Our Leaders are Idiots

There is no better evidence that our educational system is in shambles than the complete inability of our leaders to learn from history. Clearly they didn't learn much of anything in school. Well, that's if they even went to school. A disturbingly high number of our leaders didn't even go to college, and yet we're entrusting them with decisions about our country's future? How is that even possible?

Shortly after the 1929 stock market crash the response from government was to cut spending and implement austerity measures in order to stabilize the markets. The opposite happened. A rapid contraction of government spending resulted in even less commerce and even less spending which caused businesses to fail and millions of Americans to lose their jobs, which sent the country into the Great Depression.

At first in the wake of the financial crisis of 2008, I thought maybe we'd learned from our mistakes. A rapid stimulus response pumped money into the economy and spared the crash that may have happened had it not been goosed with that money. But now, just as that stimulus money dries up, the budget hawks are calling for spending cuts and austerity measures. This is during a jobless recovery. We still have official unemployment of 9% and unofficial unemployment over 16%. More Americans are out of work today than were out of work during the Great Depression. Sure, we're a bigger country now, but that's still a lot of misery going around.

Meanwhile we have messages like this coming out of Congress:

Americans deserve immediate spending cuts that demonstrate that we are charting a swift path toward a balanced budget. We must implement discretionary and mandatory spending reductions that would cut the deficit in half next year.

This was a message from the Congressional Republican Study Committee.

Why do we deserve immediate spending cuts? What did we do to deserve having our safety nets slashed just when we're clinging to them to keep from falling into the abyss? Why do we deserve to have spending cuts when what we need right now is economic stimulus? We don't need a contraction in the one part of the economy that has actually continued to spend. We need continued investment in our economy to keep it from collapsing in on itself. We're not out of the woods ... we're still in the thick of it.

What we actually deserve is leadership up to the task of leading. Up to the task of defending the working (and unemployed, and elderly, and youth) people of the United States against the transgressions of the money whores.

If you're really concerned about the budget deficit and national debt, then raise taxes on those sectors that have actually weathered the storm with remarkable ease ... the top 2% that those Bush tax cuts went to. I know I've said all this before, but I'll keep on saying it, because it's still the truth.We're supposed to save during good times and spend during bad. The trouble is we spent during good and now those idiots who didn't pay attention in school want to save when times are bad. It's backward. It's stupid. It's ignorant.

But I guess I agree with one thing. It is what we deserve. Voters get what they deserve and in 2010 we actually invited the Republican party back into power and this is the result.

Bend over, America. The Boehner's back.

Debt Ceiling Getting Closer

Why haven't I been blogging much? Well, most of all, because the topic of my last blog post - the debt ceiling fight - is still the topic at hand inside the beltway and I have little else to say about it. My position still stands.


As I suspected, the pundits are all a twitter about it and most of the country doesn't give a shit.

The Republicans have backed away from even the most reasonable of their positions and have now taken a stance that says "no new taxes ... ever" ... and they're saying it so strongly, they're signing pledges to prove their loyalty to conservative ideology. This is the extremism now displayed by 1/2 of our political parties. George Washington warned us at length about the dangers of a two party system and as has happened for the past 235 years, the public pays the price for their loyalty to one of two ideologies. As I'm fond of saying, "Voters get what they deserve."

Anyone frustrated with this current state of "broken government" needs only to look at the 2010 midterm elections to understand the cause. Giving the GOP control of the House of Representatives has resulted in a government that can't get anything done. Normally, a split government is a good thing. It keeps one party from ramming their agenda through without compromise. But the Democrats are so fractured that even when they had control of both houses and the White House, they could not pass health care or financial reform laws with sufficient protections for the American people. So what we end up with is a fractured Democratic party negotiating with an intractable and unified Republican party and nothing gets done.

Raising the debt ceiling, which is a no-brainer necessity, becomes fodder for forcing the Democrats into the Republican agenda of preserving tax cuts for the wealthy, cutting social programs, and leaving the military alone. When we could, in fact, lower our deficits substantially by doing just the opposite. The problem being, of course, the Republicans get far too much of their political support from those rich folks who benefit most from ridiculous tax loopholes that the GOP is now spinning as "raising taxes" if we stop letting them write off their corporate jets.

It's absurd, but nobody's really paying attention, because the country is bored to tears with this griping over completely unfathomable numbers. $30 billion, $2.5 trillion, etc. They mean nothing to the average person. Those figures are so abstract in our thinking. ... the average household income in America is around $50,000/year. $2.5T represents the combined annual income of 50 million American households. For perspective, there are approximately 117M households in the country, so $2.5T covers the total annual income of more than 40% of the country. And this is what our leaders re negotiating about with regard to our national debt.

How can we even wrap our heads around this?

Oh, and another tidbit. We're the only developed country in the world with an artificial debt ceiling. Other countries simply authorize their treasuries to issue new bonds to cover budget shortfalls and rely on the responsibility of their elected officials to adjust taxation and spending to accommodate any shortfalls or surpluses.

I guess that's only possible when your leaders behave like adults.

Our Banana Republic

There are times when I think our republic has always been this dysfunctional, but I'm just more aware of it today thanks to technological innovation. When I was growing up we had 3 nightly news stations and 2 local newspapers. Cable News, USA Today, and the internet did not yet exist. Of course, I was also a kid and then a teenager. Didn't have time for politics all that much, though I thought Ronald Reagan was the greatest president ever. What did I know?

Then cable news took off. I watched the first Gulf War on CNN. I studied government and history in college. Economics was my favorite subject though I ended up focusing my career in a much different area. The internet slowly grew into my preferred news source. I didn't have to rely on a single source or a few sources. I could search around for "the truth".

Today the internet and cable news provides alternative news positions everywhere you look. This has been a blessing and a curse. Information is at our fingertips like never before. And disinformation is also available in quantities previously unimaginable. News seekers no longer need to see news from a perspective that does not agree with their preconceived biases. Conservatives can run to the Drudge Report, or Breitbart's cadre of websites, or Glenn Beck's page, or Fox News. Liberals can turn to the Daily Kos, ThinkProgress, Crooks & Liars, MSNBC. There is no need for truly fair and balanced reporting anymore. Fair and balance doesn't sell advertising. Fair and balanced doesn't meet the warped demand for profitability from the free press.

But that's not the point of today's post. The point of today's post is that we've entered an era of idiocy. I suspect, though I lack evidence, that the cause of this idiocy is this fractured news environment. We no longer sit down as a country and listen to Edward Morrow explain things we need to know as citizens. There is little demand for unbiased reporting and as such our citizens have their biases confirmed and a wedge is driven further between those who lean left and those who lean right.

Gone are the days when we stood as a nation and understood that we should be rightly judged for how we treated the least among us. Now we have politicians clamoring over each other to eviscerate the safety programs that protect our poor and vulnerable.

Gone are the days when we understood that the strength of our economy was based on our working citizens making a livable wage that allowed them to purchase more goods and services and continue to grow the economy. Now globalization has made U.S. wages much less important to multinational corporations.

Gone are the days when unions were accepted as a necessary protection against the over-reach of the moneyed elite. The unions, grown fat with power, alienated all but union members and have become popular targets for opportunistic corporatist politicians.

Gone are the days when education of our children was the single most important thing we could do to assure our future competitiveness as a country. Now we slash education budgets by billions of dollars while giving billions of dollars in tax cuts to the wealthy.

The absurdity is overwhelming, yet a substantial proportion of our population is never exposed to these ideas, because they seek their news from places that defend these policies as rational or even just.

We're witnessing the Fall of Rome. The conversion of the great United States of America into a Banana Republic in which power and influence are bought and sold and the working people are an afterthought in the greed driven policies of the elite.

Thank your Congressperson.

Shame!

There is a grassroots effort brewing. Workers are taking to the streets like they haven't done in decades. The "busy middle" has awoken as austerity measures have targeted worker's compensation and collective bargaining.

Unions are easy punching bags these days, because they're often bloated, inefficient machines of a bygone era. However, they still serve an invaluable function - providing collective bargaining power to individual workers who would be powerless against their employer otherwise, especially in times of economic distress.

However, a curious thing has happened. On Tuesday, February 15th, 2011, the sleeping lion awoke. Public union workers in Wisconsin were organized by their union officials to protest in the state capitol. They've been there ever since. Three weeks of continuous protests! The protests have continued to grow in size rather than diminish. Union members not affected by the pending legislation in WI have joined to rally with the at-risk workers.

The organized GOP effort to pit private sector workers against public sector workers has backfired. While some still buy the idea that public sector workers are fat cats sucking off the government teet, many more are now realizing that this represents a threat to all working class people. The gutting of collective bargaining power will likely affect how effectively private sector unions can negotiate as well.

Mirror protests have sprung up all around the country in support of Wisconsin. "Workers of the World, Unite!" echoes in these efforts.

But the most interesting rallying cry might be the simplest. After Wisconsin house members passed the bill stripping public employees of collective bargaining rights in a late night session cries of "Shame!" erupted from the public gallery. As the lawmakers broke for the evening the gallery overran the legislative floor as the cries of "Shame!" followed the lawmakers out into the corridors.

Here is that video:

And then it happened again. Over the weekend Michael Moore, rabble-rouser and documentarian extraordinaire, flew to Madison, WI to speak to the protesters directly. His rousing and entertaining speech, America is NOT Broke, was at times inflammatory, at times hilarious, and always impassioned. Shouts of "Shame!" popped up as he spoke about the transgressions of the moneyed elite in their attempts to buy our democracy.

His full speech here:

I don't always agree with his documentary methods and I think he's sometimes over the top in his rhetoric, but he's definitely a lover of the working man and sincere in all he does. He's someone I'd be proud to have a beer with.

And most recently, the "Shame!" chant popped up in a Wisconsin Town Hall Meeting. Remember a couple summers ago when Democratic representatives were ambushed by angry citizens in their town halls over health care reform? Well, payback appears to have come to Republicans. Only the Republicans aren't taking it. They adjourned the meeting without responding to the protester's concerns.

Video here: 

And "Shame!" is what it is. Blaming the working class for the economic problems our country faces is not only incorrect, it is dishonest and at its root demonstrates a disdain for the citizens of our country. School teachers don't become school teachers to get rich. Most don't even become school teachers because they have outstanding benefits. Most become school teachers to teach our children. A similar truth exists about public employees. Many public workers choose those careers in order to serve their communities. In other to improve the lives of their fellow citizens.

It is time that the austerity hawks be shown what shame they bring on themselves and our country for the way they've attacked the working class while protecting the plutocracy.


Shame on every last one of them.

At least one politician gets it ...

With all the hue and cry about austerity and budget cuts, there is at least one lone politician on Capitol Hill who is consistently and loudly advocating for the less fortunate in the wake of the rape of our economy by Wall Street and the unfunded $3 trillion spending spree also known as the Iraq War. Want to look for a single cause of our burgeoning national debt? Look at the accounting practices regarding Afghanistan and Iraq War funding from 2001-2008. 

Nevertheless, while our politicians target safety net programs and public employee pensions as potential cost savings measures, let's remember that these same politicians have given enormous handouts to Wall Street and extended an enormous tax cut for the wealthy. 

Without further delay I give you Senator Bernie Sanders (VT-I) first expounding on how he sees things and then asking pointed questions to Treasury Secretary Timothy Geithner. 

The trouble with Bernie, of course, is that he's a self avowed Democratic Socialist. That means he is a socialist who embraces democratic principles. Remember, socialism is an economic system, not a political system. While democracy is a political system, not an economic system. When I say "the trouble with", what I really mean is that many find it easy to dismiss Bernie Sanders, because of his aversion to unfettered capitalism. Of course, when you stop and think about his position in this video clip, it is very difficult to contradict him without being a complete tool (of the plutocracy). 

A Tale of Two Narratives

There is an extreme disconnect between liberals and conservatives regarding what needs to be done to right the economy and reduce unemployment.

The usual conservative claim is that we need to cut taxes to spur growth and reduce spending to reduce the deficit in order to maintain economic security. Reducing spending is what is often referred to as "austerity measures". Basically, cutting back on government services in order to narrow the budget deficit.

The usual liberal claim is that we need to stimulate the economy through government spending in the short term by investing in infrastructure, education, and technology (President Obama's 3 pronged "Win the Future" mantra from his recent State of the Union). Though unspoken by a majority of liberal politicians, the other aspect of this is - raise taxes to narrow the revenue-expenditure gap.

For a very long time the way our government functioned was rational. Running a surplus or modest deficit (small, short term federal deficits are economically beneficial due to the economic utility of the bond market) during good times in order to pay for the costs of wars or recessions. War is self-obvious - they're expensive. But recessions are important too, because tax revenue declines (less income to tax) and demand for social services increases (unemployed seeking benefits, people dropping into poverty, etc). This made sense and everyone understood it - both left and right.

However, in the 1980s President Ronald Reagan claimed deficits didn't matter. Deficit spending by the federal government, which until that time had been modest except during war or extreme recession, ballooned into standard practice.

figured borrowed from https://www.mygovspending.com/

As you can see from this figure, other than World War II, surpluses and deficits were modest from 1945 until the early 1970s when we had our first post war recession. That golden era of capitalism, from approximately 1945 to 1973 represented the most sustained and robust economic growth in our nation's history. A rising tide lifted all ships as business owners and workers alike saw their incomes greatly outpace inflation.

When Reagan took office in 1980 we began to see much larger deficits through both his and his successor's terms. President Clinton increased revenue and reduced spending to achieve our first budgetary surpluses since the 1950s. These were squandered during a time of relative economic growth by his successor, George W. Bush, who cut taxes and went to war. An unfunded war, which contributed greatly to our real deficit, but was ignored by his administration's accounting practices. In that 8 year period our national debt increased from $5.7 trillion to $9.2 trillion. $3.5 trillion in just 8 years after accumulating $5.7 trillion in the previous 211 years. How was that even possible? And during a period of relative economic prosperity?

It's simple. He cut taxes and increased spending precipitously. Look at the blue and orange lines from the figure above. Around about 2001, tax revenue plummeted while spending continued to increase.

You're probably saying, that's all great, but how does it relate to the disparity in opinions between left and right in ways to fix our economy? Well, that brings me to the NY Times piece from two days ago, which demonstrates that stimulus, not austerity, is the path to recovery. Britain's economy has contracted since their austerity measures were announced. Germany's economy has slowed since their stimulus spending has ebbed. The American recover remains robust, because our stimulus has not yet run out.

If we allow our stimulus spending to expire, our growth will likely slow to something similar to Germany - though they have a more robust manufacturing base than we do so it's tough to draw a complete parallel. If we actually cut our federal spending, as is currently being proposed by both sides of the aisle, we risk a double-dip recession like the UK is currently experiencing. Even Goldman-Sachs is worried about the spending cuts, stating that it will likely result in a 2% reduction in expected growth in our GDP next year. 2% sounds small, but it's substantial.

The solution, of course, is not easy. President Obama's proposed 3 pronged approach to continued growth and development makes a lot of sense. This will cost money, but that money will be well worth the investment if we can improve our educational attainment, improve our infrastructure, and advance our technologies. That would have an additional benefit of providing more stimulus to our fragile economic recovery. Unfortunately, Congress appears to have no stomach for it.

Now to taxes. There is ample evidence that reducing taxes does not increase tax revenue, despite persistent claims by conservative politicians to the contrary.

The other prong of that solution is to raise taxes on the income for the wealthy, tax capital gains equitably, and end corporate tax loopholes. To make that last part clear, corporate earnings represent the single largest source of our GDP, yet corporations now pay the lowest percentage of federal revenue since at least 1950 (haven't seen data earlier than that). Conversely, personal income (wages) are now the smallest percentage of our GDP since the government began keeping track, yet personal incomes taxes remain the largest source of federal revenue. So the biggest portion of our economy contributes the least government funding while the smallest portion contributes the most.

Income inequality continues to pervade, and yet a substantial percentage of our population is oblivious to why this is an unsustainable problem. Maybe I'll try to tackle that in a future post.