AFL-CIO Headquarters by samirluther

Here we are in mid-September with 10 weeks of the “Super-committee” drama ahead of us. We’ll be waiting to see the posturing, the demands, the breath holding, the capitulations and, most likely, the intransigence of the Republicans forcing this whole exercise into failure.

The really sad part is that there is a plan out there which would actually reduce the debt by more than the 1.2 trillion this committee is charged with. That plan was laid out by the AFL-CIO and it does not require cuts to Medicare, Social Security or Medicaid.

The Hill is reporting that the venerable union has sent around a plan that outlines where trillions in deficit reduction savings could be found. If the real goal, as both Republicans and Democrats claim, is to reduce our national debt and get our people working then these are the ideas that should be discussed before we talk about cutting Social Security (which does nothing to add to our debt) or military retirement benefits.

The proposals run the gamut and they are pretty much what you would expect from a Labor Union; establish the public option as way to control costs for health care by competition with a plan that does not put profit first. Allow Medicaid to negotiate drug costs with pharmaceutical companies (why the hell we have not done this yet is a national shame) and allow the re-importation of prescription drugs from other countries. The AFL-CIO estimates that these three measures would save a total of $299 billion over the next ten years. As they say, that ain’t hay.

But that is not all the plan suggests. There are tax revenue ideas that make sense and are perfectly compatible with economic growth. The plan includes a changing the tax code so that capital gains are taxed at a rate just like income, a millionaires surtax, and the big Kahuna a small financial transaction tax on all trades on our stock markets. These measures are estimated by the union to provide, $168 billion, $400 billion and a $1 trillion dollars respectively over the next decade. That is more than the “Super-committee” is looking for in one fell swoop!
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Support Unemployed Nomads by jon|k

Hey what do you know? We actually had a modest gain in jobs this last month. The economy gained 117,000 jobs according the statistics released this morning. That is actually better than the number that analysts were predicting, which was around 85,000.

Unfortunately that is all the good news there is on this. The economy needs 150,000 new jobs a month just to keep up with the rate of population growth, so if you are a glass half empty person, we came up 33,000 jobs short of what we needed to break even.

The unemployment rate fell one tenth of a percent to 9.1% but this was almost certainly due to more people leaving the jobs market, instead of robust jobs growth. The question is, will this be enough to blunt the sell-off that we are seeing on world markets?

The answer is likely to be no. The reasons for the sell-off have more to do with the future jobs and growth outlook than they do with any single month’s report. The picture has not improved.

As long as the Euro Zone is imploding (for reasons that have a lot to do with countries not having their own currency and having Euro Zone constitutional requirements for debt limits), and the Japanese economy is still rebuilding from the tsunami and the resultant nuclear disaster of this spring, and the U.S. looking at austerity instead of jobs programs there are more than enough structural issues which can make investors nervous enough to cash in on the market highs that we enjoyed until just last month.
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Gallipoli 100 by Britrob

I am a big movie fan. As part of the deal that brought cable to the town I grew up in (Ypsilanti represent!) and one of the very few perks of Dad’s time as City Attorney, we were one of the first homes in town to get cable. So I was exposed to a huge range of films as a early teen and later.

One of the ones that always got to me was a Mel Gibson flick called Gallipoli. It is the story of two Australian runners who enlist in WWI and are sent to that disastrous campaign. At the end of the movie the troops are in their trenches, and they are about to be ordered to charge a hill controlled by Ottoman machine guns.

Mel Gibson’s character is a orders runner. He has been given the order that will stop the attack that will certainly lead to the slaughter of the troops, which the other runner is part of. He fails to get there in time and the men go over the top, into the teeth of the machine gun fire.

The other runner has been saying the mantra that he recited before a race and when the whistles blow he goes over the top, and starts to run to the enemy lines, eventually dropping his gun and being shot down. It is a horrible and wonderful statement about war and futility and courage.

What the hell does all of this have to do with politics? I am so glad you asked, gentle reader! I have been feeling more and more like that runner in Gallipoli lately. Specifically in regards to the completely manufactured debt ceiling crisis and the “solutions” that are coming out of it.

There are a lot of folks to slather blame on. One of them who is not getting a lot of play is Chicago Mayor Rham Emanuel. He is the guy who made “a crisis is an opportunity that should not be wasted” a White House article of faith.

Of course that would not be too bad if it were not for the President’s willingness to use a dangerous game by the Republicans to try to achieve a so-called ‘grand bargain” on a wide range of contentious issues. The major failure on the President’s part in this was assuming, against evidence and the fact that there are 85 hard right Republican House Freshmen, that he would have rational actors to negotiate with.
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Bull Fight 7 by George L Smyth, on Flickr

Today the consequences of having a “Know-nothing” party as one of two political parties became even clearer (as if not paying for two war, and a major Medicaid increase while drastically cutting taxes for the wealthy were not enough evidence). Standard and Poor’s lowered it outlook on the United States being able to pay its debt in the future.

Was it because we have massive deficits? No not really. Was it because we have a ton of debt built up by giving millionaires and billionaires tax breaks in order to spur economic growth that did not happen? Not directly.

The reason that the S&P is down grading the likelihood of the US meeting its debt obligations is actually because they do not believe that there is any chance of real fundamental agreement on what steps need to be taken before the 2012 elections.

Yep, that’s right. The S&P thinks that there is no chance that there will be enough adults in the conversation about our revenue issues before the country gets to decide if they want to keep any or all of the Bozo’s in Washington. Now, ya’ll know me, I am going to say that for all the weakness of the Democrats, they are not the ones insisting on illusionary solutions to a real world problem.

In fact I can demonstrate that the galling and frustrating compromises that we have seen over the last six months on this very issue show that it is not the Dems who are so intransigent and oblivious to the reality of the situation that they will play political games with the economic health of the nation. That falls the Republican Party, and solely to that party.

Democrats are not the ones who insisted that we lard up an already huge tax break renewal with another 700 billion for in breaks for billionaires. Democrats are not the ones that have just passed an new Budget Resolution that would drop the top tax rate by 10%. This is a budget that claims to balance the budget but it will actually add 7 trillion to the debt over the next decade and won’t balance it until, wait for it, 2081 if it ever did.

Democrats are not the ones who are insisting that tax increases are “off the table” from the very start. No friends and neighbors, that is the Republicans and their insanity has gotten so bad that the S&P does not see how we can get past this issue until there is a new election, in 17 months.
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I am having a problem with a word, it is one that we’re hearing a lot lately, seriousness. Now having been ‘round the block a few times I have come to the conclusion that when I hear Right Wing talkers like Robert Samuelson and Republicans using a word over and over then I tend to think they are in the process of redefining it.

Today’s little nugget of nothing from Samuelson is all about the false equivalence between the supposed lack of seriousness on both sides. Of course La Samuelson goes after the Dems first insisting that we look at cutting entitlement programs like Medicaid and Medicare and then conflating those two expensive and troubled programs with the much more solvent and non-deficit producing Social Security.

He does take a half hearted swipe at the Republicans and their abject failure to even consider increasing taxes at all to bring down our deficits. But Samuelson has a point that he wants to make in this “A pox on both your houses” column. Here, I’ll let him make it:

Our budget problem is conceptually simple. Government’s spending commitments, driven by more retirees and uncontrolled health costs, vastly exceed the existing tax base. There is an argument about how fast changes should be made to protect the economic recovery.

He is right as far as he goes. The problem is that Samuelson is not really, um, err, serious about this issue himself. Yes we do have a problem that we don’t have enough money for our commitments and yes health care costs are going up and that is squeezing the budget more as we keep our commitments to the poor and elderly to provide them with health care.

However, the solution is not finding a way to slash these programs so that they provide less care and do nothing to control costs. The solution is to fix the underlying problem, that our health care markets are fundamentally flawed.

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GOP Ostrich by stormbear, on Flickr

There are many ways to fall into bad habits, but the easiest is when one tries a vice and then is rewarded for having done so. This is where the nation is with the Congressional Republicans. Their vice has been economic hostage taking, and like all successful hostage takers, when they want something they look around of the nearest economic crisis to grab a hold of and insist that they get their way.

Which is exactly where we are with the impending, and probably inevitable, government shut down; their least reasonable members, newly elected (thanks midterm voters) have been signaling for months that if they did not get every little mean spirited and economically moronic thing they wanted, they would shutter the Federal Government.

Now with Speaker Boehner (Putz-OH) reneging on his privately agreed to cuts, there is little chance that there will be an agreement and a vote. In fact there would have to be a bill published today in order to be able to follow the new House rule of 72 hours before a vote, for there to be anything to vote on by the deadline on Friday.

It is not like the Republicans think that the public is going to be kind to them on this issue. Their leadership remembers how it played out in 1995 and they don’t want to go into another presidential election with weak candidates and a sour taste for their party in the mouths of the electorate.

Which is why they are trying to do everything they can to pin this on the Democrats. Too bad the facts are all against them. Today they are going to introduce another Continuing Resolution that would extend spending for another week. Sounds good until you hear what the price tag is.

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Bank Of Montreal by Galt Museum & Archives on The Commons, on Flickr

We’re flat broke. What do you think of when you read that? Having been busted more than a few times in my life it means no money and no prospect of getting any. Pretty simple and straight forward, unless, of course, you are the Speaker of the House; then “broke” can be parsed and spun and twisted.

We have all seen the great orange Speaker saying “We’re broke” over and over again as he tries to sell a justification for what his masters (the Freshmen Republican “Tea Partiers”) insist on him doing with the budget. It is really an effective statement, powerful, short and direct. It would be perfect if it were not for the fact that it is flatly a lie.

The United States has a deficit. That is true. The United States also has a lot of debt, but to say that we are “broke” is ridiculous. It is just another half truth scare tactic from the party that has made a performance art-form of the practice.

Even Speaker Boehner’s office has had to admit that he is parsing the word. When they were challenged on the claim the U.S. is broke they came out with a statement that said when the Speaker says “broke” he means spending more than you have for an extended period of time. Sheesh! It is hard enough to communicate in this life without making twisted and tortured parses of common words.

What gets up right up my nose about this meme is that is completely ignores the fact there are two things to do when one does not have enough money. Spend less or get more money. As State Rep. Joe Gibbons (D-FL) put it so succinctly on NPR this morning:

If my family checkbook at home is short, you know what I do? I get a second job. I don’t just eat three days instead of seven. … What they’re telling us we got to do is, you got to eat three days.”

There is a lot of opportunity and in fact lot of desire on the part of the citizenry in the nation to raise taxes on the wealthy both at the state level and the national level. Nationally 88% of folks surveyed said they would rather raise taxes on millionaires and billionaires than cut programs in an effort to balance the budget. In Wisconsin where this fight is playing out on the smaller scale 67% percent said they would like to see higher taxes on people making $150,000 a year.

Of course this shows the basic Republican ideological bankruptcy. They have been trumpeting (that’s what Elephants do, trumpet, right?) about the freaking deficit for two entire years. Yet in that time they have not been willing to raises taxes on the ultra-wealthy. Just so it does not go down the memory whole, they were the ones that held the extension of unemployment benefits for millions of out of work Americans hostage to get an extension of the Bush Tax Cuts for the Paris Hilton’s and Koch Brothers of the nation.

They are also the ones that are now trying to claim that the modest job growth that we are seeing as the final bits of the stimulus money from the American Reinvestment Act are spent is due to keeping taxes at the same rate as when their deregulatory policy crashed the national and planetary economy.

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To hear the Republicans tell it, the problem with things, the reason they are likely to take over the House of Representatives tomorrow is all the spending that the Obama administration has engaged in. Personally I think a big part of it is all the spending groups like the Chamber of Commerce and Cross Roads GPS have done, but that is for another post.

The big push from Republicans as the campaign season is ending has been about the need to cut spending. They look at our deficit situation and they say that the reason we have such high unemployment is the massive federal spending. Things like the COBRA subsidy and unemployment benefit extensions. Of course this includes the stimulus bill with its 300 billion (300,000 million) in tax cuts, which all but the ultra wealth have received some share of in terms of payroll tax reductions.

This is where you get prominent Republicans like Mississippi Governor Haley Barbour on TV saying things like this:

“The American people do not like Obama’s policies,” Barbour told anchor Harry Smith. “They don’t like all of this outrageous spending. They don’t like running up the deficits. They don’t like piling trillions of dollars of debt on our children and grandchildren, and they don’t think it works. They think it’s been bad for the economy, that it has made it harder to create jobs.

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There is something about Washington and taxes that seems to destroy the ability of law makers to do simple math. This seems to afflict Republicans and Blue Dog Democrats the worst. The Washington Post is reporting about the roll out of the Republicans Orwellianly named tax plan, the Tax Hike Prevention Act. Sen. Mitch McConnell (the man voted most likely to turn into a snapping turtle in our lifetimes) has put the idea on the table permanently extend all of the Bush era tax cuts, including the ones for the ultra wealthy, that top 2% of all earners.

From the WaPo :

"We have a spending problem. We spend too much. We don’t have a taxing problem. We don’t tax too little," McConnell told reporters Tuesday. "And if we want to begin to get ourselves out of this economic trough that we’re in, the only way to do that is to grow the private sector."

This is insane. We are currently collecting tax revenues at the same we did in 1950. In 2009 taxes were 9.2% of all personal income, just like it was when Harry Truman was president. A lot of things have changed since that time, the population has doubled and unlike now, in 1950 the United States was running a surplus. For Senator McConnell to say we are taxing too much is just another example of Republican bizzaro world, where black is white and up is down.

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Minority Lead McConnell, can we talk a minute? You are an educated man, so it is probably pretty hard to say some of things you say when defending the tax policies of the Bush Administration and arguing for their continuation. Perhaps your time in Washington has taught you the skill of being able to say any kind of nonsense but really, Senator, you have to know in the back of your mind that enacting legislation to extend the tax cuts for the ultra-wealthy (that 2% of the nation who makes more than $250,000 a year) is going to bring our nation to its knees.

I don’t know you Senator, but I have to think that you don’t really want to face what 3.2 trillion dollars in additional debt will do to our nation. You would have to cut or end social safety net programs like Social Security, Medicare and Medicaid. While that might appeal in an ideological sense, the reality of starving elderly baby boomers, indigent children wearing rags in the streets of our nation is one that even you will not want to see on a daily basis.

Worse, there is a mood of anger in this country which your allies on Fox and Talk Radio have stoked to a level I have never seen in my 43 years. It may be good politics to have your base spun up to the point where some of them are talking about political violence if they don’t get their way at the ballot box, but anger is a fire and fire is not always controllable. If you put the nation in to bankruptcy, that anger is going to spread in unpredictable ways. Riots and violence in the streets of Kentucky or California or ever Washington D.C. is entirely possible. That anger would be directed at the government you are part of. Desperate people don’t always think rationally and when someone lights a match in a powder room, the explosion affects everyone near by.

What you are asking for is to extend tax cuts to those who are not really affected by the economic downturn. When you have millions of dollars (and lets be clear most of the folks in the top 2% are not just living pay check to paycheck) a temporary reduction in the amount they earn from investments is not going to be that important. Likewise when the majority of your earnings comes from investments, an increase in the tax paid on that money is not going to be missed, except on a balance sheet.

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