Piketty fence

By Carl 

So I’m back from vacation and I keep seeing this name on my Tweeter and FacePlace feeds: Thomas Piketty.

Sounds vaguely Dickensian.

From what I gathered, Piketty wrote a book proposing a new economic theory that would put paid to many of the basic notions that support capitalism. 

Let's take a look:

Piketty's argument is that, in an economy where the rate of return on capital outstrips the rate of growth, inherited wealth will always grow faster than earned wealth. So the fact that rich kids can swan aimlessly from gap year to internship to a job at father's bank/ministry/TV network – while the poor kids sweat into their barista uniforms – is not an accident: it is the system working normally.

If you get slow growth alongside better financial returns, then inherited wealth will, on average, "dominate wealth amassed from a lifetime's labour by a wide margin", says Piketty. Wealth will concentrate to levels incompatible with democracy, let alone social justice. Capitalism, in short, automatically creates levels of inequality that are unsustainable. The rising wealth of the 1% is neither a blip, nor rhetoric.

To understand why the mainstream finds this proposition so annoying, you have to understand that "distribution" – the polite name for inequality – was thought to be a closed subject. Simon Kuznets, the Belarussian émigré who became a major figure in American economics, used the available data to show that, while societies become more unequal in the first stages of industrialisation, inequality subsides as they achieve maturity. This "Kuznets Curve" had been accepted by most parts of the economics profession until Piketty and his collaborators produced the evidence that it is false.

In fact, the curve goes in exactly the opposite direction: capitalism started out unequal, flattened inequality for much of the 20th century, but is now headed back towards Dickensian levels of inequality worldwide.

Well, at least now I know why his name sounded Dickensian.

A cursory examination of the history of the American economy... indeed, any Western economy after the 1700s... would support Piketty's theory. There are numerous instances where income inequality expands, and then contracts after an economic bubble bursts. This is usually because the investor class – you know, the 1% – milks the excess cash and assets out of an economic entity, then walks away to leave it unbalanced and unstable.

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Obama's stimulus package wasn't enough but was much better than nothing

By Michael J.W. Stickings

As CNN is reporting, Republicans are crapping all over the American Recovery and Reinvestment Act on the fifth anniversary of its passage. That's the stimulus package that President Obama was able to get out of Congress, and specifically out of obstructionist, trickle-down Republicans, early in his first term. Apparently making shit up about Benghazi and the IRS and otherwise smearing the president at every turn isn't enough. Now they're on to blaming him for... saving the economy from utter disaster.

The economy needed much more of a stimulus back then, but of course Obama wasn't about to get a bigger package from Republicans wedded to their extremist anti-government ideology and intent on trying to make him fail even at the expense of harming the country, and from Democrats who lacked either the courage or the simple common sense to embrace even this limited government intervention in the economy. But what he got was still absolutely necessary, and it was not just better than nothing but enough, it would appear in retrospect, to stabilize the economy and put the country on the road to recovery, as bumpy as it's been given how little his opponents have bothered to help.

Indeed, as Steve Benen reminds us today, "the global economic crisis had reached terrifying levels, and U.S. policymakers had to choose a direction for the nation’s future." Democrats, on the whole, demanded action and got behind stimulus, while Republicans "called for a five-year federal spending freeze." Just imagine what would have happened had Republicans gotten their way. Imagine what the unemployment level would be today, imagine how weak the economy would still be, imagine how so many more Americans would be suffering, unable to pay their bills and put food on the table, if even on a table at all.

Just take a look at the charts in Steve's post. What do you see? Significant GDP growth and private-sector job growth that is connected directly to Obama's stimulus package:

The evident details are hard to miss – the economy crashed, then Democrats approved the stimulus, and then the economy started growing, job creation picked up, and the stock market soared. I've long been curious: for Republicans, how is this possible? Was it magic? Was it a coincidence? How do they explain why every relevant economic metric showed sharp improvements immediately after the Recovery Act kicked in?

None of this would have happened with Republicans in power. Things would have gotten far worse:

Indeed, perhaps the most striking thing about GOP economic arguments is that they weren't just wrong about the efficacy of Clinton's policies, and then wrong again during the Bush/Cheney era, and then wrong once again about whether the Recovery Act would help turn the economy around, congressional Republicans also seemed to go to great lengths to impose policies – debt crises, spending cuts, sequestration, a government shutdown – that seemed almost designed to make the economy worse.

 

It's why Ben Bernanke – a Fed chairman who, up until extremely recently, was considered a fairly conservative Republican – repeatedly told Capitol Hill that the single biggest obstacle to a healthier economy has been the fiscal policies demanded by GOP lawmakers.

 

It's why Republicans are bad for America. Period.

Republicans have been very, very good to social conservatives

By Frank Moraes 

I have a bone to pick with Paul Krugman. His column today is quite good, "Republicans Against Reality." The first half of the article is about Republican dysfunction. He highlights last week's transportation bill fiasco. It's an old story. Talk to any conservative (and sadly many liberals as well) and they will tell you that there is loads of wasteful spending in the government. But when you ask them what ought to be cut, the first thing they say is: foreign aid. There are two problems with this. First, foreign aid really does help us out globally by pushing back against all the bad stuff we do. (And note: Israel gets by far the most foreign aid of any country.) Second, foreign aid only makes up about 1% of the federal budget.

So the problem the House Republicans are having is that they've gone along with Paul Ryan's new mythical budget. But when it comes to actual policies, the House members don't like it because it requires cutting programs that their constituencies like and depend upon. So vauge notions of cutting "waste": gooood! Concrete ideas of cutting actual programs: baaad!

The second half of Krugman's article is about how the Republican leadership is reaping what it sowed. He writes:

For a long time the Republican establishment got its way by playing a con game with the party's base. Voters would be mobilized as soldiers in an ideological crusade, fired up by warnings that liberals were going to turn the country over to gay married terrorists, not to mention taking your hard-earned dollars and giving them to Those People. Then, once the election was over, the establishment would get on with its real priorities -- deregulation and lower taxes on the wealthy.

That is mostly true, but I take exception to the claim that the Republican Party has abandoned the social conservative base. Just in terms of policy, they got things like the Defense of Marriage Act and Terri Schiavo. But more important, they've gotten really conservative judges throughout the federal court system. I don't have any doubt that if Roe v. Wade came up for a vote in the Supreme Court that it would be overturned. So social conservatives have gotten what they want.

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The farm bill and Big Government Conservatism

By Frank Moraes 

A lot of people wonder what a liberal like Dean Baker means when he writes a book like The End of Loser Liberalism. He means a lot, of course, and you should read it because that link provides the book in various electronic formats that are free. But mostly what he means is that the whole paradigm that we have of liberals being for big government and conservatives being for small government is just dead wrong. I write about this a lot myself, but I'm not sure that I didn't originally get the idea from him. The fact is that conservatives are just for a different kind of big government. Most of the time, it is even bigger than the government liberals want. What's more, it is infinitely more pernicious. My favorite example is that liberals want to spend money on libraries. No one ever lost their liberty because of public libraries. Yes, I know: conservatives think that taxation is theft, but that doesn't stop them from taxing for whatever it is they want. And the things they want to tax for really are associated with the loss of liberty: armies, spying, vaginal probes.

Yesterday, we had as clear an example of this divide as we will ever have. The farm bill is normally a very popular thing. Rural representatives like it because it gives money and price supports to farmers; urban representatives like it because it gives food (mostly in the form of food stamps or SNAP) to poor people. But when the House tried to pass a farm bill last month, it failed. Democrats didn't like it because it made savage cuts to SNAP. The most conservative Republicans didn't like it because it didn't cut SNAP enough. So in order to get a farm bill passed, the House Republicans split the farm bill in half: part for farms and part for SNAP. And they passed the "farm only" bill and said they would get to the "SNAP only" bill later.

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It's days like these...

By Carl 

... I wish I was an ignorant Republican, Inc-er.

I did my taxes last night. It was not pretty.

I had an instructor for Tax Accounting when I was Actorino212, and he once said something really profound.

Which is to say it would mean nothing to a Teabagger.

He said, "Never regret having a large tax bill at the end of the year. It means you made a lot of money and the IRS let you hang onto it for a few more months."

I don't mind paying taxes, although I cringe every April. See, I earned that money in the greatest nation on the planet. I consider it the price for furnishing this great nation with the tools and people who make it great for me to live and work in.

When I was a kid, I watched my dad struggle to put food on the table. He was a union man, and work was spotty. Some weeks we made do on a ham cooked on Sunday that lasted us until the following week. He never took a vacation, opting instead for long drives on long weekends, despite the fact that he was up at 4 to get to work by 6.

He banked all his vacation time, as well as sick time and whatever other days he could bank in the union coffers, in order to build a nest egg for his retirement. The first sick day I remember him taking was when he tore his bicep clean off his arm, trying to lift a steel beam that had fallen on one of his workers. The next one was when he had a heart attack.

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Going where the right-wing thinks you've always been

By Richard K. Barry

We all know the right wing loves to talk about government waste, as if all we need to do is cut the fat and Bob's your uncle as far deficits are concerned. It's always bullshit, but they never tire of saying it.

Apparently, just for the hell of it, the IRS decided it would be a great idea to spend $60,000 on a Star Trek parody with some kind of a tax theme, and call it a training video:

The six-minute "Star Trek" video made in Maryland was shown to agency employees at a conference in 2010. In the video, IRS workers are meticulously dressed as characters from the popular TV show and are flying a staged space craft towards the planet "Notax."

I don't know what I find sillier, that they spent so much money on something so bad or that someone sought out William Shatner, aka Capt. Kirk, to ask him what he thought about the whole thing.

For the record, he was appalled and thought it was a waste of money. Great.

And thank you, IRS, for giving the right wing something to talk about for decades. We already loved you anyway.

Could sequestration take down Dems?

By tmcbpatriot

It's here! Doomsday! Sequestration is upon us and its going to be BAD!!!! Or not.

This whole business of spending cuts, for what it's worth, may turn out to be a while lot of nothing, and that will not bode well for Democrats. Yesterday, for example, Janet Napolitano said that sequestration was causing airport delays. Oh no! The horror! But then "the Federal Aviation Administration reported Monday there were no significant flight delays in either Los Angeles or Chicago."

Okay, well, there must be something devastating happening as a result of the sequester because Republicans are running scared...

Americans for Prosperity, a conservative advocacy group founded by the Koch brothers, says that lawmakers should be commended for doing nothing to prevent billions of dollars in across-the-board spending cuts, known as sequestration.

"With the sequester, Congress made a promise to the American people to cut spending. They deserve to be congratulated for actually keeping that promise... It definitely wasn't easy given the pressure from the White House."

D'oh!

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Mythical government waste

By Frank Moraes 

Conservatives have a special fondness for government waste. As I pointed out leading up to the Fiscal Cliff, John Boehner seemed to think there were wasteful government programs, he just needed Obama to tell him what they were. This goes along with polls that shows that the American people want to cut government spending. But when asked about specific programs, they always want to continue funding those -- in many cases they want to increase that funding.

There is one exception. Americans want to cut foreign aid. Of course, that wouldn't do much because foreign aid is generally a bit less than 1% of the federal budget. But Americans think it is much higher. An American Public Opinion poll from two years ago found that the median American thought that foreign aid was 25% of the budget. So there you have it! In the minds of most Americans, we could balance the budget and then some (Quite some!) if we just stopped handing money out to people who hate us.

This kind of thinking is pushed by the conservative movement without actively lying. It is the reason we have Republican politicians constantly talking about "waste" without mentioning what the waste is. It is just a given that the government wastes money. When they do, they present spending on projects that sound wasteful but almost never are.

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So what if the American people are with Obama on spending?

By Michael J.W. Stickings

The Fix:

For the past several years, congressional Republicans have focused relentlessly on a single message: Washington — led by President Obama — is spending too much money, and it needs to stop.

But according to new Washington Post-ABC News polling, that laser-like focus isn't helping Republicans win the argument over federal spending — with 67 percent of those tested disapproving of the "way Republicans in Congress are handling federal spending."

This is good news, of course, what with the sequester battle shortly coming to a head. But of course these polls do not take place within a vacuum.

The fact of the matter is, discretionary spending -- pretty much everything government does other than the military and entitlement programs -- is at an historic low thanks to the right-wing ideology that pervades both parties, if more the aggressively right-wing one than the other, along with the national media and most of the rest of the Beltway establishment.

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There is no fucking spending problem

By Michael J.W. Stickings

Appearing on Fox News today, House Minority Leader Nancy Pelosi said the following:

It is almost a false argument to say we have a spending problem. We have a budget deficit problem that we have to address.

She's almost right.

It's an entirely false argument to say the U.S. has a spending problem, and to the extent there's a deficit problem it's a problem of revenue, specifically not enough of it, not expenditures.

But if you really do want to cut spending, the place to look is defense, where a bloated military sucks up an extraordinary amount of the overall budget. It isn't discretionary spending, which is government spending in a whole range of areas, which is at an historic low thanks in large part to recent cuts that President Obama himself supported alongside Republicans and a good number of Democrats.

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Must destroy Republican Party

By Frank Moraes 

The same day that House Republicans are proposing to save $600 billion in defense spending by cutting 10% of all federal jobs, the United States Postal Service announces that it is cutting delivery of first class mail on Saturdays. These are linked together. You can file them under "stupid things we do because Republicans are crazy." Let's look briefly at what this all means.

The Postal Service cut has been a long time in coming. Back in 2006, during the lame duck after the Republicans lost control of the House and Senate, the Republicans passed a poison pill that required the Postal Service to pre-fund their retirement program. This is a requirement that no other business has and was put in place because, well, Republicans are evil. That really is what this all comes down to. The Republicans want to kill the Postal Service. Sure, there is the added benefit of helping out our corporate overlords at UPS and FedEx. But it is mostly about trying to destroy anything the government does well. See: Republicans just know that the government can't do anything well. That's why government programs like the Post Service (which is in the Constitution that they supposedly love so much) and Medicare and Social Security must be destroyed. If reality doesn't conform to your ideology, change reality, because your ideology could not possibly be wrong! 

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Mitch McConnell offers lesson in Republican bullshittery

By Michael J.W. Stickings

Mitch McConnell was on the teevee yesterday laying the groundwork for Republican entrenchment in the next round of budget negotiations:

Senate Minority Leader Mitch McConnell (R-KY) vowed on Sunday that Republicans would force significant spending cuts in exchange for raising the debt ceiling even if President Barack Obama had to be "dragged kicking and screaming."

"What we're saying is that the biggest problem facing the country is our excessive spending," McConnell told NBC's David Gregory. "We've watched the government explode over the last four years. We've dealt with the revenue issue, and now the question is will the president lead? Why should we have to be bringing him to the table?"

Gregory pointed out that trillions of dollars in spending cuts had been part of last year's Budget Control Act and Republicans had refused to accept significant cuts in entitlement programs as a part of a larger deals offered by Democrats going back to debt ceiling negotiations in 2011.

"You can re-litigate the past if you want to," McConnell laughed. "I wish the president would lead us on the discussion rather than putting himself in the position of having to be dragged kicking and screaming to discuss the single biggest issue facing our future. You know, until we adjust the entitlements so that they meet the demographics of our country, we can't ever solve this problem. The time to solve it is now."

Good for David Gregory to stand firm against this nonsense, or at least to point it out for what it is.

Let's go through the bullshit:

First, the U.S. does not have a spending problem, it has a revenue problem, and the budget deficit could be eliminated simply by establishing tax rates at normal historical levels, as we saw during the Clinton years. (As the Times noted last month, "[t]he average federal income tax rate is at its lowest in more than 30 years.") And if there's a spending problem at all, it's with military spending, which is way too high. In fact, under Obama federal government spending is rising at the lowest rate since the '50s, while discretionary spending as a percentage of GDP is the lowest it's been since the same decade. There's no exploding safety net either.

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Debt ceiling "negotiations"

By Frank Moraes 

Greg Sargent at The Plum Line reports this morning that media are already covering the upcoming raise in the Debt Ceiling in Republican terms: "Media Shouldn't Get Rolled by GOP Debt Ceiling Spin." He refers to Politico reporting on Mitch McConnell's new demands, "Democrats now have the opportunity -- and the responsibility -- to join Republicans in a serious effort to reduce Washington's out-of-control spending." Two quick things to notice here. First: there is no "out of control spending"; this is the same old conservative canard that is illustrated by my second point. It is the Democrats' responsibility because... Republicans don't know what to cut; they just know the government is too damned big!

Sargent argues that we shouldn't see the raising the debt ceiling as a negotiation. This is because a negotiation involves two or more parties deciding what they will give for what they will get in return. The common media framing for the debt ceiling is that the Democrats will give spending cuts for the Republicans raising the debt ceiling. But the Republicans already want to and will eventually raise the debt ceiling. Both Boehner and McConnell have admitted that not doing so would be terrible for America. So this is not a negotiation, unless you use the Obama definition where you give up something you want in return for the other side taking something they want.

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The U.S. does not have a spending problem

By Michael J.W. Stickings 

Bernie Sanders (@SenSanders) tweeted at 5:02 PM on Wed, Jan 02, 2013: 

At 15.7%, revenue as a percentage of GDP is at or near the lowest level in 60 years. #budget #fiscalcliff 

Which is to say, the way to solve the budget/debt problem is with higher tax rates on those who can afford it (with a threshold well below 400K), along with sensible, progressive tax reform.

It is not by cutting spending, which only hurts those who need help the most -- whether it's discretionary or entitlement spending.

Unless we're talking about the bloated military, which could certainly afford a cut or two.

This is all so obvious.

If only the Democrats weren't so fucking spineless and the Republicans weren't so fucking insane -- and President Obama weren't so desperate to make deals with domestic terrorists.

Americans side overwhelmingly with Obama and the Democrats on fiscal policy

By Michael J.W. Stickings

I've got this, Speaker. You lose.

Reflecting the right-leaning, Republican-friendly, split-the-difference views of the Beltway media generally, NBC is pumping up a new poll that suggests Americans are hungry for compromise:  

An overwhelming majority of Americans want Congress and the Obama White House to reach a deal featuring both tax increases and spending cuts to avert the so-called fiscal cliff, according to the latest national NBC News/Wall Street Journal poll.

Oh really. So Americans just want each side to give in and meet halfway, because apparently each side is equally right/wrong and perfection can be found right in the middle alongside the Beltway media and its indisputable wisdom? 

Uh, no:

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Boehner: Obama must reveal mythic bad government

By Frank Moraes

Pollsters are constantly asking Americans how much the government spends on foreign aid and how much it ought to spend on foreign aid. The numbers never really change in any substantial way. In a poll in 2010, Americans thought that the government spends about 25% of its budget on foreign aid and that it ought to only spend 10% of its budget on foreign aid. In fact, the government spends 1% on foreign aid.

I know: Americans are ignorant. Nothing to see here. Dog bites man. Now if our political elites thought such rubbish, that would be a story. Jonathan Chait wrote a really insightful column this afternoon that addresses this very issue, "Why Republicans Can't Propose Spending Cuts." Basically, his argument is that Republicans are vague on what it is they don't like about government. But they are just certain that government is too damned big!

This, according the Chait, is why Boehner keeps yelling at Obama for not offering spending cuts. It isn't a negotiating strategy. Rather, it is Boehner asking Obama to show him the hundreds of billions of dollars in government waste that Republicans just know is hidden in the budget. The problem, of course, is there is no such thing. By the standards of developed countries, we spend very little on social programs. We do, undoubtedly, spend too much on our military, but the Republicans wouldn't think of cutting that. In fact, think back on Romney's budget proposal: he wanted to cut taxes, spend more on military, and spend more on Medicare. What does that leave? Medicaid, basically.

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No, Boehner, you tell us what popular programs you'd like to cut

By Michael J.W. Stickings

As usual, more ridiculousness from Republicans on the "fiscal cliff":

House Speaker John Boehner (R-OH) said on Tuesday that he was still waiting on the White House to detail what spending cuts President Obama would be willing to make in a potential deal to avert the so-called fiscal cliff at the end of the year.

"Where are the President's spending cuts?" Boehner said in speech on the House floor.

Talk about negotiating from a position of weakness. This is just bullshit posturing. As Greg Sargent notes, "Dems have already agreed to well over $1 trillion in spending cuts in 2011 -- cuts Boehner himself said were significant at the time. By contrast, Republicans have not agreed to a penny in new rates."

Two things are going on:

1) As Sargent suggests, "the idea is to try to blame the White House and Dems for the failure to reach a deal. But polls continue to show that Republicans are losing this PR battle badly."

2) "As for the demand that the White House go first in detailing its spending cuts, this is an almost laughably transparent ruse. As I keep noting, if Dems propose more in detailed spending cuts, Republicans will simply dismiss them as unserious, no matter what Dems offer -- pulling the talks further and further in their direction."

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Not serious

By Mustang Bobby

The Republicans said that President Obama's offer on the fiscal cliff fix was "not serious." So they came back with one of their own:

That framework aims to raise new revenue through an overhaul of the tax code. It also calls for slicing $600 billion from federal health programs, in part by increasing the Medicare eligibility age from 65 to 67, and saving $200 billion by applying a less generous measure of inflation to all federal programs, including Social Security benefits, according to GOP aides.

For the first time, Boehner managed to get his entire leadership team — including conservative champions such as House Majority Leader Eric Cantor (Va.) and House Budget Committee Chairman Paul Ryan (Wis.), the 2012 vice-presidential candidate — to publicly sign on to a plan that explicitly calls for new tax revenue. Republicans say they are willing to extract all the new tax money from households earning more than $250,000 a year, the same group Obama wants to target with higher tax rates. But the GOP plan would raise the money by wiping out deductions instead of raising rates.

In a meeting with reporters, Boehner called it "a credible plan that deserves serious consideration by the White House."

It's basically the same stuff that Mitt Romney and Paul Ryan were offering up until about a month ago when they lost the election. No tax rate changes, severe cuts to programs for the middle class, and deficit reduction through the magic of closing loopholes, which is one step away from traveling to the Delta Quadrant via a wormhole.

The only point of this counter-offer was to show what "not serious" really looks like. 

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Dumb, Dumberer, Dumberest

By Carl 

You'd think after having their asses handed to them in the November elections, Republicans might be a little more... flexible.

And you'd be wrong. The Great Orange Satan -- No, not Kos, the other one -- has stopped crying long enough to lash out at working Americans:

U.S. House Speaker John Boehner proposed $2.2 trillion of spending cuts and new revenue that lack what President Barack Obama calls essential for a fiscal agreement: higher tax rates for top-earning Americans. 

Boehner, an Ohio Republican, yesterday called it a "credible plan that deserves consideration by the White House." The Obama administration promptly rejected the proposal, which would raise the Medicare eligibility age and slow Social Security cost-of-living increases. 

[...]

With the Republican blueprint, both parties now have their opening offers on the table. Nebraska Senator Ben Nelson, a Democrat, said the Republican plan signals "act two" in negotiations over the so-called fiscal cliff. "There will be an act three undoubtedly, and hopefully the distance between the bid and ask is closed," he said.

In fairness, at least one of the aspects noted above might make sense, in a perverse way: raising the Medicare eligibility age.

Look, people are going to have to work longer for a bunch of reasons (not least of which is the two major recessions that have triggered on the watch of President Bush, destroying 401(k)s), which means there is a good chance that they'll have private health insurance available to them under Obamacare. By delaying the port over to Medicare, the nation could save billions over time.

Of course, who relies on Medicare but the folks who weren't able to sock away shrinking wages for retirement.

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Republicans reject Obama's initial "fiscal cliff" proposal, but he was right to make it

By Michael J.W. Stickings

The Times reports:

Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.

The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced the goal of finding $400 billion in savings from Medicare and other social programs to be worked out next year, with no guarantees.

Tax increases (on the rich)? Stimulus spending? No more Republican-made debt ceiling crises? Now that's some change I can believe in. No wonder Republicans immediately rejected the proposal.

So does that mean it was pointless? Absolutely not.


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