Posted: April 7, 2013 Filed under: abortion rights, Barack Obama, Congress, crops, Cuba, Discrimination against women, Environment, Environmental Protection, Farming, Federal Budget, Foreign Affairs, History, legislation, Monsanto, morning reads, Paycheck Fairness Act, PLUB Pro-Life-Until-Birth, racism, Reproductive Rights, Republican politics, right wing hate grouups, the GOP, Women's Healthcare, Women's Rights | Tags: Afro-Cubans, Assholes, CNN, cuba, ERA, Fidel Castro, George A Strock, Lilly Ledbetter Fair Pay Act, Roberto Zurbano, Soladad O'Brien
We have come to the end of spring break, it is amazing to me how fast time flies by…I have some interesting links for you, some of them I have saved for a little while, you may just want to come back to them during the day.
By the way, later tonight is the season premiere of Mad Men, I don’t know about you…but I sure am looking forward to it.
Y’all know that CNN made the huge mistake of sacking Soledad O’Brien last month. The Guardian had an article about her last appearance on the network:
CNN’s Soledad O’Brien signs off with call for ‘tough conversations’
CNN anchor Soledad O’Brien at belated 60th birthday celebrations for Chaka Khan. Photograph: Startraks Photo / Rex Features
CNN host Soledad O’Brien signed off on Friday with a call for the network not to back away from “tough and honest conversations”.
O’Brien, who has built a reputation for hard-hitting interviews, said on the last edition of her morning show, Starting Point, that “facts matter”.
The new CNN boss, Jeff Zucker, cancelled O’Brien’s show, which has performed poorly in the ratings, and announced on Thursday that it will be replaced by a new show hosted by Chris Cuomo and Kate Bolduan.
In a short closing monologue on Friday, O’Brien said CNN had given her the chance to cover some of the biggest stories of our time and said she would continue to focus on “good journalism”.
She said: “My tenure at the helm of this show ends today, and I’m not going to be covering daily news at CNN after today. Over the last decade at CNN I’ve had a really great chance to cover some of the biggest stories, I think it’s fair to say, of our time.”
O’Brien recalled when she and a CNN team received a standing ovation at the airport in New Orleans after covering hurricane Katrina.
“So I think if I’ve learned anything over the past year it’s that facts matter,” she continued. “And we shouldn’t be afraid to have tough and honest conversations and maybe even argue a little bit when there’s a lot at stake, and yes, Governor Sununu, I am talking to you.”
You remember that interview don’t you? Soladad kicked Sununu’s ass! O’Brien told the Guardian that CNN did not provide a lot of support for her show Starting Point. They did not get a lot of promotion and were not fully staffed. No wonder, with CNN going down the shit bucket of news. In fact, you need to see this bit Jon Stewart did this past week:
Jon Stewart Tears Apart CNN: Neither Left Nor Right, But On A ‘Steady Spiral Downward’
Stewart then turned to CNN, a network that is neither leaning left nor right, but is instead on a “steady spiral downward.” He took on the new approach of CNN executive Jeff Zucker to the news, mockingly saying things like “I love brunch! Who doesn’t love brunch? That’s news!”
Stewart brought up some graphic faux pas of CNN, including (for some reason) a CNN personality standing in the middle of a virtual field of goats. And most egregiously of all, CNN showed off a live recreation of the Jodi Arias crime scene, complete with dead boyfriend in a pool of blood on the floor.
Of course, new changes don’t come without new show experiments, and following the success of The Five and The Cycle, CNN is testing out a new primetime show called (Get To) The Point. Stewart figured CNN must have “mistook what people are constantly yelling” at the screen for a show pitch. He showed clips of the show’s hosts talking about important subjects like lizard people and vegetarians who eat bacon.
What Stewart loved the most about the show was that when promos for this new program appear on the screen during other CNN shows, it looks like a subtle jab at whoever’s talking to get to the damn point already.
Go watch the video clips…my gawd, what shit CNN is pulling out their ass now a days!
Now, this next article is something I also saved from a while back, funny how it has caused quite a controversy of late….anyway, you know that my father’s family came from Cuba back in the late 1800′s. Here is a photograph of the town Marti City, in Ocala, Florida where my great-great grandfather had one of his cigar factories. In 1890s, cigar industry flourished, died in Ocala
A horse-drawn trolley, shown in Marti City, ran south from Ocala’s railroad station along North Magnolia to Broadway, turned west and followed Broadway to haul passengers and freight to the cigar factories at Marti City.
Well, I usually share links about Cuba with you all, and this article was one I was looking forward to sharing. For Blacks in Cuba, the Revolution Hasn’t Begun by Roberto Zurbano
Alex Webb/Magnum Photos
“Havana, 2013” More Photos »
CHANGE is the latest news to come out of Cuba, though for Afro-Cubans like myself, this is more dream than reality. Over the last decade, scores of ridiculous prohibitions for Cubans living on the island have been eliminated, among them sleeping at a hotel, buying a cellphone, selling a house or car and traveling abroad. These gestures have been celebrated as signs of openness and reform, though they are really nothing more than efforts to make life more normal. And the reality is that in Cuba, your experience of these changes depends on your skin color.
Please, before you do anything else go and read that editorial…because it was written by a man who was fired for saying what he felt was true. Check it out: Writer of Times Op-Ed on Racism in Cuba Loses Job
The editor of a publishing house in Cuba who wrote a critical article in The New York Times opinion section about persistent racial inequality on the island, something revolutionaries proudly say has lessened, has been removed from his post, associates said on Friday.
The author, Roberto Zurbano, in an article published March 23, described a long history of racial discrimination against blacks on the island and said “racial exclusion continued after Cuba became independent in 1902, and a half century of revolution since 1959 has been unable to overcome it.”
On Friday, The Havana Times blog reported that Mr. Zurbano had told a gathering of Afro-Cuban advocates that he had been dismissed from his post at the publishing house of the Casa de las Americas cultural center, leaving the implication that the dismissal was connected to the article. Other associates said Mr. Zurbano told them he had been removed but would continue working there.
There is a lot more to it than there appears to be…
Reached by telephone in Havana, Mr. Zurbano would not comment on his employment. “What is The New York Times going to do about it?” he asked. He angrily condemned the editors of the opinion section for a change in the headline that he felt had distorted his theme.
The article’s headline, which was translated from Spanish, was “For Blacks in Cuba, the Revolution Hasn’t Begun,” but Mr. Zurbano said that in his version it had been “Not Yet Finished.”
“They changed the headline without consulting me,” he said. “It was a huge failure of ethics and of professionalism.”
Eileen Murphy, a spokeswoman for The Times, said the editor stood by the article’s preparation.
“We worked very hard to ensure that the wording in the piece was translated properly and accurately reflected the writer’s point of view,” she said in a statement. “There were numerous versions of the piece sent back and forth, and in the end, Mr. Zurbano and our contact for him (who speaks fluent English) signed off on the final version.”
“We knew,” she added, “that Mr. Zurbano was in a sensitive situation, and we are saddened if he has indeed been fired or otherwise faced persecution, but we stand by our translation and editing, which was entirely along normal channels.”
Believe me, there is an underlying racism within the Cuban community and to say there isn’t is bullshit. Yes, it is taboo to speak of it too. However, there is a history in a little town in Florida of Cuban whites and blacks coming together to fight for labor rights.
Restaurant in Havana, note the Albinos allowed sign.
My great-great grandfather Nicholas Santana owned a cigar factory and was partners with a black-Cuban named Sorondo who had connections with Jose Marti.
Sanborn Fire Insurance Map of 1895, Ocala FL, Marti City. My great-great grandfather’s cigar factory, Santana, Sorondo & CO., is located on the bottom left corner.
In Ybor City, Florida…you could find a small pocket of intelligence within the Southern land of Jim Crow, for racism was not prevalent in that little area of Italian, Spanish, Black, White immigrants who mostly worked for the many cigar factories. There were many Afro-Cubans, both women and men, involved in the cigar factory labor strikes in Tampa, Florida, many years ago…they were fighting with their white brothers and sisters for workers rights.
Revolution is part of the Cuban culture, and I do believe that it is fair to say that for the Black-Cuban, the revolution is not finished. It just barely started and has been put on hold, it needs to get back in gear. Racism is alive in Cuba, there is no doubt about that. And the fact that Zurbano was fired says a lot about how things are handled in Cuba.
Speaking of Cuba, there was this bit of celebrity down there: Useful Idiots: Beyoncé And Jay-Z Ignore Cuba’s Racism With Havana Trip
This week, superstars Beyoncé and Jay-Z celebrated their 5th wedding anniversary with a trip to Cuba or, as the informed refer to it, “the island prison.”
While dining, partying, and enjoying the best Havana has to offer, Beyoncé and Jay-Z not only legitimize and support the repressive regime, with both their presence and their cash, but turn a blind eye, cruelly, to the perils and languishing of the Cuban people.
Both stars are proud African-Americans — yet, curiously, chose to vacation in a country notorious for relegating its black population to second-class status, or worse.
It is no surprise that many of Cuba’s top dissidents are Afro-Cubans. Did Sasha Fierce and Jigga Man find time to meet with these brave souls, or with their families? Did they mention them? Did they even think of them?
Of course not! This was not a trip to discover truth…or to learn about history or even music. Take a look at the link for a list of Afro-Cubans advocates who have either been imprisoned or killed for speaking out against the racism.
But why stop Cuba’s racism, and its atrocious human rights record, from getting in the way of a good time? After all, Jay-Z is the ‘artist’ who famously raps: “Welcome to Havana, smoking cubanos with Castro in cabanas!”
All Jay and “B,” useful idiots extraordinaire, seem to hear when visiting Cuba is: “Extra sugar on that mojito, señor?” Never mind the life-long plight of the Afro-Cuban waiter serving that drink, who casts a longing, hopeful look in their direction, only to be met with an aloof, distant smile from the two callous multi-millionaires who, while sharing his skin color, could not care less about his plight.
The photo-journalism report that went with the Zurbano op/ed can be seen here: The Ambiguous Island – Slide Show – NYTimes.com Again, I urge you to go take a look at those images.
Now, one more link out of that little Island nation down south…this made me laugh a little, Fidel Castro to North Korea: Chill
Cuba’s seemingly immortal former leader Fidel Castro, who knows a thing or two about threats of nuclear destruction, is asking both Kim Jong-un and Barack Obama to think before they do anything stupid. “The Democratic People’s Republic of Korea was always friendly with Cuba, as Cuba always has been and will continue to be with her,” Castro wrote in his first state media op-ed in almost nine months, but “this is one of the gravest risks of nuclear war since the October Crisis in 1962 involving Cuba, 50 years ago.”
“Now that it has demonstrated its technical and scientific advances, we remind it of its duties to other countries who have been great friends and that it would not be just to forget that such a war would affect in a special way more than 70 percent of the world’s population,” wrote Castro, who’s apparently gone soft in his old age.
While the situation in the Koreas is “incredible and absurd,” he added, he warned Obama that if bombing breaks out, he “would be buried by a flood of images that would present him as the most sinister figure in U.S. history. The duty to avoid [war)]also belongs to him and the people of the United States.”
It seems like some sort of SNL skit, doesn’t it? Castro calling North Korea “incredible and absurd.”
Okay, you want real absurd? In Tennessee some asshole is putting forward a law that makes welfare payments dependent upon the student’s grades. Tennessee Gets Closer to Passing Bill That Ties Welfare to School Grades
A Tennessee bill that would cut welfare benefits of parents with children performing poorly in school cleared committees of both the House and Senate last week.
The measure takes “a carrot and stick approach,” one of the sponsors of the bill, Rep. Vance Dennis, R-Savannah, told the Knoxville News and Sentinel.
Seth Freed Wessler summarized the bill last month on Colorlines.com:
A Tennessee lawmaker introduced legislation last week to stop welfare payments to parents if their kids get bad grades in school. The sponsor, State Senator Stacy Campfield said, “One of the top tickets to break the chain of poverty is education.” But he added, “We have done little to hold [parents] accountable for their child’s performance.”
The bill would chop nearly a third of family’s Temporary Aid for Needy Families benefits, already a pittance, if their child fails to pass state competency tests or get’s held back. How exactly the threat to make poor people poorer will improve educational outcomes isn’t at all clear.
The bill is sponsored by Sen. Stacey Campfield, R-Knoxville, and Rep. Vance Dennis, R-Savannah. It calls for a 30 percent reduction in Temporary Assistance for Needy Families benefits to parents whose children are not making satisfactory progress in school, the Knoxville News and Sentinel reported.
You know what? My kids are not from a “broken” home, and both their parents and grandparents are college graduates…and they struggle in school. They do not get A’s and B’s…so this would be a disaster in terms of assistance if we were a “needy” family. I mention my kids performance at school because even with positive backgrounds and no worries about food and a place to sleep, a kid can be a disappointment when it comes to their grades. This is a horrible law…damn these GOP assholes.
In another education link: Can Computers Teach Students to Write Better?
Bet you can guess the answer to that.
Alright, moving on…Juan Cole had an excellent post this past week: Congress Obsessed with American Muslims, Neglects real threat of White Supremacists | Informed Comment
The shooting of Kaufman, Texas district attorney Mike McLelland and his wife Cynthia remains a mystery. But investigators are increasingly looking into a cell of extremist white terrorists as the suspects. Two months ago, a county assistant district attorney, Mark Hasse, was murdered not far from his office at the court. (I used the term extremist white terrorists because that is what they are, but usually the American press only describes foreigners and Muslims as terrorists, while calling whites “extremists.”)
Likewise, a gang of white terrorists is suspected in the recent slaying of the head of Colorado’s prison system.
Rep. Peter King (R-NY) and other Islamophobes in Congress, seeking to look good to campaign donors who hate Muslims, has conducted several hearings on the alleged increased radicalization of American Muslims. Sociologists don’t find evidence of such a thing; American Muslims on the whole are relatively well-integrated into US society and are disproportionately well off and pillars of the society. The hearings are a form of McCarthyism.
No one was killed or injured in the US in 2012 by terrorists of Muslim heritage, and only 14 Americans of Muslim heritage were even indicted for violent plots. Only one act of violence was traced to such a group, which produced no casualties.
Rep. Peter King is a big supporter of the old 1980s Irish Republican Army, which killed two Americans in a bombing at Harrod’s department store in London. The man’s feet won’t touch the ground when he walks because of the rivers of hypocrisy exuding from between his toes.
Read the rest at the link.
Like I said at the beginning of this morning’s reads, lots of links for you today. More after the jump.
Read the rest of this entry »
Posted: March 1, 2013 Filed under: Federal Budget, Federal Budget and Budget deficit, Sequester
Well, it’s here. It’s the day the Mayans predicted!! It’s the beginning of the end of civilization in the Americas! Sequester Disaster Day is here! Well, it’s here for those of us that like to drive on roads and across bridges. It’s here for those of us that will rely on social security or medicare this month or shortly. It’s here for those of us that have kids in schools or would like to go to university. It’s here for those of us that would prefer to live in a civilized country instead of The United States of Mississippi. For politicians and punditry in the beltway, it’s just another ball where they get to show off their designer formal wear and fancy dance steps.
As the automatic across-the-board spending cuts are set to take effect today and as President Obama meets at the White House with congressional leaders, we have to get this off our chest: This has been an absurd week. Today’s White House meeting is coming only at the last second; there’s been no sense of urgency, no negotiating, and Congress has left town; and, when you think about it, this hasn’t even been a true budget showdown. Given the lack of urgency and negotiating, it’s hard not to conclude that — deep down — plenty of folks on both sides of the aisle are OK with having these cuts take place, at least in the short term.
That’s from Chuck Todd et al. I agree. None of this makes sense if you think of economic policy or actually the idea of governing a country efficiently. I have decided that the only thing Washington cares about is the political dance and political boogie surrounding the process and not what actually happens to the nation. For some reason, these cuts play in the beltway. In that vein, Dave Weigal thinks Obama is winning the process cotillion. Will it’s good some one is winning because there are certainly going to be about 320 million losers out here in the great fly over that exists behind Washington DC and Manhattan.
Republicans have one goal, running through all of these negotiations. They don’t want sequestration to be replaced by tax revenue. Any tax revenue. Forcing the president to swallow $85 billion in cuts this year would do that. They’ve got no obvious alternatives.
But a plan like this exposes a quirk of Obama-era fiscal hawksmanship. Republicans want specific cuts. Some of them—total repeal of Obamacare!—they’ll put on the record. The rest of them, they try to put on the White House. As soon as the “supercommittee” failed and sequestration looked real, it became “the president’s sequester.” The 2011 debt-limit deal delayed real action until after the 2012 election, betting $1.2 trillion of chips on its results and giving them to the president. Even the first great structural victory of the Tea Party, the ban on legislative earmarks, handed more clout to the White House. “The power to make thousands of spending decisions, on everything from which flood control projects will be funded to how spending on military bases will be distributed, to President Obama,” warned two political scientists at the time. Republicans ignored those particular political scientists.
Vote by vote, accidentally, Republicans are endorsing an imperial vision of the presidency. Perhaps they’re picking this up by osmosis. The default position of the punditocracy is that the president must lead. The lazy pundit invokes Harry Truman’s desk ornament, “The Buck Stops Here,” as a totem of great wisdom. Brendan Nyhan, who isn’t lazy, calls this “the Green Lantern Theory of the Presidency,” after the D.C. Comics superhero and his ring that runs on willpower. Bob Woodward offered a sterling example of the theory this week, when he suggested that the president’s willingness to obey the Budget Control Act (the law that mandates sequestration) was “madness.”
See, I actually think they all must want all these cuts. They are so far removed from any impact that any of this would actually have that they’re just ignoring it. As a matter of fact, the similarly out of touch punditry likes the idea of it too. Let me offer of this from Ygelasias:”A Cheer or Two for Sequestration“.
But on the merits it seems to me that while sequestration is hardly optimal budget policy, it really isn’t all that bad in the scheme of things, and really going through with it would be better than repealing it. The key reason is that fully half the cuts are cuts to “defense” spending, and yet nobody from either party is seriously trying to maintain that America will be left defenseless in the wake of this reduced military spending. The specific sequestration mechanism is clearly awkward and clumsy, but again nobody’s saying the Mexican army is going to come swarming over the border to reconquer Santa Fe, that the Taliban is now going to be able to outspend the Pentagon, or that America’s NATO allies are now left unable to fend off a Russian invasion. That’s half the cuts with basically zero real public policy harm.
So then you look at the domestic side. Your basic transfer payments to poor people are spared, your transfer payments to the elderly are basically spared, and then everything else gets cut willy-nilly. That leads to some real policy harms. Valuable research grants are going to not happen. We’ll see some real bottlenecks at regulatory agencies. But obviously there’s some waste and fat in this domestic discretionary spending.
Long story short, if you’re a defense dove like me and have a nonutopian view of the domestic discretionary budget, then this looks like we’re mostly talking about harmless spending cuts.
This from a man who had to get a wife from an on line dating service which is basically the equivalent of a mail order bride. How much do you have to hate yourself to troll around online for an equally desperate person?
Let me just return to the economic impact of all of this.
Yes, the across-the-board spending cuts will lead to hundreds of thousands of job losses and a fiscal drag of 0.6 percent for 2013, according to the forecasting firm of Macroeconomic Advisers. Mostly, though, the rub is the timing and the inartful nature of the cuts.
“It would clearly be preferable to have a more orderly process for fiscal adjustment than the indiscriminate effects of sequestration,” wrote Macroeconomic Advisers in a recent research note.
The inopportune moment of sequestration — hitting just as the economy shows bright spots — will create a drag on the economy in a slow-motion manner. First, the furlough notices will go out in March to federal employees, the majority of whom live outside of the Washington metro area. Unemployment checks will drop as early as April for the long-term unemployed who receive the federal benefit checks.
States eventually will have to decide how to cut programs for low-income or vulnerable people that are funded through federal grants, such as child-care assistance, nutrition programs for women and children, mental-health services, and meal programs for senior citizens.
If Congress keeps the sequester cuts in place for a few months, then the economy will start to feel the effects. Federal workers furloughed for as many as 22 days between mid-April, when the furloughs are expected to begin to occur, and the end of the fiscal year will face a pay cut of as much as 20 percent. This will have ripple effects throughout the economy on consumer spending as well as state income and sales taxes.
By July, August, and September, the impact of sequestration should be fully felt. “We’re not going to go into a downward spiral overnight, but the spending cuts will build, and as they build, the effects will become noticeable,” says Nigel Gault, the chief U.S. economist of IHS Global Insight.
Already, the economic data showed a dip in federal-government spending for defense in the first quarter, a reaction to the impending cuts.
That is the real takeaway of the sequester and its economic impact. It will not hurt the economy immediately, but it still serves as a reminder of the power the federal government holds over the economy. Even if the government cannot enact policies to boost growth, it certainly can hurt the long-term prospects.
I’d really like to know why politicians these days are united in making most people’s lives worse off while maintaining things like preferable tax treatment for people that are already better off than nearly 99.9 % of the people living on the planet? The only thing I can figure out is that none of this impacts any of them so they could care less. It’s not about what happens to the nation or to its people. It’s like they’re teenagers at a country club dance. The only thing that matters is who dances with who and how they each will be perceived in the outfit they’ve chosen. Meanwhile, what will be the cost to the country in the eventual crime and social unrest? Ah, who cares, just buy stock in the latest company that runs the privatized jails. It’s a sure winner.
Posted: February 26, 2013 Filed under: Austerity, Barack Obama, Catfood Commission, Economy, Federal Budget, Federal Budget and Budget deficit | Tags: Astroturf, Deficit Delusion, deficit hawks, Deficit Hysteria, Fix the Debt, Pete Peterson, Simpson-Bowles
Ben Bernanke joined the chorus of economists concerned about the impact of the sequester on the sluggish recovery. This is not the first time the Fed chair has commented on misguided and dysfunctional Fiscal Policy in our country.
Federal Reserve Chairman Ben Bernanke warned Congress risks slowing the economy by allowing $85 billion in automatic spending cuts to be triggered on Friday, arguing they should be replaced with more deliberate, long-term cuts.
In prepared testimony for the Senate Banking Committee, Bernanke argued the sequester would pose a “significant headwind” to the economic recovery.
“Given the still-moderate underlying pace of economic growth, this additional near-term burden on the recovery is significant,” he warned.Bernanke did not offer an opinion on whether tax hikes should be included as part of a replacement bill, and he did not call for any specific entitlement reforms.
Meanwhile, the White House released reports on how the expected cuts will impact states. This undoubtedly will trigger more Republican whining on how mean the President continues to be to them as they continue their role as economic agents of chaos.
In Kentucky, home of the Senate Republican leader, Mitch McConnell, residents woke up on Monday to news articles like these: Widespread government spending cuts that begin on Friday will cost 21,484 jobs in the state. A construction project at Fort Knox will come to a halt. Three airports may endure partial shutdowns. Nearly $12 million in grants to public schools would be cut, putting at risk the jobs of 160 teachers and aides. More than 1,000 children would lose access to Head Start.
The White House released warnings for every state on Sunday in the hope that angry voters would besiege Republican lawmakers like Mr. McConnell and the House speaker, John Boehner, to stop the $85 billion in cuts, known as a sequester. President Obama wants to replace the sequester with a mix of tax increases on the rich and less damaging spending reductions. Republicans say they won’t consider any proposal that isn’t all cuts, so the sequester is all but certain to begin this week.
There’s a fairly good list of the types of spending items that will be subject to cuts at the Bipartisan Policy Center.
Setting aside the magnitude of the reductions, the most difficult aspect of both the defense and domestic cuts is that they will be made across the board to all non-exempt government spending regardless of programs’ merits or demerits.*** The reductions designed by law are executed at the Program, Project & Activity (PPA) level of the federal budget, sometimes defined in appropriations bills and which often includes very granular categories of expenditures, such as “two Virginia Class Submarines” or “salaries and benefits” of a particular agency.
Absent a new law passed by Congress, the president has little ability to spare one type of spending and cut more from another. This creates uncertainty in both the public and private sector because there remains much to be determined about how PPAs will be defined by agency administrators and how the cuts will be implemented. This inability to plan is already acting as a drag on economic growth.
Furthermore, the immediate and across the board nature of the cuts, along with their magnitude concentrated in a seven-month period, will impair economic growth as the year progresses. At BPC, we estimated last year that the sequester would reduce 2013 gross domestic product (GDP) growth by half a percentage point, and would cost the economy approximately one million jobs over the next two years. More recent estimates released by the CBO and Macroeconomic Advisors have roughly confirmed these projections.
Given all of this, you would think that most congress critterz would want to avoid the sequester. However, there’s that same group of tea party crazies that are so disconnected from an evidence-based reality it appears congress will tank the economy rather than develop a cogent Fiscal Policy related to economic theory and the state of the economy itself.
The White House strategy on the sequester was built around a familiar miscalculation about Republicans. It assumed that, in the end, they would be reasonable and negotiate a realistic alternative to indiscriminate cuts. Because the reductions hurt defense programs long held sacrosanct by Republicans, the White House thought it had leverage that would reduce the damage to the domestic programs favored by Democrats.
It turns out, though, that the defense hawks in the party are outnumbered. More Republicans seem to care about reducing spending at all costs, and the prospect of damaging vital government programs does not seem to bother them. “Fiscal questions trump defense in a way they never would have after 9/11,” Representative Tom Cole, a Republican of Oklahoma, told The Times. “But the war in Iraq is over. Troops are coming home from Afghanistan, and we want to secure the cuts.”
Cuts this draconian have no place in a tottering economy. But, realistically, the only way to break this standoff is for the cuts to exact their toll on daily life, causing Republicans to face pressure from the public to negotiate an alternative plan with higher revenues in March as part of talks to finance the government for the final six months of the fiscal year.
It’s difficult to believe that so many folks can be so misguided about the need to drastically cut the budget. Read the rest of this entry »
Posted: February 20, 2013 Filed under: Federal Budget, Federal Budget and Budget deficit, Sequester
I’ve been avoiding this unpleasant subject because I was hoping dynamics would change and maybe patriotism, reason, or some semblance of sanity would strike the elected officials in the beltway. That was wishful thinking on my part and now I feel compelled to give you some background information on sequesters in general and this one in particular. This just highlights how dysfunctional our political system has become and it really is a good demonstration of how politicians don’t tend to really get at the real problems. Let me just say that the real future source of any federal deficit problem is the monumental increases in the cost of health care. We have a completely dysfunctional third party payer system in this country as well as astronomical costs for drugs and care whose actual prices are well beyond the knowledge of actual consumers. That being said, let’s proceed to the side shows that our congress keeps setting up to tank our economy.
This isn’t the first time congress and an administration has used a sequester when it’s been unable to arrive at a budget. Usually, this comes from an inability to arrive at the same budget priorities that comes from having mixed party control of legislative bodies and the White House. You know the general approaches by each party. Republicans are no longer supportive of any kind of revenue enhancements or cut in military spending. Democrats have been more accommodating but tend to draw the line at some point when it comes to destroying the safety net and entitlement programs along with the other basic functions that government provides that the private sector just can’t do either economically or effectively. So, once you get this stand off, a sequester is used to force both sides to the bargaining table.
A sequester is basically an automatic reduction in Federal Spending during a budget year. We had a January 2 Fiscal Cliff deal that postponed the sequester until March 1. This is what will happen if nothing is done.
The deal sliced the scheduled 2013 sequestration by $24 billion, from $109.3 billion to $85.3 billion. This reduces the percentage cuts in full-year funding for most eligible programs (those that the law does not exempt from the automatic cuts). The Medicare percentage does not drop, however, because Medicare cuts were and are still capped at 2 percent, and the across-the-board cut that applies to other non-defense programs remains larger than 2 percent.
The chart and the narrative come from the Center on Budget and Policy Priorities which is a great source of information.
The first of the sequesters happened when I was fresh out of graduate school back in the mid 1980s. You’ll probably recognize the names of the usual agents of economic chaos from the Reagan years: Gramm-Rudman-Hollings–Balanced Budget and Emergency Deficit Control Act of 1985. Oddly enough, the Supreme Court found the bill unconstitutional saying that it gave Congress too much power over the budget. They had to rewrite it and it repassed in 1987.
The Balanced Budget and Emergency Deficit Control Act of 1985 (Graham-Rudman-Hollings) was an amendment to a bill that allowed the debt ceiling to be raised to over $2 billion. It created a five-year deficit reduction plan, with decreasing deficit targets each year, until the budget would be balanced in fiscal year 1991. If deficit goals were not met in any given year, a process of automatic spending cuts termed “sequestration” would take place. Fifty percent of the cuts would come from domestic discretionary spending and fifty percent from defense. Social Security, Medicare, several anti-poverty programs, and interest on the debt were exempted from a potential sequester.
Gramm-Rudman-Hollings garnered bipartisan support and was signed into law by President Reagan in December 1985. Most Republicans in the House and Senate voted for it, while the Democratic vote was split nearly evenly in both chambers. Those in favor of the bill argued that the budget deficit, which had greatly increased since 1981, required dedicated measures to reign [sic] in federal spending. Democrats who voted “no” argued that budget cuts were likely to impact domestic programs while leaving military spending largely intact. Nevertheless, the Reagan administration opposed the mandated fifty percent cuts in defense spending in a potential sequester and provided only lukewarm support for the measure.
Phil Gramm was quoted as saying that they never meant to trigger the sequester. The idea, again, was that the threat of every one losing their pet spending priorities would drive compromise. So, there were a sequesters in the 1980s and the 1990s but none of them actually were triggered.
There are some interesting things about this sequester that you should know. First, the cuts occur in the middle of the fiscal year. The discretionary cuts happen to whatever Congress appropriates. Sequesters occur at what’s called a “program-project-activity” (PPA) level. The interesting thing about this is that many federal departments don’t actually have a working definition of PPA so this makes it difficult for many agencies and functions. Sequester is likely to drive procurement costs up and delay many projects as a result.
The sequester cuts are mandated to hit defense and non defense expenditures fifty-fifty. Most studies show that the sequester will cause the economy to grow more slowly and it will cost jobs.
This is because government spending does in fact create jobs and demand for products and services made by businesses. These expenditures create a multiplying effect as the money moves through the economy as incomes, revenues, and purchases. Here’ some estimates of those multpliers to give you an idea of the magnitude of the decrease in economic activity likely to come from this austerian, recessionary procedure.
They assume a fiscal multiplier of 1.4 for general government spending, which is Moody’s Analytics
most recent public estimate of the government spending multiplier. While we use the same multiplier for all cuts, we’d guess that these likely slightly overstate the adverse economic impact resulting from defense spending cuts and understate job losses from domestic spending cuts. Budgetary programs for lower-income households in the discretionary budget—such as housing assistance and the special supplemental food program for women, infants, and children (WIC)—as well as infrastructure spending have particularly high multipliers. And to the extent that cuts to spending by the Department of Defense come from capital-intensive weapons acquisitions rather than reductions in personnel strength, the impact on employment would be milder. Regardless, any
cuts in the near-term (unless they are ploughed into more spending somewhere else) are going to constitute a drag on the still-weak recovery. Cutting government spending reduces aggregate demand and worsens joblessness while the economy is running well below-potential output.
The new study was performed by Thomas Hungerford of the non-partisan Congressional Research Service. Though the study is not a CRS product, Hungerford’s data is widely cited on both sides; he’s an impeccably objective analyst.
Here’s what Hungerford found: The single greatest driver of income inequality over a recent 15 year period was runaway income from capital gains and dividends.
This finding is directly relevant to the current debate, because Obama and Democrats want to offset the sequester in part by closing loopholes enjoyed by the wealthy, such as the one that keeps tax rates on capital gains and dividends low. Dems want to do this in order to prevent a scenario where the sequester is averted only by deep spending cuts to social programs that could hurt a whole lot of poor and middle class Americans. Republicans oppose closing any such loopholes and want to avert the sequester with only deep spending cuts.
Hungerford’s report, like all serious examinations of inequality, is very complicated. He looks at a bunch of recent data on inequality from the period from 1991-2006 — measured by the so-called “Gini index” — and calculates the degree to which various factors exacerbated it. Hungerford found that over that period, the rise in the Gini index (a story that’s been widely told elsewhere, one that’s largely been driven by the runaway wealth of the top one percent and top 0.1 percent) was driven mainly by the rise in capital gains and dividends income.
“By far, the largest contributor to increasing income inequality (regardless of income inequality measure) was changes in income from capital gains and dividends,” the report concludes.
Or, as Hungerford put it in an interview with me: “The reason income inequality has been increasing has been the rising income going to the top one percent. Most of that has come in capital gains and dividends.”
In other words, wealthy beneficiaries of low tax rates on capital gains and dividends are doing extremely well — and their runaway wealth is a major driver of income inequality. There’s a lot of that money out there that could be taxed as ordinary income — as Obama and Dems want — as a way to avert the sequester, which could badly damage the economy. Republicans oppose this.
This finding comes as even some conservatives are reckoning with the fact that the GOP’s message on the sequester is deeply flawed. Writer Byron York notes today that Republicans are openly conceding that the sequester will gut the military, even as they openly point to the sequester as an acceptable policy outcome.
Unemployment fell to 4.1% by the end of last year – a record low for at least 25 years. Poverty has fallen by 27% since 2006. Public spending on education has more than doubled, in real (inflation-adjusted) terms. Increased healthcare spending has expanded access to medical care, and other social spending has also increased substantially, including a vast expansion of government-subsidised housing credit.
If all that sounds like it must be unsustainable, it’s not. Interest payments on Ecuador’s public debt are less than 1% of GDP, which is quite small; and the public debt-to-GDP ratio is a modest 25%. The Economist, which doesn’t much care for any of the left governments that now govern the vast majority of South America, attributes Correa’s success to “a mixture of luck, opportunism and skill“. But it was really the skill that made the difference.
Correa may have had luck, but it wasn’t good luck: he took office in January of 2007 and the next year Ecuador was one of the hardest hit countries in the hemisphere by the international financial crisis and world recession. That’s because it was heavily dependent on remittances from abroad (eg workers in the US and Spain); and oil exports, which made up 62% of export earnings and 34% of government revenue at the time. Oil prices collapsed by 79% in 2008 and remittances also crashed. The combined effect on Ecuador’s economy was comparable to the collapse of the US housing bubble, which contributed to the Great Recession.
And Ecuador also had the bad luck of not having its own currency (it had adopted the US dollar in 2000) – which means it couldn’t use the exchange rate or the kind of monetary policy that the US Federal Reserve deployed to counteract the recession. But Ecuador navigated the storm with a mild recession that lasted three quarters; a year later it was back at its pre-recession level of output and on its way to the achievements that made Correa one of the most popular presidents in the hemisphere.
How did they do it? Perhaps most important was a large fiscal stimulus in 2009, about 5% of GDP (if only we had done that here in the US). A big part of that was construction, with the government expanding housing credit by $599m in 2009, and continuing large credits through 2011.
But the government also had to reform and re-regulate the financial system. And here it embarked on what is possibly the most comprehensive financial reform of any country in the 21st century. The government took control over the central bank, and forced it to bring back about $2bn of reserves held abroad. This was used by the public banks to make loans for infrastructure, housing, agriculture and other domestic investment.
It put taxes on money leaving the country, and required banks to keep 60% of their liquid assets inside the country. It pushed real interest rates down, while bank taxes were increased. The government renegotiated agreements with foreign oil companies when prices rose. Government revenue rose from 27% of GDP in 2006 to over 40% last year. The Correa administration also increased funding to the “popular and solidarity” part of the financial sector – co-operatives, credit unions and other member-based organisations. Co-op loans tripled in real terms between 2007 and 2012.
The end result of these and other reforms was to move the financial sector toward something that would serve the interests of the public, instead of the other way around (as in the US). To this end, the government also separated the financial sector from the media – the banks had owned most of the major media before Correa was elected – and introduced anti-trust reforms.
Of course, the conventional wisdom is that such “business-unfriendly” practice as renegotiating oil contracts, increasing the size and regulatory authority of government, increasing taxes and placing restrictions on capital movements, is a sure recipe for economic disaster.
So, I’m going to continue to talk more about the sequester but this should serve as enough evidence to get us started with the conversations.