December 2012 Archives

Dear America,

The new year is about to begin, and it appears from the way in which this one is ending that nothing will change.  We are still debating the subject of gun control with the murder of twenty children with an assault rifle just barely behind us.  Our surrogates in Washington, D.C. are still debating whether to avert economic trauma for the ninety eight percent of Americans who need a tax cut by giving them one because the Republicans want to give one to the two percent who don't.  The EPA director has resigned  quite possibly because she is sick of defending her position on the debate over global warming and pollution, which position she and millions of others consider to be long past proven to be valid.  And the list goes on.  But what will all this mean for us in 2013?

My guess is that the pace of change in the modern world will continue so slowly that it will be imperceptible unless measured against where we were twenty years ago.  We will have another recession because the Republicans will insist on tax cuts for the privileged few if everyone else is going to get them, and as a result, no one will get one.  With billions fewer consumer dollars being spent, it will take us all year to get back to where we are now...which is a pretty good place for many of us, though many others of us are still suffering financially on account of the economy.  The news for them may be bleak as it appears, at least to me, that we have suffered a trauma that will leave us permanently scarred.  The way in which the wealth generated by Americans gets distributed will continue to put 80% of income in the hands of 2% of the population, and life will get both better and worse, depending on who you are, at a frightening rate.  We will get both poorer and richer as a nation with the working poor outnumbering the Sybaritic rich by ever increasing margins.  And the Republicans will continue to obstruct efforts to redirect us with the demonstrably vane hope that increasing the wealth of the rich trickles down on everyone.  And all this will occur with a minimum of attention from us because the extant political system is broken down into two parties whose identities are not ascertainable in any meaningful way.  We no longer make our choices at the polls on the basis of issues, but rather we vote for the party that we think stands for our best interests overall because we identify that party with certain dogma about all kinds of things: values, national pride, defense, affluence and who deserves it and the place of the United Stares in the world, just to name a few.   And all the while, as we vote on those bases, favoring those who claim to feel as we do on the softer issues that are determined by sentiment rather than reason, those based on reason will go largely ignored.  We will see our identity as a people recede ever more deeply into inactive memory as we become something else to our core.  It's a trend that I fear will define us for the rest of this century, and thus will change the world...mostly for the worse.

So, is there cause for optimism on any front?  I don't think I'm the one to ask, not that you intended to anyway, but there are signs of a return to a saner society at hand.  New York has now reported the fewest murders for any year since records of such things have been kept, and The Senate seems on the verge of formulating a plan that will obviate the sequestration cuts that are currently law on the books and maintaining the Bush era tax cuts for all those with incomes under $400,000, which John Boehner says he will put on the docket for action by The House whether he personally likes it or not.  As to New York City, it appears that a rise in overall crime is solely attributable to thefts of i-products like i-phones and i-pads, which might lead to a decline in the popularity of such devices--a good thing in my opinion given the rapacity of Apple as a corporation and the predation on both consumers and employees by corporations that it represents.  And as to the impending compromise on the tax and spending front, all of the pressure against Republican intransigency appears to have come from the voters as they still have impunity in congress when it comes to making demands by virtue of their numbers in both houses.  Between the success of popular sentiment in changing the vector of politics in congress by virtue of the apparent electoral rejection of dogmatic conservative principles like "no new taxes," and the likelihood that The Senate will feel compelled to change its rules to prevent the filibuster from continuing to dictate American social policy by dint of what might be called the Republican "super-minority" in that house of congress, it appears that not only is popular opinion once again becoming relevant, the opinion of the majority is also coming back into vogue as a raison d'être for politicians to act.  And as popular opinion is trending back toward the more civil and collective interest sensibility of prior generations of voters, we may be headed toward a Renaissance of American liberalism and social conscience, as long as it doesn't go too far, that is.

So, like those in Washington who are being asked about the prospect of a deal before the end of the year on avoiding the "Fiscal Cliff," I am "cautiously optimistic" overall.  We should have a better idea of what to expect in the near and mid-term future within a few days as the lame duck session ends and the new congress takes over, but for the moment, I am willing to make the assumption that sanity will reign in Washington starting in 2013 largely because sanity is returning to the nation in general.  We have a few more issues to deal with, but what we are dealing with now may well be the bellwether we need to boost the consumer confidence needed to get dollars back in the stores and jobs back in our factories to make the things those dollars buy.  With that in mind, I hope you had a Merry Christmas, and that we all have a Happy New Year.

Your friend,

Mike

Dear America,

Occasionally I find myself using the phrase, the worm has turned.  I researched it one time, and while I found some Elizabethan Era references to it, neither its provenance nor its exact meaning were ever made indisputably clear to me.  However, everyone who knows the phrase knows what it means.  And now, the Republican Party has given me my latest occasion to invoke the phrase.  Last Thursday night, John Boehner, the Republican Speaker of the House of Representatives, was forced to withdraw what he called "Plan B" from consideration by the Republican controlled House because he couldn't get enough support for it from his own party.  Notably, the lynchpin of his plan was extension of the Bush tax cuts to all but .18% of the American people.  Only that .18%--taxpayers who have incomes over $1,000,000 according to Boehner--would see their taxes go up by about, and then by only a manageable 5% for people who already have more than they can ever spend, under Plan B, but even that was too much for the neo-conservatives in the Republican caucus.  Plan B was intended by Boehner to reverse the public sentiment that his party isn't offering compromise at all, and thus will be responsible if taxes go up on the 98% of us who earn less than $250,000.  That's a lot of votes, and Boehner knows it, but the neo-cons don't seem to, and they are willing to forfeit the traditional advantage that the loyal opposition enjoys in mid-term elections--the next ones will be in 2014--by precipitating the most feared political outcome in recent history: the fiscal cliff...a term I deplore for its cartoon-inspired cuteness, but it's useful because everyone knows what it means.

The Republicans, and the Republican conservative complex (Rcc) in general have hung around their necks the failures of the Democratic Party to implement the measures that the party as a whole prefers during the period of its control of both houses--and for the last two years of the period the White House as well--from 2006 through 2010.  But the reason for those failures was not just the ability of the disloyal conservative opposition in The Senate to filibuster almost every important measure.  Though it went unnoticed by the public, the ability of the recalcitrant "Blue Dogs" among the Democrats themselves, they being Democrats in name only, was also to blame.  Together, they blocked every effort in The Congress to advance the progressive agenda.  It was neo-conservatives in both parties that stymied progress toward a better nation.  Of course, Senate Republicans were openly pleased about it; they were the overt opposition.  But in The House, the Blue Dogs, also neo-cons, kept the Democratic Party from exercising its partisan control over the course of that body.  So the Democrats got blamed, but in reality, it was conservative Republicans in Democrat clothing who caused Democratic inefficacy...the serpent in our bosom, so to speak.  The Republicans in both houses must have been laughing up their sleeves the whole time they were pointing to the Democrats and accusing them of failure, knowing all the while that it was the poison pill of neo-conservatism within an otherwise liberal party that was killing the Democrats' plans, just as it was driving the Republicans' own.  But now they are taking that same medicine, and the pill is poisoning them just as it did the Democrats.  Fractiousness has paralyzed the Republicans.  Just ask John Boehner.  It seems the worm has turned.

Mind you, in my opinion going over the fiscal cliff isn't such a bad thing, although I must admit I am not looking forward to paying more taxes next year.  It reduces both the deficit and the national debt over the next ten years by a significant amount, and it brings us back, approximately, to the last time our nation enjoyed wide-spread prosperity rather than obscene corporate profits and accretion of wealth by the very few, though plenty of that will still occur.  Going back to the Clinton years wouldn't be such a bad thing, I think.  But based on the proposition that raising taxes on 98% of Americans would set our economy back significantly, I understand the motive for trying to avoid it.  We need more stimulus to sustain our forward momentum, and putting about $2,200 in every family's bank account is a good way to effect it.  It will help most all of us, but the Republican Party's future may depend on it.  If Boehner couldn't get his party's support for almost universal tax cuts, he can't get their support for anything that has a chance of getting both passed by congress and signed by The President.  So, as all of the polls show, they will take the blame for that $2,200 that comes out of every household's budget next year, and that doesn't bode well.  In fact, if the sages of economics are correct and we do have another small recession, it will allow us to get back just to where we are now probably some time during the 2014 election year.  Between the higher taxes and the decrease in government spending that "sequestration"--the other half of the fiscal cliff--demands, our economy will decline because there will be less money to spend among consumers, who are the source of 70% of GDP, and among government purchasing agents and employees as well, thus accounting for about half of the other 30%.  We will take a hit, no doubt about it.  And when we vote for our congressmen and senators in 2014, whom will we blame?  And rightly so, I might add.  This Christmas, the Republicans are getting coal in their stockings in the form of a big dose of the same medicine they have enjoyed giving us Democrats for the past several years.  And as they will discover over the foreseeable future, it is a gift that keeps on taking.

So while others wring their hands during this holiday season, I say that all is right with the world...at least in American politics.  It's a large helping of just deserts all around if you're a Republican, and it's the prospect of a future without Republican schemes for the rest of us.  They will have to repudiate some of their own and come around to moderation and loyal opposition as political tactics now, and not a moment too soon.

Your friend,

Mike

P.S.  Please forgive the unedited nature of parts of my letter today, but Christmas dinner is in the stove and needs to be attended to.  In that vein, Merry Christmas and Happy Holidays to all of you.

Dear America,

This letter is not destined to win me any friends.  Anyone who criticizes the survivors of, and the media who cover, a tragedy like the murders of little children and elementary school teachers and administrators that occurred in Newtown, Connecticut last week is treading a treacherous path,  but we have seen it so often that I feel compelled to talk about it.  Tragedy does bring out the best in us, but right next to that virtue, the media and those who have suffered loss as survivors also put on display some of the more vile aspects of human nature, sensationalism and narcissism in particular.

As to the former, the news media were on the scene immediately, and they stayed there through the weekend.  Mind you, there was nothing new to convey after the events were first reported on Friday afternoon.  By the evening news less than twelve hours after the heinous murders, we all knew that the deranged killer had murdered twenty children and seven others, including his own mother in the home he shared with her.  By mid-day on Saturday, we knew that the guns he had with him and had used belonged to his mother and included two semi-automatic pistols and an assault rifle. We knew how the parents of the children had waited nearby in suspended animation until police confirmed the identities of the dead children for them, and we could almost hear the wails of horror and inconsolable grief from wherever we were in the world...and while it could be argued that much of that reportage was an invasion of the privacy of wounded and staggered people, the coverage to that point was arguably news.  But then the circus atmosphere, what Paul Simon called an atmosphereof freaky holiday in one of his old songs, "Save the Life of My Child," descended on the mob with microphones.  The self-service and gluttony for attention of talking heads like the one on CNN who insisted on mentioning how the media suffered over their duty to cover this unspeakable crime, became so disingenuous that it was plain that the story was no longer about the people involved, but rather was about the media attempting to outdo each other with feigned piety and compassion, and grisly titillation.  He reiterated the new media credo of constraint--that the names of the perpetrators of such atrocities as these would not be mentioned so as to deprive them their macabre fame--and then he named the killer...because, he said, he had to "for the record," as if doing so were part of the chain of custody of the evidence being collected.  Even the elder statesman of CNN news, Wolf Blitzer, participated, and neither piety nor compassion had anything to do with it.  But mercenary and insincere as the press's behavior became, it did not compare to the crassness of a couple of the survivors of the slaughtered children. 

Let me start by saying that I have nothing against celebrating a life that is over rather than mourning its loss.  I have told my family that when I die, I hope they will have a celebration that appreciates my time on earth rather than maundering over the fact that I am gone.  But that presumes that my life was long, and it has been already, and that my death was natural and suffered in due course.  Such was not the case for the Newtown victims.  Their final moments were spent in terror and despair.  Their lives were cut short before they had run their courses, and not a one of them was ready to go.  I can see no basis for celebrating a life ended thus, especially that of a child, whose life was not only ended too soon, but had really just begun.  But on the evening after the murders, the father of one of the little girls who was killed appeared on television in his best suit and black tie and regaled everyone watching with his account of his little girl's virtues.  He extolled her ability to light up a room when she entered and her goodness of heart, as if such qualities were unheard of in children from five to ten years old.  His tears ran down his cheeks as he smiled, all the while obviously lapping up the attention he was getting.  He put on a show...bathing in the starlight of his dead child.  It was offensive, and I thought I had seen the worst...until this past Tuesday night.  Anderson Cooper of MSNBC interviewed the parents of another little girl, complete with pictures of her smiling in her now past life.  This time, not a tear was shed.  The parents smiled and laughed and reminisced as if they had just put her on the bus for a class trip to the capital.  They recounted their visit to a mortuary where the little victim was in a white casket and how they had loaded up their pockets with sharpies before they went so that they could draw all over it as if it were the cast on a broken leg...again smiling all the while.  Their saccharine account of the aftermath of their loss--and more importantly of their daughter's loss--was so offensive that even my wife, who has a much more forgiving nature than I, was repulsed by what seemed a genuinely sanguine demeanor in both the father and the mother of the child.  There was no sign of over compensation in their good humor, but rather there was a genuine glee in all that had happened.  It was the kind of phony brave face that people wear when they miss the point.  There was no mention of assault rifles or the failure of the gunman's mother to secure hers adequately...much less of her taking her troubled son to the firing range in order to teach him how to use it.  There was no talk of futility or wasted potential, or of the tragedy of a life that will never be lived.  They were on a picnic, it seemed, and Anderson Cooper, demonstrating once again his insatiable appetite for the lime light, extolled their bravery when the whole freaky scene was over.  But it was a fair trade, don't you think...their daughter for fifteen minutes of fame and the opportunity to display their brave faces on national television?

I feel despair over this crime as does the nation.  Having buried a wife and an unborn child many years ago, I sympathize from a perspective of some understanding, though I will never be able to appreciate the depth of the survivors' suffering.  No parent goes through the death of a child without desolation of spirit, and their absence from the television screen suggests that twenty four of the families of the twenty six child victims feel as I believe you and I would under such circumstances: private, bereaved and inconsolable.  But those survivors who chose to become celebrities on this horrific occasion demonstrated a quality that has become all too common in this country.  Their narcissism parallels that of a nation that defines its place in the world in terms of "American Exceptionalism."  We are not suffering just from the proliferation of guns for which there is no purpose other than what they were used for last Friday.  We are suffering from a kind of egocentricity that is dangerous, as the willingness of the killers in Aurora, Columbine and too many other places to count demonstrates.  It seems now that nothing is out of bounds when it comes to getting the attention of those around us, even to the point of ignoring the tragedy of the deaths of our children.

Your friend,

Mike

Dear America,

Throughout the discussion of the fiscal issues pending before our congress today, there are two that, in my opinion, have made the discussion into a crisis...one by escaping notice, and the other by the primacy it has assumed when in reality, it is the last thing on anyone's mind.

The first is that every dollar cut from the federal budget is a dollar not spent in our economy.  The significance of those dollars can be felt in the numbers on which politicians fixate and in the real world, which seems to be a planet far, far away to most of the Republican Party in particular.  As to the numbers, the gross domestic product (GDP) is the total spent on goods and services in this country, and it is the measure of all kinds of things: the amount of debt the nation can absorb, whether we are in a recession or the economy is growing, the prospect for greater job creation, whether we are succeeding as a nation, whether growth will generate more revenue in a given year and thus, how much the federal government will have to borrow to finance its operation...whether we are heading in the right direction fiscally and thus, for whom we should vote.  So if fewer dollars are spent by, say, Social Security recipients, the GDP is reduced commensurately.  Similarly, if Medicare premiums are increased or benefits are taken from people, the money that they would otherwise have spent on goods and other services have to be spent on those premiums or the medical care they would have paid for, which may not diminish GDP because that number includes both goods and services, but it is a reallocation of the dollars in the GDP that may well result in fewer jobs because medical care is so costly and the profits from providing it go into the pockets of so few.

As part of the natural progression of events then, reducing spending reduces GDP, which causes shrinkage in the job market, which results in reduced consumer demand (70% of national GDP is consumer demand), which leads to fewer jobs...the whole downward spiral.  And the evidence that such is the case is all over the world and in the news every day.  Spain is now reporting unemployment at the rate of 25%.  Greece's economy is even worse.  And the thing that those two countries have in common...almost the only thing other than being part of the European Common Market...is that they have both embarked on onerous austerity programs within which government spending has been drastically reduced.  Great Britain has also suffered such effects, though not so dire in their scope, as a consequence of austerity cuts in government spending there.  And in the United States, cost cutting has led to job losses at the municipal and state levels as federal contributions to state and local government have diminished with federal austerity in numbers equal to nearly half the jobs created in the private sector over the same period of time.  As a consequence here as elsewhere, our unemployment remains high...near 8%.  And the fact that these austerity measures are the primary cause of such consequences is inescapable.  Business and industry, the supply side of our economy, continue to prosper in terms of profit though they wring more and more out of every employee and hire fewer and fewer while investing up to fourteen times as much on automation as they spend on hiring new workers.  And they continue to send jobs abroad while paring down union rights as best they can and keeping their workers working for wages that have been constant for the past thirty years in terms of their inflation adjusted value.  Thus, the owners of capital in this country continue proving that prosperity in business is unrelated to the prosperity of the American people, just as the availability of petroleum, which is now abundant in this country and getting more so every day, has no bearing on the cost of petroleum products, which continues to rise.  So with all this in mind, there is a nexus between the arduousness of government austerity and the welfare of the American people--an inverse relationship comprising both the diminution of help received by those in need and the prosperity of those in the middle class who don't--and the discussion of how much austerity is good for us in lieu of raising taxes on those who can afford to pay should be informed by all this evidence, taking that inverse relationship into account, but it is not.  The reactionary impetus toward social and economic Darwinism is undiminished, and the zeal for cost cutting reflected in slogans like, "we don't have a revenue problem; we have a spending problem" and "job killing tax increases" is unabated.  The fact that the majority of the American people don't see it that way seems to make no difference to them.

And in that vein there is the second issue: who is offering compromise and who isn't.  In that context, the Republicans continue to claim that The President isn't offering any spending cuts when in fact, he has made more than one proposal for cuts to counterbalance the tax increases on the rich that are a sine qua not for his signature.  But the Republicans have offered no indication that even if Mr. Obama did proffer a budget plan with more spending cuts, including immaterial changes in entitlements, the Republicans would change their position one iota.  They still insist that there can be no increase in taxes on anyone, including the rich, and they continue to justify that position with captious statistics such as the fact that 50% of all small business income is earned by those in the top two percent when what is really relevant is how many jobs are created by those in the top two percent.  The fact that small businesses like cosmetic surgeons' practices, movie actors and professional athletes are small businesses under their definition elucidates my point.  In the final analysis, the Republicans have proposed nothing new, and have not diverged even a pittance from their previous position on taxes even though they claim that it is now The President's turn to make concessions.  To the Republicans fair does not mean give and get, it means get and get, and this time, President Obama has heard his outraged constituency and will not capitulate so that the Republicans will grudgingly give him a silver star for fair negotiation.  This time, President Obama will hold the Republicans feet to the fire until the American people have no choice but to see what they are doing, and that compromise is just a ploy to them as there is no such thing on their minds.  The more the Republicans call for compromise, the dirtier a word it becomes, and it is poisoning Washington, not just for the present, but for the future as well.

So, from this point on, when you hear the word compromise coming through Republican teeth with the other lies, take a large grain of salt and swallow.  When you hear talk about austerity and shared sacrifice, take another.  Neither of those things is on the Republican agenda.  What they want is more of everything for the privileged few, and that aint us, America, other than the fact that we live in a country that in the end, will never accept an oligarchy of the rich.  It is not they who made this country what it is.  We can only hope that they will not be able to make it what they want it to be.

Your friend,

Mike

Dear America,

The Gramm-Rudman-Hollings Act of 1985 temporarily returned Social Security to "off budget" status in 1985 after two decades or so of inclusion of Social Security in the federal budget process, and off budget status was made permanent in 1990 by another budget act aimed at getting our fiscal house in order.  The Congressional Budget Office was created by congress in the 1970's and has rules that are changed periodically in accordance with which it makes certain assumptions in order to calculate the effects of the multitude of scenarios in which congress is interested at any point in time.  For some reason, Gramm-Rudman-Hollings and the CBO's assumptions are not consistent on one key point: the off budget status of Social Security.

While that sounds like it has only a technical significance, it isn't so because in prior years--up to about two years ago--the contributions to the surplus in the Social Security Trust Funds that we were making every payday were included in the amount of the federal government's gross revenue by CBO, thus making revenue look that much more favorable.  Concomitantly, spending from The Trust Fund was included in federal expenditures by the CBO, and the deficit was exacerbated by that amount.  Thus, when Social Security went from bringing in a surplus, which the government borrowed, to running a deficit every month when revenues were compared to outlays, conservatives had a new tool to use against the program.  They began to claim that Social Security was costing too much because the federal government had to borrow every month to fund it.  But that isn't exactly so.  The Federal government does have to borrow money every month, but not because of Social Security's account balance.  There's a $2 trillion credit balance in Social Security's account at the U.S. Treasury where the bonds issued to The Fund in lieu of cash are held.  But now, the federal government does have to borrow from someone else every month to pay up on the bonds that are maturing because the amount that it can borrow from Social Security every month is now zero.  Since more money goes out of The Fund than comes in, that source of rolling credit no longer exists and the obligation to repay past loans from The Trust can no longer be covered by new loans from The Trust.  No more credit card for the federal government; just more naked debt.

The significance of the assumptions the CBO uses when "scoring" a proposed spending measure is that everyone quotes it if he likes it.  Thus, as Social Security is not off budget for purposes of CBO reports to congress, discussions of the deficit and the national debt always include Social Security now when they should not because Social Security pays for itself out of funds that have been saved over the past twenty five years or so...funds that won't run out until at least 2032, and as late as 2042 by a recent estimate from the office of the Social Security Fund Trustee, Tim Geithner.  So you can see how the information on which congress bases its evaluation of everything it does is skewed for the purposes of making "entitlements" the villain of every piece.  But there is also constant uncertainty about where we really stand because of this untoward CBO accounting practice that warps reality and in effect, deceives the American people.

For example, when we discuss the effect of eliminating the Bush tax cuts for the rich, the numbers are off by that Social Security vigorish that congress has built into every calculation made by the CBO.  No wonder we can't resolve the issue of whether do do so to anyone's satisfaction.  I have seen numbers as low as $42 billion and as high as $82 billion for the effect of those tax cuts one way or the other.  And then there's the calculation of the national debt and deficit.  By including Social Security in every baseline assumption, the effect of changing the COLA calculation from the straight consumer price index (CPI) to the chained CPI is just the opposite on calculations of the deficit--the negative balance between revenue and expenditures on a yearly budget--of what it is for the debt, which is the total amount that our country owes everyone it has borrowed from and not yet paid back.  So, decreases in federal benefits--on Social Security specifically for these purposes--by basing COLA's not on the CPI but on the lower, chained CPI as proposed by conservatives have a positive effect on the deficit because they reduce the federal government's monthly outlay to cover what it owes to our Trust Fund, whereas the effect on the fund in the long term of such benefit reductions is only to defer payment of the debt that the federal government already owes it.  I repeat: the effect on the national debt, including the $2 trillion lent by the Social Security Trust fund to the U.S. government, is to defer repayment of what the government owes The Fund.  The implicit Republican claim is that such a change would reduce the debt, but those bonds in The Fund have to be paid eventually.  So, no matter what congress says about it now, our debt may seem to be reduced when Social Security benefits are cut, but it isn't. We, the beneficiaries of Social Security, have to suffer for a cosmetic bookkeeping maneuver that conservative Republicans want to claim credit for in the way of deficit reduction when in reality, they just want to "kick the can down the road" on the national debt while they castigate everyone else for doing so.  And as a bonus, they advance their plan to kill Social Security softly...one slice at a time without really accomplishing anything.

But this chained CPI change doesn't affect just Social Security recipients.  It also effects higher tax rates on the working poor and lower middle class earners because Republicans want to apply it to all government programs, including the indexing of income tax rates.  Of course, that significantly affects only people earning below $250,000 because the cumulative effect over, say, ten years is about two percent of your tax burden if you earn $50,000, but as you get farther above that level, it means less and less as a percentage, meaning that the rich bear the lowest burden proportionally and the working poor bear the largest.  So on the pretext of reigning in Social Security's impact on the national debt and deficit, the Republicans can veil their intentions on every CBO report with regard to everything else, including taxes, because they have managed to make rules that bring Social Security into consideration for debt and deficit calculation when it shouldn't be.  It's complicated, deceitful, and as seems typical of Republican policy of late, very near nefarious.  Every one thinks Social Security recipients, like me, are the only ones being had, so interest in things like the chained CPI substitution get overlooked by the vast majority of Americans.  But beware America.  It's not safe for any of us in Romney's 47% to pick up the soap.  Still, if chained CPI is the sacrifice we in the lower economic strata have to make, CBO's inclusion of Social Security in the discussion of debt and deficit reduction is immaterial so long as the top tax rates, those on the top two percent, go up in order to equalize the effects of higher taxes and lower benefits on the rest of us.  I say give this to get that...but only to get that, regardless of any CBO Report.

Your friend,

Mike

Dear America,

Free market economics is dead, and the evidence keeps rolling in.  There are big pieces, like energy production.  The Rcc persists in claiming that the way to keep energy prices down and our economy thriving is to produce more oil, coal and gas, which is how they justify their efforts to ease environmental and financial restrictions on businesses involved in energy production.  But a laboratory experiment to prove or disprove that premise has already been conducted, and it is ongoing in the United States.  Energy production...and that includes oil...is at its highest level in over a decade, and it continues to go higher with the new technology that allows economical production of oil and natural gas from shale.  Projections are that we are headed for energy independence not next century, but in a few years...maybe as soon as next decade.  But the better our energy position in the world becomes-- and there is talk that by 2020 the United States will be exporting oil--the higher oil prices go and the more we pay for gasoline.  The explanation given by the industry is that energy is traded in world markets and those markets dictate our costs.  But if that is the case, the dearth of petroleum in the rest of the world will continue to dictate our prices no matter how much more we produce.  So why produce it?  Why traumatize the environment over oil that we will never benefit from anyway.  Why run a pipeline across environmentally sensitive areas rather than just building refineries where the petroleum needs to be for refining and use by the public?  But that is all digression.  The point is that the pricing advantage we were supposed to get from increased supply just hasn't materialized, and we can safely presume never will.  So the energy industry's continued reliance on free market theory, which now appears to have been a myth all along, to justify its ever increasing demands of our society in the form of tax treatment, environmental liberties to be taken and freedom from market regulation is nothing but a scam.  The evidence is in.  Free market theory doesn't work as demonstrated by the petroleum industry in particular.  And here's a small piece of the evidence against free market theory.

It appears now that the big box stores in North Dakota, where the enormous shale oil fields are humming with activity, can't find people to work for the wages they want to pay.  That should mean that wages go up and the people who hold those poorly paid jobs get a little closer to earning a living wage.  But the stores would rather bring in employees from elsewhere to take those jobs.  They are not however, increasing their wages.  In a free market for labor, the scarcity of workers would tend to require higher wages, but that is not what is happening.  You have to consider that these imported workers are going to have to live in the booming oil fields where the costs of housing and everything else are rising as people pour into the area to take the relatively well paid jobs in the petroleum industry.  So what will happen when the imported workers arrive is that they will become an under class and will be forced to live in conditions that the indigenous workers would not accept, unless of course the stores' managements follow the Chinese route to profit and feed and house them in dormitories.  Thus, just as in the case of petroleum, there is no real free market for workers either, and speaking of the Chinese, this isn't the first time that such has been demonstrated in this laboratory study to which I referred above.  In fact, American business and industry has been putting the lie to the free labor market myth for decades.  When American labor insisted on being paid a living wage, American management didn't just import workers, they exported both the jobs and the facilities in which they were performed to lower-wage-paying countries.  You no doubt heard about the garment factory fire in Pakistan last week in which more than 300 workers died because they had been locked in to keep them working.  Among the aspects of the news coverage was the fact that some of those workers were earning as little as nineteen cents per hour.  Barely a week earlier there had been a similar fire in a Bangladesh textile factory where over 100 people died making clothes for labels sold by Walmart and Sears among others.  But the textile and garment industries in this country are moribund, if not already dead, because American management didn't want to pay a living wage...especially when they could get some child in the third world to do the work almost for free.  No one in this country could live on the kinds of wages paid in the countries that attract American industry these days, so there is no free market for labor here.  There just aren't any jobs at all because, once again, we are not competing among ourselves in a free market.  Just as in the case of petroleum, the free market for labor is being controlled by conditions abroad, in the case of textiles by crushing poverty that makes any job worth having, and thus there is nothing free about the labor market here or there.  Americans are out.  Black and brown children living and being exploited in poor countries are in.

The bottom line--that's what the free market is all about--is that corporate America has made an assiduous effort to eschew the pressures that an actual free market would put on them to make a fair distribution of the wealth that is being accrued in unimaginable proportions among the privileged in the executive class and the plutocratic elite because of the labor of others.  They have succeeded in finding ways to control price by manipulation of the system in various ways such as subverting anti-trust laws to allow both horizontal and vertical integration, the latter in particular when it comes to the petroleum industry.  As to industries like the textile industry, management has effectively locked American labor and their unions out of their manufacturing facilities by moving them to poorer countries, or they are not even making what they sell anymore, leaving contractors and others to commit the sins that are necessary to take the obscene advantage of poor people that is the major ingredient in the greed laced mix of measures designed to maximize profit without sharing it with those who create it.  So, as the management of American Airlines demands $60 million in bonuses just to go away, it is becoming clear that you can get rich by doing your job badly, but if you produce a quality product with your own hands as used to be done here in the textile factories of so many small towns across our country for example, you can expect to lose your job if you demand to get paid a fair wage for your effort.  That isn't a free market...at least it isn't a market that I want to be free in.

Your friend,

Mike

Dear America,

It's important to understand how the Republicans can claim that reduction of Social Security benefits can alleviate some portion of the federal budget deficit.  And it's important because it is a wolf masquerading as a sheep, and it will eat up some Social Security recipients one way or another by taking from them what is rightfully theirs and they cannot afford to lose.  To start with, there is the way in which the Social Security Trust Fund is being used to justify the need for such reductions in benefits.  Before I go on, I have mentioned before that even Ronald Reagan knew that Social Security has nothing to do with either the national debt, and though it may seem redundant to say it again, he even used that fact in his own defense in the presidential debate with Walter Mondale that took place on October 7, 1984.  It's useful to know that date because you can pull the debate up on the internet and listen to and watch Reagan say it; you don't have to take my word for it.  The same is the case with Erskine Bowles and Alan Simpson of Simpson-Bowles fame.  They have both observed that there is no relationship between Social Security and the debt at various times, including on page 43 of their report.  You can get that on the internet too.  So how are the Republicans getting away with this assault on the single most progressive program ever created by the federal government?  It goes like this.

By law--that is under the 1939 amendments to the Social Security Act--there is a trust fund that receives the payroll contributions of American workers without them ever becoming part of the federal general fund.  That money is not tax revenue.  It is strictly dedicated to the Social Security program and can be used for no other purpose.  That is why it is collected separate from your income tax withholding.  But the Social Security money, again by law, has to be invested in order enhance its ability to provide for recipient benefits, so it is used to buy special bonds from the U.S. Treasury.  The money comes into the fund and it is used to buy those bonds to the extent that it exceeds the need of the fund to use the money to pay benefits.  Well, within the past couple of years, the flow of cash into the fund, which has over $2 trillion in it by the way, has dipped below the amount expended each month for benefits, and thus, the amount that the fund lends to the federal government by buying those bonds is less than the government has to pay back to us each month on bonds that are maturing from the past.  In fact, the amount we can now lend is zero.  In other words, it is not enough for the federal government--Republican congressmen in particular--that we lent our money, two trillion of it, to the country in the past.  They want to delay paying us back beyond what their obligations permit by reducing the benefits paid out so that those benefits no longer exceed what is coming in month to month, and thus, they can borrow from our trust fund at least as much as they are paying back from past obligations, and thus they can eliminate a portion of federal expenditures that requires them to borrow money from some other Peters to pay us Pauls and make the claim that they have reduced the deficit.  But it doesn't reduce the national debt, and it really doesn't reduce the deficit either.  It just requires us to pay some of it with the benefits we lose.  Here's how they want to do it.

First, they want to change the method of calculating how the cost of living increases that Social Security recipients get...and count on...every year that there is inflation, and that's every year.  The CPI (Consumer Price Index) has been used thus far.  As its name suggests, it is the rate at which a specific bundle of products have increased in price.  But the Republicans want to use the chained CPI, which doesn't include the entire price increase for those goods, but rather includes only the increased price of goods that people tend to substitute for them when prices go up.  So, the retail price of beef won't be factored into the chained CPI, but the price of chicken will because people, the elderly in particular, eat chicken in place of beef when the price of beef gets prohibitive.  In other words, to carry the notion that this is fair out to its absurd conclusion, the cost of living increase could be calculated on the basis of the rise in the cost of canned dog food rather than beef because in the past, seniors on very low fixed incomes have been known to eat dog food because they couldn't afford beef or chicken.  Hell, we could even use the cost of dry food for that matter.  I'm sure one could survive on it.  So, that is one way in which the Republicans want to use "entitlement reform" to balance the federal budget.

The second way is to discontinue the reduction of the payroll tax we pay into the Social Security Trust Fund.  If more money comes into the fund, there is that much more for them to ste...uh, borrow from us.  That is why they opposed the cuts in the payroll tax in the first place.  Cutting those contributions to our fund effectively makes more money available for their use via the same mechanism that I just explained with regard to the CPI and the Social Security cost of living increases.  But there's a consequence to all this that goes beyond the reduction of Social Security benefits and an increase in middle class tax payers' largest payroll deduction--the Social Security payroll tax--that they fail to mention.  The less the federal government pays us back, the longer the national debt goes unpaid.  Thus, when they stand in the well of The Senate and the House of Representatives and claim that we are burdening our grandchildren with the national debt, they are leaving out the fact that they are the ones doing it...at least to the extent I have just described.  In other words, not only is the "reform of entitlements" a scam, it is outright hypocrisy, and someone should call them on it...you.

Your friend,

Mike

Dear America,

I find myself wondering how people can accept some of the conservative palaver that seems rampant at times.  For instance, on Saturday I heard the interview of a supposed authority on the "fiscal cliff" on Fox News.  According to him, it is the most cataclysmic prospect we have faced since the 2008 catastrophe built for us over the thirty years prior to 2008 by the Republican conservative complex (Rcc)...and that may be so.  We may be facing a recession as deep as the one we suffered beginning that year, but the question isn't whether such is the case, though making that claim does give moment to the bundle of threats the Republican Party is making in an effort to rehabilitate the idea that tax increases for the rich are the devil's tool.  That idea was roundly rejected by the people who count...a bit more than 51% of the American electorate, and over 60% of those surveyed on the question, so they are trying to reinvigorate it by creating fear.  But while that may be a legitimate political tactic these days, there is no excuse for using non-facts to do so.  Thus, when I heard the "expert" say that the rescission of the Bush tax cuts for the top 2% represents only three days worth of the federal deficit, I suspected that he either didn't know what he was talking about or he was trying to mislead Fox News watchers, and that apparently Fox News didn't care or didn't know what they were talking about either.

I usually find it demeaning to analyze anyone's arguments on the basis of arithmetic, and it is rarely necessary to stoop to that level.  If you are dealing only with the four basic mathematical operations, you shouldn't need to have your calculations checked when you start talking to the American people as if you know what you are talking about, and even most conservatives don't.  Their numbers may be manipulated, but they are not often complete fabrications.  But three days is just over .8% of a year and we are experiencing deficits of just over $1 trillion per year.  My understanding is that those tax breaks comprise a total of something between fifty and seventy billion dollars per year, $82 billion if David Brooks was right in his Friday op-ed.  That is something between 5% and 8.2% of the federal budget deficit.  That's about a month worth of days, not three days but ten times that: a month.  And if we can cut the deficit by one twelfth, that sounds worth doing whereas three days, which represents less than one per cent doesn't seem worthy of serious consideration.  So, the motive for the misrepresentation was clear...to trivialize the benefit of a tax increase on the rich and thus render it an implausible remedy for our fiscal problems.  And then the manner in which he had made his error became clear as well.  He misplaced a decimal point and made his calculation of the number of days of deficit those cuts would represent by multiplying 365 days by .082%  instead of .82% ($8.2 billion dollars worth of tax revenue instead of $82 billion).

Having been reduced to the trivial task of checking someone's elementary math already, I feel personally diminished, but it had to be done.  By today, there are thousands...and maybe millions...of ordinary people going around the country spreading the rumor that the increase in marginal tax rates for the rich that is the sine qua non for President Obama's signature on a new tax package is nearly meaningless, especially in light of another canard on which they rely: that taxes on the rich will cost them their jobs.  Thus, instead of seeing that a meager 4.9% tax increase for the 2% of American people who already have plenty of money would eliminate over 8% of our total deficit problem and proportionally alleviate pressure to reduce government programs on which they rely, they are supporting the Republican myth that such tax increases won't help, but will rather be inimical to economic growth and job creation.  By the way, that myth is also supported by some dubious math and clever phrasing.  So, trivial as the arithmetic error of some marginal, obscure would-be maven may be, it is important to understand that these things happen regularly, and that elections sometimes turn on them.  Things like the apocryphal EPA regulation against raising dust on the dirt road to your farm house precipitate the credence of millions when over-eager conservative acolytes like Newt Gingrich bemoan them on the campaign trail. Similarly, when Fox News airs the opinion of someone whom they cloak in expertise born of provenance and nothing else, voters in future elections make their electoral decisions and they become immutable because they think they have heard the truth.  A myth like this three day thing...catchy in the way of most contrived political calculi...will linger in the minds of some voters for two years until they get to vote again, and then they will vote for the Republican candidate on the basis of that myth.  And Fox News, purveyor of the illusion that the media are liberally slanted, will be responsible for it...and proud of it as well.

Rather than finding experts to support media slants and biases where they exist, the media on both sides should be concentrating on the fact that no one remedy will ameliorate our fiscal difficulties.  We could advocate for some extant package of policy changes--the Simpson-Boles proposal or the "fiscal cliff" itself for example--and get pretty close to where we want to go, but the pain would be intense, and we would be risking another recession that would be perhaps more devastating than the first.  Or, in the alternative, we could cherry pick the least painful measures from among the ideas that are coming in from all sides.  My thought is that the increase in top marginal tax rates is a good beginning: 12% of what we need to break even every year.  Then we could eliminate capital gains treatment for short-term capital gains at least, if not all capital gains except dividends and interest.  No one needs to encourage the rich to invest their money by giving them tax breaks to induce them to do so.  They are not going to stop trying to increase their wealth by investing in the stock market because they can only increase it 75% as fast after taxes go up.  And maybe there should be a cap on deductions along with the elimination of tax loopholes that affect primarily big business and the rich.  But it will take a bundle of these things to get us out of this mess.  And as has been said many times by all kinds of people, including me, we're going to be ten years climbing out of this economic hole, and then only if we stop digging.  So whenever someone makes one of those facile observations about the number of days of deficit spending that a measure represents or how high a stack of dollar bills in some amount would be, be skeptical.  The facts and the theories involved in getting to the bottom of all this are not carved in stone.  They are scrawled in shifting sand.  Thus, as usual, the key to a sound thinking is to do it with your own head, not someone else's.

Your friend,

Mike