The President’s re-election (More Discussion II)

In my post entitled "The President’s re-election (Discussion)" I set forth comments that I received from various subscribers and my responses, including an exchange with Roger Streit of West Orange, N.J. and ended with my rejoinder. But my disputation did not end there, and accordingly, I set forth the further discussion with Roger in my post "The President’s re-election (More Discussion)." While my discussion with Roger has not ended, Albert Nekimken of Vienna, Virginia has joined the fray. I set forth below his comments and in my next post will set forth my rather lengthy response.

Here is what Albert opined with respect to my exchange with Roger:

This exchange is thoughtful - thanks for sharing it, though I'm not sure I can identify accurately exactly where you and Roger diverge. There are too many strands to the argument and chronology for that.

 Suffice to say that I agree with you that the future volatility of interest rates makes our high level of national debt dangerous. However, you may be minimizing the allure to some of inflating our way out of it by devaluing the USD, one way, or another.

 Regarding social security and retirement, we ought to remember that at least 30% of SS recipients have no other source of income. Also, by the mid-60s, many (if not most) people are exhausted and/or unable to continue to work even if anyone was willing to employ them, which is unlikely. If so, raising the retirement age is dangerous. Today, millions of people are struggling to remain employed at all, and therefore able to contribute to the SS fund.

 Based on my reading, the SS fund is NOT a debt of the federal government AND the fund can be rather quickly replenished for the foreseeable future simply by making 90% of all income subject to SS tax withholding contributions, as it was when SS was established; at present, contributions end around incomes of $125,000. This must be changed.

 As for rising life expectancies, where do you find evidence for this myth? American median life expectancy is already lower than that of many OECD countries and insurance companies still estimate that people like me, at age 68, should expect only ten more years of life. If so, that means less than 15 years of retirement on SS benefits--not excessive after a lifetime of work, by my estimate.

 Apart from paying off the Treasury bonds with which Congress irresponsibly stuffed the SS fund over the years, the next greatest federal spending burden is Medicare. Here the Republicans are pushing for a decrease in benefits, which are already inadequate, and ignoring the potential for legislating lower prices from vendors in the healthcare industry, which is currently VERY profitable. As the majority of the population is covered by Medicare, vendors unwilling to accept lower prices (and lower profits) offered by Washington will find ever smaller populations willing and able to pay their higher prices. The alternative approach to lowering healthcare costs, of course, is simply to establish a national health service the provides services directly. There is general agreement that we would see quickly a 30% decrease in useless, duplicative administrative costs even before considering bloated corporate profits.

 When U.S. vendors are unable or unwilling to sell at prices that the national service can afford, procurement should be opened globally. Also, if SS and Medicare payments were made to recipients for payment anywhere in the world where they may reside, you would see an earthquake of price adjustment in the healthcare industry. 

Finally, as you know, defense and intelligence spending must shrink. Alas, there is growing evidence (especially to Washington, DC residents) that the heretofore untouchable spending on intelligence has gone totally out of control. We could likely obtain the same, or better, intell while spending half of what we spend currently--again due to waste, duplication, and sheer incompetence. 

The defense vendor community is resisting spending reductions fiercely, but this is a fight that we must win--even at the cost of raising unemployment temporarily. Employment that is supported entirely by federal spending should be better shifted to time-sensitive, temporary unemployment benefits. 

Must end. Thanks again for resuming your blog and keeping our brains agile.

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 (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.

We are Americans!

In my post I entitled "The Media in General and the New York Times in Particular" I decried the tendency on the part of the media and in that case PBS to “create an artificial or false equivalence…”

That is even truer as between the parties. As I watch the present campaign rhetoric and compare it to history I am struck by the fact that Democrats, as a group tend to be more American first and Democrats second, while the reverse is true about Republicans.

This came to me quite by accident as I was reviewing some old material on my computer. I found the following first person description of one who was in the World Trade Center on 9/11. It is very dramatic and I urge the reader to read it here. 

But the point that struck me most of all was the ending of that piece. Allow me to quote it here:

Today the images that people around the world equate with power and democracy are gone but “America” is not an image it is a concept. That concept is only strengthened by our pulling together as a team. If you want to kill us, leave us alone because we will do it by ourselves. If you want to make us stronger, attack and we unite. This is the ultimate failure of terrorism against The United States and the ultimate price we pay to be free, to decide where we want to work, what we want to eat, and when & where we want to go on vacation. The very moment the first plane was hijacked, democracy won.

Compare that to the long running smears against Democrats that I related in my post: "The Election (Discussion)" Allow me to quote:

… for some reason Democrats have always been held to a much higher standard than Republicans. You will remember Joe McCarthy's charge during the Truman Administration of "twenty years of treason." What was worse is that when the Democratic led Tydings Committee "concluded that the individuals on McCarthy's list were neither Communists nor pro-communist, and said the State Department had an effective security program" and "labeled McCarthy's charges a "fraud and a hoax". Republicans responded in kind, with William E. Jenner stating that Tydings was guilty of "the most brazen whitewash of treasonable conspiracy in our history.” The full Senate voted three times on whether to accept the report, and each time the voting was precisely divided along party lines.”

But that is not even ancient history. Ann Coulter, a darling of Republicans recently, wrote: "Twenty years of treason hasn't slowed them down." and charged "50 years of treason.” 

Now compare that to the reaction as shown in the quote above. In response to 9/11 Democrats rallied around the President. They did so even though there were many questions about Bush’s negligence in not stopping the attack. The outgoing Clinton Administration had warned the President that a major attack on the US was a serious threat. It was ignored.

The hijackers were training for the attack in American flight schools, and agencies of the Bush Administration knew about it, but they did not “connect the dots.” The Bush Administration was clearly negligent in a major and dangerous way. But this was not the time for recriminations. Democrats held their fire. The said we are Americans first and partisans second. This was a time for unity.

Contrast that with the way Republicans are treating the attack in Ben Gazi, Libya, (Which by the way is not the capital of Libya and is not where our Embassy is located. What was attacked was a Consulate. The Embassy is in Tripoli.) Again we have been attacked. A time for unity? Not for Republicans! It is, as it has always been, a chance for divisiveness. Not for patriotism. Not for unity. A chance to divide the country on National Security.

Have they, or we, already forgotten how even after 9/11 Al Qaeda continued its terrorist attacks, if not on our territory on the territory of our allies. Have we forgotten the bombing of the London subway, or the attacks on our allies in other parts of the world? Obama put a stop to it even before he tracked down and killed Osama bin Laden. A decimated Al Qaeda staged they Libyan attack in order to seem relevant again. And Republicans, led by Romney and Ryan are giving them the stage they were, and are, seeking.

For shame! For shame!

They wave the flag! They wear flag pins! And they don’t know the meaning of patriotism. Only how to advance their agenda.

And what is their agenda? They accuse the President, “No Drama Obama” of being soft. He may have been in the first debate, but he sure isn’t when it comes to being what he was elected to do. He isn’t the best at blowing his own horn, or exposing the hypocrisy of his opponent, but as President, as Commander in Chief, he is always there.

Ryan during his Debate with the VP criticized Obama on Iran. He claimed that it took Republicans in Congress to toughen sanctions. Wow, we got a bipartisan bill through Congress 421-6 in the House and by voice vote in the Senate and it is promptly signed into law by “No Drama Obama” and Ryan claims this somehow reflects badly on the President and/or Democrats.

But of course no unilateral sanctions by the US has any meaning unless such sanction are imposed by a multiplicity of countries. That has been the genius of this Administration. They got something, that none of these unilateralist could have gotten! They got effective international sanctions against Iran.

Bloomberg news reports: 

Iran’s freefalling currency is turning meat into a luxury, sparking overnight price surges and spurring shoppers to stockpile goods…. Iran’s rial is in a tailspin, having lost more than half of its value against the dollar in street trading in the past two months as U.S. and European sanctions aimed at curbing the country’s nuclear program bite. Riot police yesterday fired tear gas and sealed off parts of downtown Tehran after the currency’s plunge triggered street protests.

Short of military action, whose effectiveness is problematic, and which Romney/Ryan do not advocate, (or maybe they do ---who knows, they make statement all over the map) what more could have been done. It has now been effective beyond any expectation or hope. It might end up bringing the regime down.

But how did we get here in the first place? 

It was Republican Secretary of State, Foster Dulles, and his brother Allen Dulles head of the CIA, in the Eisenhower administration who overthrew an Iranian Democratically elected government and installed the hated Shah, which in turn led directly to the Shah’s overthrow by the Ayatollah.

It isn’t just people. Parties matter. And while Democrats are not angels, (the system will not allow it) the differences between them are like night and day.

They (Republcians – Romney – Ryan) say Obama has not created enough jobs since he took office in January. They do this by counting the job losses the country sustained on the day the President took office. This is an absurd approach. Presidents don’t control events on the day and in the months immediately after they are sworn in. Obama acted fast! He got the stimulus bill signed into law on February 17, 2009 less than a month after being sworn in. It took until the end of March to have an effect. Look at the graph below: 

By April job losses had gone from 850,000 the day he took office to only 200,000 by May and except for a small spike in the middle of summer, the trend has been for the better every year. Republicans have been touting “Unemployment is still over 8%.” Well, it isn’t any more. This is a party that celebrates unemployment. It may not be good for the country, but it is good for the party.

But say Republicans through the mouth of Romney and Ryan does he (Obama) have any other plans. Well yes! On August 2, 2011 Business Insider had the headline “Congress AWOL ON Jobs.” They hold the country hostage and then blame our President. That is their patriotism.

And what of their nominee? He is the Invisible man*! Well, he may not be invisible, but his plans for the American people are top secret. He will cut $5 trillion in taxes, mostly for the rich, and make it up with ------ “it’s a secret.” He will find it in tax expenditures, but not of the most important kind, not the advantaged (for the rich) capital gains tax – that’s off limits. Dividends mostly earned by the rich – that’s off limits. Inheritance taxes, the means by which inherited aristocracies are built – that’s off limits. What’s left –it’s a secret.

           

What nefarious secrets are contained in his tax returns? We don’t know. It’s a secret.

This shouldn’t be a close election. Obama ought to win by a landslide and get a Congress that will work with him. But the American people, or about half of them, are deluded and deceived.

I pray for the future of my country, for I AM AN AMERICAN.

----------------------------------------------------------

*Borrowed from the book by that name by H.G. Wells

The Media in General and the New York Times in Particular

I have denounced our media again and again. I wish to God that such denunciations could be focused on the lying machines of Fox News and the vicious demagoguery of Rush Limbaugh, or other clearly Right Wing Media. Unfortunately, the so-called liberal media is failing us. Its editorials, more often than not are fine, but its more important feature articles leave much to be desired.

I have written about this time and time again. Please, please, read my blog posts "The Media III - Falsehoods about Kerry" and even more important "The Media II - Falsehoods about Gore."

The editorial pages of the New York Times and the Washington Post usually say the right things, but the news and feature stories are far more important, and they too often go for the sensational, or the just plain sloppy.

What has set up my ire today is a front page article in the New York Times entitled "Payroll Tax Cut Is Unlikely to Survive Into Next Year."

Here is what the article says at paragraph three: “Independent analysts say that the expiration of the tax cut could shave as much as a percentage point off economic output in 2013, and cost the economy as many as one million jobs.”

But at paragraph 10 it says: “independent economists say that the economy could shoulder the payroll tax increase without undue harm.”

Who are the independent analysts? Who are the independent economists? Is there a difference?

The author doesn’t say.

But that’s not all!!! The article goes on to say, “Many Republicans vehemently opposed its passage last year, as it would divert money from the Social Security program.”

Really? Since when do Republicans worry about diverting money from a program they have long wanted to gut and abolish. But in fact, the program doesn’t divert money from the Trust fund. Under its provisions any revenue lost to the Social Security Trust Fund must be, and is made up out of general revenue. See the applicable IRS Bulletin. 

But the New York Times article doesn’t tell us that. It leaves us believing that the reduction in the payroll tax negatively impacts the Social Security Trust Fund and the long-term viability of SS. This is simply not true.

But I don’t want to single out the New York Times. I focus on that paper because I read it more than any other and so its sins of omission and commission come to my attention more frequently.

But let us not overlook the highly regarded PBS Newshour, which was recently reprimanded by its ombudsman, for presenting a segment on global warming saying ” … it is wrong to create an artificial or false equivalence…”

But this is not the first time that the Newhour, a program I watch religiously, as being one of the few good news programs on the air, gave false information, or sought a false equivalency. While I have no proof, the fear of a funding cut-off from Republicans in Congress undoubtedly makes the program careful not to allow truth to offend those who hold the purse strings. What we need is for enough money to pour into PBS for it to be endowed with funds making it truly independent of outside pressures.

I could undoubtedly go on and on about our inadequate media, but neither my time nor my readers patience will allow that.

So let me close with a reference to Fareed Zakaria on CNN last Sunday and in the Washington Post on September 26 where Zakaria in effect assumes that Romney is so vague about his budgetary plans, that if he gave out more details he would offend his Tea Party base. Why does Zakaria assume that the real Romney is the centrist who governed Massachusetts, despite all evidence to the contrary? The evidence for those who choose to have their eyes and ears open is that he has in fact become the Tea Party acolyte he appears to be, and that he is vague about his plans, not because he is afraid of offending his Tea Party base, but because he is afraid that he would lose most of the centrist voters, and maybe many of those 47%, non-income tax-paying voters who amazingly still support him, if they knew of his real plans.

And so his plans are a secret, just as his tax returns are secret, for the more we know the fewer votes he would get.

But to me the attempted false equivalency infects the news media. If the Republican Party adopted the Flat Earth Society platform we would undoubtedly soon have debates in our media on the subject of whether the earth is flat.

But it is not only false equivalency. It is the echo chamber. Once a certain paradigm is set, no one questions it. Thus we hear again and again how “no sitting president facing an unemployment rate more than 8% has won another term since Franklin D. Roosevelt.” and this is repeated over and over again, often without mention of FDR’s re-election. The message becomes, intended or not, that no President deserves re-election with such an unemployment rate. But what is left out of this equation is that no President since FDR has inherited an economy as bad as this one, and somehow that is rarely if ever mentioned. If the one is constantly repeated, shouldn’t the other? But the media is stacked. Not the liberal way, as we keep hearing. But subtly, ever so subtly, in favor of the Right. But this is never enough. The attacks on the media as being too liberal will keep on coming, and the media ever craven will accommodate, and move further and further right to stop the attacks, which will never, ever, stop until all we get is clones of Fox.

Speculators and the Price of Gasoline - Discussion

This is an issue that I had not originally intended to discuss. But since it is one of the favorite hobbyhorses of the Left and since Eric Offner of Manhasset Hills, NY has been raising this issue forcefully, I discussed it in my post of March 29, under the heading "Control of the Weather (Discussion)." Offner has now chosen to pursue this, which prompted me to do a fairly long dissertation on the subject. I now want to share my analysis with my readers.

Offner wrote:

First see the article in Business Week entitled "Why Obama's Crackdown on Oil Speculators Won't Work." 

Then answer these questions:

1.) If a crackdown on oil speculators won’t work, does it not imply that there are oil speculators?

2.) Is it possible that Wall Street oil speculators affect the price of oil?

3.) The bigger question is whether speculation on food, water and other necessities exists and whether such action is ethical?

4.) Is failure to restrict unethical behavior unethical?

My response to his questions is set forth under corresponding numbers:

1.) Yes of course there are. The question should not be whether there are speculators but whether it is ever possible to eliminate them and whether they are bad. The answer is that it is not possible to eliminate them and in many cases not even possible to regulate them. Sometimes they are bad, sometimes good, most often neither.

2.) It is not only possible, it is probable. But that is not necessarily bad. Look at the article you sent me. He argues convincingly that speculators even-out the speed at which prices change. Without them, as happened some years ago the price can quadruple almost over-night and a more gradual rise is better for the economy and consumers.

3.) Yes and Yes. Let me take this down to basics. There is a rumor that sugar, or for that matter water, will be in short supply. Most people, i.e. consumers upon hearing this will head for the markets and hoard it. The result is the price goes up and soon the shelves are empty. A self-fulfilling prophecy. Now let us suppose a larger speculator wants to take advantage of the situation and so he goes out and buys many tons of sugar, puts them in a ware house (or he buys futures) and then taking advantage of the rising prices resells it at a hefty profit. As he and others begin to sell the price goes down. Is he/she now a good speculator? How do you stop this? Do you make it illegal for anyone to buy more than a certain amount? How do you determine the amount? How would this effect a legitimate store or a legitimate wholesaler, who by the nature of their trade must buy large amounts?

The way to stop this is price controls and rationing which brings about a black market, where the price is even higher and even less sugar in the stores. We are now seeing this in Venezuela.

Are there times when rationing and price controls are appropriate? Yes!!! But only in extreme cases, such as war-time, when the evils of the black market are preferred to letting hoarding control, but it is always a close question. Where the hoarding is by a limited group, intent on creating shortages and raising prices, it falls afoul of the anti-trust laws and definitely should be prosecuted.

Is Obama's approach sound? I don't know, but it is good politics. He is doing something!!!

Raising the margin price on commodities speculation seems like a sensible thing to do, but it takes someone more knowledgeable than I to analyze the consequences. The article you sent me seems knowledgeable and objective.

I will say this. When Allan Greenspan talked about the stock market suffering from irrational exuberance, the obvious thing to do, as far as I could see and still believe, was to raise the margin requirement, which was within the power of the Fed, but because of Greenspan's hostility to all regulations this was not done - ditto for so many other things that could have headed off the crash.

But I don't know the commodities market - We apparently have regulations but we need money to enforce them. Everything else is shooting in the dark. Simplistic answers whether from Left or Right rarely have any merit.

The article in Business Week appears to be an intelligent one. It recognizes that regulations are important and need enforcing by the CFTC. Thus it is apparent that we have regulations in place that are not being enforced, or at least not being enforced adequately. But the Republican Congress will never appropriate the money needed. Instead, they will make sure that what can be done is not done, and then blame the President, who can only do so much without Congress' help.

There are many problems with the world's food supply that are exacerbated by US policy.

The use of US ethanol as an additive to gasoline has created a shortage of corn and driven the price higher, but the corn lobby will prevent Congress from changing this.

Our foreign aid program with food is counter-productive. The law requires that we not give money to aid organizations for food aid, but rather buy the food from American farmers at much higher prices than we could buy it on the world market and it must be shipped in US vessels. If the law would allow our aid to be by buying the food from African farmers, we would save money both in the price of the food and in the shipping costs and we would aid the African economy. Now it enriches the American corporate farmers and hurts the African economy because it competes with the African grown food and drives that price down.

4.) No and the question is irrelevant since I have said such action is not unethical. But even where it is unethical there is always a weighing of unintended consequences. Simplistic questions and simplistic answers to complex problems are, well, simplistic.

I then added:

The oil market is a world market. How do you regulate trades made outside the US? If you rationed gasoline in the US, it would have no effect on the price of oil on world markets. If you had price controls on gasoline that were below the world price of oil, no one could afford to sell gasoline, since they would lose money on every gallon. World markets and globalization make a new ball game. But we can no more change it than we could stop the industrial revolution and now the technological revolution that brought about globalization.

Furthermore a high price of gas is not bad. It makes clean energy and conservation much more competitive

Even boycotts have limitations. We put a boycott on Iranian oil. But if China does not join the boycott, can it be effective? The boycott might force the price of Iranian oil to go down, in which case China gets a windfall. How do you stop this? Only with a full fledged blockade of Iran, an act of war, which would put us in conflict with China and get Iran to try to close the Straight of Hormuz. Can you imagine what the price of oil would go up to? Speculators will make a lot of money, but they are not causing the price rise - they are taking advantage of it. Is there anything we can do - yes, but I am not smart enough to know what. Ask Barney Frank - he understands these things better than I do, and while I am talking about Barney Frank I commend to you an interview of him, which appeared in New York Magazine.

Also we do have laws on the books and the Commodities and Exchange Commission, which needs more funding as recommended in the article you sent me to enforce the laws and regulations. But the Republicans will never authorize this. What can we do? Get rid of them to whatever extent we can.

But I get tired of the Left and their "it’s the speculators.”

Finally allow me to add that while normally a two party system benefits the country, now a defeat of the Republican Party to the point where we have only one party has the best hope of reforming the system. Now it is broken and can't be fixed. In our system a one party system would not last long. The Democratic Party would split in two.

Talk of a third party in our system is very counter-productive. It would make sense if we had run-offs as e.g. the French and most of the world do.

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.

Supreme Court on the Health Care Reform Law & the Ryan (Republican) Budget

In my last post "Control of the Weather (Discussion II)," I said that I would postpone my discussion entitled “It’s All About Race” because the comments on my previous post were still coming in, and I wanted to share that discussion. Now I feel I have to postpone the discussion on race again, because there have been developments that I cannot ignore.

On the politicized and run away Supreme Court I concluded in my last post with the following observation:

When we know how a justice will rule by which party appointed him/her, then it is an extension of the party, and no longer a judicial forum.

The seriousness of the politicalization of the Supreme Court is now put into the bright spotlight by President Ronald Reagan’s Solicitor General, Charles Fried, who makes these cogent observations. To get the full import of these observations one needs to read the whole interview, which can be found here. But here are some telling quotes:

Justice John Marshall said in 1824 is that if something is within the power of Congress, Congress may exercise that power to its fullest extent. So the question is really whether this is in the power of Congress. 

Now, is it within the power of Congress? Well, the power of Congress is to regulate interstate commerce. Is health care commerce among the states? Nobody except maybe Clarence Thomas doubts that. So health care is interstate commerce. Is this a regulation of it? Yes. End of story….

The other thing is I think it’s Justice Kennedy who said this fundamentally changes the relationship of the citizen to the government. That’s an appalling piece of phony rhetoric. There is an important change between the government and the system. It was put in place in 1935, with Social Security. And it said everyone has to pay into a retirement fund, and an unemployment fund. It was done when Medicare came in the ’60s. That’s a fundamental change. But this? This is simply a rounding out in a particular area of a relation between the citizen and the government that’s been around for 70 years…. 

Politics, politics, politics. You look at the wonderful decision by Jeff Sutton, who is as much of a 24-karat gold conservative as anyone could be. He is a godfather to the Federalist Society. Look at his opinion. Or look at Larry Silberman’s opinion. I don’t understand what’s gotten into people. Well, I do I’m afraid, but it’s politics, not anything else. 

And so the Supreme Court has gone from anointing the President of the United States in Bush v. Gore, to throwing out all restraints on the influence of money in politics in Citizens United v. FEC, to deciding that Congress my not legislate anything that its Party doesn’t want.

Is this the end of Democracy, as we have known it? I hope not, but I fear that it may be.

But this is only one area where the extremity of the Tea Party-dominated Republican Party can be surmised.

The Ryan budget, which has been endorsed by Republican Congressional leaders and by the presumptive nominee, Mitt Romney, clearly tells us where they want to take the country. It is the most radical and dishonest budget ever proposed by a major party.

First unlike the first Ryan budget, which by its own figures never approached any attempt to balance the budget. “Mr. Ryan's (first) plan added (by its own claims) $6 trillion to the national debt over the next decade…” See here and here.

This new one, which passed the House with 10 Republican defections and not a single Democratic vote, does claim to balance the budget. But it is not clear when or how. I have spent hours searching the web for this information. Those discussions I have been able to find charge that the Ryan budget would add trillions to the debt. 

The only place I have been able to find an analysis is in a 98 page document put out by Ryan in PDF format, which for those who want to read all or part can be found here. The most relevant page in that document is page 75 which you can find here. It states: “The non-partisan CBO estimates that this budget will balance and begin to produce annual surpluses by 2040, and it will start paying down the national debt after that.” But this is an outright lie!!! I cannot find any CBO evaluation of this budget. Nor could they evaluate it, since the budget talks about eliminating many tax expenditures (also known as tax exemptions) but does not set forth what they are to be. How a bill can even call itself a budget, when it has no specificity on where and how money is to be raised, is a mystery. But they call it a serious budget. It says: “Relative to the President’s budget, this Budget shows more than $3 trillion in lower deficits over the next ten years.” Where does the money to be obtained from elimination of tax deduction exclusions, or exemptions to come from? Which are to be eliminated. The so-called budget doesn’t say.

What it does say are generalized claims that are not backed up by any specifics. But specifics are what the CBO and the American Public are entitled to. Where will the money from deleting tax expenditures come from. Which budget items are to be reduced and by how much, and what would the real world consequences of such cuts be? Does it provide money for our space program? What happens to future generations of people, who are not yet 55, my children and yours, my grandchildren and yours? What does it do to our infrastructure – of the needed bridge repairs to bridges that are falling down? What does it do to education? What happens to early childhood education, to Pell Grants for College students? What about Medicaid? Ryan says we can’t afford to pay for these things. Instead of raising more revenue, he says, we need to reduce revenue, to make sure that we can’t afford these things. Our present taxes are way below where they were under Ronald Reagan. Why don’t we return to the Reagan tax system? They laud Reagan, but will they adopt his level of taxation?

Let us take page 17 which you can find here. This deals with defense. Item one on this page is not controversial, but the security of the US is provided for by many factors not only by the size of the defense budget. Item two “…defense is not the driver of the debt burden.” This is kind of strange – it seems self evident that any expenditure as well as any cut in revenue adds to the debt. It is absurd to say that an expenditure, whether desirable or not, does not add to the debt. In the next paragraph he (Ryan) states the “The President … imposes nearly $500 billion in defense cuts over the next decade.” “The President imposes”? Just as Romney can’t repeal laws passed by Congress, the President can’t impose defense cuts. Congress does that. See here.

The $500 billion sequester in the Defense appropriation was provided for in the Budget Control Act of 2011, which passed the House by a vote of 269-161 with 147 Republicans voting for it. It passed the Senate by a vote of 74-26 with 55 Republicans voting for it.

The Romney/Ryan axis seeks to gut the present and the future of the United States, in order to increase the wealth of the wealthiest at the expense of everyone else. What kind of a future will we have for our economy without an educated work force, and with consumers too poor to provide the purchasing power that drives the economy. Are we going to attempt to be an export economy? But even that isn’t going to work without enlarging our ports to service the large ships that are becoming the future vessels of the world.

But how radical is the agenda. It repudiates not just Franklin Roosevelt; it repudiates past Republican Administrations. This is a whole new kettle of fish. Listen to a representative of the Cato Institute talk about past Republican Administrations. See here where you can get both the video and the transcript. 

Judy Woodruff: “(Obama) is suggesting that what Paul Ryan is suggesting is much farther right than even these other Republican presidents, what they've done."

Daniel Mitchell: "Well, that's because both Nixon and Bush were both big-government interventionists."

If these Republicans were both big-government interventionists, what about Eisenhower who built our Highway system, or for that matter Reagan who did not hesitate to increase taxes to deal with our then deficit and who saved Social Security instead of ending it for those under 55.

This Republican Party has little in common with the policies of past ones. It is a wrecking crew.

As for the claim of class warfare, is it class warfare to resist polices that would enrich the upper-upper classes at the expense of the middle classes and the poor, a trend already underway, but which the Ryan/Romney policies would expedite.

It should be remembered that the last time class was mentioned it was when Franklin Roosevelt was accused of “Being a traitor to his class.” Isn’t’ that class-warfare? But the real class warfare is the insistent demand that we keep re-distributing wealth upward.

Last, but not least, I recommend to the reader an article which appears in The New Yorker titled "Call That A Budget?" 

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.