ignore.

The other reason I've become less interested is because the political arena has become less interesting. It is as if the drama of politics -- once vaguely provocative -- is now all pre-programmed. We know what Fox News and Rush Limbaugh and Glenn Beck are going to say. We know how progressive media is going to respond. We don't even have to tune in to know the reaction.

This is particularly true after elections -- and, in specific, when it comes to the mind-numbing "Future of the Democratic Party" debate. Indeed, I could have told you months ago that the week after the election would be marked by various self-appointed pillars of the Democratic Party coalition saying Democrats should do this or should do that to rescue their electoral future.

For example, I could have told you that a washed-up has-been like Evan Bayh would publish a New York Times op-ed insisting that Democrats "were too deferential to our most zealous supporters" (read: liberals) even after the Democratic Party crushed a public option, watered down Wall Street "reform," extended Bush-era civil liberties atrocities, escalated the Afghanistan War, further ballooned the defense budget and began moving to extend the Bush tax cuts.

Likewise, I could have told you that those careerists in D.C. who make their livelihood off this kind of pablum would publish a "strategy memo" in something self-importantly called "The Democratic Strategist". And I could have told you that this "strategy memo" would defend the bash-the-liberals meme with bromides about how "all of the major perspectives within the Democratic Party have a legitimate place and role in today's Democratic coalition" and about how "the present moment categorically demands a basic level of Democratic unity from every element of the coalition" (read: liberals shouldn't criticize the corporatists who destroyed the Democratic Party -- and the country).

I could have told you all of this because, as I said, it's pre-programmed. It's not spontaneous. It's not reacting to any reality out here in the real world. It's not responding to a changing country. It's pre-written, pre-conceived, pre-packaged feces sprayed at us in liquid form, all to justify a continuation of how it's always been -- and, frankly, how it probably will always be.

In the past, I may have contributed to some sort of organized pushback. But not this year. No, this time I can muster only one Cheney-esque response to the whole grotesque kabuki theater surrounding the inane "Future of the Democratic Party" debate: Go fuck yourself.

Evan Bayh and Third Way and The Democratic Strategist and the DLC and all the professional pundits and cable-TV zombies and D.C. spokesholes - all of you soul-raping corpses and shit-eating poindexters paid to appear on my television screen and scream at me about liberals ruining everything, please, I beg you on behalf of the silent irritated majority: Just go fuck yourself.

Go fuck yourself because all of your arguments are about what policies should be pursued to rescue Democratic politicians' electoral future, rather than about what policies are needed to rescue, say, the fucking country's future. Additionally, go fuck yourself because if you know so much about winning elections and if you are so sure conservadem-ism/Blue Dog-ism is the way to win said elections, how come it was the conservadems/Blue Dog candidates - not liberal candidates - who lost the most elections this year?

Also, go fuck yourself because the fact that you are even trying to create the same old bash-the-liberals debate exposes you not just as substantively wrong, but as professionally employed to despoil our culture with bullshit -- and specifically, with bullshit that you know is bullshit. That, really, everyone knows is bullshit.

The facts are painfully apparent. Though hundreds -- if not thousands -- of people in D.C. are professionally paid to pretend these facts require debate and analysis and parsing and speculation and press releases and pithy Tweets and Sunday Show roundtables and C-SPAN symposia and to-camera cable-TV rants and lengthy thousand-page books, they don't require any of that. The facts are simple. The facts are obvious. The facts are undeniable to anyone not paid fistfulls of sweaty money to lie or sensationalize:

1. The Democratic Party shit on its base with its policies, as noted above.

2. This demoralized the Democratic base, which responded by not turning out to vote. As CBS News notes, "Hispanics, African Americans, union members and young people were among the many core Democratic groups that turned out in large numbers in the 2008 elections (but) turnout among these groups dropped off substantially, even below their previous midterm levels."

3. In cause-and-effect style, the result of all this was, as the Washington Post reports, a freshman congressional class that is primarily made up of angry, white, lunatic-conservative assholes.

So yes, all of you who are wasting all of our time pretending this isn't the basic point-A-to-point-B story of the election -- and there are a lot of you out there -- please, if not for me, then for everyone else: Go fuck yourself.

We've got lives to lead, we've got struggles to struggle through, we've got bills to pay - in short, we've got to get through the shit you've created and continue to create. And as you now incessantly bitch about the alleged scourge of those evil election-losing liberals, as you whine and wail and cry from the cocktail and hors d'oeuvre paradise of TV studios and green rooms and congressional offices and party fundraising events, you've made quite clear you don't give a shit about the harsh reality we all face - the harsh reality we all face thanks to you.

Knowing all of that, I'll end just reiterate my one succinct request: All I ask is that as you continue your hard work to prop up the kleptocracy, as you continue to clog our last remaining democratic conduits with your viscous rhetorical shit bombs, please, do us all a favor and for the love of whatever god you worship - please just stop wasting our damn time and go fuck yourself.

KY man forced by local Talibanis to eat own beard

Hey Taliban, take notes from your fundamentalist, gun-toting counterparts in the lawless provinces of Kentucky! You never thought of this one, had you? Now you know. Making a man who cheated you eat his own beard, his pride and joy, is way worse than making him eat with his poo-hand.

November 12, 2010 | Huffington Post/AP

GOP pledges allegiance to foreign country over President

Summed up Greenwald: "Americans should give up Social Security and Medicare benefits so that they can continue to transfer billions of dollars every year to Israel, a foreign country which offers far more of a safety net to its own citizens [including universal socialist healthcare! - J]. But don't you dare accuse Eric Cantor of haboring allegiance to Israel and subordinating U.S. interests to this foreign country. That would be extremely wrong of you to insinuate."

I'm sick and tired of Israel-worship in American politics.

U.S. financial support of another political democracy with a market economy for no good economic or security reason is just another instance when instead of feeling the pain of cognitive dissonance, fiscal conservatives and teabaggers ignore the hole in their ideology completely.

After all, it's way more fun to be angry and stupid.

By Glenn Greeewald
November 13, 2010 | Salon

$ign of the (end?)times: Gold bug paranoia

I guess gold is like Glenn Beck's "Food Insurance," only in this case it would be "Money Insurance." The only thing is, if there is a total collapse of civilization like Beck predicts, then what are people going to need gold for? They can't eat it, can't build with it, it won't keep them warm, etc. That doesn't stop Beck from trying to fleece his herd with Goldline coin adverts though.

What Rush Limbaugh, Glenn Beck, Laura Ingraham, and other right-wing pundits are really asking their followers to do is to speculate in gold and pump up an existing bubble. As a commodity, gold doesn't produce anything so its value depends purely on trading. The more people who buy gold, the bigger the bubble gets, and the more they'll lose when the gold bubble invetiably bursts. (After all, Republicans will eventually take control of Washington, save America, and restore the dollar, right?) Of course, those in the know who got in early on this paranoia and will sell out before the bubble bursts could make a bundle. But are you that cunning, and did you buy gold early enough? If the answer to either is "no," then stay away from gold unless you're an eccentric millionaire.

Remember, gold is not a very good hedge against inflation, it's a hedge against calamity and instability.

Analysis: Here's why the world's love affair with gold is dangerous.
By David Case
November 10, 2010 | GlobalPost


Sunday, November 14, 2010

Pope: Internet alienates everybody except pedophile priests

Ah, Benny Boy, what superb timing you have. The day before you issued your warning to today's youth about the alienating effects of technology and the Internet, one of your priests was arrested for having 21,000 child sex abuse images on his computer.

Leave it to Gentle Ben to condemn harmless iPod owners and Internet surfers for the specks in their eyes while ignoring the beam in his Church's eye: ordained sex predators on every continent where the Church operates.

If the Catholic Church had any sense they'd put this mean old fogey of a pope into the old priests' home, before he manages to alienate even more people than the Internet which he despises.

P.S. -- Hey, kids, don't forget to get your daily dose of "disorientation" on the Internet at: They even have a special section: "Abuse of Minors. The Church's Response." As per usual, the Holy See is working overtime issuing speeches, pastoral letters, communiques, and press releases to resolve this grave social ill that it created. (Pssst! Yo, Vatican! You might want to try to do something to stop all your priests screwing little kids though! Just a thought.)

Rich: Beyond the deficit, extreme inequality threatens our society

You know, I agree with Frank Rich and I've argued the same: taxing the top 1% of income earners to cut the deficit is more than just the obvious way to close our fiscal deficit; Gilded-Age levels of income inequality are also a moral and social issue that portend political instability and social unrest.

However, I have to side with Obama's "moderate" approach: It's not about class, it's about math.

Too large a proportion of the electorate has been successfully brainwashed into voting against their own economic interests (although some, having parsed the numbers, disagree). Moreover, Americans rightly distrust the virtue of their Congress to spend any additional tax revenue prudently. And so any talk of what's right, fair, or socially stable can too easily be twisted into "class warfare" accusations from the Right. We can't undo their warped programming in an acceptable timeframe.

For us to win the debate, we must keep it simple and make the choices clear, like this poll did: either A or B: either tax the top 1% or cut everybody's Social Security. Then we'll see how the Teabaggers and Red State zombies like them apples.

By Frank Rich
November 13, 2010 | New York Times

Bush: McConnell urged Iraq troop withdrawal

So which Republican hawk is a liar, Dubya or Mitch?

The answer is "both," but in this particular case only one of them.

November 11, 2010 | Louisville Courier-Journal

Poll: Tax the rich first

"(W)hen respondents were given the choice between cutting the defense budget, raising taxes on the wealthy and cutting Social Security to reduce the deficit, just 12% said they'd like to see the entitlement program cut. Forty-three percent said they'd prefer to see taxes on the wealthy go up, and 22% said cutting the huge defense budget was the best way to go."

Listen up, Obama!

Sorkin: Bumper stickers don't help our troops

Sorkin has got it all wrong. Everybody knows that the best way to honor our troops is to vote Republican and keep them at war.

Bumper-Sticker Patriotism Is No Way to Honor Our Veterans
By Aaron Sorkin
November 11, 2011 | Huffington Post

Thursday, November 4, 2010

Massive secret spending by GOP groups, thanks to SCOTUS

Outside Republican groups spent $54 million more than outside Democrat groups during the campaign. Was that all the difference?

Four GOP groups alone -- Rove's Crossroads groups, the American Chamber of Commerce, and American Action Network -- spent $83 million on attack ads against Democrats. And thanks to Dubya's Supreme Court, they didn't have to disclose who donated how much to them.

Hedge fund moguls helped bankroll groups' attack ads, sources tell NBC News
By Michael Isikoff and Rich Gardella
November 3, 2010 | NBC News

A tightly coordinated effort by outside Republican groups, spearheaded by Karl Rove and fueled by tens of millions of dollars in contributions from Wall Street hedge fund moguls and other wealthy donors, helped secure big GOP midterm victories Tuesday, according to campaign spending figures and Republican fundraising insiders.

Leading the GOP spending pack was a pair of groups — American Crossroads and its affiliate, Crossroads GPS — both of which were co-founded by two former aides in the George W. Bush White House: Rove, and Ed Gillespie.

Together, the groups — which are not formally part of the Republican Party — spent more than $38 million on attack ads and campaign mailings against Democrats, according to figures compiled by the Sunlight Foundation, a nonpartisan group that tracks campaign spending in congressional races.

A substantial portion of Crossroads GPS' money came from a small circle of extremely wealthy Wall Street hedge fund and private equity moguls, according to GOP fundraising sources who spoke with NBC News on condition of anonymity. These donors have been bitterly opposed to a proposal by congressional Democrats — and endorsed by the Obama administration — to increase the tax rates on compensation that hedge funds pay their partners, the sources said.

A scorecard compiled by NBC News shows the ad barrage appeared to mostly pay off: Republican candidates won nine of the 12 Senate races and 14 of 22 House races where American Crossroads and Crossroads GPS spent money.

That had the groups' leaders gloating Wednesday about what they described as their pivotal role in the election results.

'A decisive blow for freedom'

"Thank you, America!" read the banner headline on a blog posting by Steve Law, president of American Crossroads, on the group's website. The posting proclaimed that the organizations' team had "struck a decisive blow for freedom" with the election results. "Together we not only retired House Speaker Nancy Pelosi, we also achieved the largest House seat switch since 1938!" Law wrote.

While it is hard to calculate exactly how much of an impact the Crossroads groups had in an election that was tilting Republican for a variety of reasons, their efforts helped fuel an substantial overall spending advantage by outside GOP groups. Overall, outside Republican groups outspent outside Democratic groups, $245 million to $191 million — a $54 million edge.

The Crossroads affiliates and similar groups were formed after a controversial Supreme Court ruling in January that permitted outside political groups to collect unlimited contributions from corporations, labor unions and other wealthy donors and use them directly on campaign ads. In addition, groups that were organized as nonprofit "advocacy" organizations (such as Crossroads GPS) did not have to disclose the identity of their donors.

As a result, the airwaves this campaign season were flooded with millions of dollars in attack ads, paid for by secret donors. Out of nearly $300 million spent on congressional campaigns ads by both parties, 42 percent were funded by undisclosed donors, according to a study by the Center for Responsive Politics.

Just behind the Crossroads groups in outside spending on the GOP-side were the Chamber of Commerce ($31 million) and the American Action Network ($14 million), according to Sunlight Foundation figures. Neither disclosed the identity of its donors.
While outside Democratic groups belatedly tried to mimic the GOP efforts, they fell short. America's Families First Action Fund, a group founded by a number of former Democratic strategists that operated much like American Crossroads, wasn't organized until last summer and spent just $5.5 million — $1 million of which came from a non-disclosing nonprofit affiliate, according to the Sunlight Foundation. The big outside spenders on the Democratic side were labor unions such as AFSME ($10.7 million) and the SEIU ($10 million.)

Groups coordinated spending, insiders say

In addition to the spending advantage, outside GOP groups like the Crossroads groups, Americans for Prosperity and Club for Growth coordinated their efforts, divvying up which groups would spend in which races at which times. The groups' leaders would meet and talk regularly in sessions often led by Rove or one of his associates, according to the two GOP fundraising sources familiar with how the organizations worked.

The coordination could be seen in spending patterns in key Senate races.

In Illinois, for example, GOP winner Mark Kirk benefited from $5.5 million in attack ads from the Crossroads groups targeting his Democratic opponent, Alexi Giannoulias.
In Wisconsin, meanwhile, the Crossroads groups didn't spend any money, but the Chamber of Commerce spent $748,000 on attack ads that helped defeat Democratic Sen. Russ Feingold. (Feingold, ironically, was co-author of the McCain-Feingold campaign finance law whose restrictions on advertisements by outside groups was overturned by the Supreme Court ruling earlier this year, paving the way for the creation of groups such as American Crossroads.)

The long term impact of the spending by the outside groups during this election will be to lay the groundwork for an even bigger effort during the presidential campaign two years from now. That will substantially diminish the role of the two political parties, according to campaign finance experts.

Other than running primaries, "who needs (political parties)?" asked Brett Kappel, a Washington lawyer who specializes in campaign finance laws. Contributions to the parties remain "heavily regulated," under strict limits and must be publicly disclosed, he noted.

"After this election," Kappel said, "all of that can be outsourced to unregulated entities that don't have to disclose their donors."

Wednesday, November 3, 2010

How to boost demand without stimulus?

OK, so that's at least 3 Nobel economists who favor more federal stimulus: Krugman, Stiglitz, and now Peter Diamond.

Meanwhile, small business lending is at a two-year high and loan delinquency rates are falling, so lack of credit doesn't seem to be the main problem. Small business owners say growth in customer demand is the prerequisite for business expansion and hiring. But their erstwhile customers are in the process of massive deleveraging, as U.S. household debt relative to GDP declines from its peak of 97.3 percent in 2009 to something closer to the 60-year average of 54 percent. Consumers are forgoing spending not only to pay off debt -- most notably mortgage debt -- but also to save up for uncertain economic days ahead.

So in that context, how can America boost aggregate demand without a big stimulus package? (Crickets chirping). Maybe the new Republican Congress will wow us with their breakthrough ideas, but let's just be clear: tax cuts alone won't do it. The first stimulus offered almost $300 billion in tax cuts; and Bush's tax cuts have been in effect all throughout the Great Recession, both seemingly useless.

By NPR Staff
October 31, 2010


Krugman: Automatic stabilizers, not gov't expansion, explain deficits

I'm surprised that Nobel economist Paul Krugman didn't use the economic term for the phenomenon he described: automatic stabilizers. In other words, our huge deficits are mostly a result of 1) federal benefits already on the books for which millions more people in economic distress have become eligible, and 2) a huge decrease in tax receipts as a result of job losses and lower sales turnover.

By Paul Krugman
November 2, 2010 | New York Times

While I have written about this topic recently, there is a bit more to the story on how government spending has not, contrary to what you may have heard, surged in the United States under President Barack Obama.

Cue the usual suspects, shouting that I am lying.

Here is a calculation that should make things a bit clearer. If there had not been an economic crisis and a change in which party had control of government over the last three years, what changes would we have expected to see in total government spending — federal, state and local? Probably that spending would follow a growth trend in the economy — that is, real gross domestic product, which accounts for inflation, would grow with the economy's potential, and government spending would grow at the pace of real G.D.P.

Now, over the period between 2000-2007 — from business cycle peak to business cycle peak — real G.D.P. grew by 2.4 percent a year. So a reasonable estimate for trend growth is 2.4 percent per year, or about 7.3 percent since 2007.

Accounting for inflation — the G.D.P. price deflator metric rose 4.1 percent from the second quarter in 2007 to the second quarter of 2010 — "normal" growth in government spending would have been 11.7 percent over the past three years. Actual growth has been higher: about 19.5 percent.

So government spending is about 7 percent higher, or about $350 billion more, than a simple trend projection would have suggested. So what accounts for the higher spending? None of it is government consumption; it's all in transfer payments. Data from the Bureau of Economic Analysis is not quite as helpful as I'd like, but it is clear that a large chunk, roughly $100 billion, is unemployment benefits, which have surged along with unemployment, and another large chunk is Medicaid spending, which has surged because the slump has impoverished more people. Add more for other safety-net programs, such as food stamps. Also, Social Security and Medicare outlays have gone up about $85 billion more than my 11.7 percent projection — perhaps due to increases in health-care costs and the fact that baby boomers are aging and maybe even because some people retired early because they could not find jobs.

And that basically explains the growth in government spending. No giant expansion of the welfare state — just business as usual in the face of a horrific slump.

For all those who do not believe me, the simple graphic on this page showing government spending compared with revenue presents further evidence that government spending has merely continued to rise more or less on its precrisis trend. Revenue has plunged because the economy is deeply depressed.

The giant increases in government spending we keep hearing about are a myth. If there had been more truth to it, the economy wouldn't be as depressed as it is.

[He means, that if there had been additional spending that didn't automatically kick in because of high unemployment/low incomes, i.e. if there had been real fiscal stimulus, then aggregate demand would have been boosted and the recession wouldn't be so bad. - J]


Backstory: Budget Cuts Appealing To Voters

The United States's federal debt has reached $13.7 trillion, and as the Nov. 2 midterm elections draw closer, Republicans have intensified their calls to cut spending as a remedy to this fiscal situation.

So far, this stance has proved politically successful — polls across the nation predict a Republican landslide.

However, Republican legislators have proposed only a few unspecific actions that might curtail spending. Several have demanded a repeal of new health-care legislation, while others, such as Representative Paul D. Ryan of Wisconsin, want to put in place cuts to programs like Social Security and Medicare. A careful comparison shows that Republican policies of the past 10 years will prove to be more costly than policies approved by the Democratic Congress over the last four.

The Congressional Budget Office, an independent government agency, calculates that the 2003 Republican-approved expansion of a government-funded prescription drug program will cost the United States $1.1 trillion over the next 10 years — more than the recently approved new health care initiative and President Barack Obama's stimulus package combined.

[Yeah, but gray-haired senior citizens worked hard all their lives and they deserve their Big Gubument handouts that will break the nation's piggy bank! - J]

While the results of the election will help determine the future path for economic policy, new ideas will likely be on the table. In districts where incumbents are running for re-election, 6 in 10 voters say it is time to give someone new a chance, according to a New York Times/CBS News poll released Oct. 27.

The myth of the 'self-made American'

Robinson's post jibes perfectly with Tea Partiers' cognitive dissonance when it comes to Big Gubument bailing them out their entire lives. The home mortgage interest tax deduction is one of the biggest examples of their willful ignorance: Big Gubument pays them to own a house, while propping up the housing sector. I'm not saying that's a bad policy, necessarily, but it's certainly a distortion of the free market and a handout to those who should "fend for themselves."

Going further back, let's recall that many of your parents or grandparents were the recipients of FDR's G.I. Bill home loan guarantees: "From 1944 to 1952, VA [Veterans Administration] backed nearly 2.4 million home loans for World War II veterans." And how much are those 2.4 million homes (now owned free and clear) worth today?

Wrote Robinson:

"Did Mr. Self-Made Man grow up in a VA or FHA-funded house? Attend a public school or college? Go to school on the GI Bill, Pell Grants, or student loans? Does he claim a mortgage interest tax deduction every year? Does he support his retired parents out of pocket, or does Social Security do it for him? Does his employer get government contracts or subsidies that make his paycheck possible? Does his business depend on a sound currency, enforceable contracts, or reliable transportation systems?

"It's like his rich Uncle Sam, the benefactor whose generous bequests paid his way into the middle class, has been written totally out of his entire life story. Forget gratitude; these social contract deniers insist loudly that none of that ever happened. At all. They pay taxes; but they've never seen a cent returned to them for anything. And they write their 'self-made' myths accordingly.


"Sixty percent of people who get home mortgage interest deductions (one of the most important and lucrative middle-class subsidies going) don't see this as a form of government help to their households, even though many of them wouldn't be homeowners at all without it. Fifty-three percent of the people who got through college on student loans -- and 40 percent of GI Bill beneficiaries -- also think they've paid their own freight. And 44 percent of Social Security recipients don't think that Social Security is a government program -- which comes as no surprise to those of us who remember the ubiquitous calls during last year's health care fight to 'get your fllthy government hands off my Social Security.'"

I would also add that any "self-made" man who hired employees who were products of public education did not make it on his own. Or hired somebody who lived in public housing, received food stamps, aid for their dependent children, Social Security survivor's benefits, Medicaid, or used subsidized public transportation -- because these gov't services lower their employees' expenses and depress their wage demands.

This is not to mention that people who are working -- even if they are working poor people -- commit fewer crimes and cost the state less in terms of social ills. Thus it behooves gov't to subsidize workers' expenses so that they can work honestly and still meet their basic needs.

Unfortunately, you'll never hear obvious, commonsense arguments like this from the Right. There are no more grownups left at the table.

By Sara Robinson
October 29, 2010 | Campaign For America's Future

Monday, November 1, 2010

Rally to Affirm Irrelevance signs

OK, I get it. A lot of these Rally to Restore Sanity signs were clever. I even enjoyed reading them.

But what was the point?!?

Come on, lib'ruls, let's think Marketing 101 here. What's your call to action here? This rally was the equivalent of a redneck with a "Honk If You Like Beer" bumper sticker. Yes, you have reached a large like-minded demographic, but what of it? You got a nice feeling when Bubba honked at you, but after that?.... Exactly. Nothing.

Jon Stewart proved he could write a note on a napkin and attract 200,000+ people to Washington, DC and out-rally Glenn Beck. Good for him. But what have you participants proven? That you can make clever signs that don't mean anything? Good for you, you irrelevant overeducated weenies! Now move to the back of democracy's line.

The aphorism is incorrectly stated as: "If you don't stand for something, you will fall for anything." It is correctly stated as: "You better stop believing you're so freaking clever and fight for your liberal ideals with everything you've got before Bubba Twelve-Guage and Grandpa No-Gubument-Medicare shove their insane worldview down your smug throats."

It's past time that we Gen-Xers and Gen-Yers realized that politics is a no-rules brawl, not a fashion show. We're not showing up with a knife at a gun fight, we're showing up to a war with a copy of our senior thesis. Until we learn from Republicans and get mean, angry, and settle for nothing less than victory, we liberals deserve to get our asses kicked.

By Ryan J. Reilly
October 31, 2010 | Talking Points Memo

How real men carve pumpkins

Happy Belated Halloween!

This must be how real men carve their jack-o-lanterns. Go ahead and try it in your own back yard. Invite the neighbors' kids. What's the worst that could happen?

I bet this is also how real men dispose of their pumpkins... only using a lot more clips.

Thank God for the 2nd Amendment.

By hickok45
October 24, 2010 | YouTube