Author's posts

Dec 09 2010

What Tax Cuts Do

The Obama tax deal with Republicans is insane

Tony Wikrent, Real Economics

Wednesday, December 8, 2010, 8:54 PM

If you look under the hood of the industrial economy, you easily see why there is this counter-intuitive relationship between tax rates and economic growth . With high taxes, the only way to retain the bulk of the wealth created by a business is by reinvesting it in the business — in plants, equipment, staff, research and development, new products and all the rest. But if tax rates are low, then there is more incentive to pull the wealth out, by declaring it as profits that are taxed at what turns out to be too low a rate. In other words, low taxes create an incentive for profit taking.

…

If tax rates are high enough to discourage profit taking – forcing wealth created by a business to be recycled back into the business – then businesses are pushed toward longer-term planning, as they invest in new plant and equipment that will be used for many years. And you do not get the absurd situation you have now, where companies are posting record breaking profits, but are not buying new equipment, nor hiring new employees.

Low tax rates encourage taking wealth out of industrial companies; the wealth taken out must then be “put to work.” That means more money chasing “investment” opportunities, leading to price increases in financial capital or real estate or some other asset. In other words, an asset bubble. The rise in prices of an asset bubble has nothing to do with the creation of real wealth. It all looks like prosperity – until the asset bubble bursts. That’s where we are now.

Is it that simple?  Yes, yes it is.  It’s just that simple.

I encourage you to read the whole thing which also includes 3 great historical failures of low tax policies and a prescription for a modest financial transactions tax to further encourage investment in capital (as opposed to financial) assets.

(h/t Corrente)

Dec 09 2010

Prime Time

Some premiers.  Great Performances’ Peter and the Wolf is not one of them.

Yes, this is Sunset Blvd., Los Angeles, California. It’s about 5 0’clock in the morning. That’s the homicide squad, complete with detectives and newspaper men.  

The poor dope – he always wanted a pool. Well, in the end, he got himself a pool.

You’re Norma Desmond. You used to be in silent pictures. You used to be big.

I *am* big. It’s the *pictures* that got small.

Later-

Now you listen to me, I’m an advertising man, not a red herring. I’ve got a job, a secretary, a mother, two ex-wives and several bartenders that depend upon me, and I don’t intend to disappoint them all by getting myself “slightly” killed.

Dave hosts Barbara Walters, Jayma Mays, and Alison Balsom (trumpeter).  Jon has Michelle Williams, Stephen Steve Martin (might be fun).  Conan hosts Ray Romano, Arianna Huffington, and The LXD.

Boondocks– The Red Ball (too funny, a must see)

Well, this is where you came in, back at that pool again, the one I always wanted. It’s dawn now and they must have photographed me a thousand times. Then they got a couple of pruning hooks from the garden and fished me out… ever so gently. Funny, how gentle people get with you once you’re dead.

And I promise you I’ll never desert you again because after ‘Salome’ we’ll make another picture and another picture. You see, this is my life! It always will be! Nothing else! Just us, the cameras, and those wonderful people out there in the dark!… All right, Mr. DeMille, I’m ready for my close-up.

Dec 09 2010

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 Four dead as Haiti vote protests turn ugly

by Clarens Renois, AFP

31 mins ago

PORT-AU-PRINCE (AFP) – Thousands of protesters rampaged in Haitian towns Wednesday, torching buildings in armed clashes that left four dead, after election results triggered bitter accusations of vote-rigging, witnesses said.

Supporters of popular singer Michel Martelly took to the streets after Tuesday night’s results showed he had been narrowly beaten into third place in the race for the presidency of the impoverished Caribbean nation.

Instead, President Rene Preval’s handpicked protege Jude Celestin defied all predictions to snap up second place and a coveted slot in January’s run-off in which he will battle a former first lady for the nation’s top job.

Dec 08 2010

Just Like Health Care

December 7th, 2010, a day that will live in infamy.

So this notion that somehow we are willing to compromise too much reminds me of the debate that we had during health care.  This is the public option debate all over again.  So I pass a signature piece of legislation where we finally get health care for all Americans, something that Democrats had been fighting for for a hundred years, but because there was a provision in there that they didn’t get that would have affected maybe a couple of million people, even though we got health insurance for 30 million people and the potential for lower premiums for 100 million people, that somehow that was a sign of weakness and compromise.

What goes around comes around.

The Ghosts Of Health Care Deals Past: Industry Negotiations Could Haunt WH In New GOP-Led Congress

Amanda Terkel and Ryan Grim, The Huffington Post

12-8-10 01:00 PM

WASHINGTON — The deals that the White House cut with major industries during the health care debate are threatening to come back to haunt the administration once Republicans take control of the House. One of the most closely-watched deals involved the White House working closely with a onetime foe, former GOP congressman Billy Tauzin, head of the drugmakers lobby. Now that the deal is done, Tauzin and the White House will find themselves once again on opposite sides. Tauzin, say people close to him, will be happy to talk.

Reps. Darrell Issa (R-Calif.) and Michael Burgess (R-Texas) will likely be the chairmen of the two committees that will have jurisdiction over any investigation into the health-care dealmaking. Both tell The Huffington Post they’re certain Tauzin is willing to chat.

“He’s a very transparent guy. He’s the kind of guy that’s happy to sit down and, you know, he doesn’t hide anything. If he made a deal as part of PhRMA with the White House, he’s going to tell you exactly what that deal was, who he made it with, what the terms were, et cetera,” said Burgess, the incoming chairman of the Energy and Commerce Oversight and Investigations Subcommittee.

Dec 08 2010

When you’ve lost Oliver Willis…

Obama Secures Peace For Our Time

Oliver Willis

7:11 am EST December 7th, 2010

I see President Obama has returned from his meetings with the GOP leadership and has come back waving and bragging of the agreement that cedes the Sudentenland (background) to the Republican party on taxes.

…

They’ve just conceded to the Republicans without any fight – like they consistently have since almost day one. What they’re telling us now is that their default position is concession and capitulation, giving in to the Republicans on key issues of national importance. He ran on not kicking the can down the road on important issues, but right here – again, with no fight – he’s thrown in the towel.

If President Obama is doing what is within his power to depress his base vote and give the Republican party a new lease on power, well he’s doing a great job at it. If his goal is to be a strong leader and a great Democrat, he’s failing miserably at it. 2010 was a repeat of 1994 and 2002, when all the force of moral good on the side of liberalism can’t overcome a Democratic party that simply will not fight. If he continues on this path, and nothing – absolutely nothing – has shown me otherwise, he’s setting himself up to replicate the Democratic losses of 1980 and 1984 no matter who the Republican nominee is.

We sent him to Washington to stand up and fight. Instead he’s cowering and retreating.

Taylor Marsh is a little more scathing, but she always is-

Getting that 1979 Feeling Again

by Taylor Marsh

08 December 2010 10:36 am

Two years later he’s been shown to cave on health care in favor of the insurance companies, protected too big to fail banking system, done nothing about the exporting of corporate cash from this country, ignored the job issue, and given lip service to Democratic policy principles while tilting the country ever rightward until today he’s made a deal with Republicans that they are cheering as he uses language like “hostage” for a situation he created because he not only doesn’t know how to lead, but won’t be bothered to try. He even handed off the tax deal to Vice Pres. Joe Biden, because Barack Obama is always looking for cover. On foreign policy Pres. Obama has ignored the implications of Gen. McChyrstal’s implosion, plus turned away from the obvious ramifications of the Karzai Wikileaks exposure; meanwhile, we’re days away from a complete Middle East dialogue collapse, as we are made to swallow an arms deal for the Saudis that makes absolutely no sense at all. Because of the midterms, Obama’s foreign policy options have dried up. All of this is why he rails at the Left so gracelessly, because those who understand the political disaster Obama’s constructing won’t follow him anywhere anymore.

Pres. Barack Obama has lost the entire industrial Midwest and the working class, with women splitting their vote in the midterms with the Right, while seniors went Right as well, because Obama also sold them out.

…

Whether Obama is challenged or not, his weakness as a Democratic leader is now etched in everyone’s mind. A challenger also doesn’t matter, because there are a growing number of Democrats who won’t vote for him in ’12 no matter what.

Dec 08 2010

Spelunker-in-Chief

First of all I have to give credit to TheMomCat for the title.  It’s her coinage as far as I know, and I think it’s pretty punny.

So what’s so bad about the Tax Cut deal outside, of course, breaking yet another major campaign promise?

Well, it raises taxes on those making less than $20,000 a year.

The “2% Payroll Tax Cut” starves Social Security, throwing it into a fiscal crunch that did not previously exist.

The Estate Tax break alone, affecting only 1.62% of Estates, will cost over $23.2 Billion per year.

And it runs up a $900 Billion Defict in just 2 years with over 70% of the benefits going to the Wealthiest 2% and Corporations, proving that anyone in Washington who claims to care about The Deficit is a FLAT OUT LIAR.  As Robert Reich says– “Families with incomes of over $1 million will reap an average of about $70,000, while middle-class families earning $50,000 a year will get an average of around $1,500.”

Not to mention that all these Republican Trickle Down Voodoo Economics Policies have been tried and tested for the last 10 years and are PROVEN FAILURES.

Likewise Liars are anyone who claims to care about Democratic Electoral Victory.  74% of Obama contributors and volunteers are deeply opposed to this deal, while fully 57% say it will make them less likely to support Democratic Candidates in 2012.

And Barack Hussein Obama is not just a Liar, but a Craven, Cowardly, Petulant, Whiner.

Update: I ought to point out before you invest a lot of time that the presser runs 32:24 and the Special Comment 11:51.  Americablog had the best liveblog coverage that I have read.

Dec 08 2010

Prime Time

A Charlie Brown Christmas (the classic).  Rachel in her proper place apparently.

You know, I think this Christmas thing is not as tricky as it seems! But why should they have all the fun? It should belong to anyone! Not anyone, in fact, but me! Why, I could make a Christmas tree! And there’s not a reason I can find, I couldn’t have a Christmastime! I bet I could improve it, too! And that’s exactly what I’ll do!

Later-

Dave hosts Johnny Depp and Ra Ra Riot.  Jon has Seth Green, Stephen Julie Nixon and David Eisenhower.  Conan hosts Rainn Wilson, Roberta Mancino, and Christina Perri.

Boondocks– It’s Goin’ Down

  1. What is your favorite word?
  2. What is your least favorite word?
  3. What turns you on?
  4. What turns you off?
  5. What sound or noise do you love?
  6. What sound or noise do you hate?
  7. What is your favorite curse word?
  8. What profession other than your own would you like to attempt?
  9. What profession would you not like to do?
  10. If Heaven exists, what would you like to hear God say when you arrive at the Pearly Gates?

Zap2it TV Listings, Yahoo TV Listings

Dec 08 2010

Evening Edition

Evening Edition is an Open Thread

59 Top Story Final.

From Yahoo News Top Stories

1 WikiLeaks chief Assange behind bars in Britain

by Alice Ritchie, AFP

1 hr 23 mins ago

LONDON (AFP) – WikiLeaks chief Julian Assange was refused bail Tuesday by a British judge over claims of sex crimes in Sweden, dealing a fresh blow to the website which vowed to stay online and reveal more US secrets.

The elusive 39-year-old Australian said he would fight an extradition request by Swedish authorities as he appeared in court in London just hours after he emerged from a month in hiding and surrendered to police.

Filmmaker Ken Loach, socialite Jemima Khan and campaigning journalist John Pilger each offered to put up part of his bail but a judge in London refused, saying a court would review the situation at a hearing on December 14.

Dec 07 2010

Korean Update

I know the story of the day is Obama’s spectacular cave on the Bush Tax Cuts for the Billionaires.  It is not by ANY DEFINITION a stimulus.

  1. Tax Cuts of any kind are the LEAST stimulative investments a government can make, in many cases producing negative returns.
  2. PEOPLE ARE ALREADY GETTING THIS MONEY!  This does nothing at all to introduce new Aggregate Demand.

Even the more charitable than I (and the CBO I might add) Paul Krugman estimates at best an improvement of 0.3 to 0.4% in unemployment.

But we can’t allow the new horrible to make us forget about the last horrible- that’s what they want to happen, so here’s an update on the horrible Korean Job Export “Free Trade” bill that got dumped on us Sunday, just two days ago.  My earlier piece is here.

Dec 07 2010

Prime Time

Broadcast- ugh.  According to Zap2it, The Ed Show where Rachel ought to be.

So I’m an old garbage bag put in the street, huh?… These are the worst years, I tell you. It’s going to happen to you. I’m afraid to look in a mirror. I’m afraid I’m gonna see an old lady with white hair, just like the old ladies in the park with little bundles and black shawls waiting for the coffin. I’m fifty-six years old. And what am I gonna do with myself? I’ve got strength in my hands. I want to clean. I want to cook. I want to make dinner for my children. Am I an old dog to lay near the fire till my eyes close? These are terrible years, Theresa, terrible years… It’s gonna happen to you. It’s gonna happen to you! What are you gonna do if Marty gets married? Huh? What are you gonna cook? Where’s all the children playing in all the rooms? Where’s the noise? It’s a curse to be a widow, a curse! What are you gonna do if Marty gets married? What are you gonna do?

Later-

New Dave finally.  He hosts Ray Romano and John Mellencamp.  Jon has Hugh Shelton, Stephen Garry Trudeau.  Alton does roasts, Crown and otherwise.  Conan hosts Nicole Kidman, Charlie Day, and Lauren Pritchard.

Boondocks– It’s a Black President, Huey Freeman (pivotal, a must see)

Suppose I tell you exactly what’s gonna happen to you. You’re gonna be back in television. Only it won’t be quite the same as it was before. There’ll be a reasonable cooling-off period and then somebody will say: “Why don’t we try him again in a inexpensive format. People’s memories aren’t too long.” And you know, in a way, he’ll be right. Some of the people will forget, and some of them won’t. Oh, you’ll have a show. Maybe not the best hour or, you know, top 10. Maybe not even in the top 35. But you’ll have a show. It just won’t be quite the same as it was before. Then a couple of new fellas will come along. And pretty soon, a lot of your fans will be flocking around them. And then one day, somebody’ll ask: “Whatever happened to, a, whatshisname? You know, the one who was so big. The number-one fella a couple of years ago. He was famous. How can we forget a name like that? Oh by the way, have you seen, a, Barry Mills? I think he’s the greatest thing since Will Rogers.”

Zap2it TV Listings, Yahoo TV Listings

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