Phast, Phurious and Phony!

Well well, it turns out that the Republican witch-hunt that snared A.G. Eric Holder was even more manufactured than it has long appeared to reasonable people.

Thanks to well-documented reporting by Fortune Magazines' Katherine Eban, we have learned that the so-called 'gun-walking' program Fast & Furious was a fiction from get-to-go.  ATF agents didn't intentionally allow2000 guns to 'walk' to Mexico in order to track them, instead it turns out that federal prosecutors felt that the gun purchases were legal according to current gun laws, and the agents had no legal standing to interdict the guns.

Issa's kangaroo-court has been making the claim that ATF agents lost track of 2000 guns that they let go to Mexico, resulting in the death of one agent.  But his investigation didn't pursue the F n F program, nor the people responsible for the first gun-walking operation from the Bush administration. Issa didn't interview anyone related to the actual operation, instead he focused solely on Eric Holder, demanding and receiving more than 7000 documents until he came to some that, by law, Holder wasn't allowed to release.

That was what Issa was waiting for as he badgered Holder relentlessly. No matter how much the A.G. cooperated it wasn't enough for the Tea Partisan,  who are now making the insulting and ludicrous claim that President Obama intentionally let the program go forward in hopes that the resulting violence would give him public backing to enact new gun laws and get rid of the 2nd amendment.

This is completely idiotic. Obama has made no attempt to further restrict guns, and if he had such a desire he didn't need any more evidence to justify doing so. Thanks to the NRA, the United States is awash with semi-automatic weapons, and the result is exactly what Issa accuses the President of...thousands of weapons causing millions of deaths in Mexico and the USA.

As the Issa farce went forward, several ATf  'whistle-blowers' came forth to tell their side of the story. They knew of purchasers who were buying hundreds of weapons each week, and wanted to pursue these buyers to make arrests. However, as mentioned, prosecutors recognized that this type of sale is legal, and the ATF agents had no choice unless they wanted to break the law by arresting the buyers in question.

The truth is that the GOP has been following the plan they created on Obama's very first day in office, continue to attack him with coordinated accusation regardless of the truth value of such claims. The result of that plan has been to convince some otherwise intelligent people that the Obama administration is rife with scandal. Those people watching other news sources besides Fox and the Wall Street journal, however, are aware that none of the trumped up charges against Obama add up to anything other than a man trying his best to work across the aisle and pass legislation to improve the economy.

Readers of this blog know that every single economic indicator is better now than it was before Obama took office, and that the economy is improving despite the fierce opposition to such by a recalcitrant congress more interested in voting on abortion bills than jobs or other legislation. Case in point, the US Flood Insurance bill was just stalled in congress due to "personhood" amendments being added to it by the GOP. What, you might ask, does a  flood insurance bill have to do with  abortion?" Nothing. 
Despite Issa's rationale for pursuing Holder being laid bare and revealed as a large load of partisan crap, the Tea party congress held Holder in contempt.

The irony here is that the only real case of contempt is the contempt that this congress has for the American people, as witnessed by their willingness to throw the country under the bus in order to get rid of Obama.

Disgusting.

Here's to Stupidity

This one is for all you stupid people out there. You know who you are.

Wait a minute! Maybe you DON'T know who you are!

Let's review.

After the Great Depression, we regulated the banking industry, and had a stable banking system for 70 years.

Then we de-regulated the banking industry, and within a decade the banks failed and wrecked the US economy on a scale not seen since, well, the Great Depression.

Despite high taxes on upper income brackets, we had over 70 years of prosperity, and built the strongest middle class of any nation at any time, and the strongest overall economy in the history of the world.

Then we cut taxes on the higher income brackets, and the result was not only the largest income gap since the Great Depression, but also the transformation of our budget from a surplus of 4 years running into massive and continuous deficits.

We cut taxes, it didn't work.

We de-regulated, it didn't work.

 And the lesson the GOP learned from these mistakes?

Do it again!

Ha ha, you laugh, the voters are too smart for that, they certainly won't elect someone who wants to do more of the very two things that ruined the economy and wiped out millions of people's life savings. No way!

Yes, way.

In fact, almost 40% of Americans think we should get rid of the guy who stopped a second Great Depression and produced 27 straight months of GDP and jobs growth, and instead we should elect the guy who wants to cut more regulations and further reduce taxes for the top income brackets.

America, the home of the free and the land of the brave, has in monetary terms become the home of the greedy and land of the craven.

Ironically, the 40% who think they are the most patriotic are the same ones who support the craven, greedy few who have brought our great country to the brink of ruin.

40% - this one's for you!

We ARE Better Off

In a previous post, I posted several charts that showed, with certainty, that the economy is getting better, and that we are better off now than we were when President Obama took office.

Some commentators or political pundits use statistics from the very first day Obama was sworn in to so they can make the claim that "we haven't added any jobs since Obama took over".  This is so disingenuous it is beneath contempt, and should be ignored by anyone serious about finding solutions to the problems that beset our nation during the disastrous Bush Administration. Those of us who pay attention to facts will understand that this a political mis-direct, a mis-representation of the truth, or, using the technical term favored by ethicists, "a lie".

Obviously, President Obama cannot be held accountable for jobs lost due to the failures of the previous administration, jobs lost as the economy fell into the depths of the Great Recession. It's also unfair, and completely unhelpful in analyzing policy to use numbers from when Obama had been in office for just a few months and his policies had not had a chance to take effect.

The following chart illustrate this fully, as the Great Recession featured job losses in the 500,000-700,000 range for four straight months prior to Obama's term. These losses DID change once Obama took over, but obviously NOT from the first day he was sworn in. The trend, however, is unmistakable.  Fewer and fewer job losses turning to many many consecutive months of positive job growth, all in the face of reduced public sector jobs and an obstinate Congress whose stated mission is to make sure President Obama was "a one-term President", regardless of the effect on the country.

The debt is another area of deceit in the media presentation, especially on the highly partisan Fox News. In fact, independent studies based on the Congressional Budget Office's official figures show that the bulk of the debt incurred in Obama's first year were unavoidable due to the depression-bound economy he was handed.

This information looks at the debt due to policy changes, which clearly shows that fact.

The high level of deficits Obama inherited stand in stark contrast to the way the 'Clinton Surplus' was turned into a huge deficit in Bush's second year, and as we have seen, his policies led directly to the largest part of the high spending under Obama. Note that the deficit actually went down in 2010,  the same is true for 2011, so once again, President Obama has turned the tide.

The proven method for bringing country out of a recession is for the economy to regain it's momentum, which means that the GDP has to rise.  The proven method to use in order to spur GDP growth when the private sector is stalled is for the government to spend stimulus money to provide jobs and other stimuli to replace the missing private sector spending.

Let's look at the GDP growth under President Obama.

One again, we see that under president Obama, things have gotten considerably better. If the recalcitrant opposition congress would stop blocking pro-growth policies and stop insisting on an austerity program(similar to the disastrous austerity that has hammered many European countries) our GDP would be higher still.

A look at the stock market shows the same positive trend, after a serious drop during the Bush Recession, it has climbed steadily under President Obama.

The benefits of compiling actual results from trying various policies should be to inform our current policy decisions, an intelligent government would take what worked and try to repeat it, and would avoid policies that failed. So it's simply ludicrously stupid to want to again shove the nation into recession by using the same policies that hammered our ability to run an efficient government that provides for the common good of the people.

Caveat Venditor

Caveat Venditor.  My Latin-savvy friends will recognize that means "Let the Seller Beware" 

IN this case, the sellers are corporations, and what they need to beware of is the reduced buying power of the middle class, which is stiffling the US economy.

Here are two charts showing how productivity has risen while wages /compensation has stayed flat







this is why the middle class hasn't increased their buying power, and why so many wealthy corporations are sitting on billions of un-invested dollars (more accurately, invested in low interest accounts rather than in creating businesses).


$$$$$$$$$$$$$$$$$$$$$$$$$$

From http://www.npr.org/2011/08/17/
139703989/companies-sit-on-cash-reluctant-to-invest-hire

"At the end of last year, Google was sitting on nearly $35 billion in cash."

"In a recent report, Moody's said the 1,600-plus U.S.-based companies it rates had $1.2 trillion in cash at the end of 2010 — 11.2 percent more than they did a year earlier"

" But there's a more basic reason companies are hoarding money: The U.S. economy simply isn't growing enough."

"The labor market is weak, which hampers consumption, notes Charles Biderman, chief executive officer of the research firm TrimTabs. "So without growing income, where's the money to buy more stuff?"


$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

These assessments are based on economic facts, and they point to an easy solution to our economic problems.  If the private sector won't pay higher wages, the government needs to step in and tax those record-setting profits and return money to the middle class.

A Rising Tide

"A Rising Tide Lifts All Boats".

The 'Rising Tide' in this famous metaphor is the U.S. economy, and supposedly, as the economic tide rolls in all ships will rise with it, whether you own a mega yacht or a little dinghy.

a Little Dinghy is what you would have to be to believe this. An incoming tide breaks on your head if you don't have a boat, and outright drowns you if you're anchored to the ocean floor.

Also known as 'Trickle Down', the 'save the wealthy' theory says that if we all make sure the richest among us stay rich and make most of the money, they will be so generous as to build factories and invest in businesses and perhaps give us a job.

Is it too much to ask that after a session of  'trickle down', they could at least 'wash their hands before returning to work' us over again?

Speaking truth to the power of this metaphorical mantra of millionaires is the chart comparing worker productivity against wages. As is apparent even with a quick glance, as productivity has risen year afte year, and the economy grew throughout the 1980s,1990s and 2000s, wages stayed flat, to the point where the middle class is making less money than they did 30 years ago, once inflation is taken into account.

Despite record-breaking profits due to the combination of more productive workers, increased efficiencies and favorable regulations for businesses,  wages dropped and benefits were removed year after year, and slowly but surely the 2-car garage was replaced by a 2-job barrage of difficulties for the middle class.

Some will argue that 're-distribution of wealth' is something we ought to avoid.  However, as Robert Reich shows in his new book "After Shock", we have already been in a phase of 're-distribution of income' for three decades, as the nation's wealth has been more and more concentrated amongst fewer and fewer people.

Leaving aside the morality of greed vs the benefits of 'Social Darwinism', the real problem with this trend is the effect on the economy. When the Middle Class no longer has the means to raise their lifestyle, the 'Demand' side of the free-market is stifled. This is the problem with 'Supply-Side' economics and it's largely what's wrong with our economy right now.  The people who would normally spend money purchasing flat-screen TVs, i-Pads, 4g-phones and such simply do not have enough money to do so. When the Demand side dries up, the Supply side soon follows, and workers are laid off and investment money sits waiting for a more favorable business climate. When ther eis a Demand, businesses will invest and work to increase Supply to meet that Demand.

Without Demand, the Free-Market system of "Supply and Demand" grinds to a halt.

Henry Ford recognized this way back in 1914, when he began paying his factory workers $5 per day, roughly three times what comparable workers were making elsewhere. His reason? They could then afford to buy his products. Ford's cunning business move was soon vindicated. His Model T, priced at $375, was then within reach of the middle class workers he employed. By paying them higher wages, he turned them into consumers and customers, and Ford's profits more than doubled from $25 million in 1914 to $57 million two years later.

Today, the share of the national income taken by the top 1% is close to 25%, and the top 10% receives a whopping 40% of our overall wealth.  That leaves the rest of the population with fewer and fewer dollars to spend, and has crushed the Demand side of the free-market.

At first, the once-strong American Middle Class was able to cope with stagnating wages by three basic strategies; women moving into the workforce; everyone putting in more and more hours at work; and people spending their savings and borrowing money, a large part of which was secured by their mortgages.

Those were all temporary strategies however,  and with the crashing of the housing bubble, have now all been 'maxed-out' and are no longer available. This is the point where the business cycle really starts to stop, a stagnation caused by a 30-year transfer of wealth from the bottom up.

Not coincidentally, there was also a huge transfer of wealth to the top income brackets in America in the years right before the Great Depression, roughly from 1923 - 1928. This led directly to, well, the Great Depression.

An earlier era eerily emulated eighty years later as the economic engine was eaten by The Great Recession (Hey, don't laugh! I was gonna say she stopped selling sea shells by the seashore 'cause consumers ran out of cash, credit and clams). Ahem.

Anyway, take a look at this chart showing the percentage of income held by the top 1 % during the past century.

Notice the big 'dip' in the middle?    In "After Shock" Reich refers to this period after World War II as "The Great Prosperity". During this time the USA had a more even distribution of wealth, and yet in the middle of the century the American economy was far more successful than at either end. You might notice that this is also the time that people tend to remember as "how great America used to be". They often argue that we need to reduce taxes in order to return to those successful 'good old days'.   The facts, however, show that the opposite is true, as the next chart will clearly prove.

During this time of prosperity, tax rates on the upper income levels rose to as high as 91%!!

 

 Did those ridiculously high tax rates squash productivity? Investments? Jobs?  Not at all. 

This bit of history completely crushes the contention that we can't raise taxes on wealthy people for fear of hurting our economy.

What these charts clearly reveal to us is that just before both the Great Depression and the Great Recession, as the top earners were taking a larger and larger share of the American Pie, they were also giving less back through lower and lower tax rates. The result of that was a huge imbalance of wealth leading to catastrophic failure of the financial system. Twice.

Now, one doesn't have to advocate returning to the outrageous tax rates of the war and post-war years to understand that America does better with a more even distribution of wealth.

This is one of the problems with modern politics by the way, as virtually every issue that ought to be discussed using evidence and common sense is instead demagogue'd to the lowest possible result, such that anyone calling for higher taxes on the wealthy is decried as a 'socialist" or some such nonsense. 

This refusal to use evidence as the basis for rational discussion of our problems has led to the current morass in our wildly unpopular Congress. At least being unpopular is bi-partisan.

Leaving aside our Latin friends reductio ad absurdum and argumentum ad hominem tactics for the moment, the facts clearly show us that America performs better when there is more of a balance in the share of income received by all Americans.

 

This is not a new realization. The term "American Dream", although nowadays thought to refer to something like "with hard work, anyone can rise to the top",  when originally coined by historian James Adams really meant "a better, richer, happier life for all our citizens of every rank".

"A better, richer, happier life for all our citizens, of every rank".

All of our citizens.  Of Every rank.

The American Dream has been cut in two, as the better, richer, happier life is increasingly more difficult to obtain except for those already in the top income brackets.  The tacit agreement that when labor performs well and businesses make a profit,  both would share in the rewards of that success, has been broken.

Middle Class Americans have not been spending too much money and saving too little, they haven't been immorally wasting time chasing unaffordable luxuries, and they certainly haven't been lazy.  The reality is that our workers have increased productivity and have been working longer and longer hours, but they haven't been receiving the benefits that are supposed to come with that success.

Henry Ford understood what Robert Reich calls the "Basic Bargain" which lays at the heart of a modern, highly productive economy. Workers are also consumers, their earnings are continuously recycled to buy the goods and services other workers produce. If earnings are inadequate, the economy produces more goods and services than it's people are capable of purchasing, leading directly to job losses and economic stagnation.

Consider for a moment how income inequality stops the flow of money through our society. If one person receives $100 million dollars in one year (as did Ken Lewis, CEO of Bank of America in 2007, as he led them to financial collapse and eventual absorption by Merril-Lynch),  they can't possibly spend it.  Without a strong business climate, it doesn't get invested in new business either. Take that same $100 million and divide it amongst 2,000 people, each receiving $50,000, which is close to the median income. They will spend all or most all of that money in a single year, providing the necessary fuel for our economic engine to continue chugging along, delivering it's cargo of  prosperity to everyone. The American Dream.

All of this ought to lead us to the conclusion that the path to restoring America to her former glory days, the so-called Great Prosperity",  is simple. Raise taxes reasonably on the wealthiest income brackets, while ensuring that government spending is aimed towards investing in growth and job creation, and providing a safety net so our population can weather slumps in the growth cycle. The combination of revenue enhancement and investment spending leads to balanced budgets and growth, as we saw during the Clinton years.

Factual information like this also ought to alert us to the fallacy of the cries of the 'don't tax the job creators' crowd, because as facts show us, the true job creators are the American people, living the American Dream. 

Our metaphorical middle class catamarans ride the swells of the economic ocean on the twin hulls of jobs and fair wages.  When we all share in the rewards from our hard work and increased productivity, Port and Starboard together, we shall keep the American economy riding atop the waves of commerce on an even keel, through sun or stormy weather, gliding full sail with the wind at our backs towards the dawn of our country's bright future.

At that point, then yes indeed, a Rising Tide will lift all of us.