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17:00:23 05/17/12
Meet Pete Peterson, Architect of Social Security and Medicare Cuts
[LESS INFO] 0 VIEWS | ADDED 17:00:23 05/17/12
enlarge Click for a larger idea of Peterson's world Just after the disastrous midterms in 2010, I wrote a lengthy post about who Pete Peterson was , and why he is exactly the wrong guy to be having a "bipartisan summit" on so-called "entitlement reform." Here's a snippet from back then: >
The Peter G. Peterson foundation claims to be bipartisan, yet their former CEO is out pimping a book, a new advocacy group and a position . Peter G. Peterson served as Secretary of Commerce under Richard Nixon. He claims to be very, very, very concerned about our deficit, yet not one word is uttered in this report about Wall Street's contribution to the deficit, the collapse of our economy, or any responsibility on the part of the financial industry to help reduce the deficit they helped create .
Ryan Grim at the Huffington Post has updated that information with some more current relevant facts and data: >
According to a review of tax documents from 2007 through 2011, Peterson has personally contributed at least $458 million to the Peter G. Peterson Foundation to cast Social Security, Medicare, Medicaid and government spending as in a state of crisis, in desperate need of dramatic cuts. Peterson's millions have done next to nothing to change public opinion: In survey after survey, Americans reject the idea of cutting Social Security and Medicare. A recent national tour organized by AmericaSpeaks and largely funded by the Peter G. Peterson Foundation was met by audiences who rebuffed his proposals.
But Peterson has been able to drive a major shift in elite consensus about government spending, with talk of "grand bargains" that would slash entitlements, cut corporate tax rates and end personal tax breaks, such as the mortgage deduction, that benefit the middle class.
Peterson's deficit hawkery drives the narrative away from fairness right into the arms of willing Republicans. So this week, he held a "summit" of Washington elites to pearl-clutch over the deficit and debt in order to bolster their case. We can thank Bill Clinton for contributing to that narrative, too, since he was one of the featured speakers. The entire interview is at the end of this post.
Thanks to Peter Peterson, we have a country full of people who actually believe the national debt is the single biggest issue this country faces, and because he's put a "bipartisan" face on the dialogue, he gives the appearance that Democrats and Republicans alike should abandon Social Security and Medicare because they are, in his opinion, the primary drivers of the deficit. Worse yet, he's pimping those ideas to kids in order to drive a wedge between generations in the hope of succeeding at eroding these fundamental safety nets. >
Another effort to persuade America's youth about the shakiness of the entitlement programs is a joint venture between the Peterson Foundation and mtvU, the campus-based network created by MTV Networks, called Indebted . Peterson has already shelled out nearly $2 million to fund this effort to convince college students that Social Security won't be there for them, so therefore it should be slashed now -- a self-fulfilling policy prescription if ever there was one.
The educational website for Indebted , which borrows its look of revolutionary activism from contemporary stencil-based art made famous by graffiti artists Banksy and Shepard Fairey, explains that the inevitable and unavoidable debt burden to be shouldered by college kids through student loans, credits cards and a poor job market make it all the more important to cut entitlements now.
I like Seth Michaels' answer to that over at Working America : >
Peterson—a billionaire—never has to worry about dignity in retirement, about choosing between food and medicine, about having to work even when your health won’t allow it. Nor do members of Congress with their taxpayer-funded pensions, or well-paid TV hosts, lobbyists and think-tank presidents. They also feel the pressure of paying into the system much less than the majority of working people, since they only pay Social Security tax on the first $110,100 of their income .
So here’s a modest proposal for Peterson and the networks that advance his message. You can raise the retirement age to whatever you want—as long as, at age 65, every think-tanker, pundit and politician who pushes the fake crisis gets to swap places with a 65-year-old nurse, truck driver, hotel housekeeper or drill-press operator. Sound good?
Better yet, any lawmaker who thinks it's a good idea to raise the Social Security retirement age and erode Medicare should agree to relinquish their federal pension and health insurance retroactive to the day they take office. If they can't do that, then they recuse themselves from any vote concerning Medicare or Social Security. Seems like a fair deal to me.
100 Views
23:34:50 02/24/12
Richard Wolff: 'Capitalism Is Not Working'
[LESS INFO] 100 VIEWS | ADDED 23:34:50 02/24/12
Economics professor Richard Wolff attributes the global economic crisis to the failure of the capitalist system. He argues that the root cause of the problem is over-borrowing, and that capitalism runs on an unsustainable cycle.
Complete video at http://fora.tv/2012/02/14/Monthly_Update_with_Richard_D_Wolff_February_2012
Each month, Richard D. Wolff presents an an analysis of some particular economic topics and then opens the floor to questions, comments and a general discussion. This course takes place at the Brecht Forum in New York. Each month, we aim to develop participants’ understanding of and ability to explain to others the key economic developments of our time.
The updates focus on the evolving global capitalist economic crisis and its consequences. Professor Wolff examines topics such as: the social costs effects of the historic long-term US unemployment; national debt crises and “austerity programs” in Greece, Ireland, Spain, and beyond; changes in today’s Chinese economy and their global effects; tax reform and the entire tax issue in the US today; continuing crisis in the US housing and credit markets; the economics of immigration.
Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University in New York. Wolff has also taught economics at Yale University, City University of New York, University of Paris I (Sorbonne), and The Brecht Forum in New York City. In 2010, Wolff published Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It, also released as a DVD. He will release three new books in 2012: Occupy the Economy: Challenging Capitalism, with David Barsamian (San Francisco: City Lights Books), Contending Economic Theories: Neoclassical, Keynesian, and Marxian, with Stephen Resnick (Cambridge, MA, and London: MIT University Press), and Democracy at Work (Chicago: Haymarket Books).
8 Views
21:00:06 12/29/11
There's No Mystery About Romney's Taxes and Tax Plan
[LESS INFO] 8 VIEWS | ADDED 21:00:06 12/29/11
Why is Mitt Romney alone among the Republican presidential candidates in refusing to release his tax returns ? And why is the former Massachusetts Governor also the only major GOP contender not calling for the complete elimination of the capital gains tax ? As it turns out, the answer - horrible political optics - is the same to both questions. Because Romney's continuing millions in annual income from Bain Capital are taxed at the 15 percent capital gains rate, Mitt already pays a much lower share to Uncle Sam than most middle class families . And if he called for changing the capital gains rate to zero, Mitt Romney would have to explain to voters why the $250 million man should pay virtually no tax bill at all .
Despite his famous demand in the 1994 Senate race that Ted Kennedy release his tax returns to show he has "nothing to hide," Romney last week reiterated his own paperwork would not be forthcoming. "We don't have any current plans to release tax returns, but never say never," Romney said, adding: >
"I can tell you we follow the tax laws, and if there's an opportunity to save taxes, we like anybody else in this country will follow that opportunity."
Truer words were never spoken.
In October, Citizens for Tax Justice estimated that the Romneys paid only 14 percent of their income in taxes . (It's no wonder Mitt opposes the " Buffett Rule .") As Time reported: >
Just how much Romney pays in taxes is, for the moment, a private matter. But his income is public knowledge. In August, Romney disclosed that in 2010 he and his wife made between $1.1 million and $2.8 million in royalties, salary, speaking fees and interest, most of which was likely taxed at a marginal rate of 35%, after accounting for deductions. The Romneys made an additional $5.5 million to $37.3 million from dividends and capital gains, which is generally taxed at a much lower rate of 15%.
Two weeks ago, the New York Times shed light on that "$5.5 million to $37.3 million from dividends and capital gains" that represents most of Romney's income. Though Mitt left Bain Capital in 1999, 13 years later his windfall continues uninterrupted: >
In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain's profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney's political aspirations... >
In the process, Bain continued to buy and restructure companies, potentially leaving Mr. Romney exposed to further criticism that he has grown wealthier over the last decade partly as a result of layoffs. Moreover, much of his income from the arrangement has probably qualified for a lower tax rate than ordinary income under a tax provision favorable to hedge fund and private equity managers, which has become a point of contention in the battle over economic inequality.
And that creates what Steve Benen aptly called "Romney's 'carried interest' problem." >
In case anyone needs a refresher, there's a tax loophole on "carried interest" -- sometimes called "the carry" -- that taxes private equity and venture capital income at a lower, 15% rate, as compared to 35% on ordinary income. Hedge-fund managers and the Wall Street have fought tooth and nail to protect this loophole -- even after the Obama White House tried to eliminate it -- and so far, they've been successful.
Which is why Mitt Romney has thus far refused to join his fellow GOP White House hopefuls in proposing the elimination of the 15 percent capital gains tax. Newt Gingrich, Rick Perry and Herman Cain all called for zeroing out the capital gains levy, which is one reason why their tax plans represent such a huge windfall for the wealthy . (Their support for a flat-tax is another.) The Washington Post explained why for the rich that would be "better than any Christmas gift": >
While it's true that many middle-class Americans own stocks or bonds, they tend to stash them in tax-sheltered retirement accounts, where the capital gains rate does not apply. By contrast, the richest Americans reap huge benefits. Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.
For his part, Romney has proposed reducing the capital gains tax rate only for the first $200,000 in income. But as ThinkProgress pointed out, Romney's claim that "The people in the middle...I focused my tax cut right there" is preposterous: >
Romney may think he focused his tax cut on the middle-class, but according to a ThinkProgress analysis of Tax Policy Center data*, nearly three-fourths of households that make $200,000 or less annually would get literally nothing from Romney's tax cut, due to the simple fact that most of those households have no capital gains income.
But while Mitt Romney didn't want to create the appearance of slashing most of his own tax bill, that doesn't mean his proposals wouldn't produce a massive payday for his own and other rich families while piling up yet more debt. Romney's 59-point economic plan calls for extending the Bush tax cuts, ending the estate tax and reducing corporate taxes. The result, as ThinkProgress explained: >
Romney's tax plan includes a $6.6 TRILLION giveaway to corporations and the wealthiest Americans. Meanwhile, Romney's Medicaid cuts are even more draconian than the ones in Paul Ryan plan. Both of their plans end also end Medicare, naturally.
Still, in an interview last weekend the reliably Republican Wall Street Journal wondered why Romney had been so "timid" compared to his rivals. In a rare moment of candor, Mitt revealed that his real preferences would make for very bad politics: >
What about his reform principles? Mr. Romney talks only in general terms. "Moving to a consumption-based system is something which is very attractive to me philosophically, but I've not been able to sufficiently model it out to jump on board a consumption-based tax. A flat tax, a true flat tax is also attractive to me. What I like--I mean, I like the simplification of a flat tax. I also like removing the distortion in our tax code for certain classes of investment. And the advantage of a flat tax is getting rid of some of those distortions"... >
Amid such generalities, it's hard not to conclude that the candidate is trying to avoid offering any details that might become a political target. And he all but admits as much. "I happen to also recognize," he says, "that if you go out with a tax proposal which conforms to your philosophy but it hasn't been thoroughly analyzed, vetted, put through models and calculated in detail, that you're gonna get hit by the demagogues in the general election."
"The president," Romney complained, "will characterize anyone running for office, and me in particular, as just in there to lower taxes for rich people, and that is not my intent." Perhaps, but that's the inevitable impact. As John McCain learned in 2008 , refusing the release the details of his beer heiress wife Cindy's fortune while calling for tax policies delivering his family lottery-sized winning courtesy of the U.S. Treasury is not going to endear you to working Americans. (In Mitt Romney's case, revealing the 10 percent tithe he dutifully pays to his Mormon church probably won't endear him to the GOP's evangelical primary voters, either.)
All of which explains why Mitt Romney won't release his tax returns or call for abolishing the capital gains tax, the love which dares not speak its name. Besides, Mitt Romney wants Americans to believe he's just part of the "80 to 90 percent of us" who are middle class.
And, no doubt, Mitt's willing to bet you $10,000 to prove it.
(This piece also appears at Perrspectives .)
9 Views
21:00:06 12/29/11
There's No Mystery About Romney's Taxes and Tax Plan
[LESS INFO] 9 VIEWS | ADDED 21:00:06 12/29/11
Why is Mitt Romney alone among the Republican presidential candidates in refusing to release his tax returns ? And why is the former Massachusetts Governor also the only major GOP contender not calling for the complete elimination of the capital gains tax ? As it turns out, the answer - horrible political optics - is the same to both questions. Because Romney's continuing millions in annual income from Bain Capital are taxed at the 15 percent capital gains rate, Mitt already pays a much lower share to Uncle Sam than most middle class families . And if he called for changing the capital gains rate to zero, Mitt Romney would have to explain to voters why the $250 million man should pay virtually no tax bill at all .
Despite his famous demand in the 1994 Senate race that Ted Kennedy release his tax returns to show he has "nothing to hide," Romney last week reiterated his own paperwork would not be forthcoming. "We don't have any current plans to release tax returns, but never say never," Romney said, adding: >
"I can tell you we follow the tax laws, and if there's an opportunity to save taxes, we like anybody else in this country will follow that opportunity."
Truer words were never spoken.
In October, Citizens for Tax Justice estimated that the Romneys paid only 14 percent of their income in taxes . (It's no wonder Mitt opposes the " Buffett Rule .") As Time reported: >
Just how much Romney pays in taxes is, for the moment, a private matter. But his income is public knowledge. In August, Romney disclosed that in 2010 he and his wife made between $1.1 million and $2.8 million in royalties, salary, speaking fees and interest, most of which was likely taxed at a marginal rate of 35%, after accounting for deductions. The Romneys made an additional $5.5 million to $37.3 million from dividends and capital gains, which is generally taxed at a much lower rate of 15%.
Two weeks ago, the New York Times shed light on that "$5.5 million to $37.3 million from dividends and capital gains" that represents most of Romney's income. Though Mitt left Bain Capital in 1999, 13 years later his windfall continues uninterrupted: >
In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain's profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney's political aspirations... >
In the process, Bain continued to buy and restructure companies, potentially leaving Mr. Romney exposed to further criticism that he has grown wealthier over the last decade partly as a result of layoffs. Moreover, much of his income from the arrangement has probably qualified for a lower tax rate than ordinary income under a tax provision favorable to hedge fund and private equity managers, which has become a point of contention in the battle over economic inequality.
And that creates what Steve Benen aptly called "Romney's 'carried interest' problem." >
In case anyone needs a refresher, there's a tax loophole on "carried interest" -- sometimes called "the carry" -- that taxes private equity and venture capital income at a lower, 15% rate, as compared to 35% on ordinary income. Hedge-fund managers and the Wall Street have fought tooth and nail to protect this loophole -- even after the Obama White House tried to eliminate it -- and so far, they've been successful.
Which is why Mitt Romney has thus far refused to join his fellow GOP White House hopefuls in proposing the elimination of the 15 percent capital gains tax. Newt Gingrich, Rick Perry and Herman Cain all called for zeroing out the capital gains levy, which is one reason why their tax plans represent such a huge windfall for the wealthy . (Their support for a flat-tax is another.) The Washington Post explained why for the rich that would be "better than any Christmas gift": >
While it's true that many middle-class Americans own stocks or bonds, they tend to stash them in tax-sheltered retirement accounts, where the capital gains rate does not apply. By contrast, the richest Americans reap huge benefits. Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.
For his part, Romney has proposed reducing the capital gains tax rate only for the first $200,000 in income. But as ThinkProgress pointed out, Romney's claim that "The people in the middle...I focused my tax cut right there" is preposterous: >
Romney may think he focused his tax cut on the middle-class, but according to a ThinkProgress analysis of Tax Policy Center data*, nearly three-fourths of households that make $200,000 or less annually would get literally nothing from Romney's tax cut, due to the simple fact that most of those households have no capital gains income.
But while Mitt Romney didn't want to create the appearance of slashing most of his own tax bill, that doesn't mean his proposals wouldn't produce a massive payday for his own and other rich families while piling up yet more debt. Romney's 59-point economic plan calls for extending the Bush tax cuts, ending the estate tax and reducing corporate taxes. The result, as ThinkProgress explained: >
Romney's tax plan includes a $6.6 TRILLION giveaway to corporations and the wealthiest Americans. Meanwhile, Romney's Medicaid cuts are even more draconian than the ones in Paul Ryan plan. Both of their plans end also end Medicare, naturally.
Still, in an interview last weekend the reliably Republican Wall Street Journal wondered why Romney had been so "timid" compared to his rivals. In a rare moment of candor, Mitt revealed that his real preferences would make for very bad politics: >
What about his reform principles? Mr. Romney talks only in general terms. "Moving to a consumption-based system is something which is very attractive to me philosophically, but I've not been able to sufficiently model it out to jump on board a consumption-based tax. A flat tax, a true flat tax is also attractive to me. What I like--I mean, I like the simplification of a flat tax. I also like removing the distortion in our tax code for certain classes of investment. And the advantage of a flat tax is getting rid of some of those distortions"... >
Amid such generalities, it's hard not to conclude that the candidate is trying to avoid offering any details that might become a political target. And he all but admits as much. "I happen to also recognize," he says, "that if you go out with a tax proposal which conforms to your philosophy but it hasn't been thoroughly analyzed, vetted, put through models and calculated in detail, that you're gonna get hit by the demagogues in the general election."
"The president," Romney complained, "will characterize anyone running for office, and me in particular, as just in there to lower taxes for rich people, and that is not my intent." Perhaps, but that's the inevitable impact. As John McCain learned in 2008 , refusing the release the details of his beer heiress wife Cindy's fortune while calling for tax policies delivering his family lottery-sized winning courtesy of the U.S. Treasury is not going to endear you to working Americans. (In Mitt Romney's case, revealing the 10 percent tithe he dutifully pays to his Mormon church probably won't endear him to the GOP's evangelical primary voters, either.)
All of which explains why Mitt Romney won't release his tax returns or call for abolishing the capital gains tax, the love which dares not speak its name. Besides, Mitt Romney wants Americans to believe he's just part of the "80 to 90 percent of us" who are middle class.
And, no doubt, Mitt's willing to bet you $10,000 to prove it.
(This piece also appears at Perrspectives .)
14 Views
19:00:30 12/28/11
Notable Death of the Year: RIP Austerity Economics, 1921-2011
[LESS INFO] 14 VIEWS | ADDED 19:00:30 12/28/11
"Smokestack Lightnin'," with Hubert Sumlin backing Howlin' Wolf in 1964
This is the time of year when we're reminded of all the famous people who died over the last twelve months, a list which includes two of my favorite guitar players ( Hubert Sumlin and Cornell Dupree ). But there were also some notable non-human deaths in 2011, especially in the world of economic policy.
One of those deaths should have completely altered the political debate in Washington. The name of the deceased was "Austerity Economics," and it was first glimpsed in a 1921 paper by conservative economist Frank Wright. Austerity died of natural causes brought on by prolonged exposure to reality.
But the debate in Washington didn't change nearly enough after its passing. In the nation's capital, dead things still rule the night.
Why Austerity?
"Austerity economics" backers claim that today's economic woes can only be fixed by dramatic reductions in government spending, which will lead to increased private-sector confidence and therefore to greater investment and growth.
But it's never worked. And if investors have lost confidence in the U.S. government's fiscal stability, they're sure not acting that way. There hasn't been this much demand for Treasury bonds since the government began tracking it twenty years ago, and they haven't performed as well since the go-go 1990s.
It's easy to understand austerity's attraction for power elites inside and outside of government. The people who suffer from austerity budgets aren't the kinds of people they know personally, since they're typically public employees like teachers, police, firefighters and the administrators of social programs; people who need government assistance, like the poor; and middle-class people with the temerity to either grow old or become disabled.
Austerity's attraction became even greater in the U.S. because once it became conventional wisdom that tax increases on the wealthy was "politically infeasible." That made it a program whose sole purpose was to cut government spending, lowering the pressure to increase taxes on the wealthy from today's historically low levels.
For a one-percenter, what's not to love?
Austerity Comes of Age
The idea's been around in one form or another since that 1921 paper, and the International Monetary Fund (IMF) had been imposing it on Third World nations for decades.
But 2009 was the year that austerity really came of age. That was the year that a wealthy stockbroker's son named David Cameron began campaigning for Prime Minister of Great Britain on an explicitly pro-austerity platform.
It was also the year that Cameron helped to form a group named European Conservatives and Reformists (ECR) dedicated to electing like-minded politicians across Europe and helping them collaborate on ways to slash government spending. It was also the year that right-leaning Angela Merkel won reelection as the Chancellor of Germany with a stronger mandate than she'd been given in her first term.
With Nicolas Sarkozy as President of France, Great Britain was the only major European power not yet in the hands of the corporate-backed austerity crowd.
The Global Sado-Erotic Thrill Machine
That changed with Cameron's election as Prime Minister in May 2010, an event that threw pro-austerity Americans into throes of near-erotic ecstasy. And if that sounds like hyperbole, consider conservative Anne Appelbaum's reaction to Cameron's budget in September of 2010: >
Vicious cuts." "Savage cuts." "Swingeing (sic) cuts." The language that the British use to describe their new government's spending-reduction policy is apocalyptic in the extreme. The ministers in charge of the country's finances are known as "axe-wielders" who will be "hacking" away at the budget. Articles about the nation's finances are filled with talk of blood, knives, and amputation.
And the British love it.
What can I say? There are people who collect serial-killer memorabilia, too. But Appelbaum wasn't just speaking for herself. It became unacceptable for any politician in Washington, Democrat or Republican, to advocate anything other than an austerity budget for the United States.
And it was more than an economic strategy to its backers. Austerity became a way to demonize those who had suffered most from the banking abuses and self-indulgences of the wealthy, a totemic "blame the victim" response that turned the political debate into a grotesque inversion of morality. Again, Appelbaum: >
"Not only is austerity being touted as the solution to Britain's economic woes; it is also being described as the answer to the country's moral failings."
Bad Metaphors vs. Good Economists
The Democratic President of the United States, Barack Obama, jumped onto the bandwagon with both feet by repeatedly lecturing Americans on the need for government to stop "spending beyond its means." Obama recycled the popular conservative metaphor of a family that has to sit around the kitchen table and decide how much money it has to spend.
That's one of the worst metaphors in modern politics. Does a family establish its own currency -- especially one that has the unique position of the dollar? Can a family borrow money at rates so low they're effectively less than zero? Would a family let Grandma go hungry because Junior bought too many Porsches out of the family kitty and then gambled it away on lousy mortgage investments?
The world's top economists, those who had successfully predicted the crisis of 2008, tried telling the rest of the world what was wrong with the idea: Joblessness and consumer fears were killing any chance of real recovery. More short-term spending was needed to get the economy moving again. Austerity would make things worse, not better.
But nobody listened. Austerity's S%M-like attraction had the world's elites in its grip.
Death of a Delusion
And then something else came into the picture: Reality.
Cameron's austerity budget had a shattering effect on the already-struggling British economy. His government's financial stability was downgraded five times during his first year in power and retail sales had fallen 2.5 percent. Household income was projected to fall an additional 2 percent if his austerity plans were carried forward. Britain's modest employment gains were reversed, youth unemployment reached record levels, and income inequality was the worst it had been in more than half a century.
Anne Appelbaum's erotic dreams had become Great Britain's nightmare.
As Europe's ruling austerity class pushed forward with their plans, even the IMF tried to dissuade them. It was clear to anyone who wasn't blinded by ideology or political cynicism that austerity economics was a failed program. Even in countries like Greece, where government was far graver than elsewhere, the austerity programs imposed from outside threatened to destabilize society while other reasonable measures like improved tax collection were still not taken seriously enough.
And now the entire Eurozone hangs in the balance. Bankers became wealthy by treating governments as if they were mortgages, lending recklessly and pocketing their fees without considering the long-term reliability of their loans. European leaders insisted for months they were take the kind of sensible steps that should've been taken in the United States by requiring bankers to accept at least part of the losses for the bad loans they had issed.
That plan was quietly dropped last month. "Austerity economics" never calls for austerity from those who have gotten rich by being irresponsible, only from those who didn't benefit from it at all.
The Afterlife
President Obama has dropped his austerity rhetoric, at least for the time being, but the Republicans have not. Listening to Mitt Romney discuss economics is like having a doctor wave a dead chicken over your head and saying he's decided to cast a spell on you rather than operate on that thing they found in your X-rays.
Aside from the bill introduced this month by the House Progressive Caucus to almost no media attention, there's no comprehensive plan for dropping this country's ineffective austerity strategy and replacing it with an agenda that works.
Rational solutions to our economic problems are being ignored. There won't be a real debate about alternatives to austerity until an entire political party, not just part of it, adopts this kind of program. Until then there will be chaos. And where there is chaos, austerity's powerful advocates can step in and take charge.
Austerity economics died in 2011 and is survived by the British, German, and French governments as well as the GOP and large portions of the Democratic Party. Instead of sending flowers, the family has asked the public to abandon all hopes of future economic growth.
10 Views
19:00:30 12/28/11
Notable Death of the Year: RIP Austerity Economics, 1921-2011
[LESS INFO] 10 VIEWS | ADDED 19:00:30 12/28/11
"Smokestack Lightnin'," with Hubert Sumlin backing Howlin' Wolf in 1964
This is the time of year when we're reminded of all the famous people who died over the last twelve months, a list which includes two of my favorite guitar players ( Hubert Sumlin and Cornell Dupree ). But there were also some notable non-human deaths in 2011, especially in the world of economic policy.
One of those deaths should have completely altered the political debate in Washington. The name of the deceased was "Austerity Economics," and it was first glimpsed in a 1921 paper by conservative economist Frank Wright. Austerity died of natural causes brought on by prolonged exposure to reality.
But the debate in Washington didn't change nearly enough after its passing. In the nation's capital, dead things still rule the night.
Why Austerity?
"Austerity economics" backers claim that today's economic woes can only be fixed by dramatic reductions in government spending, which will lead to increased private-sector confidence and therefore to greater investment and growth.
But it's never worked. And if investors have lost confidence in the U.S. government's fiscal stability, they're sure not acting that way. There hasn't been this much demand for Treasury bonds since the government began tracking it twenty years ago, and they haven't performed as well since the go-go 1990s.
It's easy to understand austerity's attraction for power elites inside and outside of government. The people who suffer from austerity budgets aren't the kinds of people they know personally, since they're typically public employees like teachers, police, firefighters and the administrators of social programs; people who need government assistance, like the poor; and middle-class people with the temerity to either grow old or become disabled.
Austerity's attraction became even greater in the U.S. because once it became conventional wisdom that tax increases on the wealthy was "politically infeasible." That made it a program whose sole purpose was to cut government spending, lowering the pressure to increase taxes on the wealthy from today's historically low levels.
For a one-percenter, what's not to love?
Austerity Comes of Age
The idea's been around in one form or another since that 1921 paper, and the International Monetary Fund (IMF) had been imposing it on Third World nations for decades.
But 2009 was the year that austerity really came of age. That was the year that a wealthy stockbroker's son named David Cameron began campaigning for Prime Minister of Great Britain on an explicitly pro-austerity platform.
It was also the year that Cameron helped to form a group named European Conservatives and Reformists (ECR) dedicated to electing like-minded politicians across Europe and helping them collaborate on ways to slash government spending. It was also the year that right-leaning Angela Merkel won reelection as the Chancellor of Germany with a stronger mandate than she'd been given in her first term.
With Nicolas Sarkozy as President of France, Great Britain was the only major European power not yet in the hands of the corporate-backed austerity crowd.
The Global Sado-Erotic Thrill Machine
That changed with Cameron's election as Prime Minister in May 2010, an event that threw pro-austerity Americans into throes of near-erotic ecstasy. And if that sounds like hyperbole, consider conservative Anne Appelbaum's reaction to Cameron's budget in September of 2010: >
Vicious cuts." "Savage cuts." "Swingeing (sic) cuts." The language that the British use to describe their new government's spending-reduction policy is apocalyptic in the extreme. The ministers in charge of the country's finances are known as "axe-wielders" who will be "hacking" away at the budget. Articles about the nation's finances are filled with talk of blood, knives, and amputation.
And the British love it.
What can I say? There are people who collect serial-killer memorabilia, too. But Appelbaum wasn't just speaking for herself. It became unacceptable for any politician in Washington, Democrat or Republican, to advocate anything other than an austerity budget for the United States.
And it was more than an economic strategy to its backers. Austerity became a way to demonize those who had suffered most from the banking abuses and self-indulgences of the wealthy, a totemic "blame the victim" response that turned the political debate into a grotesque inversion of morality. Again, Appelbaum: >
"Not only is austerity being touted as the solution to Britain's economic woes; it is also being described as the answer to the country's moral failings."
Bad Metaphors vs. Good Economists
The Democratic President of the United States, Barack Obama, jumped onto the bandwagon with both feet by repeatedly lecturing Americans on the need for government to stop "spending beyond its means." Obama recycled the popular conservative metaphor of a family that has to sit around the kitchen table and decide how much money it has to spend.
That's one of the worst metaphors in modern politics. Does a family establish its own currency -- especially one that has the unique position of the dollar? Can a family borrow money at rates so low they're effectively less than zero? Would a family let Grandma go hungry because Junior bought too many Porsches out of the family kitty and then gambled it away on lousy mortgage investments?
The world's top economists, those who had successfully predicted the crisis of 2008, tried telling the rest of the world what was wrong with the idea: Joblessness and consumer fears were killing any chance of real recovery. More short-term spending was needed to get the economy moving again. Austerity would make things worse, not better.
But nobody listened. Austerity's S%M-like attraction had the world's elites in its grip.
Death of a Delusion
And then something else came into the picture: Reality.
Cameron's austerity budget had a shattering effect on the already-struggling British economy. His government's financial stability was downgraded five times during his first year in power and retail sales had fallen 2.5 percent. Household income was projected to fall an additional 2 percent if his austerity plans were carried forward. Britain's modest employment gains were reversed, youth unemployment reached record levels, and income inequality was the worst it had been in more than half a century.
Anne Appelbaum's erotic dreams had become Great Britain's nightmare.
As Europe's ruling austerity class pushed forward with their plans, even the IMF tried to dissuade them. It was clear to anyone who wasn't blinded by ideology or political cynicism that austerity economics was a failed program. Even in countries like Greece, where government was far graver than elsewhere, the austerity programs imposed from outside threatened to destabilize society while other reasonable measures like improved tax collection were still not taken seriously enough.
And now the entire Eurozone hangs in the balance. Bankers became wealthy by treating governments as if they were mortgages, lending recklessly and pocketing their fees without considering the long-term reliability of their loans. European leaders insisted for months they were take the kind of sensible steps that should've been taken in the United States by requiring bankers to accept at least part of the losses for the bad loans they had issed.
That plan was quietly dropped last month. "Austerity economics" never calls for austerity from those who have gotten rich by being irresponsible, only from those who didn't benefit from it at all.
The Afterlife
President Obama has dropped his austerity rhetoric, at least for the time being, but the Republicans have not. Listening to Mitt Romney discuss economics is like having a doctor wave a dead chicken over your head and saying he's decided to cast a spell on you rather than operate on that thing they found in your X-rays.
Aside from the bill introduced this month by the House Progressive Caucus to almost no media attention, there's no comprehensive plan for dropping this country's ineffective austerity strategy and replacing it with an agenda that works.
Rational solutions to our economic problems are being ignored. There won't be a real debate about alternatives to austerity until an entire political party, not just part of it, adopts this kind of program. Until then there will be chaos. And where there is chaos, austerity's powerful advocates can step in and take charge.
Austerity economics died in 2011 and is survived by the British, German, and French governments as well as the GOP and large portions of the Democratic Party. Instead of sending flowers, the family has asked the public to abandon all hopes of future economic growth.
12 Views
14:30:49 09/29/11
Prohibition Vogue: Boardwalk Empire, Ken Burns and What it Means for Marijuana Legalization
[LESS INFO] 12 VIEWS | ADDED 14:30:49 09/29/11
Prohibition Vogue: Boardwalk Empire, Ken Burns and What it Means for Marijuana Legalization
Alcohol prohibition may have been repealed in 1933, but Americans have rarely been more intoxicated with the "noble experiment" than they are today. Between "Last Call," Daniel Okrent's best-selling 2010 book, leading clothing designers taking inspiration from jazz age fashion, a new prime-time documentary by Ken Burns, and the new, second season of HBOs critically acclaimed Boardwalk Empire, it's impossible to ignore the new interest in Prohibition. With a fixation on "classic cocktails" and faux-speakeasies, even drinking culture itself seems to be bellying up to the bar. What's fueling this fascination and where will it end? Reason.tv talks with filmmaker Burns, author Okrent, and drug policy activist Aaron Houston of Students for Sensible Policy, who argues that "Culture and art right now are reflective of a general sentiment in this society that the war on drugs has not worked." And that change is in air. Marijuana legalization initiatives will be on the ballot in at least two states in 2012, Reps. Ron Paul (R-Texas) and Barney Frank (D-Mass.) have introduced legislation to let states decide pot's legal status, and record high levels of Americans are in favor of legalization. As Okrent tells Reason.tv, the need for excise tax revenue during the Great Depression helped make repeal of alcohol prohibition not just possible but desirable. Coupled with a sense of exhaustion at a drug war that has done little to prevent drug use, the dire financial straits of government at ... From: ReasonTV Views: 13421 261 ratings Time: 05:09 More in News & Politics
0 Views
05:52:17 01/06/11
5 Views
13:55:05 12/29/10
Video: Tax Changes Create Filing Delay
[LESS INFO] 5 VIEWS | ADDED 13:55:05 12/29/10
The IRS is warning taxpayers that it will not accept certain individual tax returns until mid to late February. This is after the changes made by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, enacted December 17, 2010. The IRS emphasizes that most taxpayers will be allowed to file in January. However, taxpayers who plan to benefit from itemized deductions or certain tax credits will have to wait until February to file. The IRS is expected to announce the exact date, when people affected by the new tax changes will be able to file their tax returns, in the next few weeks.
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23:59:36 12/28/10
Video: Tax Changes for 2010
[LESS INFO] 1 VIEWS | ADDED 23:59:36 12/28/10
New tax bill has prompted the IRS to warn taxpayers that they will not be able to process itemized deductions unitl mid-late February. Taxpayers frustrated
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13:18:37 12/09/10
Video: Act Now To Increase Your Tax Refund / TurboTax
[LESS INFO] 0 VIEWS | ADDED 13:18:37 12/09/10
Make Smart Tax Moves in the Face of Pending Tax Law Changes Take Advantage of Deductions and Credits When It Matters Most Although it’s not uncommon for there to be changes to the tax law, this year taxpayers are facing an unprecedented number of changes and level of uncertainty that will affect all Americans. Taxpayers are left scratching their heads while Congress decides about changes that could impact most Americans’ 2010 tax returns. How will taxpayers make sense of it all?
52 Views
02:10:01 11/12/10
Ed Rendell - Bridges Not Bombs: Finding $300 Billion for Infrastructure
[LESS INFO] 52 VIEWS | ADDED 02:10:01 11/12/10
Complete Premium video at: http://fora.tv/conference/american_water_summit
Pennsylvania Governor Edward G. Rendell advocates for increased spending on infrastructure development. Rendell argues that while the cost to repair America's aging infrastructure may seem daunting, the hundreds of billions used to fund the wars in Iraq and Afghanistan would easily fund the project.
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Keynote speech by Pennsylvania Governor Edward G. Rendell during the 2010 American Water Summit.
Water and money need to be better connected in the United States. While water is facing greater challenges than ever before in terms of infrastructure renewal, growing scarcity, and changing demographics, the money is not there to seize the opportunity. The stimulus package has been allocated, but public finances are struggling to keep afloat in its wake. It is time for change, and time for new directions. - American Water Summit 2010
Edward G. Rendell is serving his second term as Pennsylvania's 45th Governor, overseeing a $28.3 billion budget in the nation's sixth-most-populous state. His strategic investments have energized Pennsylvania's economy, created jobs, revitalized communities, improved education, protected the environment, and expanded access to health care for children and affordable prescription drugs for older adults.
Governor Rendell is also working to create jobs in the emerging alternative energy economy and develop strategies to reduce dependence on foreign oil and save families money. Rendell was the 121st Mayor of the City of Philadelphia (1992–99), eliminating a $250 million deficit; balancing the city's budget and generating five consecutive budget surpluses; reducing business and wage taxes for four consecutive years; implementing new revenue-generating initiatives, and improving services to neighborhoods.
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12:00:00 11/01/10
Democracy Now! 2010-11-01 Monday
[LESS INFO] 17 VIEWS | ADDED 12:00:00 11/01/10
Headlines for November 01, 2010; Jon Stewart and Stephen Colbert Lead Massive Rally to "Restore Sanity and/or Fear" in DC; Rep. Keith Ellison on Tea Party Anti-Muslim Bigotry, US-backed Assassinations in Yemen, and the Firing of Juan Williams; Legalizing Pot, Tax Reform, Healthcare and Climate Change Ballot Initiatives to be Decided on Tuesday; Brazil Elects Dilma Rousseff, First Female President
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23:11:41 07/26/10
GRITtv: July 26, 2010
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New documents released by the site WikiLeaks provide an increasingly clear--and chilling--picture of the war in Afghanistan. ; Katrina vanden Heuvel notes that the documents, released simultaneously by The Guardian, the New York Times, and Germany's Der Spiegel, as well as in full by WikiLeaks, are an example of "asymmetrical media," allowing the public to access the raw documents as well as the parts filtered by the traditional press.In addition to the WikiLeaks revelations, Katrina joins us in studio for The Nation on GRITtv to discuss the Netroots Nation conference, JournoList and Andrew Breitbart, Elizabeth Warren, tax cuts, and new ways to cut down on Wall Street's power.With the release of the WikiLeaks "War Logs," more focus has been brought to the war in Afghanistan. But will anything change?
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23:11:41 07/26/10
GRITtv: July 26, 2010
[LESS INFO] 0 VIEWS | ADDED 23:11:41 07/26/10
New documents released by the site WikiLeaks provide an increasingly clear--and chilling--picture of the war in Afghanistan. ; Katrina vanden Heuvel notes that the documents, released simultaneously by The Guardian, the New York Times, and Germany's Der Spiegel, as well as in full by WikiLeaks, are an example of "asymmetrical media," allowing the public to access the raw documents as well as the parts filtered by the traditional press.In addition to the WikiLeaks revelations, Katrina joins us in studio for The Nation on GRITtv to discuss the Netroots Nation conference, JournoList and Andrew Breitbart, Elizabeth Warren, tax cuts, and new ways to cut down on Wall Street's power.With the release of the WikiLeaks "War Logs," more focus has been brought to the war in Afghanistan. But will anything change?
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22:30:00 07/20/10
Our Studio Guest: Harald L. Schedl
[LESS INFO] 30 VIEWS | ADDED 22:30:00 07/20/10
from Simon Kucher & Partners. He speaks with us about mid-sized firms.PART 1: DW-TV: And I am joined now by Harald Schedl, Managing Partner of consulting firm Simon-Kucher and Partners, and you also work with many small and medium sized companies. You consult them, give them advice. What would be your advice for an innovative company like RENA? Harald Schedl: At the moment, continue innovation, of course, and expand internationally. Lots of their business is in the solar industry, and this is becoming increasingly an international and global business, so they are already quite international for their size but they have to increase their presence in the world. DW-TV: That means they would have to do what other big groups have done already, like Siemens, outsource production to countries like China? Because the big thing about RENA so far has been that they could stay in Germany in a small little region. Harald Schedl: I would not recommend them to outsource their production to China at the moment. They are in the machinery industry, and the machinery industry has always been a global business, so you can export machinery from Germany to any country in the world. What is very important is to keep your core competence near to the production, so research and development and production is, I'm sure, one of the success factors of RENA. DW-TV: Okay. That's their secret of success, and of course they do have enough skilled workers. How do they manage to keep them there, in that small village in the Black Forest? Harald Schedl: One of the key principles is the company's growing. So the people that work for RENA increasingly have opportunities to grow as well personally. So they can, for example, travel abroad as sales people and also get new experiences in the sales shop. And that's very important that a growing company can offer interesting jobs to people. DW-TV: And how is it possible that a company like RENA hasn't been affected by the global financial crisis? Harald Schedl: They have been affected in the last year. Now they're back on the upswing, and what they have done in the last year is to reduce fixed costs as much as possible in order to come through a crisis that affected every company in the world. DW-TV: Harald Schedl, thank you for the moment. PART 2 DW-TV: Georg Oelschlegel, by the way, received the 200,000 euro loan from his bank, so he can invest in his franchise. Harald Schedl, an expert on small and mid-sized companies, joins us again. What do you make of this rather difficult situation for mid-sized companies, getting a loan? Harald Schedl: Indeed it has been increasingly harder for small and mid-sized companies to obtain a loan, and that is one of the reasons why people like Mr Langen are successful in the market. But in general, the hurdles to get a new loan are higher and they will remain higher. So companies have to demonstrate that they have a viable business model that is good and sustainable. DW-TV: Okay, you say that the hurdles are high, because a recent survey actually shows that every second small and medium sized company accuses banks of demanding excess safety guarantees for loans, of toughening disclosure requirements and raising interest. All of that doesn't make it particularly easy to get a loan. Is it the same problem for big companies, or does this really only affect small and medium sized companies? Harald Schedl: In the crisis of 2009 it also largely affected the bigger companies. But this has changed again. A lot of these companies have been able to get new loans for their investments in the further competition and internationalisation of their business model. So in 2010 I would say that has been much easier for them to get the funds they needed. DW-TV: Okay, but what about those companies that still find it difficult? I mean we've heard so often that small and medium-sized companies are the backbone of the German economy. So what alternatives are there for them to get hold of the money they need? Harald Schedl: Well, public financing is one interesting source, and, of course, private financing. There are increasingly family companies, or families, family offices that are financing small and medium sized companies in their future growth, and this is a very interesting new source that we have not seen in the last years. DW-TV: Harald Schedl, thank you very much. (Interview: Monika Jones)
