Friday, October 11, 2013

Editorial: GOP: Saboteurs or Morons?


It would be amusing if it weren’t so maddening that Republicans blame President Obama and Senate Majority Leader Harry Reid for the federal government shutdown and House Republicans’ refusal to go along with raising the debt ceiling, which threatens to cripple the government’s ability to finance its debt and would disrupt the world economy, unless the President agrees to stop implementation of the Affordable Care Act.

Republicans have talked themselves into risking financial calamity if Democrats won’t reverse the health care reform, which is designed to provide health insurance for the 48 million Americans, many of them working poor, who are not covered by health care plans — and it was a Republican idea to begin with.

Tea Party Republicans are the ground forces opposing all things Obama in Congress, intimidating House Speaker John Boehner and more moderate Republicans who would go ahead with the “clean” continuing resolution to put the government back to work. But the New York Times reported that conservative activists, led by former Attorney General Edwin Meese III and financed by right-wing billionaires, have been working since President Obama’s reinauguration in January to derail the President’s health care law. More than three dozen conservative groups have pushed their fellow Republicans into shutting down most federal agencies, and the shutdown is enforced by radical groups such as Heritage Action for America and the billionaire Koch brothers whose many affiliated political action committees have threatened to run attack ads and primary challengers against Republican officeholders who refuse to toe the Tea Party line.

This is the latest manifestation of conservative Republican ideology that has been promoting anti-worker economics for more than 80 years, ever since the GOP resisted Franklin Delano Roosevelt’s New Deal programs to end the Depression. Then, after the Depression was ended, Republicans spent the rest of the 20th century trying to dismantle the New Deal, with its pesky regulation of businesses to protect workers and consumers. They went after Roosevelt’s signature program, Social Security, as well as Lyndon Johnson’s signature domestic health programs, Medicare and Medicaid, which were enacted in 1965. Now they don’t want President Obama’s Affordable Care Act to get a running start at showing that government can improve the lives of working people, even though “Obamacare” is patterned after a program that was originally suggested by the conservative Heritage Foundation and patterned after Mitt Romney’s bipartisan health-care reform in Massachusetts.

[See Thomas Frank’s cover story for more on the conservative long march to reverse the New Deal and Edward McClelland’s story on page 12 on how conservative economic policies under Republicans and Democrats hollowed out the middle class.]

It took a long time for the generation that owed their families’ survival in the Great Depression to the New Deal, and then thrived on the post-war economic expansion that created the Great Middle Class, to turn their backs on the economic system that made the United States the richest nation on Earth. The economy boomed in the 1950s and ’60s with strong industrial labor unions and income tax rates that topped out at 92% for the wealthiest classes, but as Big Money took over the newspapers, magazines and broadcast outlets in the 1960s and ’70s, the word went out with numbing regularity that labor unions, high taxes and regulations were bad for the “job creators.”

In the 1960s, President John Kennedy decided to give the capitalists a break. He proposed that the top marginal tax rate be dropped to 77% in 1964. The top tax rate fluctuated between 70 and 77 percent through the ’70s, until Ronald Reagan took office in 1981. Reagan cut the top tax rate to 70% in 1980, then to 50% in 1982, 38.5% in 1987 and finally 28% in 1988. And you know what? Not only did capitalists take their profits out of their American factories and find cheaper places to manufacture their goods overseas; the Reagan administration also ran up record deficits as the national debt rose from $900 billion when Reagan took office to $2.8 trillion when he left. His successor, George H.W. Bush, reluctantly increased the top tax rates to 31%, but it wasn’t enough to turn the tide of red ink.

When Bill Clinton reached the White House in 1993, he convinced the Democratic Congress to increase taxes to 39.6% on incomes over $250,000. The budget and tax increase was adopted without a single Republican vote, as GOP economic leaders predicted — nay, they guaranteed — that the tax increase would plunge the US into economic collapse. Instead, of course, the late 1990s saw an economic boom and the increased tax revenues balanced the federal budget in 1998 for the first time since Lyndon Johnson left a balanced budget in 1969. Clinton balanced the budgets from 1998 through 2001, with surpluses for those four years totaling $559 billion.

What did Republicans learn from this experience? When George W. Bush was awarded the White House by the Republican Supreme Court in 2001, his administration expressed alarm that the federal government, with its budget surplus, was paying off the national debt too quickly, leaving capitalists no safe harbor for their excess profits, so Bush cut the top tax rate, first to 38.6% in 2002 and then 35% for the rest of his tenure, despite the costs of his War on Terror. He also cut the top tax on unearned income — interest, dividends and capital gains — to 15%. So millionaires and billionaires parked that undertaxed unearned income in banks overseas and the US national debt piled up once again.

After the 2008 election, when Barack Obama took office with the economy in free-fall, largely due to Wall Street financiers abusing the deregulation of the banking system, Republicans rediscovered the danger of a rising national debt. The GOP resisted Obama’s efforts to stimulate the economy with $800 billion in federal spending and tax cuts as well as his efforts to save General Motors and Chrysler with $85 billion in loans. Of course, they also resisted the drafting of the Affordable Care Act, which is expected to save the federal budget $210 billion through 2021, according to the Congressional Budget Office. Still, after 43 straight months of private sector job growth, the slowly improving economy has halved the $1.4 trillion annual deficit Obama was handed in 2009, to a $642 billion deficit projected for 2013, but Republicans are demanding that Obama return to GOP economic nostrums.

Supply-side “voodoo” economics got its shot in the Reagan and Bush administrations and it has proven to be quackery that hollowed out the American economy and ballooned the national debt. If Republicans really were concerned with restoring the economy and eliminating the deficit, they would:

• Join progressive Dems in rolling back the top tax rates to the pre-Reagan levels and do away with the low rates for capital gains, which would give capitalists an incentive to reinvest their profits in their businesses, but make room for tax breaks for the middle class, which actually would stimulate the economy;

• Resume enforcement of the Sherman Antitrust Act, which prevents cartels and large corporations from dominating the markets;

• Reinstate the Glass-Steagall Act, which kept investment banks from speculating with federally insured deposits;

• Replace free trade with fair trade laws that protect US jobs;

• Reverse economic policies that encourage corporate executives to maximize shareholder value at the expense of what is best for their employees and the communities in which they do business (as Thom Hartmann frequently argues on his radio show).

Instead, Republicans are demanding that they get something in return for letting the government open back up and pay the bills that Congress already has appropriated. One GOP proposal is that Democrats agree to “entitlement cuts” to Social Security and Medicare as a “compromise” from their previous demand that the Affordable Care Act be defunded. Some bad ideas just won’t go away. Whether Republican House leaders are saboteurs or simply morons, Democrats should stand firm against their hostage taking and leave Social Security and health care alone. — JMC
From The Progressive Populist, November 1, 2013
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Selections from the November 1, 2013 issue













Karl Rove chides House Republicans for not having an endgame. He should know

By Marc Jampole

Congratulations to Karl Rove for joining the “reality based community,” which comprises you and me and other lesser mortals who look to empirical reality when analyzing and acting in the world. 

Remember it was Rove who, when referring to the war in Iraq, supposedly said that some people were “in what we call the reality based community” and “believe that solutions emerge from your judicious study of discernible reality…That's not the way the world really works anymore. We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that's how things will sort out.”

It was Rove, too, who exploded in rage when Fox News declared Obama the winner in Ohio and therefore of the 2012 presidential election. An Obama win went so much against the alternative reality that Rove and other Republicans had constructed that he went into a hissy fit of denial.

Now Rove writes in the Wall Street Journal that it was probably unwise of Congressional Republicans to start this current fight over the debt ceiling and federal budget. In the Great Karl’s words, “In general, it's not wise to engage in a battle without having an endgame.”

Entering a battle without an endgame is something about which Karl Rove should know quite a lot. Rove was part of the neo-con faith-based if-wishing-made-it-so brain trust that planned and implemented the Iraq War without considering what would happen after the invasion. They went to war without an end game. We all know how that worked out.

I’m sure all my readers’ hearts are as warmed as mine to learn that Rove has dropped his objection to reality and has decided that maybe it is better to think first and shoot later.

Rove does remain part of the conservative propaganda machine that is trying to sell us on the nonsense that the country blames the President and Democrats as much as they do the Republicans for the government shutdown and imminent default. The latest polls of course contradict that colored view, with 22% more of Americans blaming Republicans than blaming Obama and the Democrats.

The Republican media apparatchiks, including Rove, are also trying to convince us that the Democrats are more to blame for the mess, because they have refused to enter serious discussions about deficit reductions.  Also not a part of reality: As President Obama recently pointed out, House Republicans turned down 19 requests to enter into joint discussions with the Senate. I am not the first to speculate that the House Republicans were probably too busy to meet on the budget because they were taking more than 40 votes to turn back the Affordable Care Act.

What the Tea-Party Republicans really object to is that President Obama, Democrats, many of their fellow Republicans and most of the country see the world as it is and not the world that these right wingers want to bring into existence by denying reality, the Democratic process, and, most tragically, the needs of millions of innocent middle class and poor people across the country.

Wednesday, October 9, 2013

Republicans who say defaulting is okay are lying; reflect a “good old boy underbelly” business culture

By Marc Jampole

If the topic is the potential impact of not raising the debt ceiling, how do you know whether Senators Richard Burr and Rand Paul and Representatives Justin Amash and Paul Broun are lying? Their lips are moving.

All four of these distinguished legislators are saying that the impact of not raising the debt ceiling will be minimal. And all are engaged in straight-faced lying.

Representative Broun, Georgia Republican, says that Obamacare is the greatest threat to our economy, despite the many studies that show that the new healthcare law will save money because millions of newly insured people will go to doctors with symptoms instead of emergency rooms when very ill.  Obamacare thus adds money to the economy, something that is supposed to be good. By comparison, not paying all our bills will lead to hundreds of thousands of people losing their jobs, interest rates going up and foreign investors losing confidence in the dollar as the central financial pillar of the global economy. That’s all bad.   

Both Representative Amash, Michigan Republican, and Senator Burr, North Carolina Republican, point out that with tax revenues still coming in, we will still be able to pay the interest on all the various instruments by which the federal government borrows money. But what they don’t say is that other bills won’t get paid—and no one likes that. When you’ve lent a buddy money and he’s paying you back, but you hear he isn’t paying back his sister, don’t you get a little uneasy?  

Their claims are so outrageous that even the U. S. Chamber of  Commerce and the National Association of Manufacturers, as free-market and anti-government as organizations can get, are telling Congress to raise the debt ceiling.

Broun, Burr, Amash, Paul and other Republicans suggesting that default ain’t so bad all reflect a “good old boy underbelly” business culture that no one likes to talk about in the big slick business publications like Wall Street Journal, Fortune and Forbes. It’s the culture of living right at the edge of financial ruin, one step ahead of your creditors, but still in the game. Multiple bankruptcies, dragging out payments, trying to keep afloat with another loan, selling suspect goods, using slightly suspicious selling practices, maybe puffing up inventory a little or pledging the same equipment on two personal loans—these actions characterize this entrepreneurial culture, and it’s surprising how large it is.  The good old boy underbelly business culture serves as the real underlying cause of the real estate bubble that wrecked our economy: liar loans, sub-primes, bundling bad loans with good—all qualify as underbelly business behavior.

In popular entertainment—“Cadillac Man,” “The Goods,” “Fargo,” “Glengarry Glen Ross,” “Tin Men”—this business culture is associated with selling automobiles, real estate and siding, but in fact it’s not the business but the way the owner runs it that defines the good old boy underbelly culture.
Again, I ask you to personalize: Do you like doing business with these sharks? Why should banks, large multinational corporations and foreign companies be any different? They aren’t. They’ll do what any reasonable business person does when the risk of nonpayment is great—charge more.

Let’s also not forget about the millions of people whose lives will suddenly become much more challenging because they have been laid off or aren’t getting paid. It’s not just a matter of financial consequences. There are painful human consequences to refusing to raise the debt ceiling. 

In detailing the good old boy underbelly business culture I forgot to mention one thing: These business owners are all liars who lie frequently. Which brings us full circle to the Republicans who claim that defaulting on our bills won’t be so bad.

Monday, October 7, 2013

Economist Stephen D. King shows lack of imagination in telling economic horror story

By Marc Jampole

Stephen D. King, chief economist at HSBC and author of the recent When the Money Runs Out: The End of Western Affluence, painted a horror story as gruesome as any of his namesake in his New York Times Op/Ed article titled “When Wealth Disappears.”

King reviews the no-growth economy that Europe and Japan already have and is about to reign in the United States. King takes it as a fact that no-growth has to lead to a decline in the economy—that an economy that is not growing is weak and bad. He takes it for granted that because growth will no longer bring extra wealth each year, college costs will keep going up and we will continue to fray our safety net.

Common sense should tell you that this idea is nonsense. If we have already achieved great wealth, why should no more increases prevent us from performing the functions of an economy—to provide a reasonable living standard for everyone? We have so much wealth right now that we could feed, educate and care for everyone in our country—if we only redistributed it.  All a growing economy does is enable people to live a higher standard of living without having to seriously consider wealth redistribution.

The standard of living in the mature industrialized countries is already quite high.  Who says it ever has to get any higher?  Certainly we have to improve the lives of our poorest and most disadvantaged residents, plus there are billions of people living at or below subsistence in the developing world. But in general the middle and upper classes of the industrialized nations are living on easy street.

Of course if there is no economic growth, the improved position of the poor has to be funded from existing pots of money—and that means redistribution of the wealth. And that’s just not part of the agenda for the people who created the field of economics, most practicing economists, those who fund economic research and those who look to economic theory to guide their business operations—otherwise known as rich folk.  

The idea that a healthy economy requires growth is nothing more than a first premise, similar to the premise that the shortest distance between two points is a straight line, upon which all of traditional geometry is based. The difference is that the shortest distance between two points really is a straight line (except to a few brilliant scientists and mathematicians), whereas an economy can thrive without growth. No ruling elite ever wants to try it though, because it takes planning and a commitment to the community that our wealthiest citizens don’t seem to have.

King’s own plan, outlined in broad brushes after his plea that we be honest about the end of abundance, will certainly benefit his employer without inconveniencing much, if at all.  Here it is:

“That means a higher retirement age, more immigration to increase the working-age population, less borrowing from abroad, less reliance on monetary policy that creates unsustainable financial bubbles, a new social compact that doesn’t cannibalize the young to feed the boomers, a tougher stance toward banks, a further opening of world trade and, over the medium term, a commitment to sustained deficit reduction.”

A higher retirement age and more immigration will keep the number of workers high and thereby lower wage rates, which is good for any employer. The “new social compact” assumes that taxes on corporate profits and wealthy shareholders will not go up; unspoken here is the obvious—that we could keep the current social compact if we taxed the wealthy at the rates we taxed them in 1950, or even 1980.  King does mention a tougher stance towards banks and less government manipulation of money, but what does he really mean? He has very concrete ideas when it comes to increasing the pain of working stiffs, but only vague strategic thoughts about modifying banking.    

It’s not just what King says, but what he doesn’t say. Immigration is a great way to funnel people from poor countries to rich countries with shrinking populations, but only if we have immigration across the board, not just for the wealthy and educated. There is nothing wrong with further opening world trade, but only if trading partners meet the high environmental, wage and work safety standards of the West. Otherwise free trade exploits both the poorly paid workers in developing countries and the middle class workers in wealthy countries who lose their jobs.

King’s horror story also doesn’t tell us how we got into this mess: by straining the world’s resources. We can’t grow anymore, because we don’t have the raw materials of growth.  Instead of bemoaning the shrinking population, King should embrace it and advocate efforts to bring down the population even faster.

And make no mistake about it. If we as a species don’t voluntarily bring down our population and learn to live well while using less energy and resources than Americans currently do, then we will see a true horror story—one in which the world descends into a hell of major wars, famines, epidemics and human-induced weather and chemical disasters.

Instead of fearing the end of growth, King should understand that it is a good thing and then set his mind of an economist to making sure that the end of growth does not also mean the end of wealth.

Of course, that’s not King’s job. His job is to help his company make more money.
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