Saturday, July 30, 2011

10 Year Old Understands More About Taxes and Deficit Than Republican Leader John Boehner

10 Year Old Understands More About Taxes and Deficit Than Republican Leader John Boehner

If Obama, Boehner, and Congress listened to the wisdom of 10-year-olds, and made the wealthy pay their fair share for this budget, kids like Maceo wouldn’t inherit such a large debt burden for them to pay back through their taxes. Photo by Karen Dolan.

Yesterday, 10-year-old Maceo Dolan-Sandrino was among the demonstrators. Maceo is from Maryland, just on the outskirts of Washington, the son of IPS Fellow Karen Dolan. He attended yesterday’s rally at the Capitol to oppose the cuts to our social safety net, services like healthcare and income assistance that many Americans rely upon through hard times. I thought it might be interesting to get a 10-year-old’s perspective on the day’s events. I asked Maceo what he thought about the protest.

At first, Maceo reported that he hadn’t really listened to anything, and that his feet had hurt. But when I asked him again, I got a different answer.

“The protest was about how John Boehner was going to take away social security and how he was going to – um, it was something about the taxes,” said Maceo. “Planned Parenthood was there and they had signs that said, ‘Don’t take away our birth control.’”

I asked Maceo if he realized that the United States was in debt, and that Obama, Boehner, and Congress were trying to decide whether to borrow more money. In return, Maceo offered a surprisingly searing analysis.

“It’s because the rich and wealthy people aren’t paying their fair share of taxes, and all of the big corporations are finding loopholes not to pay taxes, and then we don’t have enough money to pay our debts,” he said.

I found this comment to be incredibly astute. As IPS Fellow Chuck Collins wrote in an article for OtherWords, “Overseas tax havens enable companies to pretend their profits are earned in other countries like the Cayman Islands. Simply making that ruse illegal would bring home an estimated $100 billion a year.”

Making sure our government doesn’t tax the highest income brackets is another way the wealthy avoid paying their fair share of taxes. Since 1970, “the top marginal tax rate on our richest has been halved, from 70 to 35 percent, and our rich have become phenomenally richer,” wrote Peter Diamond and Emmanuel Saez in an article this month on And you can bet that this tax rate plunge had a lot to do with campaign contributions to friendly elected officials. Money talks, Congress listens.

Unlike Obama, Boehner, or most members of Congress, Maceo intends to stick around for quite a while in order to help pay back the debt now being discussed in Washington. I asked Maceo about how he felt about our politicians leaving future generations to pick up the tab after the government has had its spending frenzy.

“I don’t feel good at all. No, I don’t think I’m going to have that money, because I know I’m going to have a family to take care of. So, I don’t feel good about that at all.”

Maceo is a sharp kid. If Obama, Boehner, and Congress listened to the wisdom of 10-year-olds, and made the wealthy pay their fair share for this budget, kids like Maceo wouldn’t inherit such a large debt burden for them to pay back through their taxes.
Infographic: Obama Bends Over Backwards for Conservatives on Debt Ceiling Side-by-Side Comparison of Plans Shows President Is Willing to Compromise

See Chart above: The infographic above shows that the president’s latest offer to House Speaker John Boehner (R-OH) is heavily titled toward spending cuts. In fact, the president’s offer contained about $1 trillion less revenue than the recent proposal from the so-called Gang of Six, a group that includes three Republican senators and three Democratic senators. It also represents significant movement from the president’s original debt reduction framework, which itself was already more conservative than the recommendations from the chairs of the debt commission (Erskine Bowles and Alan Simpson) last December.

Unfortunately the Republican leadership still turned the president down despite his willingness to offer cuts to programs Democrats traditionally defend and to agree to much less revenue than all other bipartisan deals.

Friday, July 29, 2011

Is Big Government Spending Causing The Deficit

Radical conservatives just can't handle the truth: Tax cuts, war and the financial crisis created our huge deficits

How many outright errors of fact can you spot in the following paragraph from an op-ed by Mitt Romney published this Monday?

[Barack Obama's] approach has been to engage in one of the biggest peacetime spending binges in American history. With its failed stimulus package, its grandiose new social programs, its fervor for more taxes and government regulations, and its hostility toward business, the administration has made the debt problem worse, hindered economic recovery and needlessly cost American workers countless jobs.

Let's see. We're at war in Afghanistan, so "peacetime" is dubious. Obama has cut taxes -- income taxes, payroll taxes, taxes for small businesses. Private sector economic forecasters say the stimulus increased GDP growth and kept the unemployment rate from rising higher. We could even range into the subjective, and argue that from the left side of the political aisle, Obama has been anything but hostile to business and hasn't done nearly enough to regulate the financial sector. And we could note, just for fun, that Obama's "grandiose" social program is modeled explicitly after the healthcare reform enacted by none other than Mitt Romney in Massachusetts. (And this guy, most political analysts think, poses the biggest threat to Obama's reelection!)

But nothing is more ridiculous than the notion that Obama is a "binge" spender. Paul Krugman rightfully calls this scurrilous accusation a "zombie lie." No matter how many times you kill it, whether by decapitation, a spike through the heart or immolation -- it just keeps coming back. It's enough to make you despair -- particularly when you consider how many more times we're going to hear this nonsense from Romney and the rest of the Republican presidential candidates from now until the last precinct closes on Election Day 2012.

But as long as the undead keep coming, we have no choice but to fight hellspawn with our own holy fire. So let's review the facts.

The current budget deficit is predominantly an outgrowth of the Bush tax cuts, the wars in Afghanistan and Iraq, Medicare Part D and the financial crisis.

Here's the first thing to understand. Before Obama took office, before he was able to spend a single dime as president, the Congressional Budget Office predicted that the 2009 deficit would be $1 trillion dollars. According to an analysis published by the Center on Budget and Policy Priorities in June 2010, about half of that total -- $500 billion -- can be attributed to the Bush tax cuts and the wars in Afghanistan and Iraq. Another $400 billion was a direct result of the "changed economic outlook" -- the collapse of "tax revenues and swelling outlays for unemployment insurance, food stamps and other safety-net programs."

In the summer of 2009, the New York Times's David Leonhardt (recently awarded a Pulitzer prize for his economic coverage) conducted an indispensable analysis of the budget deficit for 2009. (By that point it was projected to hit $1.2 trillion; ultimately it reached $1.4 trillion -- in part because of stimulus spending and in part because the economy continued to get worse.) Leonhardt observed that since 2000, the year that Bill Clinton bequeathed George Bush with an $800 billion surplus, there had been a negative $2 trillion swing in the health of the government's finances. Crunching the numbers from a decade's worth of CBO reports, Leonhardt discovered:

The 2001 and 2007-2009 recessions accounted for 37 percent of the swing -- again, because of decreased tax revenue and automatically higher spending on social welfare. Legislation signed by George Bush accounted for another 33 percent -- the tax cuts and Medicare Part D.

"Mr. Obama's main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies -- together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama -- account for 20 percent of the swing."

"About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama's agenda on health care, education, energy and other areas."

The CBPP includes a neat little chart in its analysis that brings home the long-term consequences of the decisions made by Bush and Obama. Yes, the stimulus added to the budget deficit in the short term, but over the next 10 years, its contribution to the ongoing deficit -- along with TARP and the Fannie-Freddie rescue -- is minimal. The real drivers of the deficit will continue to be the Bush tax cuts and the wars -- if both continue. The tax cuts alone will account for some $7 trillion of the additional national debt over the next 10 years. And the interest payments on the debt accrued simply to pay for the automatic safety-net response to the Great Recession will also continue making a meaningful impact for years to come, long after a full recovery.

Fiscal Chart_ see above

Obama, of course, bears some responsibility for continuing the Bush tax cuts and the Bush wars -- but so do nearly every Republican legislator, and it's very difficult to imagine that Mitt Romney as president would have done anything differently. In fact, it's quite possible that the deficit would have gotten worse under Romney, because if he had decided to inject no stimulus at all into the economy, the downturn would likely have been worse, tax revenue would have declined even further, and social welfare spending would be even greater. And if any Republican president had attempted to slash spending in accordance with current party rhetoric, we'd be staring directly into the depths of Great Depression 2.0.

Also crucial to note: Obama's major new initiatives were either designed to be short term, such as the stimulus, or revenue neutral, such as healthcare reform. That's not something you can say about Bush's budget busters.

The budget deficits under Obama are big, there's no doubt about that. But the primary drivers of those deficits are a combination of decisions made by George W. Bush and the worst economic crisis in the United States in 80 years.
If we take away the wars Republicans who controlled Congress refused to pay for, the Medicare drug benefit Republicans passed but refused to pay for, two Wall St bail-out packages Republicans voted for and tax cuts for millionaires, plus the crashed economy Republican left for the next guy to handle - Obama has spent less than Bush. We have a revenue crisis not a spending crisis, and Republicans refuse once again to pay for the bills they put on the national credit card.

Thursday, July 28, 2011

Tea Party Republicans Seem To Hope for Total Economic Collapse

Wall Street shudders as Republicans root for "chaos"

Cue the panic! The Dow is falling! The Dow is falling!

Next, start the blame game.

On the Laura Ingraham radio show Wednesday, House Speaker John Boehner acknowledged that "a lot" of Republican House members "believe that if we get past August the second and we have enough chaos, we could force the Senate and the White House to accept a balanced budget amendment."

Boehner then said that he disagreed with that theory. In his view, "the closer we get to August the second, frankly, the less leverage we have vis a vis our colleagues in the Senate and the White House." But the damage was done. As the news of his comments spread through social networks, the Dow Jones Industrial Average began to fall sharply. It closed down 198 points.

OK, we don't know for sure that traders finally got spooked at this latest proof that that House conservatives are actively looking forward to debtpocalypse. The steady drumbeat of negative economic data could just as easily be taking its overdue toll? Or maybe it's all the Democrats' fault. Reliable right-wing propagandist Larry Kudlow argued that Harry Reid's attack on the Boehner plan was the real culprit. Nyah nyah nyah.

We have no definitive way to decide the true driver for today's sell-off. But if Wall Street investors are paying close attention to the state of the debt ceiling tug-of-war, then they have good reason to be nervous. Here's why:

The normal way Congress works on a big, controversial piece of legislation is to patch together a last-second compromise after months of huffing and puffing. Reid and Boehner call each other nasty names, and then cut a deal. On the surface, the current deadlock is a perfect setup for just such a denouement. Let's outsource to political scientist Jonathan Bernstein.

The truth is that Boehner's plan is a totally legitimate, if many months late, opening offer. But if he's presenting it to his conference as a done deal -- if he's arguing that if only they vote for this, the Democrats are sure to fold and accept it -- then he's just not telling them the truth. I'm not sure I agree with those who say that Boehner's plan is very similar to Harry Reid's proposal, but I do agree that it's not hard at all to picture a compromise between them. However, it's just not true that the Senate will vote for Boehner; indeed, as of now it looks as if Boehner won't get a single Senate Democrat while losing four or more Senate Republicans. Reid might have 50 votes for his own plan, but probably doesn't have 60. So the two plans, after the votes are taken, are headed for another round of deal-making. Which, of course, is how this stuff is supposed to go.

Except -- what we've just witnessed in the last 48 hours is a conservative rebellion in the House that forced Boehner to rewrite his plan and seek deeper, quicker cuts. The new plan looks likely to pass in Thursday's vote, but anyone watching must appreciate that the Tea Party has just demonstrated its power to push Boehner to the right.

So what are the odds that these folks are going to be willing to suck it up and do the traditional thing and cut a compromise deal that moves to the left at the last minute?

Low. Very low. Abysmally low.

The obvious conclusion to draw from today's events is that the only thing capable of changing minds is chaos. At that point, the pressure on John Boehner to put together a coalition of Democrats and not-Tea Party Republicans who will vote for a compromise that can pass the Senate will be intense. But if he gives in to that pressure, he seems virtually certain to face a leadership challenge that could result in the end of his speakership.

So. The Dow dropped 200 points today, and the real tussle has hardly started. Fun!

Conservatives are acting like some cult that threatens economic apocalypse unless they get absolutely everything they want. That is not compromise. Democrats have agreed to give them 90% of what they want. The tea nut crazies still think that is a bad deal. In other words you cannot make a reasonable bargain with crazy and cynical people determined to send the economy into yet another recession. Republicans Play Deeply Cynical Politics With Debt Ceiling

Wednesday, July 27, 2011

John Boehner(R-OH) Shows Contempt for America. Entire Debt Ceiling Speech One Big Lie

John Boehner(R-OH) Shows Contempt for America. Entire Debt Ceiling Speech One Big Lie

House Speaker John Boehner should be ashamed of his deceitful speech Monday night. He didn't tell the truth. After introducing himself as the speaker of "the whole House," Boehner spoke as a political partisan and not a practical problem solver.

Boehner is a hostage of the Tea Party fanatics in his caucus and the Republicans' obsession with protecting tax loopholes for the wealthiest Americans and corporations, like hedge fund managers, corporate jet owners, oil companies and other special interests.

Boehner's response to the president was an astonishing display of revisionist history and brutish partisan politics. Boehner described his plans in poll-tested generalities, but what he didn't tell the American people was that his proposal would cut $1.8 trillion from Medicare, Medicaid and Social Security, in order to protect millionaires, billionaires and big corporations from paying their fair share. It's almost cartoonishly diabolical. The GOP's approach would paralyze Washington by forcing Congress to revisit this issue again and again instead of creating the jobs our country needs.

Monday night, Boehner told one lie after another. Not half-truths or mischaracterizations. Lies. He saved the biggest lies for how he described the debt ceiling talks themselves. He said, "I made a sincere effort to work with the president," yet every time the deal gets closer to what the Republicans want they run away. He said, "The president would not take yes for an answer." That's what the president said about Boehner last week. The difference is, when the president said it, it was true and still is.

Boehner then said that the president "wants a blank check." That's absurd. How can anyone argue that a plan with trillions of dollars in spending cuts is a blank check? The cuts being discussed are historic. They're massive.

The simple fact is that the Republicans are not working with the president to avert a crisis, they're doing everything they can to create one. In contrast, President Obama and Democratic leaders in Congress have repeatedly made clear that they're willing to work with the Republicans to develop a sensible, long-term budget and avert an economic disaster that will reverberate around the world.

President Obama has always said we need a balanced plan that includes both spending cuts and revenue. It's only fair that everyone should pitch in, including millionaires, billionaires and the big corporations, and it's critical that we protect Medicare, Medicaid and Social Security from budget cuts that would devastate America's seniors and middle-class families.

The Republicans now have to decide whether they want to govern or keep saying no to protect the wealthiest people and corporations in America. The GOP's extremist position against a balanced approach won't create a single job or help a single business keep its doors open. The Republicans' fanaticism and brinkmanship is out of control and puts at risk our economy and the financial security of all Americans.
To be fair it is the job of modern Republican leaders to hate look out for the conservative movement first, misleading and screwing over America is just part of the package. Republicans should love America, what other country would let lazy elitist make so much money complaining, whining and pointing fingers - usually about problems conservatives themselves are responsible for. They say suddenly after eight years of out of control spending which they refused to pay for, that now spending is out of control. Funny how when conservatives spend your grand-children's money it is patriotic and when a new president tries to fix things spending is out of control.

Tuesday, July 26, 2011

Does America Have a Spending Problem - Obama Versus Conservatives

Obama, Conservatives and The Deficit

With President Obama and Republican leaders calling for cutting the budget by trillions over the next 10 years, it is worth asking how we got here — from healthy surpluses at the end of the Clinton era, and the promise of future surpluses, to nine straight years of deficits, including the $1.3 trillion shortfall in 2010. The answer is largely the Bush-era tax cuts, war spending in Iraq and Afghanistan, and recessions.

Despite what antigovernment conservatives say, non-defense discretionary spending on areas like foreign aid, education and food safety was not a driving factor in creating the deficits. In fact, such spending, accounting for only 15 percent of the budget, has been basically flat as a share of the economy for decades. Cutting it simply will not fill the deficit hole.

The first graph shows the difference between budget projections and budget reality. In 2001, President George W. Bush inherited a surplus, with projections by the Congressional Budget Office for ever-increasing surpluses, assuming continuation of the good economy and President Bill Clinton’s policies. But every year starting in 2002, the budget fell into deficit. In January 2009, just before President Obama took office, the budget office projected a $1.2 trillion deficit for 2009 and deficits in subsequent years, based on continuing Mr. Bush’s policies and the effects of recession. Mr. Obama’s policies in 2009 and 2010, including the stimulus package, added to the deficits in those years but are largely temporary.

The second graph shows that under Mr. Bush, tax cuts and war spending were the biggest policy drivers of the swing from projected surpluses to deficits from 2002 to 2009. Budget estimates that didn’t foresee the recessions in 2001 and in 2008 and 2009 also contributed to deficits. Mr. Obama’s policies, taken out to 2017, add to deficits, but not by nearly as much.

A few lessons can be drawn from the numbers. First, the Bush tax cuts have had a huge damaging effect. If all of them expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels. Second, a healthy budget requires a healthy economy; recessions wreak havoc by reducing tax revenue. Government has to spur demand and create jobs in a deep downturn, even though doing so worsens the deficit in the short run. Third, spending cuts alone will not close the gap. The chronic revenue shortfalls from serial tax cuts are simply too deep to fill with spending cuts alone. Taxes have to go up.

In future decades, when rising health costs with an aging population hit the budget in full force, deficits are projected to be far deeper than they are now. Effective health care reform, and a willingness to pay more taxes, will be the biggest factors in controlling those deficits.
Republicans are running around like Chicken-little on steroids. The sky is falling and its all Obama's fault. As usual nothing could be further from the truth. Reverting the average federal tax rate back to what it was under Bill Clinton will hardly be the end of the world. The tax rate on capital gains, the money made on stock trading could easily be 30% and no one would suffer. American's are paying the lowest taxes since 1950 and yet low taxes obviously are not the secret to creating jobs. Taxes are how the wealthy pay back America for all the infrastructure that makes their welth possible. Not paying taxes is just a way for the wealthy to free load.

Monday, July 25, 2011

The Norway Christian Conservative Terrorist and The Tea Baggers

The Norway Christian Conservative Terrorist and The Tea Baggers

The revelation by CNN that Norwegian right wing terrorist Anders Behring Breivik kept a diary in which he obsessed about the dangers of cultural Marxism, multiculturalism, and the “Islamification” of Europe will remind many Americans of the tactics of our own right wing (only these themes have been taken up by people much more mainstream in the US than Breivik is in Norway!) The movement to ban the shariah, the castigation of a progressive income tax as “Marxist,” the condemnation of multiculturalism as a threat to Western values, are all themes commonly heard in the US Tea Party and in the right wing of the Israel lobbies.

It would be wrong, of course, to suggest that anyone who hits these themes is a terrorist in waiting or supports violence.

But here is the reason for which such rhetoric is dangerous and can easily lead to social violence.

It is black and white, allowing no nuance. Immigration is not a smooth process, and is attended with problems in some cases. The history of the United States, an immigrant society, suggests that whatever the problems are, they are not insuperable. But Breivik saw Muslim immigration in particular as a threat to the very identity of Europe. That is, if the immigration from the Middle East were allowed to continue, then ultimately there would be no Europe, just a big Iran on all sides of the Mediterranean. Moreover, he imagined this process of Islamification as happening very quickly.

Breivik’s thinking is not new under the sun. Protestant Nativists of the “Native American” and later “Know-Nothing” (i.e. secret society) movement in the 1830s through 1850s in the United States felt exactly the same way about Catholic immigrants to the US. America wouldn’t be America if this went on. Their values were inherently incompatible with the Constitution. Their loyalties were to an anti-modern foreign court dedicated to reinforcement of political and intellectual tyranny. The hordes of them would take over the country before too long. The combination of black-and-white thinking and a conviction that undesirable change is coming very rapidly often provokes violence. Brian Porter’s When Nationalism Learned to Hate makes the point about Poland, that peaceful democratic processes depend crucially on patience and a conviction that the future can be won. When members of a movement become impatient and believe that the situation could quickly and unalterably shift against them, they are much more likely to turn to violence.

Catholic immigrants to the US, like Muslim immigrants to Europe, cannot in fact be characterized in a black and white way. Catholics in the contemporary US are politically and socially diverse, but on the whole are more socially liberal than evangelical Protestants. That is, if the Know-Nothings were afraid of an anti-Enlightenment religious movement, it would have been to their own, Protestant ranks, that they should have looked.

Likewise, making a black-and-white division between “Christian” Europe and “Islam” is frankly silly. The European continent is itself a fiction (it is geologically contiguous with North Africa, and there is no eastern geographical feature that divides it from Afro-Asia). Islam has been the religion of millions of Europeans over the past 1400 years, whether in Umayyad Spain, Arab Sicily, or Ottoman Eastern Europe, and Muslim contributions to European advances are widely acknowledged.

As for contemporary Muslims in Europe, they are diverse. Overwhelmingly, e.g., Parisian Muslims say that they are loyal to France. About half of the Turks in Germany are from the Alevi sect, a kind of folk Shiism, and most of those are not very religious and politically are just social democrats (oh, the horror of Breivik’s nightmare– Muslim progressives in Europe!) That the few hundred thousand Muslims in Spain (pop. 45 mn.) , or the 4 million in Turkey (5 percent of the population) could effect a revolution in European affairs of the sort Breivik fears is frankly absurd, especially since Muslims are not a political bloc who agree with one another about politics and society. They are from different countries and traditions. Many do not have full citizenship or voting rights, most of the rest are apolitical. But even if they became a substantial proportion of the population, they would be unlikely to change Europe’s way of doing things that much.

Breivik, of course, also exercised black-and-white thinking about the left of center currents in Europe, amalgamating them all to Marxism, presumably of a Soviet sort, and seeing them as taking over. In fact, ironically, it is parties and rhetoric that Breivik would have approved of that are making the most rapid strides in Europe. Right wing parties that would once have been pariahs have been power brokers in Sweden and Finland, and Nicolas Sarkozy has borrowed so much rhetoric from the LePens that some accuse him of legitimizing them.

Worrying about the impact of immigration is not pernicious. Opposing leftist political ideas is everyone’s right in a democracy. Disagreeing over religion is natural.

But when you hear people talking about lumping all these issues together; when you hear them obliterating distinctions and using black-and-white rhetoric; when you hear them talk of existential threats, and above all when you see that they are convinced that small movements that they hate are likely to have an immediate and revolutionary impact, then you should be afraid, be very afraid. That is when extremism learns to hate, and turns to violence.

Democracy depends on a different kind of rhetoric. Healthy politics is about specific programs, not about conspiracy theories as to what underlies someone’s commitment to a program. Most Americans don’t want people to die because of not being able to afford health care. Lambasting that sentiment as tyrannical Bolshevism is a recipe for social conflict.

Unfortunately, some unscrupulous billionaires, Rupert Murdoch and the Koch Brothers prominent among them, have honed their propaganda skills in the media and public life. The promotion of hate, panic, and fear, especially if it is tied to specific political, ethnic and religious groups, always risks violence.

The real message of Breivik is that we should all take a deep breath and step back from the precipice.

Whatever they're calling themselves - conservatives, tea partiers, tea baggers, fundamentalist Christians - the radical Right is the same old radical Right. Where would they be without their over blown fears, the paranoia, the reactionary hatred toward anyone who is not one of them. How much have right-wing conservatives in the U.S. learned from the right-wing conservative terrorist in Norway - probably nothing. The Right could not survive without its rabid nationalism and reactionary politics. Case in point - Fox Juxtaposes Norwegian Terrorist Attack, NYC Islamic Center

Friday night on The O'Reilly Factor, guest host Laura Ingraham did a brief report on the terrorist attacks that killed dozens of people in Norway. She began by saying, "In the 'Back of the Book' segment tonight, two deadly terror attacks in Norway, in what appears to be the work, once again, of Muslim extremists." She went on to describe the attacks, which involved a bombing in Oslo and a mass shooting.

Ingraham then immediately transitioned into a segment on Park51, the planned Islamic community center near the World Trade Center, by saying, "In the meantime, in New York City, the Muslims who want to build the mosque at Ground Zero scored a huge legal victory. A Manhattan judge dismissed a lawsuit by former New York City firefighter Timothy Brown, who was trying to stop construction of the mosque. Bill O'Reilly spoke with a lawyer for the Muslim developers yesterday."

The Anti-American Fox News could nto wait for evidence. There was an act of terror so it must be the people that makes them wet their beds at night - radical Muslims. It turned out to be a Christian Conservative.

Friday, July 22, 2011

The Economy - President Obama is More Conservative Than Reagan

The Economy - President Obama is More Conservative Than Reagan

President Obama endorsed [1] the Senate's Gang of Six deficit reduction plan Tuesday, saying that the proposal “is broadly consistent with the approach that I’ve urged” and “makes sure that nobody is disproportionately hurt from us making progress on the debt and deficits.”

However, an examination of the plan’s specifics [2] reveals that corporations and wealthy Americans won’t feel much pain at all—in many cases, just the opposite. The plan slashes taxes and could bring the top personal income rate down as low as 23 percent—meaning CEOs like Jamie Dimon and Lloyd Blankfein could see their after-tax income increase by as much as $3 million, according [3] to Dean Baker, co-director of the Center for Economic and Policy Research. The corporate tax rate would be reduced [4] from 35 percent to between 23 and 29 percent under the proposal. (Supposedly enough loopholes would be closed to keep total revenue from corporate taxes the same. Even in that scenario, corporations won’t pay an extra penny). Military spending also remains virtually untouched.

Meanwhile, the harm done to seniors, students, working families and others under the Gang of Six plan is unmistakable. Social Security benefits would be reduced, and there are also cuts to Medicare and Medicaid. Students and the disabled would lose some federal government support. Here’s a quick look at who would be most harmed under the new most popular proposal in Washington.

Seniors: Americans over age 65 get hit from several directions under the Gang of Six proposal. First, the plan reduces Social Security benefits by 0.3 percentage points per year by tinkering with the formula that adjusts benefits based on inflation. This could lead to annual reductions of over $1,300 [5] for some seniors. Social Security is solvent through 2037 and does not contribute to the deficit, so this change is particularly misguided.

Medicare also would also face serious reductions. The plan directs [6] the Senate Finance Committee to reduce doctor payments by $300 billion and then cut another $200 billion from the program overall. To achieve that, anything from raising the eligibility age to increasing cost-sharing could be considered and would almost have to be in order to find savings of that magnitude.

The poor: Medicaid will no doubt suffer under the Gang of Six plan, though it’s not possible to put a dollar amount on the cuts yet. The proposal says that the government must “spend healthcare dollars more efficiently in order to strengthen Medicare and Medicaid.” That’s obviously code for spending fewer dollars, which means Medicaid recipients can expect to receive less.

The cuts would be negotiated by another bipartisan group of senators over the next six months, but the starting point for Republicans on Medicaid is downright draconian. In the budget passed by House Republicans earlier this year, supported by a vast majority of Republicans when it came up for a vote in the Senate, the program would be cut [7] by a whopping 35 percent by 2021—even as medical costs skyrocket between now and then. It’s not likely the GOP would win that steep of a reduction, but even halfway to that point would be catastrophic for Medicaid recipients. As none other than Sen. Kent Conrad, a key figure in the Gang of Six, told [7] the Huffington Post in June, Medicaid operates on such low overhead that a cut “goes right to medical services.”

The disabled: The Gang of Six plan completely eliminates a disability insurance program created under the 2009 healthcare reform bill. The Community Living Assistance Services and Supports Act, or CLASS Act, provides [8] in-home care for anyone who becomes disabled, as an alternative to being placed in a nursing home. It provides up to $18,250 annually for these costs, with no lifetime cap. Premiums are $5 per month for students or people under the poverty line, and about $123 per month for everyone else, but it’s also voluntary—anybody can ask their employer to simply opt out.

The elimination of the CLASS Act is another example of sacrificing a valuable program that simply does not contribute to the deficit but rather conflicts with conservative ideology. The Congressional Budget Office estimates [9] the program actually saves the government $70 billion through 2019, because people have to pay premiums for five years in order to qualify for benefits. It also keeps people out of nursing homes, which are a major driver of increasing medical costs.

Students: The Gang of Six blueprint directs the Senate Committee on Health, Education, Labor and Pensions, which oversees federal student loan programs, to come up with $70 billion in budgetary savings. Given the somewhat limited scope of what the Committee oversees [10], in terms of areas that actually create federal expenditures, it’s virtually impossible it could find savings of that scale without serious changes to federal student loans.

One idea popular [11] with the Bowles-Simpson debt commission, and echoed recently by Representative Eric Cantor, would be to end the Stafford student loan program, which subsidizes the interest on loans while students are enrolled in college. An outright elimination of the program would save the government $40 billion over ten years, but would force students to pay interest on their college loans while still in school and likely not drawing much of an income, if any.

Pell Grants, which are federal scholarships for low-income students, are also likely [12] to be on the chopping block. The program is already running an $11 billion deficit, and will no doubt be a juicy target for Senators looking to get $70 billion in cuts.

These are the areas currently identifiable based on the Gang of Six blueprint—but it calls for massive, yet-unspecified spending reductions, and possibly discretionary spending caps down the road. Given the current slant towards reductions for needy Americans in the blueprint, it’s hard to imagine future reductions will be any different.

Some morons keep calling President Obama a socialist. That would be funny except that in fact Obama's economic policies are to the Right of Reagan. If Obama is a socialist that would mean Ronald Reagan was a raging communist. Or maybe today's conservatives have more in common with Mussolini than Reagan or Obama.

Thursday, July 21, 2011

Why James O'Keefe Has become Synonymous With Deception - The Medicaid Fraud Videos

Why Conservative James O'Keefe Has become Synonymous With Deception - The Medicaid Fraud Videos

James O'Keefe, who has a history of releasing deceptively edited videos that ultimately failed to back up his claims, has come out with a new video. This time, he claims that "citizen journalists have uncovered widespread Medicaid fraud."

The video is a compilation of several clips, showing two men, posing as Russian drug smugglers who own an expensive car, visiting offices of the Ohio Department of Job and Family Services in Columbus, Marion County, Madison County, and Franklin County, Ohio. The men are asking about applying for Medicaid for their father and are not applying for Medicaid coverage for themselves.

All of the clips are edited, and the presentation concludes with the "uncut" video of the visit to the office in Columbus. In the videos, the government employees help the two men through the application process, and the worker in Columbus emphasizes that she cannot definitively say whether or not their father is eligible to receive Medicaid. This worker is also clear that assets such as insurance and cars registered in their father's name have to be declared on the application.

The men also ask the worker in Columbus about obtaining abortions for their sister, who they claim provides sexual favors. The worker refers the men to Planned Parenthood, and explains that Planned Parenthood does not "go by age" in providing abortions. Here, the worker is mistaken: Ohio restricts access to abortion for women under 18 and requires parental consent. However, she does not purport to be a resource on abortion, and recommends that the men contact Planned Parenthood directly.

Given that most of the videos are edited and that we only see an "uncut" version of one of them, it does not appear that O'Keefe has uncovered "widespread" fraud. The workers in the videos help the men through the Medicaid application process and do not guarantee eligibility for their father. In the edited videos, we do not see the full responses of the workers.

The Columbus worker does assure the two men in the video that they are not at risk of having their homes searched, something they purported to be concerned about. She also suggests that the men leave the expensive car off of their father's Medicaid application if it is not registered in the U.S. Ben Johnson, a spokesman for the Ohio Department of Job and Family Services, explained that the employees in the videos were county, not state, employees, and made the following statement:

The video is obviously very troubling, we are looking into the matter, we are working with the counties to try and find out what exactly happened. ... Should the video turn out to be accurate, we would hope the counties would at the very least discipline these workers.


Before actually providing Medicaid services, there's a verification process that involves Social Security numbers, applicants have to prove citizenship, so some of the issues this video raises would have eventually come to light in the application process. [Politico, 7/18/11]

The world may be on the verge of having a new adjective. If someone has taken video of you and edited it to look as though you are guilty of something then you're been O'Keefed. Medicaid helps keep millions of seniors, children and the disabled out of the kind of extreme poverty America had back in the 1940s and 1950s. Without Medicaid many of these people would not get health care or they would have to pay out of their limited retirement or other funds. O'Keefe wants to end the program because he, the all mighty judge of what is right or wrong, feels that Medicaid is communism. That is how rabid right-wing conservatives think. They don't like something - a practical solution to a problem, which is all Medicaid is - then that program must be demonized and damn the consequences to the people who need it.

Fox News Parent Company News Corp. Hires Same Law Firm Leading U.S. Chamber Campaign To Weaken Anti-Bribery Law

Wednesday, July 20, 2011

Palin Fans So Paranoid They Create Conspiracy Theory Over "The Undefeated"

The victimhood myths of Palin fans - The reaction of her devoted fans to a blog post about poor attendance at a screening of "The Undefeated" is telling
By Jonathan Kay

Journalism is a funny business. The "worthy" articles and essays that you spend days, weeks or even months laboring over sometimes are the ones that get the least attention. On the other hand, a throwaway blog post that might have taken you an hour or two to write goes viral, generating tens of thousands of hits and dozens of reprints all over the Web.

Such was the case for the Atlantic's Conor Friedersdorf, who typically writes about weighty issues connected with "politics and national affairs." He’s a good writer -- even if you’ve never heard of him. Until now.

What has put Friedersdorf on the map is one of those dashed-off blog posts I referred to in the first paragraph. A few days ago, Friedersdor went to see a midnight showing of "The Undefeated," a limited-release Sarah Palin propaganda film then playing in 10 theaters, including one in Orange County, Calif., where Friedersdorf happened to be visiting his parents. He wrote an article for the Atlantic's website about the experience, whose title -- "Sarah Palin Movie Debuts to Empty Theater in Orange County" -- sums up his thesis.

The tone of the piece might be described as snark lite. He ends his reportage, for instance, by asking the theater manager: "In hindsight, do you wish you’d had one more screen showing 'Harry Potter'?" But overall, the tone isn’t as scathing as you’d expect from a snickering "lamestream" egghead. Good writers let the facts speak for themselves. And the fact that no one in Orange County wanted to see "The Undefeated" tells us a lot about Sarah Palin’s dimming political fortunes now that Michele Bachmann has become the Tea Party’s alpha female.

After leaving the theater, Friedersdorf went home, posted his account of the evening, and went on with the business of his "real" work. He didn't realize at the time that the blog post would make him famous.

Within hours, it rocketed around the Web -- catnip for every Palin-hating liberal who loved to see this object of ridicule fall on her face. Never mind that the film sold out at a Texas screening, and did respectably in a few other venues (details that Friedersdorf himself has been careful to acknowledge). The Internet isn’t about listing information, it’s about twisting it.

Before I relate what happened next, it’s important to explain a very important fact: Sarah Palin isn’t like other politicians. I know this from personal experience, having watched her speak to a massive Tea Party event that I covered while researching my newly published book about conspiracy theories, "Among the Truthers." She is not so much listened to as worshiped. Her stock right-wing policy formulations and anti-Obama barbs are not really the source of her appeal. Rather, Palin is loved for the personal qualities she embodies: Her large family, her decision to give birth to a child she knew had Down syndrome, her son who served in Iraq, her small-town clapboard roots. There is a rapturous quality that comes over right-wing audiences when she speaks, as if they were in the presence of a Madonna figure come to deliver America from its travails.

In practice, Palin’s political policies were fairly conventional: In 2007, the year before she launched her national political career, the then-governor signed a record-breaking $6.6 billion operating budget into Alaska law. Federal expenditures account for one in three jobs in Alaska. In 2008, in fact, her state was the largest per-capita recipient of federal earmarks in the nation. But in the dream world of Palin’s hardcore fan base -- and perhaps even her own mind -- none of this matters. Instead, Palin partisans focus on her constructed identity: a patriotic, God-fearing small-town girl who grew up in a Norman Rockwell Ameritopia of state fairs, basketball tournaments, beauty pageants and wooden churches. To announce one’s support for Palin is to declare one’s belief that this vision of America somehow can be recaptured, that the country’s social contract can magically be turned back to the era of sock hops and drive-in restaurants, if only Americans elect the right people. To put down Palin, on the other hand, means that you hate America.

This phenomenon was reinforced for me in 2009, when I criticized her decision to resign as governor of Alaska. Many of the right-wing critics who supplied comments on my newspaper's website plainly had decided that Palin was a sort of political Christ figure, who has been martyred for America’s political sins.

"It’s because of incessant criticism from people like you why she is quitting," one wrote. "Attack her, attack her children, attack her grandchildren. No individual should have been treated by the press as this woman has. Shameful, even after the election was over, there was no let up. You and your ilk were out to destroy this woman -- congratulations … Your ilk despises her because she refused to abort her Downs Syndrome child."

Another wrote that such "haters" as me "hate Christians. They hate the average person, who is not an elitist snob, or is not an copy of their leftist agenda. They hate the fact [that Palin] is a well spoken … They make up lies, just to avoid the truth. The lies and misinformation they spread is pure HATE, the Hollywood elite is going after her because they fear her, she is capable to put these liars in their place."

All of which brings me back to Friedersdorf. The idea that Palin is an anointed figure who bears her suffering to redeem America’s sins helps explain the bizarre reaction to his blog post. In the imagination of Palin-worshippers, the idea that her Orange County church could be empty, even at midnight, simply does not compute. It can only be explained as being some lie hatched by those elitist, Hollywood "haters."

And so began the conspiracy theories.

As Friedersdorf reports on the Atlantic site today, the first hint of out-and-out paranoia began with one William Collier, a pro-Palin blogger and movie marketer. He announced to the blogosphere that the midnight showing of "The Undefeated" in Orange County was unscheduled -- meaning that Friedersdorf might have arranged a "secret showing" that would supply him fodder for anti-Palin ridicule.

You can’t argue with conspiracy theorists. But Friedersdorf tried. He wrote Collier a note, as follows:

Bill, I am going to presume that you’ve made an innocent mistake, but I expect you to correct it. Attached is an image from the Los Angeles Times dated Thursday, July 14, 2011. The movie was advertised there, just as you’d expect, and contrary to the assertion in your post that ‘there has never been any mention of or advertising for any midnight showing.’ The movie was also advertised on Google, where I found it.

Collier's response was that the Times listing merely demonstrated "how elaborate such a setup could be." As students of conspiracism will immediately note, this is the same logic that drives "birther" conspiracy theorists to insist that the Barack Obama birth announcements placed in Honolulu newspapers 50 years ago must also have been part of an equally "elaborate" setup.

In another age, this is where the story might end. But Collier's nonsense was picked up by an obscene right-wing thug named Andrew Breitbart, who twittered the conspiracy theory to his legions of followers. And so now, the Web is rife with blog headlines such as "Palin Movie Hoax: How Atlantic reporter used unadvertised midnight show to create 'empty theater' debut headlines." Anyone who spends 30 seconds researching the story will find out that it’s nonsense. But that’s 28 seconds more than most Internet users have to spare.

Conspiracy theories act as a bridge between ideology and reality -- in this case, between the right-wing utopia in which Sarah Palin rescues the United States from liberalism by the force of her own pro-life Ivory Girl goodness; and the reality of empty theaters and fading hopes. But more broadly than this, the whole episode demonstrates what happens when the ancient human instinct for heroes and saviors gets mixed up with the very modern Internet rumor machine: For the shrillest partisans, paranoia will always play to a packed house.

Jonathan Kay's new book, "Among the Truthers: A Journey Through America's Growing Conspiracist Underground," was published by HarperCollins in May. Visit his blog at
Palin has displayed an enormous capacity for screwing things up. Elected mayor of a town of 7,000 people she managed to leave the town over a million dollars in debt. her mayoral skills mirrored the presidential skills of George W. Bush. he too spent money like there was no tomorrow a never raised taxes to pay for his spending. Conservatives seem to believe in magic economics. The kind where they can spend all they want and never have to pay for it. Palin's fans voted for Bush. Bush lied to the country and trashed our national treasure. he thinks he was a great president. Palin thinks she was a great mayor. Palin's fans think she was great. There is no arguing with the delusional beliefs of pure craziness. Palin and her base of supporters are not patriots as much as nationalists who talk a lot about doing good for the country yet have no idea what that actually means. Only Palin, who was defeated soundly in the 2008 elections would have a movie denying reality - "The Undefeated" - sounds like a parody.

Tuesday, July 19, 2011

Who Is To Blame For The National Debt and Debt Ceiling Debacle

Who Is To Blame For The National Debt and Debt Ceiling Debacle

Over the past weekend more than 35,000 protesters turned out to organize against the incumbent Governor of New Jersey. That's a medium sized protest by anyone's count. Nothing to scoff at. I suppose you could say that's a lot of tea baggers in one place protesting Democrats, right? Wrong. The protesters weren't tea baggers or even people purportedly against government spending. They were mainly school teachers and their supporters protesting cuts made by Republican Chris Christie. The Saturday protest quickly turned into one of the largest in New Jersey's history. Yes, substantially larger than the tea bagger protest that drew about 400 people earlier in the month.

Which protest do you think Fox News covered and helped promote? Well the Patriotic Freedom Fighters who shaved their nuts and showed up en masse to protest the very government services they so receive. Of course Fox News would. Whatever supposedly helps the Republican cause is what they are for.

To demonstrate just how much Fox loves the tea baggers, they are once again today promoting them on their front page.

Frustration with the growing debt crisis? They are a deranged people supported by a psychotic media organization. It's worth noting the $13 trillion debt Fox and the tea baggers are now so concerned about is largely the result of Republican Ronald Reagan, Republican George H. W. Bush and Republican George W. Bush. The three fiscally conservative Republicans account for 80% of the national debt. The "growing debt crisis" didn't by any stretch of the imagination just now begin. And no where throughout the history of the last 30 years was there a single tea bagger in the street or any concern from Fox News until now.

I'll try to make it slightly easier for Republicans to understand. 8 years of Reagan the debt increased by $2.7 trillion. 4 years of King George I the debt increased by 1.5 trillion. 8 years of King George II the debt increased by $6.2 trillion. Compare that to 9.5 years of Clinton and Obama the debt increased by $2.6 trillion combined. The combined total of two Democrats doesn't even equal Reagan, the Republican poster boy for "fiscal conservatism."

Just like how 400 people protesting is worthy of their promotions but 35,000 doesn't get a single mention, running up $10 trillion of debt by Republicans never garnered a single second of attention by Fox News or the tea baggers. Now that Republicans aren't in control anymore, Fox News and the tea baggers have them some concerns. Lying about it, of course, isn't one of them.
We as a nation are past irony or just so deep in it we do not recognize it. Conservatives have run up debts whenever they have had the power to do so. They would not enforce financial regulations just because they hate regulations; this is what largely caused the Great Recession. Now President Obama has proposed a super conservative budget that is to the Right of Saint Reagan and the tea baggers have rejected it. Completely unwilling to compromise for the good of the country. That sounds about like the wacky conservatives we have all come to know.

Monday, July 18, 2011

Republican Media Hero Rupert Murdoch Mission Is To Debase Democracy

Republican Media Hero Rupert Murdoch Mission Is To Debase Democracy

We are swimming in a gloop of scuttlebutt and tittle-tattle, driven by “unnamed sources” who always represent themselves as “close to the investigation” yet who speak only “on condition of anonymity.” Those deceptively anodyne descriptors have moved us down an ethical spectrum from transparent reporting to stories that are “underwritten,” bribed, extorted or outright lies.

Consider, for example, the insidious model of Rupert Murdoch’s media empire. Fox News Channel is a subsidiary of the Fox Entertainment Group, which in turn is a subsidiary of Murdoch’s conglomerate News Corporation. It’s a perfect circle, a consciously structured looping between news and entertainment, a business model premised on positing the amorality of “anything goes” as the civic equivalent of “freedom of the press.”

In Britain, Murdoch’s devouring influence is finally being challenged with revelations that his employees compromised a murder investigation by hacking into the voicemail of the victim and erasing her last messages; tapped the phones of politicians with whom Murdoch took issue; and paid police officers and government officials “in the six figures” for information about ongoing investigations. It is perhaps only in America that any enterprise of Murdoch’s labeled “fair and balanced” is still received as anything but laughable. We know, too, that paying for information has become broad practice among American tabloids like the Post; but we seem inured to the concern that tabloid sensibility is not just unreliable but corrupting.

The Anglo-American justice system constructs criminal cases as singular—as particular to named individuals and specifically delineated indictments. Social narratives, norms and values can never be entirely absent, but the system attempts to regulate their influence through mechanisms like the rules of evidence (barring rumor and unsubstantiated opinion) and standards of proof (like “reasonable person” and “reasonable doubt”). To keep from destroying reputations unnecessarily, we adhere to a presumption of innocence. Police are supposed to keep certain aspects of investigations closed until there is at least “probable cause.” Similarly, both sides screen and filter evidence for probity. In some cases, judges have the discretion to sequester juries from outside or inflammatory input. And we trust lawyers, prosecutors and judges to keep confidences as a matter of professional ethics.

But none of these structural buffers can operate as they should if a Murdoch-like empire runs the world, carelessly spitting out the home addresses of those it wishes to skewer, hacking into the phones of unlucky witnesses, pursuing stories into sealed records, private homes and bathroom stalls. Our democracy depends on a free press to discuss the issues of the day without interference from government. What that noble ideal does not account for is the existence of media monopolies able to exercise national and international control over civic spaces—even to the degree that their power vies with that of governments. Their careless, nonempirical, even fictionalized narratives invade privacy, ruin careers, mythologize racial stereotypes, exploit class divisions, exacerbate ideological discord, unleash mobs, wreak vengeance, assemble armies and annihilate the common good.

Today’s media chatter is beholden not to truth but rather to profit, fear and fantasy. What becomes of the duty to listen that is at the heart of free expression? What becomes of the shared mulling of ideas that allows us to think of one another as equals who exist in society with one another? What becomes of the measured thought exchange that is the essence of due process?

by Patricia J. Williams
Fox News is the embodiment of dumping down the news. making the truth merely a matter of opinion. Its defenders in parrot like fashion claim Rupert Murdochs Fox News tells it like it is. Meaning they tell their low information viewers who live in a mental bubble what they want to hear. many of them actually believe that Steve Doocy, Bill O'Reilly, Sean Hannity and the other talking heads would never look into the camera and tell lies. Isn't it illegal to lie anyway. Fox tells lies daily and no it is not against the law to tell the kind of twisted lies Rupert Murdoch 's Fox News tells. All they have to do is claim what they said was true to the best of their knowledge. Their knowledge extends as far as their radical right-wing agenda tells them. Tell the truth or push their anti-American agenda? Republicans, Murdoch and Fox News have made their choice - an anti-American, anti-Democracy agenda.

Saturday, July 16, 2011

South Carolina Gov. Nikki Haley(R) Signs On To Republican Plan to Destroy Democracy One Step At a Time

South Carolina Gov. Nikki Haley(R) Signs On To Republican Plan to Destroy Democracy One Step At a Time

South Carolina Gov. Nikki Haley(R) has a unique solution to the problem she created by signing a law in May that will require voters to present a government-issued photo ID at the polls — she will personally drive you to the DMV. As with any voter ID requirement, Haley’s law could have the effect of suppressing the vote of thousands of people who don’t currently have South Carolina IDs, especially minorities, college students, rural voters, and the elderly. For these people, it is often difficult or impossible to travel to the DMV to obtain a license, so many wind up not being able to cast a ballot come Election Day.

But Haley isn’t worried because she has a plan. “Find me those people that think that this is invading their rights,” she told a local Fox affiliate, “And I will go take them to the DMV myself and help them get that picture ID.”

So, assuming Haley’s offer is genuine, how many rides will the governor be giving? South Carolina’s election commission estimates that 178,000 of the state’s voters lack the ID necessary to allow them to exercise their right to vote. Google Maps estimates that it will take 11 minutes for Nikki Haley to drive from the governor’s mansion to the nearest branch of the state DMV:

That DMV branch is open five days a week for 8.5 hours a day. Assuming Haley wants to save some time and gas, we’ll assume that her car can fit four passengers. That means that if every single one of these 178,000 voters were to present themselves to the governor’s mansion and request the free ride Haley just offered them, it would take just over 7 years, 4 months, 3 weeks and 5 days if she spends every single minute that the DMV is open doing nothing but playing taxi driver. That’s nearly two full terms — assuming there’s no traffic.

A simpler solution: Don’t jeopardize peoples’ right to vote in the first place.
Haley belongs to the correct party. She is neck deep in corruption and along with the South Carolina's conservative legislature is determined to have government by and for the elite and special interests.

Friday, July 15, 2011

More Than Ever We Need Revenue Increases Not Deficit Reduction

This article is prescient about our current situation, written just before the elections of 2008, Read My Lips: We Need These Taxes (Sunday, June 15, 2008)

Let's imagine an alternate universe. The U.S. government is running a large and growing deficit. Not far down the road it faces huge increases in Social Security and Medicare costs. Naturally, the candidates for president want to remedy this by raising revenue. They don't want us to bequeath bigger deficits to our children or stake our future on foreigners' willingness to keep lending us money.

But have you heard this speech? "My fellow Americans, I have a plan to raise taxes so that the budget will be closer to balance and future Americans won't have to worry about their retirement security." Neither have I.

Somebody, though, should be giving it. The U.S. budget deficit will be $400 billion -- or 3 percent of the gross domestic product -- this year, according to the Center on Budget and Policy Priorities. And it's growing. A gas-tax "holiday" (as advocated by John McCain) or a middle-class cut in the payroll tax (candy from Barack Obama) are pandering and will only make things worse. How would a conscientious president deal with the deficit and also make the system fairer? Here are five relatively painless ways.

1. End preferential treatment for private equity fund managers.

When you and I earn ordinary income, we pay a maximum rate of 35 percent in taxes. The max for private equity fund managers is 15 percent. This includes folks like Stephen Schwarzman, the head of Blackstone, whose net worth has been estimated at $7.8 billion and who (when he's not in St. Tropez or sundry other vacation digs) lives in the former Park Avenue apartment of John D. Rockefeller Jr.

Why do fund managers pay less? To encourage investment, the tax system charges a lower rate -- 15 percent -- on capital gains. No one objects to fund managers paying that rate on the profits they earn on their own capital. But here's the rub: Most of their profits come from investing other people's money. Typically, for every dollar their investors earn, the managers take a 20 percent cut. This is, in effect, a fee -- or ordinary income. Why shouldn't a Schwarzman or a Henry Kravis of Kohlberg Kravis Roberts & Co. be assessed the same rate on their fee income as anyone else? And since this wouldn't affect the people putting up the money, it would have no effect on total investment or economic growth. This change would raise only $3 billion a year, but on simple fairness, it's a must.

2. Raise the cap on the payroll tax.

Social Security is financed by a 12.4 percent tax, but it's assessed only on the first $102,000 of income. So people who earn more than that amount pay a lesser share of their total income. Warren Buffett, currently the richest American, has noted that his secretary is taxed at a higher effective rate than he is. Since income disparities are growing (the top 1 percent of earners took home 23 percent of all income in 2006, the highest total since just before the 1929 stock market crash), more and more income is escaping the tax. And Social Security needs the money: Its benefits will eclipse payroll tax revenues by 2017 (after that, the system will have to reclaim money it has lent to the rest of the government; eventually it won't have enough). Raising the cap would help preserve benefits. There are many ways to do this. Obama favors extending the tax on the wealthy -- perhaps on incomes above $200,000. More simply, we could raise the current ceiling.

3. Reinstate a meaningful
inheritance tax.

The Republicans won a rhetorical debate by labeling the inheritance tax a "death tax" -- the very phrase conjures up an image of heartless bureaucrats dragging the elderly from their beds to settle up, depriving them of their final moments of peace. In reality, the tax is paid not by the dying but by their living heirs. Prior to President Bush's tax cuts, which called for a gradual phaseout, the inheritance tax was levied only on estates worth more than $600,000, or 2 percent of the total. By next year, the floor will rise to $3.5 million -- at which point only one-third of 1 percent of estates will be taxed.

The tax is due to be repealed in 2010 -- and then restored in 2011 (a gimmicky flip-flop that Congress approved so that the projected deficit wouldn't seem astronomical). Congress is certain to revise the inheritance tax during the next administration. Reverting to half the pre-Bush level, as compared with total repeal, would net the government $40 billion a year.

The justification for this tax is that while the country allows -- and encourages -- citizens to accumulate great wealth on Earth, some of that fortune should be redirected to society once they enter the hereafter. The practical argument is also important: Repeal of the estate tax would be a death knell to charitable contributions and to this country's unique network of private foundations.

4. End unfair deductions.

First, the mortgage deduction. Sounds crazy, like banishing apple pie, right? But why should the government subsidize homeowners, who on average are far wealthier than people who rent? The home-mortgage deduction costs the United States more than $75 billion a year -- with half going to the richest 12 percent of taxpayers. And the evidence that it leads to higher home ownership is sketchy. More likely, it marginally raises home values. Given the real estate slump, propping up prices may seem like a good thing. But sooner or later -- as the recent crash should make clear -- prices return to their economic value anyway.

The mortgage deduction's true effect is to encourage people to borrow more on their homes. Haven't we had enough of that? A similarly unfair deduction, which McCain favors repealing, involves corporate health-care plans. If your company has a plan, you don't get taxed on the benefits. This costs the Treasury a whopping $125 billion a year and unfairly penalizes people whose employers don't have plans. Repealing these two deductions would eliminate almost half the deficit. Or the Treasury could replace them with a credit distributed evenly to all residents and all health-care consumers.

5. (Best for last): Repeal the Bush cuts in income and capital gains taxes.

They mostly benefited the wealthiest Americans, and this would save $2.5 trillion or so over a decade. The argument against the cuts hasn't changed, but now the evidence is in. In the 1990s, the U.S. economy boomed, and the government achieved a budget surplus. In this decade, growth has been slower; the surplus -- which the tax-cutters predicted would last indefinitely -- was gone within a year. Reversing the cuts (a step Obama and Clinton favor) would raise the top rate on ordinary income to 39.6 percent from 35 percent. It would also raise the capital gains rate to 20 percent. Wall Street frets that the latter would stymie investment. But the rate was 20 percent in the '90s -- probably the stock market's best decade ever.

I said that these hikes would be relatively painless. Since all taxes cost somebody money, you could say that every hike is painful. But not having money for retirement benefits or for health care for kids or for cities leveled by hurricanes or for defense and national security is also painful. The real questions should be: Would these hikes cause unfair pain to those being taxed, and would they cause more than marginal distress to the overall economy? The overwhelming answer is no.
The argument generally goes that these people who have astronomical high incomes did some did of special work to earn it. Really the guy who takes in a few million a year works harder than a scientists who discovers a treatment for heart disease. When we get above the working class in terms of pay, you have people who get more wealth simply because they already have wealth - working and earning the money is no longer part of the equation. Work produced is no longer how we measure productivity - at least for millionaires - each of us is different and uniquely talented, but our situations in life are only sometimes because of individual effort, the monetary rewards are frequently determined by as much by the structures and social conditions which the the rich and powerful have set in place. Taxes are a small compensation to pay for all the infrastructure and labor that helped make the rich rich.

Thursday, July 14, 2011

Republican Determined to Cause Their Second Great Recession. When Will America Learn

Republican Determined to Cause Their Second Great Recession. When Will America Learn

Call it what you will: punt, cave, Machiavellian genius; there's no question that Mitch McConnell's proposal to abandon the GOP's attempt to extract major spending cuts in return for a vote to raise the debt ceiling has drastically upset Washington's political calculus. There has been an an explosion of chatter about how McConnell's move is a tacit acknowledgement of a debt ceiling stalemate: Republicans won't agree to any deal that increases revenues; Democrats won't agree to any significant cuts in entitlements that don't include at least some new taxes.

Suddenly, there's a new conventional wisdom: Since the economic consequences of not raising the debt ceiling are supposedly unthinkable, something like the McConnell plan must eventually carry the day.

There's just one problem here: the House GOP.

The Wall Street Journal's David Wessell puts it nicely:

[T]he most contentious strikes (in the days when the U.S. had strikes) came when company executives and union leaders reached agreement, only to discover that union leaders couldn't deliver the membership. That's the House today. The Republican rank-and-file is distrustful of the leadership, and the leaders don't completely trust each other. Hence the president and Republican leaders are having trouble cutting a deal.

I don't normally believe much of what House Majority Leader Eric Cantor has to say, but his comments captured in a Politico story today seem to be an accurate description of the current reality:

"Nothing can get through the House right now," the Virginia Republican said. "Nothing."

Consider how we have arrived at this point. Cantor walked out of negotiations with the White House team led by Vice President Joe Biden, because, he said, the House would not accept any deal that resulted in revenue increases -- even if those increases were the result of ending tax breaks and closing loopholes. Then the "grand bargain" fell apart because House Republicans revolted en masse against the notion of sanctioning even $4 trillion in spending cuts if it required $1 trillion in tax hikes. Now we are supposed to believe that the same people who have rejected two big deals that would have resulted in real spending cuts are going to go along with a plan that might not result in any spending cuts at all. It's very difficult to see how that happens.

I've believed for a long time that pressure from Wall Street would ensure that the debt ceiling would be raised before the deadline -- and evidence is amassing that exactly such pressure explains why McConnell broached his "contingency" solution on Tuesday. But it now seems to me that the chances of a real disaster are even higher than they were before the McConnell stunner. As Robert Draper's Sunday New York Times Magazine story profiling the House Republican freshman class suggests, many members of the newest crop of representatives do not seem to understand, or care, about the potential fallout from their actions.

As Tim Griffin, a freshman from Arkansas, put it to me, "A lot of us feel that we're here on a mission, and the mission is now, and we're not that concerned about the political consequences." That mission -- to throttle the role of the federal government in general and Obama's progressive initiatives specifically -- may seem more like a kamikaze pursuit to some of the freshmen as the 2012 elections get closer and their constituents become increasingly impatient for government solutions. For now, however, they and their Tea Party backers constitute the most formidable power bloc on Capitol Hill.

Or, as Jon Chait puts it less politely: "The more we find out about the House Republican caucus, the more obvious it becomes that they're not just trying to maximize their leverage by pretending to be crazy. They're crazy."

Just look at Michele Bachmann, the chair of the House's Tea Party caucus. David Weigel reports her version of reality, delivered Wednesday morning, and it's a doozy:

It was Bachmann, at the end of the event, who captured the emerging GOP sentiment best: "President Obama is holding the full, faith and credit of the United States hostage so he can continue his spending spree!"

In Bachmann's world, Obama, the president who offered Republicans terms that disgust and horrify his own party, is holding the United States hostage. But Bachmann has long maintained that she would vote against raising the debt ceiling under almost any circumstances (unless attached to something completely unworkable as far as dealing with the nation's current economic situation, like a balanced-budget amendment.) Does Bachmann understand the meaning of the word "hostage"?
The Republicans are holding the economy hostage for the second time. Obama has agreed to every spending cut - weather its the $2 trillion dollar plan or the $4 trillion dollar spending cut plan. In exchange for paying Republican to release the hostage he has asked to close some tax loopholes and write-offs ( no tax increases). Republican have declared they're going to shoot the hostage anyway. Criminals who act like Republicans - who must have everything they want with NO Compromises are usually called sociopaths. The only reason we're at this point is because Republicans will not raise taxes to what they were during the peace and prosperity years of the Clinton administration.