Archive for the ‘The Economy’ Category.

Econ 101 for Republicans

Republican economic theory (theology?) relies on two beliefs or tenants. The first is that if you cut taxes there will be new investment by businesses and corporations, and with that, jobs and wage growth. The second is that this increased economic activity will actually grow the treasury’s coffers, paying for themselves. This effect when applied to the impacts of a tax cut is called dynamic scoring. See, the tax cut will cost x, but the result will be y additional income to the treasury or so the theory goes. The first one could be true in certain circumstances and the second one is demonstrably false. But that is what their whole approach to the economy is made up of. Oh sure fewer regulations, but that is really a subset of the first tenant and when you add the secondary costs, like damage to environment, death and dismemberment, and loss of rights for workers, the cost are usually more than the benefits.

Let’s go after the first tenant, cutting taxes creates jobs and stimulates the economy. Well there are times when that actually helps, not as much as actual increases in government spending (a tax cut has the same effect on balance sheet of the Treasury as increased government spending), but it helps and it can be faster than government spending. Economic theory and practice have shown us that after a recession or even during one, with high unemployment, making money available to corporations and businesses in the form of a tax cut does stimulate growth. It is a tool Republicans favor because they don’t believe in direct government spending in things we need like infrastructure and R&D, and want to give it to corporations and businesses (and people) to decide for themselves.

Two things you need to ask yourself here. First are we coming out of a recession, and how high is unemployment? The answer which conservative economist Bruce Bartlett gave us the other day was neither apply as corporations are already awash in record profits, and the unemployment numbers tell us we are almost at full employment. Second, one thing we know for sure is money given to the middle and lower classes is generally spent, while money given to wealthy is much less effective. Where was the emphasis in the current tax bill? Oh, the wealthy. There are great debates about whether direct spending by government is far more effective in these times to create real demand through jobs and wages. But we have some empirical data from Governor Brownback and the Kansas experience where they slashed taxes, little change in jobs or wages, and the state went into massive debt, defunding education to help balance the books.

The bottom line on the first tenant, is that if used judiciously at the appropriate time in the economy (not now) it might help. But considering the infrastructures needs across the country, the money would have a much higher multiplication factor (return on investment; every $1 spent creates say $1.5 of increased activity in the economy), and we would create jobs, higher wages, and invest in our future. The money they are going to spend paying off their wealthy donors, in other words, is going into a big hole.

Okay, tenant number two, that cutting taxes pays for itself (dynamic scoring) is fairly straight forward, it has never worked. Oh sure there might me some increased revenue if the tax cuts were properly targeted to the middle class, but nowhere near the income to make up for the spending. “Assessing the House version of the plan and accounting for the economic growth its tax cuts would induce, the analysts found that growth would offset only about 12 percent of the plan’s cost over the first decade. After an initial economic boost, bigger deficits and rising interest rates would drag on the economy.” Here is another well research source that can find no pay for itself effect in Vanity Fair. But hey, get it from the non-partisan Joint Committee on Taxation and note they still used very optimistic growth rates.

So there you have it. Or as conservative economist Bruce Bartlett said, “…virtually everything Republicans say about taxes today is hogwash.” So we are going to take a big hit. Get ready. And what is next? This from Paul Ryan in the NYT this morning:

Speaker Paul D. Ryan and other Republicans are beginning to express their big dreams publicly, vowing that next year they will move on to changes in Medicare and Social Security. President Trump told a Missouri rally last week, “We’re going to go into welfare reform.”

That’s right. When the numbers don’t add up and the Treasury starts going in the red, they will all of a sudden care about the deficit again and go after the programs that we need most. Maybe that was their game all along. We are in for hard times ahead, but as I told my son who works in the school district in San Diego and is afraid the new tax bill that eliminated his tax deduction for interest on loans and cut the deduction for state and local taxes that school districts depend on could bankrupt him, Conservatism is like cancer. The treatment to cure it if it can be cured almost kills us. That is where we are at. The great Kansas Experiment has moved to the national stage, and we will see the same results. Think you might get out and vote in 2018?

Watching the Republicans Rape America

The Republicans were in a feeding frenzy last night. All of a sudden they found themselves at an all night buffet where they could gorge themselves on all the goodies they ever wanted. I am talking about the Senate passage of the Tax Bill last night. I watched it on CSPAN and I am still sick this morning. Even if you did not know what was in it, and most Republicans or anybody else does not because they were writing it on the fly, it was a scene of pure chaos and bad government. One could not even read the hand written mark ups. And Republicans were adding their favorite pet project to a bill that will change everyone’s lives and not one hearing, not one real examination of the results. And make no mistake. It was a mass transfer of wealth to wealthy while gutting government.

But a feeding frenzy it was. I watch as Ted Cruz entered an amendment to expand tax free savings plans for college to a tax free savings plan for private schools. How is that paid for? By cutting money for public schools. Who benefits? Rich kids who go to private schools. Who suffers? Kids who can’t afford those schools. It took Mike Pence to come in and break a tie vote on the amendment (50-50) (even some Republicans could not stomach this one) to pass it. I watched as Democrats entered amendments to try to bring some sanity to the process by trying to take out the free pass to drill in the arctic wildlife refuge, reduce the reduction in corporate tax cuts to make it not cost $1.5 trillion, make the tax cuts for the middle class permanent, all to fail at the hands of the Republicans.

And now what they have nobody knows except it is dreadful. It rapes America. Republicans have been dying for years to cut Medicare and Medicaid and in this bill they got the tools to do just that, “Pay as you go” which when all the magic asterisks do not add up (and they won’t), they can gut the programs that help the old and poor to pay for their massive tax cuts. It was a brutal rape of everything America stands for and there is so much in this bill that has nothing to do with tax reform/cuts that nobody even knows is there yet. Now you can bet they will be in a rush for a reconciliation bill with the House Republicans so people don’t find out how bad it is until it is signed by the Moron in Chief. Gotta hurry because his days are numbered.

It was a sad, sad day for America. Republicans, except Bob Corker, showed they are nothing but bought fools. Don’t give me John McCain and his regular order. If he stood for anything, last night was a time for a no vote. Don’t give me Lindsey Graham, he is a kook to he is normal (comments about the President right after the election and now) or Susan Collins, who “cares about the sick” and then let them gut Obamacare (Yep that is in it too). They all voted to rape America and steal from the poor to pay off the wealthy. The party has no morals and what we saw was the very worst of America bought by capitalism. Government does not control capitalism, capitalism controls America. That is what Republican government now represent.

Democrats fought a noble battle, offering amendment after amendment to show the hypocrisy and depravity of the Republicans and those Republicans rose to the bait voting each one down. They now have the sledge hammer they need to bring down the Republicans. They need to wield it. I am sure I am one of the few who watched the debacle last night. People in America have forgotten that freedom, liberty, and the pursuit of happiness is hard work. But I can guarantee you one thing. This one will hurt and hurt badly. There is no flow down, and as the fools that voted this Republican nightmare into office start to suffer (it will be a slow burn), maybe for once, they will see the problem. Voting third party when they don’t have a chance, has consequences.

Last night I watched the verification of what I have been saying for years. The Republican Party of “old” does not exist and the one we have left is evil. I watched the failure of democracy as the majority of Americans are against this bill. I watch the greed of capitalism at its very worst where government became its tool. And now there is no doubt in my mind any more, Republicans and those who vote for them are evil. We must root this evil out of our country if we have any hope for the future.

Why Trump Won

Fareed Zakaria, who I think is one of the best journalist out there, and there are a lot of good ones, reporting on CNN in a special, Why Trump Won, I think nailed it. This is not a new show and I think it aired back in August, but I finally saw it last night. So I will cut to the chase on this one. As Fareed pointed out Donald Trump was the perfect storm when the circumstances were perfect for the perfect storm.

And for you Hillary fans, an interview with Nate Silvers basically pointed out that Comey cost her the election. Her lead was 6 points and then a week before the election he comes out with his letter, and her lead was cut to 3 points, then in the margin of allowing the electoral college to elected the one with a smaller vote count. So it certainly cost her the election. But, and here is the thing, it should have never been that close. As we entered the 2016 election, Hillary was not a good choice and Fareed makes that point by showing how Democrats had lost the working middle class as they had become the party that represented the professional class. Hillary was also the perfect storm in that she epitomized the Democrats aloof view of the working class.

The head of the Democratic Party in Ohio was sending memos to the Hillary campaign about the pain and anger out there in Ohio and they were being ignored. Meanwhile Trump was filling that vacuum with vague promises of bringing their jobs back and representing them as an outsider and it was selling like hotcakes. All lies of course, but that seem to have made little difference. In middle America’s state of anger and frustration. Race and blaming was working well and Trump was the master salesman as Hillary made his point of the out of touch aloof politician. Fareed even made the point that Hillary actually had policies that would help them, but they were throwing over establishment Washington, clearly a Washington they no longer trusted.

That should have been the message loud and clear when Bernie came so close. Many said it was not rigged (this is me not Fareed), but of course it was. They had already anointed Hillary and the Democratic Party was lined up against that upstart Bernie when he was actually the only one with a message that resonated. It was noted that many discouraged Democrats turned to Trump after Bernie was finally beaten. There is another statistic that Fareed pointed out that should have told Democrats they were in big trouble. In a usual election the undecided voters are around 6%. In 2016 it was double that. Again, looking at who Donald Trump was, it should not have been close and that tells you that Democrats had lost their message and their messenger was the wrong person.

Now no one (who is rational) will argue that Hillary would not have made an excellent President, but in a way her defeat, while devastating to the short-term interests of the country, was probably inevitable as the Democrats had lost touch with the people it most needs to help. Even with good intentions, we would have seen more gridlock and both sides do it instead of a clear distinction between the two parties we are getting now (although establishment Democrats still seem to have not got the message). Sooner or later Democrats were going to have this “come to Jesus” moment and maybe sooner is better. It would appear at the grass-roots at least they are regrouping and refocusing.

So in a nutshell, Trump was the perfect lynch mob leader as establishment politics have failed middle America, but have worked fine for those of us in the professional class, and the banking class, the professional class represented by establishment Democrats, the banking class represented by establishment Republicans. Trump came along and lied through his teeth that he was an outsider who represented them when in fact, if they ever figure it out, he was all in with Wall Street. Hillary sadly, came across as just what the working middle class was mutinying against, establishment elitism, or “let me explain it to you Alice” (Jacky Gleason from the Honeymooners). The fact that she actually had policies to help them was irrelevant.

My own personal observation at Trump rallies was an America I found despicable. Hillary’s deplorables, which of course they were. They had thrown out their brains and the level of anger and hate was palpable. As Fareed pointed out they were the part of America most disenfranchised by the world economy and their reaction was anger, blame, racism, and hate. And Trump was the master at stoking that. It is no coincidence that this was dominate by those without a college education. They were the losers in the economy we have built. Sadly when the elected Trump, they doubled down on their losing. In case they haven’t noticed, there are no jobs, and Wall Street is back big time.

Having said that, we do have to pull them up, not by false lies Donald Trump pumped out there, but with a real plan to get them back into the economy and give them jobs and a future. Unless you haven’t figured that out, it is not by giving more tax cuts to the wealthy, or quite frankly to most of us. It will be by creating jobs by investing in infrastructure, alternate energy, helping middle America get off their addiction to opioids, making college affordable, and making fundamental changes to the economy that let’s them share in the bounty. Oh, and give them a safety net they can depend on until we can restore the middle class. FDR did it, and now we have to, because middle America really is in a depression that led to the rise of a moron like Donald Trump.

Fareed ended his program by saying we are waiting for a leader that can cross the divide between the two tribes. But Fareed is one of those too invested in the way the economy works today, instead of the reality that capitalism has to be brought to heel for all of us to share. To my ear, Bernie got closest to that ideal. Let’s not lose that momentum. Progressivism is the only way forward and only government working with industry is going to solve the problem of the declining middle class. It is time to bring back ideas again instead of blame and hate. It has not worked out well so far and maybe middle America is starting to figure that out. Now we need to get out there with a plan that gives them hope, not the same old, same old or from Stephen King’s Dreamcatcher, SSDD, Same Shit, Different Day. That is how middle America saw the establishment in 2016. The Democrats failed to head the message and ran an establishment candidate, and all the rest is history.

The Tax Gut and the Debate

Let me just set the table here:

According the nonpartisan Committee for a Responsible Federal Budget, the real cost of the Senate legislation that the Joint Committee on Taxation says will cost $1.41 trillion over a decade would be $2.2 trillion if all the temporary changes were made permanent. The group estimates that the nation’s debt, which has surpassed $20 trillion, would exceed the size of the economy by 2028 under the plan — a level the United States has not reached since World War II. (NYT)

Now note that they made the tax cuts for corporations permanent while the ones for middle class people temporary as a gimmick to get the cost under their $1.5 trillion limit they need to pass this without Democrat’s votes. Wonder why they favored corporations here? As noted above the debt would exceed the size of the economy by 2028, not done since WW II. And I would like to remind people that after WWII we never really paid off the debt, we just grew the economy so that it became manageable.

Now that opens up a debate which we have been having forever, what is a manageable debt. Well, as you would guess, I have written several blogs trying to simplify the economics, but the bottom line is simply one that does not either cause inflation from us printing money to pay for it, or one that drives interest rates up. Neither has occurred yet even with all the boogyman nonsense from the Republicans, which they no longer apparently care about with their new tax gut plan.

Now some will tell you all debt is bad and certainly in our microeconomic world of the home budget, eventually the goal is to be out of debt entirely to retire. But along the way, investments in a home, car, and education may require incurring debt as long as we can manage it. But countries (macroeconomies) don’t retire, and they too have to invest in the future. So manageable debt is a good thing if it is used to grow the economy and make us a stronger nation. Ask yourself if tax cuts to corporations do any of those things?

Now, a real debate broke out on this in the Senate between Democrat from Ohio, Sherrod Brown and Republican from Utah, and Chairman of the committee, Orrin Hatch. The media has focused on the fight, but not the arguments, and the arguments tell you everything:

Sherrod Brown: . . . I just think it would be nice, just tonight, to just acknowledge, well, this tax cut isn’t really for the middle class. It’s for the rich, and that whole thing about higher wages, well, it’s a good selling point, but we know companies don’t just give away higher wages. They just don’t give away higher wages just ’cause they have more money. Corporations are sitting on a lot of money now, they’re sitting on a lot of profits now. I don’t see wages going up, so just spare us the — spare us the bank shots, spare us the sarcasm and the satire.

Orrin Hatch: I’m just gonna say to you that I come from the poor people, and I’ve been here working my whole stinking career for people who don’t have a chance, and I really resent anybody saying I’m just doing this for the rich. Give me a break. I think you guys overplay that all the time, and it gets old. And frankly, you ought to quit it.

SB: But Mr. Chairman, the public believes it — OH: Now just a minute, I’m not through. I get kind of sick and tired of it. True, it’s a nice political play, but it’s not true.

SB: Well all due respect, I get sick and tired of the richest getting richer and richer — Overlapping discussion, Hatch calls the chamber to order.

OH: Listen, I’ve honored you by allowing you to spout off here and what you’ve said was not right, that’s all I’m saying. I come from the lower middle class originally. We didn’t have anything so don’t spew that stuff on me. I get a little tired of that crap. And let me just say something. If you didn’t — if we just worked together we could pull this country out of every mess it’s in. And we could do a lot of the things that you’re talking about too. And I’ve got a reputation of having worked together with Democrats.

SB: Let’s start with CHIP [the Children’s Health Insurance Program, which Congress did not reauthorize in October]. OH: We’re not starting with CHIP. SB: Start with CHIP today!

OH: I’ve got more bills passed than anybody on this committee together. And they’ve been passed for the benefit of people in this country. Now all I can say is, I like you personally, very much, but I’m telling you this bullcrap that you guys throw out here really gets old after a while. And to do it at the end of this is just not right. I just — it takes a lot to get me worked up like this.

Now look at the arguments actually being made: Sherrod says, “It’s for the rich…”. First the tax cut overwhelming favors the rich. That is just a fact supported by the data. Okay, that is substantive argument alleging some facts.

Second, Senator Brown alleges “that and that whole thing about higher wages, well, it’s a good selling point, but we know companies don’t just give away higher wages. They just don’t give away higher wages just ’cause they have more money. Corporations are sitting on a lot of money now, they’re sitting on a lot of profits now. I don’t see wages going up, so just spare us the — spare us the bank shots, spare us the sarcasm and the satire.” Again that can be tested against facts and data, and tax cuts rarely do anything about jobs or wages. The poll at the Wall Street Journal forum for CEOs about who was going to use the money to expand was telling. Corporation, as Brown asserted, are already sitting on oodles of cash, and they are waiting on demand.

So what was Senator Hatch’s argument against what we actually know? “I’m just gonna say to you that I come from the poor people, and I’ve been here working my whole stinking career for people who don’t have a chance, and I really resent anybody saying I’m just doing this for the rich.” Trust me, I know poor people. Bull shit. Oh, and. “— if we just worked together we could pull this country out of every mess it’s in.” I wonder if that is why the bill was presented without any Democratic input, so they could work together, or their gimmick of limiting it to $1.5 trillion so they did not have to work with Democrats to pass it?

Well, you get the drift. Democrat Sherrod Brown expressed his frustration that the Republicans ignore facts and data, and Hatch’s reply was, how dare you question my motives. I am an honorable man. Some debate. But the media focused on the sparring, not the substance. So you get the substance here, but then most people don’t come here. I wonder why I bother. Then again it is 2 to 1 against among us who vote. So why again are Republicans pushing this disaster? Because it is all they got in economic policy, failed ideas, but those ideas make their donors happy.

Footnote: Note that after Brown in his frustration raised some valid issues, Hatch used his position to label this “spout out and spewing”, and then, dare I say it, spewed out an emotional, “The lady dost protest too much, methinks” argument that shows Brown nailed it and Hatch was responding totally defensively, but using his position talking over Brown, and as all Republicans do, shout down debate.

WTF Friday

I start with a quote from Eugene Robinson this morning taking on General Kelly and his racism as he cast the Civil War as a failure to compromise. This is from the Mississippi proclamation when leaving the union:

“Our position is thoroughly identified with the institution of slavery — the greatest material interest of the world. Its labor supplies the product which constitutes by far the largest and most important portions of commerce of the earth. These products are peculiar to the climate verging on the tropical regions, and by an imperious law of nature, none but the black race can bear exposure to the tropical sun. These products have become necessities of the world, and a blow at slavery is a blow at commerce and civilization.”

Now Eugene was arguing about the debasement of the Trump White house and how they have reinvented history to their liking, but look at this in a whole new context, the declaration of corporations about how important their existence is and how they view labor in general. You think that is a reach. Remember when Bank of America downgraded Chipotle stock for over paying their employees? Think about how Republicans fight a living wage because it might make our products too expensive. Think about how corporations move jobs off shore to secure slave wages. No reach at all, but it is all justified much like the above in denying the basic humanity of all humans.

President DFF’s appointment of Jerome H. Powell to chair the Federal Reserve was the appointment of a financier and business (lawyer actually) man instead of an economist to the Fed. The DFF hates economists. But here is what you ought to think about. A financier and a business man should be an expert in microeconomics, what is good for a business or corporation at the expense of other business or corporations. An Economist would understand macroeconomics, how the entire economy responds to external and internal stimulus, not what is good for one business, which might be detrimental to others. More importantly, most economist understand the complicated connection between interest rates and monetary policy, In other words, what is good for the whole economy, not just my own profits and how to deal with recession and inflation. This confusion could be a very dangerous thing for the country as it is clear the DFF has no understanding of macroeconomics just as most successful business men do not.

President DFF lashed out after the attack in NYC against the “diversity lottery” for immigrants. He wants everyone merit tested. Now once again, this is a great example of how the DFF’s brain works, or does not work, and that he reacts to the anecdotal without a real examination of the facts. He is the perfect lynch mob leader, clueless and brainless, and quite dangerous. Karen Attiah gives us a look at the merit system and how it has worked for so many and made us a better country, but the reactionary DFF will destroy everything in his path as he reacts as a spoiled 3-year-old who does not like his cookie.

I would just like to say that the Tax Bill that Republicans have brought forward is a jumbled mess. There are two really good analysis of this by Paul Waldman and Catherine Rampell. Now first note that the budget resolution that passed the Senate (all Republicans, no Democrats) that allows this bill to cost no more than $1.5 trillion over the next 10 years is saying we are going to bust the budget by $1.5 trillion over the next ten years. If you are slow, the balance budget folks just said we are going to increase the deficit by $1.5 trillion. Say what? Next note that what they really did was try to give a major giveaway to the rich, some bones and scraps to the middle class, and then there is the math problem, how to keep all that within the $1.5 trillion. Thus the cut to deductions for student loans, home interest deductions, and state and local tax deductions. And as Catherine pointed out this hurts prosperous Blue States who have higher taxes and may make raising taxes for things we need to pay for harder. In a sense, reducing us to broke states.

Oh, and note that the average tax rat corporations pay is 12.6%, less now than what they want to lower the corporate tax rate to, without removing all their loop holes. And that brings me back to Eugene Robinson and the quote from Mississippi. It is the bill of rights of corporations and we are all so screwed. The WTF moment is that all this out there and the solutions are easy, but instead we have a DFF president and a Republican Party running on empty. Happy Friday.

The Democrat’s Never Stop Repeating the Same Mistake Over and Over

There is an insightful article in the NYT about how Senator Jeff Flake’s withdrawal from the Senate race next year has thrown both parties into disarray. Let this set the tone:

Establishment Democrats have high hopes for Representative Kyrsten Sinema, a centrist who recently dined in the Blue Room of the White House with President Trump, teaches a bipartisan spin class in the House gym and has broken ranks with her own party on key votes. She was one of only seven House Democrats, for example, who voted to create a select committee to investigate the 2012 attack on the United States diplomatic compound in Benghazi, Libya.

But those impulses toward bipartisanship have soured Arizona progressives against the candidacy of an openly bisexual woman who would seem to fit the liberal mold.

“There are issues, murmurs within grass-roots groups and the progressive community, the environmental community and others, including immigration advocates,” said Representative Raúl M. Grijalva, Democrat of Arizona and a co-chairman of the Congressional Progressive Caucus, who is withholding his endorsement of her.

Yesterday in a casual discussion with a conservative friend I heard that old foolish refrain that all we need is both sides to work together and both parties are controlled by the extremes. Now nothing could be further from the truth, and this is the false equivalency that has produced our stalemated and stagnant government*, where we fail to assign the blame and government in general suffers. When was the last time the Democrats worked with Republicans (this crazed mob) and it has worked well for them?  Remember the tax cuts under Bush and the ballooning deficti?

In fact, we just the lost the last election (sans the Russians and Comey) because the Democrats have become too much like the Republicans. Who knows what they stand for any more, and the above story is another, let’s cater to bad ideas because it might appeal to moderates who have those bad ideas. That would be the “let’s just all hold hands and work together” fools.

What we have here is, and I know I am beating this to death, a failing economy and a dumbed down electorate, courtesy of the Republicans. What you say! How can the economy be failing when the stock market is at record highs? So who is benefiting? As our current economic system’s structure favors the 1%, the rest of us are not gaining and the numbers show that most people do not believe their kids will be better off than they are. Moderate establishment Democrats are part of this problem and what we see from the above, is more of the same, again not recognizing that conservative economic and social dogma is the problem, but let’s work with them, right? We can get elected and then stand for nothing and change nothing substantial.

Also on the second part of my assertion, that Republicans have dumbed down our electorate, have you seen our president? The “deplorable base”, that is about 38% of the population either does not care that he lies and misstates the facts or they believe them. These are the global warming deniers, believe blaming immigrants or building a wall solves all problems, and believe Trump actually has business acumen is stead of an old fashioned con artist. The real test here is when the truth is exposed, as it is everyday, they don’t care. But they control the Republican Party, hence why Flake is getting out. Conservative as he is, he can’t stomach their ignorance and antisocial behavior.

Now we got Trump because the Republicans went on a dumbing down campaign of noise over the last 30 years that the media magnified as they loved to cover noise instead of substance. Equivalency awarded to science deniers. Equivalency awarded to a shouting contest without interjecting data and facts. Treating facts as opinions. That is how we got here, and like the big tobacco companies denying the cancer link to cigarettes, the Republicans took their cues from them. And conservative who rue the day Trump came on the scene, created the path for him to follow. There are no moderate or principled Republicans that do not have full responsibility for the DFF.

Now we have a Congress controlled and elected by that 38% that the media and the Republicans created. So Democrats should elect someone who will work with them (read capitulate)? There is a basic truth here that no one is talking about yet, except of course for Bernie and Progressives, that the system is broken. That conservatives have had us on the wrong path, even the moderate ones, and establishment Democrats are just culpable. I have argued before what is wrong and what needs to be done. There is a great study from The Roosevelt Institute that lays out the changes we have to make to return our nation to one of rational debate, based upon facts and science, not ideological dogma. It tells us how to change the rules of our economic system to more equitably share the profits and make us all better off, not just the 1%.

Progressive are starting to make those arguments. Electing people who go to work in Congress to work with failure will simply bring us failure. It is time for real change based upon a common set of facts and a vision. That is the way forward and I fear the Democrats are becoming superfluous if they continue this pandering to bad ideas and polls instead of making the arguments to change the system. It is ideas that will drive change, not compromise to failed ideas. The young get it, and those in failed economies (manufacturing) get it. Maybe it is time for a little soul searching by establishment Democrats.

*I could go back over how many times the Democrats came to the table and tried to compromise with the Republicans, but instead of boring you to death, let’s just look at recent history.  Most Americans want Obamacare fix, not destroyed.  How did the Republicans proceed?  With a plan no one could see or amend, and while claiming Democrats would not work them, they lined up to work with them, but the plan was never to compromise or fix Obamacare because dogma requires them to return to the old failed market place system.  Tax “reform” is following the same game plan.  Hide the plan, have no way to pay for it and hope a couple of Democrats will like tax cuts for the wealthy if it somehow helps them.  Real tax reform is hard and will take years.  That is not what we are seeing here.  The Republican ideology is small government, unregulated markets, and tax cuts alway stimulate the economy when the evidence is overwhelming this is a disaster except in a few anedotal cases. There is no equilancy here and asserting it is destroying the country because we fail to see the problem.

Peddling Backwards as Fast as We Can

I see where little Jeffy Sessions is blocking research into marijuana. Can’t know the real facts so we can just believe what we want to. I see where the EPA is loading up their staff with industry shills. I see where climate scientists were told not to attend a conference on climate change. The Senate (Republicans) with Mike Pence’s help got rid of consumer protections from banks and credit cards.  From the NYT:

Donald Trump’s pledges to “drain the swamp” of corruption in Washington attest to his genius for unintentional irony. Nepotism, egregious conflicts of interest, flights on the public dime to see Wimbledon and the eclipse — the Beltway wetlands are now wilder and murkier than ever.

You could list here a hundred things we have learned not to do, and are now doing it under the DFF (Dumb Fat F*ck). We are all watching as the normal conservatives, the few left raise the white flag, say the truth about the DFF, but it changes nothing. Most Republicans lack the bravery to denounce their party and move on. Many, as the NYT points out, sold their soul to Trump for an agenda, an agenda I might add that will wreck America in its own right. The NYT goes on to tell us:

You can’t make sense of his [DFF] shocking victory last year without reference to the downward spiral of public faith in governing elites and established institutions. Years of stagnating incomes, combined with dimming prospects for the future, have primed voters for the message that the system is “rigged” and that only an outsider not beholden to the corrupt establishment can clean it up.

In other words, one key to this populist moment in American politics is the link in the public mind between dysfunction in Washington and the economic malaise of the 21st century. An effective political response to this perilous moment begins with the recognition that this link is real — and that key changes in the policymaking process, supported by a major push from organized philanthropy, will be needed to turn things around.

The image of the swamp conveys a profound truth about the American economy. Our predicament of slow growth and sky-high inequality has many causes, but one important factor is the capture of the American political system by powerful insiders — big businesses, elite professionals, wealthy homeowners — that use it to entrench their own economic power. In so doing, they protect themselves from competition, fatten their bank accounts with diverted wealth and slow the creative destruction that drives economic growth.

Now there are several places I could go with this blog from here. Clearly as I have argued, economic inequality is the root of all evil. One might argue that climate change deniers are simply a subset of those who want the present economic order to stay in place. I think at this point one should read history, Teddy Roosevelt or the wonderful speeches of FDR attacking the bankers and the financial world. It is not like we have not been here before. Or I could point out the fracturing of the Republican Party and the end to the idea that there is still a moderate Republican economic conservative represented by this party. Or I could launch on the fact that the Democratic Party is back to its old ways, more establishment thinking and pushing down Progressives, which was the problem in Hillary’s election. They learned nothing and as the NYT quote above points out, they are going back to representing the establishment. They are part of the establishment. That is what Bernie was trying to tell them.

But where I want to go today is to look at Jeff Flake’s speech attacking the DFF, not to admire a conservative, but to point out that his philosophy really is one of the establishment and increasing economic inequality. It’s still part of the problem. In a follow-on editorial in the Washington Post, Senator Flake said the following:

I have been so worried about the state of our disunion that I recently wrote a book called “Conscience of a Conservative: A Rejection of Destructive Politics and a Return to Principle.” I meant for the book to be a defense of principle at a time when principle is in a state of collapse. In it, I traced the transformation of my party from a party of ideas to a party in thrall to a charismatic figure peddling empty populist slogans. I tried to make the case for the sometimes excruciating work of arguing and compromise.

He also said this:

“It is clear at this moment that a traditional conservative who believes in limited government and free markets, who is devoted to free trade, who is pro-immigration, has a narrower and narrower path to nomination in the Republican Party,”

Okay let’s take the first statement, especially the part about “Returning to Principle“.  The Party before Trump had become dogmatic* in principle with whole think tanks focused on reinventing reality to support their dogma.  In the second statement, “believes in limited government and free markets,” became the dogma that did not recognize reality.  Now for sure it is true that they have no principles now with Trump other than selling their souls for an agenda.  But if you look at that agenda, it is establishment big business and everything that continues the growth of economic inequality. Look at Flakes voting record.

Senator Flake, of course, could be reasoned with on some topics, but his basic agenda, small government and the market place** above all else is the very thing that favors the wealthy over the rest of us.  Who is it that will take on the large corporations and tech companies as the gain more and more power, and as we have seen, can control the news narrative?  Would that be small government?  As Teddy Roosevelt proved, only government has the clout to rein them in.

The market place has served us terribly in that it is focused on short-term gains and basically for their stockholders, not the American people.  It is the market place and vested interests who lied to us about global warming, and the efficacy of market place solutions in health care.  The experience of the rest of the world tells us differently. Sure there are tons of places where the market place is the best place to let them innovate for our future.  But it is also the worst place, and long term planning and protection of consumers comes from our government.

What conservative Republicans (the normal ones) believe is still part of the problem, they represent Wall Street and large corporations.  So does the establishment Democrats with softening at margins.  But if you finally understand that economic inequality is the problem and we need a fairer system to distribute the spoils of profits and invest appropriately, it is government that only has that power.  So in the end, it would be a better world if there were more Jeff Flakes and John McCains, but also in the end, we got to this point when they allowed the twisting of data and facts, and pandering to a base that have been sold their snake oil.

We don’t need big government, we need smart government.  We need to recognize that government is the solution in many areas especially if we stop operating on dogma and deal with actual outcomes, and adjust accordingly.  Wall Street*** does not reflect America, only the wealthy, yet that is the god both parties kneel to and bow heads to the market place.  The evidence is overwhelming that continued increases in economic inequality will hamper and possibly finally destroy our economy for most of us.  Time to look for new ways and both parties, it would appear, are dinosaurs.

*One of my favorites is the balance budget nonsense.  Certainly we need to keep our debt in control, but a balanced budget would be a disaster to the economy and our country.  This where the conservatives went off the deep end.  We can’t seem to have a rational discussion about what is a reasonable debt so we can invest when need to if you belief is no debt. See The Economy.

**There is interesting data out there that shipping jobs overseas is not the bogey man, automation is.
“The US did indeed lose about 5.6m manufacturing jobs between 2000 and 2010. But according to a study by the Center for Business and Economic Research at Ball State University, 85 per cent of these jobs losses are actually attributable to technological change — largely automation — rather than international trade.” Financial Times.  Who looks out for the long-term interests of workers?  The Market Place?  Their job is to maximize profits for their stockholders.  Very simply, reduce costs to maximize profits.  Again, the market place is going to protect workers or do long-term planning for their welfare?  There is a side issue that we are not even focused on this problem.  Oh well.

***Free Markets is a big lie.  Said more succinctly, unregulated markets.  Markets have rules and they operate by them.  Laws of contracts, taxes, regulatory frameworks, rules, all are part of what makes a market function and stable.  The problem is that all those rules have been set up by those who benefit from those rules.  So we are not talking about unregulated markets, we are really taking about changing the rules to change who they benefit.  Now you see the problem.

 

 

 

General Kelly and Seeing the Real Problem

After the FF (Fat F*ck, aka President Trump) turned the killed servicemen into a political issue, and then totally botched  the call after the Press had asked if he had made any calls (where he lied about other presidents), Generally Kelly came out and made an impassioned plea to depoliticize the whole issue, explaining what happened.  Now this should have both been pointed at his boss and ended the issue, but then he turned around and made a partisan political attack on the Congresswoman in the car where call was made (at the request of the grieving parents).  Trump of course lied about all this instead of saying, I botched and I am truly sorry, to which Kelly did not deny the conversation, but attack the Congresswoman for making a “private” call public.

Well, bull shit.  First she was asked to be there and it was put on speakerphone.  Was the President alone when the call (No)?  Secondly he offended them with his lack of empathy, which is just another instance of why he should not be president.  But then Kelly made a partisan attack on the Congresswoman, racial in undertones, showing he is not the steady hand that some were hoping for.  Kelly even made references to “other” gold star families who have spoken out and he had no right to tell them they cannot use their First Amendment rights. Then there was what was sacred discussion that let you know this man is so far removed from reality that he too is dangerous. I think Lawrence O’Donnell took his attack apart better than anyone because he had the guts to.

I want you to note one other thing.  What General Kelly heard and told the FF to say is not the same thing he said.  It is a classic example of how little understand the FF has of the human condition.

Meanwhile the Republicans passed a budget bill on all Republican votes that most of them do not know what is in it.  It was to get a win.  So far the reasonable experts tell us a couple of things.  It busts the budget and like Kansas, may create a fiscal disaster. Tax cuts don’t necessarily equal growth.  Meanwhile Wall Street is doing great and the FF is taking credit when what is really driving the economy right now is low interest rates, set up in the Obama Administration.  If as most of us think, giant deficit spending that the budget bill and the follow on tax cut will create become a reality, the interest rate will go up, and kiss the economy goodbye.

The other part of this is that less than 52% of Americans own stocks, and the majority of the FF’s supporters do not.  How Wall Street does has little with working Americans, and let’s just review, Bank of America just downgraded Chipotle stocks because they think they pay their employees too much.  Bring back slavery!  That is the mentality we are dealing with.

Meanwhile, ex-Presidents Bush and Obam took on the FF finally.  Of course there is some real hypocrisy here, but at least major figures are starting to stand up.  I am off to Oakland for a Van Morrison concert and will try to ignore the madness that is our government these days.  Happy Friday.

Noise, Total Noise, Smoke and Mirrors

What we are getting right now is noise, smoke and mirrors. Why did he do it? Who cares, because the next one will be a different why? We pretend we will get some kind of closure when we know why, I guess because we think if we know why we can protect ourselves. But the next nut job will have a different why. Take the last big shootings, Sandy Hook, the Virginia Tech Shooting, and the Pulse Club in Florida.

What is the common denominator, their type of craziness, or the assault weapons they used. Oh, and you will feel so much better because look, look, even the NRA is moving to “talk” about banning bump stocks. Note that sales are soaring just in case they do. Unless we do an Australia, we haven’t even moved the needle, yet we are so excited that the NRA and Republicans will let us talk about bumps. I am just giddy. It would appear that the more guns we have, the more we need to protect ourselves from others who have guns. Maybe if I was carrying a rocket launcher I could have taken out that nut job shooting from the 32nd floor.  I wonder when we will ever have a real debate.

I listened to one Republican dissembler tell us that we need to debate and study this issue of bump stocks. Responsible people don’t over react (like tax or healthcare reform).  How long have we been looking at this? More noise, smoke, and mirrors. Remember guns don’t kill people, people do, but guns makes it so much more efficient and effective. So why is it again that we keep handing them more and more dangerous and lethal ways to go postal?  See nukes are not the problem, people are.  See the irrational logic line here?

Almost everywhere I look it is smoke and mirrors, noise instead of real change. Tax reform is a joke. Real tax reform is hard. Everyone has a vested interest and we don’t start from the same place. What has to be paid for before we going giving away treasury? No agreement there so this is nothing but a tax slash for the wealthy which is the only economic policy position Republicans know.

Climate change is happening, and we have just had three of the most disastrous storms we have seen in hundreds of years, predicted by global warming, and who is the lead of the EPA (a climate change denier), and now the Dotard in Charge (DIC) is appointing a coal lobbyist as the second in command at EPA. His boys and girls (Cabinet/White House staff) are using their private emails (lock her up) and flying around the country on private jets at your and my expense, and he is draining the swamp? Oh did I mention he is meeting with the generals on North Korea (“Calm before the storm”), and wants to change the Iran agreement? Meanwhile the Republicans are stonewalling the Russia investigation. It’s noise, smoke, and mirrors while the country slides backwards into chaos.

Now that I have thoroughly depressed you unless you are a LD (Little Dotard, Trump base), let me try to show you how we got on this path of ignorance. Right after the shooting in Las Vegas I heard an interview with a woman who was spouting the conventional wisdom about bringing the country back together. “We just need to start listening to each other. We need to lower the rhetoric and listen and try to understand the other side. Then maybe we can find common solutions.” Sounds great doesn’t it? It is horse shit. Pabulum for those who have not been paying attention. It’s pabulum because we don’t operate on the same set of facts anymore.

Were you not paying attention during the Obama years?  Much to my chagrin, because I don’t think Republicans have workable solutions, President Obama tried to compromise with them.  How many Republican votes did he get on healthcare (0).  It got to be a standing joke that even if Barack proposed a Republican plan (which he did on numerous occasions), they were against it.  There goal was to destroy the his presidency (remember Mitch McConnell’s one term President comment?).

In order to take the positions Republicans have taken and support their policies, one had to create an alternate universe, and they did.  Climate change doesn’t exist, tax cuts pay for themselves, immigrants are the root of all our economic problems, all trade agreements are bad, the EPA just hurts business with regulations, regulations in general are bad, government is bad, guns are a natural right, and they were extremely effect at then explaining away failure to act as both sides do it.  Now they are in charge, and they still can’t do anything.

But the point here is that they created a public that does not agree on a set of facts.  Does it not floor you that much of America gets their news on Facebook trending junk?  We can’t have effective solutions if we cannot come together on root cause and effect.  Republicans believe that more guns makes us safer.  How has that worked out?  Republicans believe that climate change is worst a hoax, at best not man-caused, so we do nothing as the conditions for disastrous climate changes increase.  How can all regulations be bad when many of them came from very bad situations where protections are in order? Obamacare is a disaster, but their answer for a fix is trust us, the market place will solve all issues?  The facts do not support any of their beliefs.

So back the woman who wants me to listen.  But the other side has already ended listening because I must be confused about my facts.  Why should I listen to someone who wants to take away gay, lesbian, or transgender rights?  Why would I want to listen to someone who wants to destroy Obamacare with no viable solution?  Why would I want to listen to someone wants to destroy the EPA and deny climate change?  Until we can establish again the difference between political differences and facts, there is no debate.

Let me leave you with this.  There will be no hand holding and coming together.  We have to re-establish facts before we have political debates about what to do about them.  Climate exists and is man caused.  Tax cuts in this economy do not simulate growth.  All government is not bad.  Immigrants help, not hurt our economy.  More guns are killing more people.  We live in a global economy and we need trade agreements.  If we could just start from those established facts (google them!).  Then maybe the listening could start.  But Republicans have made clear they have an alternate set of facts and no further discussion is necessary.

The only fix is that if we survive this four years, we need to hose out the White House and Congress after we throw all of the Republicans and “moderate Democrats” out, and get about the business of governing again.  We deal with facts, data, and science, develop policies based upon them, and if they need fixing, we do not have an ideological agenda or wanting to believe something that prevents us from doing just that.  It is just amazing to me that the real ideologues are not progressives who can change, but Republicans who cannot, and yet somehow we all just need to hold hands.  Bull shit.

The Agenda

Republicans have lost all sense of morality (see the House and Senate bill on healthcare) as they see their opportunity to enact their conservative agenda and “save America”.  The President’s crude and demeaning behavior, signs of an unstable and dangerous personality are overlooked as just actions in the moment, not deep character flaws that puts our very democracy at risk (attacks on free press, other branches of government, and now voter suppression through his Voter Fraud Commission).  So the obvious is now obvious.  Republicans are going to do nothing.  So unless Special Counsel Mueller rubs their noses in it, we are going to get “the agenda”.  Democrats can do nothing.  They have been removed from power for the simple reason that they did nothing.

So what of the agenda?  Well it is simple, continue the very thing that has caused the malaise in America, unfairness and economic inequality.  I would go on here and explain how Republicans will pass bills that only further transfer wealth to the few (see the Senate healthcare bill), and how Democrats answer to this, is that the market place is a great thing, but needs to be kinder and gentler (a failed policy), but James Kwak has once again come to my rescue.  We are all asking the question, so what happened to the Democratic Party and what should our new direction be, and he has provided it in what should be mandatory reading for everyone. It is titled The Importance of Fairness:  A New Economic Vision for the Democratic Party, and I will give you some of his thinking, but really, you should stop reading this blog and go to the link and read it for yourself.  It is by far the best succinct analysis of what happened to Democrats and our way forward.

He starts out with this quote from Bernie Sanders that gets to the heart of Democratic failure:

The model the Democrats have followed for the last 10 to 20 years has been an ultimate failure. That’s just the objective evidence. We are taking on a right-wing extremist party whose agenda is opposed time after time and on issue after issue by the vast majority of the American people. Yet we have lost the White House, the U.S. House, the U.S. Senate, almost two-thirds of the governors’ chairs and close to 900 legislative seats across this country. How can anyone not conclude that the Democratic agenda and approach has been a failure?”

He then goes into a short summary of his thesis in his book Economism, which is that we have bought into a false god in the market place that will lift all ships:

…the belief that simplistic models accurately describe the real world and should be the basis of public policy… This naive or disingenuous worldview, according to which unregulated markets produce the best of all possible worlds, is frequently invoked to defend policies that favor the wealthy and justify the vast inequality that results.

…Economism was promoted by conservatives who sought to roll back the New Deal and restore a mythical libertarian paradise governed by free markets, with a minimal state and low taxes. Their vision became the platform of the Republican Party in the 1970s and the policy handbook for President Ronald Reagan and every conservative leader since. In response, Democrats have tacked to the right on economic issues. Since Bill Clinton, the Democratic Party’s economic vision has been that prudent management of macroeconomic factors would foster higher private sector growth, which would in turn create jobs and prosperity for working families. The central planks of this platform have included: cutting budget deficits to reduce interest rates; reappointing Republican Federal Reserve chairs who would control inflation; and even seeking a “grand bargain” that would reduce Social Security spending in exchange for modestly higher taxes. As the Republican Party has been taken over by charlatans who insist on cutting taxes and crippling government at every opportunity, Democrats have rebranded themselves as the moderate party of responsible economic stewardship.

…To be clear, the failure of overall economic growth to benefit the middle and working classes is not solely or even primarily the Democrats’ fault. The villain in that story is the Republican conservatives who weakened unions, undermined the social safety net, and slashed taxes on the rich. Globalization and competition from low-wage countries were another factor. But since the onslaught of the conservative revolution, Democrats have played defense by claiming the space once occupied by moderate Republicans. Recall the pivot to deficit reduction in 1993, welfare reform in 1996, the capital gains tax cut of 1997, the commitment to free trade agreements from NAFTA to TPP, and the bipartisan commitment to financial deregulation that helped produce the devastating financial crisis of 2008.

So you get the drift here and it is the truth of our times.  Conservatism has no answers for our future and the Democrats have bought into most of this nonsense and have left themselves with no real answers either, but compromise with failure.

What the Democratic Party needs is an economic message that: addresses the real problems that many Americans face on a daily basis (instead of callously insisting that “America is already great”); and resonates with their very real frustrations and anxieties. Both politically and as policy, the idea that the rising tide of economic efficiency and growth would lift all boats has failed. It is time for something new.

Then he lays out the way forward in detail but I will simply sum it up here:

…Most important, the fetishization of efficiency assumes that our primary goal as a society should be expanding the pie—increasing the total volume of goods and services available for consumption. This assumption is crucial to economism: the ultimate justification for unregulated markets is that they theoretically result in the production of more stuff.

…At this moment in history, however, what a rich country like the United States needs is not more stuff. We need to share the stuff we have in a more fair, more morally acceptable way. In 1980, the bottom 90% of households owned 32.9% of all household wealth and took home 69.9% of national income; by 2012, those figures had fallen to 22.8% and 59.0%, respectively (see Saez and Zucman, Appendix Tables B1, B25). In other words, if we could restore the 1980 wealth and income distribution, the bottom 90% of households would enjoy a 44% increase in net worth and an 18% increase in income—an improvement in living standards that would take decades to achieve in our current economic system.

…Fairness is not just a rallying cry. It is the unifying theme for fundamental policies that will improve people’s lives in the crucial areas of education, housing, health care, employment, and retirement, reducing inequality and improving the material standard of living of ordinary Americans. It also offers something new to the many people who feel left behind on the wrong side of the inequality gap, who have been told that economic growth will solve all their problems but whose own lives have only seen less job security, more debt, and higher health care costs.

This is not some revolutionary new gospel, but a return to the roots of the modern Democratic Party. In his 1941 “Four Freedoms” speech, President Franklin Roosevelt described the principles that Americans would soon be fighting and dying for in these words:

“There is nothing mysterious about the foundations of a healthy and strong democracy. The basic things expected by our people of their political and economic systems are simple. They are: Equality of opportunity for youth and for others. Jobs for those who can work. Security for those who need it. The ending of special privilege for the few. The preservation of civil liberties for all. The enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living.”

These are the core principles of the Democratic Party. They describe the world that most people want to live in. Markets and economic efficiency are tools that may be used to achieve (some of) these ends, not ends in themselves. Ultimately, our goal must be the better, more fair society that Roosevelt envisioned three-quarters of a century ago.

Just as an aside, I had written to Professor Kwak about his book Economism and how important a book it was, and had mentioned the “Four Freedoms” speech and how Republicans had invented a fifth freedom, freedom of the market place, and he replied that my reminder had made him re-read that speech.  Maybe, just maybe, my little contribution is here in his summary.  Or maybe not. He has offered us a great summary of our way forward.  If only Democrats would embrace it.