Dec 242010

A reshaping of the economic team, beginning by naming a new director of the National Economic Council, is among the most urgent priorities of the new year. Gene Sperling, a counselor to the Treasury secretary who held the position in the Clinton administration, is among the final contenders to succeed Lawrence H. Summers in the job, along with Roger C. Altman, a Wall Street investment banker who also served in the Clinton administration.

Jeff Zeleny, New York Times

White House portrait of Lawrence Summers.
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I find it interestin­g that just 10 days ago the story had Obama selecting the replacemen­t for Summers from three finalists, with only one not having strong Wall Street ties. Now it appears that only Sperling and Altman are still in the running, with Richard Levin, the one candidate who might have put Main St. in front of Wall St., having been eliminated­.

If only Obama would just once embrace his rhetoric with his actions, but that’s not going to happen. Alternativ­ely, he could just start being honest in what he says and admit that he is politicall­y wed to Wall Steet. Obama telegraphs everything well in advance of taking action, and this reorganiza­tion follows that practice — it portends a continuati­on of Wall St. feast and Main St. famine.

And with the Republican­s gaining control of the house and far too many Democrats falling in step to support Obama’s spirit of “compromis­e,” the writing is on the wall, etched in stone — things are likely to get worse, much worse for the average American.

Read the entire Article at the New York Times

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Dec 212010

The list [of Obama’s legislative accomplishments], in fact, is staggering: major, not to say sweeping, new laws on health care, banking and finance, food safety, child nutrition, credit cards, pay equity, home mortgages, student loans, tobacco use and sale, home mortgages — not to mention $1.7 trillion in tax cuts and spending in the name of economic “stimulus.”

Taken together — and at least in theory — these measures amount to the most aggressive expansion of federal regulatory authority in a generation. It is no wonder the Chamber of Commerce spent $100 million and turned itself into a Rovian attack machine.

Even so, the party’s progressives aren’t particularly impressed by much of the new legislation. The Krugmanites — columnist Paul Krugman deserves to be their namesake — argue, and often with good cause, that the new laws are timid compromises with the powerful industries they are supposed to reform.

Does anyone think that big banks — having been saved by bailouts — have now become earnest stewards of the public good? How about insurance companies? Health-care conglomerates? Mortgage lenders?

Howard Fineman, Huffington Post

Change We Need Sisters
Image by Heather Ferguson via Flickr

Obama is a corporatis­t, plain and simple. He is selling the middle and working classes down the river, and all under the guise of upholding Democratic ideals — what a farce! After caving on healthcare and gifting the medical insurers and Big Pharma with 32 million new, government subsidized patients, he moved to financial “reform” and strived to keep the banks alive and thriving, with their casino still wide open for business.

Then the President ends the first half of his term with a “compromis­e” that includes no “compromis­e.” It’s the lesson he learned from the teaser rates of the illegitima­te mortgage originator­s. You hook people by making them offers they can’t refuse — it’ll completely obscure their perception that all you’ve done is inflate the bubble a bit more. “Compromis­e” is when somebody gives — not when both sides get what they want.

The Obama tax deal is an abominatio­n, and any politician who voted for it is either corporatis­t or a crack dealer. This deal is nothing but a hit in the arm, a fix, and the high will end shortly and leave the nation much worse than it was. But it doesn’t really matter — not to the corporatis­ts. This entire fiasco is just another chapter in the Great American Ponzi Scheme — the one where the rich take their loot before the pyramid collapses, before the next calamity.

The sad truth is that America is suffering from over-concentration of wealth, and the Obama “deal” will only feed that fire. American productivi­ty climbed steadily for decades, but the gains have all been accumulate­d at the very top. The peak income for the bottom 90% of Americans occurred in 1973, when they averaged $33,000 in inflation adjusted dollars. Since then, the per-hour output of the average worker has increased by 50%. If that increase was shared proportion­ately by everyone from the workers to the CEOs, the average worker would be making 35% more now — the average household income would be increased by $20,000.

But that’s not the way it’s worked out. The deal has been broken. The top income people have taken a disproport­ionate share, like CEOs who now make 500 times what the average employee takes in — where it was only 25 times more in the 70s. Add to that the incessant shipping of jobs overseas to increase profits, often to the tax advantage of the traitorous company, and all the while, the government withholds tariffs under free trade. Who gets hurt? The American worker.

Of course, the multinatio­nals still enjoy the American consumer market and all the protection­s of American society. They even enjoy privatized earnings and socialized losses, Add to that the increasing­ly regressive tax structures that have helped to concentrat­e more financial wealth in the top 1% than the bottom 95%, and top it off with a burgeoning debt that could topple the dollar from being the reserve currency, and you’ve got a giant pyramid scheme that’ll likely be coming down soon.

President Obama has done NOTHING to help this situation, and by signing his tax deal into law, has actually forced the further descent of the American middle class. The bottom line is either raise taxes or drasticall­y cut services — what direction did the Obama “deal” take us? Obama and the Republicans will be coming for the spending cuts very soon, because now that we’ve given another tax cut to the only segment of the population capable of paying, there is no alternative. So tuck your Social Security away and batten the hatches — this is going to get ugly.

Read the entire Article at the Huffington Post

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Dec 162010
Santa Claus
Image via Wikipedia

The Senate voted 81-19 yesterday to accept the $858 billion Obama/McConnell tax deal. California Senators Dianne Feinstein and Barbara Boxer voted with the majority but for varying reasons. Boxer attributes her support to provisions that will extend breaks for alternative energy sources. Feinstein says that while she doesn’t like the bill, she’s voting in the affirmative because it will create much needed jobs. Both of these positions hold an element of truth, but in the final analysis are, in tamed vernacular — equine feces!

A little simple arithmetic will help to appreciate the insanity of what these politicians would have us believe. Taking Feinstein’s rationale, she’s in favor of the “deal” because economists told her it would increase the GDP by .6 to 1.2 percent, which she claims will translate to 600 thousand to 1.2 million jobs. So in other words, it makes sense to the Senator to add $858 billion to the deficit in order to sustain jobs at a best-case rate of $715,000 per job. Does that make any sense at all?

Math for Senator Boxer’s justification is even worse, since she claims the energy provisions will only result in “tens of thousands of jobs.” Although to be fair, she does also identify help for the middle class as another motivator.

The problem with both of these positions isn’t really the math; it’s the fact that they’re really nothing more than an exercise in rhetorical gymnastics used to justify support for a bad piece of legislation. While this deal is being spun as “temporary,” the tax cuts are anything but. Set to expire in two years — during a presidential election — the politicians who lacked the will to terminate them now are not going to do so then. If they really were intended to be temporary, they would have been extended for a single year, where there was at least a chance of it happening. The sad truth is that this deal will seriously impact a federal deficit that’s already teetering at record highs, and it will do so for dubious benefit.

Center to the “deal” are the unemployment benefit extensions that the Republicans have held hostage pending the approval of tax cuts for the wealthy. Few disagree with the need for this action that will enable those who have not yet exceeded the 99-week maximum to continue receiving payment. Economists all agree that it is of the highest order of economic stimulus, returning as much as $1.90 for every dollar spent. But the 13-month extension accounts for only $56 billion of the package, and although it may be the right thing to do, it does nothing to address long term unemployment issues.

Other items included in the remaining $802 billion also have legitimate justifications.  For instance, the reasoning behind extending the Bush tax cuts for the middle class, which is the single largest piece of the tax deal pie, is sound. The situation is that 70% of the GDP is fueled by consumer spending, and because the middle class has been so severely squeezed by the recession, if their taxes were to increase, it would translate directly into a reduction in GDP. And when the GDP drops, jobs go with it.

The 2% reduction in payroll taxes follows the same logic as the extension of the middle class tax cuts. The money will mostly go to people who have already tightened their belts in order to make ends meet and will therefore be spent immediately and returned into the economy. Estimates actually place the return as high as $0.90 for every dollar spent, which is more than double the estimate for the general tax cuts. But at a cost of $120 billion, there are much more effective ways to use the money. And none of the other possibilities have the potential downside of tying Social Security to the general fund, which could lead to future arguments to dismantle the program.

Provisions included to extend certain tax credits follow the same reasoning, with each putting money in hands that will spend it. And the provision that will allow businesses that make investments in 2011 or 2012 to accelerate deductions by expensing 100% in the current year is really more of a shift than an outright loss of revenue.

But the sound reasoning and rationale component of the deal ends prior to evaluating the tax cuts for the top 2% and the estate tax reduction for the top one-tenth of 1%. Both of these upper crust tax cuts will reduce federal revenues, thereby adding to the deficit and requiring further indebtedness to foreign nations, like China. But they will do so, not for the purpose of stimulating the economy, as the money is much more likely to be saved. Neither will the savings be extended because the recipients have been hurt by the economic collapse and are in need. No, the tax cuts for the rich are included strictly because they are the ransom demanded by Republicans in order to do what’s right.

The sole justification for the tax cuts for millionaires and billionaires, beyond the fact that the Republicans demand it, is because the money belongs to these people. That’s it. Ask any Republican — it’s their money and the government doesn’t have the right to take it. Never mind that the wealth people accumulate is not created in a vacuum. That wealth is the fruit of both their individual efforts and the societal system that ALL Americans work to support and maintain. Never mind that taxation is the means by which the citizens of a free society fund the government in order to provide the services required to sustain that system and enable the accumulation of wealth.

This is the classic “redistribution of wealth” argument, and it’s as invalid now as it was the first million times it was spoken. Those who present the “redistribution” argument choose to give credit disproportionately to the individual, which is obviously nonsense. It takes an entire society to sustain a system of opportunity. The problem in America today is that too many of the wealthy and would-be wealthy want to extract the benefit of our democratic society but don’t want to pay back into its sustainment.

This is precisely the reason that our infrastructure is crumbling and the wellbeing of the average American is in serious decline. The problem that’s taken root in America over the past 30-plus years is unethical redistribution of wealth — from working Americans to the top 2%. It is that concentration that’s behind the recent collapse and the present stagnation. We are experiencing the result of over-extraction of wealth. It is therefore the responsibility of the system — the one that so many people have used to accumulate said wealth — to adjust and bring back employment and prosperity to those who have been exploited.

America needs jobs, and we need fair taxation. The Obama tax deal delivers neither. Working Americans will be glad to pay more taxes — if they are just allowed to work and share in the huge increases in productivity that have lined the pockets of the wealthy. Make no mistake about it: there is no justification, rational or moral, for the Republican-demanded tax cuts. They’re nothing but the looting of America by the new Robber Barons.

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