Sunday, May 30, 2010

Memorial Day

My grandmother was born in the 19th century, so she called it "Decoration Day." It was a holiday created after the Civil War, when Americans were expected to go to the burial places of the war dead with flowers and flags — to remember their sacrifices.

Of course, even during the Civil War, the poor and working class did most of the fighting. A rich man could pay some immigrant or field hand to fight in his stead when called. The World Wars, it seems, were somewhat more democratic — although the rich fell naturally into the officer corps, while the poor crawled on their bellies through the mud. In the Vietnam era, the better educated found ways to stay out of the fight, if not the war.

Bill Clinton, Dick Cheney and I found ways to avoid the draft. George W. Bush, Richard Blumenthal, and quite a few of my friends and relatives managed to snag non-combatant reservist positions which allowed them to claim they "served their country."

Today, post-draft, the separation between civilian and military cultures dwarfs the Grand Canyon. How are we supposed to successfully oppose neo-imperialist military involvements when there isn't even a threat of our own (educated, middle class) children being drawn into personal danger?

Maybe we need to reinstate the draft — even though military leaders seem to prefer their self-motivated, FOX indoctrinated, all-volunteer army. Maybe. Given the history of draft evasion, though, it's not likely to bring any significant change.

So what's the answer? Beats me. Given the state of the economy, it might be possible to raise the standards required for enlistment. Maybe we could find a way to connect military service to the forgiveness of student debt.

One thing, though, is certain: separating the vast majority of our citizens from our soldiers can only serve to perpetuate war. If the vast majority never feels the war, the war never has to end.

Tuesday, May 18, 2010


"I just said it was like a cross between a bulldog and chihuahua,
but what I meant is it will have a
fantastic hybrid vigor."
Boris Johnson - Mayor of London

Most Americans are paying little or no attention to the recent elections in the UK. I might be among them were it not for the fact that I indulge in a bit of BBC on podcast while out walking off the pounds. What I've enjoyed most about the recent UK excitement is the way the right (Cameron and the Conservatives) have so easily found a route to compromise with the (sort of) left (Clegg and the LibDems.) (Please pardon my parentheses.)

Our own Barack Obama has been attempting to travel a similar course, with many unexpected and, doubtless, heartrending roadblocks thrown up in his way. Somehow, he managed to endorse offshore drilling for oil just in advance of the destruction of the Gulf of Mexico. Somehow, he managed to endorse the SM-3 missile interceptor system just before it was shown to be pretty-much worthless. Honestly, I don't believe the guy is an asshole — but I think he's been getting some pretty bad advice.

The Far Right has taken over the Republican establishment, and the Tea Party dorks are almost a breath of fresh air — kind of like a right-of-center LibDem-ish minority. There is nobody even remotely open to compromise in the GOP except for, perhaps, Lindsey Graham and those two women from Maine. Unlike just about all the other Republicans, they're not unmitigated opportunists — they say what they mean. (I especially admire Lindsey Graham, for his genuine respect for the law.)

Frankly, Mr. President, this might be an ideal time to be a one-term president, so stop trying to compromise and take a firm stand. Dump those Rubin relics, repudiate the remnant Clintonians, and just lose the goddamned election in 2012! The steps the new president will be forced to take — to deal with an ongoing economic crisis — will be so unpopular that his or her party will be pesonae non gratae for many subsequent years.

Take one for the team, and stop trying to be all things to all people. You're not.

Thursday, May 13, 2010

Debt and Taxes

Now is not the time to begin deficit and debt reduction — the economy remains in precarious condition, and unemployment and underemployment remain terribly high — but it certainly is time to start thinking about working towards a more "pay-as-you-go" system of taxation and spending. Sorry, Democrats, but spending cuts are needed; and sorry, Republicans, taxes will have to go up.

A good place to start cutting is military expenditures. The Cold War is over, and America's current adversaries are incapable of launching the kinds of attacks that require more complex and more expensive weapons systems to repel. Military contracting, by the way, is not labor intensive, so job losses would be manageable.

The Bush wars in Iraq and Afghanistan created far more enemies than they eliminated, and the Obama "surge" in Afghanistan is getting nowhere because there is no legitimate government to take over an area once it has been "liberated" from the Taliban. Let's just cut our losses, and get out with all deliberate speed. While we're at it, we can also remove our bases from Japan, Europe, and the Middle East. We can deal with terrorist strongholds with small, highly mobile forces and Predator drones.

Another cost savings could come from eliminating farm price supports. Not subsidizing corn, for example, would not only save money, but enhance public health — reducing the cost of medical care.

Yes, both the savings ideas offered above would arouse bipartisan opposition. You always can count on bipartisanship when it comes to protecting sacred cows.

As for tax increases, it makes sense to look for the money where the money is — that is, look to the individuals and corporations that have the most of it. There should be no cap on Social Security deductions, and the tax should be applied to all income, not just salary. On the other hand, there should be a cap on deductions for mortgage interest — and that cap should be gradually lowered.

There has been plenty of talk lately about a value added tax, or VAT. The good thing about a VAT is that it is hard to notice, and hence does not draw as much public anger as its first cousin, the sales tax. The bad thing about a VAT is that it is a form of sales tax, and so is regressive.

A better approach, I believe, is to stick with the income tax, but to make it much more progressive by adding more tax brackets, especially at the top end. There also must be much stricter limits on deductions and credits — taxes should not be used to create social policy. Interestingly, half of all deductions for charitable contributions are for donations to churches. I cannot imagine what social goods churches provide that make them so valuable to the American people.

None of these ideas will balance the budget, of course — much more sacrifice will be required, and supply-side nostrums about rising tides lifting all boats are just dead-out wrong. Yes, a stronger economy will help, but even in full recovery, we still will have to figure out what to do with all those people in their forties and fifties who will remain structurally unemployed. The welfare state is here to stay.

Friday, May 7, 2010

Amidst the craziness...

Well, even as I was writing yesterday's post, the Brown-Kaufman amendment failed and Bernie Sanders' proposal to increase the GAO's oversight of the Fed was watered down to a one-time audit. Why do I let myself succumb to optimism when optimism virtually never is justified? I imagine it's a safe bet that the banks won't have to spin off their derivatives desks either, and they'll find a way to defeat the Volcker Rule as well.

There's a lot of talk about a bank tax lately — to repay government for bailing out the industry, provide a cushion for the future, and just reduce the deficit — but I don't see that happening either. The administration proposal for a $50 billion fund collected from the banks to help finance future bailouts already is dead, so a permanent tax seems even less likely.

In the meanwhile, high-speed trading by computers created quite an "anomaly" in the market yesterday. It will be interesting to hear how mere humans will eventually explain it — and interesting to see if there's a complete recovery from the losses at the end of the day. Unless the problem was entirely a technical glitch that cascaded out of control, one figures that some major investors think stock prices have been a bit overheated of late, and their sell orders triggered the robotic meltdown.

It also will be interesting to learn who might have made money while stock prices were bouncing around. Is it paranoid to think that some of the quants who created the algorithms that led to the craziness might have... hmmm.

Thursday, May 6, 2010

Regulating Wall Street: things looking up!

Judging by how upset Barack and his Banker Buddies have been in recent days, the financial reform bill coming out of the Senate is likely to be a lot stronger than most of us expected. Sherrod Brown and Ted Kaufman's proposal to reimpose caps on deposits and liabilities a single bank can have on its books looks like it will be part of the final bill; and while Blanche Lincoln's proposal to force banks to divest themselves of their derivatives desks is far from a sure thing, it is doing well enough to make Tim Geithner squirm.

Most encouraging is that support for these and other new restrictions have bipartisan support, showing that members of both parties have noticed the popular rage against big finance, and are afraid to buck it. There is support on both sides of the aisle for the Volcker Rule, which would bar banks from proprietary trading; support on both sides for reinstating Glass-Steagall separation of commercial and investment banking; and an extraordinary alliance of the left and the right calling for expanding GAO powers to audit the Fed.

The bank lobby — with full support of the Robert-Rubinesque contingent of the Obama administration — is working mightily to construct "placebo amendments," substitute proposals senators could vote for that would make it appear they support reform while continuing to serve the plutocrats.

So, stay alert. As many have noted, we have a once-in-a-generation opportunity to rein in the banks. If it doesn't happen this time, it won't happen until the next mega-recession comes along.