This report is actually from late last year, but nothing’s changed. There are numerous rational, reasonable, legitimate plans out there for dealing with U.S. budget issues with a maximum of fairness and effectiveness, and without the crass, corrupt idiocy that currently dominates public discussion of these (and most other) issues. Conservatives from both parties, realizing (in the crude sort of way that they “realize” anything) what a threat such plans might pose to frenzied, heedless corporate profiteering and therefore their own political sinecures, are spurning them in terror, the way that stupid people do in general when their fundamental views are questioned, even a little bit.
 

This is the second edition of an Institute for Policy Studies study that debunks the premise that the United States of America is broke. We released the first one a year ago, shortly before the supercommittee — a congressional panel tasked with putting our nation on a sound fiscal path — fizzled into obscurity…
 

Our proposed reforms amount to $881 billion in potential new revenue and savings per year. These measures would eliminate most of the budget deficit, leave plenty of resources for jobs and for the nation’s pressing human and environmental needs, and stave off those…across-the-board cuts. We have not assembled an exhaustive list of rational budget-cutting alternatives. But we have demonstrated that there are sensible ways to achieve a more sustainable budget without shredding our already threadbare safety net. Together, these measures would generate more than enough savings to prevent a (further) harmful shift toward austerity.
 

(Institute for Policy Studies)

More on what’s really wrong:
 

From 1966 – when Lyndon Johnson was president — to 2011, 45 years later, the bottom 90 percent of Americans’ average income, as reported on tax returns, went up by a stunning $59 (adjusted for inflation) — almost no change at all. If you measure that $59 increase for the vast majority of Americans as one inch, then on the same scale, the incomes of those in the top 10 percent went up by 168 feet. The top one percent, 888 feet. The plutocrats — the Mitt Romney crowd, the top one percent of the top one percent? Their incomes rose by almost five miles relative to that one inch.
 

(AlterNet)

And more, this one for those with a wonkish bent.
 

A case can be made that the greatest threat to the future of industrial capitalism comes, not from excessive statism, but from the excessive share of the economy going to the “private taxation” of productive business by unproductive, parasitic private rentier interests. In the U.S., the rentier sector is sometimes described as the FIRE (finance, insurance, real estate) sector. The FIRE sector accounts for most of the rent-seeking in the U.S., although it does not include energy/mineral rentier interests or professional associations.
 

Without invoking a conspiracy, we can identify a Rentier Agenda that is harmful both to productive business and ordinary wage earners but promotes the policy goals of many of America’s large and influential rentier interests, particularly those in finance. The Rentier Agenda has three broad components: low taxes on rentiers, privatization of natural monopolies, and a macroeconomic policy driven by fear of inflation.
 

(Salon)

‘Scuse me while I (sniff) shed a tear!

A quote from a fellow at the (Tax Policy) Center, which is described as a nonpartisan “research organization,” succinctly sums up the problem: “My sense is that high-income people feel abused by being targeted always for more taxes,” Roberton Williams tells (Stephen) Homemaker (of the Associated Press). “You can understand why they feel that way.”

 

To learn if middle class families feel “abused” in the current economy or why high income families pay as much as they do, the reader must skip past seven full paragraphs of political context about President Obama calling on Congress to close a “bunch of tax loopholes that are benefiting the well-off and the well-connected” (an idea that sounds absurd in light of the already unbearable tax burden), Senate Minority Leader Mitch McConnell (R-KY) rejecting that premise, and Democrats proposing a tax on “people making more than $1 million” to replace the sequester.

 

In paragraph 24, Ohlemacher finally presents a reason for the higher tax rates — though even this is delivered as an opinion from “Liberals and Democrats” and is not accorded the factual tone of Williams’ observation that the rich feel “abused.”

 

“Liberals and many Democrats say rich families can afford to pay higher taxes because their incomes have grown much more than incomes for middle- and low-income families,” Ohlemacher writes, quoting CBO data showing that “after-tax incomes for the top 1 percent of households more than doubled from 1979 to 2009, increasing by 155 percent,” while “incomes for those in the middle increased by just 32 percent during the same period.”

 

(Think Progress)

I don’t know, how it is that many people are apparently able to reconcile any degree of self-respect with “careers” that basically consist of only pulling their heads out of the rich man’s butt now and then for long enough to spout some wretched drivel on his behalf.

From another source:

Note that that graphic is based primarily on numbers from Bloomberg. Not what you’d call an “anti-business” source.

Finally:

Business Insider magazine recently polled a group of registered voters, asking them for their preferences on three different Congressional plans that have been floated to help the nation avoid damage from the looming sequester.

 

The poll found that when the voters didn’t know which plan was whose, the policies that most voters preferred were those offered up by the Progressives Caucus in the House of Representatives.

 

More than half of those polled favored “The Balancing Act” plan, proposed by the Congressional Progressive Caucus. Shockingly, 47 percent of Republicans polled preferred the House Progressive approach, instead of the across the board cuts proposed by Republican Congressional leaders…

 

Or, to put it simply, very few Americans like the ideas and policy proposals coming out of the Republican Party, and a few of the Conserva-Dems. It’s clear that Americans know which ideas that will actually help the country, and disagree with the bizarre Republican position that only those things that help the billionaire class and corporate America will help working people.

 

(The Smirking Chimp)

For decades, conservatives have maintained a drop-dead simple recipe for economic growth — namely, the Underpants Gnome economic theory:

Step 1: Cut taxes for the rich.
Step 2: ???
Step 3: Economic growth!

It’s completely absurd on its face. If cutting taxes somehow led to job creation, Mississippi would be an economic powerhouse, and the George Bush tax cuts would have brought prosperity instead of two recessions.

But despite its obvious failures, the Underpants Gnome economic theory has been the Republican party line for nearly four decades. Even worse, it has somehow become the conventional wisdom among the Very Serious People of the political chattering class. That’s why it was great to hear Governor Dayton not only forcefully pushing back on this nonsense in his State of the State address, but making the case that his budget would actually improve our business climate:

I want Minnesota to provide the best jobs for our citizens, the best lives for their families, and the best environment for our businesses to provide those jobs.

Those who measure “business climate” only by tax rankings will question my strategy… However, Minnesota has not been considered a “low tax” state during my almost four decades of public service. And the facts show that states offering businesses and their top executives the lowest taxes usually offer the rest of their citizens the lowest incomes, the fewest public services, and the highest crime rates….

I have a respectful, but strong, disagreement with some of the other elected officials here tonight, about the value of public investments in, and incentives for, economic growth. My father and uncles taught me the paramount importance of continuous private and public investments in improving the communities in which people work and live. (Dayton’s prepared remarks, emphasis added)

Low taxes for CEOs aren’t a sufficient incentive to start or expand a business; trickle-down economics just doesn’t work. What does work is having a well-educated workforce, excellent public infrastructure, a great quality of life, and a prosperous population that can afford to buy businesses’ goods. That’s a much better way to improve our business climate than racing other states to the bottom.

Trickle-down economics has failed. It’s time for us to abandon the Underpants Gnome economic theory and get proactive about improving our business climate for real.

The DFL looks to be making a serious push to raise the minimum wage.

Rep. Ryan Winkler, DFL-Golden Valley chairs the Select Committee on Living Wage Jobs, which had their first meeting on Monday.

I really hope they can get this accomplished as I believe this will help our economy.

Does anyone know when the hearings are that Ryan Winkler will be having?

Thanks,
Adam T, Saint Louis Park Class of 2004

Amidst all the talk of the “fiscal cliff,” there’s one topic that has received short shrift: We need more stimulus to boost economic growth. Not only should we avoid slashing spending during a recession, we should increase spending over the short term, while reducing the deficit over the long term. What’s more, investors will actually pay us to do that:

Borrowing costs for the United States have plummeted. While real interest rates for borrowing 10 years out were still positive in late 2010 when these plans came out, they have since gone negative and stayed there. Investors are paying us to borrow money for the next 10 years. (Mike Konczal, via Wonk Wire)

Given these negative interest rates, a large, well-targeted stimulus is the fiscally responsible thing to do. We can meet years of infrastructure needs — projects we’ll be paying for anyway — at discount prices. Not only that, the best way to reduce the deficit over the long term is to restore tax revenues by bringing back the economy. If we can do that with one-time spending at negative interest rates, the one-time cost will have been well worth it.

Of course, Washington won’t consider this. All the Very Serious People know that the thing to do is to eliminate Medicare, Medicaid, and Social Security. This is a mistake. We’ll never get anywhere by dismantling America, only by rebuilding it.

There’s a sensible way to both stimulate our economy and handle our long-term deficit, and I’m glad to see that it’s steadily gaining support. The gist is stimulus now, deficit-reduction later. The latest to espouse the idea is The New Republic‘s Jonathan Cohn:

…a better approach might be to preserve tax breaks on incomes up to $250,000, and to renew anti-recessionary programs like extended unemployment insurance and a payroll tax holiday, but only on a temporary basis. And rather than setting these measures to expire on a fixed date, Congress could try an idea economist Peter Orszag has floated: Setting these tax cuts to expire when, and only when, the economy had become stronger.

I think everyone agrees that over the long run, our debt is an issue. We can’t afford for our debt to keep increasing at the rate it has since the Bush tax cuts passed in 2001. In the short term, though, it’s not a problem at all. The nation’s credit rating is strong, and interest rates are lower than they have ever been, despite years of fear-mongering over inflation from the right. That’s why we should spend some money now to right the economy, while putting a plan in place to eliminate the deficit once the economy has turned around.

Since the deficit and debt are long-term problems, we should adopt long-term solutions. We should aim for a 10-year budget that eliminates the deficit by the end of the tenth year. That means that for the first few years, we can focus our energies on our most pressing problem: the economy.  
In fact, I would suggest a trillion-dollar stimulus to give the economy a true jolt into motion. Yes, this would add another trillion dollars to the national debt, but as one-time spending, it would pose no long-term problem. If we put a budget into place that eliminates the deficit, our debt as a percentage of GDP will quickly shrink, even with a trillion dollars in one-time spending. We can have stimulus now while planning to eliminate the deficit over 10 years.

As Cohn suggests, one way to eliminate the deficit would be restoring the Clinton tax rates for everyone. This would amount to rolling back the Bush legacy and returning to Clinton-era prosperity. After all, the largest causes of our deficit are the Bush tax cuts, the Bush wars, and the Bush recession. Eliminate all of these, and the problem is solved. We can end the first two easily. By taking a long-term approach, we can finally end the recession as well.  

Republicans firmly believe that Magickal Job Kreatorz will magickly create jobs if you give them tax breaks. They have been trying to implement this approach since Ronald Reagan and to a lesser degree under Bush the Elder. Under His Shrubness, they fully implemented it. They gave us the Reagan Recession and The Great Republican Depression under which we’re still suffering.

As Minnesota Gov. Mark Dayton and the DFL-controlled legislature propose a tax bill and a bonding bill next spring, Republicans will shriek about their Magickal Job Kreatorz and how the economy will suffer.

But consider this. Their economic theory is equivalent to the Underpants Gnomes theory.

They can’t explain how their Magickal Job Kreatorz will actually create any jobs … it’s just accepted as dogma.

It’s been months and months since Elizabeth Warren made her now-famous remarks on the rich, the social contract, and the role of government. Still, her brief remarks remain the absolute best articulation I’ve seen of the liberal perspective on the role of government in our economy. Warren clearly and succinctly laid out the liberals’ case for progressive taxation and the value of government services. To a very large extent, it was Warren’s vision that the American people embraced last night.

Warren’s remarks deserve one more watch. I’m so glad she’ll be joining the Democrats in the Senate.

The 2012 election could have major, long-term effects on how the public views liberal and conservative economic policies. Under Barack Obama, our economy is steadily improving — in fact, it’s improving faster than usual for a financial crisis. But if Romney and the Republicans win in 2012, they’ll take credit for the Obama recovery, cementing Americans’ (false) impression that conservative policies are good for the economy.

I’ve been concerned about this possibility for quite a while, but don’t take my word for it. No less an authority than Bill Clinton says the same:

Former President Bill Clinton told an Orlando, Fla., audience that Mitt Romney’s vague economic plan is part of a scheme to get elected, then steal credit for a President Obama’s coming recovery

Clinton cited recent reports that top economists and financial firms are predicting a strong boost to growth soon, likely matching Romney’s current pledge to create 12 million jobs over the next four years, whether or not he’s elected.

According to Clinton, America is looking at 4 percent GDP growth soon, double the current rate, as long as “we don’t mess it up.” The danger then is that Romney will win the election then “cut taxes for wealthy people,” “gut the Medicaid program,” slash aid to education and scientific research, then claim these policies as the reason an already inevitable short term bump occurred in his first term.

For Liberals and Progressives, the Romney/Ryan threat to roll back the New Deal and Great Society should be enough motivation to get out to the polls. But just in case it’s not, imagine how devastating it would be to the future of liberalism if Romney manages to take the credit for Obama’s success.

My sister brought me a pin from the DFL booth at the Minnesota State Fair that says, “I ♥ OBAMACARE,” and I was proud to put it on.  We have a friend with a serious precondition, who would be struggling without health insurance if it weren’t for the passage of this long-overdue program.

I also wish I had a pin that says, “I HEAD OBAMACARE” with an icon of a functioning brain.  From my perspective as a self-employed person, the problem of finding affordable health care has become painfully acute over the past decade. I have seen more than one friend who would rather freelance take full-time work, because it was the only way to get health insurance for their families. I’ve heard a friend who’s a manager in a small business tell about the resentment shown to employees who get sick, because of the impact on the company’s premiums.  And I’ve felt the anxiety of those who know they’d better hide a diagnosis, since if word got out, it could render them unemployable.

All of which raises the question: To what extent is the current health care morass holding the economy hostage, because it’s interfering with risk taking? It’s not a big leap to imagine what would happen once we begin to subtract health insurance from the jobs equation. Individuals would have more freedom to risk starting their own businesses. Companies would have more flexibility to take the risk of hiring, including older workers and people with disabilities. It would be easier for everyone to look for jobs and start businesses in different states, without worrying about state-by-state health care provisions.

I’m not saying Obamacare is going to solve all this nation’s problems. But it’s a big step in the right direction and could be exactly the economic stimulus we need.

Cynthia