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Americans need to face a hard fact: we almost certainly dodged another Great Depression by a hair’s breadth thanks to the combined efforts of Bush Treasury Secretary Henry Paulson, the Obama administration and the much maligned Democratically-controlled Congress. But the fallout from the near economic collapse and financial meltdown is likely to endure for years and not months. The problems are deep and widespread, global and not merely national in scope

Whilst our government is not entirely helpless in the face of this recession, neither does it have in its bag of tricks a silver bullet or a magic wand to make it disappear. Unaccustomed as they are to an unemployment rate near 10%, Americans are unlikely to see a dramatic improvement any time soon no matter which party rules in the White House or congress.

In Europe, the harsh consequences of recession-induced joblessness is ameliorated significantly by a substantial social safety net that provides a livable income, retraining opportunities and housing assistance.  America’s Swiss-cheese version offers few such protections. The fact is Americans are just a pink-slip away from personal catastrophe, where a job lost can mean no health insurance (although thanks to Democrats that will change by 2014) and perhaps homelessness for themselves and even their children.

On NPR recently I listened to some bright spark from one of the right-wing think tanks explain why extending unemployment benefits is a disincentive to those who have been unemployed longer than a few months to search vigorously for a job – this despite credible estimates that there are five job seekers to every available job in the market. Is $300 a week a fortune to people who were earning $50K just year ago? Not on the planet most of us live on, that’s for sure. He went on to suggest more of the unemployed should be willing to uproot their families and move; or be prepared to take a job at McDonald’s at minimum wage, as though you can support a family that way.

Appalling, outrageous and shameful though it may be, this is the prevailing view on the right and among congressional Republicans. It highlights the extent to which most Republicans are completely out of touch with the way most Americans live, and lack any ability to empathize with those in distress.

So it does matter which party steers us through the hard times and best prepares the country to take advantage of the global recovery when it does come. And that, ladies and gentlemen, would be the Democrats.

American families that are hurting need help not platitudes. Yes, they need jobs. But these do not grow on trees nor appear on government demand. In the short term unemployed Americans need government assistance to ensure they have basic financial assistance, can keep a roof over their family’s heads and for re-training where that is feasible.

And as the economist and New York Times columnist Paul Krugman endlessly preaches, we also need to take advantage of the low cost of government borrowing to invest heavily in our human resources through increased spending in education, and on needed infrastructure improvements.   To cut spending now on these essential engines to our future prosperity as states struggle to balance their books is myopic and idiotic.

As for the deficit, we don’t need lessons on fiscal rectitude from a party that:

1. Drove us into two wars (and botched both of them),
2. Turned a budget surplus into a deficit quicker than you can say “Bush tax cuts for the rich,”
3. Passed into law an unfunded Medicare drug benefit to pander to and keep seniors in their political column,
4. Calls for fiscal austerity, but still wants extend Bush’s tax cuts for the rich even though their expiration would add hundreds of billions of dollars to the treasury,
5. Wants more spending on an already bloated Pentagon budget and on border fences with Mexico, and finally,
6. Whose deregulatory zeal got us into this mess in the first place.

Dick Cheney was wrong; deficits do matter – but not now.

I understand that Americans are unhappy with the Obama administration and congress for not fixing the economy. The fact is there are no easy answers or quick fixes to our economic doldrums, and much depends on what happens outside of our shores and beyond our control.  The impulse to hold someone, anyone, responsible for what ails us is strong.

Yet to elect more Republicans, a party bereft of ideas and only able to obstruct and impede government, is to invite paralysis to our policy making machinery and the infliction of more pain on those Americans who need our help in these times.  Please, let’s not cut off our noses to spite our faces in November.

Ever since Democrats passed the stimulus bill in early 2009, Republicans in congress have attempted to portray themselves as born-again deficit hawks, eschewing their profligate ways during the George W Bush years.  Fortunately, this fiction has not survived the question of what to do about the Bush tax cuts for the rich which are due to expire.

The Obama administration intends to let them expire, thereby saving the treasury some $697 billion over 10 years.  GOP leaders, however, support an extension of all the Bush tax cuts because (and they even manage to say this with a straight face) they don’t add to the deficit at all since they stimulate the economy and actually pay for themselves.  This nonsense has been disproved so many times you’d think even Republicans would be embarrassed to trot it out again; but it does highlight, in addition to a certain obtuseness, their hypocrisy on the deficit.  According to the GOP, extending unemployment benefits to those hit hardest by this recession must be paid for with offsetting cuts elsewhere in the budget, but the rule shouldn’t apply to tax cuts on the wealthiest Americans least touched by the downturn. Sweet!

McConnell and others in the GOP explain the difference in terms of their opposition to government spending adding to the deficit, but this hardly concerned them when they were passing the Medicare drug benefit or appropriations for the wars in Iraq and Afghanistan – none of which were offset with spending cuts elsewhere.  Even now when pressed to identify specific and significant cuts to government spending in programs such as Medicare or Social Security or the defence budget, GOP spokespeople dodge and weave and obfuscate shamelessly without ever giving a straight answer.  Indeed, if you listen to them in other contexts, they insist not enough is being spent on things like border security.

This incoherence is fundamental to today’s national Republican Party and is guided by an essential right-wing conviction:  that an unfettered free market is paramount, and that government has no business and is essentially ineffective in all but a few areas such as national security.  The party therefore has no incentive to make government work efficiently or effectively either when they are in power or in opposition, since this would undermine their guiding principal.  This explains, for example, the utter incompetence of the Bush years when the GOP controlled both the White House and the congress, and the intransigence of today’s congressional Republicans as they strive to thwart any and all initiatives of the Obama administration.  For Republicans gridlock is good.

Voters should remember this as they go to the polls this fall.  By any reasonable standard, the Obama administration and congressional Democrats have accomplished a great deal in the last two years, virtually all of which I happen to believe, will be to the long term benefit of the country.  In the short term, the stimulus really did soften the blow of this deepest of economic downturns.  Yet the number of jobless is still way too high and Americans are feeling unsettled and grumpy; Democrats, unfairly or no, are likely to feel the brunt of their ire.  Republicans will benefit simply by being the party out of power. But a party as bereft of ideas as the GOP and whose policies and ideological devotion to deregulation largely caused the mess in the first place should not be rewarded with increased power and influence.  That is simply a recipe for prolonged national pain.

Rand Paul, son of Ron Paul, and Tea Party candidate for Senator of Kentucky won the primary.  He beat Trey Grayson in the Republican primary.

“I have a message,” Mr. Paul said, delivering a victory speech in Bowling Green. “A message from the Tea Party.  A message that is loud and clear and does not mince words: We have come to take our government back.”

Back from who?  The black man in the White House?  The bankers on Wall Street?  The super rich people that horde all the money?  The poor brown people who mow their lawns, pick their fruit, scrub their tubs, and burp their babies?  Who?

I’ve read a few articles about the Tea Party over the last few days, and I think that Michael Kinsley summed them up best in his article “My Country Tis of Me” for The Atlantic:

Not only do TPPs not have one big issue like Vietnam—they disagree about many of their smaller issues. What unites them is a more abstract resentment, an intensity of feeling rather than any concrete complaint or goal.

…

If the Tea Party Patriots ever developed a coherent platform or agenda, they would lose half their supporters.

The Seattle Times ran a feature piece on a Tea Party leader in last Sunday’s Pacific Magazine.

IF THE TEA Party movement is about the rage of the pitch-fork-wielding masses toward a government run amok, then Keli Carender is its most unlikely heroine.

She’s 30, fresh-faced, Oxford educated and about as Seattle as you can get in her slacker wardrobe of plaid duds and Converse All Stars.

Like the brainy girl in the front row of civics class who rolls her eyes every time the teacher gets a date wrong, there’s a little snarkiness in her disposition, perhaps a tick learned on her night job as an improv comedian.

But as a leader in a movement full of people who only see dark clouds over America’s horizon, Carender manages to be pleasantly partly-sunny, her hopes set firmly on shaking up the November midterm Congressional elections.

The article quotes a 69-year-old Tea Party supporter, Betty Donovan:

“I’m tired of them taking money from people that earn it and giving it to people that don’t earn it,” Donovan says, referring to health-care reform.

She doesn’t specify who these non-earners are.  The populism of the Tea Party movement makes targets of strange bedfellows, from welfare recipients to Wall Street titans.  The one universal enemy, however, is Big Brother.

Yes Big Brother.  The Federal Government.  The same organization that sends her a Social Security check every month and provides her with medical insurance.  What she and her gang of angry old white people object to is that Big Brother is running a deficit.  I would bet that she voted for George Bush twice, and I am certain that she hasn’t thought about how, if the Bush Administration and the brownshirt Republicans in congress had not given away trillions of dollars in tax cuts to the super rich and had not started two unfunded wars that cost trillions of dollars, Big Brother would have been in pretty good shape going into this recession.

One more observation about this quote from Keli Carender in the Seattle Times feature:

“The difference between maybe a leftist group and our group is we are very much individualist,” she says.  “It is a little bit harder to get a unified message.”

It’s probably harder because their “unified” message is about hate.  It’s hard to just come out and say that because, well… it would sound hateful.  Hard to rally around that.

Paul Krugman writes about the politicizing of federal budget deficits in today’s column:

To me — and I’m not alone in this — the sudden outbreak of deficit hysteria brings back memories of the groupthink that took hold during the run-up to the Iraq war.  Now, as then, dubious allegations, not backed by hard evidence, are being reported as if they have been established beyond a shadow of a doubt.  Now, as then, much of the political and media establishments have bought into the notion that we must take drastic action quickly, even though there hasn’t been any new information to justify this sudden urgency.  Now, as then, those who challenge the prevailing narrative, no matter how strong their case and no matter how solid their background, are being marginalized.

And fear-mongering on the deficit may end up doing as much harm as the fear-mongering on weapons of mass destruction.

This is the year that the Bush tax cuts expire, so the Republicans will use their scare tactics to convince people that raising taxes on the rich is the wrong thing to do, and they’ll probably even argue that we should lower the tax rates to stimulate economic growth, because everybody knows that more money in the pockets of billionaires creates jobs, right?  WRONG!

Obama has been making a point of placing blame for the deficit spending where it belongs – with the Republicans – and he has been pretty vocal about how their tax-cutting schemes have not worked in the past.  He has pointed out that they are the party that reduced federal revenue by trillions of dollars by cutting taxes for the super rich, and they are the party that handed a blank check to Bush for the funding two very long wars.  Obama should keep hammering on the Republicans about the deficit they created and he should be very firm with Reid and Pelosi about not extending the Bush tax cuts for the rich.

The Democrats in Congress should not be pressured by the deficit hysteria Krugman writes about.  Now is not the time to cut funding for government programs that are essential to stimulating the economy and getting us out of this recession.

President Obama must have read Paul Krugman’s January 18th column in which he wrote about how “Reagan spent his first few years in office continuing to run against Jimmy Carter,” which led into:

Mr. Obama could have done the same — with, I’d argue, considerably more justice. He could have pointed out, repeatedly, that the continuing troubles of America’s economy are the result of a financial crisis that developed under the Bush administration, and was at least in part the result of the Bush administration’s refusal to regulate the banks.

But he didn’t. Maybe he still dreams of bridging the partisan divide; maybe he fears the ire of pundits who consider blaming your predecessor for current problems uncouth — if you’re a Democrat. (It’s O.K. if you’re a Republican.) Whatever the reason, Mr. Obama has allowed the public to forget, with remarkable speed, that the economy’s troubles didn’t start on his watch.

Obama got the message:

Now, even as health care reform would reduce our deficit, it’s not enough to dig us out of a massive fiscal hole in which we find ourselves. It’s a challenge that makes all others that much harder to solve, and one that’s been subject to a lot of political posturing. So let me start the discussion of government spending by setting the record straight.

At the beginning of the last decade, the year 2000, America had a budget surplus of over $200 billion. By the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts and an expensive prescription drug program. On top of that, the effects of the recession put a $3 trillion hole in our budget. All this was before I walked in the door.

Now — just stating the facts. Now, if we had taken office in ordinary times, I would have liked nothing more than to start bringing down the deficit. But we took office amid a crisis. And our efforts to prevent a second depression have added another $1 trillion to our national debt. That, too, is a fact.

That’s a fact he needs to wield as a hammer far more often than he did during his first year in office.

Seriously, that’s what it says in the new GOP pamphlet released last week.

I scanned through it today and found the same tired old theories about how they are the party of low taxes and controlled spending.  It was really quite hilarious.  On page two I found how their plan:

CURBS SPENDING

•  
  • Limits the Federal Budget from Growing Faster than Family Budgets Instead of spending money on wasteful programs under the guise of “stimulus” and investments,” Republicans seek to ensure that the federal budget cannot grow faster than families’ ability to pay the bill.

And on page nine I found that the government would be collecting way less revenue because, you guessed it – they want more huge tax cuts for the rich!

Republicans propose a simple and fair tax code with a marginal tax rate for income up to $100,000 of 10 percent and 25 percent for any income thereafter, with a generous standard deduction and personal exemption.  Republicans would allow any individual or family satisfied with their current tax structure to continue to pay those rates, while dropping the two lowest rates by 5 percent to provide every taxpayer with a tax cut.  Republicans would also permanently fix the Alternative Minimum Tax (AMT) so that millions would no longer have to fear the possible imposition of a huge, new tax each year.

Yes, they want to CUT the top tax rates that are currently set at 35%, 33%, and 28% down to 25%.  That would give the super rich who currently pay 35% a 10% reduction on their income-tax bill, unless they fell into the category of those who are “satisfied with their current tax structure” who will choose “to continue to pay those rates.”  I wonder how many millionaires and billionaires would willingly pay more taxes than their greedhead associates.  Not many I bet…  

And as if the income-tax reduction isn’t enough, I’ve read they would also like to completely do away with the capital gains tax.  If they had their way, the very richest CEO’s among them would save an average of $1,500,000 every year, while the working class would see little to no reductions in their taxes. 

How much tax revenue would be lost under the Republican plan?  Citizens for Tax Justice says: 

The income tax proposals in the House GOP plan, which is presented as a fiscally responsible alternative to the President’s plan, would cost over $300 billion more than the Obama income tax cuts in 2011 alone.

So the Republican tax plan would reduce federal revenues by hundreds of billions of dollars a year that would be funneled into the pockets of their super-rich base and, you guessed it, the government wouldn’t be able to spend money on “wasteful” programs like schools, bridges, roads, alternative energy development, and health care to stimulate the economy.

Obama shouldn’t waste a nanosecond trying to reach out to these greedy vulgarians and their pissed-on tax plan.  He should do what he was elected to do:   Start changing things.  If I were him I’d start by telling everybody that the right thing to do at this time is to take back the hundreds of billions of dollars that the super rich pretty much stole from everybody else by RAISING their tax rate to at least 50% and using the extra revenue to rebuild our country.

The Alternative Minimum Tax instituted in 1969 was put in affect to prevent a very small number of very rich Americans from using accounting tricks to avoid paying any income taxes.  How much were the “very rich” earning in 1969?  Well the alternative tax applied to those who earned $200,000 or more.
 
So what’s $200,000 adjusted for inflation from 1969 to date?  $915,000.  So you can see, the AMT was never intended to reach down into the ranks of the upper middle class, and since the compensation threshold was not indexed to inflation, it’s been a fought over in Congress more and more frequently as middle class incomes rise. 

Just before Congress adjourned a couple weeks ago, they passed a bill that provides some relief for those who would have to pay the AMT for 2007.  The Democrats wanted to pay for the loss of revenue the AMT would have generated by raising taxes on the super rich.  One plan was to make hedge-fund managers pay regular income tax rates on their billions in earnings instead of the lower 15% capital gains tax. 

Whoa!  What a crazy idea.  Why would anybody with a normal job who’s paying 20% to 30% in Federal Income Taxes want billionaires who earn their money by extracting dollars from the economy to pay the same or higher taxes than they do?  I don’t know… maybe because the hedge fund managers are taking so much money for themselves and not contributing anything tangible to the economy.  Maybe they should be stuck with paying a greater portion of total income taxes. 

Ask anyone you know who works for a living if he or she thinks it is acceptable for people that collect most of their income from investments – not from real jobs – to pay a lesser tax rate than they do.  I think you’ll find the idea of the super rich getting discounts on income tax rates makes them very angry.

Back to that AMT bill recently passed by Congress:  Here are two quotes from opposing sides:

“Let me be clear, there is no disagreement between Republicans and Democrats over protecting the middle class from the AMT,” House Majority Leader Steny Hoyer, D-Md., said. “The question is, will we do so responsibly or charge tens of billions of dollars to our grandchildren?”

Rep. Eric Cantor, R-Va., the Republicans’ chief deputy whip, said the Wednesday vote was “a huge victory for us.” The GOP position, he said, “has been consistent down the line. We don’t believe we ought to raise taxes to correct the mistake of AMT.”

I like that… “the mistake of the AMT.”  Remember, the original 1969 tax was targeted at those earning more than $915,000 dollars a year in today’s dollars.  The “mistake” of course is that the 1969 income level was not indexed to inflation.  If it was, it would have continued to affect only the very rich as originally intended.  So why are the Republicans so adamant about not raising taxes on the super rich to offset the loss of revenue?  Pretty simple really.  It’s all part of the Republican plan to shift a large portion of the tax burden from the ultra rich to the middle and lower classes.

NOT TRUE! You say.  Oh really…

Take a look at these numbers that Paul Krugman derived from recent “Historical Effective Federal Tax Rates” reports put out by the Congressional Budget Office:

Here’s what the numbers say about percentage gains in after-tax income from 2003 to 2005:

Bottom quintile: 2%
Next quintile: 2.4%
Middle quintile: 3.9%
Fourth quintile: 3.7%
Top quintile: 16%
Top 10%: 20.9%
Top 5%: 27.7%
Top 1%: 43.5%

It was a boom, all right — but only for a few people.

Leave it to Bush and his congressional foot soldiers to protect “his base” by refusing to raise income taxes on the richest Americans who have seen their incomes increase by 43.5% over the last three years compared to the 2% to 3.7% for bottom 80%

They’d rather run higher deficits than offset the loss of revenue from a “mistake” tax that crept its way into the middle class than transfer the burden to the richest 1% that can easily afford to pay back a portion of what they’ve extracted from the rest of us.

Here is a part of a rant by David Michael Green posted on CommonDreams.org that you really should read:

Regressives like to call people like me Bush-haters, and so it is important to address that claim before proceeding, because the entire intent of hurling that label at the president’s critics is to undermine their credibility. If you simply hate the man, they imply, you’re not rational, and your critiques can be dismissed. But it isn’t that simple – not by a long shot. First, it should be noted that the regressive right is far wider a phenomenon than just one person. It currently includes an entire executive branch administration, almost (and, just a year ago, more than) half of Congress, a majority of the Supreme Court and probably a majority of the lower federal courts, a biased-to-the-point-of-being-a-joke mainstream media, and tons of lobbyists, think tanks and profitable industries.

But as to George W. Bush, himself, I suspect it’s quite fair to say that most Americans and even most progressives did not originally despise or loathe him. I didn’t. I certainly didn’t admire the guy, nor did I think he was remotely prepared to be president of the United States. (Nor, by the way, was I particularly impressed with Al Gore in 2000.) Bush campaigned as a center-right pragmatist (a “compassionate conservative”, in his words), much as his father had been, and I expected that’s how he would govern if elected. You know, more embarrassing most of the time than truly destructive.

I mention all this because it is important to note what has – and what has not – been responsible for my/our anger, and to make clear that attempts to dismiss that anger as some Bush-hating bias or predisposition are false, a ploy to destroy the messenger when one doesn’t care for the message he’s carrying. If Bush had governed like he campaigned I’m sure I would have disliked him, but neither hated him nor his policies, nor experienced the rage that I feel about what he’s done to the country and the world. Frankly, my feelings toward another center-right Bush presidency would have likely been largely the same as my feelings toward the center-right Clinton presidency which preceded it.

But he hasn’t governed anywhere near to how he campaigned, and he wasn’t even elected properly, and I do in fact feel huge anger at the damage done. Moreover, I cannot for the life of me imagine how anyone – even conservatives – could feel differently. Even the wealthy, to whose interests this presidency is so wholly devoted, have to sleep at night. Even they have children who will inherit a broken country existing in an environmentally and politically hostile world, though no doubt they figure that big enough fences, mean enough private armies, and loads of central air conditioning will insulate them from the damage.

Followed by a litany of nauseating offenses.  Read it all here.

Everything you need to know about Alan Greenspan’s economic policy in six panels of This Modern World.

Karl Rove is no idiot. When he promises an ‘October Surprise‘, he delivers.  So, if he promised an ‘October Surprise‘ back in September, he knew what he was delivering.  I have pondered this topic in a few other posts(here, here, and here), but never found his special gift to the world.

But what is it???

I think his ‘October Surprise’ is a gift that keeps on giving, for at least the next 18 months or so.

The Republicans took a dive in the midterms.

Before we look at the possibility of the Republicans taking a dive, I want to state that I wholeheartedly believe that voters overwhelmingly wanted Republicans out of office and a change of direction for the nation. But, perhaps Karl Rove did not use all the tricks (ex. electronic voting manipulation, caging lists, etc.) which are accessible to him, allowing the Democrats to take control.

Basically, the Republicans could benefit greatly from taking a dive, letting the shit hit the fan with Democrats in power, then in 2008 come in to clean up the mess. I know, the mess is the Republican’s mess, but remember, these guys operate at a 5th grade mentality.

If you don’t believe me about their mentality, check out this passage from an article in Rolling Stone that I mentioned previously:

According to the rules, conferences have to include at least one public, open meeting…amazingly, the Republicans sneak off to hold the real conference, forcing the Democrats to turn amateur detective and go searching the Capitol grounds for the meeting. “More often than not, we’re trying to figure out where the conference is,” says one House aide.

In one legendary incident, Rep. Charles Rangel went searching for a secret conference being held by Thomas. When he found the room where Republicans closeted themselves, he knocked and knocked on the door, but no one answered. A House aide compares the scene to the famous “Land Shark” skit from Saturday Night Live, with everyone hiding behind the door afraid to make a sound. “Rangel was the land shark, I guess,” the aide jokes. But the real punch line came when Thomas finally opened the door. “This meeting,” he informed Rangel, “is only open to the coalition of the willing.”

So, now that I’ve illustrated the maturity of the Republicans, let’s regress to childhood for a moment and role play…

You are a child in a room. There is one other person in the room. There is a table. On the table is a jar filled with your favorite candy. It isn’t your candy, but you love the candy. You eat a piece, yummmmmmm. You eat another and another. Pretty soon the jar is empty. You hear someone coming.

You have two options. One is to stick around and take responsibility for eating all of the candy. The other option is to go out the back door and avoid any confrontation as to who ate the candy. You know that if you leave, the other person will be held responsible for your actions.

So, what would you do as a child? Not just any child, but the type of child who holds ‘public’ meetings in secret?

Not the best analogy, but hopefully it makes the point. I think that Karl Rove had the Republicans take a dive so that in 2008 they could come back to ‘fix’ the results of the growing mess that the Republicans made in the past 6 years.

The list of the current mess is long and I am tired, but how about Iraq, corruption, a housing bubble about to burst, the growing deficit, and on and on…

The electorate has an amazingly short memory and I predict that the next 2 years will be a period of Republicans turning these into Democrat failures.