Two Can Play

By James Kwak

Quick, what was the greatest conservative accomplishment of the George W. Bush presidency? It wasn’t Medicare Part D: that was a clever way to steal a Democratic issue and pass it in a form that was friendly to the pharmaceutical industry. It wasn’t Roberts and Alito: yes, they are young and conservative, but the majority is still only 5-4. It wasn’t Social Security privatization: that didn’t happen. Iraq? Getting political support to invade Iraq was a major coup, but everything went downhill from there.

The answer is obvious: the tax cuts of 2001 and 2003. Together, they were a wish list of conservative tax policy: a reduction in the top marginal income tax rate from 39.1 percent to 35 percent; a reduction in the top rates for capital gains and dividends to 15 percent; much higher contribution limits for tax-preferred retirement accounts (meaning that if you have enough money to save, you can shield more of it from taxes); and eventual elimination of the estate tax. In total, when fully phased in, the Bush-era tax cuts sliced almost 3 percent of GDP out of federal government revenues.*

And most of that money stayed in the pockets of the wealthy. According to the Tax Policy Center, 65 percent of the dollar value of the tax cuts (in 2010, once the 2001 and 2003 tax cuts were phased in) went to the top income quintile, and a staggering 20 percent — that’s tens of billions of dollars — went to the top 0.1 percent. Even if you look at the impact in percentage terms, the rich still took home more than their share: after-tax income went up by 0.7 percent for the bottom quintile, 2.5-2.6 percent for the middle three quintiles, 4.0 percent for the top quintile, and 8.2 percent for the top 0.1 percent.

Everyone knows all that already. Who cares? The point today is that President Obama can make this epic conservative victory vanish by snapping his fingers. He can say, “I promise to veto any bill that extends any of the tax cuts.” (Or, if he prefers, he can say, “I promise to veto any bill that extends any of the tax cuts, except the income tax rate reductions for the ‘middle class.’”)

Why would he do such a thing? Think about where the debt ceiling negotiations are today. The House Republicans are effectively holding the financial system and the economy hostage, demanding a massive, spending-cuts-only deficit reduction package. What makes this a smart move (where “smart” is defined solely in terms of likelihood of winning, not the risk being taken) is that if they can force Obama to choose between (a) raising the debt ceiling on their terms and (b) not raising it at all, he is going to choose (a). Even if he would be better off politically letting the government default and blaming it on the Republicans, no one thinks he would actually let it happen.**

Well, Obama has a hostage, too, if he wants to use it: the Bush tax cuts. From the Republicans’ position, just thinking about themselves and what they want (not about the country as a whole), are a few trillion in spending cuts over ten years — averaging something like 1.5 percent of GDP — worth giving up the greatest accomplishment of the entire conservative revolution?

Now, I’m not enough of a political strategist to know exactly how this would play out. For Obama to use the threat, he has to be willing to go through with it. That means mutual assured destruction: the Republicans insist on $3 trillion in spending cuts as the price to pay for raising the debt ceiling; Obama agrees in order to prevent default; and then Obama lets $3-4 trillion in tax cuts expire. Politically, it means being willing to argue in 2012 that letting the tax cuts expire was the right thing for the country. But that’s not an impossible case. Back in 2001, every aspect of the tax cuts was unpopular, other than the fact that they were tax cuts. (See Hacker and Pierson, Off Center, pp. 50-51.) Alternatively, Obama could propose a bill that extends just the “middle class” tax cuts on a take-it-or-leave-it basis.

As I said, I can’t tell you what the political percentages are. But it seems to me there has to be some leverage here that Obama can use — if he wants to.

* In the January 2007 Budget and Economic Outlook, the total 2017 cost of extending all the tax cuts, in addition to but not including patching the AMT, was projected to be $616 billion (Table 1-5), or 2.9 percent of GDP. I chose the 2007 projection because (a) it goes out to 2017, which is when some tax cuts were scheduled to expire and (b) it is before 2008, when the tax cuts to stimulate the economy began.

** What makes it a somewhat less smart move is that, with the Senate in the hands of the Democrats, the Republicans have no clear way of forcing Obama to sign or veto their deficit reduction bill. If the two houses can’t agree on a plan, Obama can avoid having to make the choice (and the end of the world will be Congress’s fault).

44 responses to “Two Can Play

  1. Elliot Spitzer, writing yesterday in Slate,http://www.slate.com/id/2300000/ made the point that back in December, Obama should have traded an increase in the debt ceiling for an extension of the Bush tax cuts.
    Spitzer thinks Obama is just a poor negotiator/deal maker. At this point, it’s hard to see any good coming from whatever transpires next. Trillion dollar cuts in social spending, coupled with continuing regressive tax cuts, in exchange for raising the debt ceiling. Or a default. Such a parcel of rogues….

  2. Obama could have done a lot of things and has chosen not to. We should drop the pretense that he is just a horrible negotiator and accept that he is a moderate republican. The Bush tax cuts were Bush’s greatest conservative victory and Obama chose to extend them with nothing in return. I think that says all you need to know about Obama’s motives.

  3. Moses Herzog

    President Obama has taken to quoting Reagan lately. Although I wouldn’t get to much in the habit of quoting Reagan (Reagan was a clueless buffoon from his first day in office, and a sad pathetic Alzheimer’s victim no later than ’83) if I was him. Anyone who has seen the blank look Alzheimer’s patients get in their eyes could tell you what was happening, and Howard Baker should have put an end to it, but he didn’t, so there you go…… but if President Obama wants to be like Reagan, there is ONE way he could follow Reagan’s footsteps and learn a great great lesson in the process:
    Three words: VETO!! VETO!! VETO!!

    Grow a pair of testicles, the ones you should have had when you met with the 13 Bankers in the White House March 27, 2009. If you don’t get a long-term debt reduction plan that allows the tax cuts for the rich to expire, pull out that pen and VETO. It’s called strong negotiation, and “holding on to your base”. As in “base voters” in case this is a new concept to you.

    Listen to the awkward laughter, incredibly awkward laughter in this 1987 meeting where if Reagan so much as sneezes, clears his throat, or mumbles, everyone dies in awkward laughter as if they’re so grateful the idiot didn’t fall out of his seat:

  4. Dan Palanza

    The Book of Accounts Is A Computer

    The word ‘bookkeeping’ is slang for a business entity’s ‘Book of Accounts’. ‘Bookkeeping’ is popularly believed to be ‘bean-counting’. A formal Book of Accounts, however, is in fact a computer, even when the bookkeeping was computed with paper and pencil. A Book of Accounts, as computer, is not to be confused with a simple adding machine that computes in one category of arithmetic. A Proper Book of Accounts computes in four categories of arithmetic. It is clear that categories of arithmetic is not understood even by our accountants and economists. Categorical arithmetic is a casualty of half baked computer software.

    Paper driven computation, as a business entity’s Book of Accounts, was refined into practice in medieval Italy, 670 years ago. When computers came along, Alan Turing used the metaphor ‘machine|tape’, to explain a ‘hardware|software’ computational method as: (1) a machine that mechanically interprets physical states, such as the production of goods and services, into an arithmetic model of those states (that is one category of arithmetic); (2) a tape that intellectually compiles a composed code, as information that controls the state changes of the mechanical machine (that is a second category of arithmetic). The Book of Accounts (3) therein generates a mechanical model of the physical production of goods and services, as money’s debtor-value system (that is a third category of arithmetic); (4) The mechanical monetary system must then set isomorphic to the tape’s informational control to compute each contributor’s intellectual ownership production’s value, as money’s creditor-rights language (that is a fourth category of arithmetic).

    We don’t have a financial problem here in the USA today, we have a software problem: We The People do not know how to program a computer that will deliver a fair and equitable accounting of our production of goods and services, as things of value that must be translated into a fair and equitable monetary system. Over the past 30-40 years we have fudged our computer’s arithmetic to a breaking point. What we need today is lessons in accounting’s computational arithmetic that is 670 years old, and ought to be the backbone of our financial software. The full scope of such arithmetics differs considerable from the arithmetic used by a simple calculator. Our accountants, economists, and political leaders have no idea that this problem with the software programming of money’s complete set of arithmetics exists.

  5. Moses Herzog

    Here’s another one of Reagan. Now as you listen to this “cute” little poem (which rightly makes the point you never bribe terrorists or kidnappers), keep in the forefront of your mind that while the idiot was reading this poem, the very same time this idiot was reading this poem, Iran-Contra was happening right underneath his nose. Now add, on top of that, there is a still a large degree of mystery surrounding the release of 52 hostages literally 20 minutes after Reagan was inaugurated. Reagan was not, is not, and will never be a hero of this nation except in the minds of the uneducated whites who connect their brain (such condition that brain is in) to the FOX/Drudge Report matrix on a regular basis.

    Anyone who doubts the above can look at the following two links. William Casey appears to have been “the point man” in the whole deal.
    http://www.nytimes.com/1991/05/07/world/bani-sadr-in-us-renews-charges-of-1980-deal.html

    http://www.nytimes.com/1991/04/15/opinion/the-election-story-of-the-decade.html

  6. Moses, it seems that your world must be so perfect that no one man is qualified to achieve its goals, execpt probably you. So you pick on non-linear presidents and then tell the linear ones to go grow a set, or grow a brain when they don’t adhere to your standards or beliefs. Its so easy to trick and trust a non-linear person/president, and just as easy to trick a non-numerologist, but you can’t trust a true numerologist, so your attempts to talk them into submission are doomed for failure. For mathematics is the great equilizer, and that is all your people need to know.

  7. jeff simpson

    Obama will not let the Bush tax cuts expire because that would alienate his underwriters. He is doing what no Republican could get away with: the undoing of the New Deal. Until he starts surrounding himself with people who are not of the pro-Wall-Street mindset, this should come as no surprise.

    I am beginning to think that a return of the presidency to the GOP will be good for the country in the long run, if only because the GOP will move to right of Obama’s center-right position, and thereby speed the economic decline being prompted by ‘trickle-up’ economic theory.

  8. jeff simpson

    I should add that speeding the economic decline will be good because it will expose the current economic conventional wisdom for what it is: utter crap.

  9. @Dan P – Is there any country on earth using the correct model?

  10. CBS from the West

    @ Apinak (and also jeff simpson)
    “We should drop the pretense that he is just a horrible negotiator and accept that he is a moderate republican. ”

    Krugman said essentially the same thing yesterday on his blog. But go look up Nate Silver’s analysis of Obama’s position in these negotiations (fivethirtyeight.com, about a week ago). You will see that Obama’s starting point is actually *to the right* of the average Republican voter. Not the average American voter, but to the right of the average *Republican* voter. Obama is not a moderate anything. He is part of the right wing, and because of his camouflage as a moderate or centrist, he is (as jeff simpson points out) able to implement the right wing agenda more effectively than any Republican could.

  11. @Annie – Is there any country on earth using the correct model?

    Probably not Annie. But it surely was 40 and more years ago when I first studied the art. I began researching the problem 30 years ago, and it had gone further and further downhill with time.

    What put the correct model out of practice is computer software. One must have an experiential understanding of the bookkeeper’s art, it that art is to be correctly programmed into software. The irony in the art being missing on today’s computers is that if it were programmed properly into software, that program would run circles around any that history has ever known. Our financial system has a software problem, not an ability to generate wealth problem, as goods and services. Keep in mind that, weird software, widely distributed, has been legislating the rules of commerce and culture for some time now. Our federal government, at the moment, is a dog being wagged by its special interest tail.

  12. jeff, if the Dubya administration didn’t expose the conventional wisdom, what makes you think a Romney administration will? In fact, I submit the only error the deficits-don’t-matter gang made was a miscalculation about when the economy would tank. T”was only a slight miscalculation though; they’re trying to tie it to the Democrats’ takeover of Congress in 2006.

    Frankly, I am flabbergasted that so many still accept the tinkle-down theory in the face of overwhelming evidence of failure. It’s faith-based economics where the rich are now called job-creators and death panels properly remain as part of the private sector.

  13. @ Apinak

    Obama, the Charlatan-in-Chief, has finally been hopelessly exposed. He’s a stealth Republican hell-bent only on reelection and a trophy library.

    “Of course, Obama’s most grievous political wounds were self-inflicted, starting even before his election when he rushed back to Washington to help rescue Bush’s Wall Street bailout. This was perhaps the first real indication that the luminous campaign speeches about generational and systemic change masked the servile psyche of a man who was desperately yearning to be embraced by the nation’s political and financial elites. Instead of meeting with the victims of Wall Street predators or their advocates, like Elizabeth Warren and Ralph Nader, Obama fist-bumped with the brain trust of Goldman Sachs and schmoozed with the crème de la crème of K Street corporate lobbyists. In the end, Obama helped salvage some of the most venal and corrupt enterprises on Wall Street, agreed to shield their executives from prosecution for their financial crimes and, predictably, later got repaid with their scorn.”

    “Thus the Obama revolution was over before it started, guttered by the politician’s overweening desire to prove himself to the grandees of the establishment. From there on, other promises, from confronting climate change to closing Gitmo, from ending torture to initiating a nationalized health care system, proved even easier to break.”

    http://www.counterpunch.com/stclair07272011.html

    ********************************************************************************************
    “So Obama is doing what any good demagogue does: delivering his constituency to his campaign contributors on Wall Street. Yves Smith has aptly called it Obama’s “Nixon goes to China moment in reverse.”

    “The Republicans help by refraining from putting forth a credible alternative presidential candidate. The effect is to give Obama room to move far to the right wing of the political spectrum. Far enough so that it is his own Democrats who are most intent on scaling back Social Security, not the Republicans.”

    “This is done most easily under pressure of near panic. This worked after September 1008 with TARP, after all. The Wall Street bailout melodrama should be viewed as a dress rehearsal for today’s debt-ceiling non-crisis.”

    http://www.counterpunch.com/hudson07262011.html

  14. I am amazed at how well the right has done in framing the acceptable, “serious” terms of this debate. While I suspect it is money talking here as everywhere else, the complete absence of any serious discussion of any form of alternative, progressive resolution of the Country’s debt issue is striking. It’s as if the wishes of the moderate to liberal portion of the Country simply lack any political outlet that is taken seriously by the political mainstream. Sure, we have Krugman, but we don’t have the equivalent of Grover or Limbaugh, the enforcers of the right.

    Maybe it’s more than money talking. Maybe this debt thing is teaching us a lesson, that for a determined political minority, financial terrorism works. The next question is if the left is willing to start playing by the same rules. Frankly, I don’t see that we have any choice, and since most of the right’s policies come down to protecting the property of the wealthy, we have a lot more leverage here than they do.

    So let’s offer to accept the short term deal, and have 41 Democratic Senators announce the same day that passage of the next extension can only be accomplished by the immediate cancellation of the Bush tax cuts for individuals making over $250,000 and that any amendments to Medicare must include a Medicare buy-in option for all Americans. A real President could accomplish this himself, by threatening to veto any subsequent legislation that does not contain these terms, but the idea that our current guy has the courage to actually stand for what the people who elected him believe in is of course laughable.

    The right is doing this because they think only they can play this game, they neither fear nor respect the left. Until they realize that their action cause counteractions, they will continue to increase their demands.

  15. There are those who gladly believe that the paying for tax cuts for the rich and two unfunded wars by stealing from social security and cutting medicare speaks to GWB’s genius.

  16. It seems to me that the prospect of giving up the Bush tax cuts may be a major driving force behind the whole debt-ceiling hostage event. The Bush cuts remain “temporary” and so in theory highly vulnerable to repeal. The easiest sales pitch to the public is “we have a huge deficit and the Bush tax cuts caused it.” Get a plan in place to reduce the deficit (a painful plan is good, in this case) and the argument for repealing the cuts is very much weakened. “No new revenues” has, after all, be a bedrock demand from Republicans, except for Boehner, sometimes.

    It’s quite clear from Republican behavior when in power that they don’t care about the deficit. They care about tax cuts. Putting a painful plan in place to cut the deficit allows Republicans to say “the deficit is no longer a problem, and we don’t want to inflict more pain on the public through tax hikes”.

  17. The only problem with your analysis of the “hammer” Obama has to use, is that the curent extention of the Bush Tax cuts don’t expire until January 1, 2013. If Obama leaves office on 1/20 and a Republican President comes in, they will just renew the tax cuts and retroactive them back to January 1. So at the end of the day if Obama uses the tax cuts as a weapon, it gives the Republicans even more incentive to do nothing, harming the economy thus making it less likely Obama gets re-elected, thus allowing the GOP to have their cake and eat it to. If the cuts expired this coming year instead of 2013 he would have a stronger hand, but they don’t and it’s Obama’s fault he let them be extended for thow years in the first place.

  18. @ Dan P

    Yikes!

    Thanks for sharing – I have been watching, since the early 1990s, the same thing happen in the work I did when *they* implemented “weird software”. Technocrat Nihilists *perceive* that they have created the perfect “paint by numbers” scheme that will produce a Michelangelo every time…instead it’s coming out cubist – square circles.

    I agree that the problem is not the actual production and distribution of life maintenance goods and services. It’s knowing where the limits are. Profits about 3% for goods is not possible because of agriculture limitations. Profits above 7% for *services* means people won’t be able to afford the service, over time.

    But it only took my abacus to figure out that in the situation on planet earth today, the cost of war was going to be far greater than the value of the booty – meaning that the booty was never going to cover the cost of the war.

    So a JUST WAR against this 21st century gang of war profiteers is inevitable.

    The tragedy is that when they fall (fuel runs out to move their machines), beating the swords back into ploughshares, so to speak, won’t be possible for a whole lot of reasons – which is a another year long conversation, at least. We’re gonna be stuck with a whole lot of un-recyclable toxic crap…at which point, we’ll have to introduce another calculation into proper book keeeping.

    Bottom line – we’re not the stupid ones :-)

    And therefore, we have the DUTY and moral obligation not to listen to liars thieves and murderers following today’s math formula: More misery for others = more $$$$ for ME ME ME

    When I told everyone Obambi was the uber-Wrecking Crew candidate, no one would listen….I guess having no guilt over anything remotely related to a personal or cultural history of wealth building through slavery, murder and theft, I didn’t look at the color of his skin, but the content of his character – it was way “too cool”…among many other little *signs*…I hate that hysterical shove that media puts together – the louder and longer the yapping, the bigger the lie – 2 years to sell that dude…

    …..and the drug dealors are in charge of the ‘hood, ain’t they? No democrat running against him, is there?

    Heck, not even a Republican other than a BainPain Mormon…

    This keeps up, Witness Protection Program is going to morph into it’s own country :-)

    Sorry to ramble, I’m cursed with seeing the big picture and using an abacus to do the *math*

  19. jeff simpson

    @roaxle, Yes, there is no reason to believe that people will ever realize that tax breaks for the wealthy do not help the little guy.

    Hey all you economists, consider this: A reliable indicator as to who will prevail in an upcoming presidential election is who raises the most money, especially from the big contributors. In the 2008 campaign, Obama originally promised to use public financing money only — but then he saw how much more he could get by accepting all that corporate money and he ‘rejected the broken system’ (and broke his promise). I wonder how it will play out this time, and whether the candidate with the most cash will win once again.

  20. Problem is he had this option – last December – and did nothing with it.

    If he asserts it for December 2012, what he gets is an election issue to use against him, followed by an election, followed by a lame duck session in congress when the tax cuts expire, and then a month later, a new President can follow through on a campaign promise to cut taxes.

    Really, we should blame the Democratic Party for failing to have a coherent plan last year and the year before when they had a majority in congress.

    The fiscally sound thing to do is to simply let all the tax cuts expire – but Obama doesn’t want to do that, as there is significant tax relief at the middle and the bottom.

  21. MK-

    That’s why I said “Immediate” expiration of the Bush tax cuts. By the way , the S&P comments about avoiding a downgrade assume BOTH a 4Trillion Tax Cut AND the Bush cuts expiring- a point receiving shockingly little notice from the mainstream media.

    This further reinforces my point that the right has done an amazing job of narrowing the scope of “serious” debate. Money talks, an nod where so loudly as in what it silences.

  22. Endgame:

    “This is what is happening today. Instead of enjoying what the Progressive Era anticipated – an evolution into socialism, with government providing basic infrastructure and other needs on a subsidized basis – we are seeing a lapse back into neo-feudalism. The difference, of course, is that this time around society is not controlled by military grabbers of the land. Finance today achieves what military force did in times past. Instead of being tied to the land as under feudalism, families today may live wherever they want – as long as they take on a lifetime of debt to pay the mortgage on whatever home they buy.”

    “And instead of society paying land rent and tribute to conquerors, we pay the bankers. Just as access to the land was a precondition for families to feed themselves under feudalism, one needs access to credit, to water, medical care, pensions or Social Security and other basic needs today – and must pay interest, fees and monopoly rent to the neo-feudal oligarchy that is now making its deft move from the United States to Ireland and Greece.”

    “The U.S. Government has spent $13 trillion in financial bailouts since Lehman Bros. failed in September 2008. But Mr. Obama warns that thirty years from now, the Social Security fund may run a $1 trillion deficit. It is to ward it off that he urges dismantling the plans for such payments now.”

    “It seems that the $13 trillion used up all the money the government really has. The banks and Wall Street firms have taken the money and run. There is not enough to pay for Social Security, Medicare or other social spending that the Blue Dog Democrats and Republicans now plan to cut.”

    “Not right away. The plan will be to “paper over” the current crisis by delegating the plans to a “Deficit Reduction Commission #2,” appointed from Congressional members.”

    “Finally, we have ‘Change we can believe in.’ Real change is always surprising, after all.”

    http://www.counterpunch.com/hudson07262011.html

  23. Reid versus Boehner on establishing caps on “OUR” discretionary spending (yours and their’s [?] annual rainy-day fund piggybank?) and what “Is”,… the definition of is — is [?], program integrity?
    Program Integrity is such a altruistic anomaly today in Congress, that I’m a bit perplexed by it’s coming out from the “Arithmetic Specialist” called “CBO” that never learned how to add or subtract!

    http://www.cbo.gov/ftpdocs/123xx/doc12336/HouseBudgetControlAct.pdf
    http://www.cbo.gov/ftpdocs/123xx/doc12338/SenateBudgetControlAct.pdf

    Thankyou James and Simon

  24. This “end of the world” business is sounding a lot like the purposely hysterical pre-TARP “economy will freeze-up” “economy will melt-down” exclamations with no details behind them.

    Doesn’t the government take in revenue constantly, thereby having a steady source of funds to spend to meet some of its obligations without raising the debt? And can’t it get some degree of forbearance on some of its obligations in order to fill at least some of the revenue-obligations gap?

  25. Brenda Vinall-Mogel

    James, I thought you might like some lines from history to discribe this situation we are in. This was written by me earlier under the name — lines from history- under the Shiller and Seigel debate in the WSJ. I personally needed a break from all of this — history too many times has had situations where a rather simple, but difficult choice comes and everyone points at the other and nothing happends or the wrong choice is made and everyone pays for that choice for many years to come. These often become the events which change the coarse of history….

    Rome burns, while government fiddles, the governors of the provinces bleed the people and collect slaves, when they have enough money they march on Rome and tell the Senators how to run the government for their benefit and not the citizens, those who defy the great engine go to the arena, and the barbarians laugh and hoard their silver. In the end no one will win, not slave, governor, outside barbarian, Roman Citizen. Only the lowly farmer who owns his land and can feed those who will follow him will gain. And the circle can start again.

  26. Lucy Honeychurch

    OR, Bama could just invoke the 14th Amendment, and declare the discussion closed. Duh.

  27. Thanks for the excellent post, James Kwak!

  28. Moses Herzog

    This update on the current budget talks brought to you by Wendi Deng and the Rupert Murdoch “Oops, I Bugged Murder Victims’ Phones On Accident” Defense Council.
    The part of John Boehner being played by comedic veteran Larry. As is everything run on FOX news, this video is 100% accurate (allowing for error of plus or minus 100%) and all sources were checked with the bathroom attendant of whatever building the event took place in.

    For those wondering, this comment was intended as satire. Maybe not ironic satire, but satire nonetheless. Thank you kids.

  29. Obama has been to too many garden parties since his brief tour as a grassroots guy ended. He does not want to change anything. His rich friends like their tax cuts. They want to talk about DADT and other headline grabbing issues. Not issues that call for shared sacrifice.

  30. no matter what the past 4 presidents and i have to say reagan to some extent, have run on during the elections, they govern moderately……. the biz boys who put these tea party republicans in office are second quessing their deeds…… leaves one to wander if the games being played out in DC currently is an attempt to make the tea party get some sort of satisfaction…….to slowly squash out. the old breed of republicans looks at deriving at a balanced budget by whatever means neccessary…….that includes revenue from tax increases……i am gonna be watching closely to see if the republican party implodes within……old republican vs new breed… there are alot (not as many as they think) of people in this country who are anti-gov’t/ anti-tax that think they are gonna change things…..ain’t gonna happen……and btw, obama will get another 4 years….. the republican establishment won’t challenge with any real candidate……i’ve said that all along….. the establishment republicans know obama has been governing from the middle……next year, watch what happens in the media to the republican contenders……i have a view on the employment situation but will leave that to the imagination of this society……

  31. “Discretionary Spending” ,… oh my!

    First things first — remember that budget deal in April/2011 where we had to cut the budget (or else the sky would fall?) ~ $400 +/- billion or so, and somehow came up with only ~ $352 million in actual saving according to the CBO’s.
    Ref: CBO Says Budget Deal Will Cut Spending by only $352 million This Year! (4-13-11)
    http://www.nationaljournal.com/budget/cbo-says-budget-deal-will-cut-only-352-million-this-year-20110413

    http://www.cbo.gov/ftpdocs/106xx/doc10621/DiscretionarySpending05-05.pdf
    http://www.gpoaccess.gov/usbudget/fy11/index.html [ All pdf resources /aggregate US Budget]*

    Finally — How to cut a slice of pie that is the whole of the pie?
    http://en.wikipedia.org/wiki/Appropriations_(law)
    http://en.wikipedia.org/wiki/Anti-Deficiency_Act

    Thankyou James and Simon

    God Bless You — Julian Assange

  32. Let’s face it, the way American politics is going, other countries must be laughing at the results of “democracy” in this country. I am saddened, nauseated and appalled at what I see happening to American governance in 2011. I was Republican for years, then I became socially far more liberal, feeling that the least of us were consistantly getting the short end of the stick, but now I no longer can relate to either of the major parties, but not necessarily because of ideologies, and almost strictly on the basis that it is one thing to have certain beliefs and try to use them to guide decisions you make in governance, but one thing that all seem to have almost completely forgotten, that in the end effective governance is done on the basis of making the best rational decision possible, and understanding that 99% of the time that involves compromise to at least some extent. Responsible governance is not otherwise possible. FDR (as the liberal icon) and Ronald Reagan (as the conservative icon) both understood this, along with folks like LBJ, Tip O’Neal, and many others known for their ideological standards. We can’t fall into this trap of a sort of “one-up-man-ship” when it comes to governance. Yes, the Tea Party was sent to Washington with a message. We all get that. But, even its staunchest supporters would not advocate destruction as the upshot of attempting to hold the line on that message. It is easy for all of us to stand back and see how the “deal” should come down (somewhere between the Gang of Six and the Obama/Boehner Grand Bargain). Perhaps the only way that this can be played is to take a very hard stand against the irrational parts of the Tea Party demands, much like you just can’t negotiate with terrorists. So, let’s see what happens next. I am not betting on anything useful happening. If it did, that would be absurdly amazing.

  33. I still don’t understand why Obama can’t just tell the Treasury to “print” the money. It will pay the bills. Is it illegal? Doesn’t he have the authority? When I grew up there were 3 kinds of money: Silver Certificates (blue printed emblem), Treasury Notes (red printed emblem) and Federal Reserve Notes (green printed emblem). Now, there is only one kind. Perhaps, variety is the spice of life.

  34. Bruce E. Woych

    (1)
    LIFTING THE VEIL:
    This film explores the historical role of the Democratic Party as the graveyard of social movements, the massive influence of corporate finance in elections, the absurd disparities of wealth in the United States, the continuity and escalation of neocon policies under Obama, the insufficiency of mere voting as a path to reform, and differing conceptions of democracy itself.
    http://topdocumentaryfilms.com/lifting-the-veil/

    (2)
    http://topdocumentaryfilms.com/shock-doctrine/
    (3)
    http://deanhenderson.wordpress.com/2011/01/17/swiss-bankers-bis-the-house-of-rockefeller/#more-1007
    January 17, 2011 — Dean Henderson
    “The utilization of Eurodollar offshore bank accounts by the super-rich costs cash-strapped governments
    around the world trillions of dollars in annual revenue

    (4)
    ZEITGEIST: Moving Forward
    Produced by Peter Joseph
    http://www.sprword.com/videos/zeitgeistmovingforward/

    (not to mention Texas Looting>>>>)

  35. James Kwak:

    The interesting thing to me about the Bush tax cuts is that their impact was forecasted by the late syndicated columnist Molly Ivins of Texas who had been following Bush for years. In one of her columns in 2000 (which I saw in the Chicago Tribune) she mentioned that the Bush tax cuts when he was Governor of Texas horribly impacted the funding of Texas state government.

    I remember thinking at the time that I was looking at a forecast of the next eight to ten years if Bush won in 2000, which he did.

    Republicans seem to have taken an extremely selfish point of view about the public goods and services provided by government.

    Public goods and services provided by government have been mostly headed downhill under Republicans since Richard Nixon. The beginning of the end of the emphasis in our economy on Science, Technology, Engineering and Mathematics (STEM) began in 1969 under Nixon when he cut funding for the NSF by 50%.

    The demise of the space program is the latest evidence.

  36. @Dan – “We don’t have a financial problem here in the USA today, we have a software problem: We The People do not know how to program a computer that will deliver a fair and equitable accounting of our production of goods and services, as things of value that must be translated into a fair and equitable monetary system. Over the past 30-40 years we have fudged our computer’s arithmetic to a breaking point. What we need today is lessons in accounting’s computational arithmetic that is 670 years old, and ought to be the backbone of our financial software. The full scope of such arithmetics differs considerable from the arithmetic used by a simple calculator. Our accountants, economists, and political leaders have no idea that this problem with the software programming of money’s complete set of arithmetics exists.”

    “Fraud” is getting the full, hysterical, and politically correct treatment now that some of the facts are sinking in about the “weird software” problem – you can’t use that word anymore – “fraud”.

    Weird software, because it does not deliver a “fair and equitable accounting of our production of goods and services, as things of value that must be translated into a fair and equitable monetary system” is complicit in providing “data” that is fraud.

    In spirit and in fact, this was the most massive heist of all those “productivity gains” imaginable. So while I appreciate the diplomatic Roman-like wordsmithing, “weird software” WAS created to do what it has done – steal – and/or get a cut of everything that moves…”….you have to take it from someone else to get yours…”

    Meanwhile, while catching up with friends, another one bites the dust – lost the factory job in Vermont – Canada bought out the company and decided to bring in Somalians to do the factory work….the CIA is going to get *rent* from that manufacturing enterprise…

    I heard *the mob* got 25 cents of every dollar back in the day. Can anyone calculate how much of every dollar today is going to mercenaries and *secret* global shenanigans (modern asymetrical never ending war)?

    For-profit health insurance companies are blood sucking vampires – they should not exist as part of *health care*. Period. Instead of following the built-in obsolescence business model, Big Pharma needs to come up with *cures* (the productivity model)….

    Healthy people who do any kind of productive physical labor have much less expensive health care costs – prove me wrong. But since the employer model of health insurance is morally repugnant to the *weird software* generation….who can possibly predict what the words *health care* will mean in a few short weeks of erasing the meaning through political correctness….?

    What *debt ceiling*….?

  37. Free Trade, then why Tariffs: US @ 2% — S.Korea @ 6% — China @ 10% ?
    US Corporate Taxes the highest in the Industrial world,… yet all empirical data proves it’s the lowest!
    So two can play on a three-legged stool balanced atop the elephant in the room,… and guess who the elephant is? Sorry, times up!

    Ref: Daily Kos: It’s the Tax revenue, Stupid (3/8/2011)
    http://www.dailykos.com/story/2011/03/08/954186/-Its-the-Tax-Revenue,-Stupid

    Ref: Archived-Articles: A Scaled Tariff Would Help… – American Thinker (Jan/2011)
    http://www.americanthinker.com/2011/01/a_scaled_tariff_would_help_bal.html

    Note: per usual, if link fails must Google ref. title

    PS. 2010 US Outlays $3.456 Trillion/ 2010 US Revenues $2.162 trillion
    Shortfall (negative revenue ~ $1.294 Trillion — 2010
    PS2. A United States Corporate Rate overhaul,… parleyed with a scaled tariff regarding the US “Free Trading Partner’s” would enhance our coffers by ~ $600 Billion annually, cutting almost in half our negative revenue. (JMHO)

    Thankyou James

  38. He needs to do more than grow some balls, he needs to accept the fact that the Tea Baggers & the Republicans HATE,HATE,HATE him and will do anything to destroy hime along with the middle class. Trying to extend the olive branch to these narcissistic, right wing so called “christian” sociopaths is NOT working and it is not going to. If he is playing to independents and calling for a stupid “bi-partisan” congress, then he is more delusional than I originaloly thought. Not raising taxes on the !% wealthiest or using his power to initiate reform on those degenerates who caused the economic collapse of the country could cause him to lose the election because his base is fed up with the same ole shit he spews about ‘BI-PARTISAN” BULLSHIT. iT IS “UNIPARTISAN” and the Republicans are the “UNIS.”. The republicans I know laugh continuously about what their plan is to get him out of office by rigging elections to prevent the poor and people of color from voting or to impeach him by any means they can. Indeed these are the same 1% folks who claim if their taxes are raised they won’t create new jobs and if he doesn’t raise taxes, they will create jobs overseas so their profit margins will go up. They LAUGH about this openly all along calling him a N@#$%* and worse. They do not care about the impact on the American people just like they didn’t care about the insurance companies, Wall St. or Big Pharma and the destruction they caused in 2008. They are all Bernie Maddoffs and intend on continuing their fraud & embezzlement until the people demand more from our government. If it was a black person or poor person causing this chaos, you can bet they would have already been tried and convicted and jailed for the rest of their life. THere is absolutely NO fairness or equal rights in this country no matter what air they blow up our asses about this being the best country in the world- but only if you are the right color, religion and have more than a six figure income. We can shut the country down without the repuclicans pulling the plug on the debt limit by not buying goods-new cars, TVs, computers, phones etc.,etc.,etc. However, most want to keep up with their neighbors to look like they have as much or more. This is a very narcissistic society and is getting worse.

  39. Jim, you might find this article by Jonathan Chait interesting.

    http://www.tnr.com/article/politics/magazine/82218/tax-obama-gop-debt?page=0,1

    It is sub. req’d, but you should be able to get it through Yale or U. Conn.

  40. It seems clear to me that the R’s want the economy to slide further and further downward, not just to make Obama look bad, but because it also serves their economic interest. More unemployment, more folks without health insurance, little hope of recovery means more fear and more desperation. Hunger makes people do things they might not do otherwise–like work under the table for sub minimum wages, join the army etc. Desperation makes fertile ground for demagogues. Demagogues create scapegoats (the other) to channel the fear and anger.
    The R’s need a permanent underclass to defend their wealth, fight their wars and work for near starvation wages. After all, much of the large transnational corporations’ profits come from overseas now. We will see the commoditization of all things and the destruction of the concept of common good.

  41. BRUCE E. WOYCH

    why and precisely whaT was the mechanism that pronounced Obama as a Nobel Peace Prize recipient? No one seems to dare ask how this atrocity came about: No one questions the “Chicago Schools” (heavy finacial funding beyond all reason for the economic department) and its own uncanny luck with the corrupted streak of the hy-bred bank finaced award versions either. And no one questions Obama’s background any more as child in the land of the CIA massacres of Indochina (…just boy hood traning…), nor do people see Daly and Chicago power politics settling into and entrenching the National Capital city with its stench…as part of the Obama team stream. Just keep your eyes on the money now, but maybe instead of temper tandtrums over Wall Street Greed and Corporate syndicalism we might all start a new realistic chant: that might just make a real difference in “real: history:

    NOW!!! ELIZABETH WARREN
    http://en.wikipedia.org/wiki/Elizabeth_Warren
    …………………………………………….for President YES! FOR PRESIDENT!

    NOW!!! ELIZABETH WARREN
    http://en.wikipedia.org/wiki/Elizabeth_Warren
    …………………………………………….for President YES, FINALLY; AN HONEST PRESIDENT!

    NOW!!! ELIZABETH WARREN
    http://en.wikipedia.org/wiki/Elizabeth_Warren
    …………………………………………….for President… BUT OF COURSE, SHE KNOWS WHERE TO FIX THINGS AND WHO TO KICK OUT OF THERE!

    NOW!!! ELIZABETH WARREN
    http://en.wikipedia.org/wiki/Elizabeth_Warren
    …………………………………………….for President …THINK OF THE GREAT MINDS IN THIS COUNTRY SHE WILL ENDOW WITH POWER AROUND HER!

    A REAL PEOPLE’S CHOICE!

    NOW!!! ELIZABETH WARREN
    http://en.wikipedia.org/wiki/Elizabeth_Warren
    …………………………………………….for President A PRESIDENT OF THE PEOPLE…

    NOW!!! ELIZABETH WARREN
    http://en.wikipedia.org/wiki/Elizabeth_Warren
    …………………………………………….for President….FOR THE PEOPLE , AND:

    NOW!!! ELIZABETH WARREN
    http://en.wikipedia.org/wiki/Elizabeth_Warren
    …………………………………………….for President ………… BY THE PEOPLE!

    ELIZABETH WARREN FOR PRESIDENT NOW!!!!!!!!!!

    LET’S HEAR IT ACROSS THE COUNTRY!

    LOUDER!!!!!!!!!!!

  42. @ Bruce E. Woych

    Hey Bruce,… check this out — Yves Smith (8/1/11) “Should Elizabeth warren run for President?” *(Naked Capitalism)* :-))

    http://www.nakedcapitalism.com/2011/08/should-elizabeth-warren-run-for-president.html

  43. Pretty good post. I just found your site and wanted to say that I have really enjoyed browsing your posts.In any case I’ll be subscribing to your blog and I hope you post again soon mbt tabia