Bushie writes Open Letter to Obama, encourages Obama to be even more Republican than he already is

Posted: January 2, 2011 | Author: | Filed under: income inequality, Populism, POTUS | Tags: , , , | 32 Comments

The caving is by design, and so is the wingnut slide further to the right of anything that makes sense.

Alright, so the letter is not as blunt as I am. But, that’s how this reads to me. To appear in Sunday morning’s NY Times, an open letter to President Obama by Bushie N. Gregory Mankiw titled “How to Break Bread With the Republicans“:

DEAR President Obama:

Sorry to bother you. I know you are busy. But I have the sense that you could use a few words of advice.

In a matter of days, Republicans will control the House of Representatives and have a larger voting bloc in the Senate. If economic policy is to make any progress over the next two years, you really will have to be bipartisan. To do so, you’ll need to get inside the heads of the opposition.

I am here to help. As a sometime adviser to Republicans, I’d like to offer a few guidelines to understanding their approach to economic policy. Follow these rules of thumb and your job will be a lot easier.

Right. Well lucky for Obama it is not too difficult for him to get inside the heads of Republicans since he’s essentially one himself in everything but name. But, I’m sure he is ever so grateful for Mankiw’s pointers. I can picture Obama reading them with his chin peevishly up in the air. He’s got to be grateful for all the cover the right wing gives him to keep on telling the Democratic base to suck it up and quit whining about all the magnificent crumbs they are getting.

Mankiw’s letter continues with his first Rule of Thumb Dumb:

FOCUS ON THE LONG RUN Charles L. Schultze, chief economist for former President Jimmy Carter, once proposed a simple test for telling a conservative economist from a liberal one. Ask each to fill in the blanks in this sentence with the words “long” and “short”: “Take care of the ____ run and the ____ run will take care of itself.”

Liberals, Mr. Schultze suggested, tend to worry most about short-run policy. And, indeed, starting with the stimulus package in early 2009, your economic policy has focused on the short-run problem of promoting recovery from the financial crisis and economic downturn.

But now it is time to pivot and address the long-term fiscal problem. In last year’s proposed budget, you projected a rising debt-to-G.D.P. ratio for as far as the eye can see. That is not sustainable. Conservatives believe that if the nation credibly addresses this long-term problem, such a change will bolster confidence and have positive short-run effects as well.

Fortunately, the fiscal commission you appointed assembled a good set of spending and tax reforms. The question you now face is whether to embrace their sensible but politically difficult proposals in your own budget.

WTF? “Liberals tend to worry most about short-run policy…” While what? Republicans focus on the long run? Funny that, I seem to remember 8 years of Bush-Cheney not planning for a damn thing, be it when it came to national security, the wars, the economy, natural disasters, infrastructure, the environment, energy, etc. That’s largely how we got in the mess we are in today, with Bush-Cheney allowing 9-11 to take our eyes off the prize and let our standard of living fall by the wayside, though Obama sure has yet to answer the call of getting us out of any of this either.

Second Rule of Dumb:

THINK AT THE MARGIN Republicans worry about the adverse incentive effects of high marginal tax rates. A marginal tax rate is the additional tax that a person pays on an extra dollar of income.

From this perspective, many of the tax cuts you have championed look more like tax increases. For example, the so-called Making Work Pay Tax Credit is phased out for individuals making more than $75,000 a year. That is, because many Americans lose some of the credit as they earn more, the credit reduces their incentive to work. In effect, it is an increase in their marginal tax rate.

From the standpoint of incentives, a tax cut is worthy of its name only if it increases the reward for earning additional income.

Republicans are something else with the way they worry about “the reward for earning additional income” but not about unemployment benefits and benefits for the 9-11 first responders. I’m starting a new tag for this kind of crap: Culture of life, my ass. It’s always been a culture of No Profit Left Behind for these social darwinists.

Third Rule of Dumb:

STOP TRYING TO SPREAD THE WEALTH Ever since your famous exchange with Joe the Plumber, it has been clear that you believe that the redistribution of income is a crucial function of government. A long philosophical tradition supports your view. It includes John Rawls’s treatise “A Theory of Justice,” which concludes that the main goal of public policy should be to transfer resources to those at the bottom of the economic ladder.

Many Republicans, however, reject this view of the state. From their perspective, it is not the proper role of government to fix the income distribution in an attempt to achieve some utopian vision of fairness. They believe, instead, that in a free society, people make money when they produce goods and services that others value, and that, as a result, what they earn is rightfully theirs.

This view also has a long intellectual tradition. The libertarian philosopher Robert Nozick has suggested revising the old leftist slogan “From each according to his ability, to each according to his needs” to “From each as they choose, to each as they are chosen.”

Obama is not a socialist, he is a corporate stooge. Even Ron Paul gets that much.

Fourth Rule of Dumb:

SPREAD OPPORTUNITY INSTEAD Despite their rejection of spreading the wealth, Republicans recognize that times are hard for the less fortunate. Their solution is not to adjust the slices of the economic pie, as if they had been doled out by careless cutting, but to expand the pie by providing greater opportunity for all.

Since the mid-1970s, the gap between rich and poor has grown considerably. One of best analyses of this long-term trend is by the Harvard economics professors Claudia Goldin and Lawrence Katz in their book, “The Race Between Education and Technology.” The authors conclude that widening inequality is largely a symptom of the educational system’s failure to provide enough skilled workers to keep up with the ever increasing demand.

Educational reform, therefore, should be a high priority. To be sure, this is easier said than done. But research suggests that one key is getting rid of bad teachers. In a recent study, the economist Eric Hanushek says that “replacing the bottom 5 to 8 percent of teachers with average teachers could move the U.S. near the top of international math and science rankings.”

Oh, so we’re back to this. Education reform is the place where Obama and the rightwing are open about their shared agenda, after all.

Last Rule of Dumb:

DON’T MAKE THE OPPOSITION YOUR ENEMY Last month, when you struck your tax deal with Republican leaders, you said you were negotiating with “hostage takers.” In the future, please choose your metaphors more carefully.

Republicans are not terrorists. They are not the enemy. Like you, they love their country, and they want what is best for the American people. They just have a different judgment about what that is.

Let me propose a New Year’s resolution for you: Have a beer with a Republican at least once a week. The two of you won’t necessarily agree, but you might end up with a bit more respect for each other’s differences.

Gah. I am so tired of this political theatre. I’m going to rant in the form of my own open letter.

Dear President Obama,

I know you won’t follow my suggestions, but here they are.

  1. FOCUS ON THE LEAST OF THESE. It’s a very Christian thing for you to do, since you seem obsessed with convincing the zombie class of your religiosity.
  2. THINK AT THE MARGINS OF SOCIETY, NOT AT THE MARGINS OF PROFIT. You were elected by human beings, not dollar signs, although I can see why with all the heavy marketing and big money that went into your campaign, you might get confused.
  3. STOP USING THE WINGNUTS WHO SHRIEK ABOUT SOCIALISM AS COVER TO GET AWAY WITH THE WEALTH TRANSFER TO WALL STREET AS IF IT IS SOME KIND OF COMPROMISE THAT BENEFITS MAIN STREET. It’s bad karma. You can finagle on this one all you want, but the American people have already figured out you’re just a bagel. (I never tire of that finagle/bagel line from Chicago‘s “Razzle Dazzle.”)
  4. DO SPREAD OPPORTUNITY. Using charter schools as a catch-all solution to the education system is not spreading opportunity. It is a backdoor to privatization. Don’t listen to Wall Street on education. Listen to what educators say. Where charter schools work, study why they worked. And, where charter schools do not work, let an honest discussion of those failures happen. And, until we can solve the big picture problem of our education system, let’s focus on the opportunities we can spread to workers right now. That means jobs and a strengthened social safety net, instead of more expensive and unnecessary war, less civil liberties, less opportunities to work, and less benefits.
  5. DO MAKE GOP CORPORATE CONSERVATISM THE ENEMY. It is a failed ideology. You and Bush have already proved it. You need to do what you should have done when you were elected. Lead on something genuinely populist and socially democratic, as if your own well-being depended on it. You have nothing left to lose, though you probably foolishly believe otherwise.

Wednesday Reads II

Posted: December 29, 2010 | Author: | Filed under: Democratic Politics, Feminists, Gitmo, Human Rights, morning reads, POTUS, U.S. Economy, Women's Rights | Tags: , , , , , , , , , , , , , , , , | 30 Comments

Good morning, Sky Dancers!

Minkoff Minx is under the weather and needs to rest up, so I’m filling in for her on today’s roundup. Here’s hoping things ease up for her soon!

I’ll start us off with some historical trivia for today.

Tillie Brackenridge on the porch of Mrs. William Vance's residence at Navarro and Travis Streets in San Antonio, where she was employed, c. 1900—Tillie formerly was a slave in James Vance's elegant home on East Nueva Street and told of seeing Robert E. Lee, a frequent visitor to the house. (from texancultures.com)

On December 29th, 1845, Texas enters the Union and becomes the 28th state (link goes to the History Channel site):

The citizens of the independent Republic of Texas elected Sam Houston president but also endorsed the entrance of Texas into the Union. The likelihood of Texas joining the Union as a slave state delayed any formal action by the U.S. Congress for more than a decade. In 1844, Congress finally agreed to annex the territory of Texas. On December 29, 1845, Texas entered the United States as a slave state, broadening the irrepressible differences in the United States over the issue of slavery and setting off the Mexican-American War.

Reminds me of this indelible photo of Juneteenth (Emancipation Day), taken in the year 1900, at what I believe used to be called Wheeler’s Grove in Austin (today it is known as Eastwoods Park). Here’s another poignant photo of the first official Juneteenth Committee, from the same place and same day as the first photo.

While I was digging around for decent links to these two iconic images, I stumbled across this post back in June 2009 about the holiday, from the Smithsonian’s “Around the Mall” blog — it’s fairly brief and there’s a neat and concise Q&A at the end if you have the time.

Just a little Juneteenth in December from your Texan on the frontpage.

Also a reminder of the countless unsung and ordinary heroes and heroines throughout the course of human history who have played a role in that most painstaking and arduous of endeavors–fighting the good fight to secure, maintain, protect, and strengthen all human and civil rights.

Texas became a state on December 29, 1845, but it did not become a free state until two decades later on June 18/19, 1865.

I’m just waiting for us to turn into a blue state again…I like picturing my mayor Annise Parker leading the way to defeat Guv Goodhair one of these days. Hey, a lefty wonk-gal in Texas can dream!

Speaking of human rights, I recommend checking out Clifford Levy’s piece yesterday from the NYT‘s “Above the Law” series. It’s called “An Accuser Becomes the Accused.” That’s the video version, but there’s also a text article in case that’s more convenient — “In Russia, an Advocate Is Killed, and an Accuser Tried.”

From the text:

MOSCOW — In a small courtroom in Moscow, friends of Natalya K. Estemirova crowded onto wooden benches, clasping photographs of her. It was 16 months after the murder of Ms. Estemirova, a renowned human rights advocate in the tumultuous region of Chechnya, and now the legal system was taking action.

A defendant was on trial, and his interrogators were demanding answers about special operations and assassination plots.

But the defendant was not Ms. Estemirova’s suspected killer. It was her colleague Oleg P. Orlov, chairman of Memorial, one of Russia’s foremost human rights organizations.

The authorities had charged Mr. Orlov with defamation because he had publicly pointed the finger at the man he believed was responsible for the murder: the Kremlin-installed leader of Chechnya. If convicted, Mr. Orlov could face as many as three years in prison.

The shooting of Ms. Estemirova, 51, in July 2009 has so far produced only an incomplete investigation, and no charges have been filed against anyone involved. Her case has instead turned into an example of what often happens in Russia when high-ranking officials fall under scrutiny. Retaliation follows, and the accuser becomes the accused.

Be it Wikileaks or the shooting of Estemirova, distracting far away from the original story under investigation seems to be the name of the game.

Now I’m not saying the Wikileaks circumstance is equal in nature or degree to the situation surrounding Estemirova’s murder. Justice is clearly being denied in the latter, whereas the former is far more complex. But either way, the detours from the initial topic of investigation do nothing but breed more suspicion and doubt at a time when trust in public and private institutions is on the decline.

Speaking of distractions, file this next one under Obama Derangement. From TPM — “Latest Right-Wing Freak-Out: Obama Wants To Give Manhattan Back To Native Americans“:
Read the rest of this entry »

What if this is as good as an Obama Administration Gets?

Posted: December 26, 2010 | Author: | Filed under: Populism, POTUS, We are so F'd | Tags: , , , , , , | 78 Comments

Frank Rich, in today’s Gray Lady, asks:

Who Killed the Disneyland Dream?

From the link:

This month our own neo-Kennedy president — handed the torch by J.F.K.’s last brotherand soon to face the first Congress without a Kennedy since 1947 — identified a new “Sputnik moment” for America. This time the jolt was provided by the mediocre performance of American high school students, who underperformed not just the Chinese but dozens of other countries in standardized tests of science, math and reading. In his speech on the subject, President Obama called for more spending on research and infrastructure, more educational reform and more clean energy technology. (All while reducing the deficit, mind you.) Worthy goals, but if you watch “Disneyland Dream,” you realize something more fundamental is missing from America now: the bedrock faith in the American way that J.F.K. could tap into during his era’s Sputnik moment.

How many middle-class Americans now believe that the sky is the limit if they work hard enough? How many trust capitalism to give them a fair shake? Middle-class income started to flatten in the 1970s and has stagnated ever since. While 3M has continued to prosper, many other companies that actually make things (and at times innovative things) have been devalued, looted or destroyed by a financial industry whose biggest innovation in 20 years, in the verdict of the former Fed chairman Paul Volcker, has been the cash machine.

I believe there was a poll conducted not too long ago that gives a fairly good baseline from which to guestimate just how many middle class Americans still “believe” — I’m talking about that WaPo poll back at the end of October, which found that 53% of Americans are concerned about their ability to pay their rent or mortgage.

Getting back to Frank Rich’s piece, Rich concludes the following:

It’s a measure of how rapidly our economic order has shifted that nearly a quarter of the 400 wealthiest people in America on this year’s Forbes list make their fortunes from financial services, more than three times as many as in the first Forbes 400 in 1982. Many of America’s best young minds now invent derivatives, not Disneylands, because that’s where the action has been, and still is, two years after the crash. In 2010, our system incentivizes high-stakes gambling — “this business of securitizing things that didn’t even exist in the first place,” as Calvin Trillin memorably wrote last year — rather than the rebooting and rebuilding of America.

In last week’s exultant preholiday press conference, Obama called for a “thriving, booming middle class, where everybody’s got a shot at the American dream.” But it will take much more than rhetorical Scotch tape to bring that back. The Barstows of 1956 could not have fathomed the outrageous gap between this country’s upper class and the rest of us. America can’t move forward until we once again believe, as they did, that everyone can enter Frontierland if they try hard enough, and that no one will be denied a dream because a private party has rented out Tomorrowland.

…which brings me back to what I wrote yesterday in my Saturday roundup, about America being locked in reflexive doubt, and that being as corrosive as blind faith.

A huge part of the problem is that we have an empty suit in the White House from whom the best we can hope for is that he simply lets other people lead for him and make something good happen once in awhile, if we are even that lucky. It’s a victory if he lets other people throw us a bone and fight the fights of ordinary Americans for him. Woo hoo.

Three years ago or so the Obama campaign started churning out posters with the word “believe.” The Obama machine wanted us to believe in an image, a brand. Whenever it has come time for Obama to get us to believe in ourselves, he quietly folds up his teleprompter and goes golfing.

For months on end we had the MSM trying to explain away Obama’s inability to communicate that he even cares. Oil gushed out into the Gulf, and all Obama could muster up was “I can’t suck it up with a straw.”

Sure he cares. Now watch this drive.

Whether it was letting Bill Clinton bring Euna Lee and Laura Ling home or letting Joe Lieberman lead the way to repeal of DADT, it seems this is the zenith of the Obama presidency. Letting other people do the actual president-for-the-people stuff while he enjoys the perks of Being President.

With this president, the sky is not the limit, it is merely aspirational..

Ordinary Americans are just trying to survive in today’s economy, at a time when their own president does not think the sky is the limit in terms of the lengths to which he will go to fight for the American people but rather insists that the best he can do is talking point reforms with all the corporate benefits and backdoor privatization buried in the fine print, not to even speak of all the obligatory pork.

Asking or expecting people in such a hostile working/living environment to believe “the sky is the limit if they work hard enough” is essentially asking them to bury their heads in the sand. What is still left of Obama’s ostriches (think Dubya’s 23 percenters) can ignore reality all they want, but that will not change the fact that most Americans are invisible to this president and they know it.

We are stuck in reflexive doubt at this point, but how is having a president who reinforces all of those doubts supposed to help? At this point, I have no idea why anyone on the left still persists in the delusion that there’s any 2% less evil difference between Obama and the GOP.

From a recent Democracy Now interview with Chris Hedges (h/t Dakinikat), where he talks about his latest book, Death of the Liberal Class:

AMY GOODMAN: Your assessment of President Obama?

CHRIS HEDGES: A disaster. A poster child for the bankruptcy of the liberal class. Somebody who, like Clinton, is a self-identified liberal, who speaks in the traditional language of liberalism but has made war against the core values of liberalism, which is a concern for those people outside the narrow power elite. And the tragedy, if tragedy is the right word, is that Obama, who made this Faustian bargain with corporate interests in order to gain power, has now been crumpled up and thrown away by these interests. They don’t need him anymore. He functioned as a brand after the disastrous eight years of George Bush.

And what we are watching is an even more craven attempt on the part of the White House to cater to the forces that are literally destroying the United States, have reconfigured, are reconfiguring this country into a form of neofeudalism. And all of the traditional—the pillars of the liberal establishment, that once provided some kind of protection and, more importantly, a kind of safety valve, a mechanism by which legitimate grievances and injustices in this country could be addressed, have shut tight. They no longer work. And so, we are getting these terrifying, proto-fascist movements that are leaping up around the fringes of American society and have as their anger not only a rage against government, but a rage against liberals, as well. And I would say that rage is not misplaced.

And, there you have it. This is the difference between having Obama and having a GOP president.

So he lets Lieberman or Clinton or someone do something right once in awhile. So what?

I personally won’t waste time denying Obama the “credit.” While the soldiers and the activists who fought for repeal of DADT at the grassroots level are the ones who made this historic step in that direction possible and are the real heroes and sheroes of this story, the fact of the matter is that had Obama succeeded in blocking the DADT repeal, then the blame would have been piled on high at his doorstep.

So he can have the credit, but he also needs to take responsibility for the fact that simply standing back and allowing others to do the heavy lifting once in awhile is neither enough nor the vision of someone who thinks big or sets the sky as his limit for what he can do AS president for the people who elected him.

Unfortunately, Barack Obama set the limit to just being president.

No one would be happier than I would be if Obama would just prove this theory wrong. I have no Disneyland dreams or illusions that he will do so, though.

Social Security: Why mess with an American Success Story?

Posted: December 10, 2010 | Author: | Filed under: Catfood Commission, legislation, POTUS, The Bonus Class, U.S. Economy, Voter Ignorance | Tags: , , | 54 Comments

I spent most of the day listening to the Bernie Sanders show, but stories of the joint Clinton/Obama presser that turned into the Bill Clinton show grabbed my interest.  I have more than a passing interest in Social Security.  I haven’t paid into it for about 15 years, but I have an exhusband who has and I have 20 years worth of dibs on his account.  I’m a tailend boomer with a much smaller nest egg  post Financial Crisis than pre Financial Crisis.  Ex Hubby’s social security and his pension plan loom on my horizon.  They stop me from having bag lady nightmares.

So, what’s all this talk about a payroll tax holiday and why, all the sudden, is the Cat Food Commission’s foray into social security creeping me out?  Well, for one I think that a lot of people–including the President–don’t seem to get social security, its history,  its issues, and its challenges and that always irks me.  For another, I think it opens this trap door to having more of my future Shanghaied.   I don’t want any more of anything related to my future going off to Shanghai.

So, since the President–among others–is spreading disinformation about the Social Security program, I thought I’d take the time to remind you that I wrote a four part series on Social Security in May 2009.  If you want a little background and perspective, you can go check it out.  (Fortunately, it’s here in the file cabinet portion of Sky Dancing.) It is all based on Academic work and people that do active research on the program, its solvency, and its issues.

First, here’s a list of links to those old posts of mine:

Social Security: Reform, Refund or Opt-Out (Part 1) Introduction

Social Security: Reform, Refund or Opt-Out (Part 2) Public Pension Concepts and Alternatives

Social Security: Reform, Refund or Opt-Out? (Part 3) Lessons from the World

Social Security: Reform, Refund, or Opt Out? (Part 4) What to do when Pensions are out of balance

I wanted to point these out since I don’t want to completely reinvent the conversation here.  The government has a website that it dedicated solely to the Social Security Act of 1935.  There are still many, many people that do a lot of research in the area.   Here is a link to one of the new studies that looks at the impact of increasing the level of maximum earnings subject to Social Security and its impact on the program. This is one of the things that is being suggested to increase funding for social security.   Here is a brief from the National Academy of Social Insurance that looks at various funding formulas. This group is actually associated with actuaries so it is quite statistics intensive. Findings specific to this brief are:

  • The number of Social Security beneficiaries per 100 covered workers will increase from 30 in 2005 to 46 in 2030 and to 50 in 2050.
  • Social Security benefits will rise from 4.3 percent as a share of the total economy today to 6.1 percent in 2030.
  • When baby boomers are retired, the total number of people each worker supports(including workers themselves, children, retirees, and other nonworking adults) will not be as large as it was when the baby boomers were children.
  • As a share of the total economy, spending for Social Security benefits when baby boomers are retired will grow less than spending for public education grew when baby boomers were children.
  • While baby boomers may have been a surprise when they turned up in record numbers to enroll in kindergarten in the 1950s, their retirement six decades later is not.  Policymakers began to plan as early as 1983, when Congress lowered the cost of  Social Security benefits for boomers and later generations by raising the age at which unreduced retirement benefits will be paid.
  • Workers’ wages are projected to grow in real terms (that is, faster than inflation). By 2030, real wages will increase 33 percent. Even if policymakers chose to balance Social Security’s finances solely by a tax rate increase, workers’ net wages (after paying the higher tax) would still be 28 percent higher than they are today.
  • While earnings that are taxed to pay for Social Security represent 38 percent of the total economy, other national income is not taxed for Social Security purposes.
  • Broadening the tax base, reducing scheduled benefits, raising the Social Security tax  rate, or allocating other kinds of revenue to Social Security are ways to improve Social Security finances.

So, you can see this isn’t an urgent issue right now. I guess my  point is that the ‘sudden’ urgency we seem to have with social security is not something out of the blue and it’s not something that  hasn’t been discussed, planned for, or actually worked on.   As recently as August, the President himself gave a speech saying just these things which is why I am so confused about the Cat Food Commission’s dalliance with the program.

President Obama said Social Security is not in crisis and only modest changes are needed to keep it solvent.

The president acknowledged at a small town hall gathering in Columbus, Ohio, Wednesday that the pension fund “has to be tweaked because the population is getting older” but said Republicans’ plans to drastically overhaul the program are wrong.

“Social Security is not in crisis,” Obama said. “We’re going to have to make some modest adjustments in order to strengthen it.”

I also wanted to bring up a little bit on the idea of Payroll Tax Holidays and that bizarre Clinton/Obama presser today.  I’m even more confused by this sudden urge to create a payroll tax holiday. This is an odd thing.

The tax deal reached between President Obama and congressional Republicans could mean a higher tax bill for roughly one in three workers as a result of the Social Security tax cut Republicans pushed as a replacement for the current Making Work Pay tax credit.

The Making Work Pay credit gives workers up to $400, paid out at 8 percent of income, meaning that anybody making at least $5,000 gets the full amount — and gets as much as anybody else. Its replacement knocks two percentage points off the payroll tax cut, meaning a worker would need to make $20,000 to get a $400 break. Of the nation’s roughly 150 million workers, around 50 million make less than $20,000 and will see at least some increase as a result.

Additionally, roughly a quarter of 20 million state and local workers pay no payroll tax, because they have a separate pension system. Some of those workers with children will benefit from the extension of other tax credits, but overall will have less money in their pocket.

Rep. Raul Grijalva (D-Ariz.), co-chair of the Congressional Progressive Caucus, said many House liberals were opposed to the payroll tax cut because of its effect on the poorest workers. Progressives are also concerned that the tax cut will become permanent and undermine Social Security’s funding stream and political support over time.

Social Security is a stand alone program.  Mixing it as part of a goodie bag with other tax things doesn’t strike me as a very good idea from a political standpoint.  It’s not part of the general budget.  It’s a form of insurance.  We (or in my case, my exhusband mostly) paid into it.  Why mix it up with other tax give aways?

I did go hunting about for information on Payroll Tax Holidays to see if they really could stimulate the economy effectively.  One of my issues is that I know that the FICA taxes are regressive because of the maximum income ceiling so I thought that the spending impact couldn’t be very large. So, it seems like getting rid of some of those taxes really gives more to the rich than the poor. Rich folks really aren’t very reliable spenders.  Turns out, my hunch was studied and released in early 2009 at CBPP.  They basically say that the biggest benefits would go to workers least likely to spend the money. That also seems to be every one’s take on this program.  Also, there are people like me who worked for states and municipalities that don’t do Social Security. We don’t get a thing from this.

A payroll tax holiday, however, would both be costly — a two-month suspension could cost about $120 billion, for example — and likely relatively ineffective as a stimulus measure.  Public resources would be better spent on stimulus measures with a higher “bang for the buck,” such as the Making Work Pay tax cut that President-elect Obama has proposed.

Economic stimulus measures aim to encourage an immediate increase in aggregate demand by boosting consumer spending.  The most efficient way to boost consumer spending is to put money into the hands of people who will spend it quickly rather than save it; tax cuts focused on moderate- and low-income households are more effective as stimulus than tax cuts that are larger for people with higher incomes, because people at low-income levels spend a larger share of tax cuts they receive than people at higher income levels do.

A payroll tax holiday does not score well on this front — too little of the benefit goes to lower-income households struggling to make ends meet and too much goes to higher-income taxpayers, who are likely to save a significant fraction of any new resources they receive.  Under the payroll tax, employees pay tax of 6.2 percent on earnings up to $106,800.  So, for example, a worker earning $10,000 would receive a tax cut of just $103 from a two-month payroll tax holiday, while a worker earning ten times as much ($100,000) would receive a tax cut ten times as big — $1,030.  Indeed, the highest-income fifth of households could receive more than half of the benefits that would go to workers from a two-month payroll tax holiday.

So, when President Clinton got up to day in a presser with Obama to support this comprise deal, I was really confused.  It seemed like a double play triangulation move with a snagglepuss type-exit stage-left by POTUS. You can say a lot about Clinton–both good and bad–but he does understand his economic theory. Why would he support this?

Clinton comfortably outlined how the pending package of tax cuts, business incentives and unemployment benefits would boost the economy – even though it included tax help for the wealthy that Obama had to swallow.

“There’s never a perfect bipartisan bill in the eyes of a partisan,” Clinton said. “But I really believe this will be a significant net-plus for the country.”

When he finished his pitch, Clinton played the role of humble guy, saying, “So, for whatever it’s worth, that’s what I think.”

So, it all boils down to what can we get something past the Republicans?  This entire deal puts Social Security in an awkward light. It also uses money for a payroll tax holiday that probably isn’t as efficacious as it could be if put to other uses.  It also plays into the idea that giving taxes back to rich people stimulates the economy enough (VOODOO economics).  It also indicates that playing up to adherents of VooDoo economics is worth adding to the deficit and to the problems with the deficit and the challenges social security faces in the future. It sets them up to make bigger arguments down the line.

I guess after reviewing everything, I just don’t see how this is worth it. Passing all of this because it’s the best you can do given the state of the Republican Klan in Kongress just isn’t good enough for me.  It opens up too many issues in other areas.  However, this is the graph they’re circulating as a White House talking point to show how Obama got the better deal. This is the graph that has Charles Krauthammer’s tie in a too tight double Windsor knot so much that Clinton brought it up.

I’m not buying it.  How about you?

House Democrats Find their Spines!!

Posted: December 9, 2010 | Author: | Filed under: Breaking News, Democratic Politics, POTUS, president teleprompter jesus, Team Obama | Tags: , , | 60 Comments

Wow!  Maybe a future of being outnumbered has caused House Democrats to finally rediscover their party affiliation!  This is hot off the CNN Political Ticker.

Defying President Obama, House Democrats voted Thursday not to bring up the tax package that he negotiated with Republicans in its current form.

“This message today is very simple: That in the form that it was negotiated, it is not acceptable to the House Democratic caucus. It’s as simple as that,” said Democratic Congressman Chris Van Hollen.

“We will continue to try and work with the White House and our Republican colleagues to try and make sure we do something right for the economy and right for jobs, and a balanced package as we go forward,” he said.

The vote comes a day after Vice President Biden made clear to House Democrats behind closed doors that the deal would unravel if any changes were made.

“Wow did the [White House] mishandle this,” a senior House Democratic Source told CNN. “Breathtaking. Members have major substantive concerns and they should have gently guided people to the finish line.”

Rep. Peter DeFazio of Oregon said: “They said take it or leave it. We left it.”

I guess last minute visits by VPOTUS and last minute guilt trips by POTUS just didn’t work.

President Obama warned his fellow Democrats on Wednesday that they risk plunging the country into a double-dip recession if they reject his tax-cut deal with Republicans.

It also appears that the Dream Act will die in the Senate.  This is from NPR.

A measure that would have given grown children of illegal immigrants a path to citizenship stalled and likely died Thursday in the Senate, after Majority Leader Harry Reid was unable to persuade enough Republicans to give the measure the 60 votes it needed to avoid a GOP filibuster.

The DREAM Act, which passed the House Wednesday by a 216-198 vote, would create the citizenship path through college or military service. Reid, a Nevada Democrat who won a tough re-election in November, promised his constituents that he’d bring the measure to the Senate floor.

Reid’s request that the Senate table the motion passed 59-40. Given the lack of Republican support and the dwindling number of days left in Congress’s lame duck session, the chances that the act will be re-considered are slim.

This is all happening at a time when a Bloomberg poll shows that more than have of Americans say they are worse off than they were two years ago.  Count me in that number.

More than 50 percent of Americans say they are worse off now than they were two years ago when President Barack Obama took office, and two-thirds believe the country is headed in the wrong direction, a Bloomberg National Poll shows.

The survey, conducted Dec. 4-7, finds that 51 percent of respondents think their situation has deteriorated, compared with 35 percent who say they’re doing better. The balance isn’t sure. Americans have grown more downbeat about the country’s future in just the last couple of months, the poll shows. The pessimism cuts across political parties and age groups, and is common to both sexes.

The negative sentiment may cast a pall over the holiday shopping season, according to the poll. A plurality of those surveyed — 46 percent — expects to spend less this year than last; only 12 percent anticipate spending more. Holiday sales rose by just under a half percent last year after falling by almost 4 percent in 2008.

Hopefully, we’re at some kind of tipping point.  You certainly can see the tide turning against POTUS in left blogosphere and even in the media.

Dear Answerperson: My boyfriend is a liberal Democrat and ever since the president announced his tax deal with the Republicans, he has been impossible to live with. First he burned his “Audacity of Hope” sweater. Then he began messing up the cat’s litter box, claiming he needed to draw “lines in the sand.” Now he wants to call off our wedding because he says that when you put your trust in people, they break your heart.

Stay tuned.  Things are getting interesting.

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