By James Kwak
Sometime this spring, Congress is going to have to raise the debt ceiling or the federal government will face default. Republicans are going to demand many, many pounds of flesh in exchange, ranging from cuts in discretionary spending to rethinking of entitlement programs, which together could undermine the weak stimulative effect of the December tax cuts. Democrats are probably going to give in to at least some Republican demands for two reasons: politically, they fear that they would be held accountable for a default because the public still associates spending with Democrats, and they hold the White House; pragmatically, they are just not as crazy as the Republican right, and in most negotiations the crazy party gets a better deal.
Of course, this is insane. The deficit problem was created by Congress, through its many votes to increase spending and decrease revenues (otherwise known as taxes). As James Hamilton put it:
“One of the peculiar embarrassments of the American political process is the fact that Congress votes separately on the deficit and debt, as if they were two different decisions. . . .
“A politician who votes for the spending and tax measures that produced the deficit but against a debt ceiling consistent with these is deliberately wasting taxpayer dollars for no purpose other than to grandstand before voters as a ‘fiscal conservative’. Anyone playing such a game has complete contempt for the intelligence of their constituents.”
I know this is a bit early, but I wanted to get some facts out there in advance of the debate. I picked five major bills in the past decade that have significantly increased the national debt: the 2001 tax cut, the 2003 tax cut, the 2003 Medicare prescription drug benefit, the 2009 stimulus, and the 2010 tax cut. (I left out the Afghanistan and Iraq Wars because it’s hard to pin down Congressional votes specifically authorizing their costs, in part because the famous Senate vote wasn’t actually a vote to go to war, in part because of the peculiar way the costs of the wars were budgeted.)
Then, for each of those bills, I looked up the CBO budget impact estimate made at the time. (Sources are at the bottom of this post.) Their costs, as projected at the time (and hence as knowable by members of Congress), were as follows. The first number is the ten-year cost; the number in parentheses is the portion of that cost through fiscal year 2011. Numbers are in billions.
- 2001 tax cut: $1,346 ($1,346)
- 2003 tax cut: $350 ($354 — the cut has a tiny deficit-reducing impact in its final years)
- Medicare Part D: $395 ($271). Note that I am not including the fact that the cost of this bill was almost immediately reestimated after it passed to be significantly higher, since that was not knowable to members of Congress when they voted.
- 2009 stimulus: $838 ($793)
- 2010 tax cut: $858 ($374)
That’s a total of $3.8 trillion — $3.1 trillion of it hitting the national debt by this year, and hence contributing directly to the need to raise the debt ceiling.
Then I looked up how current senators voted on these bills, whether they were in the Senate or the House at the time. For each senator, I added up how much of the current (2011) debt he could have voted for, and how many he did vote for. So, for example, Daniel Akaka (D-HI) was in the Senate for all five votes, so he was on the floor for $3.1 trillion in budget-busting bills; he voted for the last two, so he voted for $1.2 trillion, or 37 percent of what he could have voted for.
The results are predictable, but I still think worthy of noting, especially with all of the grandstanding that is going to happen.
Overall, current Democratic senators (including Sanders and Lieberman) had the opportunity to vote on $127 trillion of additional debt, and voted for $64 trillion, or 50 percent; current Republican senators had the opportunity to vote on $104 trillion of debt and voted for $70 trillion, or 67 percent.
The difference would have been greater except for trends in the composition of the Senate. Of current senators, the proportion in each party voting for each bill is as follows:
- 2001 tax cut: Democrats 18%, Republicans 93%
- 2003 tax cut: D 3%, R 94%
- Medicare Part D: D 17%, R 88%
- 2009 stimulus: D 100%, R 5%
- 2010 tax cut: D 77%, R 87%
So the typical Democratic vote pattern is N-N-N-Y-Y (I counted “present” and not voting as no votes — there were very few of these, anyway), which would mean voting for 37 percent of the total debt produced by these bills (just like Daniel Akaka). In fact, thirty-four Democrats were able to vote on all five bills, and twenty of them voted that way.
The typical Republican vote pattern is Y-Y-Y-N-Y, which means voting for 75 percent of the total debt. And, of the twenty-seven Republicans around for all five bills, eighteen of them voted that way.
The reason that the Republican-Democratic “debt responsibility” percentages are 67-50 instead of 75-37 is that not all senators have been in Congress for the past decade, and most of the ones who have only been there for a few years are Democrats. So there are many Democrats who were only in Congress for the last two votes, on which they typically voted Y-Y (100%), and a few Republicans who were only there for the last two votes, on which they typically voted N-Y (32%). So the facts that the Democrats’ budget-busting bills came later, and that I’m only looking at current senators, make the Democrats seem more profligate than their party has been as a whole, and vice-versa for Republicans.
The bottom line: As a party, the Republicans who will be railing against fiscal irresponsibility and threatening to block a raise in the debt limit are the irresponsible ones themselves who created the need to raise that debt limit. The Democrats can claim to be somewhat less irresponsible; more to the point, perhaps, insofar as they did vote to raise the debt, at least their current behavior (assuming that most support the administration and vote to raise the debt limit) is at least consistent with their past votes.
Of course, it’s more fun looking at an individual level. And the only people who can claim not to be responsible for the national debt — at least not via any of these five bills — are the newly elected members (except Rob Portman and Pat Toomey, who voted down the line to increase the debt as Congressmen) and Tom Coburn, who joined the Senate in 2005 and voted against both the stimulus and the 2010 tax cut.
By contrast, Republican leaders Mitch McConnell and Jon Kyl each voted for $2.3 trillion of debt (75 percent), yet will somehow try to argue that the need to raise the debt ceiling is not their fault.
On the flip side, the only people who voted for all $3.1 trillion of debt are Ben Nelson (D-NE) and Susan Collins (R-ME), generally considered moderates. (Liberals think Nelson is a closet Republican, and conservatives think Collins is a closet Democrat.) Following Nelson and Collins, at $2.8 trillion, are Max Baucus (D-MT), Dianne Feinstein (D-CA), Mary Landrieu (D-LA), and Olympia Snowe (R-ME) — also generally considered centrists. One inference you could draw is that bipartisan centrists are the last thing we need, since they vote for both tax cuts and spending increases. Of course, the December tax cut is Exhibit A in the problem with bipartisan compromise, at least from the perspective of the deficit.
Finally, I realize that Hamilton’s post was actually a quotation from a post he wrote in 2006, when the political situation was reversed; the Bush administration was trying to raise the debt ceiling so the government could continue functioning, and the Democrats voted against it. But I don’t think that it’s fair to say the Democrats then were the same as the Republicans today.
There are two different issues here. One is the political issue of trying to score points by blocking an increase in the debt ceiling that is necessary to avoid chaos in the global economy. That is irresponsible today, and it was irresponsible then, I agree.
The other is the substantive issue of whether, in fact, you created the national debt in the first place and should behave accordingly. Hamilton tried to nail the Democrats in 2006 by pointing out that they voted to spend $3 billion on the Low-Income Home Energy Assistance Program on the same day that they voted against an increase in the debt ceiling. But that’s a pretty weak argument when the Democrats overwhelmingly voted against the 2001 tax cut, the 2003 tax cut, and the Medicare prescription drug benefit, with a total ten-year cost of $2.1 trillion — seven hundred times as much as they spent on the Low-Income Home Energy Assistance Program. I don’t think you can demand that someone vote against every spending increase and every tax cut to avoid being called a hypocrite. And in 2006, the Democrats at least could claim that they were not responsible for the recent ballooning of the national debt. The Republicans can make no such claim today (except for Tom Coburn, Rand Paul, Marco Rubio, and a few other newbies).
Anyway, here’s a spreadsheet with all the data if you’re interested. Feel free to reuse.
Sources
Since the Senate generally votes on a bill multiple times, it is not always clear which is the most important vote. Usually there is at least one vote to pass the bill in the first place and another to pass the version that comes out of conference committee. This being the Senate, however, sometimes the cloture votes are the ones where the bill actually stands a chance of passing. I’ve indicated which vote I used below. Using different votes might yield slightly different results, but only slightly since the votes don’t move around that much.
- 2001 tax cut: CBO estimate — Senate vote (to approve conference report)
- 2003 tax cut: CBO estimate — Senate vote (to approve conference report — this was a 50-50 vote that was decided by Vice President Cheney)
- Medicare prescription drug benefit: CBO estimate — Senate vote (a procedural motion that required sixty votes and only got sixty-one)
- 2009 stimulus: CBO estimate — Senate vote (to approve conference report)
- 2010 tax cut: CBO estimate — Senate vote (the final vote in the Senate)
The Baseline Scenario 
We have three laws when you can only have two. 1. Spending, 2. Taxation, 3. Debt Limit. That’s why the Debt Limit is pointless and always yields to the other two. It’s so consistent – I don’t see why anyone is really worried about it – it’s only a regular opportunity for silly politics.
It should just be abolished. The only way to restrain congress is by amending the Constitution. The Republicans should propose an amendment and hold a vote on that (which will clearly fail among partisan lines) if they wish to make political hay out of this.
And, hey, maybe it wouldn’t fail because the Democrats don’t want to look like the endless-spending bad guys in this climate. Then things get interesting.
It should just be abolished.
I disagree. It is too easy to vote for tax cuts while simultaneously voting for free ponies for everybody. Forcing a single, explicit vote on raising the debt ceiling forces politicians either to explicitly vote for more debt or to expose themselves as total hypocrites.
These debt ceiling debates make our lawmakers’ hypocrisy obvious even to the most thick-headed of the citizenry. That is an unalloyed good thing.
I FIND IT AMAZING THAT THE DEMS CANNOT ARTICULATE THEIR OUTRAGE AT THE HYPOCRISY OF THE GOP. WHEN BUSH ENTERED THE WHITE HOUSE IN JAN 2001 THE BOOKS WERE BALANCED AND THE DEBT WAS ABOUT 5 TRILLION. WHEN HE LEFT OFFICE, THE US WAS RUNNING A DEFICIT OF CLOSE TO A TRILLION PER YEAR. NOW THE DEBT IS APPROACHING 13 TRILLION; A 8 TRILLION INCREASE SINCE 2001 MOSTLY ATTRIBUTABLE TO GOP POLICIES AND THE NEED FOR STIMULUS TO RESCUE THE US ECONOMY FROM THE RESULT OF THE GOP’S IRRESPONSIBILTY DURING THEIR TENURE.
WHY CANNOT THE DEMS GET THIS SIMPLE SUMMATION ACROSS TO THE US POPULATION?
PLEASE CORRECT ME IF I AM WRONG.
Not completely inaccurate. Debt was 6.2 trillion for W’s first budget year, 2002 and 11.9 when we finally got rid of him. More like 5.7 trillion dollar increase – though his contributions to the debt (Iraq, estate tax cuts, tax cuts for the rich, etc.)will be seen for another decade.
The problem is that Democrats cannot seem to speak with one voice and are unwilling to call issues that would potentially embarrass the GOP for fear of upsetting a couple Demos – for example voting on a tax bill that would increase the taxes for the wealthiest but not the average Josephine.
I would point out that shouting in ALL CAPS does nothing to further the discussion. Caps lock off is much more polite. Most people would assume you are wrong just because you are shouting like a GOP member of Congress =)
Principles over Politics.
Stop with the partisanship. It goes no where. Success will come from backing the correct principles. Not parties or people.
This article lacks any discussion of principles and only inflames with more blaming. It is a fine example of an academic selecting whatever criteria he likes that supports his position. Blaming helps no one but the party not in power.
You are still missing the point. Both parties have had a chance at the helm and they both act the same.
Time for new management not associated with either party.
GAO comptroller general pointed out much of it happened after the fiscal responsibility act expired in 2002.
60 minutes program on medicare drug bill had a one sentence added at the last minute (exclude competitive bidding) and the revised estimate was prevented from being given to congress until after the vote. showed side-by-side identical drugs for VA and medicare. VA drugs with competitive bid are 1/3rd the cost of same drug from medicare.
60 minutes also said that 18 members of congress and staffers responsible for the one liner, had all resigned within six months (of vote) and were working for drug companies.
GAO comptroller general estimated unfunded mandate for medicare drug bill at $40T.
If as by apportioning blame problems would disappear… they don’t… and so therefore I haven’t the foggiest of the why of this post.
I understand that Mr Hu Jintao will retire from his job as President of the Peoples Republic of China (and his other job as General Secretary of the Chinese Communist Party, but that is a misnomer these days). I suspect that his upcoming visit to the US is indeed to interview for the post of Chief Executive of the USA, given hist cast experience as a leader overseeing rapid economic growth while keeping politics locked up within the sarcophagus of the CCP. You must be very well informed…
I couldn’t agree more!
What a beautiful example of the wholesale corruption that we call the legislative process!
After finance, the health care industry (including but not limited to big Pharma) are our nation’s biggest welfare queens.
James, at last something that no one can disagree with, with a helpful collection of data. But what is the point? What could be the alternative and how would that be designed and implemented and by whom? Big Brother?
Principles serve no purpose if they are not rooted in facts. Actually, principles first and foremost can result in tragic situations, or at the very least intransigence that results in stonewalling.
A quick glance at the fiscal data from 2002 to 2006 and 2008-2010 shows that the GOP acted in such a way to significantly increase both deficits and debt while one of the significant legislative actions of the Democrats has a significant debt reduction (“Obamacare.”)
I would also point out that the most blatant hypocrisy – which could very well be a lack of principle – is obvious when the GOP spent months concerned about deficit reduction only to hold hostate a small hit to the debt for tax cuts to lower and middle clss families in order to achieve incredibly expensive tax cuts for the highest earners.
Finally, a quick glance at fiscal behavior over the last 50 years shows that deficits grow the most when the GOP controls Congress and the Presidency while Democratic Presidents and Congress demonstrate much, much smaller deficits and debt impact.
Thank you for illustrating your ignorance of the definition of principle and continuing to blame others. well done.
Principles, by definition are rooted in fact. A principle is a law or rule that has to be, or usually is to be followed, or can be desirably followed, or is an inevitable consequence of something, such as the laws of nature or the way that a device is constructed.
citing a long string of statistics is not principles.
There a lies, dam lies and then statistics.
James, I love both you and Simon and really enjoy reading the articles here as well as the commentary, which sometimes is as cogent/revealing as the articles. In this case, I have to marvel at your hard work to prove something of little interest. Let’s face it, the irrational past can’t be a guide to a rational future. Even if I both understand the numbers and agree with the logic, I still believe that the big problem we face, as at least one blogger pointed out, is Constitutional and not Congressional. If we are serious about running efficient government, there are a number of Constitutional amendments which would be germaine to efficiency. First, one which changes election laws by making all elections publicly funded and, by forbidding the use of either private or corporate funds for specific candidate support. Second would be a balanced budget amendment, and obvious one. There are others related to things like the pork barrel amendment process (any amendments to any bill must be related to the main topic of the bill). I am sure there are others, like limitations on gerrymandering (which can only occur in part of our states. There should also be one to abolish the FED, which has become far more harmful than useful.
Here here, yes.
Bayard of the Huffington Post?
Tear down this fake democracy.
If all the Democrats can do is compromise and lose their positions under the politics (war) of attrition, then they may not actually want to do things differently and perhaps are just doing lip service to their constituents.
Counter measures should be demanded that are balanced against the onslaught of the relentless (Freddy and Friday the Thirteenth come to mind…) policy demands and their dictatorial demands for compliance. They should be made to pay a serious political price everytime they employ their stalemating NO consensus against serious legislation.
(1)
We eed to demand that they act. Demand a progresive wealth tax to pay for the war and military. They always use this military leverage as their patriotic duty…let them pay for it and show the soldiers they mean business! Let the rich who benefit pay for their wars. I can almost guarantee peace in that future.
(2)
We need to action up on this idea of a BANKING TAX!
IT IS CALLED THE ROBIN HOOD TAX:
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Robin Hood Tax | Robin Hood Tax
Be a Robin Hoodie. Sir Ben Kingsley, Noel Clarke, Joe Dempsie, Blake Harrison and Jaime Winstone get behind the Robin Hood Tax. …
robinhoodtax.org/ – Similar
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The big idea | Robin Hood Tax
In a nutshell, the big idea behind the Robin Hood Tax is to generate …
robinhoodtax.org/how-it-works – Similar
[ More results from robinhoodtax.org ]
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Robin Hood tax – Wikipedia, the free encyclopedia
The Robin Hood tax is a package of financial transaction taxes, proposed by a campaigning group largely composed of civil society NGOs. The tax has been …
en.wikipedia.org/wiki/Robin_Hood_tax – Similar
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YouTube – The Banker
Feb 9, 2010 … this robin hood tax idea is a band-aid on a system that has … Added to queue Robin Hood Tax Rappersby JustinJamesUK23 views · 1:03 …
http://www.youtube.com/watch?v=qYtNwmXKIvM – Similar
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Rich Nations Urged to Weigh ‘Robin Hood’ Tax to Help Poor …
Nov 10, 2010 … As President Obama huddles with world leaders for the G-20 summit in South Korea to weigh proposals aimed at stabilizing the global economy, …
http://www.foxnews.com/politics/2010/11/10/obama-world-leade... – Similar
START SPREADING THE WORD…
GET THIS AROUND THE NATION…
COPY PASTE AND SEND IT TO EVERY ONE OF YOUR FRIENDS!
http://www.soros.org/initiatives/justice/focus/legal_capacity/articles_publications/publications/paralegals-manual-20101208?utm_source=Open+Society+Institute&utm_campaign=660e0affbc-news-20110114&utm_medium=email
Community-Based Paralegals: A Practitioner’s Guide should be useful for anyone who wants to start a new paralegals program, improve an existing one, or learn more about paralegals and the legal empowerment of the poor.
Need help downloading a file or playing a clip? Click here.
Community-based Paralegals
PDF Document – 590K
Download the complete 174-page guide.
“while one of the significant legislative actions of the Democrats has a significant debt reduction (“Obamacare.”)”
So says the CBO. But in their evaluations they have to make estimates of the extent to which the actions set out in the legislation will actually work out. Their track record on that in the health care arena is not very good.
There are lots of components of “Obamacare” that purport to reduce health care costs. But when you look at the details, they are anything but robust. A huge component of the projected savings is a package of Medicare reimbursement reductions not much different from those already mandated under the “Sustainable Growth Rate” formula enacted for Medicare in the late 1990’s. Yet every year since then (more than a decade now) Congress has issued a “temporary” postponement of those reductions (known as the “doc fix.”) The CBO says this time will be different. Really?
There is much ado about the creation of “accountable care organizations.” It sounds innovative, but the actual substance of it is a hodge-podge of ideas that have been talked about as long as I’ve been a physician (since the 1970’s), and probably before then, too. Yet so far even successful demonstration projects of these ideas are about as common as hen’s teeth. But the CBO says this time will be different. Really?
Comparative effectiveness research is supposed to empower patients, physicians, insurers, and all other interested parties to choose treatments that provide real value and shun those which do not. Sounds great–and the money will certainly help my research career! But then we see that the funding for this research is not routed through the existing health care research agencies, but rather through a special trust fund. And lo and behold, all but a handful of seats on the board that controls the fund are specifically designated for representatives of hospitals, the pharmaceutical industry–i.e. all the people whose business model is to peddle all the health care they can, whether it does any good or not. But the CBO also counts this as deficit reduction. Really?
There will be pilot demonstrations of new ways to deliver health care that save money. But I’ve been watching the reports of successful pilot demonstrations gather dust since at least the 1980’s. The CBO says this time will be different. Really?
So really it’s a lot of smoke and mirrors, combined with a healthy dose of wishful thinking.
Coprolite?
copy and send to your mailing list!
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Austerity vs. Progress: The State Tax and Budget Battle in …
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Minnesota Network for Progressive Action: News Center
* http://www.ourfuture.org/news-release/2010041623/progressives-mobilize-oppose-conservative-peter-peterson-influence-obama-def
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Our Fiscal Security – Blog – A Progressive Budget Plan: Job …
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This is a critical interest:
* http://www.ourfuture.org/news-release/2010041623/progressives-mobilize-oppose-conservative-peter-peterson-influence-obama-def
Specifically for James and Simon:
Concurrent with “austerity” as the new shackle system; the “culture of poverty” is creeping back into new circles of political dialogue:
http://books.google.com/books?id=hV8A1Ptk8xcC&printsec=frontcover&dq=Reconsidering+Culture+and+Poverty&source=bl&ots=E8NZPjcVHY&sig=MHt_A0seIq0UeRdErVnfS1GIh7E&hl=en&ei=mw8uTYWvDY2usAOXlvWIBg&sa=X&oi=book_result&ct=result&resnum=4&ved=0CDIQ6AEwAw#v=onepage&q&f=false
(2)
http://www.bostonreview.net/BR36.1/steinberg.php
(3)
http://ojs.gc.cuny.edu/index.php/formations/article/viewFile/678/764
(4)
http://blogs.plos.org/neuroanthropology/2010/10/26/the-culture-of-poverty-debate-continued/
compliments: B.E.W.
(should light up live…)
“The Banker”
RobinHoodTax
I’m curious…..what happened to the “JOBS” that these geniuses pushed leading into the election? They take PARTIAL control of ONE THIRD of the working govt and all of a sudden it’s DOWN WITH OBAMACARE!!! Really? Is that the best they can do? Fight against one of the many GOOD things to come from Obama’s presidency? Aren’t we suffering enough from the last bozo republican? Some people will still walk into the pretty light, no matter how hot it gets.
People are tired of not having access to health care- due to Republican stupidity. People are tired of the economic woes caused by the irresponsible Bush admin. People are tired of the wars started by the GOP and mismanaged by the GOP. Don’t be fooled by the right wing nut spin. America is sick of GOP antics.
As illustrated in the remarks, everybody has their own personal political-philosophical attitude and articles of this sort do nothing to change preconceived attitudes. It’s also unlikely that corporate media, which has abandoned all moral responsibility in the name of profit, will cite articles such as this. I suggest the author include a photo, wearing a tricorn hat and waving a Gadsden flag. Then it might get some attention.
While we have two political parties in control of government, each of which is corrupt and self-serving, little will change.
Tunisia is where it’s at.
Why do Republicans keep cutting our federal government revenue, when they know it increases the deficit, which they claim to abhor?
It’s all part of the plan (see post of 11/18)
winningprogressive.com
So really it’s a lot of smoke and mirrors, combined with a healthy dose of wishful thinking
Or simply a rerun of your favorite show at your favorite location on the internet rerun list.
We became a debtor nation in 1985, so you’ll have to include the Reagan tax cuts in the list.
I am certainly not as smart as the above folks who have made comments, but the republicans say they are going to cut spending, Mr Gates gave them cuts of 78 billion from the pentagon wasteful spending, they are not happy about cutting it, Boehner and Cantor have both received big contributions from the defense industry!
In addition, the deficit for Bush’s final budget year, 2009, was about $1.45 trillion. Clinton’s Pay-As-You-Go law was allowed to expire under a GOP controlled government.
From my standpoint, the debt ceiling law simply allows the GOP to pretend to be fiscal conservative through their mastery of the talking point and the lack of a knowledgeable public.
Since the fact that those perceived as more risky are forced by the regulators to pay returns on more bank capital than those who are not perceived as risky, even when they already pay higher interest; which would be similar to requiring more capital from health-insurance companies when insuring those perceived as being less healthier, even though the perceived as less healthy already pay higher premiums, why do we not start by eliminating the discriminatory regressiveness of current financial regulations… because if we do proceed to tax the banks, it will be those who are most discriminated against who will end up paying most of those taxes?
In the video the question so conveniently left out was… and at the end of the day who do you believe will pay those taxes?
The GAO comptroller general had resigned to be more outspoken about fiscal responsibility … making frequent comments about *nobody* in congress for the past 50 yrs has been capable of middle school arithmetic (based on inability to budget … somewhat analogous to old complaints about kids graduating from high school w/o being able to balance a checkbook).
Amazing. Usually the problem with blogs is that they are short on facts. I write a post that is full of facts and now I get blamed for not discussing principles?
Thank You Per Kurowski>
My full comment was not posted, it related some aspects of Banking to gambling addiction…I can’t for the life of me, figure why it was censored…but perhaps it had a technical link that was not permitted? I don’t know, …but here is pretty much the content of my reply.
Per Kurowski:
The Video is fun. It certainly would be self defeating to lose the point of its intention, and that is to show the disproportionate revenue flow of Banking profits over misery in the world. I think that the World Bank has done some admirable evaluations in tracking the growth of famine and food price structures around the world. I have not seen them place it in proportion to the profit growth of International Banking. A lot of accountability is lost when you segment the world into subsystems and then disconnect responsibility.
I appreciate your willingness to engage in dialogue, something other financial officials and professionals like to obscure with rhetoric, technical lexicon and jargon; and just plain obstructive obfuscation. I know you have a serious concern about regulation bein enept, and that you are a staunch advocate of free market “systems capacity” equilibrium overall.
But I think you know more than you proscribe.
Money interests certainly are self preserving and they will attempt to convince otherwise intelligent people that this is some (ghostly) invisible hand. We both know better. There is also what the French call(translated) a professional blindness and built in bias. We can take this further to blind faith and wishful thinking; but the historic truth is that the “Trust me…just do more of it…” is an “Appeal to Authority” fallacy. Capital flow in general has run its game on the world and has come full circle.
SEE:
http://www.guardian.co.uk/commentisfree/cifamerica/interactive/2010/mar/24/imf-financial-crisis ; (video)
http://www.guardian.co.uk/commentisfree/cifamerica/2010/mar/01/imf-capital-controls ; ; (article)
BE THAT AS IT MAY FOR BIG BANKING AND BIG FINANCE,
any serious reality check of the comprehensive global situation must place accountability and regulation by reciprocal components into perspective. The competitive advantage of regulation and non-regulation is a vertical and horizontal grid that includes everyone that is a stakeholder…not just the shareholder. While we consider whether Goldman Sachs type operations of finance are too big too fail, WE FAIL TO ADMIT THAT THERE IS AN ABSOLUTE PRICE FAILURE AT THE OTHER END! Look how Greece sold out its own infrastructure, and if Taibbi is even half right…we are doing the same thing to America. So your metaphysical pricing structures that counterfeit wealth in speculative gambles above supporting assets IS offset by real people who are paying for it at the other end…and this is happening all over the world and between classes as well. The delusion is stretched beyond reality’s ability to repair it so the cost is shifted…and shifted…and shifted some more…breaking up reality just like the derivatives broke up the real and the unreal…and passing it over and across borders.
The professional blindness is a professional myopia. It brackets its ethics exclusively and hedges against “externalities.” It frames it’s own paradigm of self serving grandeur and reinforces this with monumental architecture and institutions to mesmerize and impress a sustained delusion of succession (couched as success and development; but never measured in proportion to its “turnover” which is often corrupted, and its trade offs which is often a planned obsolescence of yesterday; and unfortunately an increase in poverty (or a shift from self sustaining rural economy to dependency market economies of scale warehoused into consolidated (yet expanding) urban sprawl.
(I personally know of a World Bank President’s estate in Central New Jersey…a massive plot of land and a setting reserved for a king…The land used to be productive farm land! Some development! Here lies the grapes of wealth)>
So you posture defensively, obscure the frames of reference, set up fortified fences and boundaries to entry; set up standards of rhetorical denial as talking points against your avocation; then railroad the intruder and blame the outsiders (past regulators perhaps were inept…or power hungry, or corrupt…or perhaps just in the way?)…and even end up blaming the victims. Then that same system sells its cures and employ measures and answers that justify, legitimate, and enforce your own version of financial and monetarian regulations on all the rest of us!
The final bottom line is that as you say, “if we do proceed to tax the banks, it will be those who are most discriminated against who will end up paying most of those taxes?”
WELL MY DEAR POLISH BROTHER: WHO IS PAYING FOR IT NOW!
From Merriam Webster -(a comprehensive and fundamental law, doctrine, or assumption). An assumption is not a fact. For example, my principled belief is that Zoll is the one and only true god. Can you prove this is not a fact? And the use of statistics does not necessary mean the numbers lie. It means the numbers can be interpreted to support any position. Ironically, you illustrating your ignorance of the definition of principle and continuing to blame others as well. well done.
Then that same system sells its cures and employ measures and answers that justify, legitimate, and enforce your own version of financial and monetarian regulations on all the rest of us!
AND THEN CALL IT…”MARKET” self-regulation !
Phooey!
I blame that on the shifting belief of what principle is, but I thought your article was quite factual.
Not so, the tax that is described in the video ( listen to the first minute) is not a tax on bank profits but a tax on bank transactions, and there is a world of difference in terms of who ends up paying for it.
What happend when Reagan cut taxes? Tax cuts don’t increase debt. Buying stuff you can’t afford increases debt. Lets say 10 people want to buy a $.50 candy bar. Now lets increase taxes because it isn’t healthy. Now that the candy bar is $1 do all 10 people still buy that candy bar?
The problem with your argument is that you beleive increasing the cost of doing business will have ZERO impact on the amount of business that company does. How much federal debt was created by environmental laws that slowed down production companies and sent jobs overseas?
If you include the Environmental laws and wage laws wouldn’t Dems then be largly responsible for business being shipped overseas and off the top of my head lets throw their portion of “Made in everywhere except USA” be near $30 Trillion?
James – your selection of which facts to include is the problem at hand. How did you arrive at these 5? Are they the 5 largest?
What if you don’t include tax cuts? You are mixing apples and oranges here, as tax cuts are pro fiscal conservatism, while spending bills are not.
Not raising the debt ceiling will merely
cause the government to borrow from the
Fereral Reserve – i.e. print money. This
is a more honest policy than adding debt
so that future taxpayers will have
to print money.
@ CBS from the West
Can somebody say Senator [D] Tom Daschel way back when?
What happened when Reagan cut taxes? The deficit increased.
Your argument is ridiculous. Tax cuts increase debt because they increase the extent to which you can’t afford “buying stuff.”
Then you provide an example of a 100% sales tax, which no one has ever proposed, much less implemented. Finally, you claim — with no evidence — that “environmental laws” cause companies to move production overseas, and as cost then pull a figure out of your backside of $30 trillion.
Congratulations on a fact-free regurgitation of discredited talking points, sophistry and misinformation.
Thank you! Someone finally says it- both sides have done damage by playing the political game and letting them continue isn’t going to get us anywhere. Anyone who things our debt problems are the result of any one party is really just pushing the current unsustainable system to continue.
I had no interest in the topic before reading this very informative article by the author.
http://mail.aol.com/33124-111/aol-6/en-us/Suite.aspx
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James, et al, please do not use the term “entitlement.” It brings up the notion that people have neither earned nor deserve these necessities required to live a meaningful and productive life in o
ur society. Health care, including. Medicaid, Medicare, and medications, is a necessity; SS is a necessity for many people who have worked hard throuhout their life yet have not benefited from the ” winner-take-all” economy; education is a necessityto be able to pursue your happiness.
I have no problem with “starve the beast” tactics. If you want to impress us at least show combined support for tax cuts and increased spending
. Plenty of folks from both parties are guilty. Its low hanging fruit. Even from your liberal …… main stream media view point.
James Kwak, hey don’t be hard on yourself. I thought the article was very factual. It straight to the point. As for the blogs, I take most peoples opinions with a grain of salt. Thanks for the information
To Anonymous: I think the last vote on the tax bill , passed in Dec 2010 demonstrates there are no ” Fiscal Conservatives” left in the US Congress….
“The bottom line: As a party, the Republicans who will be railing against fiscal irresponsibility and threatening to block a raise in the debt limit are the irresponsible ones themselves who created the need to raise that debt limit.”
I thought that the implication of your factual dta pointed directly to a default in principle. It needn’t be defined in every detail as a thesis. Most of the time I see principle (The United Nations Core Principles; etc) as a ideal framework from which best practices (rules of order) and governance can be guided. The problem is that it is not enforceable; they are NOT laws in that regard. When the facts point directly to contradictions in practice and hypocrisy…or even deceitful and irresponsible public service…then the best way around those facts are to talk principle! Of course when you are talking principles it typically follows political ritual and rhetoric that has its own set of Bounded Rationality and Bracketed facts …on the fast track…thank you…with an “consilia evangelica” to enshroud it with authority and legitimation.
Stick to the FACTs Jack!
While I do not have the time right now to look up all of the bills, I do remember many of them having important things attached to them. So yes you are adding spin to this and you are better than this. Yes, we have a debt problem, but the problem is rooted in so much more than what you seem willing to address.
Let’s look at one dept. I have been watching as I was hoping to sit on the minority panel — USDA. Everyone thinks of the USDA as purely Agricultural when in truth 70% of the budget goes to Food Programs. http://www.obpa.usda.gov/budsum/FY11budsum.pdf Truly Agricultural programs 17% will get blamed, and yes there are programs I feel that should get cut, but the real problem is that we have too many people on food stamps. No one is willing to address that wages are stagnant or that we have unemployment. No one is willing to address illegal immigration and the fact it keeps low wages lower. No one is willing to tell their children if they do not do well in school then they are going to have to pick vegetables and work in meat packing plants the rest of their lives or clean other peoples’ houses. No one is willing to address that working class jobs have gone overseas. (As cost of shipping and wages overseas go up, they will come back and are starting according to the Wall Street paper yesterday, but from my sources it is mostly supply chain length that is bringing it back.) No one was willing to address that housing prices were raising above affordability for the average wage. No one was willing to address that ag land was being taken out of production for urban sprawl. No one addressed that too many houses were being built for the actual population we had. I brought all these problems up to my local Congressmen many with solutions. I got blown off. Again, What does a TOWN PLANNER know or a SHEEP FARMER know or a person with 180 credits who sits back and watches you people talk past each other and point fingers…. Last I looked Ben Franklin was a printer who loved to think and Thomas Jefferson an educated Farmer. The difference between them and what we have today is ideas and people who are willing to listen to ideas from outside of the halls of education and the DC Loop.
We have crisis’s in the US because we like to put Band-Aids on sucking chest wounds and we leave so many loopholes in the works a team of lawyers can drive a Mack Truck through them. A centrist knows there are times when you have to spend money to fix problems, but the ultimate goal is to fix the problem and never have to spend the money again. Neither the Democrats nor the Republicans seem willing to address the real problems in this country and with what you wrote above, I am beginning to think you are more interested in contributing to the problem by figure pointing rather than finding solutions.
Regards,
Brenda Vinall-Mogel
As I have said so many times on this blog, but that the blog-owners fully ignore, because it does not fit with their thinking, or agenda… how can you NOT have a public debt problem when you require banks to hold 8 percent in capital whenever they lend to a “risky” small business or entrepreneur, while allowing them to hold 0% zero capital when lending to the “absolutely not risky” public sector… so that perhaps some bureaucrats and politicians, instead of bankers, are to decide whether to assist small businesses or entrepreneurs.
The first thing that a Congress should do, as to uphold the spirit of your Constitution, is to eliminate all arbitrary regulations that discriminate against the citizens and in favor of the public sector. Who thinks Ben Franklin, the printer, or Thomas Jefferson, the farmer, would have approved such a thing?
At this particular moment you have no idea of where the interest rates on US public debt would be if the US government had to live with the same bank regulations that applies for small businesses and entrepreneurs.
And by the way how come no one here talks about the outsourcing of financial regulations the US has made to the Basel Committee and the Financial Stability Board… and which in many ways makes a mockery of the recent financial regulations reform act?
How long are you going to allow agendas to stand in the way of the truths?
The “defense” industry is our nation’s biggest welfare queen.
Like most of your persuasion, you start from a mistaken premise: when taxpayers get a tax cut, the government “loses” money and problems result with deficits as they are unable to pay for them.
We have 40 million on food stamps
20 million underemployed or unemployed
47% not paying taxes.
Meanwhile we penalize carbon fuels producers to “talk green” and threaten everyone’s welfare with the fight against the fiction of global warming.
It isn’t caused because the taxpayers get to keep more of what they earned but rather by a government that spends too much money on more and more unproductive activities, ignores the mathematics of their expenses, demands more and more from any productive agent and refuses to admit their culpability.
The government is NOT the solution – they are the problem.
Exposing politicians as hypocrites is not worth the powder. They are hypocrites, by and large. Anyone who cares to notice can do so without having a vote on the debt ceiling. The debt ceiling vote then becomes one more way of playing to the idiots. We have far too much of playing to the idiots in our politics, as it is. Just makes things worse to mandate playing to the idiots on a semi-routine basis.
Sadly, our politics run on partisanship and blame. Your prescription was followed by the Obama White House in a good many cases, but the GOP failed to join in civility. Negative politics works as politics, and it is clear that politics matter to policy. To make good policy, you have to be good at politics. That means at the very least calling a spade a spade.
I would dearly love to live in the world you ask for, but it just doesn’t exist.
Bravo James!
Let’s take a magnifying glass to the passage of the “Debt Ceiling” fiasco – who got what in “EarMarks”, and what political party received the “Grandest Amount”?
I’m willing to bet that on this side of the argument that it’s 50/50?
PS. I admire, and respect US Rep.(TX) Ron Paul…but it is he who gobbles up a greater percentage of ear marks for his district then any other congressman,…surprise?
Ref: “Earmarks’ to Nowhere: States Losing Billions” / USA Today
http://www.usatoday.com/news/washington/2011-01-04-earmarks_N.htm
Ref: “Earmarks Aren’t Gone For Good” / Political
http://www.political.com/news/stories/0111/47063.html
Ref: “House Appropriators Face Deep Budget Cut in Anti-Earmark Era” / Washington Post
http://www.washingtonpost.com/up-dyn/content/article/2011/01/04/AR2011010402001.html
Ref: “Dire States” / The Atlantic Jan-Feb/2011
http://www.theatlantic.com/magazine/archive/2011/01/dire-states/8330/
America’s Defense Meltdown
is 1/10th or less the financial meltdown (see 13 bankers)
“47% not paying taxes”
Hahaha, you swallowed that republican propaganda hook, line, and sinker.
I laugh when people quote this incorrect number not realizing that it excludes FICA taxes which have been lumped into Federal tax revenues since 1968.
77% of households pay federal taxes, not bad when real unemployment is close to 20%, when you include FICA and other federal taxes.
Oh, and another thing the repugs wont tell you is that social security had a net surplus over $2.5 trillion as of 2009 and is estimated to be fully funded til 2040 or 2050.
We certainly wont have to worry about SS if Americans continue to shovel food into their fat faces. Life expectancy will drop if that trend continues.
I have more respect for the hypocrites that know better than the ignorant fools who swallow the propaganda.
Can you please cite your sources? both of you.
Please cite your sources.
Back to the poor house are we?
Which is the far nobler in the mind of the idiot?
To vote for she willing to cut the tax on our daily bread, while selling our fields and plowshares to those willing to sell your children’s future for a profit?
Or
To vote for she willing to tax our daily bread to purchase votes from those with out bread of their own?
What will it matter if we sit inside the poor house unable to pay our debts to the landlord’s who squandered their profits on strong drink and slow horses?
Or to sit outside the poor house in the street and beg for pennies as there is no work in field nor town to be had?
And we argue still, who is dirtier?
Perhaps if the poor house were not run for profit and all afforded their daily bread, man could look for better reasons to support a political party?
It’s actually better than I previously stated.
“In fact, only 14 percent of Americans didn’t pay either income or payroll taxes.”
http://taxvox.taxpolicycenter.org/2010/04/15/about-those-47-percent-who-pay-%E2%80%9Cno-taxes-%E2%80%9D/
“The federal government owes $2.5 trillion to the Social Security trust funds. And if the government doesn’t pay that money, it will default on its debt — something the U.S. has never done in its history.”
http://www.npr.org/blogs/money/2010/11/18/131420919/are-the-social-security-trust-funds-a-mirage
Our federal government has to repay the $2.5 trillion it’s raped from the social security trust just like we have to pay back China. Social security has a $2.5 trillion surplus, the government has to slash defense spending and pay back the debt.
People need to wake up from their ignorant stupor.
@ tigger nitro___Ref: “Citizens against Government Waste”
http://www.cagw.org