Tax Cut Clusterfuck

Goddamnit, Senate Republicans. What are you thinking? Your tax plan flies in the face of your most treasured goal—reducing the national debt. It stimulates the economy when it is already nearing full productive capacity which is likely to cause inflation and recession. Token, ephemeral tax cuts in the near

And why is all this happening? You are afraid of losing your donor base! Oh, dear. That would be terrible, wouldn't it? No doubt, it would be maybe the worst thing ever that could happen. So that justifies bypassing Regular Order and thorough vetting of the bill's provisions to enact a jury-rigged bill developed in secret whose provisions are unknown to many senators even as they are called to vote on it. Sure it does. You already have your own set of “facts” and ignore the non-partisan and professional analyses that strongly suggest that your tax plan is a bad idea.

As of this morning, it looks like you may get your wish. I can only hope that I am wrong. Regardless of the bill's fate, I know one thing: Senate Republicans (along with House Republicans and our alleged president) only care about passing something, anything to “prove” that Republicans can govern. Americans' economic security and future opportunity? You talk a good game but it's mostly hyperbole and re-cycled voodoo economics. Real economics suggests that you are doing the wrong thing at the wrong time just to keep your party alive.

Party first! Damn the consequences. 

The Republican Party in 2017.

Flashback

Reading this story about the Republican tax bill today I flashed back to my year in Vietnam.  The article describes a bill whose likely effect may well harm the nation's economy according to many economists.  The bill is also highly unpopular among the public.  And still the Republicans continue to push this bill through Congress to show that they can actually accomplish SOMETHING after a year of factional disarray and legislative impotence.  The tax bill may not be good for the nation but it keeps the Republican donor base happy.

The tax bill's displaced objectives remind me very much of my year in Vietnam.  Rather than risking our lives for some great national purpose, we were there in 1971 mainly to keep Richard Nixon from becoming "the first President to lose a war."  We were fighting and dying to provide political cover for a politician.  I've never forgotten the the hopelessness and anger I felt in those days.

More important than my feelings then was that along with the death and destruction we inflicted on Vietnam, the war damaged the United States, morally and economically. Nixon's "Vietnamization" policy simply prolonged and increased that damage.  The tax cut may not pose the same level of personal risk that my military service did but I sure have the sense that public power and policy are being used for narrow purposes to the detriment of the larger public.

All because the politicians are afraid.

Where I Agree with Republican Conservatives and Vladimir Putin

In thier biograpy of Vladimir Putin, Fiona Hill and Clifford Gaddy note that one of Putin's earliest objectives as Russia's president was to reduce Russia's national debt.  He viewed the debt in nationalistic terms and believed that Russia's indebtedness to western banks limited the nation's latitude in dealing with the west and forced it to capitulate to to the dissolution of the Soviet state in the early post-Comunist years.  Hill and Gaddy report that Russia's debt to has been reduced considerably under Putin.  I don't approve of the Putin's "New" Russia, with its oligarchs, corruption and political repression, but I reconize the value of limiting your exposure to outside forces that do not necessarily share your interests.  That makes sense to me.  A large and growing debt puts a nation, even the United States, at the mercies of the debt-holders. 

Also making sense to me are fiscal conservatives in America who question the wisdom of funding routine operations and programs with an ever-accumulating national debt.  I know governments, especially governments of rich, powerful nations like the United States, don't operate at the same level as my household or even a business but I don't see where an increasing level of debt is sustainable.  The US Government Accountability Office (GAO) doesn't think so either.  So when I hear Republicans talking about reducing the deficit, I can agree with the idea ensuring that the federal govenment is sustainable.

Where I disagree with the Republican fiscal conservatives is on the scope of government and how best to finance that government.  I support social welfare programs that protect the most vulnerable Americans and believe that the nation is wealthy enough to support those programs.  That's the socialist in me.  The socialist in me is more than willing to take from the rich and give to the poor and society at large. I'm not an economist but I do understand how markets work and how financial incentives drive innovation so I'm not talking about expropriation.

What I am talking about is asking those Americans who have profited handsomely during the past three decades of Reaganomics and neo-Regonomics to share a portion of their wealth with the rest of us.  Wealthy individuals and profitable corporations benefit greatly from organized government, often more than the mass of taxpayers.  It is reasonable for the nation ask a greater sacrifice from the wealthy and profitable corporations to support the nation as a whole.  I like to think Americans are smart enough to figure out how to make this work.  We are supposedly a practical nation.  At least, we used to be.

Non-economist that I am, I do not believe that America must pay off its entire national debt or even eliminate all deficit spending.  Debt can be used wisely for to build and aquire long-term assets like infrastructure that serves future generations as well as the present.  Deficit spending can be an effective tool for managing the economy.  I am by no means a deficit/debt hawk but it does seem like a good idea to keep the national debt at a manageaable level.  At this time in America

So while I agree with the Republican--and GAO--concerns about fiscal sustainability, I don't agree with their "trickle-down" tax cuts and consequent demands for program cuts.  Far better to tax the rich.  They can afford it and still continue to live well beyond the means available to the average American. 

A Social Success.

Friday was Social Security's 80th birthday, an anniversary worth celebrating.  Due to Social Security, poverty among senior citizens is greatly reduced, especially so following the Social Security Amendments of 1965.  (Courtesy of Lyndon Johnson before Vietnam destroyed him.)  Social Security survivors' benefits were a mainstay for my family after my father died.  That monthly stipend covered living expenses for my first three years of college (I turned 22 in the fall of my senior year and lost my eligibility).  I expect to receive an above average Social Security pension based on my 40 plus-year career.  In all, I am very supportive of a system that has worked well. 

Social Security an important component of our national and inter-generational social contract.

“Social Security creates a strong link between the aged and the working-age population. The idea behind the program is that today’s workers create the capital, the technology, and the wealth that will support tomorrow’s generation. Embedded in its formulas is the notion that those of us who came before, whether they were teachers, accountants, homemakers, mail carriers, barbers, cashiers, or lawyers, have built up the productive capacity of our nation.

When the children of these workers come of age (along with new immigrants), they will earn their living from this infrastructure while also making their own contributions. As they do so, we will peel off some portion of their earnings to provide pensions for their forebears, just as those forebears did for their own predecessors. If this were a Disney movie, music about the “Circle of Life” would swell up here, but suffice it to say, Social Security is an elegant collaborative solution to a universal challenge.”

This, to me, is one of those fundamental values that demands the nation's attention and resources.  For those resources I would look to the wealthiest to surrender some portion of their wealth to ensure that the system remains sustainable and available to future generations.  It's that important and the wealthy have plenty to spare.

Social Security was the topic of Bernie Sander's speech to a Socialist gathering in Seattle last Saturday to celebrate the 80th anniversary, the speech he never gave.  (The Stranger has some excellent coverage of that event.  I also got a first-hand report from Maggie who attended the event while I was in Seattle videotaping a friend's wedding.)  One of the reasons Sanders has always appealed to me is his unwavering support for raising taxes, possibly even mine, to keep Social Security solvent.  

In the 70's I and my fellow Boomers wondered if we would actually receive Social Security benefits.  Reforms in the 80's increased the retirement age for people born after 1937, increasing the age for full benefits to 67 for people born 1960 and later.  That made the system solvent but it produced a surplus that was all too convenient for politicians trying to minimize annual deficits so those surpluses are now US Treasury bonds that the current crop of politicians don't want to pay.  After all, it might cause some of their wealthy supporters some financial discomfort. 

That's why I'm happy to see Bernie Sanders running for president.  He may not stand a chance but he may just keep his opponent from selling out to the fat cats who fund her campaign. 

Martin Luther King, 1929-1968

The speech every American should hear on MLK day.  Decades later, his words still ring true.



Text available here.

More Capitalism Waiting to Happen

All my life I've heard the stories of oppressed peoples who rose against their oppressors to secure justice and freedom.  From colonial patriots to  pioneers to the "Greatest Generation", America has collective imagery of triumph over distress. 

So I guess I should take heart when I look at the forces arrayed against the public interest.  According to the national myth, the good guys win.  Looking at reality, the story is less positive.  Money wins, if not immediately, in the long run then.  And even when it loses, money can often manage the results in its interest.

These gloomy thoughts are amply illustrated by Gary Rivlin's article, "How Wall Street Defanged Dodd-Frank", in The Nation.  It's a case study of massive lobbying on behalf of private interest at the expense of the public.  It's all-too-typical of how national policies are established.  A hard-fought, not-perfect-but-good-start attempt to regulate the excesses that crashed the economy is slowly whittled to nothing by the same monied interests that created and profited from those excesses. 

And this is simply one front in the corporate wars.  The Trans-Pacific Paratnership is a "free trade" agreement that gives preference to corporate interests over silly, "un-scientific" national and public interests like social, enconomic and  environmental concerns.  Think NAFTA only bigger  Add in the US-European Union trade negotiations and it looks all too much like the private interest and profit has won despite our best efforts.  

This tells me that the myth of good triumphing over evil is only part of the story.  Any victory will be hard fought.  Nor will any victory be complete or final.

An Aussie Looks at America

...and sees corporatocracy and the web of interlocking interests that perpetuate corporate control at the expense of the majority.  If only Americans could see as clearly.

(h/t to Skippy)

Solving the Deficit

When given a choice of fixed options to reduce the federal deficit to a sustainable level, most Americans are willing to accept higher taxes, less domestic and military spending losing the state and local tax deduction and even a carbon tax, according to a poll reported in Slate. The poll features an interactive menu of policy options totaling $2,082 billion.The user is tasked to select options totaling $900 billion to reduce the deficit.  Policies individually chosen by 53 percent or more respondents total $943 billion and do not, include reducing Medicare and Social Security benefits.  Those options garnered 34 and 37 percent respectively. 

Of course, the devil is in the details but the interactive menu provides some good thumbnail information, enough to make you think.  I took the poll and found $514 billion right off by choosing cuts in military spending, higher tax rates for incomes above $250K and a carbon tax.  The carbon tax was chosen by 56 percent of the respondents.  It makes perfect sense to tax something we want to discourage; given climate change we need to discourage carbon.

I can get to $731 billion by reducing domestic spending 1 percent a year (same as military) but that leaves me $269 billion short.  Frankly, I think I could get more savings out of the military.  Department of Defense financial management has been reported by the Government Accountability Office as high-risk area every year since GAO began identifying high risks in 1995.  For this exercise, if I get those additional savings, I would use them to offset cuts to the domestic programs so I'm still short.

Choosing a national sales tax would add $406 billion to my total and allow me to reduce those domestic program cuts big time.  Fifty percent of the poll respondents chose the sales tax.  I'm not inclined to.  Sales taxes are regressive and have traditionally been used by state and local government.  The other big money option is tax rate increases for all.  That would add $336 billion and give me some margin.  I don't want that option either.

My next choices would be to eliminate the deductions for home mortgage interest and state and local taxes.   Those two options put me at $943 billion. I would consider those options only as part of a larger review of all tax deductions.  Other deductions could well have less social and economic utility and could be much better candidates for elimination.  But as long as I am willing to accept a reduction in deductions, I can legitimately claim the savings.

So that's how I would solve the deficit.  It's pretty much in line with what most Americans want.  Maybe if Congress would listen to Americans and not corporate lobbyists, the deficit would be no fucking big deal.

Those Electronic Medical Records

...that will reduce health care costs?  Maybe not so much.

Many doctors and hospitals say that computerized medical records encourage the move to higher codes because the software makes it easier for providers to quickly create documentation for charges. One electronic medical records company predicts on its Web site that its product will result in an increase of one coding level for each patient visit, potentially adding $225,000 in new revenue in a year.

Which goes to show that entrepreneurs will always work the angles.  Still, much can be done.  Inefficiencies in the US healthcare system waste about $750 billion per year.  That's right--$750 BILLION.  The Institute of Medicine estimated losses due to unnecessary services ($210 billion annually); inefficient delivery of care ($130 billion); excess administrative costs ($190 billion); inflated prices ($105 billion); prevention failures ($55 billion), and fraud ($75 billion).  These are estimates but even allowing a margin of error they are large numbers.  Targets of opportunity for reform and effective management.

Whither Capitalism?

Steven Pearlstein examines capitalism's raison d'etre in today's Washington Post.  The article is a good review and commentary on current thought about what a capitalist economy should be and to.  It's a good discussion, worth reading in toto.  Pearlstein articulates my economic values very well:

A pure market economy is an ideological fantasy; even the freest markets operate in a framework of laws, infrastructure, institutions and informal norms of behavior in which government is heavily implicated.

[...]

In the current, cramped model of American capitalism, with its focus on output growth and shareholder value, there are requirements for financial capital, human capital and physical capital, but no consideration of what Stiglitz calls “social capital,” Zingales calls “civic capital” and Martin calls the “civil foundation.” It is this trust in one another that gives us the comfort to conduct business, to lend and borrow, to make long-term investments and to accept the inevitable dislocations of the economy’s creative destruction.

Whatever you call it, societies do not thrive, and economies do not prosper, without it.
This erosion is most visible in the weakening of the restraints that once moderated the most selfish impulses of economic actors and provided an ethical basis for modern capitalism. A capitalism in which Wall Street bankers and traders think it is just “part of the game” to peddle dangerous loans or worthless securities to unsuspecting customers, a capitalism in which top executives have convinced themselves that it is economically necessary that they earn 350 times what their front-line workers do, a capitalism that puts the right to pass on unlimited amounts of money to undeserving heirs above the right to basic, life-saving health care — that is a capitalism whose trust deficit is every bit as corrosive and dangerous as its budget and trade deficits.

The Money Quote

Joseph Stiglitz, Nobel Laureate in Economics, on America's economic divergence, 

The seriousness of America’s growing problem of inequality was highlighted by Federal Reserve data released this month showing the recession’s devastating effect on the wealth and income of those at the bottom and in the middle. The decline in median wealth, down almost 40 percent in just three years, wiped out two decades of wealth accumulation for most Americans. If the average American had actually shared in the country’s seeming prosperity the past two decades, his wealth, instead of stagnating, would have increased by some three-fourths. (my emphasis)

I know I certainly saw two decades' worth of savings and investment disappear.  I know, too, that I am one of the lucky ones who didn't lose everything and, more importantly, I've been employed steadily for the past four years and able rebuild my savings somewhat.  All this tells me that I and most people in my life are more fortunate than the majority of Americans.  Drastically so compared to most human beings on this planet.

At one time in America the economic security I seem to have attained was a reasonable expectation for many.  No more.  Uncertainty is the new norm, with more and more Americans sliding from middle class to poverty and the rest of us hoping we can hang on.

As the rich get richer.

A Wish for 2012

Steven Pearlstein describes the myriad forms of capitalism in the Washington Post today.  Capitalism, he writes, comes in a variety of flavors.  Each produces a different outcome, often profit and sometimes enormous wealth for some at the expense of many. 

In this national election then, Pearlstein believes it is fair to ask candidates about the kind of capitalism they want for America.

We would all surely welcome an intelligent presidential debate on what kind of capitalism we want to have. Only please spare us the self-serving nonsense about who created or destroyed how many jobs. In almost any form of capitalism, running the government is not the same as running the economy, and neither is like running Bain Capital.

My additional wish asks for non-capitalist options.  Given the choices possible in 2012 America, I vote for humane capitalism.

Budget Matter

In this political season much talk centers on the federal budget. Who gets what? Who gets hit? And all that. As a rule, I distrust budgets. I much prefer to see what is actually spent and where. Real numbers for real actions. Only when the books are closed and verified will I know what actually took place. Except for the Defense Department.

Budgets, on the other hand, are a promise and if we are talking politics, we are talking promises. And expectations. At this stage a budget is a a financial and policy road map that tells where this politician or that politician will steer the country.

Ezra Klein does a good job of digging into the budgetary weeds to show what Representative Paul Ryan's Republican budget will do, even if Ryan himself hasn't worked out the details. Klein comes to the inescapable conclusion that "You can't cut spending without cutting spending." Someone must take the hit. If not me, then you. Or someone else.

That's the detail. Klein works back to the broader assumptions and policies underlying Ryan's budget choices, which is a discussion Ryan would rather avoid. I read his budget and see a grim America: decaying public infrastructure, increasing economic insecurity and declining quality of life for all but the rich. That tells me all I need to know in order to make a principled choice in the matter.

That will get me through the political season but a budget is not the end of the story. The politicians may think they've made a decision but when the money hits the pipeline it can go in unsuspected directions. Down in the weeds lie many adjustments, transfers and encumbrances that sometimes account for real differences.

Only when the money is actually spent do we know how good were those budgetary promises.

Perspective

Whenever I am anxious about my personal finances, I need only remind myself that I am among the richest people in the world.

The BBC confirms that today with a feature on global wages. You can plot your monthly wage on a chart of national averages. My very good American salary is nearly off the scale. Even a half-decent American wage tops most national averages.

The chart actually understates the difference since it omits the poorest nations. That means I am better off than even more people whose economic activity is either not measurable or not worth measuring.

I haven't won on any of the big bucks lottery tickets I've purchased over the years but I certainly won the economic history lottery by being born a mid-20th century white American.

Everyone should be so lucky.

Good fortune is best shared.

A Microcosm

The legislatures in both my native state, Virginia, and my home state, Washington, failed to agree on a budget before their respective clocks ran out this week. In my previous home state, Arizona, the legislature is still in session but the fact that AzCentral has a Budget Crisis web page does not augur well.

Such is the contemporary landscape of the political-economic culture I've known. Leaves me feeling a bit like Joe Btfsplk.

Occupy in Olympia

Beginning Friday and running through Monday, Olympia is hosting the Occupy Solidarity Forum, a gathering of members from the various Occupy sites from around the country. As nation-wide gatherings go, it's a smallish affair--maybe 200, including many locals--but the size does not preclude enthusiasm or vibrant exchange of ideas.

The size does not preclude diversity. At various functions I've met Occupiers from Phoenix, Tucson, Modesto and Missoula. One person came from the original Occupy Wall Street in New York. The couple from Phoenix drove up, giving workshops in San Francisco and Portland along the way. Two others came out from Washington, DC. Occupiers from Oakland gave one of Saturday's workshops. The Corporate State may have evicted the occupiers but the idea is very much alive.

I'm not deeply involved in the Occupy movement but I support its many goals and the idea of citizen activism to reclaim our lives, our planet and our future from corporate oligarchy. Perhaps its greatest lesson is that there are more of us than there are of the privileged 1%. The second great lesson is that the economic system that serves so many so poorly operates with our consent. Occupy is hardly the first recognize that strength and leverage--I heard S. Brian Wilson say the same at the Veterans For Peace conference in August--but Occupy is real step toward withdrawing that consent.

David Korten, author of Agenda for a New Economy, spoke last night and laid out a thoughtful, well-informed reasoned analysis of modern economic dysfunction and offered equally thoughtful, reasoned solutions for creating a human-centric economy. Earlier in the day, Foster Gamble hosted a screening of his documentary "Thrive" which covers much the same ground. The documentary is a bit out there in places but much of it rings true and is certainly more credible than the propagandistic pap served up by the media, http://www.blogger.com/img/blank.gifcorporate interests and their government lackeys.

All this tells me that people are beginning to think, ask questions and act. I can see it in the Move Our Money campaign and the call to revoke the corporate charter of socially irresponsible corporations such as Massey Energy. Korten noted that we have one advantage that all previous movements have lacked: the ability to communicate and exchange information directly. Occupy and many other movements have used this tool effectively.

On this particular morning, I feel hopeful that we can defeat the Empire and create a sustainable, just and fair society. I look forward to an American Spring in 2012.

I would be remiss if I did not salute and thank the organizers of the Occupy Solidarity Forum. They put on two full days of workshops, speakers and entertainment at multiple locations throughout downtown Olympia. They fed many of the participants and helped many find low cost accommodations, including the more than 50 or so who camped at the State Labor Council Building. They are proof that the spirit of Occupy lives.

Martin Luther King, 1929-1968

The speech every American should hear on MLK day. Four decades later, his words still ring true.



Text available here.

(via Chuck Palazzo)

Shared Ideology

Growth for the sake of growth is the ideology of the cancer cell..
--Edward Abbey

Capitalism also begins with the letter "C" and hews to the ideology of growth. Presumably that growth benefits all. Judge for yourself how that has worked out.

We have, however, certainly all experienced the prodigious downside of capitalism.

Something To Be Thankful For

Last night I heard an interview with economist Richard Wolf on Between the Lines. He was speculating on the prospects that Occupy Wall Street may have for transforming the US economy, and quite possibly world-wide change as well. He sounded pretty upbeat, noting that in the many years he has observed social movements their focus was typically single issue. Occupy and its related movements question the entire premise of our economic model, they question capitalism itself, something he has not seen before.

That's good news since the Earth is a finite planet whose laws trump human conceits. If we continue to consume everything, then ultimately all we will have is waste, a diminished planet that supports limited life forms (maybe). All of which means that capitalism based on consumption is not sustainable.

Naomi Klein makes a similar argument in The Nation. She argues at length and convincingly that meeting the challenges of climate change with require revolutionary change in the way we think about economic and societal organization. Simply put, capitalism is not compatible with a living ecosystem.

So the ideas are out there and being discussed. They are more visible now than six months ago. And that discussion will continue. Another interview on Between the Lines was with two media organizers from Occupy Wall Street. They said that the movement was more than the encampment; they had offices and other spaces that are sill in use after their eviction. Here in Olympia, the same is true and the encampment received support from the many local progressive organizations.

The discussion will become more lively here in Washington on Monday as the Legislature meets in special session to carve another $1.7 billion from the state budget after receiving the latest grim revenue estimates. Occupy groups, community action programs, other Peoples' Advocates from around the state will converge at the Legislative Building for an extended occupation for the purpose of educating legislators on the reality of life in this capitalist economy. Events are planned each day. It's not necessarily a sleep-in but will certainly be a notable presence.

Of course, all this may come to naught, as so often in the past. But at least the ideas are in play, a necessary first step. I can be thankful for that.

More Than I Usually Expect

Give credit to the Washington Post for two provocative opinion pieces today. Taken together they ask some serious questions and offer strong support for their conclusions. Not the norm in the mainstream these days.

Stephen Pearlstein, who wrote cogently about economics as a regular Post columnist before moving to academe, writes about the latest financial bubble, commodities. He concludes:

What’s clear from this tale is how little the financial services industry has really changed since the crisis of 2008. The financialization of the economy continues undeterred, creating a bubble in commodities just as it did with houses and office buildings. The industry is still engaged in clever games to circumvent regulation, increase risk and find the cracks between one regulatory agency and another. And when regulators step in to try to restore some sanity to the markets, they inevitably run into a political buzz saw created by the industry and its Republican allies.

Big Finance is water running downhill. You cannot stop it. You may be able to control it but the force is imperative and always carries the potential for serious damage.

Alec MacGillis writes about additional occupations that will further illuminate the monstrous inequities in the American economy and their root causes. Among his targets is Wal-Mart for its success in destroying organized labor. MacGillis reminds the reader about why unions are important:

Harvard labor economist Richard Freeman says that organized labor diminishes income inequality mainly by forcing employers to give back more in compensation to workers that executives otherwise would claim for themselves. In a strong union environment, this dynamic even applies to nonunion firms, which must pay better wages to compete for workers.

But there’s also a broader contribution to inequality in the decline of organized labor in America — the loss of the “countervailing force” that strong unions used to provide in debates with business groups over, say, financial deregulation.

Which is why Wal-Mart and big business fought so relentlessly to destroy that countervailing force.

Yesterday Olympia Fellowship of Reconciliation held a Jobs Not War workshop to explore ways to move toward a peace economy. Among the ideas for action was "shaming" corporations for social irresponsibility. The Occupy Movement has been one form of that shaming for the financial system as a whole. MacGillis has identified some other actors and practices worthy of shame. Pearlstein reminds me of why we need to be always vigilant when vested interests handle large sums of others' money.