Tag: Economy

Dec 13 2010

What I hate about blogging.

Monday Business Edition

I hate repeating myself, and yet I feel people need to be reminded about… well… facts.

Archaeology is the search for fact… not truth. If it’s truth you’re looking for, Dr. Tyree’s philosophy class is right down the hall.

I woke up this morning convinced that someone, somewhere would be picking up on the fact that this “Tax Cut Stimulus Deal” is actually a A TAX HIKE for any Household in America making less than $40,000 a year (WHICH IS JUST ABOUT 50% OF THEM!) so your average Millionaire can pocket $70,000 a year.

And there’s the totally non-stimulative nature of continuing the Bush Tax Cuts for the Weathiest 2% to begin with.  Over 10 years it hasn’t contributed a single job AND people already have that money, they’re not going to be doing anything new with it.  Washington/Wall Street Economics just doesn’t add up in the ways (DID I MENTION A TAX HIKE ON 50% OF HOUSEHOLDS?) people understand.

And now Obama weighs effort to overhaul tax code.

I suppose I’m not surprised so much as appalled.

Tax Cuts don’t work.  Supply Side Trickle Down Voodoo Economics is a fraud.

But if you’re going to buy into that and get past your hefting bigotry and prejudice, then Mitt Romney is your boy and he’ll kick Obama’s ass.

Bloomberg denies interest, Dean and Feingold also, but blood is in the water.

One Term?  He’ll be lucky to make it to ’12 because he’ll be impeached over his corrupt deals on the Health Insurance Companies Welfare Mandate.

Can’t say I disagree.

The Why-Should-I-Get-Out-Of-My-Chair Gap in 2012

Robert Reich

Sunday, December 12, 2010

In the 2010 midterm elections Democrats suffered from a so-called “enthusiasm gap.”

If Dems agree to the tax plan just negotiated by the White House with Republican leaders, they’ll face a “why-should-I-get-up-out-of-my-chair” gap that will make 2010’s Dem enthusiasm seem like a pep rally by comparison.

It’s a $70,000 gift for every millionaire, financed by a gigantic hole in the federal budget that will put on the cutting board education, infrastructure, and everything else most other Americans need and want.

Business News below.

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 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 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 06 2010

YAB: Yet Another Betrayal

Monday Business Edition

While most commentators are focusing on Obama’s sell-out on Tax Cuts for Billionaires, in the background he’s also sold out on his campaign promise to Rust Belt Independents for no more NAFTAs.

Firedog Lake is practically the only site providing coverage-

Update:

Trade Does Not Equal Jobs

Paul Krugman, The New York Times

December 6, 2010, 9:43 am

One thing I’m hearing, now that all hope of useful fiscal policy is gone, is the idea that trade can be a driver of recovery – that stuff like the South Korea trade agreement can serve as a form of macro policy.

Um, no.

Our macro problem is insufficient spending on U.S.-produced goods and services; this spending is defined by

Y = C + I + G + X – M

where C is consumer spending, I investment spending, G government purchases of goods and services, X is exports, and M is imports. Trade agreements raise X – but they also lead to higher M. On average, they’re a wash.

This, by the way, is why claims that the Smoot-Hawley tariff caused the Great Depression are nonsense. Yes, protectionism reduced world exports; it also reduced world imports, by the same amount.

There is a case for freer trade – it may make the world economy more efficient. But it does nothing to increase demand.

Business News below.

Dec 05 2010

What Happened to the “Other” Tax Bills

From David Waldman at Today in Congress, seems to be the only one pointing out that there were two other bills on the agenda for the Saturday Tax Cut Showdown in the Senate. One was to extend all the tax cuts permanently and the other was to extend them for two years. What happened to those two bills? This is what happened, the Republicans manipulated the Senate rules to make the Democrats look bad and the White House just tags along.

In the Senate, courtesy of the Office of the Majority Leader:

   Convenes: 8:15am

   By unanimous consent, at 10:30am Saturday, December 4, the Senate will proceed to vote on the motion to invoke cloture on the Reid motion to concur with the House amendment to the Senate amendment to H.R.4853, with the Baucus amendment #4727 [link] (tax cut extension for those making up to $250,000, plus several additional items such as UI extension, AMT relief, estate tax, 1099 repeal, making work pay credit, and others).

   If cloture is not invoked, the Senate would immediately proceed to vote on the motion to invoke cloture on the Schumer amendment #4728 [link] (tax cut extension for those making up to $1 million, plus several additional items such as UI extension, AMT relief, estate tax, 1099 repeal, making work pay credit, and others).

   The time from 8:30am until 10:30am will be equally divided and controlled between the Leaders or their designees.

So what ever happened to the supposed deal for having four votes rather than two? Well, apparently that deal — which would have included two Republican amendments that would have offered the choice of either a temporary or a permanent extension of all the cuts — fell apart when a Republican objected to it at the last minute, leaving a surprised and embarrassed Mitch McConnell at the table empty-handed.

Why would a Republican object to a deal offering the minority an equal number of amendments on the bill, each aimed at doing exactly what they supposedly wanted? Because someone in the Republican Conference thinks both of the Democratic amendments will fail on their cloture votes, and Dems will be embarrassed by their inability to settle this situation, and then House Republicans will be free to write the extension bill they way they want it come January. And they’ll make the extension retroactive to January 1, and look like heroes.

Why would a Republican make a surprise objection at the last minute and embarrass Mitch McConnell like that? Because Mitch McConnell hasn’t been the Republican Leader for at least the last year. Jim DeMint is the real Senate Minority Leader, and he plays harder ball than McConnell does. He just showed Mitch who’s boss by pulling the rug out from under him, and reminded Republicans that the source of their power is not their ability to use procedure to leverage deals, but their ability to leverage procedure to prevent any from being made while Democrats control the White House and Congress.

It’s time to stop trying to understand Republicans in terms of figuring out what they want and trying to find middle ground. If “what they want” were even really of interest to Republicans at this point, then they’d have been over the moon at having a legitimate shot at passing an amendment to make all the tax cuts permanent today. But they walked away from that (as they walked away from a legitimate shot at passing both 1099 repeal and a $39 billion stimulus rescission earlier this week, totally abandoning their “tax cuts don’t have to be paid for” rhetoric in the process) because “what they want” at this point is for Democrats to be seen losing as often as possible, on as many things as possible.

Waldman repeated this several times today on Twitter:

I can’t repeat this enough: Senate GOP was offered a vote to extend all cuts permanently and still said no.

His explanation of why they did this:

Why would GOP oppose their own plan for permanent extensions? It might pass, and people might think Dems helped. And they can’t have that.

The Republicans along with his Tea Party allies and a few Blue Dogs have 98% of the country held hostage and will most likely continue to do so for the next two years.

Dec 05 2010

2 Bloggers, an Economist and a Comedian

There were these two Bloggers, an Economist and a Dead Comedian who met in a virtual bar to discuss the economy and Social Security. The conversation turned to why President Obama is trying to do what George W. Bush failed to do, cut the only safety net many Americans have, Social Security. The President’s Cat Food Commission failed to get the 14 votes needed to pass the resolution that Congress would have been obligated to vote on. Now there are those on both sides of the aisle that want to bring to a vote anyway. Why do these people and the President hate 98% of Americans?

What the first Blogger said:

Well naturally the commission failed to get the required 14 votes and the press is spinning it as a new majority baseline for future compromise. But we knew this.

What is far more disturbing is Dick Durbin voting for it on the basis of wanting it to “move forward.” He is seen as a proxy vote on this for the president.

If they pursue this Social Security/Austerity business I think we’ll have a one term presidency (even, Gawd help us, if the Queen of the Arctic gets the nomination.) And I’m not sure that the Democratic Party won’t be permanently shattered.

I know that sounds hyperbolic, but it’s vitally, vitally important that the president understand that if he goes after Social Security, the Republicans will turn the argument on him just as they did with “death panels” and “pulling the plug on Grandma” and end up solidifying the senior vote for the foreseeable future and further alienate the Party from the liberal base. I know it makes no sense that Republicans would be able to cast themselves as the protectors of the elderly, but in case you haven’t been paying attention lately, politics doesn’t operate in a linear, rational fashion at the moment. After all, the Republicans just won an election almost entirely on the basis of saving Medicare.

The Economist added his two cents agreeing with the first Blogger that “a fair number of “centrist” Democrats – probably including the Incredible Shrinking President – seem willing, even eager, to join up with Republicans in cutting Social Security benefits and raising the retirement age.”:

The question you have to ask is, why are Democrats such suckers on this issue?

The proximate cause is that cutting Social Security is one of those things you’re for if you’re a Very Serious Person. Way back, I wrote that inside the Beltway calling for Social Security cuts is viewed as a “badge of seriousness”, which has nothing to do with the program’s real importance or lack thereof to the budget picture; that column elicited a more or less hysterical reaction, which sort of proved the point. (Looking back at the column, I was surprised to see that it was about the ISP himself; tales of a debacle foretold.)

But why Social Security? There was a telling moment in 2004, during one of the presidential campaign debates. Tim Russert, the moderator, asked eight or nine questions about Social Security, trying to put the candidates on the spot, while asking not once about Medicare, which serious people – as opposed to Serious People – know is the real heart of the story. Why the focus on Social Security?

The answer, I suspect, has to do with class. . .

So going after Social Security is a way to seem tough and serious – but entirely at the expense of people you don’t know.

From the past, the Dead Comedian weighed in to remind his bar stool companions that this is what the “owners of this country” have wanted all along:

The second Blogger summed it up:

The political analysis is equally simple, but it uses power as the dynamic – If you’re in the predator group, you get to eat the prey. It’s just a matter of feeding; no ill will intended.

(“The Incredible Shrinking President”? Well, that one’s gonna stick.)

Dec 03 2010

Look Over Here. Nothing Is As It Appears

While the MSM is panting over President Obama’s unannounced visit to Bahgram Air Base in Afghanistan, his now canceled teleconferenced meeting with Afghan President Karzai and his address to the troops, the other important news that is getting lost in the frenzy.

Judging from the headlines, the media would have us all believe that the President’s Debt Commission (Cat Food Commission) had approved its final report.

Politico has since changed its headline from “Divided deficit group approves proposal” to the more accurate “Debt panel falls short on votes”

Both CNN and the NYT are touting that the report has bipartisan approval. They would like us to believe that a commission packed with deficit hawks determined to reduce the deficit on the backs of the middle class and the elderly is a great plan because the multimillionaires on the committee embraced it.

Then there is the news about jobs growth, or rather the lack of it, and the increase in unemployment numbers. The poor and unemployed are likely to stay that way and their numbers will grow between now and 2012 if the Republicans and blue dog Democrats have their way.

The Senate hearings on the repeal of DADT extended into it’s second day with some “heroes”, like Sen. Tester making really good argument for repeal now and the villains, like homophobic Sen. McCain who wants to hear from everyone in the military this will affect over the “next year”. Amazingly the biggest “hero” today was Defense Secretary Gates who told GOP Senators that “polling troops on policy decisions is a dangerous affront to our nation’s unbroken history of civilian control over the military”:

GATES: I can’t think of a single precedent in America history of doing a referendum of the American Armed Forces on a policy issue. Are you going to ask them if they want 15-month tours? Are you going to ask them if they want to be part of the surge in Iraq? That’s not the way our civilian-led military has ever worked in our entire history . . . I think in effect doing a referendum of the members of the Armed Forces on a policy matter is a very dangerous path.

Meanwhile, CNN and MSNBC are salivating over a photo-op visit to Afghanistan while Fox News just keeps spewing its usual twisting of myths and facts while babbling about ventriloquists.

Dec 02 2010

The Federal Reserve Fleecing of America

$3.3 TRILLION went to purchase junk mortgage bonds from Deutsche Bank and Credit Suisse, the two largest European banks, but there is no money to help out long term unemployed Americans. When you hear about how the banks have repaid the $750 million that was loaned to the large American banks and financial services, ask when that $3.3 TRILLION will be paid back to reduce the deficit and stimulate the American economy.

This is why Bernanke opposed the Federal Reserve Audit:

Fed Opens Books, Revealing European Megabanks Were Biggest Beneficiaries by Shahien Nasiripour at Huffington Post

NEW YORK — The Federal Reserve on Wednesday reluctantly opened the books on its monumental campaign to save the financial system in the midst of the recent crisis, revealing how it distributed some $3.3 trillion in relief.



The data revealed that the Fed’s aid was scattered much more widely than previously understood. Two European megabanks — Deutsche Bank and Credit Suisse — were the largest beneficiaries of the Fed’s purchase of mortgage-backed securities. The Fed’s dollars also flowed to major American companies that are not financial players, including McDonald’s and Harley-Davidson, through unsecured short-term loans.

The measure, initiated in Jan. 2009 to stimulate the flow of credit and keep household borrowing costs low, led the nation’s central bank to purchase more than $1.1 trillion in mortgages packaged into the form of securities. The mortgage bonds are backed by Fannie Mae and Freddie Mac, the twin mortgage giants now owned by taxpayers.

Deutsche Bank, a German lender, has sold the Fed more than $290 billion worth of mortgage securities, Fed data through July shows. Credit Suisse, a Swiss bank, sold the Fed more than $287 billion in mortgage bonds.

The data had previously been secret. It was released Wednesday per the recently-enacted law overhauling the federal financial regulation. The Fed, ferociously backed by the Obama administration, fought lawmakers’ desire for full disclosure throughout the financial reform debate.

(emphasis mine)

Cenk Uygur reveals the key points of what has been revealed so far.

Dec 02 2010

“I Think We Elected a Republican”

David Dayen @ FDL:

We’ve officially gone around the bend.

OFA Tries to Get Supporters to Write Letters to the Editor Praising a Federal Worker Pay Freeze

From Gaius Publius at AMERICAblog

The Fix is in on tax cuts.

Visit msnbc.com for breaking news, world news, and news about the economy

Everybody in the city knows that the president has essentially agreed to accept a two- or three-year extension of tax cuts for all Americans, including the wealthiest.

It seems that this [working] group [with senators and Tim Geithner, etc.] is designed to come to the conclusion that they know they’re already supposed to come to and then give it back to the president.

The Republicans are going to make a big show of being reasonable by reluctantly giving up on their desire to extend the tax cuts for the wealthiest into infinity. And they’re going to be the reasonable ones here, so they’re going to claim, by just agreeing to two or three years. And the president’s going to accept it.

And how do we know we are being sold out by this Republican in Democratic garb?  Just take a look who Obama has sent to negotiate the terms of surrender.

Obama Appoints Geithner, Lew to Seek Tax Deal With GOP

However, in one sign of action, Obama said he appointed Treasury Secretary Tim Geithner and budget director Jack Lew to work with congressional Republicans and Democrats to come up with a deal on taxes in the next couple of days.

If no agreement is reached before Congress breaks for the holidays, taxes on all Americans would increase, a new year shocker that would increase pressure on Washington to act.

Immediately following the meeting, congressional Republicans said the discussion with President Barack Obama was a positive one in which both sides agreed to spend more time working together and finding common ground on tax and other tough issues.

The majority of Americans are so screwed.

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