Church and State

Franklin Graham, son and heir to evangelist Billy Graham, says that "progressive" is just another word for "godless;" and that what godless progressives want most is to take away the tax-exempt status of religious organizations.  In the real world, of course, you're unlikely to find any politician willing to endorse ending religious tax breaks; but that doesn't make it a bad idea.

Religion and politics are inseparable.  Both are systems of social control, evolved to limit certain individualistic behaviors by defining them as deviance: the immoral and the illegal largely overlap.  It follows that every sermon is political speech: no clear line ever has separated Church and State.  Religion has been integral to American politics since the arrival of the Puritans, entangled in every major political debate.  Inevitably, a contribution to a church is a political contribution.

Property tax exemptions for religious organizations deprive local governments of revenue, subsidizing church members at the expense of everybody else, irrespective of need; and the deductibility of donations lets individuals use government funds to advance sectarian ideologies.  Granted, the only feasible path to reform is to make all charitable contributions non-deductible, but given the political abuse of 503(c) corporations and similar manipulations, the time for genuine "tax simplification" has arrived.  Donors will have to give out of genuine altruism; religious donors, perhaps, to avoid joining godless progressives, and anybody else who doubts their "truth," in Hell.

Notes for a Counterrevolution

With the passage of the Republican tax bill, the economic coup by the plutocracy against the people of the United States is nearly complete.  All that remains is to shred what is left of the safety net in the name of fiscal responsibility — and we can anticipate a concerted effort to accomplish that before the midterm elections.  What can Democrats do about it?

A coup requires a counterrevolution, not incremental "improvements."  None of the suggestions that follow are remotely possible before the 2020 elections, and even then they stand little chance of implementation: not all plutocrats are Republicans.  It's nice to dream, though.

First, the corporate tax rate should be reduced to zero.  Next, virtually all income, including wages, pass-through income, dividends and capital gains should be taxed on the same progressive scale.  Income reinvested in businesses thus would be tax-free, but all income distributed to individuals would be taxable.  Interest income, which encourages savings and the loans that finance economic expansion, would be tax-free.  Payments to foreign investors, who own a bit more than 20% of the US economy, would be taxed at internationally competitive rates.

All income should be taxed to finance Social Security, Medicare, and Medicaid, and all caps on taxable income should be removed.  To make American businesses more competitive with each other, anti-trust laws must be strengthened and vigorously enforced.  Vertical as well as horizontal combinations need closer scrutiny.

The devils can be worked out of the details with implementation, but since none of this is likely to happen anyway, I'll just leave the details to the economists.

Tax policy

This is a long one.  Read it anyway!

Now that we have a decent idea of where all the presidential candidates stand on federal tax policy, it might be a good time to start thinking about whose plan is best for our future.  I've started, albeit I'm not getting too far, because none of the plans makes any sense.

The Republicans all agree that the rich should be paying less, showing that even a dead horse will attract plenty of riders provided those riders are willing to deny that the horse is dead.  The dead horse, in this instance, is supply-side economics, aka "trickle-down."  Over the past thirty or forty years, it's become abundantly clear that cutting top tax rates does absolutely nothing to stimulate economic growth, so the vast increases in government income predicted by Arthur Laffer and his ideological kindred never have, and never shall, manifest themselves.

Economists who base their analysis on data rather than political cupidity agree that all the Republican plans would lead to sharp increases in the federal deficit and debt, something all Republicans claim to oppose.  Oddly enough, the Republican plan that would increase the deficit least is the one from Rand Paul, but only because he wants to create a value added tax (VAT), which is essentially a sales tax broken up over the various stages of production.  The costs, eventually, are paid by the people who purchase the products, so  like the sales taxes we have now, a VAT would be regressive.  Rich people invest large portions of their income, whereas lower income people spend almost every cent they earn.

Excluding VAT, the main difference among Republican candidates is whether they favor continuing progressive taxation or switching to a flat tax.  Carson, Paul, Cruz, and Fiorina all favor the flat tax, whereas Bush, Trump, Kasich, and Rubio would continue to apply different tax rates to different income levels.  (Rubio calls for greater cuts for families with children, along with total elimination of capital gains taxes — yet another giveaway to the very rich — while both he and Cruz would totally eliminate the payroll tax, which funds Social Security and a few other programs the rich can live without.)

Assuming that all the Republicans (with the possible exception of Carson, who appears more and more to be a genuine ignoramus) recognize that supply-side economics is invalid, we can also assume they all subscribe to Grover Norquist's "starve the beast" plan to shrink government until it is "small enough to drown in the bathtub."  That amounts to a sort of anarchist extremism best described as evil.

As for the Democrats, nothing they say much matters because Republicans will control the well-gerrymandered House at least until the 2020 census, and probably well beyond that unless Democrats figure out how to win state elections in the interim.  Hillary probably would be content to let the tax code remain as it is, while Bernie probably would beat his head against a wall trying to build up public support for genuine income redistribution.

Sadly, the public is unlikely ever to support tax increases for the middle class, which is the only way to genuinely straighten out the budget of the USofA.  Americans might be comfortable with higher taxation if what they get in return seems worth it but, frankly, I don't see how you get there from here.

State of the Union

Obama managed to sound somewhat more like a Democrat last night, and he seems to have given up entirely on his earlier "working across the aisle" mantra.  I like some of the ideas he floated, needless to say those least likely to be enacted into law by our current troglodyte Congress.  Raising the top capital gains tax rate to 28%, albeit only a modest increase, would be a step in the right direction.  "But wait," shout the Republicans, "that would stifle investment and kill jobs!"

Nah.  It's still a lower rate than the rich would be paying if they actually had to work for the income, and since corporations are so astute at avoiding paying taxes, the "double taxation" argument won't hold.  Dumping the inheritance dodge also makes a lot of sense, but I didn't hear anything about closing the "carried-interest" loophole this time around.  Oh well, it wasn't going to happen anyway, so why keep antagonizing Hillary's likely Wall Street donors?

Getting Congress to actively authorize military action against IS makes a lot of sense, because when things go terribly wrong, as they always are inclined to do, the administration gets to share the blame.  Free community college tuition sounds good, but community college tuition is cheap, generally covered by Pell Grants for the poor, as David Brooks pointed out in his NYTimes column a couple of days ago.  He is also on the mark when he observes that raising graduation rates from community colleges is a much more difficult, and a much more important, endeavor than just shuffling more failures through the system.

One area where Obama might get Republican cooperation is in getting fast-track authority for his Trans-Pacific-Partnership.  Will the TPP result in improved labor standards in Asia?  Maybe.  Asian standards just might improve almost to the same extent that US standards deteriorate.

All in all, though, inching to the left, however slightly, is likely to help Democratic candidates in 2016, while keeping what Paul Wellstone called "the democratic wing of the Democratic Party" at bay — and I suspect that may have been a major objective of last night's address.

The Romney Tapes

Now that everybody has heard Mittens pandering to his plutocrat friends and demeaning the memory of his father — who was a decent man — it hardly seems necessary to comment.  Well, when you get right down to it, my comments hardly ever seem necessary.  Nevertheless, comment I shall.

It should be no surprise that Mittens is, in his heart of hearts, an insufferable little twit.  Yes, it is true that that "the 47%" do not pay income taxes, albeit they pay a hell of a lot of other federal taxes.  Those who are employed (most of them) pay payroll taxes, which turn out to be a larger percentage of their incomes than than the combined income plus payroll taxes of a lot of top earners.  The cap on payroll taxes of roughly $110 thousand is unabashedly regressive — and if you figure in the "carried interest" advantages enjoyed by Romney and his fellow "lucky duckies," most of those low income workers pay a greater proportion of their income in federal taxes than the very rich.

Despite Romney's "doubling down" on his repulsive comments — essentially designed to capture the support of those who associate "the 47%" with the usual minorities — it's pretty clear that even the least involved are sickened by the Romney tapes.

Sorry, Mitt.  I'm pretty confident you won't surpass your father.  Tough shit.

Tax Policy

I've been trying to figure out what kinds of tax policy are endorsed, respectively, by Obama and Romney.  It's not easy.  Yes, we know Obama wants the two top income tax brackets and the capital gains tax back where they were under Clinton, but those ideas are not policy — they're talking points.  They have as much chance of making it through Congress as a squirrel fart has of making it through a hurricane.  We also can look back to some Obama proposals when he and Boehner were trying to strike a "grand bargain," but those ideas were contingent on Boehner accepting some elements that he had no way of getting past the House he allegedly leads.

Romney is even harder to nail down.  He maintains he can lower everybody's taxes by plugging "tax loopholes," but he refuses to identify any of those "loopholes"  — better known as subsidies, tax credits, and tax deductions.  Personally, I think we would be better off if all the credits and deductions in our convoluted tax code were eliminated, and subsidies limited to R&D — albeit I think a lot of it has to be done gradually.

The biggest "loophole" of all is the mortgage interest deduction.  At this time, it applies to interest on loans of up to one million dollars, which means it is regressive.  The greatest advantages go to those who finance the most expensive homes — which means that people like you and me, who don't live in $125 million dollar homes, get a lot less out of the deduction than our more affluent non-neighbors do.  Renters get nothing.

Eliminating the mortgage interest deduction would depress property values, because without that deduction, home buyers could not afford the payments on more expensive homes.  Even homes sold out of foreclosure would cost their buyers more.  The solution is to drop the cap on mortgage interest deductions gradually, so that property values could adjust gradually.  Needless to say, this won't happen.

Representative democracy in conjunction with capitalism doesn't work too well.  The people who want to lead us feed us bullshit.  The plutocrats control the flow of money, power, and ideas.  I don't suppose it bothers too many of us with consistent sources of income and decent health insurance all that much, but it bothers me.

The current Republican credo is "leave every child (except mine) behind, so long as I get to hang onto my current comfort level."  It just might work this November, but it still makes me sick.

The Buffett Rule

To nobody's surprise, the Buffett Rule — which would have imposed a 30% marginal tax rate on income over $1 million — failed to gain 60 votes in the Senate yesterday, and so did not come to the floor for debate. Given that the bill was nothing but political theater, and never could have cleared the House had it by some miracle passed the Senate, nobody much gives a damn.

Anyway, a 30% marginal tax rate on income over $1 million is entirely too low. Even during the first Reagan term, the rate was 50%, and in terms of garnering revenue, it was a step back from ending the Bush tax cuts for those earning over $250 thousand. If the Obama administration really wanted the very rich to pay their fair share, it would push for a return to taxing dividends and capital gains at the same rate as earned income. (Capping those rates at 15% was one of the contributions of the "liberal" Clinton administration.)

Recently, Simon Johnson and James Kwak suggested that all the Bush tax cuts be allowed to expire at the end of this year. I agree. Stopping new legislation, as the Republicans have demonstrated over and over, is a lot easier than getting anything positive done, and the tax cuts Bush provided to the middle class really are small enough to be negligible.

Nevertheless, absent some grand bargain, I think we can count on Congress to extend them all — perhaps even make them permanent. If Obama is serious about deficit reduction, and a bill like that reaches his desk, he'll veto it.

So Much for the Supers

Well, what did you expect? Of course they deadlocked, and as Paul Krugman pointed out in his column in Friday's Times, it's the best outcome we could have had. Anything short of a deadlock would have been a Democratic cave-in, since the Republicans are totally committed to protecting their plutocratic masters from any slight discomfort or inconvenience.

As we all know, in our current government, it's the President's job to cave. Okay, maybe that was a bit cruel. Honestly, I think Obama really believes a lot of that neoliberal bullshit the "New Democrats" have been spouting for twenty years now. Coming out of the Ivies and then teaching at the University of Chicago, he would have been marinated in it for most of his intellectual life.

I think those "automatic cuts" that are supposed to be triggered in 2013 have about as much chance for survival as a Democratic candidate in Utah, even though $1.2 trillion over ten years is not a hell of a lot of money. Congress will have over a year to backtrack, and find ways to rescue its unquestioned overlords, the defense contractors.

If Obama genuinely wants to make a difference with regard to deficit reduction, he has to veto the inevitable effort Congress will make to extend the Bush tax cuts. Since he's unlikely to get a bill that only raises taxes on the rich, he has to be brave enough to let them all expire. What's left of the middle class will manage with a little less money in their pockets.

What frightens me most is talk about "streamlining" the tax system — reducing the number of tax categories and eliminating most deductions. When it was done under Reagan in the eighties, it started the decline in taxation of the rich — and in the years since, just about all the corporate tax breaks that were eliminated at the time have been written back into the code, and then some.

We should not be worrying about deficit reduction now, in any event. Even with the so-called "downgrade" of US debt by S&P, we don't have any trouble borrowing at ridiculously low rates. We should be taking advantage of those ridiculously low rates to borrow the money we need to put people back to work. The best way to balance the budget is to expand the number of people earning good salaries and paying taxes.

Obama Mans Up

It is good to see Our President taking up the populist banner and telling us it's time to "soak the rich." I guess Plouff and Axelrod finally figured out that the old Clinton approach of "triangulation" wasn't working, and it was time to try the old Clinton approach of "doing whatever the polls say." A sizable majority of Americans want the rich to pay significantly higher taxes. Now, so does Obama.

"Class warfare," say the Republicans. I don't know about you, but I saw the class war begin thirty years ago, and guess what, fellow proletarians? We lost. If there really were any "class warfare" going on now, it would have to be a counterrevolution. The rich won the war outright, culminating in the Bush income tax cuts and, more important, the reduction of capital gains taxes to 15%.

I'm still not at all persuaded that Our President is on Our Side, but if it keeps Rick Perry out of the White House, whatever chicanery he attempts is okay with me. More important, delivering a strong, populist, anti-fat cat message could help the Democrats weaken or break the Tea Party grip on the Republican Party and the House, and also hang onto the Senate.

As for economic stimulus, the new tax proposals, even if they were enacted into law, would not do any more than the similarly doomed JOBS proposal; but, like the JOBS plan, they make for good politics. Anyway, the actual proposals don't matter, provided the president is seen as aggressively asserting his belief in them.

An unspoken but obvious truth of American politics is that independents don't know enough to make rational choices. Granted, most registered Democrats and Republicans also don't know shit from Shinola, but at least they have people telling them what to believe.

Independents ignore policy, and vote based on personalities. They particularly look for strength. One must hope that fourteen months is long enough for America to get over its perception of Obama as a wimp. If not, a raging asshole like Rick Perry might be our next president.

Hey, what happened?

While I've been calming down from that last post — not to mention the consummation of that Faustian bargain I mentioned — it seems many others have been getting a bit more excited. Today's market plunge may be just more of the "volatility" which indicates that nobody knows what the hell is going on. On the other hand, it just may be that investors finally have figured out that austerity is not likely to be good for their investments.

After all, the corporate world has been sitting on its money and spending bupkes for the past couple of years, and plutocrats tossing their loose change around at Bergdoff-Goodman and Tiffany do not an economy make. When the United States joined Europe in the cult of what Krugman calls "the confidence fairy," it appears many Wall Streeters decided it was time to listen to the economists rather than the Koch brothers.

Then, of course, there's the SUPER-COMMITTEE, whoopie doo! Since the Republicans already have sworn that no tax increase supporters nor loophole closers will be appointed to their six, one supposes they are assuming at least one of the Democratic appointees will be an Obamesque anilinguist (and one assumes that we all can assume they are correct in that assumption. And, okay, I haven't calmed down all that much.)

I know I swore off making predictions a while back, and hence I will refrain — but I just can't see anything good coming out of any of this.

Regarding what's "on the table"

The June job figures show employment continuing to crash, even as corporate profits increase. Is anybody surprised? The profits are coming mainly from overseas, although "productivity increases" here at home (automation plus increasing worker exploitation) aren't hurting at all.

In his column in yesterday's Times, Paul Krugman pointed out that the president is running very low on economic advisers, and wondered if the political advisers — who, like Obama himself, seem to know very little about economics — might be exerting too much influence. Given the quality of the economic advisers he used to have, I suspect there's not a hell of a lot of difference, but I'm hoping somebody can communicate some sense to him.

First of all, somebody has to pound it into his thick skull that we are not dealing with supply-side problems. It doesn't matter how many tax cuts and tax advantages government tosses at business — they'll just take the money and sit on it, or use it to buy back their own stock or take over other businesses (with concomitant staff "consolidations") or distribute it as dividends to shareholders. None of it will be used to create jobs in the United States as long as Americans can't afford to buy their products.

(The political advisers, of course, will point out that some percentage of "independent" voters have swallowed the supply-side line, and will encourage Obama to "get out ahead" of the Republicans. Obama once said he'd rather be a good one-term president than an ineffective two-term president, but I suspect he was either lying or self-deceiving at the time. I don't have a lot of confidence in Obama — or any of our current political elite — putting the country ahead of their own ambitions.)

If we disregard political ambitions and corporate contributions (har de har har), it makes absolutely no sense to give the corporations "tax amnesty" for bringing overseas profits back to the United States. We tried it back when Bush was president, and all it did was create a great deal of moral hazard, inevitably leading to the current proposal to do it again.

It also makes no sense to cut entitlements, which would serve chiefly to further reduce demand, and make our employment problems even worse. If Obama really has Social Security and Medicare "on the table" in the current talks with the Republican leadership, let's hope he's feeding them a line of bullshit no less stinky than the line they're feeding him about the possibility of increasing tax levies on the plutocrats.

Shit, nobody in either party wants to tax the plutocrats! They are the plutocrats! (Where's the IWW when you need it? We need it now.)

Eric Cantor on Taxes

Naturally, we already know House Majority Leader Eric Cantor's take on taxes: cut them, with special emphasis on cuts for the rich and for corporations. Yesterday's speech called for a 25% maximum rate, with the usual trickle-down rationale — let the rich and the corporations keep more of their money and they will, as Republicans like to express it, "invest in America." This is supposed to lead to rapid job growth.

As usual, the basic premise is fallacious. Top tax rates in the United States already are extremely low. Corporations are, in common parlance, "sitting on mountains of cash." Why? Thanks to low demand caused by high unemployment and concomitant excess productive capacity, it doesn't make sense to "invest in America."

As for wealthy individuals, they certainly are looking for places to invest the extra cash they pocketed thanks to the Bush tax cuts and their unconscionable extension under Obama. The sad fact, though, is that American business and industry doesn't offer very satisfactory returns on investment these days. Surplus funds are more likely to go to faster growing parts of the world like India and China, used for commodities speculation, or sunk into the new social media bubble. (Social media companies, by the way, provide very few new jobs.)

What we need — contrary to both Republican and Democratic talking points — is more government spending, because the private sector just is not coming through. If we can pick up employment — in infrastructure improvement, education, health care, environmental preservation, and other areas where we need lasting, long-term improvements — demand for private sector goods and services also will grow.

What we don't need is European style austerity programs. They're only making things worse in Europe, and they are beginning to have the same effects here.

Obama on Deficit Reduction

Okay, he threw a hefty wad against the wall. Now we have to wait and see how much of it sticks.

To me, the best part of yesterday's speech was the commitment to let the Bush tax cuts expire — presumably including the possibility that middle class taxes also will increase. Personally, I don't think a middle class tax increase would be all that awful. Granted, there is not quite so much middle class as there once was, but what the hell... most of the people who think of themselves as "middle" wouldn't be out more than a couple of hundred a year. Too bad for McDonalds, WalMart, etc.

The worst part of yesterday's speech was the continued assumption that Obamacare would reduce health care costs. The only sensible way to reduce health care costs is to remove the profits enjoyed by private insurance companies. Given that Obama is an unrepentant Clintonista, we won't be hearing anything from him about Medicare for All.

While Obama's speech was more aggressive than I expected, we won't know what any of the rhetoric — generally seen by the news media as "the first speech of the campaign season" — genuinely means in terms of action for a while.

I would love to be surprised.

Well, we lefties lose again

So what else is new?

Working people, to be sure, will average about a thousand bucks in reduced payroll taxes. It will be more than twice that for those up near the top of the income cap — or above — and it seems inevitable that the new Republican majority in the incoming House will try to extend the 2% discount next year. That will leave Democrats with a choice of stopping it in the Senate and looking like the Grinch who stole Christmas 2011, or helping the Republicans defund Social Security. Great compromise, Barack. Great politics. Brilliant.

Then there are the Bush tax cuts, which the Republicans will want to renew or, more likely, make permanent, just about when you come up for re-election. Why defund just Social Security when they can defund the entire "evil" government? Maybe you were too young to be paying attention in the days of "starve the beast," but I hope you have the guts to let all the cuts expire then, even if it means you won't be Our President anymore. If you honestly think you can redo the whole tax system, even if you have the full six years, you're crazy.

Anyway, the Reagan tax restructuring of 1985 — "simplification," we were told — just accelerated the transfer of wealth from the poor and middle classes to the rich. I don't think you'd do any better, even if you really want to do better.

Since there's so much underutilized productive capacity these days, there's only one sensible way for businesses to use the tax incentives they're getting for new capital equipment — buying automated tools to replace workers. Isn't that exactly what we need at the moment?

Frankly, I don't give a damn about the change in the inheritance tax, but it's likely to leave a sour taste in a lot of middle class mouths. Now, of course, you're sucking up to business interests even more than before. What happened? Did a smidgen of populist rhetoric hurt their feelings?

You make me sick.

Regarding the Bank Tax

I wish I could figure out what the Obama administration has in mind regarding that idea for a tax on the big banks. Whose idea was it? Did it come from Summers and Geithner? (Maybe, but I don't think so.) How about Rahm and the political team? (A lot more likely.) Somebody else? (I hope so!)

You see, it's actually a pretty good idea — provided it's done right. There is that little problem that it would have to be enacted by Congress, which means that getting it done right is very unlikely. Nevertheless, unable to rid myself of a residual twinge of optimism left over from my youth, I can't help thinking of how it might be done right.

Here's how it might happen: noticing how unhappy most of America is with the giant banks, their bailout by government, their vast, government subsidized profits for the past year, and the huge bonuses they are paying to their inept executives, members of Congress who are not total prostitutes to Wall Street will decide it might be a good idea to go a bit populist. They will go along with the Obama administration's efforts to assuage teabaggers and fellow travelers who think a balanced budget will restrain their taxes.

Community banks certainly cannot afford additional taxes — enough of them already are failing because they financed all those half-empty strip malls. Community banks will be excluded from the new taxes. The targets will be the big banks — the ones that are too big to fail.

If you slap a big tax on the biggest banks, it's a dead cinch that those big banks will break themselves into manageable pieces — pieces that are small enough to fail (and not pay those taxes.) Congress won't do it, but an appropriate tax will encourage the banks to do it to themselves.

Will it happen?

I'm not too optimistic, but, what the fuck, there's a chance.

Still, I'm not holding my breath.

Dereaganizing America

Can they do it? Can Obama & Co. actually manage to undo close to three decades of damage? Can they they, at long last, end the Age of Reagan?

Needless to say, I'm hoping the answer is "yes." I have especially high hopes for tax restructuring, bringing back some of the progressivity lost over the years. If it were my call, the restructuring would be considerably more aggressive, with a top marginal rate somewhere around 45%, but just getting back to Clinton era taxation is a step in the right direction.

Frankly, however, I think the middle class cuts may be a mistake. It's always a lot easier to cut taxes than to raise them, and one of the main reasons we have the deficit problems we do today is because every politician is a Keynesian in rough times, happy to slice taxes and increase spending. The real problem comes in periods of rapid growth, when Keynes would have us increase taxes and cut government spending. There's no real incentive to do it, because tax collections are going up with increased incomes and business activity. Government is flush with cash -- so why would a politician even consider raising taxes or bringing home a bit less pork?

As a matter of fact, in good times politicians are inclined to cut taxes even more than in bad times -- because government seems to be able to afford it -- but that's always a really bad idea. The Keynesian model is to build a surplus in the good times, to offset the deficits incurred when growth is off and stimulus is needed. Putting on the brakes when growth is accelerating also reduces the likelihood of bubbles -- and we've all come to know what those can do.

As for aspects of tax policy other than income tax, where all Obama really has to do is wait for the Bush tax cuts to expire, some real effort will be required. The problem is not the Republicans, who are so closely identified as lackeys of the rich that they have virtually no legitimacy at this time. The problem will be Democrats with obligations to various special interests. If direct payments to agribusiness are substantially reduced, I'll be pleasantly surprised. There's a better chance, I think, of eliminating the subsidies for insurance companies providing Medicare Advantage, but it's certainly not a done deal.

The "experts" are finally coming around to the point of view that most Americans have held all along -- that the economy is in worse shape than government and business leaders have been willing to admit. I find it very hard to believe that the unemployment rate will stay below 10% for the remainder of this year, and I wouldn't be at all surprised if it went higher still. Consider that employment levels are very slow to recover even when the economy starts expanding again, and you have to admit that America's problems are likely to be around longer than the Obama administration might like -- and possibly longer than the Obama administration.

I'm trying to look for the silver lining. The egalitarian economic opportunities of the 1950s and 1960s, a generation of real advances for average workers, were made possible by the vicissitudes or the Great Depression. If it takes hard times to re-establish social and economic justice, than hard times are just what we need.

Human memory is short, of course, and history (as my former students insisted) is "boring," so eventually the locusts will descend again. In the meanwhile, though, we should be spreading as much economic insecticide as possible.

"Half-assed" defined: "compromising" with assholes

So much for the definition -- on to the case in point: Obama's economic recovery plan.

Let's say you're a hospital administrator. A majority of the doctors at your hospital think patients with infections should be treated with antibiotics. A minority -- a loud minority -- believe those patients should be leached or, better yet, bled. Only in that way, they maintain, will the foul humours be released. (Note: they recommend bleeding no matter what the patient's condition, from robust health to death rattle.)

"I know," you proclaim, "let's compromise! We'll cut the dose of antibiotics in half, and we'll placate the minority with some bleeding! That way everybody will like me, and the bleeders won't shout quite so loud when they go on Fox News."

Listen, Barack, stop being such a goddamned pansy. A half dose of antibiotics (spending) and a half dose of bleeding (tax cuts) ensures that the patient dies. If you're re-elected in four years, it won't be because you knuckled under to a pack of loud-mouthed Republican troglodytes. You don't have to compromise, because if they won't go along with a real stimulus package, it simply means that they hate America. You are the goddamned popular president (albeit not yet especially popular with me), so use the goddamned popularity you worked so hard to win and get us out of this mess.

Tax cuts -- $500 for individuals and $1000 for couples -- will not stimulate anything. The money will go straight to the banks to pay down debt, which was exactly what was done with the last stimulus package. There is NO economic reason to promulgate stupid little tax cuts, except to push more public money at the very same people who created the current crisis. Did a Republican ever espouse bipartisanism? Even when goddamned Bush lost the popular vote, did it ever occur to him to compromise with Democrats?

I'm not saying helping people get out of debt is a bad idea, but a tax cut is the wrong way to do it. The average household owes over $9000 in credit card debt, with interest rates from the mid to high teens. Those who have missed a payment or two may find themselves paying interest rates in the upper twenties.

Once upon a time -- that is, before 1978 -- rates that high were illegal in every state but Delaware and Nevada. All the other states protected their residents with anti-usury laws. Then came the Marquette decision, in which the Supreme Court ruled that banks could charge borrowers in any state whatever interest was legal in the state where the bank was based.

As you might expect, banks from all over the country started relocating their corporate offices to Delaware and Nevada; then, so as not to lose their banking industries, all the other states overturned their anti-usury laws. If the new administration wants to help people get out of debt, trying to get a federal anti-usury law through Congress would be a great way to do it. At the very least, there should be a limit on interest charged by banks taking federal bailout money.

The money that Obama wants to blow in tax cuts would be much better spent in direct aid to the states. State tax revenues are crashing, and state governments are responding with budget cuts. That means job losses for workers in state and local government -- clerks, secretaries, teachers, fire fighters, librarians, social workers, trash collectors and, if things get bad enough, police. Thirty-seven states are required by their constitutions to balance their budgets, so governors will have no choice if they don't get help right away.

Yes, money for infrastructure projects is a fine thing, and should help put many of those in the construction trades back to work, but helping to support state payrolls should not be ignored -- and the twenty-two Republican governors will appreciate it every bit as much as the twenty-eight Democrats.

Grab your shovels -- it's bullshit time

Everybody, it seems, has advice for Barack Obama. A lot of that advice suggests that he either delay or reconsider commitments he made during the campaign -- usually citing the current economic crisis as justification. Most of it is bullshit.

• Bullshit premise #1: The Employee Free Choice Act, which would make it easier for workers to form unions, would slow the growth of new jobs and keep unemployment high.

  The argument is based on the notion that since unions would negotiate higher wages for members, employers could not afford to create as many jobs. That's total nonsense. Excluding nepotism, businesses never create unnecessary jobs -- and if a job needs to be done, somebody will be hired to do it.

  Also, anybody who ever has negotiated a union contract knows that you can't get blood out of a stone. If a company can't afford to pay higher wages, there is no way a union can force it to do so -- and if a business really is in danger of failure due to union contracts, unions (like UAW) will renegotiate. A union contract is worth nothing if a company is forced to go bankrupt.

• Bullshit premise #2: Raising taxes on the rich must be postponed to prevent worsening the economic slowdown.

  Yes, Keynesian economics teaches us that recessions require tax cuts, but that doesn't mean everybody's taxes have to be cut. The spending of those with adjusted gross incomes of more than $250,000 a year will scarcely be affected by increasing their marginal tax rate from 35% to 39.6%, which was the top rate during the Clinton years. To increase consumption and stimulate the economy, tax cuts should be heavily tilted towards the poor, who spend every cent they have available.
  

  Now is not the time to forget that the immense shift in wealth from the poor and middle classes to the very rich was at the heart of the current crisis. Immense wealth looking for a place to go fueled the growth of mortgage backed securities, gambling on credit default swaps, and the drive to create all the other unregulated derivatives that continue to threaten our banking system. A downward redistribution, to undo some of the effects of the Bush upward redistribution, will do far more good than harm.

• Bullshit premise #3: Health care reform must be delayed until the recession is over.

  Health care is not a good deployment of federal money now, say the critics of reform. Health care is too complicated and too expensive to address under current circumstances. If employers are forced to provide health care or, as in the Obama plan, pay into a fund to offset the cost of health care for the uninsured, businesses will not have the cash they need to survive and grow strong again.
  

  It's true that the Obama plan might not be optimal at the moment. It wasn't designed for a period of economic crisis. A far better approach right now would be national, single-payer health insurance. It would allow government to effectively negotiate cost reductions with health care providers and big Pharma. It would relieve smokestack industries, like the Big Three automakers, of their legacy health insurance costs, making them far more competitive with foreign companies like Toyota and Honda.
  

So, we are left to wonder what Obama will do when he takes office. Will he play it safe and "centrist," or will he follow through on his promises to the people who elected him? Judging by his cabinet appointments to date, one suspects it may be the former -- but who knows? He's played his cards pretty close to the chest so far. Maybe he'll surprise us all.

The next economic stimulus package

As I predicted way back on Groundhog Day, that stimulus package that was supposed to rescue us from economic stagnation turned out to have been a bust. The reason, clearly, is that it was more a product of political considerations than economic considerations. Giving away "free" money always is popular with the public, but it wasn't especially helpful.

To the extent that the cash was used to pay down consumer debt, it may have delayed some write-downs by the banks -- but given the state of American indebtedness, most of those who used their "Bush Bucks"* to pay credit card bills probably were in just as much trouble when the next month's batch of statements arrived.

It seems likely that most of the remaining rebate money was spent on gasoline. The part of the oil company profits that didn't go overseas went to the usual fat cats, and wasn't spread through the economy to any significant extent. The multiplier effect of the rebates, it follows, was insignificant.

Now Democrats are talking about another stimulus package. Mind you, just before a national election is really a very bad time to discuss an economic stimulus because there's no possibility that politics won't play a big role in what takes shape -- but there are a few level heads in the relevant Congressional Committees, so perhaps there are a few rays of hope for a genuinely helpful package this time.

The hardest part will be enacting a package without rebates. A new round of rebate checks will be no more helpful than the last round -- but the temptation to woo voters with dollars may be too strong to resist. If the presidential candidates get on the rebate bus, there's absolutely no hope of putting the money to better use.

To be worthwhile, stimulus spending must be targeted. A good start would be direct financial assistance to state and local governments. State and local governments are major employers, and many state constitutions mandate balanced budgets. When sales tax revenues fall -- and they have fallen fast because of the current recession -- government employees are laid off.

Not all aid to the states should wind up in their general funds, though. Some should be specifically targeted towards infrastructure improvements. Workers in the construction trades were particularly hard hit by the collapse of the housing market, and infrastructure projects could put many of them back to work.

Yes, politically connected contractors, as always, would get the lion's share of the contracts -- but I don't care if certain brothers-in-law profit so long as they are paying worker salaries. In my ideal world, contractors being paid with federal funds would be required to hire union workers, but that's probably way too much to hope for, even if the Democrats win big in November. There still are entirely too many "New Democrats" out there.

If there was anything good about the 2008 Farm Bill, it was the improvement in the Food Stamps program (now to be known as the Supplemental Nutrition Assistance Program for the sake of a snappy acronym), but rising food prices make even more improvement necessary. I also was pleased by the expansion of unemployment insurance benefits. Both programs pump money into the economy at the bottom, where it is certain to be spent, and have the greatest multiplier effect.

In the long run, though, no economic stimulus will be especially effective if it drives the federal government deeper into debt, further depressing the value of the dollar. To the greatest extent possible, federal stimulus spending should be paid for with cuts in other areas. I can think of two places to cut, right off the bat: oil subsidies, and agricultural subsidies. Big oil and big agribusiness have been making out like bandits (an apt comparison) while the rest of America has been suffering.

I'd also suggest changes in the Alternative Minimum Tax: index it for inflation, so that Congress need not go through it's annual ritual of raising the floor amount; and make what essentially is a flat tax progressive, so that the super- and super-duper-rich pay more than the current 28%. Of course, the AMT could be eliminated entirely if Congress had the guts to undo some Reaganomics and create a couple of higher tax brackets for both individual and corporate income taxes.

In brief, I think the people who got us into our current mess should pay to get us out of it.

*(Note: I heard the expression "Bush Bucks" from my daughter. I don't know how widespread its use might be.)

To Barack Obama from an old white guy

A little while ago, I posted the video you can watch above to YouTube, as a response to a video from the Obama campaign which you can watch here. If you don't find my video in the "video responses" section, it means the Obama campaign didn't "accept" it -- that is, decided they'd rather not have it associated with their video.

If you didn't have the patience to listen to me go on for close to ten minutes, here's the gist of it -- I tell Obama that what I really want him to do is undo the Reagan Revolution. I tell him he should significantly raise taxation of the very rich, re-regulate a lot of what's been deregulated over the past quarter-century, and run a government that's actively pro-union. Beyond that, I want him to put government workers back on the payroll to do most of the work that's been contracted out, and I assert that the Iraq War was started specifically so the private sector could loot the Treasury.

Yes, it's one of my usual diatribes, and if it actually appears on YouTube as a response to Obama's video, I'll be flabbergasted -- but there's at least a chance that somebody in the Obama campaign will have looked at it.

The truth is that I don't expect Obama could accomplish what I think needs accomplishment even if he wanted to. The biggest problem I see with an Obama presidency has nothing to do with Obama. Rather, it has to do with the fractious nature of the Democratic Party. Will Democrats in Congress unite behind Obama if he wins? I'm guessing they'll give him all the stunning support they gave, say, Jimmy Carter. Thanks in part to Clinton pulling the party to the right, there are quite a few powerful Democrats who are quite conservative -- and the fact that Congress becomes more and more of a millionaire's club with each election cycle won't much help either.

By the way, I tried to make the video more visually interesting than just my talking head by adding a bunch of stills and animations, some of which are moderately amusing. If you haven't watched it yet, please give it a try.