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What That Letter Should Have Said

9:54 pm in Uncategorized by letsgetitdone

On Valentine’s Day, Senator Bernie Sanders sent a letter to the President, authored by himself and signed by 15 other Senators, all Democrats. The letter was a response to the rumors that the President intends to include his Chained CPI proposal to cut Social Security benefits in the budget he will soon send to Congress. It summarized:

Mr. President: These are tough times for our country. With the middle class struggling and more people living in poverty than ever before, we urge you not to propose cuts in your budget to Social Security, Medicare, and Medicaid benefits which would make life even more difficult for some of the most vulnerable people in America.

We look forward to working with you in support of the needs of the elderly, the children, the sick and the poor – and all working Americans.

The letter also stated a number of the usual talking points made in arguments against cuts to Social Security. In addition, it also contained praise for the President for his actions in improving the economy, creating jobs, and reducing the deficit, and it mentioned some specifics, including reduction of the Federal deficit to less that half of the $1.4 Trillion deficit he began with. The letter also asserted the need to do much more, especially in the areas of the economy, reducing unemployment and wealth and income inequality, and reducing the deficit “. . . in a fair way.”

It is a positive development that a group of Senators decided to preempt the President’s budget offering stating their disagreement with any proposed cuts to SS, Medicare, and Medicaid, but I think there were a number of ways in which the letter could have been done more effectively. First, It would be great if progressives urging the President not to cut the safety net would stop reinforcing the frame that lower deficits are good and that the President is due praise for cutting the deficit so sharply (CBP projects a 3.0% of GDP deficit this fiscal year). It is not good that he has cut the deficit so much, because in doing so, he has subtracted from Federal Government additions of Net Financial Assets (NFAs) to the economy. These contributions are projected to be so low this year that they will only compensate for the demand leakage due to the trade deficit, leaving no additional NFAs for net aggregate private sector savings.

Given the presence of unequal economic power to collect financial assets in the hands of economic elites, the implication of this is that the lower deficits will only further exacerbate inequality in the United States as well as contribute to continued high and long-term unemployment and stagnation (low growth) in the economy. In short, the austerians, including the President and other Democrats and Republicans who have been insisting on lower deficits are responsible fr the stagnation we see all around us.

Second, the letter would also have been more effective, if it had more than 15 signatures on it. Many Democratic Senators are running for re-election this year. Do they really want to be running as one of the faces of a party whose head is advocating for cuts to Social Security? Is this really good for Kay Hagan, Jeanne Shaheen, Mary Landrieu, Mark Pryor, Mark Warner, Cory Booker, Tom Udall, Mark Udall, Chris Coons, and John Walsh? So why haven’t they signed the letter? Do they really expect to re-elected if they decide to support a budget that contains chained CPI, and, even if they don’t support it, will they benefit if their party leader is proposing chained CPI? So why wasn’t Bernie Sanders able to get these additional signatures from Democrats who face challenges and are running this year?

And third, this letter would have been much, much stronger if the Senators who signed it said to the President directly that they know that there is no short or long-term debt problem and hence no further need to worry about cutting the deficit to achieve fiscal sustainability or ficsal responsibility. And that they also know that any debts that the Treasury has incurred in the past, or deficits that it incurs in the future, can be either paid off as they fall due, or covered completely by revenues from High Value Platinum Coin Seigniorage (HVPCS) used under the authority provided by legislation on denominations, specifications, and design of coins, passed in 1996. (Full details and issues surrounding HVPCS are given in my e-book.) They also should have added that since there is never any need based on the idea that “we’re running out of money,” to cut any safety net programs, that they want the President to know that everyone signing the letter is committed to voting to kill any budget offered by the President including the chained CPI, or any other provision cutting safety net programs.

A letter enhanced in the three ways I’ve just outlined would have been a damn sight more effective in warning Obama off the chained CPI, than the one Bernie Sanders and the other 15 Senators sent. And it also would have been much more effective in getting those Democratic Senators who signed it and are running, elected in November.

Cross-posted from New Economic Perspectives.)

Professor Krugman’s Nervous Tic?

10:24 am in Uncategorized by letsgetitdone

Does he genuflect slightly to conservative opinion?

Paul Krugman’s recent post makes some good points about the myth of the undeserving poor. But does he have a nervous tic? When criticizing conservative economic views, doesn’t he always seem to genuflect slightly to conservative opinion in order to appear “reasonable?” In this post he says:

I’ve noted before that conservatives seem fixated on the notion that poverty is basically the result of character problems among the poor. This may once have had a grain of truth to it, but for the past three decades and more the main obstacle facing the poor has been the lack of jobs paying decent wages. But the myth of the undeserving poor persists, and so does a counterpart myth, that of the deserving rich.

What “grain of truth” ever existed in this story? Where is the empirical evidence that the poor were ever more “lazy” than the rich or had other “character defects” (Not K’s words) that the rich don’t have in abundance, as well? I don’t think there is any. What the conservatives believe is pure BS. Some people are certainly “lazier” than others. But there’s no evidence that this aspect of character is class-based. It’s just prejudice, myth, and conservative fairy tales, which they embrace in place of authentic religion, run rampant.

Many of our most visible and celebrated “liberals” or “progressives” seem to share this nervous tic with Professor K. Bernie Sanders, for example, seems always to begin any comment he makes about fiscal policy by genuflecting to the idea that, of course, “. . . the US has a long-term debt problem, and we must have a plan for long-term deficit reduction, but . . .” Bloggers at the Campaign for the American Future are careful to mention that in order to implement progressive spending policies, of course we need to raise taxes on the rich, because the spending must be consistent with the goal of long-term deficit reduction. And while raising taxes is certainly not genuflecting to conservative religion, the idea that we need deficit reduction is.

I’m sure my readers can easily multiply examples. But the larger point here is that genuflecting just reinforces the conservative framing and we don’t need that. What we do need are full-throated statements of progressive ideas that make no full or partial validations of the myths and shibboleths of the neoliberal and conservative past.

What we need is the unvarnished truth as we see it. That is the only way to move on and away from the sad place of emerging global feudalism in which we find ourselves.

Cross-posted from New Economic Perspectives.

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Bernie Sanders: Self-shackled Champion of the People

1:48 pm in Uncategorized by letsgetitdone

I gotta love Bernie Sanders, because he seems so much like people I grew up with and like myself too, and he also seems to have that passion for equality and democracy that is so important for the future of America. Sometimes I think Bernie is one of the few champions of the people left in Congress. But I also think that along with other progressives he has constructed chains for himself that prevent him from being as effective a champion of the people as he otherwise might be.

His chains are the chains of either false beliefs or a decision not to speak the truth about fiscal matters for fear that the “very serious people” in the Washington village will marginalize him even more than they do right now. I can’t say which of these is true, but I think whichever reason is operative, his self-shackling hurts his effectiveness.
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The Five Worst Reasons Why the National Debt Should Matter To You: Part Four, The Three Real Reasons

2:15 pm in Uncategorized by letsgetitdone

This is the concluding post in a four part series on the “Top” reasons why the national debt should matter. In Part One, I considered “Fix the Debt’s” claim that high levels of debt cause high unemployment and argued that this is a false claim. In Part Two, I followed with a review of the historical record from 1930 to the present and showed that it refutes this claim throughout this period, and that there is not even one Administration where the evidence doesn’t contradict “Fix the Debt’s” theory. In Part Three I showed that the other four reasons advanced by “Fix the Debt” also had very little going for them. In this part, I’ll give reasons why the national debt does matter, and why we should fix it without breaking America, or causing people to suffer. Read the rest of this entry →

The Fiscal “Cliff” and the Real Problem

7:02 pm in Uncategorized by letsgetitdone

so-called cliff

Like many others, I’m not worried about the so-called fiscal “cliff,” and the ravages to the economy that are likely to occur if Congress doesn’t do something about it before the end of the year. That’s because a lot of the impact can be cushioned in the short run by Executive Branch manipulations while negotiations continue to go on. But if measures aren’t taken to reverse the contractionary effect of the sequestration-induced changes, we’re looking at deficit cuts of $487 Billion over 9 months of the fiscal year.

By comparison, the American Recovery and Reinvestment (ARRA) of 2009 produced only $350 B in stimulus during its first year. And, if the full sequestration were allowed to proceed unmodified, then it would result in a “claw-back” of about 60% of the total ARRA stimulus.

Fortunately, if we do go over the “cliff” heavy pressure will then be on both parties to reintroduce the middle class tax cuts, and make them retroactive, and to restore some of the other cuts as well, so it may be possible to mitigate much, if not most, of the damage, if the Democrats are aggressive enough in pushing the negotiation advantages they appear to have now. So, the real danger of the manufactured “fiscal cliff” is more long-term.

That danger is the constant bleating from both deficit hawks and “progressives” that we have to do something long-term about the deficit/debt problem. So, they put up these long-term plans to delay deficit cutting for a year or two and then want to cut even more down the road to ‘stabilize’ the debt-to-GDP ratio. This is a non-existent problem, and any plan providing for deliberate polices to force deficit reduction by constraining Government spending to some arbitrary level is bound to damage the economy seriously when the prescribed spending cuts and increased taxes for lowering deficits take effect.

People have to come to accept reality, which is: if we want to import more than we export; and also want the private sector as a whole to save money (i.e. bank savings, pensions, other savings) then there is no alternative to having the Government deficit spend. Further, how much the deficit ought to be, without incurring the penalty of demand-pull inflation is dictated by how much we want the private sector to save, and how much of a trade deficit we want to continue to run. If we want to have a trade deficit at 4% of GDP, and we want to save 7% of GDP, then we must allow the Government to run a deficit of approximately 11% of GDP. And we must do that year after year after year, for as long as we want to save that much and import that much.

Do I need to point out that our deficits are not now anywhere near 11%? And that as a result we not only have high unemployment, an output gap of more than $3 Trillion annually in GDP, but also less in both savings (financial wealth being accumulated) and imports (real wealth being accumulated) then we otherwise would have? What will happen if even the “liberal” Center On Budget and Policy Priorities (CBPP) hits the economy with its proposed total of $3.7 Trillion (the $1.7 Trillion already agreed to last year and the additional $2 Trillion it is proposing) in deficit reduction? That is an average of $370 Billion per year in enforced deficit reduction which will come right out of savings and imports. That, in the absence of credit bubbles creating unsustainable demand, will condemn us to a stagnant economy as far as the eye can see.

We don’t have to run those 11% of GDP deficits, and also have them drive 11% of GDP further debt accumulation. Deficits and debt accumulation are not the same things, and can be decoupled. We can have the deficits and use Proof Platinum Coin Seigniorage (PPCS) to underwrite the deficit spending; or we can change the rules preventing the Fed from monetizing deficit spending by just creating the necessary credits for spending Congressional deficit appropriations and placing them in the Treasury General Account (TGA) when needed. So having the increased debt along with the continuing deficits isn’t necessary. And if we don’t like the debt, then we can get rid of it.

But, again, if we want the imports and if we want the savings, then we must have the deficits, and we must never have deficit reduction unless we also have savings reduction and/or trade deficit reduction. So the bottom line here is: We need to have the “loser liberal” message we’re hearing from Bernie Sanders, Robert Reich, The Center On Budget and Policy Priorities, and various “progressive” pundits and organizations, just stop!

Keynes’s idea that a fiscally responsible nation incurs deficit/debt in bad times, and pays it back in good times with surpluses, is wrong in the context of fiat currency nations. The gold standard’s been gone since 1971. Nations have much more fiscal space. Some nations want to run trade surpluses all the time, and accumulate nominal financial wealth, and others want to accommodate them and accumulate the real wealth of their imports instead.

So, this makes it impossible for those others to have both aggregate private sector savings and full employment, without Government deficits compensating for the demand leakages. The accommodating nations need to run permanent deficits to serve their own populations. And, if other nations, object to that, then they need simply to stop having export-led economies.

We have no national debt, or debt-to-GDP ratio problem, because we are a nation with a non-convertible fiat currency, a floating exchange rate, and debts in currencies not our own. This means we can always generate new currency to pay our obligations using the methods I just mentioned. And it also means that 1) our levels of debt and debt-to-GDP ratio have no impact on the fiscal sustainability of our fiscal policy; and 2) fiscal responsibility can’t mean targeting fiscal policy at particular levels of the national debt, or the debt-to-GDP ratio.

Nor can the bond markets create rising interest rates on US public debt because “we,” that is the Fed and the Treasury together, control those rates and can keep them as low as they want to even if every ratings agencies downgrades US paper to its lowest rating. Put simply, our creditors have zero power over our interest rates. Reich’s talk about persuading our creditors that we’re serious about getting our fiscal house in order is just errant nonsense. What we really need to do about them is to use PPCS to fill the public purse, repay our debt instruments as they come due, and take their bond market in USD away from them entirely. It’s only a source of “welfare” payments to rich people and foreign nations anyway. What do we need it for, anyway?

(Cross-posted from New Economic Perspectives.)


Photo by tbennett under Creative Commons license.

Americans Elect and the Emerging Oligarchy: Update

10:53 pm in Uncategorized by letsgetitdone

1%-ers Playing Their Tunes (Photo: fattytuna/flickr)

1%-ers Playing Their Tunes (Photo: fattytuna/flickr)

The Occupy Wall Street (OWS) movement has made many more Americans aware of the issue of an emerging oligarchy based on wealth inequality taking control of American Democracy. There are a number of ways to look at this:

– the growing economic inequality in the United States and around the world,
– the increasing control of politics both in the United States and most industrial nations by the wealthy and the giant multinational financial, energy, pharmaceutical, and other corporations which are viewed as having either the same, or in certain respects more rights than human citizens,
– the fact that neither of the two major political parties is preparing to run someone who is likely to represent the interests of the 99% (the President’s recent noises notwithstanding),
– the control of all the major media outlets by corporate interests promoting public debt hysteria,
– the persistence and growth of different standards of law enforcement for the 99% compared to the wealthy and well-situated (the 1%), and
– the increasingly powerful legal/quasi-military apparatus suppressing the constitutionally guaranteed rights of free speech and assembly in the name of order and defense against terrorism.

All of these perspectives come together to support a narrative and an image of the increasingly rapid takeover of democracies, including the United States, by a small global elite composed of the very rich and very powerful corporate executives. Most Americans and many more people around the world are recognizing this reality of an emerging oligarchy and are looking for ways to get out from under its domination and to re-affirm democracy and open society. But to do that they somehow have to counter the influence of wealth in manipulating the perception and construction of social, economic, cultural, and political reality by the 99% and in dominating electoral processes even though they are vastly outnumbered.

To accomplish that, people are increasingly looking to the Internet as a democratizing force that could provide the ability for people among the 99% to self-organize and create their own reality and political movements without recourse to massive financial resources. Web-based organizations are now creating web sites/platforms that claim to offer people the possibility of having a greater voice in politics and in determining its impact on their lives. But do these new efforts offer a way out of oligarchy and back to democracy or do they just reinforce the emerging oligarchy?

This is the second in a series of posts on some of these new web-based platforms and how they relate to this central question of oligarchy vs. democracy. The first, “A System-Changing Solution for the OWS Movement?”, which I co-authored with Nancy Bordier, compared and contrasted two alternatives available to OWS, the Interactive Voter Choice System and Americans Elect (AE). This one will offer a more detailed analysis of AE.

Description

AE is organizing people to participate in a national on-line convention that will nominate Presidential and Vice presidential candidates and place them on ballot lines in all 50 States. People who sign up as delegates will decide the issues, select the candidates, and nominate the President through participating in the on-line convention. According to its web site, any constitutionally eligible citizen can be a candidate, provided they meet AE’s eligibility and qualification criteria. They have ballot lines in 11 States at this writing, and are currently working on 16 more.

AE states that it is “non-partisan” in its approach, and also claims that it is not a political party. However, to get a ballot line in some States you have to identify as a political party. Also, their draft by-laws contain this section:

“Section 7.2. Transition to National Organization. Pending the formation of state committees, the Board of Americans Elect shall be deemed to be acting in each state as an authorized state committee and to perform and exercise all duties, powers and responsibilities of a state committee as may be required by state law. In states where Americans Elect has met all statutory requirements to form a minor political party, such organizations shall be considered separate legal entities from Americans Elect, and shall be governed by the Board pending qualification as a national political party in accordance with law in the 2012 election. Nothing in this section shall prevent the Board from appointing persons to act as local governing bodies or agents consistent with these Bylaws in any state where Americans Elect has met such statutory requirements.”

So, there is some gray in the position AE is staking out. Are they aiming to become a national political party? If not, then what does this section of their by-laws envision?

AE claims that it doesn’t represent any special interests, and it also welcomes any registered voter, whether party-affiliated or not, who wants to become a member and participate in their on-line national nominating convention coming up in the Spring of 2012. In addition, AE says that it is not committed to any ideology, and that it will not promote any candidate or platform before its on-line nominating convention. Nor will it promote the nominee selected by its convention delegates to run on the ballot lines it secures in the 50 States.

AE is run by a closed corporation whose funding sources haven’t been made public in the main. The corporation sets all the rules for its national convention, determines who can and cannot participate, which candidates can and cannot run, and then it registers and tallies all votes in secret and without any monitoring to prevent tampering with the vote for candidates.

Evaluation

As I pointed out earlier, AE says that it is non-partisan, and is not committed to any ideology or political party, and that it is not a political party itself. Well, it certainly isn’t a branch of either the Democratic or Republican Party. However, we’ve already seen that in getting on the ballot in many States AE declares that it is a political party. So is it or isn’t it? It seems that when it wants to get a ballot line in some State it says that it is a political party; but when it wants to raise funds it relies on its status as a 501 c(4) organization to secure contributions as needed with no specified limits and also to refuse to disclose its contributors as political parties must legally do.

Is AE really non-partisan? Well, it is in the sense that it doesn’t subscribe to the platform of the two major existing political parties, but that doesn’t mean that its Managers, Leaders and Boards of Directors haven’t agreed on definite positions that they are partisan about, and that are definitely ideological.

Their ideological bias is reflected in the framing and structure of the hundreds of multiple choice questions that it asks registrants to answer to define their “true colors” from a political perspective. I won’t review those here and suggest that you go to their site, take their “true colors” survey and see for yourself whether you think there is a clear framing bias in their survey instrument. I think there is, and that this ideological bias is illustrated very well by the “core questions” that every prospective delegate to their national convention must answer.

“To date, Americans Elect delegates from the across the political spectrum answered 5 million questions on AmericansElect.org. The 9 core questions that every DELEGATE has already answered include:

ECONOMY: What is your stance on the US budget deficit? Are in you in favor of more spending cuts, more tax increases or some combination of both?

ENERGY: What is your stance on America’s energy needs? Do you favor investment in renewables or more drilling or some combination of both?

HEALTHCARE: What do you think the government’s role in health should be?

IMMIGRATION: What is your stance on illegal immigration? Do you think that all or most illegal immigrants should stay in the country or all or most illegal immigrants be deported?

FOREIGN POLICY: When you think about the US pursuing its interests abroad, to what extent should the US listen to other countries?

EDUCATION: What is your stance on educational curriculae? Should it be set by the local school boards, by national standards, or some combination of both?

SOCIAL ISSUES: When you think about the rights of same-sex couples, do you believe they should be allowed to marry or only allowed to form a civil union?

ENVIRONMENT: What is your stance on our use of Natural Resources? Do you think it exists for the benefit of humanity or should it be completely protected or a combination of both?

REFORM: Should we make this country great by returning to the values of our forefathers or keep building and adapting for the future?”

Every one of these core questions has an obvious framing bias leading the registrants in a particular direction. The question on the economy assumes the deficit hawk framing of fiscal irresponsibility. It assumes that one should have “a stance” on the budget deficit, that one should want to cut it, and that the only alternatives are cutting Government spending, raising revenue through taxation, or a combination of both. This is not true, of course.

The question on energy issues is framed in terms of the present partisan split, implying that the center is a position following both approaches the question frames. The framing of the health care question doesn’t provide a preamble explaining the difference between the options provided to respondents. It assumes that people know the differences between Medicare for All, and and other types of Government intervention in health care, when there is plenty of survey evidence that there is no clear understanding of these differences.

The framing of the immigration question in terms of “illegal immigrants” isn’t even centrist, but biases replies toward a rightist view. The foreign policy question assumes that listening to other nations and pursuing the national interest of the US are in conflict. This is a nationalistic “framing” of the issue. The education core question frames the issue in terms of local vs. national control; but not in terms of the issue of excellence in education.

Social Issues are cast in terms of same sex marriage vs. civil unions. But there are many other social issues of importance such as those affecting Federal rules about a woman’s right to choose, continuing racial discrimination various areas, the role of religion in American politics, etc. Why select same sex marriage vs. civil unions as a “non-partisan” non-ideological social issue?

The environmental issue frame is very abstract in philosophy. There are a dozen other ways and more to frame this issue. Why is this framing the “non-ideological one” that all must respond to in order to elicit a “centrist position”?

Finally, the question on political “reform” is highly abstract, and it’s very hard to tell what responses might mean to the members. Why is this not framed in terms of issues like Congressional paralysis in the context of the filibuster, or reform of the electoral college, or the highly unrepresentative nature of the US Senate; or the gerrymandering of Congressional Districts; or whether greater regulation of Supreme Court Justices is needed to ensure that they disqualify themselves from hearing cases where they have an obvious conflict of interest; or the role of money in politics?

AE has many other questions people can answer that go beyond the core questions in dealing with some of the above issues. But 1) they are not the core questions that all must answer, and 2) even when many other questions exploring these issues are posed, they are posed with a definite ideological “centrist” bias. Whether or not, or by how much, it differs from major party formulations, these questions aren’t either non-partisan or non-ideological unless you mean, by those terms, formulations different from major party formulations.

One of the most important issues arising in evaluating AE is the discrepancy between the claims it makes about its purposes and processes, the scope it is trying to provide for people to influence the political process, on the one hand, and the reality of its structure and operation, on the other. AE says that people who choose to participate in its process will decide the issues, select the candidates, and nominate the President; but its actual functioning, both current and projected, as described on its web site and in its bylaws, belies these claims.

– So far, the issues embodied in AE’s questions are framed by its staff and leadership, not by the people who sign up as members. We’ve already written about the ideological biases present in the AE core questions, and also indicated that if one takes the trouble to answer the remaining hundreds of questions they ask of willing registrants, there are biases present in the comprehensive set of questions amounting to the staff and leadership framing “a centrist agenda” of issues to regulate the priority choices of members. The whole process of agenda selection occurs in the context of a “top-down” framing of the issues. There is no ‘bottom-up” influence on the framing of the agenda, even though the members/delegates can respond in ways favorable or unfavorable to the specifics of the centrist framing.

– When it comes to selecting the candidates, AE says that delegates will be able to nominate American citizens they favor. However, the AE leadership will review all candidates to see if they’re “qualified’ to run for the presidency. AE leadership may or may not specify explicit criteria, but whether they do or not, and whether a candidate meets them or not, AE reserves the right to eliminate candidates they judge as “unqualified.”

In other words, the leadership of AE is able to make sure that all candidates nominated by the delegates are acceptable to the leadership, and that the delegates won’t have an opportunity to vote on candidates that the leadership thinks is “unqualified.” the leadership can ensure that all candidates remain within a particular of range of opinion that the leadership finds acceptable. This seems like a selection of candidates by the leadership of AE rather than by the delegates.

– Going further to the on-line nomination contest itself, the AE leadership guarantees a completely secure and honest process. However, the delegates have no way of verifying that the process is secure and honest. AE mentions an independent evaluation mechanism to ensure the honesty and integrity of the nominating process. But it is the AE Board and leadership who will select the “independent evaluators,” not the delegates to their national convention.

So, the bottom line is that the delegates will have no control over the process, and no way of monitoring its honesty and integrity. The only thing delegates will have is the word of AE, an organization that has been very reluctant to implement transparency at this writing, that it will accept the actual nomination of the delegates rather than manipulating the results of the selection process in secret. Is AE’s word enough? None of us know. But we do know that deception in politics, in marketing, and in the financial sector is the order of the day.

The President promised change when he ran in 2008, but the change most of us see is certainly not the kind of change we think we voted for. The Republicans ran on creating jobs in 2010. But, no jobs have been created through programs passed by House Republicans. Corporations routinely offer ads about all they are doing for the environment; but the reality of their practices is very different. Local governments say they are trying to keep order; but then they engage in what appear to be little more than police riots violating the first amendment rights of Freedom of Speech, Assembly, and the Press. Systematic dishonesty and fraudulent behavior seems to pervade our culture in every aspect of it, and it is no big deal for our leading politicians and business leaders to look directly into the camera and lie to the public.

So, why would anyone take what a new organization intending to intervene in and change the electoral process says at face value? Why shouldn’t warning bells go off whenever an organization has a discrepancy between what it says are its goals, and its actual structure and practices? Why shouldn’t people question discrepancies between an organization’s claim of non-partisanship, and its clearly partisan and biased framing of issues?

Why shouldn’t people be skeptical when an organization says that it is subject to no special interests, but is clearly funded by $22 Million in contributions from a very small number of people, and then doesn’t disclose the contributors? Why shouldn’t people demand demonstrations of transparency and proof of sincerity and absence of elite control, before they commit any support to an organization that purports to give the public a greater voice in decision making?

– In addition, AE’s goal of holding an online presidential nominating convention that automatically puts the same ticket on the ballots of all 50 states simultaneously appears to be headed in a dangerous direction because it is seeking to eliminate the face-to-face primaries and caucuses at the state level that are one of the cornerstones of the U.S. electoral process, hard-won by progressives over many years in their efforts to create open and honest elections that escape for the old ‘smoke-filled’ rooms.

Again, AE is run by a closed corporation that is secretly funded and sets all the rules for the convention, determines who can and cannot participate in the convention, which candidates can and cannot run, and registers and tallies all the votes. Whether the substitution of a closed corporation run in this way as the source of electoral nominations is a democratic improvement over the U.S. political party system is, to say the least, an arguable proposition, whether or not its delegates can select a presidential candidate within the constrained parameters AE’s leadership chooses to impose.

Conclusion

So, if the problem the United States is facing is to provide a way of changing the political process to counter the emergence of oligarchy and to restore a Government that is “. . . of the people, by the people, and for the people . . .” then it’s pretty clear that AE won’t help us do that. Given its rules, governance, the lack of transparency in its funding, and the “guided democracy” style of its functioning organization, it won’t help us to repeal Michels’ “Iron Law of Oligarchy” and give the 99% a continuing influence in creating policies that serve them rather than enriching the 1%. Instead, it will simply provide a way for the discontented to vent their feelings through another political organization that is guided and managed from the top-down by people representing the oligarchy.

Now, to be entirely fair about this, it’s pretty clear from AE’s web site and interviews with some of their principals that Its purpose was never specifically to save the US from an emerging oligarchy. AE’s view of the US’s political problem is that it is legislative paralysis, caused by the two-party system and its excessive partisanship, in passing legislation aimed at our real problems. So, AE proposes a non-partisan President nominated through the AE online process and then elected, as a way of breaking partisan immobilism through a unity Administration that can broker consensus solutions among centrists in both parties. Its view of the world is through the right-center-left prism and so its solution is to strengthen the center giving it the balance of power, and allowing it to broker bi- or non-partisan solutions on which centrists of both parties can agree.

AE may succeed at developing a “centrist” balance wheel for the political system. But if this leads to legislative solutions that support or enhance the interests of the 1%, then how does that help the 99% and its problem of breaking the power of the emerging oligarchy?

For example, these days there is a Washington beltway consensus, and to a great extent a global consensus on the notion that the cure for our economic problems is austerity in public expenditures and restoring private solvency through savings. But how does that “old-time fiscal religion” help the 99%, especially since its short-term effects are likely to be a second and probably much deeper downturn than we have now?

If AE’s centrist balance wheel had been in place this past fall it would have imposed a “centrist solution” to our economic problems in the form of a long-term deficit reduction plan such as the Bowles-Simpson proposal, which would have raised more tax revenue from the wealthy, but also cut entitlement and other Government programs for the middle class and the poor. But, this is a 1% solution, not a 99% solution. It doesn’t represent what the 99% want. It is what the well-off people who run Americans Elect and many of the 1% seem to want.

So, the “non-partisan” solution to two-party polarization that AE is trying to mid-wife won’t fix the political system by restoring popular control, but instead will place that system even more firmly in control of the oligarchy by imposing austerity economics and impoverishing the 99% even further, while providing the balance of power in national politics to a third political force that is dominated by centrist establishment figures. In short, AE isn’t offering a way out for people, it’s offering them a way to dig a deeper hole than they find themselves in now.

A 99% solution is one that, according to the polls, would re-create full employment, punish the banksters, stabilize the financial system, bring order to the housing sector while keeping people in their homes, provide consumer protection against the financial sector’s predatory practices, provide Medicare for All, repair the nation’s infrastructure, create a first class educational system open to all, and strengthen the social safety net, while taxing the rich, if necessary, to allow those things to happen. This 99% solutions could possibly be facilitated by AE, if it were set up to allow people to self-organize in whatever ways they choose. But its guided democracy structure won’t let that happen. But the main point is that this 99% can only be brought forth by a change that undermines the emerging oligarchy and creates bottom-up accountability to the 99%.

You can also safely bet that whatever AE’s delegates want, there will be no AE platform coming from its nominee that doesn’t reflect the fact-free Hooverian perspective of fiscal responsibility = Government austerity, the current Washington consensus about what Government should do about the economy. And you can also safely bet that Bernie Sanders, Bill Black, Jamie Galbraith, Matt Taibbi, Dennis Kucinich, or Warren Mosler, provided it looks like they will be nominated by AE convention delegates, will then be disqualified by AE’s governing committees before the convention is convened. This will happen because it is the job of AE committees to keep the world safe for the emerging “centrist” oligarchy, and out of the hands of people who might bring about the renewal of bottom-up democracy.

Update: Day in and day out, the best coverage of Americans Elect is provided by Jim Cook at his Irregular Times site. Here are three recent entrees that collectively drive home the point that Americans Elect’s claims of being non-partisan and non-ideological have little, if any credibility, and that AE is primarily a marketing effort claiming these qualities, but belying these claims with almost every action it takes.

“Christine Todd Whitman Goes on TV and Promotes Jon Huntsman a Sixth Time, Violating Americans Elect Bylaws”

“Having Obtained Predictable Result, Americans Elect Erases Most of its Rating System”

and:

“Americans Elect introduces new “Priorities” Ranking System… Contradicting its Old System”

These three posts fit into the pattern of manipulation, systematic dishonesty, and the huge gap between AE’s stated policies and actual behavior that I point to in my post above. In addition, there is a strong suggestion in the ratings system errors and sudden changes in the system and resulting ratings, reported by Jim Cook, that there is more than a bit of political bias, confusion and perhaps even incompetence, either on the part of AE’s contractor “On the Issues” who handled the processing of data to obtain the ratings “matching” the candidates positions to the quiz choices given to Americans Elect “delegates,” or on the part of AE employees who used their results.

AE is an organization that has raised $22 million for its project. If it is true, as its apparent rating system problem suggests, that it hasn’t been able to get organized well enough to ensure that its process is unimpeachable, then that provides very little confidence that its online nomination process will be a reliable one that won’t be subject to manipulation by its contractors and/or staff.

If it has its way, then hundreds of thousands, and perhaps millions of people would be participating in that process. Shouldn’t those people have a nominating process whose integrity, reliability, and accuracy is beyond either reproach or the possibility of fraud by its administrators? How will AE ever be able to guarantee that? And how, given what they’ve done thus far, and appear to do on an everyday basis, in bringing centrist ideological bias to their web site and opinion instruments, can they guarantee to their delegates a non-partisan and non-ideological nominating process?

Perhaps AE needs to come clean and admit that it is not non-partisan, but actually a nascent political party with a definite centrist, austerity agenda, which it thinks is in opposition to the agendas of the two major parties. Then it won’t have to claim that it has no framing biases, or that, incredibly, it is nonpartisan and non-ideological, or that it is anything other than another political party representing the 1% and its full-on austerity, globalist agenda for the US. That might not be unpopular, or get many people involved in its activities. But, at least, it would be refreshing.

Think of it, a political organization that is honest about its intentions! That should be worth at least a few points for its nominee at the polls on election day!

Et Tu Bernie?

10:29 am in Uncategorized by letsgetitdone

Bernie Sanders appeared on Dylan Ratigan’s show yesterday talking about Elizabeth Warren’s appointment. Towards the end of his interview, he said a few words about his opposition to extending the Bush Tax cuts to the wealthiest Americans. His proposal was to end the tax breaks the high income people, take the $700 Billion freed up, spend $350 Billion on sorely needed infrastructure projects, creating millions of jobs over a 10 year period and taking the other $350 million in savings and applying it to deficit reduction.

So, Bernie’s heart is in the right place but he really doesn’t get the economics of it. The Bush tax cuts for the wealthy have some stimulative effect on aggregate demand, namely about $0.29 for every dollar of tax not collected. So, if we extended the tax cuts that would save $203 Billion in aggregate demand over the next decade. On the other hand, let’s say we took Bernie’s proposal and used $350 Billion for infrastructure. That would produce $557 Billion in aggregate demand, clearly better than the tax cuts for the wealthy. However, what if we took all $700 Billion and used it for infrastructure? Then we’d have $1.113 Trillion in aggregate demand and twice as many jobs as in Bernie’s proposal.

But what about the idea of saving half the tax cut and reducing the deficit, isn’t that important? Doesn’t that have value? the answer is no, not in the abstract. It might have value if the economy recovers enough to provide full employment, and we need to fight inflation. But if there is no inflation, then the money “saved,” is of no value to the Government (including the Federal Reserve Bank), or to the economy, since Government tax receipts don’t affect the ability of a Government like the United States presiding over a fiat currency, with full authority to create money through its spending, to spend. Government spends by marking up private sector accounts and adding to private sector assets. It doesn’t spend by using money remitted to it through taxation. In fact, it destroys that money, i.e. removes it as a financial asset of the private sector, and is in no way constrained from future spending because it destroys tax revenue.

So, Bernie’s proposal to “save” half the Bush tax cuts for the wealthy, doesn’t add a bit to the Government’s ability to spend. All it does is remove money from the private economy, and reduce the amount of the aggregate demand that might have been created. In fact, if Bernie had proposed extending only half the Bush cuts for the wealthy and using the other half for infrastructure, this would be better for aggregate demand than his proposal, and would generate an estimated $659 Billion in aggregate demand; $102 Billion or so more than Bernie’s proposal, but less than the $1.113 Trillion that would be generated if all of it were used for infrastructure.

In addition to getting higher aggregate demand, however, there is another reason why we ought to prefer doing $700 Billion in infrastructure spending to extending those tax cuts, and that is working towards economic justice. Over the past 40 years or so, the United States has seen a trend towards the kind of profound economic inequality that has magnified the political influence of the wealthy and threatened American Democracy. To save our Democracy we need to reverse that trend in any number of little ways, and we need to move much faster back towards greater equality, than we have moved towards inequality.

One of the things we ought to do is to move the tax code back towards a situation where those who benefit most from increasing productivity, must also pay their fair share of taxes. What that share is we all have to decide, but there’s a general consensus right now that marginal income tax rates for high income people ought to go up. Over time, political processes will help us to decide what is “fair” in this respect. But it does seem unfair to have an essentially flat marginal tax rate for most upper income people. It’s certainly grossly unfair for a family earning $300,000 in New York City to be subject to the same marginal tax rates as people with incomes over $5 million annually.

The goals of greater economic equality, and greater fairness in taxation don’t have to conflict with the goal of increasing aggregate demand. We simply have to keep in mind that raising taxes on high income people will cause a fall-off in aggregate demand. So, when we do increase those taxes, we need to make sure that Government spending is increased in areas that will produce higher aggregate demand than is being lost from increased taxation. For example, more spent on food stamps, payroll tax cuts, Federal aid to the States, and Federal Job Guarantee Programs are good, because all have very high aggregate demand multipliers.

So, there is no cause for worry that if we raise taxes on the wealthy that we will lose aggregate demand we cannot easily replace. But we do need a Government that can act to implement policies to get high aggregate demand without being diverted too much by the need for political compromise, and that, in the current American context, means a Government willing to get rid of the filibuster in the Senate so that blue dog Democrats and Republicans don’t have to be conciliated in passing economic programs that can end unemployment.

I’d be remiss if I didn’t mention Warren Mosler’s economic program at this point. Warren who is running for the Senate in CT on the Independent Party ticket has proposed a payroll tax holiday, Revenue grants of $500 per person to State Governments, and a Federal Job Guarantee (FJG) to end our economic difficulties in 90 days. All of these, are high multiplier fiscal policies for increasing aggregate demand, and the FJG program will eliminate involuntary unemployment. Bernie Sanders would do well to look at this program and begin to push it himself, rather than suggesting that we “save” half of the taxes collected through ending the Bush tax cuts for high income taxpayers.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

What Now for HCR: Sidecar Reconciliation and Trusting the Leadership?

12:19 am in Elections, Republican Party by letsgetitdone

Well, it’s official, or pretty official anyway. Scott Brown has been elected to Teddy Kennedy’s old seat and Martha Coakley has conceded. Some Democrats are blaming Coakley for running an inept campaign, and this may well have accounted for Brown’s margin of victory. But the real question is what allowed him to get close at all. The theory I subscribe to says that the Massachusetts special election for the Senate became nationalized around the pending health care reform bill. Brown dubbed himself the 41st vote against it, and Coakley obliged by calling herself the 60th vote for it, and also, in doing that, reneged on her strong pro-choice position taken in the primary, and then reinforced the narrative that she was part of the industry bailout team by interrupting her campaign to go to a fund raiser in which health care and Pharma industry lobbyists and contributors were prominent. Coakley was clueless about the strength of the anti-Wall Street feeling out there, just as her leader Barack Obama has been. Hopefully, the White House bubble has now been pierced and the President recognizes that an electoral disaster is pending unless the Administration can align against Wall Street and for Main Street. But whether he has or not recognized this, he now surely knows that the 60 votes in the Senate to pass critical legislation he favors, including health care reform, are not likely to be there on Party line votes. So, either he must work on a bi-partisan basis, not a good prospect with this band of Republicans, or he, along with the Senate leadership, must find a way around the 60 vote requirement in the Senate. Read the rest of this entry →

Bernie Caves and Explains Why

8:36 pm in Uncategorized by letsgetitdone

Bernie Sanders’ appearance on The Ed Show, was a sad one for me to see, because he tried to explain his joining the Democrats in voting for cloture on the Senate’s health care reform bill in two ways. First, of course, he waxes enthusiastic about the tremendous good that the measly $10 billion (about 0.1 of one percent of total expenditures under the bill) he secured for funding community health centers would do for the uninsured, clearly implying that it would have a substantial effect on the 45,000 annual fatalities we now see. But second, then he moves right to the false Democratic Party talking points we’ve been seeing from so many Party functionaries this week, and even much earlier in relation to supporting the stronger, but still pathetic House bill.

Read the rest of this entry →

He’ll Deserve the Credit, He’ll Deserve the Blame

9:41 pm in Uncategorized by letsgetitdone

He’ll deserve the credit, he’ll deserve the blame, and Harry Mason Reid, not Nikolai Ivanovitch Lubachevski, is his name. And don’t let him try to tell you any differently, because it’s just not so.

Here’s the way things can play out now. Harry Reid, under cover of merging the Senate HELP and Finance Committee bills, can pretty much write anything he wants. He can really merge these two bills, and create any one of a variety of mergers, or he can substitute Bernie Sanders’ single-payer S 703, or even write a Senate version of the Conyers/Kucinich HR 676 single-payer bill. The other people he’s included in the merging process: Chris Dodd, Max Baucus, the President’s representatives, Empress Snowe, have no formal authority in this situation. They can advise him. They can figuratively stamp their feet, or express encouraging words, or express opinions about process and content. But he’s the only one in authority to decide what the bill that goes to the floor will look like. So, again, he will deserve the credit, or the blame for its content. Read the rest of this entry →