The Surreal World of The Villagers vs. The Nightmare Reality of the 99 Percent

Amazing Portraits of Salvador Dali (13)

This is going to be sort of a cross between a morning reads post and a rant.

Yesterday, Dakinikat and I were talking about how lately it seems like it’s hard to find things to blog about because there’s nothing really new happening in the political world. Sure, there’s news coming out of DC, but it’s pretty much the same thing every day. The Republicans hate President Obama and continue to do their best to block everything he tries to do. Obama sort of sounds like a liberal at times, but he’s still offering that “grand bargain” to the Republicans who hate his guts and still letting down the voters who elected him in the process.

Republicans pretend to obsess over the federal deficit and debt and economic writers like Paul Krugman and Robert Reich repeatedly try to explain that the problem with our economy right now isn’t the deficit or the debt, but the high unemployment and stagnating wages that keep the lower 99 percent of us from spending our money as freely as we’d like.

Lugubrious Game, by Salvador Dali, 1929

Lugubrious Game, by Salvador Dali, 1929

As I looked around for Thursday reads last night, I began to feel as if I’d entered a surreal alternative reality–almost as if I had awakened to find myself in a Salvador Dali painting in which everything seems crazy and nothing ever changes. The only breaks from the tedium of the Village come when there’s news of another shooting and the media covers it for a few days–like the recent obsession with ex-cop “Rambo” Christopher Dorner.

Now that Dorner has gone down, there’s another high-profile shooting for the media to focus on. USA Today reports: Olympic runner Oscar Pistorius charged with murder.

South African police on Thursday said they would charge Olympic athlete Oscar Pistorius with murder after his girlfriend was shot and killed at his home earlier Thursday morning.

The circumstances of the incident are still unclear but police in South Africa said they would oppose bail when the Paralympic gold medalist appears in court Friday. The hearing was scheduled for Thursday afternoon but was delayed to give forensics investigators time to do their work, the Associated Press reported.

Police in South Africa do not name suspects in crimes until they have appeared in court but police spokesperson Brigadier Denise Beukes said that Pistorius was at his home after the death of the victim and that “there is no other suspect involved,” The Associated Press reported.

Britain’s Sky News first named the woman as Reeva Steenkamp, a model and recent contestant on Tropika Island of Treasure 5, a South African reality TV show. A talent agent for Steenkamp said she was the victim. However, police have yet to confirm the woman’s relationship with the Olympic and Paralympic athlete.

South African Olympic athlete Oscar Pistorius and Reeva Steenkamp attend an awards ceremony in Johannesburg, South Africa last November.(Photo: Lucky Nxumalo, AP)

South African Olympic athlete Oscar Pistorius and Reeva Steenkamp attend an awards ceremony in Johannesburg, South Africa last November.(Photo: Lucky Nxumalo, AP)

Meanwhile, as the Villagers ignore the need for gun safety legislation and argue about the deficit and the supposed out-of-control government spending that isn’t actually happening, the rich get richer and the lower 99 percent get screwed. Case in point, please read this piece in The New Republic by Timothy Noah that the Villagers will either ignore or mock: The One Percent Gobbled Up the Recovery, Too. In fact, it put the 99 percent back in recession.

Emmanuel Saez, the Berkeley economist who (with Thomas Piketty, an economist at the École d’economie de Paris) first mapped the enormous 34-year run-up in income share for America’s top 1 percent, came up last year with a statistic that was widely quoted by people who care about rising income inequality. In 2010, the first year of economic recovery after the 2009-2010 recession, 93 percent of all pre-tax income gains went to the top 1 percent, which in that year meant any household making more than about $358,000. This was, I quipped at the time, a members-only recovery. No 99-percenters need apply.

Saez has now updated (PDF) this statistic to include 2011. When you look at the economic recovery’s first two years, the top one percent (which by 2011 meant any household making more than about $367,000) captured 121 percent of all pre-tax income gains.

How is it even possible for the one percent to capture more than 100 percent of all income gains since the last recession? Looked at from one point of view, it’s not. It is enough to say that in 2010 and 2011 all of the recovery went to the one percent. If you were in the bottom 99 percent, as by definition nearly all of us are, you didn’t see a dime of that recovery.

What happened to the rest of us then?

Over 2010 and 2011, it saw, on average, a slight net decline in pre-tax income of 0.4 percent. This “negative growth” is what, at least theoretically, boosts the one percent’s share of income gains from 100 percent to 121 percent. If you think of income distribution as a Pac-Man game, with the one percent as Pac-Man, imagine your Pac-Man consuming all the pac-dots in one game and then somehow, after you’ve left the arcade, gobbling up some of the pac-dots in the next player’s game too. Another way to put it is that the one percent didn’t just gobble up all of the recovery during 2010 and 2011; it put the 99 percent back into recession.

Sadly, airhead talking heads like Joe Scarborough will continue to have much more influence in the Village than actual economists like Emmanuel Saez and real reporters like Timothy Noah.

Speaking of airheads, after the SOTU speech on Tuesday night we had the pleasure of watching baby-faced Florida Senator Marco Rubio make a complete ass out of himself on the TeeVee. Hullabaloo blogger David Atkins, who–unlike Rubio–is somewhat knowledgeable about economics, tried to explain to the the latest “great Republican hope” (before his speech) that not only do deficits not cause unemployment, but also our federal deficit is steadily decreasing. Of course no reader of Dakinikat’s posts needs any of this explained. But I still want to link to Atkins’ concluding paragraphs.

Why is the deficit shrinking? Mostly, because of the pickup in economic activity. The elimination of some of the tax cuts for the wealthy will also help. The Affordable Care Act will also be taking a bite out of our extravagant healthcare costs.

4. None of this has any impact on unemployment. Generally speaking, there are two kinds of jobs: public sector and private sector. Even though the private sector is doing better, public sector jobs are still declining due to conservative policies theoretically designed to reduce deficits. Private sector jobs, meanwhile, depend on consumer demand–not corporate profit. American corporations are experiencing record profits, but they aren’t hiring because there’s not enough middle-class consumer demand for them to hire workers.

4a. The lack of consumer demand leading to poor private-sector job growth in spite of record profits has nothing to do with deficits or uncertainty in the investing climate. It has everything to do with income inequality and economic insecurity among the middle and lower classes.

4b. The obsession over deficits among conservative politicians is directly responsible for public sector job cuts that are helping to drive up the unemployment rate and kill consumer demand.

All of which means that politicians like Marco Rubio who insist that the deficit is directly hurting employment are either so ignorant of economics that they shouldn’t be handling public policy, or so cynically manipulative that they shouldn’t be handling public policy.

And no “reporter” in Washington or elsewhere should be covering Rubio’s statements without providing a basic lesson in macroeconomics as context for his fact-free response.

Actually, Village idiots “reporters” like Chris Cillizza pretty much ignored whatever substance there was in Rubio’s speech and approvingly reported on the personal history that Rubio discussed. But beforehand, Cillizza wrote that Obama should focus on deficit in State of the Union

It’s the deficit, stupid. A look back at Obama’s first three State of the Union speeches, plus the address to a joint session of Congress in 2009, suggests a similar thematic pattern: He starts with the economy, moves to education and then, in the middle section of the speech, addresses the deficit. (The exception was in 2011, when Obama began his speech with a riff on partisanship.) In 2012, Obama spent just five minutes on the debt — less time than he spent on partisanship (51/2 minutes) or foreign policy (six minutes).

He should flip that script in this State of the Union and spend the bulk of his time talking about the deficit. Here’s why: In January 2009 polling by Pew Research Center, 53 percent of respondents said reducing the deficit was a “top priority.” In January 2013, that number soared to 72 percent, by far the biggest increase of any issue over that time. (By contrast, 85 percent said strengthening the economy was a top priority in 2009, while 86 percent said so at the start of this year.)

The debt is the issue of the day, and one that, if Obama is beginning to eye his legacy as president, could go a long way toward shaping how history remembers him. Make this speech a deficit speech.

For Cillizza and his ilk, “the deficit” (or “the debt,” which he doesn’t seem to understand is not the same thing) is “the issue of the day,” and unemployment and the other struggles of the 99 percent are completely invisible. Oh, and by the way, Dick Cheney loved Rubio’s speech.

I could go on and on like this, but I’ll stop now. I just wanted to rant for a bit in hopes of pulling myself out of my current malaise. I’ve realized finally that there isn’t going to be any real change as because the Villagers (often including the President) are just going to continue focusing on cutting spending and ignoring the problems facing those of us who live in the real world.

If you stayed with me this far, thanks for letting me rant! Now, I welcome your links to whatever you are reading and blogging about today.


Countdown to SOTU

He shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient; he may, on extraordinary Occasions, convene both Houses, or either of them, and in Case of Disagreement between them, with Respect to the Time of Adjournment, he may adjourn them to such Time as he shall think proper; he shall receive Ambassadors and other public Ministers; he shall take Care that the Laws be faithfully executed, and shall Commission all the Officers of the United States.

We’re going to be live blogging the SOTU address to night so be sure to join us.   However, dribs and drabs of SOTU preview are hitting the media channels already.  It’s probably good to do a round up of them before we settle in with our popcorn and disappointment.

ABC’s Jake Tapper is part of the White House entourage. Here’s a list of things he has that will be covered tonight by President Obama.

Pursuing a path of deficit reduction and government reform, President Obama will tonight in his State of the Union address call for a ban on earmarks and he will propose a five year budget freeze on non-security related discretionary spending, ABC News has learned.

The proposals come as the president prepares to tackle the deficit and debt and as he faces a House of Representatives in Republican hands, many of whose members include those affiliated with the Tea Party who may be willing to embrace both moves.

The president will propose some new spending in certain areas that address the speech’s theme of “How We Win the Future”: innovation, education and infrastructure. But those increases will be proposed within the context of a proposed partial budget freeze.

In other words, the President’s State of the Union address will embrace the politically expedient while denying the obvious.  Our country has a severe lack of critical mass of buyers with incomes to support their own discretionary spending.  We also have levels of unacceptable unemployment all over this country which means less taxes and more outlays.  To not specifically address what we know from 70 years of economic theory directly and continue living in a Reagan-like stupor over what really drives things like jobs and GDP growth is just morally reprehensible for any educated person in a leadership position.  Look at that picture up there.  There appears to be a huge group of them.

Earmarks aren’t a huge deal as I’ve showed in post after post on the actual numbers of the budget deficit. They make up less than 1 percent. That’s a political potato chip and no one seems to be able to eat just one. No wonder all the economists left the west wing and have been replaced by investment banker/lawyers. You can only fight an uphill right wing meme so long coming from a Democratic President.

ABC has a SOTU primer up that gives some history and sets some expectations. They believe that POTUS will make hay of the productive lame duck session.

While the election was heated, there has been a move since to tamp down the rhetoric and move toward bipartisan solutions. The lame-duck period after the election was particularly productive as Democrats and a few Republicans passed a number of bills before Republicans took control of the House this month.

Obama will likely point to this period as the way government should work. Obama will likely point to this period as the way government should work. Republicans grumbled at the time that Democrats took advantage of the lame-duck session, passing legislation before Republicans officially took control of the House in January.

If there is a possibility to get some infrastructure spending through at any meaningful level, then I could experience a little sense of relief.  TPM believes that even some key Republicans will go along with that type of spending. Of course, that actually is a bit of an earmark isn’t it?  Doesn’t every congressperson want their share of road funds or that new airport?  How these get chosen and funded might just mean we see more earmarks in reality.  However, any government spending that increases demand and spurs jobs at this point is preferable to none.  I’d even take a few bridges to no where at this point.

One area the Republican party’s anti-spending crusade puts them in a bind is infrastructure spending. Repairing roads and bridges, modernization, etc. have historically been bipartisan priorities — but they’ve also always cost a lot of money.

Ask Republicans whether they want to include transportation infrastructure in their calls for broad spending cuts, and you don’t get a very specific answer.

“We’ve got to learn how to prioritize and do more with less in all areas of government,” said House Majority Leader Eric Cantor at his weekly press conference today. “It just is what it is. In the terms of transportation, we’ve got to figure out ways how to leverage dollars, how to come up with innovative ways to address the nation’s ailing transportation infrastructure.”

The biggest problem getting these through congress will have to do with the Federal Accounting system as much as anything.  You see, the government doesn’t depreciate or amortize things like battleships and dams.  Expenditures are fully expensed so in terms of the budget deficit, things will get worse in the short term. This means there has to be a cease fire on the ‘size’ of the deficit on these kinds of items.  Their benefits last for years.  They create do create jobs and jobbers.  The problem is they are an upfront cost and we live in a world of political football rhetoric that includes deliberate misunderstanding of economics as well as economics deniers.

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