The President’s re-election (More Discussion)

I posted my last commentary "The President’s re-election" on November 18. On November 23, 2012 I posted the first installment of the discussion, which ensued under the heading "The President’s re-election (Discussion)"

In that post I set forth a lengthy exchange with Roger Streit of West Orange, NJ. That discussion continued after my post and I want to share it with you. 

My last rejoinder to Roger, as set forth on my blog of November 23, 2012 was:

That is an old but dangerous argument. Our debt has to constantly be refinanced. Three years from now interest rates may suddenly go up sharply, and will if the debt is large and growing. Then we are suddenly faced with a major crisis. We cannot just focus on now. We must also look to the future.

To which he replied:

Please consider than when you are criticizing [Paul] Krugman’s economics, there is a good chance that you are wrong. I know that you think you are qualified to do so, but you certainly have not convinced me by past columns.

 Of course we have to work on reducing the deficit in the long term. No one says anything different, including Krugman. 

FYI, C-Span 2 is showing A Conversation on the State of the Economy with Joseph Stiglitz & Paul Krugman on Saturday at 11 pm and again on Sunday at 2:45. 

My response to this was:

Or course, it is always possible that I am wrong. I am not an oracle. I do not claim infallibility. As for my convincing you with past columns, that is also a risk I take. I can't expect to convince everybody all the time and some, I am sure, never. All I can do is try. As you can see, Krugman, who is certainly far better credentialed than I am, can't convince everybody either. He is not an oracle either, and I fear that you are treating him as one. Actually, I am sure that he knows that he is wrong. As a columnist, he has to condense his comments to the length of the column.

              

I expect that he will be far more on the mark on C-Span, and I thank you for calling it to my attention. I will watch it.

               

But I don't think he should be allowed to be fast and loose with the facts any more than the Right. For instance, please refer to my commentary of November 18, 2012 entitled "The President's Re-Election" where I write: "writing in his column of November 15 entitled: "Life, Death and Deficits": I quote Krugman: "... right now the most dangerous zombie is probably the claim that rising life expectancy justifies a rise in both the Social Security retirement age and the age of eligibility for Medicare" and I say: "He makes some cogent arguments to support this, but fails to propose any reasonable alternatives, such as having a different retirement age for the relatively affluent and well-educated, and a different one for Americans in the bottom half of the income distribution, who aren't living much longer. (He doesn't cite any actuarial tables) and does not even propose closing the Social Security budget gap by raising the Social Security tax ceiling for the affluent."

              

Since then I have checked on the actuarial tables for those over 60 and in a discussion with another of my subscribers wrote:  In 1940 (I have no data earlier than this) life expectancy for males was 12.7 years. In 1990 it was 15.3.  I have nothing earlier or later, but if we go back to 1930 and forward to 2015 we can assume that it is double that, or 6 years. So an increase to 71 for males would be justified. Or we could consider changing it altogether, to kick in after 40 years of work. This would have the advantage that those who start work earlier, usually the under class, could draw earlier than those going to college, who earn more and are more advantaged. The figure for women as of 1940 are 14.7 and for 1990 19.6, so at the risk of being sexist, it might make sense to have an older eligibility age for women than for men.

               

In my view, the Left has become the conservatives on this issue, and the Right are the radicals who want to go back to an age long gone. But while the Right is dangerously wrong, so is the Left. We must embrace change to meet changing conditions.

Now to get back to the deficit.

Let me put it this way. Let us suppose you had a huge adjustable mortgage at 1% and the bank told you didn't have make any payments on principle or even on interest for 10 years and you can borrow more every year, say by 10%. Should you accept it? It sounds too good to be true. In fact that is what happened leading up to the bubble. Five years from now, or even ten, the bank raises the interest rates to 10%. “Whew,” you say, “I can't afford that.” I better pay it off, but where am I going to get the money now owed, which is now about twice as large as ten years ago.

               

This is the danger in ignoring a growing deficit. It is real, and there has to be a balance between stimulating the economy, re-building our infrastructure, and our social safety net, while always keeping an eye on the deficit. We need to get enough revenue, to meet our needs. Meeting our needs by borrowing is not a solution. That is why the argument about taxation is so important. It is not about the importance of getting money from the rich. It is about getting as much revenue as possible from those who can afford it, so we can meet our needs without increased borrowing.

Rogers’s rebuttal was:

I do not glorify him. I appreciate that Krugman is fighting the people who would use the deficit to cut entitlements. He proves over and over that they do not really care about the deficit. As you well know, we had surpluses until unfunded wars and tax cuts that mostly benefited the wealthy.

 You have to read his blog in addition to his columns. Otherwise you say things like "(He doesn't cite any actuarial tables) and does not even propose closing the Social Security budget gap by raising the Social Security tax ceiling for the affluent.” You frequently criticize him for what he does not say in one column. As you mention, his columns must be short, so they cannot address all points. But here is a post that answers at least one of your complaints. 

 We will certainly have a negotiation. Accepting the argument that the problem is mainly the deficit is a mistake in fact and in tactics. Krugman wisely criticizes the Very Serious People, who have been wrong consistently. As much ridicule as possible will help the cause. (See Clinton.)

 Comparing a country that has its own currency (and is the de facto safe haven for investors) to a family borrowing on a mortgage is just plain wrong.

My concluding counter to this was:

First of all let me thank you and compliment you for taking the time to voice your views and to enter into a debate with me. It is unfortunate that this happens so rarely. It is through sincere debate that we can all benefit.

                       

Allow me to respond to your points, one by one, and then I will go public. I really need to go on to other subjects.

As to paragraph one, I have been making the same point over and over again far more extensively and possibly earlier than Krugman. For example as early as July 14, 2011, I began writing on this subject with "The Deficit – One Big Hoax (Part I)," "The Deficit – One Big Hoax (Part II)," "The Deficit – One Big Hoax (Part III)," "The Deficit – One Big Hoax (Part IV)" and "The Deficit – One Big Hoax (Part V)." But the point I was making, and continue to make, is that while Republicans are insincere in using the deficit as a cudgel to try to kill our safety net, which we cannot and will not allow, does not mean that the growing deficit is not a real threat and danger.

                 

Your second paragraph points out that Krugman in a short blog showed the life expectancy tables at age 65. But he does not draw the right conclusions from this statistic, which is that even at age 65 life expectancy has risen significantly, something he denies in his column. Quite aside from the deficit debates, we need to put Social Security on a financial footing so that it is secure far beyond where it is now scheduled to have more expenditures than income, which according to the latest calculations is 2038. That is not far away. We need to make adjustments to make income equal expenditures, and we need to do it as soon as possible. The longer we wait, the harder it becomes, and with polls showing that: "Half of Americans between the ages of 18 and 29 don’t believe that Social Security will exist by the time they reach retirement age, a recent poll from iOMe Challenge finds. Of those young people that do say Social Security will still be around when they’re 67, only five percent say it will exist at the same level it does today."  That is a serious danger. They need to be reassured by making it sound into the period where they will begin to draw or they will not support it.

                       

Ronald Reagan did a lot of damage during his reign, but his Social Security compromise with Tip O'Neill served Social Security well and substantially extended its solvency. Its time to do it again. It is time, aside from the deficit arguments, to remake it for the 21st century along the lines I proposed in the fourth paragraph of my last message. Sitting on our asses and opposing all change is not being liberal.

                       

Using Alan Simpson as a foil is doing what I always criticize the Right for, setting up a straw man.

                       

Criticizing the phonies is not something I have a problem with. I have been doing this for a very long time. But to talk about going over the cliff rather than compromise is irresponsible. It could do the opposite of what you and he have been most concerned about. Jobs! The cliff would raise the unemployment rate to well over 10%. What a calamity. Sure, the President has to signal a willingness to go over the cliff if Republicans are intransigent. But by the same token, he has to show himself to be reasonable, in order to avoid the cliff, if it is at all possible. And if it has to happen, it must be clear to the public who was the unreasonable one. If the Public believes it was the President that will be reflected in the next election.

Let Obama be Obama. He is shrewd, liberal, and practical.

Finally, you say that a country is different from a person because it has its own currency. Point well taken. But it doesn't solve the problem I outlined. Solving a debt problem by printing money is inflationary, if not in the short term, certainly in the long term. Nobody remembers any more the terrible inflation during the Nixon years, which Carter stopped by having Paul Volker sharply raise interest rates. It caused a recession and was a major factor in Carter losing to Reagan. But we don't want to go through that again.

As for Medicare, increasing the age of eligibility would be a big mistake. In fact lowering it, by adding people who are healthier, would make more sense. But in order to reach agreement with Republicans, it will most likely be necessary to make some concessions (I trust not too many) that might not be desirable. But reality dictates that some compromises that include deleterious things will be part of the package.

Further comments, questions, or corrections, are welcome and will be responded to, but will not be distributed, since it is my intention to address other issues hereafter.

The President’s re-election (Discussion)

I posted my last commentary "The President’s re-election" on November 18.

As coincidence would have it, I received an inquiry from one of my subscribers that relates to it even before I posted my commentary, so allow me to share that exchange with you.

The inquiry came from Barbara Valentino Crowley Baptiste Moreus, of Port St. Lucie, Florida, who asked:

How does one rebut Senator Marco Rubio’s comment that: there isn't much point in raising taxes on the wealthy because they have the money to hire people who would help them get out of paying taxes. The billionaires and millionaires that are going to be impacted by higher rates, they can afford to hire the best lawyers, lobbyists and accountants in America to figure out how NOT TO PAY those higher taxes. Obama's approach will fail and therefore the problem of the huge annual deficit still remains. The President doesn't seem to understand that he is not going to get the "Bang for the Buck" by taxing the wealthy.

To which I responded:

“This is true as long as we have a tax system that has a million loopholes that clever lawyers can exploit. We really do need to close the many loopholes that are now in the tax system, e.g. look at my post "Romney is worse than I thought!" and look at the loopholes that Romney exploited. These need to be closed. Republicans are right that this kind of tax reform probably would raise more revenue than raising tax rates. But are they really prepared to eliminate them. I don't think so. The biggest loophole is that taxes on capital gains are taxed much lower than ordinary income. This needs to be changed. There is absolutely no reason why income from working should be taxed higher than income derived from investment. If we believe in the work ethic then we shouldn't punish people who work and reward those who get passive income by investing. But Republicans are adamant against this change.

But look at the many other loopholes that Romney exploited. When he gave assets to charity, he got a deduction for the value of the assets at the time of the contribution, rather than the price he paid for them, thus avoiding even the smaller capital gains tax. That is wrong. He should have to pay the capital gains tax when he gives to charity, as though he had sold the asset.

Inheritance tax. Aside from being too low under the Bush tax rates they allow a decedent to escape capital gains taxes altogether, since the law now says that assets of a deceased are exempt even from the very low capital gains taxes.

I can go on and on. Yes, Republicans are right that there is more money there than in increased tax rates, but they are phony when they suggest that they really favor tax reform. They will not support any of these reforms.

Extending the Bush tax cuts on the wealthy on the basis that at some time in the future we will have real tax reform is offering a bird in the bush. (No pun intended.) They will never let it happen. But if they have specific ideas along this line, I would like to hear them, and so would the President.

However Rubio is right about how much simply extending the Bush tax cuts for the wealthy will bring. 

To make a real dent in the deficit we would have to extend The Bush tax cuts for all, as Allan Greenspan has been advocating. If none of the Bush tax cuts were extended the deficit would be reduced by approximately $3 trillion over a decade, but extending them, in accordance with Obama's plan, only for those making more than $250,000 per couple, $200,000 for singles, would increase revenue by only 3/4 of a trillion over ten years, not nearly enough. But politically Obama can't be for extending all because he has made a pledge not to do so, and at this point in the recovery, it is not desirable. After we have recovered it would make sense. See here.

The amount that Obama is seeking in additional revenues is 1.6 trillion. See here. The 3/4 trillion achieved by the proposed elimination of the cuts is less than half of what we need in additional revenues. So not extending the Bush cuts for the wealthy gets us less than halfway there. Additional revenue beyond that must be found. The article, which I referenced in US News, is not realistic as to other sources.

This addresses the point made by Rubio.

The other points generally made are that taxing the rich will hurt job creation because it hits small businesses. This is not true. Small businesses and the wealthy are not the same. Please read the article which you can find here.

Finally the argument that taxing business at all will hurt job creation is also nonsense. There is a super abundance of cash in businesses, large and small, that is not being invested. Having more is not going to make a difference. There is only one reason businesses are not hiring, and that is that they have no need for additional employees because there is a lack of consumer demand. When consumer demand picks up, they will start hiring. It is well established that 70% of the economy comes from the consumer. That is why putting money into the hands of people who will spend it on consumer goods is by far the most effective way to move the economy. The stimulus worked, despite all the denials. Look at the figures. Before the stimulus, jobs were being lost at a rapid clip. Right after job losses declined rapidly, and then jobs started being created at an ever faster clip. It is true that the stimulus was too small and did not last long enough, but that is not Obama's fault. The size of the stimulus was the best that could be gotten out of Congress. 

Republicans are right that the best way to deal with the deficit is by growing the economy, but wrong about the way to grow the economy. The economy grows from the bottom up, not from the top down, i.e. consumers drive the economy, not supply side economics. Compare the economy under Bush I lower taxes, Clinton's higher taxes, and with Bush's II lower taxes.

Joel Wiener of Boca Ratan Florida, had this observation:

I found Krugman's earlier column (November 8th - Let's Not Make a Deal) on the Fiscal Cliff interesting, especially his conclusion:  

“Meanwhile, the president is in a far stronger position than in previous confrontations. I don’t place much stock in talk of ‘mandates,’ but Mr. Obama did win re-election with a populist campaign, so he can plausibly claim that Republicans are defying the will of the American people. And he just won his big election and is, therefore, far better placed than before to weather any political blowback from economic troubles — especially when it would be so obvious that these troubles were being deliberately inflicted by the G.O.P. in a last-ditch attempt to defend the privileges of the 1 percent." 

"Most of all, standing up to hostage taking is the right thing to do for the health of America’s political system. So stand your ground, Mr. President, and don’t give in to threats. No deal is better than a bad deal.”  

I just don't think the Obama has the nerve to see what happens. I recall that in the third debate, when asked about the Fiscal Cliff, he said: "It will not happen." That was before the election, however.

To which I replied:

In a sense this is like the confrontation with the Russians in the Cuban Missile Crisis. Don't act too tough; don't overplay your hand, but be tough and offer the other side some kind of concession.

The military wanted Kennedy to immediately order the invasion of Cuba. Kennedy said NO! That would definitely lead to war. But he ordered a blockade. He then contacted Kruschev and said take your missiles out of Cuba and we will take ours out of Turkey.

That’s what we need here. Tough and a signal that we are willing to face disaster (falling off the cliff if we have to) but not so tough as not to offer concessions and to make a deal unlikely.

                       

No deal may be better than a bad deal, but what is the definition of a bad deal. Is a bad deal any that makes painful concessions?

I trust Obama's judgment. This is where Krugman and I part. He does not.

And Rick Pereira of North Adams, Massachusetts chimed in with:

I totally agree with you that gerrymandering continues to be, if not the primary, then at least the fundamental, cause of our perceived political instability. It may well be part of why we have effectively only two parties. In my belief, it will take one or more states to take action against gerrymandering as a political message against it and to raise public awareness of it.  I have long complained of the lack of the words "accountability" and "transparency" in politics (national as well as state) and although I'm encouraged by Cuomo's efforts, I've been very disappointed in New York's lack of transparency in its election laws.  Furthermore: if there is any contingent of citizens concerned enough about this issue, one strategy may be to promote enlarging of political districts in the name of saving money, because technology is now easily able to handle larger districts. This should obviate gerrymandering on a zipcode-by-zipcode basis.

To which I responded:

We need to revise the Constitution as difficult as that may be. We are spending too much time on elections, so that as soon as one election is finished, fund raising begins for the next. I would suggest that both members of the House and the Senate should be elected every four years to coincide with Presidential elections and that state elections for Governor and state legislatures be held at the same time. One election every four years is more than enough and the Presidential election brings out more people voting, so the results are more democratic.

An override of United needs to go with it, saying specifically that the Congress shall have the power to regulate the manner of raising and spending money in elections and the extent to which the government shall finance it. Fewer members of Congress and larger districts are desirable. 

Then Congress needs to legislate how Districts are to be drawn, setting forth the criteria, e.g. contiguous, no more population variation than 5%, geometrically concise such as a square, etc. and that these criteria are to be fed into a computer by the US Census Bureau. That may not be perfect, but I can't think of a better way. The type of voting machine to be used and how many voting machines per registered voter also needs to be mandated.

As for state elections, the above will improve these, but under our federal system, anything beyond this will have to be a state matter, though I would like to see a mandate that judges must be appointed by the governor and not be elected.

And finally I had an extensive exchange with Roger Streit of West Orange, NJ who opined:

I do agree with Paul Krugman’s argument as set forth in his November 11 column  “Contrary to the way it’s often portrayed, the looming prospect of spending cuts and tax increases isn’t a fiscal crisis. It is, instead, a political crisis brought on by the G.O.P.’s attempt to take the economy hostage.” 

Why do you “take it from this that Krugman would be perfectly happy for taxes not to go up, even on the very rich, as the President wants, because … he doesn’t specifically say so”? 

From previous columns, it is very clear that he is in favor of raising taxes on the rich. He doesn’t have to make that point in every column. He was debunking the right’s supposed concerns of reducing the deficit. He identified the hypocrisy and also pointed out that they have been consistently wrong in their prescriptions and predictions. 

In short, you have to read Krugman on a consistent basis in order to appreciate his columns. I suggest that you read his blog as well as his columns before you criticize him. IMO, he has been right much more often than not. See also here.

To which I replied:

It is both a fiscal crisis and a political crisis. As I pointed out in numerous posts, the deficit is a phony issue when Republicans raise it, because they are totally insincere. Ryan's budget doesn't even attempt to close the budget gap. All it does is to destroy the safety net and all kinds of other governmental functions and cuts taxes on the higher incomes.

                       

But that doesn't mean that the looming deficit, which is a Bush creation, having inherited Clinton's balanced budgets and surpluses as far as the eye could see, isn't real. The Supreme Court's denial of the election to Gore was one of the greatest tragedies in American history.

                       

It is real. Not immediately. But down the road, but we can't wait till it is an immediate problem. That is too late. We need to put a long-range plan in place now. The President has been trying to do that for quite a long time with his proposals of tax increases and cuts, but the G.O.P. has been adamant for no revenue increases. That has changed. Now it is only how much and how. But cuts must be and will be part of the equation.

                       

Yes, Krugman wants taxes to go up, but he undermines the need for this when he argues that the deficit is irrelevant. If it is irrelevant, then we can just meet the nations needs without tax increases and let the deficit keep going up.

                       

Krugman is simply sloppy in writing his column and columns. Look back on my blog where I have time and again criticized him for undermining our President. He has no sense of political realities, and he is too often more of a polemicist than a thoughtful economist. I hope he does a better job in teaching his economics classes.

And then added:

Roger, let me add that I agree with much of what Krugman says. Erskine Bowles would be a terrible choice for Treasury Secretary, but I am not aware that he is being considered. When he says, "the deficit-scold movement was never really about the deficit. Instead, it was about using deficit fears to shred the social safety net," I agree with him, and I have been saying that all along. But when he says they "don’t even deserve a seat at the table." that is downright silly. The President can't deal with the "fiscal cliff without dealing with 'deficit scolds' in Congress!! To say they shouldn't have a seat at the table is ludicrous. Just because he rightly advocates for  ‘Keynesian economics’ as I do, doesn't give him a license to say silly things.

To which Roger replied:

I agree with you that you have to negotiate with the crazies, but you don’t have to give their arguments any credence. President Obama has given much too much weight on deficit reduction and has not focused enough on reducing unemployment. As Krugman has pointed out, the U.S. can borrow money for free and we have massive unemployment. Why not focus on putting these people to work?

And my rejoinder was:

That is an old but dangerous argument. Our debt has to constantly be refinanced. Three years from now interest rates may suddenly go up sharply, and will if the debt is large and growing. Then we are suddenly faced with a major crisis. We cannot just focus on now. We must also look to the future.

Comments, questions, or corrections, are welcome and will be responded to and distributed with attribution, unless the writer requests that he/she not be identified.

The President’s re-election

I recently had dinner with some good friends and they greeted me with the exclamation: “Aren’t you elated that Obama won.” I looked at them and said: “I am relieved, but not elated.”

I am relieved because while it is true that we would have avoided the fiscal cliff if Mitt Romney had been elected, which was the rationale for the endorsement of Romney by the Des Moines Register, who posed the question as, “Which candidate could forge the compromises in Congress to achieve these goals?” meaning avoiding the cliff, and concluded: “When the question is framed in those terms, Mitt Romney emerges the stronger candidate…”

Of course, for Romney there would have been no need to compromise. He would have embraced the program of the Tea Party, with only a Democratic Senate (which was in doubt until the results came in) standing between him and his cohorts gaining a complete victory.

The likelihood of falling off the cliff has certainly increased as a result of the Presidents re-election. But the result of capitulation, while possibly less frightening in the short run, would have dire consequences in the long run, as I outlined in my blog posting entitled "The Election." The consequences of just the domestic sequester staying in place is ably outlined in an article in the New York Times entitled "White House Details Potential Effects If Automatic Budget Cuts Go Through" which I urge the reader to read.

So we are caught on the horns of a dilemma. Holding firm risks going over the cliff, i.e. if automatic spending cuts go into force and all the Bush-era tax cuts expire, then according to the nonpartisan Congressional Budget Office, the nation would slip into recession next year and unemployment would rise to 9.1 percent, from October’s rate of 7.9 percent. But simply canceling those deficit-reduction measures would risk a financial crisis that would make matters worse …” according to this watch dog. See here.

And looming just behind the fiscal cliff is the debt ceiling. The Treasury Department said Wednesday that the U.S. probably will hit its $16.4 trillion borrowing limit by the end of the year, at the same time that Congress will be grappling with the automatic tax hikes and large government spending cuts scheduled to kick in Jan. 1. See here. Republicans, as they did last year, are talking again about refusing to raise it, which would force the US into default and bring into serious question its invaluable credit worthiness. Last time around even the threat of default caused Standard and Poor's to lower the rating for the US from AAA to AA+ See this CNN Money article wherein Standard and Poor's is quoted as giving the reason for the downgrade as: “The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed."

The lower rating fortunately had no effect on the markets, with US securities remaining in large demand and continuing to sell at interest rates at all time lows.

But then there was no default, only the threat of one.

In any case with these frightening potential developments, is it any wonder that I find myself less than elated? I will be elated when the President succeeds in navigating these currents and works out a compromise that very substantially increases revenue, while protecting our safety net, not from some cost saving reforms, which are inevitable, but from having them undermined. I do not find Paul Krugman’s argument as set forth in his November 11 column  persuasive. Krugman says: “Contrary to the way it’s often portrayed, the looming prospect of spending cuts and tax increases isn’t a fiscal crisis. It is, instead, a political crisis brought on by the G.O.P.’s attempt to take the economy hostage.”

I take it from this that Krugman would be perfectly happy for taxes not to go up, even on the very rich, as the President wants, because while he doesn’t specifically say so, he argues that the larger the deficit the better. Of course, what he really wants is for there to be no changes in Medicare and Social Security, writing in his column of November 15 entitled: "Life, Death and Deficits":  “… right now the most dangerous zombie is probably the claim that rising life expectancy justifies a rise in both the Social Security retirement age and the age of eligibility for Medicare.” He makes some cogent arguments to support this, but fails to propose any reasonable alternatives, such as having a different retirement age for the relatively affluent and well-educated, and a different one for Americans in the bottom half of the income distribution, who aren’t living much longer. (He doesn’t cite any actuarial tables) and does not even propose closing the Social Security budget gap by raising the Social Security tax ceiling for the affluent.

As for Medicare he argues against raising the eligibility age with which I agree, and argues that the way to control costs is to “… give Medicare the ability to bargain over drug prices. Let the Independent Payment Advisory Board, created as part of Obamacare to help Medicare control costs, do its job instead of crying “death panels.” With which I also agree, but in making these arguments isn’t he implicitly recognizing that we can’t just ignore deficits.

But as can be seen from the above, the re-election of Obama has not magically solved our problems. We have a tendency to think, as we did four years ago, that as long as we elect a good man/woman to the Presidency, we have solved the nation’s problems. That is true only in the fantasy world that so many on the Left in our nation inhabit.

The fact is that in order for the President to be in a strong bargaining position with Republicans, he must signal a willingness to go over the cliff if Republicans are too intransient. Or as John Cassidy writes in the New Yorker: 

“Fiscal discipline, equity, and economic experience all point toward a return to the top tax rates of the Clinton era. In order to get there, though, Obama is going to have to demonstrate that he is willing to leap off the fiscal cliff, and that he isn’t bluffing. Anything short of an ironclad commitment to let all the Bush tax cuts, including the ones that affect the middle class, expire on December 31st if an agreement isn’t reached, will be exploited by the Republicans, who otherwise don’t have many cards to play. 

“Basically, this is an exercise in brinksmanship—the logic of which is well understood. If Obama’s threat is perceived to be credible, he almost certainly won’t have to go through with it. But if the Republicans think he is likely to back down—as he did in 2010, when he initially opposed extending the Bush tax cuts—they will stonewall, figuring that the White House, at the last minute, will offer them a compromise along the lines Boehner is suggesting. Don’t forget, this is a G.O.P. that hasn’t agreed to a rise in tax rates for more than twenty years. In the current House of Representatives, all but six of the two-hundred-and-forty-two Republicans have signed Grover Norquist’s pledge “to oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses.”

Whether the President needs to be that demanding and that uncompromising is open to question, but that he must signal a willingness to take the plunge is an absolute sin qua non to successful negotiations. But that means that we run the danger of, as the CBO has stated, of the nation slipping into recession next year with unemployment rising to 9.1 percent, from October’s rate of 7.9 percent. That is why I am not elated at the outcome of the election. We are far from out of the woods.

Of course, if the House of Representatives had gone Democratic, we would have a totally different landscape, and then I would have been elated. But despite the fact that Democrats “won one million more votes than Republicans” for the House, they did not win a majority due to very effective gerrymandering. This, in my view, represents a clear violation of the Equal Protection clause of the US Constitution, which says: “No State shall make or enforce any law which shall … deny to any person within its jurisdiction the equal protection of the laws.” However the US Supreme Court in 2003 in Vieth v. Pennsylvania upheld by a vote of 4 to 4 a lower court ruling that gerrymandering was not unconstitutional. The four justices holding gerrymandering constitutional were Scalia, Rehnquist, O’Connor, and Thomas. Justice Anthony Kennedy agreed that no justiciable standard existed and affirmed the district court’s opinion, joined in dismissing the claim, but would not go so far as to say all partisan gerrymandering claims are nonjusticiable. Justices Stephen Breyer, Ruth Bader Ginsberg, David Souter (joined by Ruth Bader Ginsberg), and John Paul Stevens dissented from the plurality, with each dissent proposing a new test for federal courts to adjudicate partisan gerrymandering.

And so we have the ridiculous situation where Democrats gain more than a million vote majority in the House, but Republicans gain far more seats and we end up with a political crisis.

Comments, questions, or corrections, are welcome and will be responded to and distributed with attribution, unless the writer requests that he/she not be identified.

The Nation Escaped a Bullet

It is with a sigh of relief that I celebrate the reelection of Barack Hussein Obama.

However, I must warn my readers not to make the same mistake they made four years ago, when they thought the election of Obama would immediately and irrevocably bring in a new era. That since Obama had spoken of a nation that does not consist of blue states or red states, but only the United States, that he would bring in an era of bi-partisanship.

That since he was the first black American to achieve the Presidency, he represented the beginning of a post-racial era.

That since he had indicated that in the way that Ronald Reagan had been a transformational President, he too hoped to be a transformational President, and bring in a new era of governmental responsibility.

It was not understood that these were aspirational ideas, that might one day be achieved, not promises that would be achieved on day one, or after one year or after one term or maybe not even after a decade.

But I tried to disabuse my readers after the election in 2008 when I wrote my essay with the tongue in cheek heading "Obama Walks on Water." I don’t think many paid attention.

Now as we come into the President’s second term I hope people have more realistic expectations. We are a nation that takes great pride in its checks and balances. We don’t want our President to be a dictator. We want our President to have to look to Congress for legislation, to pass our budget, to confirm appointments, etc. and then when the President is hamstrung by the system and by an opposing party that brooks no compromise, we wring our hands and feel our President has let us down. I have said before and I say again, the President has no magic wand.

It is also a fact that no President should be held responsible for what happens in the first nine month of his Administration. During those nine months the President is working with his predecessor’s budget, with his predecessors appointees, and with the effects of his predecessor’s policies. Thus the campaign attacks, as mirrored by the media, were totally misplaced and unfair. If we look at the graph of job creation which I published in my blog post "We are Americans!" and we delete the job losses of the first nine month of the Obama Administration, the wild number of job losses vs. job creation look quite different, as would figures on how large the deficit was to be attributed to the Obama Administration and how much to the outgoing Bush Administration.

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Some may say why dig up old history? But it is not old history in the sense that it illustrates how the media fails to enlighten, and in fact acts as a medium for obfuscation and deception, and those who have been reading my blog post know how upset and angry I am with an institution that has a primary responsibility to elucidate and inform.

Please reread my blog post "The Media in General and the New York Times in Particular" where I refer the reader back to other blog posts criticizing the media and elaborate on recent sins of omission and commission including sources I most respect – PBS Newshour and The New York Times.

But even since then I have watched with dismay as the Romney campaign flagrantly distorted what the President said on job creation. The Romney campaign attacked the President for ostensibly saying: “If you’ve got a business -- you didn’t build that.” (See here for examples of how the Romney campaign extensively distorted this.) The media in their typical attempt to find equivalency in everything equated this so-called faux pas with Romney reference to the 47%. But in fact there was no faux pas on Obama’s part. What Obama had said was: “If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business -- you didn’t build that.”  It was more than obvious that Obama was referring to roads and bridges when he said you didn’t build that. Where was the faux pas? Only in the fact that Obama did not foresee that the statement could be taken out of context. Is that the same as Romney talking with contempt about 47% of the American people? Nothing taken out of context.

For that matter the media also equated the 47% comment by Romney with Obama’s comment about “Guns and Religion” which he made four years ago. For example, Mary Bruce of ABC News asked “How are Romney’s comments any different from what the president said?," ignoring both the time lapse and the fact that Romney was talking about most Americans and his own constituency, while Obama was talking about a much smaller segment and people who hate his guts. But the media is always looking for equivalencies no matter how false.

How did we get here? To be sure, as the media likes to point out in its defense, poor biased reporting was common at the early years of our Republic. But we had a much more responsible press not so long ago, though few would remember it. An Op-Ed article in the New York Times deals with this in part. (Yes, the Times gives us some excellent editorials and excellent columns –its news pages are often lacking) The article correctly points out that, “…In 1985, the conservative organization Fairness in Media, backed by Senator Jesse Helms, tried to arrange a takeover of CBS and “become Dan Rather’s boss.” It failed, but two years later conservatives set the stage for an even bigger triumph. For decades, radio and television broadcasters had been required to present multiple viewpoints on contentious public debates on the grounds that they were stewards of the public airwaves. But in 1987, members appointed by President Ronald Reagan to the Federal Communications Commission abolished this ‘fairness doctrine.’ The change facilitated the creation of conservative talk radio and cable outlets to combat perceived liberal bias. Liberals followed suit with programming (albeit less effective) of their own.…most news organizations (with notable exceptions) abandoned their roles as political referees. Many resorted to an atrophied style that resembled stenography more than journalism, presenting all claims as equally valid. Fact checking, once a foundation for all reporting, was now deemed the province of a specialized few.”

But there is even more to the story. While Jesse Helms failed in 1985, eventually the networks were taken over by large multi-national corporations, e.g. NBC is owned by General Electric. CBS is owned by Westinghouse Electric, which has renamed itself CBS. ABC is owned by Walt Disney Company, and of course Fox is a new huge conglomerate.

What does this mean for news coverage? Most importantly the old networks used their news division as loss leaders. News divisions were not expected to make a profit. Their new owners demanded that all divisions make a profit. This meant two things. The news operations had to seek the largest audience possible which led to yellow journalism, and they had to keep expenses as low as possible which led to inadequate resources. But that was fine with Jesse Helms and his Right wing cohorts.

Finally, in 2007 a Bush revamped FCC (Federal Communication Commission) “lift(ed) a 35-year-old ban on companies owning both TV stations and a local newspaper in the country's top 20 markets, saying it was no longer needed… Looser cross-ownership rules would benefit companies such as News Corp. NWSA +1.61% and Tribune Co., which already own newspapers and TV stations in certain big markets and have long operated with waivers of the cross-ownership ban. News Corp., for instance, owns the New York Post and two TV stations in the New York market. (News Corp also owns The Wall Street Journal.)”  The results of this has resulted in a concentration of the industry as summarized by Common Cause in a paper entitled: “Facts on Media in America: Did you know?” which I urge the reader to read here.

But to return to the campaign! As the campaign wound down some voices seemed to think that who wins wouldn’t make much difference, e.g. here is a quote from a Letter to the Editor of my local newspaper: 

“Nationally, I know one thing: If Barack Obama wins re-election, I will get up at 6:30 a.m. on Nov. 7, get my kids ready for school and go to work. If Mitt Romney should win the day, I will get up at 6:30 a.m. on Nov. 7, get my kids ready to go to school and head to work. Nothing will change that. It's fun to debate national elections, or even state elections, but much of what transpires afterwards does not help or hurt us too badly. Our success and failure is not reliant on public policy. Never has been. Will never be. Our nation generally speaking, survives and thrives because of the people, and in spite of the government, not because of it."

And the Des Moines Register, a paper that has consistently endorsed Democrats endorsed Romney because they felt he had a better chance to reach consensus with the intransient House Republicans, than Obama would, without examining what such a consensus would mean for future seniors, its health care system, its educational system, the rights of women and minorities, etc. and the country’s future. 

But the fact is that while the country has dodged a bullet we are still faced with what has come to be known as the economic cliff, with a Republican majority in the House pledged not to raise revenues to meet the nations needs and its looming deficit, and willing to force the nation into default and/or shut down the government unless it gets its way, regardless of the election.

Our President has his work cut out in meeting this challenge, which at this moment seems insolvable. A media that truly informs would be of immense help. But the signs don’t augur well. The last time around the can was kicked down the road with a sequester that called for reductions in discretionary defense spending to be cut by 9.4% and nondefense programs to be cut by 8.2%. The idea was that the prospect of this would cause the “super-committee” to work out a more practicable compromise. This failed because without additional revenues the choice became and becomes between such draconian cuts and not dealing with the looming deficit. 

Now with the looming crisis once again upon us they have already begun to demagogue the issue, demanding that the portion relating to the military must be repealed, without offering any means for offsetting this spending cut. Of course the equally draconian cut in domestic spending, which in the compromise was supposed to make the cuts balanced, they want retained, and possibly increased to make up for the elimination of the military cuts.

But again where is the media? They report extensively on the Republican demands and what the cuts would mean for our defensive capability but fail to mention what the domestic cuts would entail, though the White House has released detailed itemization of the consequences. For those who are interested enough, or masochistic enough, to want to read the full 394 page report it can be found here. But that is what we supposedly have media for. To read and summarize such reports. How many have seen such summaries in our media, whether in print, on TV or even in its electronic form. Oh yes, The New York Times gave us the information. But where was information of such great import? Was it on page one where it belonged? No, it was on page 17 under the heading: “White House Details Potential Effects If Automatic Budget Cuts Go Through.” This is worth reading and rather than being 394 pages long it is only two pages long. See here.

But in the final analysis what does the media give us front and center. They tell us about campaign tactics; who’s ahead, whose behind. They turn it into a sporting event. And worse, as the highly respected The Economist magazine tells us: 

The media, meanwhile, and this can't be repeated often enough, is overwhelmingly biased towards producing exciting political races. Horse-race reporting gives the media the collective ability to shape the kind of narrative it needs in order to report excitingly.

We deserve and should demand better!!!