Confused?

By James Kwak

Some of the headline numbers for President Obama’s deficit reduction proposal that you hear are the following:

  • $3 trillion in deficit reduction over ten years—more than the $1.2–1.5 trillion expected from the Joint Select Committee (JSC)
  • $4 trillion in deficit reduction, including the discretionary spending caps in the Budget Control Act
  • $1.5 trillion in tax increases
  • $1 trillion in deficit reduction by capping spending on Iraq and Afghanistan

This didn’t make sense to me for a few reasons, notably that any deal that preserves any of the Bush tax cuts should be scored by the CBO as a tax cut, which increases the deficit. The actual numbers are rather more complicated.

You can download the complete proposal here. Table S-3 (p. 57) shows the administration’s view of the world:

  • Adjusted August baseline deficit of $10.6 trillion (over ten years)
  • Discretionary spending caps from the Budget Control Act: $0.9 trillion
  • New Obama proposals, including both the American Jobs Act and the new deficit-reduction proposals: $3.1 trillion
  • Total reduction: $4.0 trillion
  • Resulting deficit (over ten years): $6.6 trillion

But the weird thing is that $10.6 trillion number at the top. To see where that comes from, look at Table S-4. What they did is this:

  1. Start with the CBO’s current baseline deficit of $4.7 trillion, from the August Budget and Economic Outlook. Note that the $4.7 trillion does not include the $1.2 trillion of deficit reduction that will come either from the JSC or from automatic spending cuts.
  2. Take out the caps on discretionary spending in the Budget Control Act.
  3. (a) Extend the Bush tax cuts and (b) index the AMT for inflation.
  4. Implement the Medicare doc fix (preventing a 30 percent drop in reimbursement rates on January 1).
  5. That gives you a ten-year deficit of $10.6 trillion.

There’s nothing underhanded about taking out the discretionary spending caps in Table S-4 and then putting them back in Table S-3; that’s just so Table S-3 can show the totals with and without the discretionary spending caps.

There’s also nothing particularly nefarious about #3(a) #3(b) and #4, since everyone expects those things to happen. Basically, they are just assuming some of the alternative policies that have been estimated by the CBO.

But there are some issues here. First, if they’re including the AMT patch and the doc fix in their adjusted baseline, why aren’t they including the cost savings from troop drawdowns in Iraq and Afghanistan? Those fall in the exact same category as the AMT patch and the doc fix: everyone expects them to happen, and they are in the CBO’s alternative policies. It looks like the administration is proposing an explicit cap on overseas contingency operations, which would affect CBO forecasts, as opposed to the current situation where the CBO is required to project growth at the inflation rate; this gets them $1 trillion in savings in Table S-3. At first glance, this seems like a pretty naked attempt to get credit for something that was going to happen anyway. If they were starting from the CBO baseline it would be defensible, but I don’t see how you justify adjusting the baseline for the AMT and the doc fix but not for overseas contingency operations.

More seriously, it’s not clear to me how President Obama’s proposal can count as a suggestion for the JSC. The JSC is supposed to reduce the deficit by at least $1.2 trillion relative to the CBO baseline. Obama’s bottom line is ten-year deficits of $6.6 trillion, which is higher than the CBO baseline. The biggest reason is that Obama’s $1.5 trillion tax “increase” is really a tax cut relative to current law, which includes the expiration of the Bush tax cuts. Anything that sets income tax rates lower than they were in 2000—even if those rates are higher than they are today—count as a deficit-increasing tax cut. According to Mitch McConnell, that was the whole point, since it took the Bush tax cuts off the table. Relative to current law, Obama’s proposal reduces taxes by $2.4 trillion, all of which adds to the deficit.

Now, there might be a way around this. As far as I can tell from reading Title IV of the Budget Control Act, the JSC just has to reduce the deficit by $1.2 trillion in whatever bill they come up with (see § 401(b)(5)(D)(ii); they do not have to also offset any other legislation going on in the same session. So Congress could pass one bill to patch the AMT (before or after the JSC bill), one bill to implement the doc fix, and one bill to extend the Bush tax cuts for the “middle class.” Then the JSC could reduce the deficit by more than $1.2 trillion just through the cap on overseas contingency operations and the proposed cuts to Medicare and Medicaid. But I don’t see how you get $3 trillion in “recommendations to the JSC,” since those recommendations include $900 billion from letting the Bush tax cuts expire for the rich—which the CBO can’t score as a tax increase.

Just an observation: President Obama has decided to frame his tax proposal as a $1.5 trillion tax increase on the rich (relative to current tax rates), when he could have framed it as a $2.4 trillion tax cut for the middle class (relative to current law). That’s a purely political decision, and I’m not sure it’s the right one, but his people are the experts, not I.

Finally, by assuming extension of the Bush tax cuts in his adjusted baseline, Obama has moved that item from a contestable policy choice to a fait accompli. It strikes me that no one should be happier about this outcome than President George W. Bush. Obama has basically endorsed making 80 percent of the Bush tax cuts permanent. Sure, the 20 percent for the rich was probably the part that Bush cared about the most. But it means that the core of Bush’s domestic agenda—cutting taxes and depriving the federal government of revenue—is now safe. (As far as I can tell, Obama wants to keep the lower tax rates on investment income that were in the 2003 tax cut.) As I’ve said before, it was bad policy then, and it’s bad policy now. But it will be with us for a long time.

74 responses to “Confused?

  1. Kwak, “depriving the federal government of revenue” what do you mean? We need to be depriving goverment of spending. Your outlook of government is so far off base that you can’t even debate this with any intellectual honetsy. You have it completely backwards which is why we are in the debt mess that we are in. Long Live the Bush Tax Cuts!

  2. I think we need to move some more chairs from starboard to port.

  3. Last time I looked, the bulk of the deficit was from lack of revenue, not excess spending. There are also disparities in the US that need to be addressed, extreme wealth concentration is one of those.

  4. Last time I looked, the bulk of my credit card debt was due to my income being too low, not because of all the stuff I purchased.

  5. ” Long Live the Bush Tax Cuts!” Long live deficits, long live borrowing from future taxpayers, long live demanding services without paying for them!

  6. The Classic, “Fuzzy Math Syndrome” redux, brought to us by Georgie Boy’s astute protege – the Honorable “King Bartholomew of ChicagoLandia”? Any questions,… I’ll refer you to his highness self appointed court of bean counting extraordinaire’s.

    Ref: “Dear Ben please print more Money” (8/2611) & “Fed policies slam us Again” (8/18/11) & “Cutting the Deficit: A Bipartisan Joke” (9/9/11) @ http://www.testosteronepit.com *Nice reads*

    http://www.testosteronepit.com/home/2011/8/18/feds-policies-slam-us-again.html
    http://www.testosteronepit.com/home/2011/8/26/dear-ben-please-print-us-more-money.html
    http://www.testosteronepit.com/home/2011/9/9/cutting-the-deficit-a-bipatisan-joke.html

    Note: As america drowns in debt not knowing what tomorrow brings, all the while, the bird-caged fenced-in (ie. American Populous via Homeland Security) ostrich gabbles out loudly – “I’ve been Hit”,… with a foreclosure notice, whereas a humongous florescent flashing sign post exclaims – Your Lucky to be Alive”?

    Confused “N” Florida James, and thankyou for another “Great Post”

  7. Any increase in taxes, however defined, will be immediate or in the near-term.

    Any significant cut to spending will be in the far future.

    Given history, does anyone here really believe the cuts in spending will ever actually take place?

    If history shows anything, all the forecasts about the future like those of the CBO are a fantasy and all the talk about the details of policy and what policy measures might do in the future is a waste of time.

    Let us stop kidding ourselves and focus on the here and now. Government spending is out of control, much of that spending is nothing other than government-sanctioned corruption, and on the margin much of that spending is a total waste yielding no real benefits or welfare to the country. Spending should be cut substantially, the tax code revised to cut rates for everyone and eliminate privileges, and government policy directed towards promoting production and trade rather than consumption and redistribution.

    Let me add, who is greedier, those whose taxes are already high and do not what to pay more or those who pay absolutely nothing and want taxes increased on “the rich” so they can continue to live at the expense of others?

  8. “Let us stop kidding ourselves and focus on the here and now. Government spending is out of control, much of that spending is nothing other than government-sanctioned corruption, and on the margin much of that spending is a total waste yielding no real benefits or welfare to the country.”

    Raw power *capitalism* works very well!

    http://www.huffingtonpost.com/bill-rempel/criminal-organization_b_971420.html

    Sigh. Don’t you wish we could get away – today – with taking care of Union sympathizers the way they get to do it in PURIST CAPITALIST Columbia!

    Pass the Trade Bill!

    War Lords and Drug Lords – bend your knees to their GENIUS *ISM*, you mangy stupid peons!

  9. Ian, Nice, sure let government decide what you can keep! That is what they do in third world dictatorships and socialist European countries (see Greece on how that is working). I designate myself your dictator, please begin forwarding your “extreme wealth concentration” to me. Thanks!

  10. Bill, I don’t think it is a matter of intellectual honesty or dishonesty; I believe it is a matter of philosophy. You seem to believe it is your money and the government is taking it from you. I think James is working from the opinion that it is the government’s money, and when you are allowed to keep a larger portion, the government is deprived of a larger portion of its money. Rather than accuse him of intellectual dishonesty, it might be more effective to try to convince him that your philosophy is right. Sounds like a daunting challenge, doesn’t it?

  11. Bruce E. Woych

    http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=7335

    Tom Ferguson: Tax proposal shows conservative economics have been a disaster …

    ————————————————————————————————————————

    http://www.commondreams.org/headline/2011/08/30-12

    Published on Tuesday, August 30, 2011 by In These Times: by Roger Bybee
    Let’s Make It Official: Obama Is Not Serious About a Real Recovery

  12. Anonymous, I am not requesting any governement services, don’t know what you are talking about. I want the government to leave me alone and let me keep what I earn. I will donate to the charities I choose.

  13. Nemo, “I think we need to move some more chairs from starboard to port.”?!? Are you serious? As you can plainly see, that iceberg is still headed straight for us. Any fool could have told that your plan wouldn’t work! We obviously need to move the fore chairs to the aft deck!

    ps. Welcome to the 112th congress.

  14. Yo, Fed Up… the problem is on both ends of the income spectrum:

    “Let me add, who is greedier, those whose taxes are already high and do not what to pay more”

    You mean Buffett, Gates, or any of the others actually earning over $1M/year (and many many others living on >$100K/year of dividends and capital gains)… all of whom pay lower overall rates (total tax / total income) than any manufacturing line worker? There’s a huge amount of Federal giveaway going to a lot of folks who benefited from all that corruption. Those who are genuinely productive can earn more, but far too many have been given far too much at public expense.

    “or those who pay absolutely nothing and want taxes increased on “the rich” so they can continue to live at the expense of others?” … You seem to be forgetting that the poor pay payroll taxes, medicare taxes, sales and property taxes (paid as part of rent if they don’t own), eh? No one is getting a free ride except the welfare queens and bankers. But I agree that the income tax equity issue is a big one… we ought to have something like a 10% income tax on all income over say $5K/yr, no matter the source. Fair is fair.

    Our lingering economic crisis is in large part a failure to maintain a just and equitable system.

  15. Question: Who would be the likely Chairman of the “Federal Reserve Bank” – chosen by the “Worldly, and World’s Oligarchy”? Assuming that Mr. B.B has run his favorable course of obligatory patronage?
    Would he or she be of a dual mandate,… that being a makeup of Princetonism/ Yaleism/ Harvardism, Group-Think & Thunk Tank [?], and the oh-so biggy – will it matter if he or she be of: Mormon, Hindu, Calvinist, Ashkenazi Jew, Christian, Muslim, Zoroastrian, etc., etc., or Atheist {atheist are people too[?]} religion?

    Please pencil in your two-part questioaire, and submit to the United States Congress,…
    Yours Truly, anony[mouse]

  16. Hmmm, any thoughts on how the paradox of thrift will affect these austerity plans?

  17. Official word is out, job seekers are moving to other countries to train and lead by the hand, other countries citizens so they can grow their own country. They didn’t say anything about what happens to them once the job is finished, I guess its considered a long term investment, so no need to worry about that now we know what type of short term work will be available and where.

  18. @ earle: I’ll throw my hat in the ring for a down home Mayberry type kid, named opie tayor, who should be growed by now and might still live there. Who could resist the disiplined nature and so many learned adventures as he? He made $5 in one day in the mid to late sixties, I knew my maximum each week, it was a dime. Even jethro got fifty cents.

  19. Deliberate obfuscation.

  20. Yo, Wisdom. 
     
    The poor do not pay a Social Security tax because there is no such thing as the Social Security “tax”. Payments made into Social Security are mandatory contributions to a defined-benefit pension system, in principle no different from contributing money to some private company defined-benefit pension system. 
     
    After all, when you pay normal taxes there is no expectation of getting your money back and no relation between what you paid in taxes and what you receive in the way of government services. With Social Security you get your money back in close proportion to what you put in.  It is not a tax.
     
    If there is a difference between your Social Security pension and your private defined-benefit pension it is that it is illegal to arbitarily reduce the benefits provided to contributors to the private system. Government, in contrast, does it all the time. 

  21. ooops – need to alter the *WORDS* a little to make the point – sorry for any confusion :-)

    War Lords and Drug Lords RULE.

    Bend your knee to their GENIUS *ISM*, you mangy stupid peons!

    The LORDS get to keep the $$$$ they *earned* through FRAUD, THEFT and MURDER.

    It’s the NEW GLOBAL ECONOMY and if you are left out….do us all a favor and die.

  22. I am not anyway qualified to comment on the article above, I’ll can say is this is not a budget that will help those suffering or a budget that cares about the real taxpayers that funded this and every budget before. I would want a means of changing the tax system. The political system has been separated between those that have the most and the others that just pay. I want the tax system to be separated into two system geared to pay for each groups divided wants and needs. Each individual could opted to have their taxes reflect what they see as essential to them. If not and the tea party mentality gains further power then there just might be cause to see a tax revolt. People who know they have been used usually react when their lot only worsens. Please comment, I am sure to be dismissed.

  23. SInce the Tea Party election of 2010, we’ve cut taxes and spending……..The result has been lower growth and higher unemployment.

    Bill Munny, I suggest you move to a country with lower tax rates and enjoy your ability to keep a higher percentage of your gross income. My guess is that keeping a higher percentage of what will most likely be a much lower gross income will not be good for you.

  24. The entire system is foul and toxic. Any slight manipulation of any one of myriad variables in any of these gargantuan numbers can alter the extended outcome in manifold ways. The problems we face are simplistic from a purely mathematical calculation. Credit is essential to the mechanics of modern economies. Insatiable greed, criminal manipulation of markets, and systemic speculation with no legal or moral restraint are deleterious to both markets and economies. The fascists in the gop may deride regulation as debilitating to free markets, – but they ignore the glaring fact that there are NO freemarkets. That debt based products are PONZI schemes that only benefit the top 1%, and that regulation is essential to stabilize markets by forcing industry to compete fairly and under the ruleoflaw. Remove these structures, and we have what we have today – a speculative banditcapitalist market commandeered and manipulated by oligarchs and a den of vipers and thieves in the predatorclass, who purchase and control governments to advantage oligarch and predatorclass interests and disadvantage the rest of population.

    Teabaggers are the klansmen of the 21st century. Bigoted, ignorant, ruthless, bloodthirsty, and pathologically partisan.

    In the end, if these freaks imagine the rest of the population will tolerate their twisting and mangling of facts and reality, and accept their supremist perversions peacefully, – – they got another thing coming.

    Thefew have robbed and pillaged fartoomuch, from themany for waytoolong. It is time to right these horrible wrongs and demand recompense. All our financial problems can be resolved by holding the predatorclass accountable, and taking back what they have stolen from the people.

    Classwarfare may be the tune of the day, but it is NOT the poor and middle class who perpetuated this conflict. It is the predatorclass, and it is the predatorclass that must pay!!!

    There will be a balancing and a reckoning.

    In a world where there are no laws, – there are no laws for anyone predatorclass biiiiiaaatches!

  25. Tony,

    I am a member of the Tea Party and have attended many of their meetings.

    I have found them open-mined, well educated, kind and considerate, helpful to others, and their membership composed of Democrats, Republicans and Libertarians.

    Their leadership includes Whites, Blacks and Asians, Ph.D.s, workers, executives and small business owners, people of cheerful demeanor, able-bodied and disabled individuals, and always willing to discuss issues and the goals and objectives of public policy.

    I have never heard a rant anything near as nasty as yours.

  26. Great comment, Tony Foresta: telling it like it is, without the kid gloves. As for the latest ‘sales’ gimmick, we all need to keep in mind that all such machinations are motivated solely by politics, not real leadership–the American people will always lose. The system is corrupt and we can not go forward.

  27. Bless you for being able to decipher a complicated subject. Now the probability of any of this happening with our disfunctional congress is extremely unlikely. It is also unlikely that the deficit group will come to any agreement and all this will result in great rhetoric for the election next year. At least Obama has finally drawn a line in the sand even if it is wavering.

  28. Um, Chuck,
    It’s no coincidence that Obama is drawing-in-sand because he knows there’s no way in hell that the Repubs are going to pass his ‘bill’..
    I for one am not falling for the ol’ banana in the tail-pipe again. Apologies to all bananas and most tail-pipes..

  29. @anonymous: Don’t overlook the fact that todays politicians are elected with the promise that they do absolutely nothing. And that is exactly what they have been doing.

  30. Tea Party not racist? Good one!

    Evil Twins must be putting up the RACIST signs wherever “they* go….use a search engine, if ya think it ain’t true.

    It’s not a bad apple in a barrel of apples; it’s more @ THE ENTIRE BARREL is ROTTEN.

  31. @Owen

    “The Worst is Ahead of Us and Very Close”

    “Barack Obama’s new plan in the fight against unemployment will have no significant effect. On the one hand, it’s not up to the challenge and, for this reason, can’t rally the country’s energies; and on the other, it will be cut to pieces by the Republicans who will only keep the tax cuts… The only result of which will be to increase the country’s debt even more (39).”

    http://www.globalresearch.ca/index.php?context=va&aid=26614

  32. “Finally, by assuming extension of the Bush tax cuts in his adjusted baseline, Obama has moved that item from a contestable policy choice to a fait accompli.”

    Ultimately, this may simply reflect political reality on the ground. The GOP has already demonstrated that they’re willing to blow up the world to get what they want, so dropping the argument on the middle-class part puts them into a position where they’ll need to argue solely against the upper-income cuts.

    Terrible economics (not that any of the conservatrolls that seem to have popped up out of the woodwork would understand why), but potentially useful politics.

    Hint to the conservatrolls: your financial problems WOULD be due to a lack of income if you had just negotiated a salary *reduction* with your boss. That’s what Shrub did, so STFU.

  33. it can’t get much worse than paying e-bonds between 11-15% thru 2013 with todays rate of 3 something. who in their right mind would not consider that the ultimate scheme, they were so desperate to pay after war rebuilding bonds, that the promised rate was outragous, as were the mortgage rates for those who had to purchase another home for whatever reason. The middle class got hammered and the rich got richer, now thats been compounded and for some corrupt reason (not includeing the unfunded liabilities perhaps), we can promise low 30 year rates for the next 2 years while Greeces rates (whos does include unfunded liabilities) are at 76%, which is where our rates should be if you had a real accountant. What part of ultimate ponzi scheme don’t the people understand? I wouldn’t touch a 30 year bond if you paid me, and I wouldn’t say very close, i would say its here now.

  34. With all due respect Fed Up, teabaggers are funded by wingnut predatorclass oligarchs like the Koch brothers, and others of their billionaire brood, and brute the same anti-labor, anti immigrant, anti-poor, anti-medicare, anti-social security, anti-biggovernment, pro oligarch, propredatorclass, pro taxcuts for the predatorclass and predatorclass oligarchs – policies pimped by the fascist elements in the gop, ie the leadership. I do not see many notwhite people at teabag rally’s, nor did I, or do I see any teabag leaders condemning the “open-mined, well educated, kind and considerate, helpful to others” teabaggers creepy cheers and applause for dying poor people and executions at the most recent gop debate.

    Perhaps you are a gentleman and ” always willing to discuss issues and the goals and objectives of public policy”, and I would relish that debate in good faith, – but teabaggers I have encountered on the net, and in the streets are lockstep partisans of the most extreme right wingnut elements of the gop, whose policies and ideologies are racist and fascist.

  35. You da man, Tony! :)

  36. War Lords can’t spin their way out of OBVIOUSLY derailing peace between Israel and its *neighbors* – they say that the timing is not right – let us march onward to Iran – then we’ll get back to you….

    Of course, with the housing mess created by banksters, USA people might start identifying more with how the Palestinians have been getting ground into the dirt….imagine if any other country had shot an unarmed USA citizen in the head while he was on a humanitarian mission (anyone remember THAT incident…?)

    Entertaining site, as usual :-)

    Hooliganism supporters progressing towards *debating* the issues…

    Best laugh of the day – thanks!

  37. Tony,

    I know hundreds of Tea Party members. None fit your description or that of Woop. Frankly, I do not believe anyone who is really a member of the Tea Party is a racist or fascist. It is completely out of character.

    James wrote an interesting and worthwhile post, much of which I agree with. I thought this was a site which would discuss policy and move us forward in finding ways to overcome our problems. Many of the comments are in line with this purpose, and, like James’ post, helpful in understanding the situation we are in and discussing alternatives. Through a back and forth on the policy ideas, we could all learn something and perhaps even find a way out.

    It is unacceptable to call people people you have never met in person and never spoken to face-to-face and who you would probably like if you ever did meet — people who are my friends and acquaintances — malicious idiots.

    I’m out of here and wouldn’t be back.

  38. Fed Up, have a nice day. :)

  39. For all the partisans who comment on this blog, this is the way it looks to me: the Republicans tell us precisely how they’re going to “F” us over, and then they do so. The Democrats tell us they will never “F” us over, and then they do so.

    The “Democrats” will never lead the way to fundamental change. Unfortunately, I think we will achieve real change only in reaction to the “Republicans.”

    I’d sure like to live long enough to see something better than the Republicrats who rule us now.

  40. One thing I have found out is that the comments I am reading here are far more intelligent than the ones I have to endure on the Journal Blog on WSJ . And I agree with all said —but I have little hope that the Democrats will ever become what they say will or do what they tell all during elections. Hoping for a tax system change because protesting is too painful and is usually taken over by the media whose message sounds like a ad to sell and market corporations.

  41. @Tony, @Woop, Fed Up has a point. There are several aspects of the Tea Party platorm, such as it is, that are very disturbing to me, and its close connection – at least in the South – with fundamentalist radicals with little interest in a marketplace of ideas and pragmatic compromise in service of good secular government makes me shudder. On the other hand, the Tea Partiers share something in common with you: disgust over the current state of governance and a desire to retake political power from the corporatists. Unfortunately, such a grass roots movement will have to come from a coalition of those on the left and the right, which means that neither side can dismiss each other out of hand. We have to create that marketplace of ideas, and we might as well start now.
    The repeated cries of “death to the oppressors” that have come to dominate this site over recent months serve no purpose. This site was started as a way of empowering the grassroots through respectful discussion. Don’t quite believe @Fed Up? Challenge him/her on the details of the issues. If you want the Tea Party – at least the rabid, anti-intellectual factions of it – to go away, it will be through empowering the more moderate, pragmatic indivduals therein.
    Otherwise, this site descends into a dark corner of ranting irrelevance.

  42. Yes but it is the corporate funding and their agenda that is really worrying. Imagine Koch etc really sick minds with a record of taking all and leaving garbage—there has to be an alternative —-some have pointed to if I am right North Dakota as doing some things right.

  43. @Oregano – since I whip out sentence structures that are – ahem, unique :-) – I do need to clean them up for the sake of precision, you know, this is what I really mean.

    So I’m thinking maybe your sentence needs a precision adjustment – isn’t this what you really meant to say…?

    “The repeated cries of “death to the oppressors” that have come to dominate this site over recent months have served their purpose.”

    Every guy has to change their pick up line, don’t they?

    Of course the numbers are whacked. They’re all made up.

    Bad accounting in black and white…

  44. @Annie, thank you, you’re right, that is indeed what I meant. We’ve vented, It’s time to get down to work. @Fed Up: care to join the conversation?

  45. Point taken Oregano. Though I remain opposed to the teaparty on it’s backing, platform, intentions, ideologies, and tactics. The gop sank to the darkside under the bush regime and is, in my opinion an arch enemy of the people, – that is poor, middleclass, notwhite, and not fundamentalistchristian people. May the goddess have mercy on their souls.

    And Carla makes a good point as usual. Obama has betrayed the people who elected him, and his administration and the democrats have relentlessly and repeatedly caved to gop strongarming and extortion on every major issue. Democrats and Obama are culpable for allowing the den of vipers and thieves on Wall Street to continuing robbing and pillaging poor and middleclass Americans through systemic criminality. Looking beyond the crimes, abuses, and perversions of the bushgov was a terrible disservice to America, and the first haunting hint, that indeed, NOTHING will really change.

    Reaching across the isle, or holding any hope of compromising with the gop or the teaparty is impossible.

    I keep hoping and praying that Obama and the democrats finally realize this sad fact, and begin championing policies that advance the best interests of the people and NOT the predatorclass, or predatorclass oligarchs, and truly fight for those policies regardless of the political consequences.

    Mr Kwak’s post proves after all the speeches and tricky accounting, – these hopes and prayers remain unanswered.

  46. I think all would like to believe that the global economy can untangle all the manipulations from various predatory sources, but I can’t see it. One of the biggest problems during the Melt Down was that none of the pernicious financial bodies were compelled to actually use the bailout money to further credit usage. In fact all expectations have not been met the way they were instructed and therefore expected. One can’t enforce without something powerful expected as a consequence if not complied with.

  47. It may be abit naive to believe this site could derive solutions to today complex situtations, it can not. And neither can any other. No, the answers and solutions will come from a God most people don’t believe in. This is more of an intellectual site meant to be understood by only a choosen few, the others are simple drifters with mostly the same ideas as in the past. And of course there was our dearly departed, fiercely independant and ultra comfortable leader, Mr. Waterbury, who set in motion events that are still cursing him today, to no avail of course. You really can not put the cart before the horse, even if you wish it so. So if you need some type of action today, you will surely be disappointed, but you can still vent your anger here with the hopes that another can run with it and make a difference. But we have done all we can do, execpt the waiting and watching and praying from time to time. Best wishes Simon, and keep up the good work.

  48. The Tea Party remains committed to carrying-forward the programmatic agenda of its’ billionaire benefactors and sponsors. As such, this *movement* (how appropriate) is nothing beyond ( fake) astroturf, whose predominant themes are racist, anti-governance, anti-labor, anti-New Deal, and nihilistic, That most of these folks are unwitting dupes, is not my concern.

    Moreover, What is there to listen to, in a grouping of incoherent mumblers and bumblers, carrying guns and hostile signs? Why accord any respect to haters and mockers?

    Sorry, and all this preach about *respecting views of others*, is just another useless slogan. I know which side the toast is buttered on, and I don’t need lessons in humanity.

  49. @ Owen

    That sounds perfectly gloomy–still better than even a small dose of delusion, let alone the euphoric amounts the masses are fed on their way to dystopia.

    “Next time you come across someone still deluded enough to think that things will turn around economically, send them here.”

    http://ampedstatus.org/collapse-roundup-6-the-european-bank-run-has-begun-this-is-what-a-collapsing-global-ponzi-banking-system-looks-like/

  50. @owen owens, “No, the answers and solutions will come from a God most people don’t believe in.”

    Ah yes, the *religion* fake out – no atheists in the fox hole during war, eh?

    MY *God* taught, “Love one another.”

    Your *God*? I already have MY answer, you PERSONALLY threatened to make predatory financial moves to *hurt her (Annie) even more*….

    So in declaring war on an innocent (I’ll be happy to post my tax returns on the internet – it’ll shut ALL you people up), what did you expect – no fight back?

    That was a stupid assumption and will be YOUR undoing…but then criminals are always *dumb*…

    @margaret b – yes, you are trying to keep the *tone* nice, sorry, I have to throw out the sarcasm – exactly WHO *believed* that they were going to do what they said they were going to do?

    Kwak might want to redo the numbers – they still have the hard on to invade Iran. If peace was to break out in the M.E., well, the threat to USA citizens with jobs making killing *stuff* is unemployment, right?

    How many of you know that TPs are being paid their *work* wages to go make their political noise…?

    The political terror campaign – lay offs, unemployment, job overseas NEVER to come back – in full swing until 2012…? wow, that’s SERIOUSLY psycho….

  51. Confused? Not if looked at this way and she may be up two points on Brownie.

  52. @myskin – it’s like looking in a mirror :-)

    She should be elected Prez under the new government being launched by Declaration of Independence 2.0…

  53. ripleys believe it or not

    Sure, even a caveman can get out in twenty years. and annie, i feel your pain every morning, one queen short of a KING of pain. its with me all the time, and i don’t really know why knot i got into this situtation but it drives me crazy day and nite, money made it better till i had none, so i guess i will feel this way till i die, so i sigh at 9-11 calls and bark at cherry trees till the cows come home, or pink hippos, which ever comes first on todays list o complaints.

  54. I am not sure what to make of Obama’s sudden new interest in taxing the rich. Is it that he needs to head off at the pass the growing effort to have some other Democrat primary him? Hm-m. That’s certainly what it smells like.

    When Obama had the chance to “tax the rich” — during his first two years as president, when he had solid majorities in the senate and House — he did nothing.

    He COULD have fought against extending the Bush tax cuts that were put in place to use up the surplus created by President Clinton — but he didn’t.

    Instead Obama has pushed through legislation that is destroying Social Security — with his “payroll tax holidays.”

    He now intends to increase the “payroll tax holidays” and deprive the Social Security fund of hundreds of billions of dollars each year — plus he plans to give employers a “payroll tax holiday” to speed up the death of Social Security.

    I guess it’s the word “holiday” in there that has caused this travesty to go down so easily: if it’s a “holiday,” it must be a good thing! Right? WRONG ! ! !

    If a Republican president had done this and then proposed extending and expanding this drain on Social Security funds, Democrats would be screaming bloody murder; but since it’s Obama doing the killing (of the Social Security program), Democrats have all gone mute.

    Some history . . .

    In 1983, President Reagan and his advisors realized the Baby Boomers would start retiring in 25 years and more money would be needed in the Social Security trust fund to pay out their benefits when they retired. Since then, we have been paying a whopping amount out of each paycheck to cover the anticipated benefit payments to the Baby Boomers — America’s largest generation ever.

    The Social Security trust fund built up, in those 25 years, a SURPLUS of more than TWO TRILLION DOLLARS. Social Security is forbidden BY LAW to draw benefit funds from the regular federal budget; it must have its own funding — and it does. Social Security has had NOTHING to do with the federal budget deficit or the federal debt.

    So, why are all Republican eyes focused on destroying Social Security?

    And why is Obama helping them by de-funding the Social Security Trust Fund?

    The money that flows into the Social Security bank account each week — via payroll taxes (the F.I.C.A. tax) — is paid out each month to Social Security beneficiaries (retired workers, disabled people, and the widows and orphans of deceased workers).

    The workers of America have paid into Social Security all their working lives, but now — with Obama’s help — the Republicans will achieve their dream of destroying the Social Security program, which will mean they never have to pay back into the Social Security trust fund the money they “borrowed” in order to justify tax cuts for millionaires.

    If you don’t write to Obama, to your House Member and to your two senators, don’t be surprised when the day comes and we are told, “Well, we would love to pay you the Social Security money you are legally entitled to, but we are out of funds and can’t pay you.”

    Imagine if you had paid into an annuity with some insurance company all your working life but then when you went to claim your annuity you were told,”Well, we gave out such big bonuses to our executives that we are now bankrupt and cannot pay you the annuity amount you are legally entitled to”!

    Would you think that was highway robbery?

    Of course you would.

    Well, it is highway robbery now, and the highway bandit is our president — Obama.

    He is stealing your Social Security money as surely as any highway bandit would be stealing your money, except the highway bandit would need to use a gun to get your money.

    Obama just has to push legislation to steal our money — and THAT is exactly what he is doing with his “payroll tax holidays.”

  55. Fables and tales have been told for generations, and there must be some truth to them. I introduce to you, the tourtous and the hare, or should I say *rabbit*.

  56. @ripleys – suggestion – stop taking the meds, or smokin’, or drinkin’, or gazing at the navel…

    And stop pretending you know any individual person’s story – there would not have been so much to STEAL had we not all been producers of wealth – like duh.

  57. @ Annie….”he’s back”…..same web troll, different nomme de guerre. :)

  58. My intent was no to keep my “tone” nice but to point out that the main goal of the bailout was to ensure that the money given to these financial predators was to “make credit available and in use to get the economy operating”. That was impossible when no preconditions were legally insisted on by the Fed and given the criminally tainted behavior of these speculators in the first place it is beyond common sense as to why these conditions were not essentially in place. This led to further misuse of funds when treasury bonds were bought with this bailout money to garner interest profits, leaving main street taxpayers gouged twice and nothing to stop the credit freeze. The situation today is no better, corporations are doing exactly what they were expected no to do—–sit on profits —not hire new employees—not stimulate productive growth here but invest in foreign economies. And now main street taxpayers are on the hook again, this time their jobs, medicare, and social security are being taken away. Just what are they supposed to do, go out and protest, beg for what was and is rightfully theirs? I haven’t hear one feasible suggestion, instead this injustice just keeps on growing and US’s reputation grows darker with the smell of hypocrisy.

  59. correction “My intend was not to keep my “tone”—–

    correction “what they were expected not to do—–

  60. speaking of the smell of hypocrisy:

    “Obama criticises fat cats… then meets them for dinner and asks for their money (but conveniently forgets to mention his tax hikes)”

    http://www.dailymail.co.uk/news/article-2039878/Obama-tax-increases-President-criticises-fat-cats-asks-money-dinner.html

  61. We just might be confusing bad legislation coupled to an accounting CBO firm where most, if not all of their bean counter resume`s were graded for employment when working on the “Big Dig”? The United States is about to cross over the Rubicon (it perplexing, and perhaps an enigma, but?) and and re-enact the Glass-Steagall Act, and clip the wings of the Federal Reserve Bank. It’s time we ring-fence the casino’s – Morgan Stanley, and Goldman Sachs investment houses from our banks! BofA is close to Lehman status thanks for overpaying a huge premium for Merrill Lynch, and CountryWide.
    Gold is being bought up by the private markets not visible to the markets, and every sovereign in the known universe is in on the heist. Remember when FDR confiscated all gold (not getting into any other reasons other than that he did)?
    During the great depression or multiple, multiple recessions the big money bought bonds, and treasuries notes knowing quite well that they were not making a penny on their investment (losing money because of inflation big time) but it preserved their wealth til those bad times subsided (note: America was the supreme ultimate force to be reckoned with, and nobody else was even close!). The same scenario is happening at this moment, as I write. The FRB and Chairman BB` are out of BS, and it’s everybody on their own,… unless that “1941 Moment” happens again in the ME?
    The politicians now realize their mistakes,… both GOP and Dem’s, and nobody gives a hoot what the Libertarian’s think – it time to become a singularity in order to preserve our great Republic! JMHO

    Thankyou James and Simon

    God Bless You,… Julian Assange :-))

  62. @Margaret B – lucid assessment – agree with you on all points.

    Here’s from the CIA (yes, that CIA:-)) website about USA economy:

    Stock of narrow money:

    $1.87 trillion (31 December 2010 est.)
    country comparison to the world: 4
    $1.724 trillion (31 December 2009 est.)

    Stock of broad money:

    $12.39 trillion (31 December 2009)
    country comparison to the world: 2
    $12.46 trillion (31 December 2008)

    Notice how no one on this site does any double entry accounting based on narrow and broad money…just *policy*…?

    New dark low for the human species, I’ll grant you that – using *math* to rationalize the LAW behind *growing injustice*….fraud, theft and murder – paint by numbers *math*…

    More misery for others = More $$$$ for ME ME ME

    “….In the beginning there was $$$$, and then came Life….”

    I suggested, at least 3 years ago, that we print new $$$ – just like during the Civil War…

    But Russia is a good example – the *black market* was how people stayed barely alive, then the *black market* revealed itself to be the real market that works, then Gorbachev was hauled off and replaced with that Yeltsin lush, then Putin got in the fight….and *defaulted*….

    20-somethings have no choice but to operate a “black market” since everyone is yelling at them that they are toast and there is no *future* that are being given permission to build

    borrow a little bit of narrow money and a little bit of broad money :-) finally a generation not looking to *enron* grandma…

  63. Elizabeth Warren surely isn’t *confused* about the multi- trillion mile deficit hole the USA is in, nor is she unclear about “class warfare” and the social contract, that is the core of civilized society.

    Thanks for sharing that vid, myshkin.

    She’s got the REAL maverick thing going, and she will be elected.

  64. Siemens isn’t confused either, knowing that French banks are ALSO *George Romero ZOMBIES*…..a “flight of last resort.”

    http://www.zerohedge.com/news/shocker-siemens-pulls-€500-million-french-bank-redeposits-direct-ecb?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

    We’re coming apart at the seams, baby. Move to the COUNTRY, while you can.

  65. @ Woop

    But didn’t Timmy and Jim say everything would be alright?

  66. @ margaret: I concur, and would add that todays problems stem from the Feds inability to raise rates, which leaves many branches of gvt hamstrung and can only agree on printing money and confiscating wealth by most any means available.

  67. @ Anonymous, they wouldn’t LIE, would they?

  68. Here we go, when New Yorkers show open disgust for the years of their own yaddayadda, it’s quite the conversation:

    http://www.msnbc.msn.com/id/37560195/#44631015

  69. Don’t be confused by this, China’s trade war with the US has esclated in the form of multipul tarriffs(poultry to tires), the manufactoring giant has run low on coal and built to much with the hope of providing employment that has dried up. Commodity uses are down across the board, in addition they won’t backstop the EU. We will now see deflationary side effects that could rival early 09, and persist for an extended period of time. And what is worse is the political approach to it all, we won’t officially know when we are in another recession until it is over. Who made that up, where did that brainiac idea come from?

  70. Identities of people involved in the alleged JP Morgan conspiracy to manipulate the price of silver have been exposed, along with the mechanisms of the manipulation of silver. King World News was contacted two days ago by key people familiar with this situation. This was described by an individual out of London who is very familiar with the lawsuit as, “The biggest news in a long time because these are actual people who are coming out and naming names of individuals who were involved in this alleged conspiracy with JP Morgan to actively manipulate the price of silver. People may go to jail over this. JP Morgan has all barrels pointing at them as traders are named in this suit, including senior traders at JP Morgan.”

    Could this why the commodies are on a roller coaster ride lately?

  71. Confused!? I was hoping to be better off, but now I’m left with more questions… I really can’t see how the proposed cuts are going to resolve the deeper issues.

  72. Frank in midtown

    what a great thread. I love the tea party guy post about how reasonable they are and how everyone else is just , and Bill, omg, he doesn’t request any services, it’s always a hoot how the free-riders hide behind self-reliance. FREEEEEE RIDERS don’t need no services!!!! Oh how they long for their libertarian paradise and the bellum omnium contra omnes. The tea party, fresh out of 1650.

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