Sunday, June 20, 2010

The American Dream

Inspired in part by our friend Sheerahkhan's rant and partly from a couple or more things that our friend Ranger wrote on RAW and a bit from the education posts here, I present George Carlin.

Our president recently set up a commission ( something he said was a sign of the failure of government to solve problems during his campaign, I guess he's changed his mind about that ) to look into ways of controlling the federal deficit.

The National Commission on Fiscal Responsibility and Reform, which first met this past April.

Weekly closed door sessions, not open to the press or the public, no news releases. Apparently, to my way of thinking, something either to shut the lid on conservatives' pressure for deficit reduction or to open the door wide for that long-time conservative wet dream, part or full privatization of Social Security.

There are people who are trying their level bests to pry the door open a bit, with some luck:

But for now, I’d like to come back to a point that Trudy made before, about the alarming lack of coverage of the commission. This is a high-powered group, charged with a hugely important task: “identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.”

Yeah. Important, right? We’ve all got a lot at stake in the commission’s work. And there are early signs that Social Security will be a key issue in the midterm elections.

Well, you wouldn’t guess that from the press coverage of the panel. Make that the lack of press coverage. Sure, there are those fiery interviews with Simpson. That’s what he does best, and that’s why reporters like him. But on the real work going on behind those closed doors? Not much.

Go here for what coverage and news we are able to get:

With unemployment hovering around 10 percent following the worst economic collapse in 70 years you would think that members of Congress would be working day and night to get Americans back to work. You would be wrong.

The deficit fear mongers have done such a number on the thinking in DC that members of Congress think that when the American people say "we need jobs!" that they are really saying "cut my Social Security." But, I guess that when a
billionaire Wall Street banker spreads $12 million dollars around town it can really confuse people.

Peter Peterson, very rich deficit hawk and very concerned about the financial well-being of the country:

This week, Peter Peterson [net worth $2.8 billion] and his foundation convened a closed-door meeting of Wall Street billionaires and millionaires at the Ronald Reagan International Trade Building in D.C.

Peterson is a former CEO of Lehman Brothers and former chair of the Federal Reserve Bank of New York. He underwrites the foundation with his own money, and his agenda is not a secret.

Peterson says the coming retirement of baby boomers is a threat to the economy and the federal budget. He wants to see significant cuts in Social Security and Medicare benefits, and would prefer a stream-lined process via a commission to implement these changes to "reduce the deficit."

After taxpayers bailed out Wall Street for over $700 billion, Peterson is worried about the deficit. And, of course the real problem is… Social Security. (The problem certainly would not be recent tax cuts, unfunded wars, and billions of taxpayer dollars squandered as bonuses to the very financial managers who brought the economy to near-ruin.)
The group today which included Alan Greenspan [$5 million]; Robert Rubin [$124 million]; Congressman Paul Ryan R-WI [$2.8 million]; Erskine Bowles [$71.5 million]; John Castellani [$5.57 million 2008 salary]; Sen. Judd Gregg R-NH [$10.2 million]; and Bill Clinton [$35 million], didn’t catch the show outside the Ronald Reagan Building over lunch hour.

Some "Billionaires for Social Insecurity" in tuxedos and gowns countered the secret meeting inside with a more public ask of the public (today this happened to include large groups of children on field trips) to donate their Social Security benefits so that they, the billionaires, could continue business as usual.

Another example of life imitating art, or to get Old Testament about it, the true test of a True Prophet is time. And Time is rapidly proving George Carlin true.

I do not know what power we as individuals have against the overwhelming influence of these people and their over-reaching media mega-phone. Politics in my home state Kansas is picking up, with the usual mess of candidates, like Tim Huelskamp. These are a dime a dozen, and they all say the same things, with the exception of trying to out-scream the proclamations of "cut taxes" and the false religiosity of their opponents. What I do know that we can do as individuals is to gum up their plans as much as possible, oppose them and their media cheerleaders, do what we can to inform, plead and reason.

If that fails, declare jihad, ragnarok, armageddon, whatever your particular religion requires, and we'll all eat lamb in paradise. ;)

Or, just cuddle up with your bear and remember what you love most of all.

Update 1: Judge sells out:

Judging from his reasoning (see Savage’s piece in NYT), which buys without question the industry’s arguments, this particular judge probably wasn’t ideologically inclined to accept the government’s arguments in any case. And there’s the little matter of his reportedly having an apparent financial conflict in the industry stocks he owned.

But when a judge argues that we would never ground all airplanes just because a wing fell off one plane, you have to wonder.

Update 2: Senator sells out, again:

Lincoln isn’t really showing her “true colors” here since they’ve been so obvious to anyone paying even a little bit of attention. She’s the Senator from Wal-Mart and pretty much always has been.


  1. The net benefit of deficit spending is questionable. Economic theory is not clear about this (econometrics yielded conflicting results in different studies).

    Sure, jobs are important, but the easy way out (stimulus/deficit spending) is an illusion. It was created in a kind of grassroots media hysteria and suddenly it was accepted as "correct" by most opinion multipliers and not questioned any more.
    Meanwhile, even economics Nobel prize winners disagree, and their different opinions on the subject can be traced to the specific areas of economic theory they were working on.

    So yes, deficit hawks (if they are true ones, and have been the same during the GWB years) have a point.
    There's a reason why the German government didn't buy into the stimulus craze (at least not beyond two rather smallish programs tat were meant to calm the crowd down).

  2. Sven: I don't think anyone outside the pure nutjobs are saying "deficit spending is good". I think the point is that governments have it as a tool in their kit, and used carefully it appears to have some benefit.

    But the point is that deficits are something you do when you have to - when you have a war, or a Depression - and not when you want to give your fatcats a tax cut.

    This disqualifies nearly all the "deficit hawks" now shrieking about the issues of stimulus. They were hooded ten years ago when GWB gave away the Treasury to his cronies.

    So while I agree with you in general that deficits are not a good thing in the long term, we're in an unusual period right now, deficits are as thinkable now as they have been since 1945, and I tend to agree with basil that all this sudden concern with deficit spending has way more to do with wealthy people worried about their marginal tax rates going up.

  3. The net benefit of deficit spending is questionable . . .

    I'd guess you're not a Keynesian then.

    If you don't now, start reading Paul Krugman at the NY Times.

    He has history on his side.

    Here he is today, dispensing more Words of Wisdom:

    But if we need to raise taxes and cut spending eventually, shouldn’t we start now? No, we shouldn’t.

    Right now, we have a severely depressed economy — and that depressed economy is inflicting long-run damage. Every year that goes by with extremely high unemployment increases the chance that many of the long-term unemployed will never come back to the work force, and become a permanent underclass. Every year that there are five times as many people seeking work as there are job openings means that hundreds of thousands of Americans graduating from school are denied the chance to get started on their working lives. And with each passing month we drift closer to a Japanese-style deflationary trap.

    I seriously doubt that you'll find in anything Peter Peterson writes or mentions cuts in defense budgets. After all, there will be need of guards to safeguard all that money.

    War and the threat of it is big money.

    Right you are, Chief, but there is more to it than just tax rates. I sincerely believe that there is a real LOVE of money at work here. It has to be really heady stuff to have the ability to have whatever you want when you want it, and the ability to change entire governments and nations to do your will.

    Even if it's a matter of just one sitting US senator. Take a walk through this site from time to time.

    Back to my homegrown Kansas windbags, when they talk about cutting taxes, it sure as hell ain't my taxes they're talking about. After a couple of decades of these steamy piles dotting the landscape, my taxes have gone up, especially property taxes. Those taxes and sales taxes and the sin taxes consistently rise.

    Income taxes are not. Now who do you think is behind that?

    The false religion of these folk is glaringly obvious if you pick a bit to read just about anywhere in the New Testament.

    It isn't pretty for those whose God is money.


  4. BB,

    Krugman's singing a different tune from 2003.

    Here's one argument questioning Keynesism.

    Personally, I have no idea. All these economic theories are backed by very little verifiable, empirical evidence showing positive results. While counter-cyclical deficit spending seems like a sound idea in theory, in practice politicians don't spend the money wisely or in a timely manner - just look at the last stimulus. There's also this to consider.

    Overall, I think government's ability to manage economic crises isn't very strong absent the command-economy lite we had in WWII.

  5. Well sure, 2003 is sooo 2003 and not 2010.

    Revised Lawrence: large pool of unemployed citizens at bottom of water/lemonade mix in US economic glass. Add heat of continued misery for an extended length of time, add emotional ingredient of large numbers of young unemployed not having anything better to do, so what ARE they gonna do?

    What will you do with them? How will you foster the conditions for them to be productive, earn money, grow families, communities, and live the American Dream?

    Here's the Tea Bag version of let them eat cake, the worthless bastards and lazy good-for-nothing scum.

    I'm really trying to understand what Nevada Tea Party Senate hopeful Sharron Angle thinks her job as US Senator should be. According to her remarks on this video, it's not the job of a United States Senator to be involved in job creation. Further, evidently job creation isn't something that's really a problem. No, the problem is that those unemployed people just think they're too good to scoop garbage out of the gutters as long as they collect the fat unemployment check every couple of weeks.

    Really? The "unemployed as deadbeats" theme has been around for years. It's not new and it's not unusual from the right, though it usually doesn't come from candidates running for the Senate in a state where unemployment is at one of the highest rates in the country.

    What resonates with me here (besides her amazing whiny-toned voice) is how utterly craven she is about slapping down people who have lost their jobs for no reason other than to bolster the bottom line.

    I had a job from the time I was 15 to the time I was 51. Always full-time, and I was always self-sufficient. When I was laid off and had to apply for unemployment, it was a low day for me, and it's because of people like Sharron Angle who blame us for being in need while they do every thing in their power to make sure that need goes deeper and lasts longer than the last time someone was in need.

    And no, we don't "make more" by collecting unemployment than by working.

    Here's a little factoid for Sharron Angle: 51-year old workers don't get hired at McDonald's or elsewhere at minimum wage, even. They don't because we either don't fit the optics (young, up-and-coming staff), or we cost too much. We didn't ask to be laid off and we're not asking for a handout.

    Angle's remarks about it not being her job as a Senator to create jobs or anything else, it seems, are a huge gift to Harry Reid. If ever there was a definition of 'workfare', it's Angle's idea about what it means to earn around $174,000 a year of taxpayers' money to NOT represent constituents.

    Back in the days when I was in management, you know what I used to do with employees who said it wasn't their job to do whatever I'd just told them to do?

    I fired them. When Angle is fired, she'll take comfort in knowing that unemployment benefits are not available to employees fired for cause, rendering her ineligible to apply for an unemployment claim.

    How ironic. In Angle's case, losing an election will be truer to her values than winning it. No welfare queen, she.

  6. BB,

    I'm not sure what Angle or the Tea Party has to do with anything I said.

    On Krugman, the point is that he apparrently doesn't read what he's previous written on a topic. It's not like this is an isolated case. Krugman in 2003 called a deficit of 3% of GDP and a 10-year debt projection of $1.8 Trillion a fiscal train wreck. Now that the deficit is 11% of GDP and the debt projection is somewhere around $11 trillion, Krugman says it's not a big deal. In 2003 he talks about how the CBO is forced to wear rose-colored glasses and their projections are too conservative, but when the CBO assesses a program he likes (ie. the Health care bill), their cost projections are as good as gold.

    Look, the guy is obviously smart and he's someone I listen to and read everyday. But he's not an oracle and he clearly promotes a certain agenda. Nothing wrong with that, of course, but he's not an unbiased observer whose view should be swallowed whole.

    As for what to do about the economy, I don't know. Then again, I don't believe the US Congress knows either. I'm not sure anyone really knows and I think anyone who claims to have "the answer" is someone who should be viewed skeptically. As I think I've made clear here, I'm not too hopeful on the future of our national solvency regardless of how the economy performs in the next couple of years. So what the heck, let's throw another $500 billion at the problem - can't hurt, right?

    Actually, what would help is for government to provide a stable tax and regulatory environment for at least the next five years. Businesses don't like uncertainty, won't hire or expand because of it, and uncertainty is exactly what we have today.

  7. I'm not sure what Angle or the Tea Party has to do with anything I said.

    She's running for a Senate spot, Majority Leader Reid's no less, and what she says about the plight of the unemployed certainly should be listened to.

    As for what to do about the economy, I don't know. Then again, I don't believe the US Congress knows either.
    I'm not too hopeful on the future of our national solvency regardless of how the economy performs in the next couple of years. So what the heck, let's throw another $500 billion at the problem - can't hurt, right?

    Somebody had better start acting like they have an idea, a CBS/NYT poll puts employment issues at 40%, which is really really big. ( PDF )

    500 Billion? OK, that might prime the pump. That's about 2/3 of the present defense budget, right? Why not reduce defense spending, why not call for that instead of what these billionaires think we need to do. Why is defense always so much more important than the health and well-being of the American populace?

    As Carlin explicitly says . . . . .

    I wholeheartedly agree with you about taxes and regulation. But can we wait 5 years to get businesses to hire?

    The general well-being of American society may not last that long under present conditions.


  8. And lest anyone think I'm all bashing Republicans or haranguing Tea Baggers ( though IMVHO they deserve it and this title "GOBP" ) there are plenty of Democrats who deserve a spanking and worse:

    Earlier today, the house conferees in the Wall Street reform conference committee voted to approve the swipe fee compromise that was forged yesterday. As the compromise stood yesterday, banks and major credit card companies were set to lose billions in profits every year, thus denting their concentration of wealth and power. Also, some of the money will be passed along to small businesses, charities, and consumers.

    On the Senate side of the Wall Street reform conference, however, New York Senator Chuck Schumer is still trying to protect the profits his wealthiest, most powerful constituents. Sources close to the process have told me that, in conjunction with major credit card lobbyists, Schumer is currently trying to get Republicans to offer a new amendment in the conference committee that would gut the compromise deal. Schumer has been working to defeat any regulation of credit and debit card processing fees all along.

    Schumer is attempting to lower the visibility in his role fighting against swipe fee regulation, which is why the current plan is to have Republicans in the conference committee offer the amendment.

    More developments as they come in. This process may conclude tonight, and more likely will conclude tomorrow.

    Update: The Senate has accepted the swipe fee compromise forged yesterday. There is still talk of a Republican introduced, Schumer-backed amendment to gut the regulation tomorrow, however.


  9. @Basil beast:

    Here some English language texts on stimulus skeptics, accessible for free and understandable without an economics degree:

    The "stimulus program" rush was a stampede of published opinion - it is not based firmly in economic science.
    Krugman is a prolific writer, but as I mentioned many times before - even Nobel prize winners in economics disagree on the stimulus. There's no reason to believe the one who's writing the most and appearing the most in TV shows.
    Science demands theory, falsification, evidence - not success in print and on the screen.

  10. Thanks for the comment, Sven, but I'll take Krugman over someone whose name I'm not sure I'm pronouncing correctly.

    Sorry to be flippant, but more writers I tend to agree with also agree with Krugman. He does seem to be correct about the experience Japan had with their economic woes of a few years ago and also about the history of the depression of the US in the 30s and FDR's experience and history during that time.

    I have no expertise in economics, but I have read people in the field over the past years and tried to make sense of it all. However, it seems to me that those who push Mankiw follow those policies of people whom I do not respect.


  11. I did a little research, and it seems that Greggie Boy likes to debate but not bring up some relevant facts:

    I respect good economists, having worked with several excellent ones, especially ones who accurately describe the market they’re analyzing. But Mankiw didn’t mention that numerous studies have shown the health insurance industry is so highly concentrated that the top two or three insurers control a huge share of the market in virtually every state. Studies also show that prices are not set by efficient competition but instead by a dominant price leader, just as economic text books would predict.

    This is what I'd call "flim-flam artist", "cheating a cards", or not being entirely honest with folks. This is not a good mark of character.

    Brad DeLong, blogging economist:

    It's just a commenter, but read through DeLong's post to get the background if you want, but here you go:

    Face it, Prof. Delong, Prof. Mankiw is a republican shill, who happens to be a professor of economics. Prof. Krugman is right, civility is wasted on the people who should know better. They deserve a stiff calling out and professional ridicule.

    Another economist I read, Duncan Black, aka "atrios":

    Not very supportive of GM.

    This is funny:

    The "economics" of buying GM's books!


    Oh, but you see, this next bit is the most damning of all.

    From 2003 to 2005, Mankiw was the chairman of President Bush's Council of Economic Advisors.

    I wonder what state the economy of the US was in the few years after GM advised the POTUS at that time, G.W. Bush?


  12. I gave you an easily accessible English language example.

    I could give you as well German names, or Japanese, or point at books, or mention that I have a university degree in economics and basically learned about the whole stimulus thing long before the media stampede in favour of deficit spending.

    My point is: The love for stimulus is fashion, not science.
    The pro-stimulus people cannot overcome the fact that their whole argument is no better than the contra-stimulus people's argument for the econometric studies on the key multiplicator variable have conflicting results; some pro-stimulus, some contra-stimulus and some basically tell us that a stimulus was irrelevant.

    People can love a fashion, they can follow an ideology, they can cling to faith - but those who want to trust science should accept that we simply don't know whether a stimulus is a good idea.

    We do know that politicians are quite incapable of doing their good times job in the Keynesian world; surplus budgets that reduce the debt from the last stimulus deficit spending phase.
    They simply don't do that (and that's why Keynesian economics cannot work out well in the long term anyway).

    Worse; in this case the U.S., UK and others ran into trouble not because of Wall street greed (that was a mere symptom), but because their tolerance for deficits in trade, budgets and private was too high.

    Today U.S. and UK leaders whose countries ran into troubles by disregarding terrible deficits want to convince Germany (which had a huge trade surplus and moderate public deficits) that more deficit spending is the way to go to get out of a crisis that was mostly created by deficits in the first place.
    I think I've got a good enough reason to not respect the U.S. position on this.

    Besides; Japan DID huge deficit spending in the 90's, the experience was crappy. They left that valley of tears only when they finally reformed their banking sector.

  13. Germany certainly has the right to determine her own economic policies, within the framework of the EU. I am not familiar enough either with economics or Germany's present economic situation to make any cogent arguement about economics.

    I disagree with you concerning the cause of the current US economic troubles.

    As for Mankiw's credibility, the people he has worked with ( Bush's administration ) destroyed that for me.


  14. Scientific arguments' reputation cannot be destroyed by partisanship - only by falsification.