Friday Reads: Red State Hell Realm Edition

newspaper-2Good Morning!

I’m not sure a lot of you know what it’s like to have a Republican Governor these days implementing the Koch Brothers and ALEC agenda.  I thought I’d focus a little bit on that.  I hope those of you that live in Red States–like me–and are horrified at what’s coming down the pike in your neck of the woods will share. Yes.  I just don’t stop writing about ALEC.  I can’t.  It’s like watching a train come down the track knowing that all of your friends are bolted right to it.

So, climate change is one of those topics where Republicans love to be deep in denial.  What’s it like to be in one of the hottest Red States in the US and have a governor that’s basically ensuring that you’re in the fire or the frying pan?  This one is for my birth state of Oklahoma where my Dad grew up during the worst of the dust bowl days.  They have one of the dumbest damn Senators on the planet. Here’s the ever quotable and insane Jim Imhofe.

Oklahoma is another state that experienced its warmest year on record. The average temperature in the Sooner State was 63 degrees. The USDA today declared a drought disaster in 76 of Oklahoma’s 77 counties.

When it comes to climate change denial, Republican senator James Inhofe takes the top prize for outrageous statements. His anti-environmental stances are even more dangerous because Inhofe serves as the ranking member of the United States Senate Committee on Environment and Public Works and was its chairman from 2003 to 2007.

In a 2003 Senate speech, Inhofe said that “catastrophic global warming is a hoax.” Last year, Inhofe stated on a Christian radio show that the Bible refutes climate change, saying “God’s still up there. The arrogance of people to think that we, human beings, would be able to change what He is doing in the climate is to me outrageous.”

Down here in Louisiana, we’re mired in a recession and have had our public health and education systems gutted to the point that the accrediting institution for LSU is asking if any one’s in charge of the system.  So, what’s that freak of nature Governor Bobby Jindal up to?  He wants to eliminate our state income taxes and corporate taxes.  I have no idea how a got stuck in a Pinochet-like hell realm but here I am.

Louisiana Gov. Bobby Jindal is proposing the complete elimination of income and corporate taxes in the state, and says he wants to replace the revenue by increasing sales taxes.

The Times-Picayune reported that Jindal is in the process of fleshing out the tax reform proposal, the goal of which, according to a statement from the Governor’s office and given to the paper, “is to eliminate all personal income tax and all corporate income tax in a revenue neutral manner. We want to keep the sales tax as low and flat as possible.”

“Eliminating personal income taxes will put more money back into the pockets of Louisiana families and will change a complex tax code into a more simple system that will make Louisiana more attractive to companies who want to invest here and create jobs,” Jindal says in the statement.

“Tax reform will remove administrative burdens from families and small businesses and improve Louisiana’s business prospects; create more business investment opportunities with increased job growth; and raise the state’s profile in national business rankings,” the statement continues.

“The bottom line is that for too long, Louisiana’s workers and small businesses have suffered from having a state tax structure that is too complex and that holds back economic prosperity. It’s time to change that so people can keep more of their own money and foster an environment where businesses want to invest and create good-paying jobs.”

I pay nearly 10% sales tax now and it has completely stopped me from looking at cars.  I already go out of state to shop for clothes and nearly ww2 reading newseverything but basic food.  Hasn’t this mean, bug-eyed man found enough policies that punish the poor already?    Those of us that have to actually buy something do not keep more of our income if we’re paying regressive consumption taxes.
The one thing that I’ve really noticed about these granny starvers is that they could all play the part of some creepy Shakespearean villain.  Paul Ryan, Eric Cantor, Bobby Jindal, and Rick Scott look like the original templates for those lean, hungry men.  They also remind me of the creeps that show up in the Dickensian tales.  Speaking of Rick Scott, let’s not forget this guy and what he’s up to with health care in Florida.  The man who is well known for cheating scandals is now in trouble for exaggerating the cost of a Medicaid expansion.

Florida’s Republican Gov. Rick Scott has rejected the Medicaid expansion under the Affordable Care Act. And now he’s in hot water for apparently inflating the cost of the expansion to Floridians in order to justify his decision.

The website Health News Florida reported Tuesday that Scott was warned in letters by the state legislature’s top economist and budget analyst that his administration’s figure — that the expansion would cost the state $26 billion over 10 years — was false.

Scott’s aide reportedly said, in emails obtained by HNF, that the figure was based on the assumption that the federal government — which is tasked with paying for the vast majority of each state’s Medicaid expansion for the first decade — would not fulfill its promise.

But after the report was published and caused a stir, including scathing criticism from Rep. Kathy Castor (D-FL), Scott said through a spokeswoman that his Agency for Health Care Administration would consider alternate cost estimates.

“AHCA’s report concluded that adding people to Medicaid under the new law would cost Florida $26 billion over 10 years,” said Scott’s aide Melissa Sellers. “Others have asked AHCA to use different assumptions to calculate different cost estimates. We look forward to reviewing those cost estimates as well.”

Castor accused Scott — a former hospital executive who rose to national prominence in 2009 while campaigning against the ACA — of deliberately deceiving Floridians.

“Not only did Gov. Scott manufacture flawed cost estimates, but it appears he had been advised that the numbers were flawed and used them anyway,” Castor said in a statement. “Florida Legislative Appropriations staff advised the governor’s office that the numbers were misleading, but it appears that the governor ignored it. … Clearly this was not a mistake. Knowing that the numbers are wrong and using them anyway is.”

The Scott administration’s Medicaid figures were disputed by multiple nonpartisan analyses.

tumblr_m3kx6dNEe11qzq84io1_500Both Jindal and Scott have  lifted their agendas directly from ALEC.  Wisconsin is another state being driven into developing nation status by rogue legislation designed to enrich the wealthy.  Here’s a list of bills to watch for in that state.

Wisconsin’s 2011-2012 legislative session saw the introduction of 32 bills or budget provisions reflecting American Legislative Exchange Council (ALEC) model legislation — including Governor Scott Walker’s contentious attack on public sector collective bargaining, voter ID legislation, and bills that make it harder for Americans to hold corporations accountable when their products injure or kill — and 19 of those proposals became law.

What pieces of the ALEC playbook might be on the agenda for the 2013-2014 session, which began this week?

One of my favorite Louisiana Bloggers –Professor Robert Mann–has read and reported on the “snake oil” agenda of ALEC and how it’s impacted the economic viability of the states I grew up in.  This study comes from the state of Iowa where I spent most of my grade school days and where my dad was a small town Ford dealer.  Here’s a great synopsis that discusses how that trickle-down, voodoo economics is bad for state economies.  I’ve written many times about the Laffer curve and its absurd hypothesis which has been refuted by study-after-study. This should be just one more nail in the voodoo economics coffin.

That scrutiny comes in the form of a November 2012 report by the Good Jobs First and Iowa Policy Project, “Selling Snake Oil to the States: The American Legislative Exchange Council’s Flawed Prescriptions for Prosperity.” The report, written by Greg LeRoy and Philip Mattera, concludes:

A hard look at the actual data finds that the Alec-Laffer recommendations not only fail to predict positive results for state economies—the policies they endorse actually forecast worse state outcomes for job creation and paychecks. That is, states that were rated higher on ALEC’s Economic Outlook Ranking in 2007, based on 15 “fiscal and regulatory policy variables,” have actually been doing worse economically in the years since, while the less a state conformed with ALEC policies the better off it was.

Read the report for yourself. It’s a treasure-trove of evidence debunking the whole wacky supply-side economic theories that have governed the Republican Party for the past 30 years. But here are a few helpful excerpts that are particularly relevant to those of us who live in states, like Louisiana, with governors totally beholden to the corporate interests that are selling this economic snake oil.

ALEC-Laffer claim that lowering state and local taxes produces much greater job growth; in actuality, such taxes are such a tiny cost factor for businesses, and come with higher taxes on others or lower quality public services, that such a strategy fails

ALEC-Laffer claim that a low top personal income tax rate is a key to small business success; in actuality, property and sales taxes—ignored by ALEC-Laffer—are far more important issues

ALEC-Laffer claim that high top personal income tax rates and the presence of estate and inheritance taxes cause large-scale out-migration of high-income individuals; in reality, migration has little to do with taxes, and there is no plausible case for state estate taxes affecting job-creating investment

The ALEC report asserts that state tax rates in many instances approach “Laffer Curve” territory, where tax cuts would actually increase tax revenue; in reality, tax cuts reduce revenue and result in the defunding of public goods such as education and infrastructure, which really do matter for economic development

A remarkable finding in the Iowa Policy Project report, stated a few paragraphs above, is worth repeating: states that swallowed ALEC’s economic snake oil have done worse than state that did not.

. . . actual results are the opposite of the ALEC claim. The more a state’s policies mirrored the ALEC low-tax/regressive taxation/limited government agenda, the lower the median family income; this is true for every year from 2007 through 2011. . . . The relationship is not only negative each year, it also became worse over time: the better a state did on the ALEC Outlook Ranking, the more family income declined from 2007 to 2011. . . . The more a state followed the Alec-Laffer policies, the higher its poverty rate, every year from 2007 to 2011.

And what do Fisher and Mattera prescribe in lieu of the ALEC snake oil? Well, they advise against slashing income taxes to spur small business job growth, explaining

Income taxes, on the other hand, are low or nonexistent in the early years of a business when it is showing losses; they are payable only to the extent that a business has gotten off the ground and is generating a profit, and even then will often remain low, or nonexistent, for years as the early losses are carried forward. Clearly if a state wants to encourage entrepreneurship and help really small businesses, it should shift taxes from sales and property to income. But Rich States, Poor States would have us do the reverse. It’s another example of how ALEC and Laffer are fixated on progressivity (which most affects high-income individuals and larger corporations) and will employ any argument, valid or not, against it.

For those interested in learning what really does spur economic growth in states, the authors of the Iowa Policy Project study note that there exists “a large volume of research investigating this question over the past 40 years.” And what is the conclusion of these studies?

The preponderance of the evidence from many dozens of studies over a period of 30 years or more is that business tax cuts, if they could be enacted without cutting public spending, have some positive growth effect on state economic growth, but that this effect is quite small. These statistically controlled policy experiments are in effect holding all else equal. It is important to understand what this means. The research does not imply that a 10 percent cut in taxes on business that is paid for by cutting 10 percent of the state budget would produce 3 percent growth. Such a balanced budget policy (and states of course must balance their budgets) might well produce no growth at all, especially in the long run, because budget cuts necessarily mean cuts in state and local services essential to the functioning of the economy. As [Professor Timothy] Bartik himself has said: “[A]n economic development policy of business tax cuts may fail to increase jobs in a state or metropolitan area if it leads to a deterioration of public services to business. An economic development policy of tax increases may succeed in increasing jobs if it significantly improves public services to business.”

The authors’ conclusion is fairly simple and impressively substantiated in their report: ALEC’s snake oil does little more than provide “a recipe for economic inequality and declining incomes for most citizens and for depriving state and local governments of the revenue needed to maintain public infrastructure and education systems that are the underpinnings of long-term economic growth.”

That’s also a very nice summary of Jindal’s failed approach to government.

What really makes this so shameful is that these Banana Republic-style agendas are being subsidized by Blue States.  There are very few economically viable Red States in our country.  They could not exist on their own as they are in worse shape than countries like Greece.  They stymie policy at the national level and continue to subsidize their backward growth agendas with federal monies. However, they are not beyond complaining about government spending will sucking it in like a big ol’ black hole.

No place was this hypocrisy most evident than in their collective votes and responses towards Hurricane Sandy Victims. 

Palazzo is one of 67 House Republicans to have voted against the federal flood insurance expansion; many of those said that the funds need to be offset by cuts to other areas of the federal budget. Think Progress reported that 37 of the dissenting members had previously backed federal disaster aid for their home states. Rep. Lynn Jenkins (R-Kan.), the House Republican Conference vice chairwoman, told HuffPost in a statement that she voted against the flood insurance money due to concerns about the long-term debt of the flood program and a need to protect flood insurance funding for Kansas residents.

It’s amazing to me that so many folks living in the states where I’ve spent most of my life do not wake up and smell the cafe au lait and the feed lots! I’ve always found the scent of both very hard to miss.

Meanwhile, red districts and states continually send us the likes of Michelle Bachmann with their conspiracy theories and insane outlook on life.  Bachmann’s silly ass is right back in a seat on the intelligence committee despite the very clear threat she has brought to he life of US public servants..  She also introduce the first HR that once again seeks to overturn the HCRA.  Meanwhile, Paul Ryan has just introduced another “Personhood” HR.   This is what we get from these Red State Whackadoodles.

It’s amazing to me how these people continually waste our money and time while wrecking our economy with completely rogue and disproved ideology.  It’s clear that the ALEC agenda is all about plumping us turkeys up for their corporate feasts.

So, I’ve written way too much and ranted way too long.  What’s on your reading and blogging list today?


The Republicans Just won’t Trade in their Fairy Tales

There’s a notable absence of economists on panels in the mainstream media that discuss the fiscal “ramp”.  I’m refusing to call it a fiscal cliff because that’s a misnomer.  I’m not sure why they won’t put research economists on these panels.  Perhaps they think we’re not photogenic or–despite the fact that a lot of us teach–we can’t explain ourselves.  There’s an extremely strong consensus in the economics community on the s0-called budget crisis.  Dragging out mainstream economists like Paul Krugman and Joseph Stiglitz and labeling them lefties because of their political leanings is rather disingenuous. It stops them from getting on panels where they could actually explain to people what’s what.

The corporate press would rather haul out a few journalists with real background in the field.  There’s a difference between asking a journalist, a lawyer, or some self-anointed policy expert a question on economic theory.   First, asking an economist to answer a question as an economist means they’ll stick to the theory and the empirical findings.  Second, you can actually pull in almost any economist either trained after about 1980 or who has kept up with the dynamic business cycle models, the empirical findings, and theories and you won’t get much disagreement.  You wouldn’t know that if you listen to the press, which seems to be made up a few folks with MBAs who have very little understanding of theory, models, or findings.

Deficit hawks tend be either Wall Street types, lawyers, or partisan right wing politicians. The folks that are screaming worst about dropping the tax cuts for the uber rich tend to have the most to lose personally and the least to lose professionally.  Study-after-study-after-study shows that tax cuts to the middle, working, and lower classes and to young people tend to create completely different circumstances than they do for older people and the rich.  First, there’s more folks in the first group.  Second, they tend to spend a lot more of their current income.  Third, their savings and investment opportunities are limited, so the assets they use stay in the country.  None of this applies to the uber rich who tend to create jobs and wealth overseas these days and work hard to avoid taxes anyway.  We’d do well to just simply let go of the idea that increasing the tax rates on the rich will either lead to unemployment, won’t pay down the deficit, or will suppress growth.  These are tales of sound and fury signifying nothing but personal greed.

It is true that we are not on a sustainable spending path.  This is because of the direct actions of the Bush administration.  They lowered tax rates.  Ran two huge wars with no tax increases. They oversaw and created two recessions.  They created an asset bubble and then popped it. Growth, employment, and the value of taxable assets all decreased because of their actions.  We simply have to reverse their trajectory.   We have to do some work on Medicare and we need to walk away from the decaying, rotting corpse of Zombie Economics.  The Republicans still won’t let that rotting corpse go.

Krugman talks about some of this on his blog in a post called “Squirming Hawks”.  Paul Krugman may be a liberal but he’s certainly not going to risk his reputation in the economics community to spout crackpot hypothesis.  Look at what happened to Arthur Laffer whose basically been expunged from any serious text, publishing deal, or institution.  When you push crackpot hypotheses that do not stand up to empirical testing and you do not give them up and move on, the community of those who base their research on the scientific method will write you off.  Those that follow Hayek and Von Mises have been similarly written off.  Their ideological hypotheses do not stand up to any empirical testing.

Now, there’s a straightforward argument for why the fiscal cliff is bad but long-term deficit reduction is good — namely, that you really don’t want to cut deficits when the economy is depressed and you’re in a liquidity trap, so that monetary expansion can’t offset fiscal contraction. As Keynes said, the boom, not the slump, is the time for austerity. But the deficit hawks can’t make that argument, because they have in fact been arguing for austerity now now now.

So they’re left making a mostly incoherent case: it’s too abrupt (why?), it’s the wrong kind of deficit reduction (???), and then this:

a better approach would be to focus spending cuts on low-priority spending and on changes which can help to encourage growth and generate new revenue through comprehensive tax reform which broadens the base – ideally by enough to also lower tax rates.

Low-priority spending? I think that means spending on poor people and the middle class. And isn’t it amazing how people who claim to be horrified, horrified about deficits can’t stop talking about cutting tax rates?

Meanwhile, the CRFB features on its home page an op-ed by Jim Jones declaring that

We are perilously close to trillion-dollar yearly interest payments, 7 percent yields on 10-year U.S. Treasury bonds, 10 percent home mortgage rates and 13 percent rates on car loans. For the good of the country, the parties must come together and not let this happen.

How does he know that we are “perilously close” to this outcome? Not from the markets; not from any kind of economic model. My guess is that Peggy Noonan told him.

Scaring people with large numbers that are not grounded to other large numbers is a mean and terrible thing to do.  We have a huge tax base. We have more than enough ability to continue to borrow at low interest rates.  We have the ability to print money.  We have all kinds of options.  We have a huge economy that is showing signs of coming out of a lot of trauma. We should get a double peace dividend shortly.  These things point to a very good reason not to be crazy-go-nuts like the Europeans and fall on the austerity sword.

I think that Mark Thoma has some interesting things to add to this conversation.  He asks rhetorically and then answers: Hasn’t Paul Krugman Heard about the Magic of Tax Cuts and Supply-Side Economics? No, and for Good Reason…

I guess Paul Krugman hasn’t heard about the magic of tax cuts and supply-side economics. Well, Cato-at-Liberty has, and it’s ticked at the CBO because “it assumes higher tax rates generate more money” when making budget projections. That’s right, despite all the evidence against the claim that tax cuts actually increased revenue — it’s a myth that won’t die because people who know better, or ought to, still promote it — we should discredit the CBO for making the claim that higher tax rates would help with the budget problem.

And that’s not all. The CBO should be further discredited because it says the stimulus package helped to ease the recession:

The CBO repeatedly claimed that Obama’s faux stimulus would boost growth. Heck, CBO even claimed Obama’s spending binge was successful after the fact, even though it was followed by record levels of unemployment.

I’ll pass over the “record levels of unemployment’ claim (but note that unemployment peaked at 10.0% in October 2009, but was 10.8% at the end of 1982, at best this is playing games with the word “levels” and ignoring population growth — and if duration is the argument, as Reinhart and Rogoff recently noted, conditional on the type of recession this recovery is actually a bit better than most).

On the main claim about fiscal policy, there’s plenty of emerging evidence supporting the contention that fiscal policy helped to ease the recession (and remember how much of the stimulus package was tax cuts — it’s amusing to listen to conservatives tell us how useless the tax cuts they fought for as part of the stimulus package turned out to be, especially when in the next breath they argue for more tax cuts). The CBO is dealing in actual evidence, the claims made by Cato-at-Liberty are backed by nothing more than the Republican noise machine that is so good at misleading followers.

Republicans just can’t help themselves from attacking anyone and anything that is inconvenient to their goals, and actual evidence has little to do with it. Apparently, they learned nothing from the election. This is part of a larger effort to discredit the CBO because it doesn’t agree with Republican views on the magic of tax cuts, and for other results the non-partisan agency has come up with that Republicans don’t want to hear (so they basically cover their ears and ignore them).

The Republicans aren’t the only ones doing this.  I watch about 5 minutes of an Ali Velshi panel that really horrified me.  No one there directly took on Stephen Moore of the WSJ on that same damn fairy tale about job creators and tax rates on the rich. Why doesn’t any one mention that his assertions have no basis in reality, theory, or empirical evidence and have been thoroughly trounced?  Better yet, why is some one who spouts propaganda even on a news program that supposedly informs people about economics, finance, and policy?  There was one truly knowledgeable person on the panel.  The rest of them should have asked questions then  listened to Mohamed A. El-Erian.   Again, Stephen Moore should only be placed on panels where fairy tales are involved.  His degrees in economics are obviously stale.  Plus, he works with Laffer whose been laughed out of any organization that contains serious economists.  He’s basically a tool of the plutocracy.

Fortunately, it looks like the Senate Democrats are having none of this.

Sen. Patty Murray (D-Wash.) on Sunday said Democrats were prepared to allow the expiration of all George W. Bush-era tax rates if Republican lawmakers objected to raising taxes on the wealthiest.

“We can’t accept an unfair deal that piles on the middle class and tell them they have to support it. We have to make sure that the wealthiest Americans pay their fair share,” said Murray on ABC”s “This Week.”

Murray said one option would be to let the lower rates expire across-the-board and then return to the table next year with new talks on a tax-cut package.

“So if the Republicans will not agree with that, we will reach a point at the end of this year where all the tax cuts expire and we’ll start over next year. And whatever we do will be a tax cut for whatever package we put together. That may be the way to get past this,” said Murray.

The Washington senator is likely to become chairwoman of the Senate Budget Committee and previously served on the congressional “supercommitee,” which failed to finalize a deficit-reduction plan, which may trigger sequestration cuts in January 2013.

The evidence points to the recessionary impact of tax cuts on the middle class.  There is nothing that shows allowing the Bush Tax cuts to expire will do the same. Republicans keep suppressing the evidence.

In particular, the CBO gave its most detailed look at how the expiration of the Bush-era tax cuts would affect the economy. Apparently, it would do little harm, the numbers show.

Just like the damn things did little good for the economy and most of us, letting them die would do little harm.  I hope the Dems just hold to the facts and that the election has given them some resolve to do the people’s business.


Economics in a Nutshell

Joseph Stiglitz is one of my favorite economists.  He has that rare ability to put the results of theory, models, and empirical research into pithy common sense statements.  He has shown–with tons of peer-reviewed research–how frictions that exist in all markets distort results.  There is no real world example of a perfect market. In fact, he has a Nobel Prize for it.  Markets are not these efficient, well-oiled, rational deal makers that many Republicans, Libertarians, and Rich People would like you to believe simply because they really really want to believe in it.  They can click their red ruby Hayek slippers as much as they want but decades of study over the results of market have left us with lots of succinct lessons that a lot of  21st century policy makers appear to have unlearned.  In a recent speech and interview, Stiglitz manages to hit all the main ones in short order.  Here’s what the evidence has taught us.  First, it’s really not good for any economy to have income inequality.

Inequality is bad for growth, stability and efficiency. … Inequality peaked both before the Great Depression and before the Great Recession, and it’s not an accident. So basically, when we have a lot of inequality, demand goes down. … All this inequality was offset by creating a bubble. The bubble allowed people to consume more. Now we have the inequality but we don’t have a bubble, and that means that we will have persistent, weak demand, and therefore unless we create another bubble it’s going to be very difficult for us to get back to full employment.

A lot of the inequality that we have in the United States is created by distortions – excessive financial sector, monopolies like Microsoft … giving the oil companies, mining companies resources at a discount. … These things distort the economy, while they create wealth at the top. So it’s not wealth creation – it’s wealth redistribution, which makes the size of the pie smaller.

Second, a lot of government policy and just things inherent to some markets can create distortions that make markets very inefficient. Government actually creates a lot of distortions by trying to put businesses on steroids. Our recent tax policies that give special treatment to capital gains over income earned from labor are an example.  They have created horrible distortions that have drained resources away from useful things and into parasite markets and gambling activities.

And the loopholes, the distortions, the giveaways. … When you tax capital gains at half the rate of others, you encourage speculation. And so you divert resources to speculative activity, including the best brains at Columbia, into speculation rather than into creative activities.

Stiglitz also has his three top Economic Memes and Tropes that are absolutely killing this country’s economy because they have absolutely no basis in any evidence or reality.  He’s actually been tweeting them all morning as the top three Myths.  The first myth is the one about the confidence fairy.  The second and third are part and parcel of trickle down economics.  This is the horrible Republican kneejerk response that we have to appease “job creators” at all costs even when we have evidence they are more job destroyers than creators. Economists have been hypothesizing these things for decades and every bit of evidence from policies meant to achieve these results from Reagan to Bush have shown them to be seriously untrue.  However, they persist in the minds of many policy makers and they are killing our future.

The first is that reducing the budget deficit would stimulate the economy by restoring confidence, which you hear over and over again. No evidence that has ever worked. You might call it the austerity myth – that’s the most serious one.

The second one is that raising taxes on upper-income individuals will lead them to save less, invest less, will have adverse supply-side effects. Again, no evidence of that.

The third is that lowering [the] corporate income tax rate across the board will stimulate investment in the United States. No evidence of that. … If you want to encourage investment, what you do is lower taxes on firms that invest and you raise taxes on firms that don’t invest. You can restructure the taxes to provide incentives to invest.

I’m not certain what it will take to end the impact of these harmful myths.  However, given that harmful myths–notably the ones that come from any religion not based on evidence and reality–have kept us in Dark Ages before and are likely to continue to do so.  For many people, science fiction still holds a broader appeal than science fact.


Architect of Bush Torture and Spy Policies is Tea Party Point man at Heritage Foundation

David Addington

Wow, these ultra-right-wingers are like zombies. They never stop, they never die. They just keep popping up again and again where you least expect them.

Remember David Addington? He was the secretive, publicity-shy legal counsel to Vice President Dick Cheney from 2001-2005. Later, after Scooter Libby was forced to step down because of his involvement in the Valerie Plame outing, Addington replaced him as Cheney’s Chief of Staff from 2005-2009.

Addington was heavily involved in designing the Bush administration’s torture and NSA wiretapping policies. In addition, his was the legal mind behind Bush’s hundreds of signing statements and generally was a powerful force in the Bush administration’s efforts to expand executive power.

You’d think someone who had been involved in such execrable behavior would have the good grace to slink away and never be heard from again, but that’s not how it works with these psychopathic types. Today, according to The National Journal,

Addington has taken on a new role as enforcer of tea party dogma during the intensifying partisan bickering over the debt ceiling. From his perch as the Heritage Foundation’s vice president for domestic and economic policy, Addington is throwing verbal thunderbolts at House Speaker John Boehner’s current debt-ceiling proposal, which he argues will pave the way to tax increases.

The merits of Addington’s arguments about the need to oppose Boehner’s proposals are in some ways less interesting than the simple fact that Addington is the one publicly making them. Addington kept a low profile during the Bush years, granting no interviews and largely shunning lawmakers from either party. But he wielded enormous power behind the scenes, helping Cheney craft the Bush administration’s warrantless eavesdropping program and most of its detention initiatives.

Critics of those policies say they’re horrified by Addington’s reemergence onto the public stage.

“To see this person who led the country into legal and moral disaster resurface as a respected commentator is somewhat galling,” said Ben Wizner, the litigation director of the American Civil Liberties Union’s National Security Project. “Addington was as responsible as anyone else for the U.S. becoming a torturing nation. He has done damage to the U.S. that will take decades to reverse.”

Indeed. Especially because we’ll have to wait until President Obama leaves office before much reversing takes place–if it ever does. But I digress. Addington’s new role is to help keep the Tea Party Caucus in line while undercutting House Speaker Boehner. How very very interesting. At the New Republic, Jonathan Chait called it “Hot Republican-On-Republican Action.”

The internecine fighting among conservatives over the Boehner plan has much of the same ideological and stylistic feel of a late 1960’s feud pitting left-wing factions that favor immediate violence against those seeking more time to radicalize the masses. The less-extreme faction clearly has the better of the argument, yet the overwhelming impression is the sheer fanaticism of the whole political subculture.

Is it possible this GOP infighting could be helpful to our side? Addington’s greatest concern about the Boehner plan is that it includes the “committee” that we have been calling “Catfood Commission II.” Addington fears that because this group will have the power to write legislation that cannot be amended and must be voted on up or down, they might end up proposing new taxes. Now I never thought of that possibility! Here’s Addington blogging at the Heritage Foundation website on Monday:

The second step in the [Boehner] plan is a set of recommendations from a new dozen-member joint select committee of Congress. The committee’s recommendations to Congress would not be subject to amendments and would get a straight up-or-down vote. The plan directs the committee to propose reductions in the deficit by at least $1.8 trillion over 10 years. The government runs a deficit when it spends more than it takes in from Americans as taxes, and the government has run deficits in most years for decades. As always, there are two ways to reduce a bloated government’s deficit — the right way of cutting spending and the wrong way of hiking taxes. While the second step of the Boehner plan may produce some useful spending cuts, the second step also allows the Committee to propose raising taxes as part of its unamendable, fast-track legislative package. Thus, the second step greases the way for tax hikes.

As you can imagine, taxes are anathema to Addington.

Tax hikes in a weak economy slow economic growth and kill jobs. As students of American history (or the movie “Ferris Bueller’s Day Off”) know, enactment of the tax hike known as the Smoot-Hawley Tariff Act during the Great Depression hurt the already weak economy and made unemployment worse. Job-killing tax hikes in the current weak economy, as millions of Americans go without jobs and the unemployment hovers above 9 percent, will have a similar effect. However good the intentions of the drafters of the Boehner plan may have been, the plan sets up America for higher taxes and fewer jobs. Conservatives should continue to fight plans that either hike taxes now or set America up for tax hikes in the future.

Now wait a minute. I know Dakinikat will have plenty to say about that last paragraph–if she can get away from all the student exams and papers she’s grading. But I’ll take a crack at it even though I am not an economist.

Tarriffs are not equivalent to income taxes. The Smoot-Hawley Tarriff Act was raised tarriffs so high that our trading partners retaliated with their own tarriffs, leading to dramatic decreases in U.S. imports and exports. Now that is a job-killing tax. That is not the same thing as restoring the tax rates on the rich to Clinton administration levels and perhaps making the children of the super-rich pay a little more in estate taxes. As Dakinikat is fond of saying, if cutting taxes led to job creation, we wouldn’t be in the mess we’re in now. The Bush tax cuts would have taken care of everything.

Addington summed up his insane economic theories in another post, written in response to President Obama’s speech on Monday night.

Americans sent a message in the election of 2010 — cut the size and cost of government. Conservatives must act now to drive down spending on the way to a balanced budget, while protecting America, and without raising taxes. Forget the McConnell, McConnell-Reid, Coburn, Gang-of-Six, Boehner, and Reid plans. Go with the American plan — cut government spending, deeply and right now, for the good of the country.

Man, he’s looney-tunes!

Anyway, I think it’s just fascinating that Addington is leading the charge against the Boehner plan and pushing for an even crazier one. Addington has a history of accomplishing a great deal. What he accomplished was evil, of course, but he showed himself to be highly competent and efficient, unlike President Pushover. This battle could be really entertaining. I’m hoping for a major Republican meltdown.


Hey Andy, me ‘n’ Barney didn’t have nuthin’ better to do, so we decided to crash the economy!

Barack O'Gomer and Deputy "Barney" Geithner*

This morning Sky Dancing’s resident economist Dakinikat wrote about Tim Geithner’s latest trial balloon about maybe stopping Social Security checks in August if Congress refuses to raise the debt ceiling. That’s right, he wants to use the trust fund that elderly people paid into all their working lives to pay China and other foreign debtors. Now that’s a brilliant plan boys–throw grandma and grandpa out in the streets to starve and die. It’s genius!

Then while we were all commiserating in the comment thread, we got the jobs report for June: only 18,000 jobs were added, and the phonied-up unemployment rate is now at 9.2%.

O’Gomer dragged his sorry a$$ out to the Rose Garden in late this morning to mumble a few weak excuses.

“Today’s job report confirms what most Americans already know,” Obama said. “We still have a long way to go and a lot of work to do to give people the security and opportunity that they deserve.”

The president tried to lay some blame at Congress’ feet. He said lawmakers could pass a handful of policies today to create jobs. His list included an infrastructure bank, free trade deals and patent reform.

“There are bills and trade agreements before Congress right now that could get all these ideas moving,” he said. “All of them have bipartisan support, all of them could pass immediately, and I encourage Congress not to wait.”

Yeah, patent reform, that’s the ticket! And more trade agreements to create more outsourcing of American jobs. Brilliant! And cutting off Social Security checks! That’s really gonna give Americans “the security and opportunity they deserve.” Who is advising this guy anyway?

Well, one of O’Gomer’s top advisers, David Plouffe, made an unfortunate remark before the jobs report came out. Minkoff Minx wrote about it in her SDB reads earlier this evening. From The Christian Science Monitor:

David Plouffe, Mr. Obama’s top political adviser, got things started Thursday at a breakfast sponsored by Bloomberg News.

“The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers,” Mr. Plouffe said. “People won’t vote based on the unemployment rate; they’re going to vote based on: ‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’ ”

Ask yourself, Mr. Plouffe, how do you think most ordinary Americans feels about their situation right about now? O’Gomer’s buddy Timmy Geithner is talking about cutting off Social Security payments. O’Gomer himself is trying to talk the Republicans into cutting Social Security, Medicare, and Medicaid. This administration hasn’t done diddly-squat about jobs except occasionally have O’Gomer mention that we need to create them. Talk is cheap, Mr. Plouffe. Actions speak louder than words as my mom used say.

According to Julian Brookes at Rolling Stone, Plouffe also made this odd assessment:

the president, says Plouffe, has a good shot with independent voters, who’ll reward his bipartisan, bend-over-backwards approach the debt talks; is a seasoned campaigner with a huge war chest; has moved to the center without losing the base (the oft-noted “enthusiasm gap” seems to have closed); and has demographic trends working in his favor (he won big with minorities in 08, and they’ll make up a larger share of the electorate next year). Plus, of course, the GOP field is weak: Frontrunner Mitt Romney is the most formidable of the bunch, but he’s nobody’s idea of a galvanizing standard bearer.

What is wrong with this guy? Does he really believe that Independents like politicians who “bend over backwards” instead of showing some strength? Does he really believe O’Gomer hasn’t lost his base? And the center? O’Gomer has gone so far right he’s out-crazying the Tea Party!

Then there’s William M. Daley, the White House chief of staff. Check out what he recently had to say about Americans’ attitudes about the crappy economy. According to Peter Nicholas at the LA Times, O’Gomer’s main defense is that the middle class was already suffering under Bush, so it’s not really his fault. Never mind that unemployment has gone from 7.8% to 9.2% on his watch. So O’Gomer is asking for more time:

Speaking at a fundraising dinner in Philadelphia last week, he said that the nation’s challenges “weren’t a year in the making or two years in the making, but are actually 10 years in the making.”

But Obama’s nuanced message isn’t breaking through. A Gallup Poll last month showed that Americans’ economic confidence was near its low for the year.

For the White House, it’s tough to get the public to pay attention to anything else.

A Democratic senator spoke by phone recently with White House Chief of Staff William M. Daley. “He said, ‘Honest to goodness, if we’re not talking about jobs and the economy, nobody is listening,’” recalled the senator.

Surprise, surprise, surprise!!

Gee, do you think maybe you ought to stop talking and actually DO something then? Just wait until Grandma finds out she might not get her Social Security check in August. Maybe O’Gomer and his advisers need to get a clue. And find O’Gomer a couple of advisers who know something about economics, Mr. Daley.


*NOTE: The graphic at the top of this post is the work of our old friend StateOfDisbelief.


President Hornswoggle and the Debted Hallows

So, you know me.  I’m out looking for exactly how bad this debt ‘deal’ is going to austere our economy in to the Great Recession Redux.   BostonBoomer has been writing about President Hornswoggle putting Medicare, Medicaid, and Social Security–not even part of the federal budget–on the table.  I’ve searched and searched and can’t find the details on the great American Give Away other than a few articles showing a beaming Boehner saying we’re at a 50-50 chance of reaching a deal now.   If Boehner is beaming, all but the richest among us should be holding on to our personal liberties and wallets.

We know that the President has caved on a bunch of things during both the HRC negotiations and the extension of the Dubya Tax Breaks for Billionaires pogrom.  However, the Democratic leadership was aware of this, grumbled some, and backed his usurpation of responsibility for our future.  Imagine my surprise when I watched Chuck Schumer on Andrea Mitchell say that he had no idea about the details of the current deal so he couldn’t really comment on it.  The most noticeable detail was his face that said “I’ve got a sick tummy, mommy”.  Senator Schumer is on the Senate  Committee on Finance that handles all of these things and is supposedly a key person on the budget deal.   You would think he would know.  But, he doesn’t and neither does any other Democratic Senator or Congressman.  It appears the press told them what Obama was handing over to the Republicans.

Senate Democrats reacted angrily Thursday to a report that President Obama has proposed significant cuts to Medicare and Social Security in closed-door talks with GOP leaders.

Democratic lawmakers said they were dismayed to read about Obama’s offer in the press rather than hearing it from the president himself. Their frustration is exacerbated by Obama’s snub of their invitation to speak to the Senate Democratic caucus Wednesday.

Instead, Obama is meeting with Democratic and Republican leaders from both chambers Thursday morning.

“We would have preferred to hear it from the president instead of from the press,” said Sen. Barbara Mikulski (Md.), a senior member of the Senate Democratic conference. “We first have to go after tax earmarks.”

Mikulski said cuts to Medicare and Social Security should be a solution of last resort. She said closing tax loopholes and pulling back from Libya should be considered before entitlement cuts.

She said Obama should not assume Democratic support for a deficit reduction plan that cuts entitlements.

I now fully expect President Cave-in to hand the keys to the nation over to a bunch of punch-drunk Republicans.  What I don’t get is why the Democratic members of Congress continue to let him get away with it.  They are the very face of “sound and fury signifying nothing”.  Let me ask you if you’d want to be a congress member from some solid Democratic district facing re-election by having to defend a Democratic President that’s happy to cut Medicare and Social Security?  Social Security doesn’t even need to be on the table.  He’s just offered it up for some reason that I can’t fathom. How on earth could you face your electorate and back such a  deal?

Let me remind you, all of the economic data gathered in the last 80 years tells us that this austerity agenda is just going to tank the economy. We continue t0 enact the very same crap that put us in the worst economic position we’ve seen since the Great Depression.  Why oh why are they doing this to us?  Here’s a taste of Noble Prize winning Joseph Stiglitz for some perspective.

A decade ago, in the midst of an economic boom, the United States faced a surplus so large that it threatened to eliminate the national debt. Unaffordable tax cuts and wars, a major recession, and soaring health care costs—fueled in part by the commitment of George W. Bush’s administration to giving drug companies free rein in setting prices, even with government money at stake—quickly transformed a huge surplus into record peacetime deficits.

The remedies to the U.S. deficit follow immediately from this diagnosis: Put America back to work by stimulating the economy; end the mindless wars; rein in military and drug costs; and raise taxes, at least on the very rich. But the right will have none of this, and instead is pushing for even more tax cuts for corporations and the wealthy, together with expenditure cuts in investments and social protection that put the future of the U.S. economy in peril and that shred what remains of the social contract. Meanwhile, the U.S. financial sector has been lobbying hard to free itself of regulations, so that it can return to its previous, disastrously carefree, ways.

Here’s a thorough, peer-reviewed, strong methodology-based  IMF study–cited by Paul Krugman–that provides evidence that austerity programs are recessionary and bring on worse budget problems.

The paper corrects this by using the historical record to identify true examples of deliberate austerity — and it turns out that they are contractionary. The multiplier is less than one, but that may reflect the fact that these austerity programs did not take place in the face of a zero lower bound, so they were partly offset by monetary expansion.

The paper also provides a tentative answer to the apparent tendency of spending cuts to be less contractionary than tax increases: it looks as if central banks take more aggressive action to offset spending cuts than tax hikes, reflecting some combination of inflation concerns, belief that spending cuts are more durable, and (the paper doesn’t say this) bankerly ideology.

If we were discussing a politically neutral subject, the evidence here would long since have been considered definitive: expansionary austerity is a doctrine that failed. But since we’re in the political realm, of course, such a convenient doctrine can’t be abandoned. On the contrary, it now seems to be the official doctrine of both the GOP and the White House.

Also, let me remind you that Medicare, Medicaid, and Social Security are very successful programs.  They have successfully stopped the elderly from being the poorest segment of society.  Just as an example, the majority of single, elderly women would be in poverty without Social Security.

Elderly unmarried women — including widows — get 51 percent of their total income from Social Security. Unmarried elderly men get 39 percent, while elderly married couples get 36 percent of their income from Social Security. For 25 percent of unmarried women, Social Security is their only source of income, compared to 9 percent of married couples and 20 percent of unmarried men. Without Social Security benefits, the elderly poverty rate among women would have been 52.2 percent and among widows would have been 60.6 percent.

Here’s a recent,  powerful, academic study showing the benefits of providing Health Insurance for the poor.

When poor people are given medical insurance, they not only find regular doctors and see doctors more often but they also feel better, are less depressed and are better able to maintain financial stability, according to a new, large-scale study that provides the first rigorously controlled assessment of the impact of Medicaid.

While the findings may seem obvious, health economists and policy makers have long questioned whether it would make any difference to provide health insurance to poor people.

It has become part of the debate on Medicaid, at a time when states are cutting back on this insurance program for the poor. In fact, the only reason the study could be done was that Oregon was running out of money and had to choose some people to get insurance and exclude others, providing groups for comparison.

I continually feel as though we’ve all been drug down the rabbit hole. It is like the President is purposefully enabling  joblessness, poverty, and public health problems.  No amount of research, historical data, and polls appear to be able to penetrate the Washington, D.C. group think these day. The biggest issue is that the President himself believes in the confidence fairy, the bipartisan elves, and the high priests of voodoo economics.  He’s not just part of the problem, he is THE problem.  Can  just one or two members of the Democratic caucus please stand up to this man and his notion that bipartisanship that surrenders the country to right wing reality-deniers is better than any form of principled leadership?   Can at least one of the please be brave and start talking some sense and representing the will of the people for a change?

Invoke the 14th Amendment and end the damned sell outs now!


Republicans in Wonderland

Republicans embrace and peddle voodoo economic memes whereever they can.  They all hold Ronald Reagan up as the godfather of great economics.  Just look at that graph to determine who exactly is responsible for the current deficit which they all think is a terrible problem.  Even odder are their “unorthodox”  economic policy prescriptions.  Here’s some of the more egregious suggestions as provided by Politico.

The Republican field is filled with potential candidates who have called for radical overhauls of the tax code, the abolition of the IRS, an end to the Federal Reserve central bank— and even a return to the gold standard.

Oddly enough, Mitt Romney is the only one that actually talks real economics.  The rest of them are in some bizarro world where math never adds up.  If Tim Pawlenty hasn’t disappeared by 6 pm CST, we may have to deal with his odd views in a debate where odd views will prevail.  Pawlenty is scheduled to announce his candidacy on Monday.

In one particularly striking recent moment, former Minnesota Gov. Tim Pawlenty railed against “fiat currency” in a recent appearance on Fox — a signal to a narrow constituency of voters who believe that America’s woes began when it abandoned the gold standard in the 1930s. He also has gone on the record supporting a flat tax — a single-rate income tax that would eliminate the bracket system. The single tax rate for all is a simple concept but would probably involve wiping out the current tax code — including many popular deductions and credits — just to generate enough revenue.

“I support a flatter tax rate. I don’t know if we can get to a flat tax in one leap, but moving in a flatter, more transparent direction, absolutely,” Pawlenty said on Larry Kudlow’s CNBC show in March.

Newt Gingrich has also indicated support for an across the board 15% flat tax.

Gov. Mitch Danielscalled for a value-added national sales tax paired with a flat tax. (Jon Huntsman passed a flat tax as governor of Utah, but hasn’t articulated a national platform.) And Paul wants no income or sales taxes at all, envisioning a government funded with tariffs, highway fees and excise taxes.

Further into the field, the plans get more exotic.

Herman Cain has backed the ‘Fair Tax’ plan, a proposal with a small, well-organized and vocal constituency, which would impose a national sales tax of just under 25 percent and abolish the income tax system. He has also backed a possible return to the gold standard — but only after we “significantly pay down our national debt, stabilize and grow our economy,” spokeswoman Ellen Carmichael told POLITICO.

 Our economy has always used a progressive tax rate.  We’ve never really considered value-added taxes or national sales taxes because we know these kinds of taxes hit the poor hardest.  Social Security is about the only real regressive tax that’s been enacted. However, disabling a reasonable capital gains tax has giving enormous wealth to the major rich who receive bonuses and inherit trust funds.  The suggested Republican tax schemes are most likely unworkable and would hit the middle class hard.  This would be especially true of those who are financing homes.

The odd calls for gold standards, eliminating the Federal Reserve Bank, and possibly even ending fiat currency are all insane suggestions that shouldn’t even merit a public platform.  Academic research has indicated that monetary policy has been mostly effective since the 1980s in achieving its intent.  Also, the Fed’s structure and laws have been copied by every other economic entity that’s formed within recent history because it’s been so successful. The most important aspect is to keep monetary policy out of the hands of politicians.

“Fiscal policy, I can see how we might want to have a broader debate. With monetary policy, it’s harder to see that,” said Mark Zandi, chief economist of Moody’s Analytics. “The strong consensus view is that the Fed has done a very good job — that it was put in a very difficult position.”

“I think there’s less sympathy for the argument that Federal Reserve needs a significant overhaul,” said Zandi.

But, facts and peer-reviewed research don’t appear to phase these folks.

Sen. Jim DeMint (R-S.C.), a supporter of the Fair Tax, faced attacks in his own state for supporting what Democrats cast as a massive sales tax increase. Gleeful Democrats simply neglected to mention that DeMint’s proposed policy would have also abolished the IRS. Similar attacks on Fair Tax candidates have occurred in other races. And this cycle, Herman Cain has already faced a similar tough questioning about his support for the Fair Tax in the most recent GOP presidential debate.

“According to the experts, the practical effect of a Fair Tax would be a tax cut for the wealthy and a tax increase for the middle class,” Fox’s Chris Wallace pointed out.

“Your experts are dead wrong — because I have studied the Fair Tax for a long time,” said Cain to loud audience applause.

So, who would you believe?  Economists or some CEO of a small time pizza chain?  The fact that these guys get a pretty receptive audience in the GOP is appalling until you see where the support comes from.  For some reason, the GOP has done a pretty good job ginning up support via xenophobic, homophobic, and gynophobic dog whistles and making economic statements that were never true and would never happen.  Since their voters reward them, there appears to be no end to the insane suggestions for economic policy that comes out of their mouths.