The Traveling Wilburys' "End of the Line"

Music on Sunday @ The Reaction

By Richard K. Barry

Here's a classic. I was at a great poolside party yesterday and the host mentioned that if he were to meet an untimely demise, he'd like the Traveling Wilburys' "End of the Line" to be played at his funeral.

Maybe it's a morbid thought, but I hardly see the harm in taking some control of your final arrangements. Then someone asked if I had any idea what I'd like played for me. The truth is that I haven't turned my mind to it, but maybe now I will.

The Traveling Wilburys were an English-American supergroup made up of Bob Dylan, George Harrison, Jeff Lynne, Roy Orbison, and Tom Petty. Can't really go wrong with that crowd.

They recorded two albums in 1988 and 1990, though Roy Orbison died before the second was recorded.

"End of the Line" is a pretty upbeat song for, well, the end of the line. But maybe that's the way it should be if you've done things right.

(Cross-posted at Lippmann's Ghost.)

The S&P downgrade and the GOP's apparent disdain for America

By Richard K. Barry

Three things caught my eye this morning on the S&P downgrade of U.S. debt.

The first was the helpful timeline provided by Steve Benen at the Washington Monthly describing how we got to this point. Benen

provides facts that point to the Republicans as the villain in this drama. If you don't like his facts, offer your own, but do try to stick to facts.

The second is the comment by publisher Steve Forbes, a one-time GOP presidential hopeful, who said the following of the downgrade:

I think in a narrow sense it is a political move... an outrageous move. The government can pay its debts, it is legally obligated to do so, its got the wherewithal to do it. But I am surprised S&P would play politics -- the U.S. government can pay the interest and principle on the bonds -- but in a broader sense we do have severe economic troubles, but we will be able to pay the interest and principle on the bonds.

The third was Greg Sargent's comment that, holding aside whether we should give any credibility to the downgrade, it is hard to see how the Republicans can claim victory in any of this, citing the S&P report:

The political brinksmanship of recent months highlights what we see as America's government and policymaking becoming less stable, less effective, and less predictable, than we have previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting disagreement fell well short of the comprehensive fiscal consolidation program that some proponents have envisioned until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

As Sargent points out, S&P explicitly cites the GOP threat of default as leverage for policy ends as an indication American governance is becoming less stable and predictable.

To sum up: The downgrade was precipitated by clearly identifiable Republican actions over the past 30 years; it was a cynical, politically motivated action on the part of S&P; and, the current inability of Washington to effectively govern the nation can be traced to irresponsible GOP maneuvering beholden to a radical right-wing ideological agenda.

Obama is right on this one. The GOP drove the country into a ditch, have done everything they can to make sure the current administration can't get it back on the road, and are having great fun blaming the president for the shape we're in.

I am always amazed that Republicans claim the high ground on how much they love their country. It seems to me they have little claim to this high ground as long as they continue to be such an obstacle to improving the state of the nation. How else to explain their actions?

(Cross-posted at Lippmann's Ghost.)

Republican economics: give money to rich people and everything will work out

By Richard K. Barry

Isn't it about time that every working man and woman in America realized that the Republican Party doesn't give a crap about you or your ability to have a job and support your family?

In a recent interview, CNBC host Jim Cramer made the mistake of assuming House Majority Leader Eric Cantor (R-Va) would support extending unemployment benefits "given the chaotic situation." Perhaps not all that surprisingly, Cantor replied:

Jim, the most important thing we can do for somebody who's unemployed is to see if we can get them a job. I mean, that's what needs to be the focus. For too long in Washington now we've been worried about pumping up the stimulus moneys and pumping up unemployment benefits and to a certain extent you have states for which you can get unemployment for almost two years and I think these people on unemployment benefits would rather have a job. So that's where our focus needs to be.

The interesting thing for me is that in the same sentence where Cantor says you can get unemployment insurance for almost two years in some states he also says people on unemployment benefits would "rather have a job." What he really means is that supposedly lazy Americans who want to collect government checks for up to two years need to be cut off so they will be forced to get a job.

What Republican bullshit. Working men and women are just too lazy, in Cantor-world, to get themselves off the government dole.

But not only is this view wrong and obnoxious, it's also bad economics. Republicans want to put more money into the hands of their rich friends through tax cuts, or at least not increasing taxes, which they argue will act to create jobs. They don't care that this just doesn't work and hasn't worked as a way to create jobs, they are ideologically wedded to it. They argue that all we need to do is give money to rich people and they, "the job creators," will make sure there's a job for anyone who wants to work.

In fact, the only thing it ensures, and has ensured, is that the rich will get richer and poor will get poorer.

By definition, to be a Republican means that everything the government does is wrong and everything the private sector does is right, even when that is demonstrably untrue.

As Paul Krugman writes:

When the economy is booming, and lack of sufficient willing workers is limiting growth, generous unemployment benefits may keep employment lower than it would be otherwise. But as you may have noticed, right now the economy isn't booming - again, there are five unemployed workers for every job opening. Cutting off benefits to the unemployed will make them even more desperate for work - but they can't take jobs that aren't there.

As Krugman continues, extending unemployment benefits would help.

One main reason there aren't enough jobs right now is weak consumer demand. Helping the unemployed by putting money in the pockets of people who badly need it, helps support consumer spending. That's why the Congressional Budget Office rates aid to the unemployed as a highly cost-effective form of economic stimulus. And unlike, say, large infrastructure projects, aid to the unemployed creates jobs quickly.

A program like unemployment insurance, which not only helps Americans survive, but is also good for the health of the economy, is of limited interest to Republicans simply because it is not exclusively a private sector solution.

It doesn't matter that unemployment benefits stimulate the economy and job growth, that they have been proven to work. Republicans hold such ideologically narrow views on the role of government that they would rather Americans starve than that we use available and effective policy tools to put the country back to work and the economy on the path to recovery.

The Republican campaign slogan for 2012 should be: "Give Money to Rich People and They'll Make Sure We Are All Taken Care Of." Do you think that would sell?

As I said, any working man or women in American who supports these clowns needs to give their head a good shake.

(Cross-posted at Lippmann's Ghost.)

And a mess of Bam's barbecue

By Zandar 

And Fox Nation leaves this in a bag on America's doorstep, lights it on fire, rings the bell and runs (h/t Oliver Willis).

Ahh, the president's birthday celebration had black people at it and didn't create jobs! This is where we are right now, it's a brutally long campaign season, folks... and the rampant, ugly, and now massively overt racism by the GOP and their enablers is only beginning. People ask me how President Obama can put up with such drooling idiocy, and I remind them that the president is never the true audience for shock-jock racism like this.

In a sick way, you have to admire the blue-steel hatred Fox has for the man. When the dog whistles are put away and the megaphones are brought out instead, it's proof that the president's most recent maneuver has demoralized the Tea Party faithful and that it's time to throw the red meat into the pit to get some action going (which gives more "moderate" conservative pundits the chance to pretend to disavow the bomb-throwing to look "centrist and principled").

It must mean, then, that the rank-and-file Tea Party disagree with John "Orange Julius" Boehner's assessment that the GOP got 98% of what it wanted in the debt deal. Indeed, many Americans are furious at the Republicans in the wake of this week's deal and the weeks of hostage-taking that preceded it.

Time both to fire up the base and to take the higher ground at the same time while Eric Cantor blames the extension of federal unemployment benefits for causing unemployment itself, and vows to hold it hostage next.  Always onwards to the next Pyrrhic victory, our GOP friends.

New Jersey Gov. Christie gets one right on the irrational fear of Sharia Law

By Richard K. Barry

Okay, I don't like Gov. Chris Christie. I've said before that I think he's a bully and I've been disgusted by his union bashing. But he is an effective politician and when he occasionally gets something right, it is a thing of beauty.

Such was the case when he defended the appointment of Sohail Mohammed to the state bench despite the fact that it angered some wackos on the right who seem to see the threat of Sharia Law wherever they look.

Christie called such concerns "crap." He went on to tell reporters that he rejected complaints that have been made that Sohail Mohammed is unfit to be a judge because he defended Muslim Americans who were wrongly arrested post- 9/11, saying that:

Ignorance is behind the criticism of Sohail Mohammed. He is an extraordinary American who is an outstanding lawyer and played an integral role in the post-September 11th period in building bridges between the Muslim American community in this state and law enforcement.

And in addressing frequently heard comments by conservatives who fear that Sharia Law will come to America he said:

Sharia Law has nothing to do with this at all, it's crap. The guy is an American citizen. Sharia Law business is crap and I'm tired of dealing with the crazies. It's just unnecessary to be accusing this guy of things just because of his religious background.

Too bad Christie hasn't jumped into the Republican presidential nomination race, as some thought or still think he might. It would be fun to see him take on Herman Cain who has made quite an effort to fire up his base by suggesting that we need to actively oppose Sharia Law coming to America because, apparently, that's going to be such a big problem for us.

Christie's politics aside, there really are potential Republican presidential nominees who know that in this go round you have to be more than a little insane, or pretend to be, to be seriously considered. If Christie got in, he'd be dealing with the crazies every day and that is something for which he seems to have little patience.

Here's the clip of Christie addressing the press on the issue:

(Cross-posted at Lippmann's Ghost.)

Rick Perry's rally

 By Mustang Bobby.

I don't really care if Texas Gov. Rick Perry's upcoming prayer festival is a big hit or not; hey, whatever gets you through the night, right?  But the folks that he's invited to participate have some interesting interpretations of holy writ, including Oprah being a sign of the Apocalypse, birds dying because of the repeal of Don't Ask Don't Tell, the Statue of Liberty is a pagan idol, and the perennial favorite: Hurricane Katrina was divine retribution for New Orleans being a fun place to visit.

This weekend's prayer rally is intended to serve as the overture to Mr. Perry's run for the presidency, which is all well and good because there's no reason that a person of faith shouldn't run for office... any more than a person who doesn't believe in magical sky faeries or Flying Spaghetti Monsters shouldn't run for office either.  After all, the Constitution is clear on the prohibition of a religious test as a qualification for office.  And I don't have a problem with a candidate or an office holder relying on his faith as a part of his daily life in or out of the office.

What I do have a problem with is a governor or a president or a city council member substituting their dogma for reality or proven fact and turning it into law or public policy.  You can believe all you want in the literal interpretation of the book of Genesis, but you don't get to impose that in place of the glaring proof that the universe was not formed 6,000 years ago and that Adam and Eve palled around with triceratops.  You do not get to proclaim that being gay -- or straight -- is a choice because you're obsessed with other peoples' sex lives and you can't get beyond your adolescent fixation with genitalia.  You don't get to assert that some supernatural being has it in for a major American city because too many people are having altogether too good a time at Mardi Gras.  You can't warn the nation about the non-existent threat of the imposition of Sharia law while defending the right to post the Ten Commandments in a court house, and you can't inform the rest of the world about your stunning lack of irony by condemning Harry Potter for being a harbinger of magic while you're on your way to Mass to eat a cookie and sip some wine that has been magically transformed into the body and blood of Jesus H. Christ.  In short, you can't project your own psychological shortcomings onto the rest of society and use your religion as the excuse for your behavior.

Certainly a man of faith can run for the presidency and win.  We all remember the administrations of Presidents William Jennings Bryan, Pat Robertson, and Mike Huckabee, right?  The electorate of America may have its flaws and foibles, but it has so far done well by applying the doctrine of the separation of church and state to candidates as well as the Constitution.

(Cross-posted from Bark Bark Woof Woof.)

Tim Pawlenty's wife's qualified enthusiasm for his chances

By Richard K. Barry

More news on the Tim Pawlenty presidential campaign "death watch," and this one is just plain funny.

It seems that poor Tim can't even catch a break from his own wife. CNN reports recent comments by Mary Pawlenty that she was "cautiously optimistic" about her husband's chances and that: 

He needs to move from where he's been and show significant progress, but I'm reasonably confident we're going to see that good progress.

Ouch. When the best your own wife can do is say that she is "reasonably confident" that your campaign won't flatline in the near future, that's not good.

The comments were made with the Ames Straw Poll in Iowa in mind, which is a key event in the Republican presidential nomination race calendar that takes place on August 13th.

There was a time when Pawlenty was hoping for a big showing in Iowa. It now seems that he's simply hoping not to embarrass himself. Judging from the relative lack of enthusiasm from Mary, what do we think the chances are that Tim will show "good progress" any time soon and, more to the point, how long do we think it will be before he decides to pack it in?

Hard to say.

And, by the way, here's another little piece. The New York Times reports that:

Al Hubbard, a former Bush administration official who two months ago became a top policy advisor to Tim Pawlenty, has stepped down from Mr. Pawlenty's presidential campaign.

When he came on board in June after a close ally, Gov. Mitch Daniels of Indiana, decided not to get in the race, it was considered a big coup in the competition among GOP candidates to recruit people with connections to W's network of donors.

Not surprisingly, the Pawlenty campaign suggests we not read anything into his departure, stating that Mr. Hubbard "became busy with work and is not operating in a policy role."

Or maybe the stench of defeat coming from the Palwenty campaign drove him away.

It could be that.

But to hedge my bets just a little, T-Paw is putting in a huge effort to do well in Ames and knows as well as anyone that a poor showing would be disastrous, as much as his campaign is trying to play down expectations, apparently with the help of his wife.

(Cross-posted at Lippmann's Ghost.)

Little noticed in this "Arab Spring"

By Carl 

Israeli citizens are demanding more liberal government:

TEL AVIV, Israel -- While the world has been focused on the anti-government movements that sprang up during the Arab Spring, the largest protests in Israeli history have been sweeping the country for the past two months, threatening to destabilize the government with calls for extensive change.

The protests began with a Facebook petition over the cost of cottage cheese. They now include a litany of demands, including a return to the days when the government took a more active role in subsidizing costs. Protesters also want changes in the tax system, more subsidized government housing and more spending on health and education.

Last weekend, more than 150,000 people participated in a nationwide march to protest high housing costs. The organizers are calling for another march this weekend and promising an even larger turnout.

Israeli officials admit surprise at the strength and staying power of the protesters, and Prime Minister Benjamin Netanyahu responded this week by canceling a scheduled increase in the price of gasoline that was to have gone into effect Tuesday.

That's not popcorn popping, that's the sound of the heads of neo-conservatives and right-wing Zionist bloggers like Pamela Geller exploding.

In a time of austerity measures in America and much of Europe, tiny Israel is deciding, yes, we the people need more.

In fairness, Israel is a nation built on socialist values. As a small island of Judaism in a larger hostile environment, people who are crammed together learn the importance of looking out for one another.

Here in America, we could have adopted the same basic moral values, but chose instead to live with the romantic illusion of "rugged individualism."

Bollocks, as the British would say. "No man is an island," as John Donne put it. Opportunity in America is defined as the culmination of the tribe fostering the one. No one gets rich in this nation on his own, and our tax codes and social constructs ought to recognize this. For behind every rich person in this nation lies an entire community and network of people who work to support his or her opportunities. 

And since greed drives the acquisition of wealth, you can guaran-damn-tee he or she ain't rewarding those folks adequately.

America stopped being about "fairness" a long time ago. It stopped being about opportunity more recently, but still, the barriers to entry in any market are in direct violation of the basic principles of laissez faire economics put down by Adam Smith (who believed in soaking the rich, by the way).

That kind of rugged individualism, where a person through the sweat of his own brow and the dirt under his fingernails, could carve out a modest life for himself that allowed him to be free of working as an indentured servant on someone else's farm, that kind of rugged individualism one can admire. But it's not the rugged individualism people think of today.

It's not the rugged individualism of free enterprise and competition. Now, markets close to competition. Companies will patent everything in sight, including your own DNA, to claim rights to them. Try "going Galt" when you leave your DNA everywhere.

Today, if you don't wear a helmet while riding a motorcycle, you're a rugged individualist. An idiot, but an RI nonetheless. Note that you're middle class enough to *afford* the motorcycle in the first place. You were not someone's slave who suddenly freed himself through dint of hard work and savings. 

Americans have a very hard lesson to learn. We are not individuals. We pretend we can be. And in some small ways, we can be, but not in ways that matter.

A friend of mine said to me recently, "You can be a slave to the corporatocracy under Republicans or a slave to government under the Democrats." There's at least some truth to the latter, and a lot of truth to the former -- although I challenged him to show me how he could be a slave under Democrats. I got a lot of talk about Spain. Not sure it was relevant.

We are slaves. Nearly all of us earn a living making someone else wealthy.

A few of us earn part of our living making someone else wealthy, and part of our living siphoning wealth off other people: in other words, with an economy that is effectively a zero-sum game, you are either being sucked dry or sucking someone else dry. Neither is a particularly pleasant moral position to take.

That the corporatocracy has dug it's siphons so deeply into our society was an inevitable outgrowth of Republican policies (and sadly, many Democratic ones, too).

For my part, I'd rather be a slave to a government that at least once in a while has to get my authorization to enslave me, and that every so often, gets overruled. It sure beats an autocracy of boards of directors and CEOs with no fealty to shareholders, much less other stakeholders like employees or vendors.

Americans could learn a lesson from the Israeli people. When the notion of fairness goes out the window, the best strategy is not to be more antisocial, but less. 

(Cross-posted to Simply Left Behind.)

Plain speaking: What President Obama should have said to the American people about the budget and the debt ceiling

By Distributorcap

This is the speech Obama should have given on Sunday night -- before he let the terrorists Republicans dance the hora all night. His polls would have gone up at least 20 points and his re-election would have been all but guaranteed. Americans may love hearing the words "tax cuts" (even when they're for 1% of the population), but they love their John Wayne character even more.

Ladies and gentlemen, the President of the United States:

Good evening.

As we all know, the U.S. government is scheduled to reach its limit for borrowing, or what has come to be known as the "debt ceiling" on Tuesday. The U.S. Congress, knowing full well the consequence of not increasing that limit would be economic chaos, has historically raised the ceiling under both Republican and Democratic administrations. This time, due to the intransigence of the opposition Republicans in the House, Congress has been unable to reach a compromise that would increase that limit. With a painful and catastrophic default staring us in the face, I am ordering the following steps to be taken:

Unless a clean bill raising the debt ceiling reaches my desk by Monday night, I will invoke the clause in the 14th Amendment to the Constitution that states, "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned" -- to raise the debt ceiling. As President of the United States, I cannot morally or financially let the United States default on its obligations. I cannot allow the actions of a small group of Representatives to push the entire American economy off a cliff. I cannot allow millions to suffer at the hands of a few. If you do not agree with this process or do not take well to the move I am undertaking and want to begin some sort of investigation into the legality of this procedure or even impose hearings for impeachment, let me quote our last Presiden: "Bring it on." I look forward to that fight.

After we ensure the continued flow of checks and payments, Congress and the Executive Branch will immediately begin discussion of the U.S. budget. To be blunt, these budget discussions will include spending cuts across the board, including defense, subsidies to the wildly profitable industries, and closing loopholes that exist only to enhance the re-election of specific Senators and Representatives, for example the corporate jet loophole. I cannot say what the figure will be, but every branch of government will be touched, including many of the perks enjoyed by Members of Congress.

The budget discussions will also include raising taxes on individuals and on corporations, especially those persons that make over $250,000 and corporations that have generated enormous profits yet pay minimal to nothing in taxes. Many of these individuals and corporations have profited greatly from the tax breaks and government bailouts over the past decade. It is time to review just exactly what this government largesse has truly cost a majority of the American people. The Bush tax cuts, which have cost over $400 billion and have not created any jobs, will not be renewed in their current form -- period.

These budget discussions will also include an in-depth examination of the cost to the American economy of sending jobs abroad and the creation of a public works program in conjunction with the private sector to rebuild our faltering infrastructure. The U.S. cannot compete in a world where jobs are shipped out of the country to save a few dollars and the rest of the world builds while applying band aid after band aid.

In addition, I am ordering Harry Reid and John Boehner to keep their respective constituents in session all month -- yes, I know it is August -- to hammer out the framework of a budget that I can sign, a budget that will truly demonstrate shared sacrifice across the board, a sacrifice that will not be based solely on those who cannot pay for high-priced lobbyists sent to D.C. to protect specific breaks and grants.

The past three years have not been a vacation for the American people, and therefore we, the men and women who these struggling Americans elected to shepherd in a better and stronger America, are not taking a vacation until we can agree on a true compromise to get our fiscal house in order.

Thank you.

Another epic FAA-ilure

By Zandar

The airlines now think you're too stupid to notice the fact they are picking your pockets and have been for almost two weeks now.

The debacle could have had an upside for airline passengers because ticket taxes, which typically average about $30 on a $300 round-trip fare, are suspended during the shutdown.

Hey, that's great. 10% off airfare, at least that's not so ba... wait a frackin' minute.

But airlines decided to pocket the windfall. Within hours of the shutdown on July 23, most airlines raised their fares by amounts equivalent to the taxes that disappeared.

Transportation Secretary Ray LaHood called airline CEOs to complain and lawmakers have sent letters demanding the fare hikes be reversed and the profits be placed in escrow. But their howls have largely been ignored. Airlines collectively lost about $440 million in the first six months of this year, according to the Air Transport Association.

Yeah, wondering why the Republicans left town for a month without doing anything about the FAA? How about a six-week plus stimulus package for the airline industry? Airlines boost ticket prices by 10% and you never notice the difference because that 10% was going to the FAA to cover the cost of airport maintenance and improvements. Airlines are now taking every dime of that and they're getting away with it.

The invisible hand of the free market just grabbed your wallet.

Senator Orrin Hatch bows to the Tea Party

By Richard K. Barry

A lot of people expect Republican Senator Orrin Hatch of Utah to get a challenge from his political right in 2012. In fact, Rep. Jason Chaffetz looks to be the one who will take on the task.

And Chaffetz, should he challenge Hatch for the Republican nomination, will have some juice as the principle author of the "Cut, Cap and Balance" legislation in the House.

Hatch's sin is mostly that he's been around too long. In fact, he's been around so long that he has a history of working with Democrats to actually pass legislation and govern the country in a responsible manner. Of course, that's not allowed if you're a Tea Partier. Working across the aisle is proof positive that you need to be replaced. Chaffetz intends to continue hammering away at Hatch for having done things like vote to increase the debt ceiling in the past and for supporting the Troubled Asset Relief Program (TARP).

As Chaffetz has said:

Part of the reason we are in this debt crisis is because 26 times Sen. Hatch had an opportunity to vote no and he voted yes to raise the debt ceiling. Sixteen times a direct vote for yes, and 10 times allowed unanimous consent for the increase in the debt ceiling. That's why, in part, we're in this mess.

(And how many of those debt ceiling increases were under Ronald Reagan? Was it 18?)

Along with Senator Richard Lugar of Indiana, who is also likely to face a Tea Party challenge, Hatch has just been around so long that there is too much history of his having worked in a bi-partisan manner for the good of the country, of actually having governed. And, like I said, that just won't do if your a Tea Party type.

It's all about right and wrong. They are right and everyone else is wrong and don't get caught so much as smiling at the enemy.

Having said that, there is a real sadness in what is happening to someone like Hatch who has served his country for so long, no matter what one might think of his politics. He's reduced to making cringe-worthy statements like "I'm a Tea Party person," or "The fact of the matter is I've been a Tea Party person I think since before the Tea Party came into existence."

Yeah, right.

How much do you want to bet that Hatch comes close to gagging when he says those words, that he hates what he's being forced to say and do by the insane ideological purity of what has become of the radical right of the Republican Party?

When Hatch says "I'm a Tea Party Person," it sounds very much in tone like what a social misfit might say to prove he is worthy of the notice of the supposed in-crowd, while knowing all along that he shouldn't lower himself in such a way, but he's just so damned terrified of being left on the outside.

This is nothing short of a purging of those who were once the most revered figures in a political movement because they have failed to keep up with the ideological requirements of the new regime. We've seen this before in history and it never ends well.

(Cross-posted at Lippmann's Ghost.)

Flat tax flounders

By Carl 

Inherent in the current sooper sekrit budjit soopercommittee Congress is setting up in response to the budget crisis, a re-write of the tax code is inevitable.

The time has come for an overhaul of the tax code, to be sure. Right now, taxes on the rich are the lowest they have ever been since Herbert Hoover was president (You'll notice the bookend of terrible unemployment and low taxes on the wealthy, too.) The effective tax rate on the wealthiest one percent (i.e., the rate the wealthy actually pay in total, after deductions, deferrals and exemptions) is the lowest it's ever been.

In turn, deductions that are available to the middle class that promote what had been good public policy (for example, the mortgage interest deduction in order to encourage home ownership) have become warped and twisted to such an extent that they actually create bad public policy. The recent collapse in the housing market is a terrific example of too much of a good thing, in terms of taxes. It only occured after the right to deduct the first $125,000 off the gain on the sale of a home, which had been limited to senior citizens as a one-time-only deal, was expanded to include practically the sale of any residence.

The alternative minimum tax (AMT), originally devised to ensure that the wealthiest pay a fair share of their income in taxes, has become a bane of the middle class. It was never indexed when first implemented in 1986 (at the $30,000 threshold for individuals, $40,000 for a married couple) and only peaks this year at $48,450/$75,000. It drops again next year to $33,750/$45,000. The AMT penalizes people who live in expensive states with high taxes, people who own homes (it phases out the mortgage interest deduction,) and/or have children, and people who like to give money to charity to lower their tax burdens.

It is, in other words, effectively a flat tax of 26% (28% if your income is over $175,000).

Which leads me to today's topic: the flat tax.

Now, given that there are so many "libertarians" who would call for a flat tax in the midst of this rigamarole, I thought it would be a useful prophylaxis to examine why it's a bad idea.

First and foremost, the flat tax is highly regressive, penalizing the poor while subsidizing the wealthy. On it's face, it seems fair (this is part of why many have euphemistically called it a "fair tax"). After all, dollar one gets taxed at, say, 10%, dollar one hundred at 10%, dollar one million at 10%. The guy making a million pays $100,000 in taxes. The guy making $100 pays $10.

Flip the numbers, though. The guy making $100 is left with $90 to buy food, clothing, shelter. The guy making a million is left with $900,000 to buy the same things. Granted, the millionaire is likely to buy more expensive stuff, but here's the thing: he has a choice as to how much he can spend, but not how little. It's that last part, how little to spend, that comes into play.

The guy left with $90 has to meet a threshold to feed, house and clothe himself. Let's say that will cost him, in total, $80. He's left with $10, and must make a choice what to do with the rest of his money: put it away for retirement, splurge on a movie, save it for a rainy day. The guy making a million, also spending that $80, is left with $899,920 to just go nuts.

How is this subsidizing the wealthy? Glad you asked. Unless you want to assume private roads and private infrastructure, the government is going to be the one who wires the community, who paves the roads, who builds the subways. You'll notice the poor soul can't afford a car and walks to work, yet his taxes are paying for things he can't possibly avail himself of, much less benefit from.

A guy making a million bucks is part of a population that is less than one half of one percent of the whole. Good thing, too, because it will take 10,000 people making $100 bucks to equal his income (and to be fair, his tax liability).

None of whom can benefit from the spending that he benefits from.

So it's regressive in terms of the actual taxation, but also regressive in terms of the benefits derived from that taxation. The poor will receive less from the government than the rich under a flat tax system, by definition.

Too, the income tax helps mask another annoying fact of the American tax code, which is that other taxes are highly regressive: sales taxes, property taxes, excise taxes, tolls on highways, mass transit fares, all have to be paid by rich and poor alike in direct proportion to the value of the benefit obtained, which means the rich skate by yet again on the backs of the poor.

There are other reasons the flat tax is a ludicrous proposition. For one thing, it discourages savings, since that would become effectively a double tax: you're taxed on the wages and the interest earned on the money you've socked away. It discourages investment in businesses, for similar reasons. It discourages saving for retirement, since the income that is building towards that is taxed now.

Some might argue, well, Social Security would be off the table. OK, except that the employer portion is taxable at the corporate level (since we're flat taxing all income, no restrictions) so you're double taxing the same money. Revenue is fungible. It doesn't matter how it's apportioned.

Plus, you'd have to raise Social Security taxes to cover the now-heavily-reliant population. And that means wages would now be double taxed even more heavily (you pay SSI and Medicare tax on gross income. You pay income taxes on gross income).

In other words, a flat tax would kill the few American businesses still left.

Lower the corporate tax rate to compensate? American corporations already pay a marginal rate that's among the lowest in the world, and the effective tax rate of the corporatocracy is (based on the Fortune 500) about 18%. So if anything, a flat tax would raise taxes on corporations. Not a bad thing, in my book, but you can bet your bottom dollar ExxonMobil would disagree vehemently, and continue to offshore money.

Proponents of the flat tax point to the success it's had in other countries (Montenegro and the bankrupt Iceland, neither of which is an economic model I'd choose to follow in any other respect), conveniently forgetting that no state that currently has a flat tax had to transition from a progressive taxation to the flat tax.

And in many of these countries, adding in the equivalent of the Social Security tax raises their tax levels *higher* than many if not most states with progressive rates.

It seems to me the Clintonian shibboleth about welfare -- "mend it, don't end it" -- applies to the progressive tax system, too.

(Cross-posted to Simply Left Behind.)

This day in history - August 2, 1943: Lt. John F. Kennedy's PT-109 is rammed by a Japanese destroyer

By Richard K. Barry

Working with a lot of younger people as I do, I no longer take it for granted that they will have a working knowledge of the historical events that I consider important. It would have been impossible to have grown up in the '60s, for example, without knowing the story of President John F. Kennedy's exploits as a young naval officer in the Pacific during WWII. They even made a movie about it, not to mention the book, both of which came out in 1963.

The short of it is that Kennedy commanded a small patrol boat that was rammed by the Japanese destroyer Amagiri. Although there were a couple of fatalities, the remaining crew managed to reach an island and were later rescued. Kennedy's leadership in helping to secure the crews' rescue was no doubt helpful in defining him in a way helpful to his political career.

If you are of a certain age, you knew all of that.

Interesting to note that Kennedy's exploits were more or less accepted at face value, though many decades later John Kerry's military record and reputation were all but destroyed by lies and innuendo. Makes you wonder what has changed.

(Cross-posted at Lippmann's Ghost.)

Introducing our new... International Sports Reporter!

By Robert Lawson, International Sports Reporter

Ed. note: As you may have noticed, we've been blogging a bit more than usual about sports recently. While I have no intention of shifting our focus away from U.S. politics, I think it's good to branch out and cover other topics well beyond the world of politics -- art, music, film, television, philosophy, etc. And that includes sports -- because, well, many of here are serious sports fans. In the coming weeks, Richard and I will be starting up a weekly football post on Sunday mornings, complete with our picks. As well, we'll continue to write every now and again about baseball, hockey, and whatever else gets us going.

I'm pleased to introduce our new International Sports Reporter, Robert Lawson. He's a good friend of mine and I can think of no one better to cover the world of soccer (he'll call it football -- just humour him), hockey, rugby, and so on. The guy knows his sports. If you're already a fan, I think you'll really like his engaging takes on the English Premiership, and on whatever else he decides to cover. If not, I encourage you to give him a chance. He's a great writer, and I'm sure you'll find his posts entertaining. 

(And if you're an audiophile, audio tech nerd, or vinyl enthusiast, or some combination thereof, or if you just love great music, check out his blog Analogue Adventures.)

With that, let me turn it over to Robert for his introductory post...

-- MJWS

**********

Hello, everyone. I'm happy to introduce myself to you as the new International Sports Reporter here at The Reaction.

In the main, I'll be writing (well, ranting in prose, to be precise) here about the beautiful game. While my focus will be English football, I'll also keep tabs on some of the other top European leagues (especially Spain, Italy, and Germany) and club competitions (Champions League and Europa League). With Euro 2012 on the horizon and the early stages of World Cup qualifying set to begin here in North America, I also intend to write a bit about international football.

In addition to the football, there will be a few posts here and there about rugby (union), cricket, and many other types of sport typically overlooked, ignored, and even ridiculed in this part of the world.

That said, I'll admit my bias right away. My primary interest is and will be the English Premier League.

This is, in large part, a product of Scouse heritage. I'm an ardent supporter of Liverpool with little time for Everton, little love for Manchester United, and unyielding fealty to King Kenny Dalglish. Indeed, I've been following Liverpool and English top flight football since the late-1980s, when I used to wake up early every Saturday morning to watch Soccer Saturday on TSN (Canada's main sports network) with Graham Leggat. I've also been to Anfield on multiple occasions.

For what it's worth, I typically spend the entirety of Saturday and Sunday morning watching matches. Much to our good fortune up here in Canada, we get at least six matches a week on TV and often more. And I do try to keep up with the football news at The Guardian, the BBC, Sky Sports, and ESPN Soccernet, among others, during the week. In other words, I'm keenly aware of what's happening each week in English football.

With that said, I hope you enjoy my contributions here a The Reaction and I look forward to your contributions in the comments section.

Keep your eyes peeled for my next two posts: a recap of the 2010-11 Premiership and a preview of the 2011-12 season, set to begin on Saturday, August 13.

As they like it

By Capt. Fogg 

Wake up, little Susie, wake up
Wake up, little Susie, wake up
We’ve both been sound asleep, wake up, little Susie, and weep
The movie’s over, it’s four o’clock, and we’re in trouble deep
Wake up little Susie
Wake up little Susie, we gotta go home. 

- The Everly Brothers -

___________________________ 

I'm relatively sure that our new "save your way out of unemployment, no job needed" austerity program will stifle the economy and thwart any meaningful recovery and that a good share of the people who held the gun to our heads to push this sorry debt ceiling bill, not only know it too, but desperately want that outcome so as to help push the Tar Baby out of office and privatize the presidency in 2012. 

The Tea Terrorist Great Leap Backward may not let 20 million people starve as Mao Zedong's Great Leap Forward did, but it's not only not going to put bread on the table. For many of us, that table may be a park bench.

Victory is so close, they can almost taste it. Unemployment is so high so that millions don't have the money it takes to be heard, don't have the money it takes to buy the products that make the economy expand, but corporate profits are up -- way up. Call your congressman? Write your senators? Sorry Charlie, tea bags come with strings attached and unless your letter is stapled to a million dollar check you might as well save the postage and stationery.

Corporate profits are up, and that's OK. We're selling overseas and manufacturing overseas and American workers are redundant -- and face it, America and what we used to think of as the American way of life, the American Dream, is a millstone around the corporate neck. It's a global economy now and global corporations owe no allegiance to the United States even if they're nominally American companies. They will use every strategy they can to avoid paying taxes in the US or benefiting workers who can be replaced and exploited cheaply in China and India. We're witnessing one of those strategies today. The only people not in danger of being outsourced or laid off or screwed out of benefits and pensions are the legislators and judges and corporate propagandists on the payroll and sorry, little Suzie Teabag, that ain't you. Wake up. 

Now all that Social Security money and that Medicare money go right back into the economy, purchasing goods and services immediately. Minimum wage workers spend every dime they make. Nobody hoards food stamps. They don't want that. They don't want money in your hands, since it's money that might give you some political power, since it's money they could sit on and hoard and invest abroad with no taxes paid. Think it will go to creating American jobs? Are you stupid? 

Your taxes aren't going down, theirs is. They're not creating any jobs you're eligible for or would accept, and your cost of living will be going up as the Dollar shrivels like Limbaugh's penis and your freedom and your rights and your privacy and your political voice and your retirement plans are dissolving in the rapidly rising water. 

And they like it that way.

(Cross-posted from Human Voices.)

I can't believe they still let David Frum be a conservative

By Richard K. Barry

I don't know David Frum. I know people who know him (or used to know him). I even spent a number of my early years in Canada watching and listening to David's mother, Barbara Frum, a respected Canadian television and radio journalist, who died far too young. If you follow the Canadian scene at all, you would know that the Frums are considered to be serious people.

Some time ago David decided to take his career to the U.S. and even worked as a speechwriter for George W. Bush for a while. At some point it seems that he, while holding onto his conservative political beliefs, decided that he was having a hard time with the radicalism coming from so much of the right-wing. Not to speak for him, but it appeared to me that he was having difficulty with the lack of cogent argument coming from so many on the right, especially the Tea Party right.

They weren't arguing the facts, they were simply mouthing platitudes that they believed to be supported by an understanding of what it means to be an American. For conservatives like Frum, who lives to argue the facts, that was crazy making.

I don't support Frum's brand of politics, his conservatism. He says that he's all about free markets, low taxes, reasonable regulation and limited government. Sounds okay in a sense but we all know that the devil is in the details so, no, he and I wouldn't agree about much once we started to get into the details.

But when he speaks, I believe that he is working hard to make a good case and that he would be open to other ideas if presented intelligently. As I said, I don't know the man, but that's the feeling I get. I think we also know that this kind of reasonableness on Frum's part has not always made him popular on the right and that strikes me, from my perspective, as a good thing.

I came across a piece that Frum wrote recently for CNN on the debt ceiling talks and I would like to recommend it to you. Not only does it makes sense, but it reminds me of the way I used to debate with conservatives about politics and economics. It used to be about positions and facts and arguments and maybe a good faith attempt to see things differently.

In the current context, here are three things that David Frum wants us to think about.

1. Unemployment is a more urgent problem than the debt.

2. The deficit is a symptom of America's economic problems not the cause.

3. The time to cut is after the economy recovers.

I don't intend to have this discussion here, only to say that America would be a better place if our political leaders, on both sides of the aisle, were able to have discussions on statements like these based on facts and not blind ideology.

Good on Mr. Frum for suggesting it.

(Cross-posted at Lippmann's Ghost.)

Bifurcated democracy

By Carl 

This was an interesting op-ed in yesterday's New York Times:

OUR nation isn't facing just a debt crisis; it's facing a democracy crisis. For weeks, the federal government has been hurtling toward two unsavory options: a crippling default brought on by Congressional gridlock, or — as key Democrats have advocated — a unilateral increase in the debt ceiling by an unchecked president. Even if the last-minute deal announced on Sunday night holds together, it’s become clear that the balance at the heart of the Constitution is under threat.

The debate has threatened to play out as a destructive but all too familiar two-step, revealing how dysfunctional the relationship between Congress and the president has become. 

The article talks about how presidents have decided to exercise power unilaterally, like Obama's Libyan adventures (although the practice goes back decades to Reagan and even Nixon,) while the Congress has been unable to rally itself to challenge the President's usurpation of power. Either the Congress is divided (like now) or reinforces the person holding the Oval Office (as under Bush the Younger).

This is what the punditry tells us we want, over and over again: divided government. Given what we've experienced for over three decades now (absent the six years of Bush the Younger) is this really what we want? An ineffectual Congress hamstrung by the tyranny of the minority and a Presidency who usurps power like a king?

Mind you, none of this is partisan: Republicans and Democrats have been to blame in BOTH branches. Clinton was forced to legislate by executive order, much as Obama is. Both Bushes declared wars without making a firm case to the American people as to the need for them (this wasn't dominoes toppling or any such credible threat.) Reagan tossed American troops around like candy and American armaments to enemies.

In Congress, John Boehner can't even get a centerpiece of legislation passed trying to keep the party's dog-and-pony show from tearing each other up. When Pelosi was in charge, she had to placate Blue Dog Democrats, rather than muscle them into line.

Hell, about the only thing any Congress since 1990 has been able to agree upon is that Bill Clinton needed to be impeached and a bunch of Asian deserts bombed!

This has effectively emasculated an entire branch of government. Power seeks a vacuum. It's almost understandable that the president would unilaterally legislate.

Plus, members of Congress don't have to take a stand on anything controversial. Take the EPA actions earlier this year to regulate greenhouse gases. Now, long time readers of this blog know there are few people more concerned with global climate change than me. Maybe Al Gore. So while I don't have a problem with Obama taking the bull by the fumes... so to speak... I worry about the fact that Congress didn't vote on this.

Note: it wasn't voted down. The bill stalled before a vote could be taken. It's probably still in the hamper, waiting to be aired out. Look at what this saves Republicans from, say, Montana, where people believe climate change is real and a problem. The party would insist they vote against the EPA actions. Their constituencies would say "We need a better Congresscritter." No responsibility, yet they can parade around touting how angry they are that they didn't get their say.

The more a controversial issue remains undecided, and the more critical that issue becomes, the less likely it is Congress will ever actually take action. And the more likely it is they will cede that issue to the Executive branch. Fine for a liberal like me when a semi-liberal like Obama is in charge, but what happens when another Dumbya hits the Oval Office? One a little more clever?

Congress will still feel this is expedient.

But it is unhealthy. It is unhealthy for an economy, it is unhealthy for a Constitution and it is deep unhealthy for a society and its people.

(Cross-posted to Simply Left Behind.)