If Only

By James Kwak

Paul Krugman describes the battle lines this way:

“Democrats want to preserve the legacy of the New Deal and the Great Society — Social Security, Medicare and Medicaid — and add to them what every other advanced country has: a more or less universal guarantee of essential health care. Republicans want to roll all of that back, making room for drastically lower taxes on the wealthy.”

I think he’s right about the Republicans. But I don’t think he’s right about the Democrats.

If you want to preserve Social Security, Medicare, and Medicaid, in a world where the population is aging and health care costs are going up, then it’s obvious that your top priority should be higher tax revenues. Without a reasonable level of federal tax revenues, there’s no way we’ll be able to pay for those programs in the future.

Instead, President Obama chose tax cuts for the “middle class.” That doesn’t make him a bad person: those tax cuts help the middle class, at least in the short term. (The one thing that I always found indefensible about his position, however, is defining the middle class up to $250,000 in annual income per household, which was his threshold before the compromise at $450,000.)

But those tax cuts came at the expense of future federal tax revenues, which means they came at the expense of—you guessed it—Social Security, Medicare, and Medicaid. In other words, Obama and the vast majority of the Democrats in Congress chose goodies for low-, middle-, upper-, and very-upper-income families today (the only people not getting goodies are the super-upper-income families that make more than $450,000*) over the fiscal capacity required to preserve our social insurance and safety net programs.

That’s the problem with the tax deal—not the fact that the threshold was set at $450,000 rather than $250,000, which Krugman correctly notes doesn’t make much of a difference. And you can’t say the tax cuts were a necessary choice to keep the economy from slipping into recession. If that were the case, they should have been temporary, not permanent, and Obama has been trying to make them permanent since 2010.

The Democratic Party today, as I’ve said countless times over the past year, has become the party of smallish government and tax cuts for most people, while the Republican Party is the party of tiny government and tax cuts for everyone. There is no party dedicated to the New Deal and the Great Society. We need one.

* And even they are getting goodies. First, they benefit from the lower marginal tax rates on income up to the $450,000 threshold; second, they benefit from the treatment of dividends as capital gains, not as ordinary income; and third, they benefit from the $5 million estate tax exemption.

136 thoughts on “If Only

  1. neither party is for “smallish” or “tiny” government. they both share a common rough priority – tax cuts for rich people. beyond that, they have some differences about kinds of spending and further tax tricks – each seeking to give money to their clients – as well as differences not related to money. their branding strategies exaggerate these differences, as well as pretending to contrasts that don’t really exist in the end.

    a party dedicated to the New Deal would be looking backwards – we need to go much further, we need a Better Deal. Ned Resnikoff’s list would be a modest start – http://goo.gl/462ad

  2. They are only committed to what the legions of corporate lobbyists demand of them. They run campaigns on false patriotism and false empathy for the “middle class” or the “poor,” all the while maintaining or strengthening the status quo for multinationals, Wall-Street execs, and the military-industrial complex. Further, the mainstream media aids all of this by being mostly lapdogs, not watchdogs. But frankly, the country deserves their poor and lost wages, their absence of universal healthcare, their evaporation of jobs because they won’t stand up for it, as labor unions did in the past and demand more for their labor. They would rather just give it up for…what else? Guns and religion. Because they’re scared.

  3. i think james is correct in thinking that many of the dems will fold. i see this in their actions which often do not match the words. in general they seem to me to be running scared.. many do not want to acknowledge that we need growing revenues too to support what they say they value.

  4. How’s this for limiting donations to political parties (see below). Perhaps, utterly baffling in American-style politics.

    Quebec’s government has introduced two bills to reform the province’s Election Act. One would reduce the limit on contributions to political parties from $1000 to $100, and increase the public subsidy to parties. The other would establish fixed election dates.


  5. Yep … reducing political donations from $1000 to $100. The gubmint would provide the subsidies to parties for election campaigns. I suppose this would make some Americans fall out of their chairs in disbelief.

  6. I think its great that the Democrats care about Social Services but they have to figure out how to pay for them.

    It would certainly help to cut the Military which has made the US one of the most hated countries in the world.

    But I think there is an opportunity here for Green Energy. First we only have about 4 years left of continued carbon emissions before Global Warming becomes unstoppable. But even if we only half believe in that idea, think of a wind turbine factory in every state producing green energy while producing jobs. Isn’t that how we got out of the Great Recession except we made armaments for the second world war.

    We should be undertaking a massive program for nuclear power. In spite of the Fukuishima disaster that involved nuclear power plants 30 years old, we have nuclear power plants today that can burn spent plutonium getting rid of the disposal problem. They have 3 different shut down mechanisms that don’t require electricity and can keep the reactor cool after shutdown without electricity.

    We should be doing a deal with Brazil to build wind turbines for them in exchange for bio fuel which they are able to produce economically from sugar cane.

    We can save the world and the economy at the same time.

    There is no second planet, its our last chance.

  7. A better deal is still needed. I find the income of 450,000 dollars to be way to high. The income of 250,000 made good business sense.
    The president should not have caved on this one. Let these hard core republicans eat their own cake. The nerve of the Speaker wanting to make 1,000,000 dollar the level to pay more taxes on! Shame on him.

  8. The way to make Social Security sustainable is by raising the retirement age somewhat in line with growing life expectancies.

    The way to make Medicare, Medicaid, the VA and ObamaCare sustainable is to bring medical costs in line with the rest of the OECD nations at around 10% of GDP, not nearly 20% as today. That would require confronting the American Medical Association’s cartel (and to a lesser extent Big Pharma and the insurers with their runaway administrative costs), something neither party seems prepared to even talk about.

  9. Krugman almost invariably offers the most generous interpretation of Democrat behaviour. In the last couple of columns, he has allowed himself a few criticisms of Obama, but this is a rare phenomenon. This habit makes him a far less convincing analyst than he could be.

  10. @We can save the world and the economy at the same time.
    There is no second planet, its our last chance.

    Dubious on both accounts. WE can’t do anything right, and yes, it is their last chance. Which is why there is still hope for some in this putrid environment he turned this planet into.

  11. I am laughing at this article to be honest. Yes blame the repubs for a bill that was passed in the Senate and authored by Reid. Some of you just do not get it. The Dems passed this bill not the repubs. Go ahead call me names and sceam and tell me I do not know what I am talking about. Then go look at the votes and you will find the facts will slap you in the face.

    The tax tables are set in stone for now and off the table. I hope you are indeed happy with the feeling that you stuck it to the rich. What happened? Well lets see most people making 450k make their money from money and they got a big time break with the capital gains tax at 20% and other investments and breaks. Keep thumping your chest in victory, but you just lost a trump card and do not even know it. Obama’s main speaking point is settled. Now it will be cuts and more cuts. Go read the bill it is only 154 pages.
    Some cannot see the forest for the trees.

  12. Oleguy, you are entirely missing the point of the article. It’s a criticism primarily of the Democrats for not truly standing up for what they claim to believe. And it isn’t about “sticking it to the rich.” It says that the middle and upper middle classes will also have to pay higher taxes to maintain current social programs.

  13. The least sustainable portion of our budget is medicare. While private payer and fee for service seem to be at the core of our health care inefficiencies, at the moment, there aren’t the votes to alter this. What if, in exchange for a rise in the eligibility age for medicare, we were to allow people of age 60 and more to have a “public option” — of essentially purchasing medicare at cost from the government. The insurance industry would shed a relatively costly demographic, the lower cost would require fewer government subsidies, and we would likely have better evidence for the argument over time that single payer would serve all of our citizens best.

  14. How about letting everyone have the choice of the Public Option? This could significantly reduce the cost of Health Care because some of the CEOs of the HMOs are earning $200 Million per year.

    The reason the Republicans do not want the public option is because the HMOs are making obscene profits and part of those profits are donated to the Republican Party for continued protection.

  15. One great irony as we cross these “cliffs”, is that it takes the votes of Democrats to fulfill the interests of mainstream business. In the peculiar alliance of business, fundamentalists, and libertarians that comprise today’s GOP, business has enjoyed the obsequence of the party’s other wings. Though, if Boehner is unable to retain his speakership while allowing votes from the full house during these upcoming “cliffs”, will business interests perceive the GOP as their party of choice?

    Speaker Pelosi anyone? ;-)

  16. Government has grown steadily under both Democracts and Republicans. Hard to argue either party is a party of small government.

  17. Emerich is right, both parties favor big government despite their denials. The real difference between them is who that government serves. The Democrats pay lip service to the bottom 90% and the Republicans want o protect and promote the top 10% (I’m being generous here). But both are so beholden to BIG MONEY that the bottom 90% are going to get screwed no matter what happens because neither party is willing to face the problem of inequitable distribution of the fruits of every American’s labor.

    The fact is that we could cut hundreds of billions of dollars from the budget over 10 years by right-sizing the military, attacking out of control health care spending (as noted by others) and applying efficiency principles to the rest of government. I worked in the federal government for 26+ years and the duplication and overlap of necessary programs together with the perpetuation of unnecessary programs and jobs is rampant. Then we can fine tune Social Security (e.g. raise contribution limits, etc.) and work toward single payor health insurance. But in the end, if the economy is not in full recovery and the fruits of that economy are not distributed more equitably, the American people will continue to suffer and the argument about how many crumbs the government throws to whom–essentially what the two major parties are arguing over today–will remain largely irrelevant. The Democratic should focus on establishing policies and programs that ensure that the fruits of our labors are distributed more equitably to all Americans. Solving that problem will resolve the revenue and expenditure issues.

  18. The fundamental error of the article is its misunderstanding of what funds government. Taxes and borrowing do not (and cannot). Ask yourself, where would taxpayers get the dollars to pay their taxes if the government didn’t spend them out into the economy first?

    Then there’s the procedure for issuing dollars. Essentially for every dollar issued, the Fed creates a dollar of government “debt” (completely unlike household debt. See http://www.rooseveltinstitute.org/new-roosevelt/federal-budget-not-household-budget-here-s-why). That means that if we zeroed out the “debt” the non-government sector would not have the financial assets (“dollars”) issued by government for the convenience of the economy. The accounting equation is government “debt” = non-government financial assets + net exports. That’s just accounting, not some exotic theory. Removing such assets from the private sector just as it’s trying to pay off an enormous debt burden — three times government “debt” and the highest since 1928 — is just cruel, and favors the creditors to the max.

    So taxes and borrowing do not (and cannot) fund government… and “debt” is actually good because it leaves financial assets in the hands of the private economy. Kind of unusual to think this way, no?

    The Modern Monetary Theorists (Randall Wray, Stephanie Kelton, Yves Smith, Marshall Auerbach, and this depression’s Keynes, Steve Keen) elaborate at length. Check ’em out.

    Bernard Lietaer (a former colleague of Krugman’s) expands their work on TED and in a series of Youtube lectures (start with http://www.youtube.com/watch?v=nORI8r3JIyw). He lobbies for a diversity of monies, and notes the taboo of mentioning the way money works in current, conventional economics. That taboo is what keeps things stuck in depression.

  19. Hi James:
    I have heard that the Republicans are run by the Oil Companies and the Democrats are run by Wall Street. I think there is some truth to that.

    I agree with your comments about cutting the military.

    But probably the more important angle is to eliminate duplication in government. The typical action plan is to hire a consultant to look at a particular program and identify how it could be more productive. But often no one wants to implement the recommendations to protect their own turf.

    The truth is, these 10 year plans to get to a balanced budget are just wishful thinking with the intent of giving it to the next guy. The US should have a 3 year plan for eliminating the $1 Trillion deficit. This puts it a window closer to a typical political lifetime.

    One huge opportunity is sin taxes i.e. taxes on gasoline, cigarettes, booze and retail. These hit the middle class harder than the upper class so the Republicans would favor this. And an increased gas tax would encourage people to get more efficient vehicles so they can help Global Warming while reducing the deficit.

  20. If You Are Having Trouble Understanding What Is Going On In Washington, This May Help.

    Here are the numbers.

    * U.S. Tax revenue: $ 2,470,000,000,000
    * Fed budget: $ 3,620,000,000,000
    * New debt: $ 1,150,000,000,000
    * National debt: $ 16,271,000,000,000
    * Recent budget cuts: $ 38,500,000,000

    Let’s now remove 8 zeros and pretend it’s a household budget:

    * Annual family income: $ 24,700.00
    * Money the family spent: $ 36,200.00
    * New debt on the credit card: $ 11,500.00
    * Outstanding balance on the credit card: $ 161,710.00
    * Total budget cuts so far: $ 38.50

    Does that make things clearer??

  21. James:
    It seems simple to us. But they put 6 Democrats and 6 Republicans in a room for several months and they could not come up with a recommendation.

    They simply do not seem to have common sense. We could have put 12 school children and got a more sensible solution.

  22. @James and Mike – it’s ridiculous to compare FIAT $$$$ distributed through a fractional reserve banking scheme to a “household” budget.

    It was the cost of mounting a 10 year raid on the planet to steal from your neighbor to put it in YOUR budget so that you could pay back the interest on FRB debt and still remain in debt ’till you die if you make ANY purchase of food, clothing, shelter, energy and/or medicine without robbing Peter to pay Paul!

    And then, how, according to your simple minds, did 480 USA citizens end up being worth a collective total of 2.08 TRILLION?! And how are they not even paying $38.40 to SUPPORT their PRIVATE mercenary army that allows them to be super-duper superhero successful following this ROCK SOLID math:

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

    You are all a bunch of ignorant a h o l e s. A Jonestown cult….

    Women around the planet, everywhere, hold in their souls a deep MORAL CONTEMPT for brute force. Now and into infinity…and this MANUFACTURING of poverty via computer algorithyms controled by psychopaths on the www – well, you don’t GET IT – you are all too far gone like Golum with “My Precious”….

    People NEED to go to prison for this MASSIVE HEIST. If they keep re-writing the LAWS to make their iniquity LEGAL, they will die.

  23. James K., your naïveté is showing.

    If Democrats follow your advice, the GOP would sweep the next round of elections. Then where would we be with Social Security, Medicare, Medicaid, much less all the other domestic initiatives passed by Democrats over the last 50 years?

    The fiscal cliff package did, in fact, include significant tax increases on those earning between $250,000 and $450,000, though it was not an income tax increase. It also included significant increases on middle income earners by allowing the payroll tax cut to expire.

    It would have been political suicide for Democrats to propose higher taxes on the middle class while the GOP opposed any tax increase whatsoever. Indeed, I suspect the blowback from the payroll tax increase is going to be worse than anyone expects because middle class wage earners have been led to believe they escaped higher taxes in this deal. They did not and the increase will show up immediately in their pay checks. It’ll be a nasty surprise for many people.

    Also, a tax package that hit the middle class harder than this one did would have had a more negative effect on economic growth, an effect all of us progressives oppose.

    I concur that taxes on high income earners should have been raised more than they were. But the battle is not over. There will be another bite at the apple during the sequestration negotiations, and while I share other progressives’ wariness about the WH’s negotiation skills, I think Obama is in a good position to make his a-dollar-in-revenue for a-dollar-in-cuts rule stick. For obvious political reasons, those tax dollars are likely to be heavily tilted toward corporations and high-income individuals.

    For better or worse, in exchange for these new tax revenues, Obama will probably be willing to give ground on Social Security or Medicare if/when the GOP brings those proposals to the table and combine those cuts with some defense reductions to meet his one-for-one rule.

    This deal reversed at least 33 years of regressive tax “reform”. We have a chance to do more in the weeks ahead. Stop making the great the enemy of the good.

  24. will keep beating it until the rider is dead also just like the entire top layer of the Polish government who let the CIA set up torture sites in Poland died in ONE airplane crash – you are far from safe

  25. Happy and Healthy New Year….Annie, Bruce, Tony, Oregano, Per Kurowski, Moses….et al…..and to Simon and James Kwak. May the Force be With Us All.

  26. O.K., If you have handled the math (Annie excepted), then you can turn your attention to the real problem we face.
    This May Be The MOST Important Idea You Have To Consider In 2013!!

    I have been reading a fascinating book by two economists, Daron Acemoglu and James A. Robinson, entitled WHY NATIONS FAIL-The Origins of Power, Prosperity and Poverty.
    They have examined and traced just about every society since records have been kept. Their conclusion is that there are four conditions of crucial interest in every society. They have cute, academic names for each of them, but since I am not up for tenure, I will substitute simpler names. Two conditions are economic and two are political.

    Closed Economies: In this condition, existing industries and sources of wealth are protected and new industries and sources of wealth are prohibited or discouraged.

    Open Economies: This is Joseph Schumpeter’s “Creative Destruction” in which new ideas, new industries, new sources of wealth are welcomed and encouraged even though they may well displace existing ones.

    Closed Politics: In this condition, a very small group of elites control the entire government and use that power to enrich themselves out of all proportion.

    Open Politics: Here, governance is widely shared by all members of the society and decisions are made that are in the best interests of everyone in the society.

    Their conclusion is that when Open Economies are combined with Open Politics everyone benefits and the economy grows profitably. But Closed Politics always leads to Closed Economics and the society always becomes very poor, or there is a revolt, which may lead to Open/Open conditions, or it may simply change the members of the ruling elite.

    Now here is the Issue Of Incredible Importance: As we speak, there is a still small, but influential group of people saying the America’s days of prosperity and growth are behind us, and that your children, and grandchildren will not live as well as you do. Bill Gross, Paul Krugman and Robert Schiller are among that small group.

    Following the analysis in Why Nations Fail would suggest that we are moving from an Open Economy/Open Politics to a Closed Economy/Closed Politics.

    So what is the evidence here? Well, first of all there is Congress where 96% of the members who seek re-election win. Virtually all current Congresspersons are millionaires. Only a few were millionaires when they were first elected. Even most of those who chose not to seek re-election become lobbyists at million dollar salaries and they never leave Washington.

    The CEO’s of major U.S. Corporations are now paid staggering incomes in wages and options and bonuses. Not long ago, the CEO made 20/30 times more than the lowest paid employee. Now it is 300/400 times as much.

    The top 1% of all U.S. households hold 40% of all the wealth in the entire U.S.

    Does that sound like a small group of people have gained control of the U.S.?

    Here is what a complete outsider has to say about this. This article appeared in the Sydney (Australia) Morning Herald.

    The four business gangs that run the US

    December 31, 2012

    Ross Gittins
    Ross Gittins
    The Sydney Morning Herald’s Economics Editor
    View more articles from Ross Gittins

    Illustration: Michael Mucci. Illustration: Michael Mucci.
    IF YOU’VE ever suspected politics is increasingly being run in the interests of big business, I have news: Jeffrey Sachs, a highly respected economist from Columbia University, agrees with you – at least in respect of the United States.

    In his book, The Price of Civilisation, he says the US economy is caught in a feedback loop. ”Corporate wealth translates into political power through campaign financing, corporate lobbying and the revolving door of jobs between government and industry; and political power translates into further wealth through tax cuts, deregulation and sweetheart contracts between government and industry. Wealth begets power, and power begets wealth,” he says.

    Sachs says four key sectors of US business exemplify this feedback loop and the takeover of political power in America by the ”corporatocracy”.

    First is the well-known military-industrial complex. ”As [President] Eisenhower famously warned in his farewell address in January 1961, the linkage of the military and private industry created a political power so pervasive that America has been condemned to militarisation, useless wars and fiscal waste on a scale of many tens of trillions of dollars since then,” he says.

    Second is the Wall Street-Washington complex, which has steered the financial system towards control by a few politically powerful Wall Street firms, notably Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley and a handful of other financial firms.

    These days, almost every US Treasury secretary – Republican or Democrat – comes from Wall Street and goes back there when his term ends. The close ties between Wall Street and Washington ”paved the way for the 2008 financial crisis and the mega-bailouts that followed, through reckless deregulation followed by an almost complete lack of oversight by government”.

    Third is the Big Oil-transport-military complex, which has put the US on the trajectory of heavy oil-imports dependence and a deepening military trap in the Middle East, he says.

    ”Since the days of John D. Rockefeller and the Standard Oil Trust a century ago, Big Oil has loomed large in American politics and foreign policy. Big Oil teamed up with the automobile industry to steer America away from mass transit and towards gas-guzzling vehicles driving on a nationally financed highway system.”
    Big Oil has consistently and successfully fought the intrusion of competition from non-oil energy sources, including nuclear, wind and solar power.

    It has been at the side of the Pentagon in making sure that America defends the sea-lanes to the Persian Gulf, in effect ensuring a $US100 billion-plus annual subsidy for a fuel that is otherwise dangerous for national security, Sachs says.

    ”And Big Oil has played a notorious role in the fight to keep climate change off the US agenda. Exxon-Mobil, Koch Industries and others in the sector have underwritten a generation of anti-scientific propaganda to confuse the American people.”

    Fourth is the healthcare industry, America’s largest industry, absorbing no less than 17 per cent of US gross domestic product.

    ”The key to understanding this sector is to note that the government partners with industry to reimburse costs with little systematic oversight and control,” Sachs says. ”Pharmaceutical firms set sky-high prices protected by patent rights; Medicare [for the aged] and Medicaid [for the poor] and private insurers reimburse doctors and hospitals on a cost-plus basis; and the American Medical Association restricts the supply of new doctors through the control of placements at medical schools.

    ”The result of this pseudo-market system is sky-high costs, large profits for the private healthcare sector, and no political will to reform.”

    Now do you see why the industry put so much effort into persuading America’s punters that Obamacare was rank socialism? They didn’t succeed in blocking it, but the compromised program doesn’t do enough to stop the US being the last rich country in the world without universal healthcare.

    It’s worth noting that, despite its front-running cost, America’s healthcare system doesn’t leave Americans with particularly good health – not as good as ours, for instance. This conundrum is easily explained: America has the highest-paid doctors.

    Sachs says the main thing to remember about the corporatocracy is that it looks after its own. ”There is absolutely no economic crisis in corporate America.

    ”Consider the pulse of the corporate sector as opposed to the pulse of the employees working in it: corporate profits in 2010 were at an all-time high, chief executive salaries in 2010 rebounded strongly from the financial crisis, Wall Street compensation in 2010 was at an all-time high, several Wall Street firms paid civil penalties for financial abuses, but no senior banker faced any criminal charges, and there were no adverse regulatory measures that would lead to a loss of profits in finance, health care, military supplies and energy,” he says.

    The 30-year achievement of the corporatocracy has been the creation of America’s rich and super-rich classes, he says. And we can now see their tools of trade.

    ”It began with globalisation, which pushed up capital income while pushing down wages. These changes were magnified by the tax cuts at the top, which left more take-home pay and the ability to accumulate greater wealth through higher net-of-tax returns to saving.”

    Chief executives then helped themselves to their own slice of the corporate sector ownership through outlandish awards of stock options by friendly and often handpicked compensation committees, while the Securities and Exchange Commission looked the other way. It’s not all that hard to do when both political parties are standing in line to do your bidding, Sachs concludes.

    Fortunately, things aren’t nearly so bad in Australia. But it will require vigilance to stop them sliding further in that direction.
    Twitter: @1Ross Gittins

    Read more: http://www.smh.com.au/business/the-four-business-gangs-that-run-the-us-

    We could examine each of these four corners of the new Closed Politics here, but I will settle for one, the Oil Company oligopoly. Consider who fought mass transit at every step? Who gets HUGE government subsidies called the Depletion Allowance?
    Who fights “green technology” with great ferocity? Who is risking the drinking water of a huge number of Americans by routing the TransCanada pipline right through the Ogala Aquifer? And If you want to see a staggering number, just check out how much money Exxon pays Rex Tillerson? It is an obscene number.

    Now it is your job to check out the other three corners. If you want a place to start, look at the connections between the senior Senator from New York (a Democrat), and Wall Street to see where his money comes from, and then see how he votes.

    And always remember that if you can see the money in public, it is only a trivial portion of the real amount. There is a “river” of cash that flows from businesses to the government, at all levels, that is completely hidden and out of sight!!

  27. James,

    First, the Total Budget Cuts So Far (Family) in yesterday’s post should be $385, not $38.50. More to the point, the metaphor is inappropriate for any number of reasons. But on its face it’s misleading because it ignores the assets held by both the US government and the family. In the case of the federal government, these assets are enormous and they are backed further by the nation’s GDP. In terms of your metaphor, I suppose this is roughly equivalent to the family having access to a portion of a vast family trust.

    Another weakness in the metaphor is that when the family cuts its spending it doesn’t lead to a reduction in its income as a reduction in government spending does for the treasury. Recent research by the IMF demonstrates that a $1 cut in government spending may reduce revenue by as much as $1.50. This suggests why the austerity measures adopted in the European periphery are failing to reduce deficits while driving their economies deeper into depression.

    As for your last post, I couldn’t agree more. Both the nation’s politics and its economy are becoming more closed thanks to increasingly concentrated economic power, the influence of propaganda from partisan think tanks and media, the dumbing down of Americans, and the arms race in lobbying and political campaign spending.

    But it won’t last forever. Americans will eventually wake up, and out of the wreckage these policies have created, they’ll find an Andrew Jackson, Teddy Roosevelt or FDR and their New Progressive allies who will open American politics and economic opportunity again.

    As Churchill is alleged to have said (he did not, but he could have), “The United States can always be relied upon to do the right thing — having first exhausted all possible alternatives.”

  28. a “little” history?
    “The Freeman is an American libertarian journal published by the Foundation for Economic Education (FEE).[1] It started as a digest sized monthly study journal; it currently appears 10 times per year and is a larger-sized magazine. FEE was founded in 1946 by Leonard E. Read, who served as its president until his death in 1983. The Foundation was established to present the principles of free markets, limited government, private property, the rule of law, and libertarian philosophy and to oppose government programs introduced during the 1930s under President Roosevelt’s New Deal.”


    “The Freeman is widely considered to be an important forerunner to the conservative publication National Review magazine, which was founded in 1955, and which from its inception included many of the same contributing editors.[4]”

  29. http://truth-out.org/news/item/12672-drums-beating-to-privatize-social-security
    Drums Beating to Privatize Social Security
    Sunday, 11 November 2012 12:49 By Paul Jay, The Real News | Report
    “BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.JAY: So what caught your attention this week?

    BLACK: Well, last time we talked there was the problem that I pointed out, that Obama was promising, if he were reelected, that he was going to enter into what he calls the grand bargain—and what I call the great betrayal—in which they would put cuts in the safety net on the table and begin the process of gutting Social Security, which is, of course, Wall Street’s greatest dream.So the first thing that happened, even before the election, there’s a group called the Third Way—which styles itself as moderate Democrats but has a board that is completely dominated by Wall Street—said, oh, you know, this is terrible, this talk of it being a betrayal; it’s the only choice we have to save America. And then as soon as Obama won—in fact, as soon as he was projected to win, commentators began talking about the very first thing the president needs to do is to enter into this supposed grand bargain (to me, great betrayal). And now we have a flurry of written stuff saying that that’s—it’s vital that Obama do just that.Out of the box we have, of course, leading the way, as it always does, The Washington Post, whose greatest goal is to start the privatization of Social Security. And they have a prominent op-ed by Erskine Bowles, he of Bowles–Simpson. This was the BS report that said before the election we needed to start the process of privatizing Social Security and cutting back the safety net.”

  30. ‘Billionaires for Social Insecurity’ Ask Americans to Donate Social Security Checks

  31. The films traces its origins back fifty years, to the University of Chicago under Milton Friedman, which produced many of the leading neo-conservative and neo-liberal thinkers whose influence is still profound in Washington today.

  32. I agree with the dumbing down of Americans comment, as a matter of fact, it’s tentacles reach deep into the House of Representatives where a tit for tat debate rages among, non-linear, millionaires. Just how do (or did I should say) these people avoid the cut throat politics (of which the family has had to endure unheard of hardship), to remain rich, powerful, and extremely arrogant about their lives, laws and entitlements.

    This has to end badly for a great number of people. Who by the way, will not even see it coming until it is to late for them. What will we do without the bills, the steve’s, the jobs and the gates. When it comes time to debate the war issue and build the war machine again?

  33. If Only, the gvt were NOT so entrenched in the insurance business, we might have had a chance to wright wrongs. One thing I have learned about the insurance industry is, they can never get enough money, and now your gvt is the primary provider of it.
    What to do when in the insurance business and needing more money, legislate it. Between health care, real estate (katrina, now sandy), (excluding the life insurance scam), the only untouched part of gvt insurance is the automobile. And even that can be costly if one is not the up most careful driver.
    So look to your gvt, when increasing the cost of insurance, becomes to much of a burden on you!

  34. These programs are funded out of a special tax, so (unless you expect a breakdown in that system) can’t just talk about general tax revenue with respect to those programs. The point of this separation is to make it plausible to balance the budget for these programs independently of the usual problems (e.g., politics and the desire of the dollar-using world to deposit in the US Treasury as a bank). And Congress has periodically made the necessary adjustments to keep that one system working, despite simultaneously running deficits, probably because there’s essentially only one dimension to negotiate on. That said, this particular system is presently completely out of whack, because its taxes aren’t high enough for forecasts, plus the democrats suspended them entirely. I think the ultimate problem is that the tax partially discourages hiring, rather than coming from sources unrelated to hiring (or even having payroll be deductible from it).

  35. @publiustex, “…In the case of the federal government, these assets are enormous and they are backed further by the nation’s GDP….”

    Which brings us to the “socialism” operating in USA – that whole OWS chant of “privatize the profits, socialize the losses”…and now on to “derivatives” math…

    Rented a car on Dec 31…card was swiped and the “pending”-up-to-$250 security deposit was entered into the matrix – “socializing” my personal $$. Also took out that insurance that lets you deliver the car back in an envelope, drop off the keys and walk away. Dropped the car off in perfect shape except for some Canadian goose droppings as a huge flock took off jaust as we were driving by, so it needed a car wash. “Do you want to keep the charges on the same card…?, she asked. OK. Walked out with the Summary of Charges receipt for an undisputed amount. Business relationship over, right? Nope. The car rental company – even AFTER the business relationship was OVER/COMPLETED on Jan 2 without incident – charged the SECURITY deposit along with the final cost. SOmeone pleas explain to me how this is NOT a fraudulent transaction??!! ANd that money was not back in MY account until 2 full days AFTER I dropped off the stinkin’ car! So why bother with the extra insurance?! You cant move in ANY direction anymore without having some amount way over and above the amount of what anything REALLY costs. And while the “traders” on Wall Street trade in nanoseconds with all the hijacked 250 from the accounts of everyone who rented in the same time frame – YOU are told that with BILLIONS in technology, it will “take “x” amount of time (days?!) for someone to hit the “enter” key to put your $$ back in your account. Is that

    So that’s how billionaires roll – and this company BRAGS about the ex-military guy who grew this fantastic business.

    Just wanted to present this “family budget” example to try and explain the “truth” of what is fraud and what isn’t in this argument:

    “…..In terms of your metaphor, I suppose this is roughly equivalent to the family having access to a portion of a vast family trust….”

    Looks like the “family trust” is an temporary extraction of everyone else’s “wealth”….and THAT is not “fraud” anymore in USA.

  36. Obama’s strategy: False Flag Politics and Old Man River…
    “Barack Obama had previously caved to the Republicans without fighting, concerning his elimination of the public option from his “Obamacare,” and more recently breaking his long-made promise never to compromise on increasing taxes on the top 2%, $250,000+, and he had also chosen not to hold Republicans’ feet to the fire on the fiscal cliff; but now, the only thing that realistically remained in his arsenal of weaponry against Republicans’ forcing slashes in Social Security, Medicare, Medicaid, regulatory enforcement, and many other vital government programs, was simply handed away by him, even well before the fiscal cliff came on January 1st. Clearly, therefore, Mr. Obama is determined to give Republicans much of what they want on these matters. He evidently wants to find a way to allow that to happen. He wants House Republicans to be able to block the Federal Government from paying its previously contracted debts, so as to force him to cut “entitlements.”
    Read more at http://www.nakedcapitalism.com/2013/01/eric-zuesse-understanding-president-obamas-strategy-to-force-cutting-social-security-medicare-and-medicaid.html#bDLAbeCmRDBYkbuH.99

  37. Right on a few points, wrong on most.

    Time will tell just how resolute Obama is on the debt limit and sequestration. He won’t evicerate SS or Medicare the way you fear, though he’ll probaly give some ground in a one-for-one exchange for more tax revenue from business and high income earners.

    The result will be the most progressive tax code in 50 years and the ability to move on to immigration reform and control.

  38. @Woych – they just RAISED the amount of FICA tax coming out of paychecks. Raise and cut at the same time is FRAUD – means they want to “socialize” the Social Security fund for PRIVATE use “legally”.

    This is just scummy street corner shell games now…”under which cup is the bill”…

  39. What is occurring presently is an actual credit default.
    When does this reach the world stage, depends on when we run out of money. The only way to guaranty a credit default, is to breach the debt ceiling. Which has about 4 or 5 weeks to develop, so instead someone should get them talking amongst themselves, as to where their retirement money went to so quickly, and what can we do about it now?

  40. http://robertreich.org/post/39872465002
    The Hoax of Entitlement Reform, by ROBERT B. REICH;
    Sunday, January 6, 2013
    “Taming future deficits requires three steps having nothing to do with entitlements: Limiting the growth of overall healthcare costs, cutting our bloated military, and ending corporate welfare (tax breaks and subsidies targeted to particular firms and industries).

    Obsessing about “entitlement reform” only serves to distract us from these more important endeavors.”

  41. Daniel Barkalow: “I think the ultimate problem is that the tax partially discourages hiring, rather than coming from sources unrelated to hiring (or even having payroll be deductible from it).”
    Interesting and very ground level belief: Tough on the Businessman and inhibits “hiring” …
    But of course we all know that if these mandated contributions to sustaining a quality of life insurance were not enforced,…they would not exist at all except in the projected pockets of the employer…it would never be part of salary or wages. So if SS is to be eliminated; there will be a massive reduction in wages across the Nation. So the argument that people could “invest” is a pure lie. There would be nothing to invest….period!

  42. Publiustex, three points.
    1) Thank you for locating the missing decimal. I have demonstrated over the years that I cannot proof read what I have written, so any help is greatly appreciated.
    2) While I don’t disagree with what you said, you miss the point and that is that most people need some place really simple to start from in understanding the Federal Budget. I am offering high school government finance and you are asking for PhD finance. Crawl first, walk later.
    3) I truly wish I could be as optimistic about the great mass of voters as you are!! If just one crooked Wall Street banker had gone to jail, or even been indicted, I might have some hope.

  43. I’m with you on throwing a bunch of the bankers in jail. Failure to even prosecute those SOBs is one of the real failures of Obama’s first term. He should have at least made examples of a few of them.

  44. It’s not off topic,
    hey Tom, how bout you and me, lefty and righty, split up for awhile.
    I think we can cover more ground that way.

  45. False Flags and Looting…what else is new in America Annie?
    A Brief History of Attacks on Social Security

    A Brief History of Attacks on Social Security
    by Ted Marmor
    June 16, 2010

    The National Commission on Fiscal Responsibility and Reform set up by President Obama claims both that reducing the projected federal deficit should be a major national objective and that Social Security should be considered as one potential source of relief either through reducing benefits or enhancing revenues or some of both. That much is simply a fact.

    “…remind readers that the same attacks on Social Security have been going on — in different guises — for at least four decades. The stagflation of the 1970s, precipitated by the oil crisis of 1973-74, provided long-term, ideological critics of social insurance an opportunity to argue that such programs — retirement, survivors’ insurance, Medicare, disability coverage, unemployment — were unaffordable. Critics from the Cato Institute, the Heritage Foundation, and increasingly, in the 1980s, in publications financed by the Wall Street financier Peter Peterson, were not prepared to attack the desirability of social insurance programs directly. Instead, claims varied from how ungovernable such programs seemed during the 70s to the follow-up charge of affordability.

    What is crucial to understand is how devious and misleading such lines of argument are.”

    It is ironic — and infuriating — to have a debate in 2010 about Social Security when that program had nothing to do with the transformation of the nation’s fiscal policy from surplus to deficit since 2000. Two wars, Bush tax cuts, and the fiscal consequences of the economic crash of 2008-9 explain the size of the deficit. Why are we even talking about reducing Social Security at this time? ================================================================

    For a review of the same arguments two decades ago, see Marmor, Mashaw and Harvey, America’s Misunderstood Welfare State, (Basic Books, 1990, 1992).

  46. off topic, apologies to the hosts
    I actually kind of felt “reinvigorated” (??) over Pres Obama’s choice of Hagel today. For whatever it’s worth coming from a member of the “great unwashed”, I think it was an excellent choice, and I think he is a gentleman, straightspeaker, and really I don’t think it’s too far to say a hero of this country. I was very very afraid Pres Obama was going to go with Kerry, which would have been a horrific choice (his worst since choosing Geithner for Treasury).

    Why would Kerry be so bad?? First, some of his military awards honors have been questioned (as to their legitimacy). Those charges are strong and not to be made lightly, but in this case I think those are sticking to the wall very well, and there is very legitimate reason to question it.

    Secondly, I really see Kerry as the epitome of the “head in the ivory tower” type guy. How can a “normal” American not manage to order something from Wendy’s without acting like he and his family are looking at a menu in Shanghai?? http://www.telegraph.co.uk/comment/personal-view/3609219/Could-Kerry-slum-it-in-the-White-House.html

    And this guy is going to empathize with military men on their Nth tour of duty?? Tell me another one.

    But here is the worst of all, John Kerry doing pep-rally cheerleading for BILLIONS of funds to go to Pakistan government.

    Now if you are DUMB enough to believe that a large portion of those Pakistan funds or “aid” doesn’t get siphoned off to terrorist cells of the Pakistan/Afghani region, maybe I should tell you “bankers are saving the gigantic bank reserves they got from TARP to give you for your down payment on your next home”, because if you are dumb enough to believe the former, you’re dumb enough to believe the latter.

  47. He is not confirmed yet, it may just be a ploy to prove to the country how deeply committed we have been, and continue to be, invested in the war machine. There is no doubt that a lot of resistance will rise above from the arrogance of this group of lobbyists, it’s their job on line, and they will fight tooth and nail to keep their bucks a rollin in.

  48. @Woych, “….False Flags and Looting…what else is new in America Annie?…”

    The “matrix” is new, right? Theft at NANOSECONDS…and would there even be a ludicrous “derivatives” market if it was done on paper with an official seal of “reality” :-) and backed up with double entry book-keeping accounting? Look at the damage MERS did to PROPERTY RIGHTS!

    People need to go to JAIL.

  49. Bruce wrote:
    “it is ironic and infuriating to have a debate in 2010 about Social Security when that program had nothing to do with the transformation of the nation’s fiscal policy from surplus to deficit since 2000.”
    I agree with you that items other than Social Security contributed to the deficit since 2000.
    However, since 2010, the Social Security trust fund has run a cash deficit, and those deficits are projected to get larger until trust exhaustion.
    For example, according to the Social Security Administration, the cash deficit was $45 billion, and increased the budget deficit by a like amount.

    “The net cash flow during amy period is total non-interest income less total outgo.”
    Why is non-interest income backed out of the cash “surplus?”
    Because the trust fund interest and principal is not a cash asset – it is unable to be redeemed without new general revenues, which add to the deficit, just like any other ezxpense.
    Put in year 2011.
    Don Levit

  50. “…Two wars, Bush tax cuts, and the fiscal consequences of the economic crash of 2008-9 explain the size of the deficit. Why are we even talking about reducing Social Security at this time? ….”

    Clearly, the MIC lobbyists are too stupid to know how to beat swords back into ploughshares. But the FACT is that we can’t afford another massive wanton waste of non-renewable natural resources like we’ve had with “getting to the good stuff” (oil). Earth is a SPACESHIP – a closed self-sustaining environment that is EASY to manage without insane predators at the helm. Privatize the profits, socialize the losses is an “ism” that can no longer be ignored as a PRIME cause warranting a “Just War”.

    If you all think you are in a “safe” zone because you are positioned in a predatory extraction scheme with a “contract” in hand, guess again. Snakes eat their own tails. So go ahead and keep walking by the human debris of economic genocide as if it won’t be YOU next – yea LOOK at all those EVIL nurses, teachers, tool and die makers and everyone else in the producer middle class who do not DESERVE to “own a home” – they deserve what they got….right? And now watch the DRUG LORDS count their bankster laundered cash…there’s your rich neighbors – your “moral majority”…

    “….There would be nothing to invest….period!….”

    There IS nothing left to invest in life maintenance or energy modernization or you-name-it that isn’t torture, terror and treason because the cost of the pre-emptive wars FAR EXCEEDED the value of the booty the COUNTRY got. That’s why the massive heist (Paulson’s 3 page stick up note) of everything everyone has via the matrix INCLUDING the life-long contributions people made to their own SECURITY! How is it not TREASON to allow whore sycophants to break 10,000 years of HUMAN MORAL AGREEMENT?

    This is right up there with Hitler and Stalin – this ABSOLUTISM of “My Precious” – the one algorithm to rule them all…

  51. From all the verbal garbage being spewed lately, I’d say crack dealers would have the money, but could you get them to eat a tuna?

  52. Calling GLOBAL DRUG LORDS dealors scum of the earth is “verbal garbage” – basically the new politically incorrect – why?

    Because without them banks would fail? Now that IS some new moral universe…

  53. Generating more revenue would certainly allow for the better provisioning of all those entitlement programs you mentioned. However, raising taxes on the middle class in the middle of a depression would be disastrous. We’d plummet right back into recession, stagnate and end up like Spain or Greece. In that case, even if taxes were raised on the middle class, revenue would still see a decline.

    In other words, the net of effect of raising taxes on the the middle class–with high MPCs–would only worsen the situation. While I lean to the left, I’m not deluded when it comes to actually shoring up our social programs. Spain may have had a more equitable healthcare system than we, but that will hardly matter now that they’ve bottled any chance at recovery. In order to have well-supported social programs, we need to think about long-term sustainability.

  54. I am pretty surprised by the family law attorneys issues that have been flying around. In Philadelphia, it is literally to the crisis point. Thanks for sharing this information though!

  55. For the few of you who actually think about things, this will be of interest. The rest of you can just keep on wallowing in your silliness.

    ** The Crisis of the Middle Class and American Power (http://stratfor.us4.list-manage.com/track

    January 8, 2013 | 1000 GMT


    By George Friedman
    Founder and Chief Executive Officer (http://stratfor.us4.list-manage.com/track/click?u=74786417f9554984d314d06bd&id=1b04df3576&e=301a34c410)

    Last week I wrote about the crisis of unemployment in Europe (http://stratfor.us4.list-manage1.com/track/click?u=74786417f9554984d314d06bd&id=2874146ac1&e=301a34c410) . I received a great deal of feedback, with Europeans agreeing that this is the core problem and Americans arguing that the United States has the same problem, asserting that U.S. unemployment is twice as high as the government’s official unemployment rate. My counterargument is that unemployment in the United States is not a problem in the same sense that it is in Europe because it does not pose a geopolitical threat. The United States does not face political disintegration from unemployment, whatever the number is. Europe might.

    At the same time, I would agree that the United States (http://stratfor.us4.list-manage.com/track/click?u=74786417f9554984d314d06bd&id=7006c588aa&e=301a34c410) faces a potentially significant but longer-term geopolitical problem deriving from economic trends. The threat to the United States is the persistent decline in the middle class’ standard of living, a problem that is reshaping the social order that has been in place since World War II and that, if it continues, poses a threat to American power.

    ** The Crisis of the American Middle Class

    The median household income of Americans in 2011 was $49,103. Adjusted for inflation, the median income is just below what it was in 1989 and is $4,000 less than it was in 2000. Take-home income is a bit less than $40,000 when Social Security and state and federal taxes are included. That means a monthly income, per household, of about $3,300. It is urgent to bear in mind that half of all American households earn less than this. It is also vital to consider not the difference between 1990 and 2011, but the difference between the 1950s and 1960s and the 21st century. This is where the difference in the meaning of middle class becomes most apparent.

    In the 1950s and 1960s, the median income allowed you to live with a single earner — normally the husband, with the wife typically working as homemaker — and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well. I know this because my family was lower-middle class, and this is how we lived, and I know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn’t a bad life at all.

    Someone earning the median income today might just pull this off, but it wouldn’t be easy. Assuming that he did not have college loans to pay off but did have two car loans to pay totaling $700 a month, and that he could buy food, clothing and cover his utilities for $1,200 a month, he would have $1,400 a month for mortgage, real estate taxes and insurance, plus some funds for fixing the air conditioner and dishwasher. At a 5 percent mortgage rate, that would allow him to buy a house in the $200,000 range. He would get a refund back on his taxes from deductions but that would go to pay credit card bills he had from Christmas presents and emergencies. It could be done, but not easily and with great difficulty in major metropolitan areas. And if his employer didn’t cover health insurance, that $4,000-5,000 for three or four people would severely limit his expenses. And of course, he would have to have $20,000-40,000 for a down payment and closing costs on his home. There would be little else left over for a week at the seashore with the kids.

    And this is for the median. Those below him — half of all households — would be shut out of what is considered middle-class life, with the house, the car and the other associated amenities. Those amenities shift upward on the scale for people with at least $70,000 in income. The basics might be available at the median level, given favorable individual circumstance, but below that life becomes surprisingly meager, even in the range of the middle class and certainly what used to be called the lower-middle class.

    ** The Expectation of Upward Mobility

    I should pause and mention that this was one of the fundamental causes of the 2007-2008 subprime lending crisis (http://stratfor.us4.list-manage1.com/track/click?u=74786417f9554984d314d06bd&id=11f7634abd&e=301a34c410) . People below the median took out loans with deferred interest with the expectation that their incomes would continue the rise that was traditional since World War II. The caricature of the borrower as irresponsible misses the point. The expectation of rising real incomes was built into the American culture, and many assumed based on that that the rise would resume in five years. When it didn’t they were trapped, but given history, they were not making an irresponsible assumption.

    American history (http://stratfor.us4.list-manage.com/track/click?u=74786417f9554984d314d06bd&id=1dbe996cd5&e=301a34c410) was always filled with the assumption that upward mobility was possible. The Midwest and West opened land that could be exploited, and the massive industrialization in the late 19th and early 20th centuries opened opportunities. There was a systemic expectation of upward mobility built into American culture and reality.

    The Great Depression was a shock to the system, and it wasn’t solved by the New Deal, nor even by World War II alone. The next drive for upward mobility came from post-war programs for veterans, of whom there were more than 10 million. These programs were instrumental in creating post-industrial America, by creating a class of suburban professionals. There were three programs that were critical:
    1. The GI Bill, which allowed veterans to go to college after the war, becoming professionals frequently several notches above their parents.
    2. The part of the GI Bill that provided federally guaranteed mortgages to veterans, allowing low and no down payment mortgages and low interest rates to graduates of publicly funded universities.
    3. The federally funded Interstate Highway System, which made access to land close to but outside of cities easier, enabling both the dispersal of populations on inexpensive land (which made single-family houses possible) and, later, the dispersal of business to the suburbs.

    There were undoubtedly many other things that contributed to this, but these three not only reshaped America but also created a new dimension to the upward mobility that was built into American life from the beginning. Moreover, these programs were all directed toward veterans, to whom it was acknowledged a debt was due, or were created for military reasons (the Interstate Highway System was funded to enable the rapid movement of troops from coast to coast, which during World War II was found to be impossible). As a result, there was consensus around the moral propriety of the programs.

    The subprime fiasco was rooted in the failure to understand that the foundations of middle class life were not under temporary pressure but something more fundamental. Where a single earner could support a middle class family in the generation after World War II, it now took at least two earners. That meant that the rise of the double-income family corresponded with the decline of the middle class. The lower you go on the income scale, the more likely you are to be a single mother. That shift away from social pressure for two parent homes was certainly part of the problem.

    ** Re-engineering the Corporation

    But there was, I think, the crisis of the modern corporation. Corporations provided long-term employment to the middle class. It was not unusual to spend your entire life working for one. Working for a corporation, you received yearly pay increases, either as a union or non-union worker. The middle class had both job security and rising income, along with retirement and other benefits. Over the course of time, the culture of the corporation diverged from the realities, as corporate productivity lagged behind costs and the corporations became more and more dysfunctional and ultimately unsupportable. In addition, the corporations ceased focusing on doing one thing well and instead became conglomerates, with a management frequently unable to keep up with the complexity of multiple lines of business.

    For these and many other reasons, the corporation became increasingly inefficient, and in the terms of the 1980s, they had to be re-engineered — which meant taken apart, pared down, refined and refocused. And the re-engineering of the corporation, designed to make them agile, meant that there was a permanent revolution in business. Everything was being reinvented. Huge amounts of money, managed by people whose specialty was re-engineering companies, were deployed. The choice was between total failure and radical change. From the point of view of the individual worker, this frequently meant the same thing: unemployment. From the view of the economy, it meant the creation of value whether through breaking up companies, closing some of them or sending jobs overseas. It was designed to increase the total efficiency, and it worked for the most part.

    This is where the disjuncture occurred. From the point of view of the investor, they had saved the corporation from total meltdown by redesigning it. From the point of view of the workers, some retained the jobs that they would have lost, while others lost the jobs they would have lost anyway. But the important thing is not the subjective bitterness of those who lost their jobs, but something more complex.

    As the permanent corporate jobs declined, more people were starting over. Some of them were starting over every few years as the agile corporation grew more efficient and needed fewer employees. That meant that if they got new jobs it would not be at the munificent corporate pay rate but at near entry-level rates in the small companies that were now the growth engine. As these companies failed, were bought or shifted direction, they would lose their jobs and start over again. Wages didn’t rise for them and for long periods they might be unemployed, never to get a job again in their now obsolete fields, and certainly not working at a company for the next 20 years.

    The restructuring of inefficient companies did create substantial value, but that value did not flow to the now laid-off workers. Some might flow to the remaining workers, but much of it went to the engineers who restructured the companies and the investors they represented. Statistics reveal that, since 1947 (when the data was first compiled), corporate profits as a percentage of gross domestic product are now at their highest level, while wages as a percentage of GDP are now at their lowest level. It was not a question of making the economy more efficient — it did do that — it was a question of where the value accumulated. The upper segment of the wage curve and the investors continued to make money. The middle class divided into a segment that entered the upper-middle class, while another faction sank into the lower-middle class.

    American society on the whole was never egalitarian. It always accepted that there would be substantial differences in wages and wealth. Indeed, progress was in some ways driven by a desire to emulate the wealthy. There was also the expectation that while others received far more, the entire wealth structure would rise in tandem. It was also understood that, because of skill or luck, others would lose.

    What we are facing now is a structural shift, in which the middle class’ center, not because of laziness or stupidity, is shifting downward in terms of standard of living. It is a structural shift that is rooted in social change (the breakdown of the conventional family) and economic change (the decline of traditional corporations and the creation of corporate agility that places individual workers at a massive disadvantage).

    The inherent crisis rests in an increasingly efficient economy and a population that can’t consume what is produced because it can’t afford the products. This has happened numerous times in history, but the United States, excepting the Great Depression, was the counterexample.

    Obviously, this is a massive political debate, save that political debates identify problems without clarifying them. In political debates, someone must be blamed. In reality, these processes are beyond even the government’s ability to control. On one hand, the traditional corporation was beneficial to the workers until it collapsed under the burden of its costs. On the other hand, the efficiencies created threaten to undermine consumption by weakening the effective demand among half of society.

    ** The Long-Term Threat

    The greatest danger is one that will not be faced for decades but that is lurking out there. The United States was built on the assumption that a rising tide lifts all ships. That has not been the case for the past generation, and there is no indication that this socio-economic reality will change any time soon. That means that a core assumption is at risk. The problem is that social stability has been built around this assumption — not on the assumption that everyone is owed a living, but the assumption that on the whole, all benefit from growing productivity and efficiency.

    If we move to a system where half of the country is either stagnant or losing ground while the other half is surging, the social fabric of the United States is at risk, and with it the massive global power the United States has accumulated. Other superpowers such as Britain or Rome did not have the idea of a perpetually improving condition of the middle class as a core value. The United States does. If it loses that, it loses one of the pillars of its geopolitical power.

    The left would argue that the solution is for laws to transfer wealth from the rich to the middle class. That would increase consumption but, depending on the scope, would threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. You can’t invest what you don’t have, and you won’t accept the risk of investment if the payoff is transferred away from you.

    The agility of the American corporation is critical. The right will argue that allowing the free market (http://stratfor.us4.list-manage2.com/track/click?u=74786417f9554984d314d06bd&id=c025bdd3bf&e=301a34c410) to function will fix the problem. The free market doesn’t guarantee social outcomes, merely economic ones. In other words, it may give more efficiency on the whole and grow the economy as a whole, but by itself it doesn’t guarantee how wealth is distributed. The left cannot be indifferent to the historical consequences of extreme redistribution of wealth. The right cannot be indifferent to the political consequences of a middle-class life undermined, nor can it be indifferent to half the population’s inability to buy the products and services that businesses sell.

    The most significant actions made by governments tend to be unintentional. The GI Bill was designed to limit unemployment among returning serviceman; it inadvertently created a professional class of college graduates. The VA loan was designed to stimulate the construction industry; it created the basis for suburban home ownership. The Interstate Highway System was meant to move troops rapidly in the event of war; it created a new pattern of land use that was suburbia.

    It is unclear how the private sector can deal with the problem of pressure on the middle class. Government programs frequently fail to fulfill even minimal intentions while squandering scarce resources. The United States has been a fortunate country, with solutions frequently emerging in unexpected ways.

    It would seem to me that unless the United States gets lucky again, its global dominance is in jeopardy. Considering its history, the United States can expect to get lucky again, but it usually gets lucky when it is frightened. And at this point it isn’t frightened but angry, believing that if only its own solutions were employed, this problem and all others would go away. I am arguing that the conventional solutions offered by all sides do not yet grasp the magnitude of the problem — that the foundation of American society is at risk — and therefore all sides are content to repeat what has been said before.

    People who are smarter and luckier than I am will have to craft the solution. I am simply pointing out the potential consequences of the problem and the inadequacy of all the ideas I have seen so far.


  56. @James Taylor: Very interesting materials. I had followed Stratfor Reports and they are well worth assessing. i would opinionate, however, that at times there are gaps or leaps in conclusions. the reports tend to be essentially (and deliberately) strategic, and also tend to be what might be called “meaty” Executive Bulletins. They did a brilliant summary of China and the currency antagonisms between East & West, and pointed to (very critically minded…and objective) the fact that the Japanese had the YEN collapsed from under them by listening to “Free Market” demands. Their assesment was unbiased at a time when the Freemarketeers were touting patriotism and China bashing was in vogue to the n’th degree of intensity (Krugman had some bias in that one too.. at the time, if I recall).
    I would also say that this perspective on historical lineality is valid as a chronological or serial reading of events; and is very useful. But remember that while these sequential events are linked successively and perhaps insightfully, they are neither causal nor fully dimensional in scope and scale. The Truth is that sequencing can be misleading; but it can also be revealing…you have to respect “DUE DILLIGENCE”
    in accepting direct inferences.
    There should be more interests like this for open communication, and I fully agree that “sometimes” there is too much chatter and not much matter. Remember that there always seems to be signal to noise ratios, and distractions are going to be both social and tactical.
    Thanks for that great entry post;
    Mahalo, Aloha!

  57. ….The inevitable curse of privatizing….
    Web of Debt blog / By Ellen Brown
    comments_image 13 COMMENTS
    Austerity Disaster: Hurricane Sandy Victims Thrown to Lending Sharks and Privatized “Relief”
    Disaster victims are now expected to shoulder relief expenses that used to be shared publicly.
    If so…then so…
    What happens after Social Security is Looted & Privatized?

  58. The analysis fails because it assumes the current structure of the U.S. healthcare and insurance complex. Switch to a sensible single-payer system like that in France, where life expectancy and other health care result measures are better and the cost is one half that per capita in the U.S.A and the problem goes away.

  59. June 28, 2012,
    U.S. Health Care Costs More Than ‘Socialized’ European Medicine
    “LONDON — A sobering statistic emerged on Thursday as the United States Supreme Court prepared to deliver its judgment on Obamacare.
    It confirmed that the U.S. spends more per capita on publicly funded health care than almost every other country in the developed world. And that includes countries that provide free health care to all their citizens.
    Figures published on Thursday by the Organization for Economic Co-operation and Development, a 34-nation grouping of advanced economies, showed that less than half of health spending in the U.S. was publicly financed compared with an O.E.C.D. average of 72.2 percent.
    “However, the overall level of health spending in the United States is so high that public (i.e. government) spending on health per capita is still greater than in all other O.E.C.D. countries, except Norway and the Netherlands,” according to the Paris-based organization’s Health Data 2012 report.”
    “An earlier survey found that U.S. health care was overpriced and not always better than in comparable countries. “Sometimes treatments are provided which are unnecessary, or even undesirable,” the organization said in a 2011 report on comparative health indicators.
    “It does a lot of elective surgery,” the survey said of the U.S. health care system, “the sort of activities where it is not always clear-cut about whether a particular intervention is necessary or not.”

    Advocates of state-funded universal health care might use such statistics to show free health care for all is not only fairer but also cheaper.”
    “Commenting on the latest O.E.C.D. figures, an editorial in Gannett’s The Advertiser noted: “America pays big-time money for health care and gets Third World results.””

  60. Bruce writes:
    “What happens after Social Security is looted and privatized?”
    Well, it’s already been looted. The trust fund was loaned to the Treasury to pay for current expenses. Just imagine what the fund would have been like if it had not been looted from within? It certainly would not have been called intragovernmental debt.
    Don Levit

  61. You are so wrong if you think that the schtick of “meh”-ing something like the looting of Social Security will settle on everyone as the PC response to the situation.


  62. About the American taxpayer money that is given to African dictatorships and especially to the worst of them: the Republic of Congo of Denis Sassou NGuesso. The IMF and the World Bank have made him a gift of $ 250 million in addition to the cancellation of the debt by the United States. All this on the basis of false reports IMF

    How it was able to work? Is there corruption at the IMF?

    In 2010, the Head of Mission in Senegal was “surprised” with a suitcase full of banknotes at its transit in Paris airport, between Dakar and Barcelona. The Ethics Committee has ruled on this case and stated that there was no corruption.

    I wrote several articles about certain facts after the departure of Mr. Simon Johnson of the IMF. I even filed a complaint before the Paris prosecutor’s office against Mr Dominique Strauss Kahn for false reports IMF to promote debt cancellation Congo.

    Here is an article that uses and takes precisely the arguments of Mr. Simon Johnson: http://sergeberrebi.over-blog.com/article-goldman-sachs-the-imf-and-the-congo-translation-114115300.html

  63. Whatever hope I had that America’s citizens might revolt and overthrow the cabal that is running the country now, and has been since Eisenhower warned of the the government/military/industrial complex, ended today with a Los Angeles Times front page story (shown below) and an editorial that called Barack Obama “two faced” on money in politics. If Barack Obama, the ultimate outsider, cannot change the game however slightly, there is little hope for the rest of us.

    Read it and weep for your country.

    WASHINGTON — Even before Barack Obama was sworn in as president the first time, he touted his efforts to “change business as usual in
    Washington” by setting strict rules for his inauguration: No corporate donations were allowed; individuals could give only $50,000.

    This time, Obama’s inaugural committee is seeking million-dollar contributions from corporations and offering perks in return, such as tickets to the official ball. The six companies that have given so far include AT&T, Microsoft and Financial Innovations, a marketing company that received $15.7 million to produce merchandise for Obama’s reelection campaign and is the official vendor for the inauguration. The committee has put no limit on how much individuals can give.

    The relaxed rules reflect how Obama has largely dropped his efforts to curb the role of money in politics, a cause he once vowed to make central to his presidency.

    Advisors say the White House does not plan to take up campaign finance reform any time soon, even following an election that saw more than $1billion spent by outside groups, much of it financed with seven-figure donations from billionaires.

    The gusher of money was triggered in part by the Supreme Court’s 2010 Citizens United ruling, which allowed corporations to spend freely on political activity, a decision the president denounced in his State of the Union address that year.

    But campaign finance reform advocates say Obama has at times even embraced the system he decries.

    After railing against the political influence of outside groups funded by unlimited contributions, Obama gave his blessing to just such a group working on his behalf during his reelection. Priorities USA Action, a “super PAC” set up by two former White House aides, spent nearly $75million. Organizers of last year’s Democratic National Convention vowed to produce it without corporate money, but ultimately used $5million from a committee financed by companies such as Bank of America and Duke Energy to rent an arena in Charlotte, N.C.

    “It’s all headed in the wrong direction,” said Fred Wertheimer, president of the finance reform advocacy group Democracy 21. “In failing to treat campaign finance issues as serious issues, President Obama has done what every other president has done during the past 40 years — and that is to do very little.”

    Obama advisors reject the charge, noting that he voluntarily released a list of his top fundraisers during last year’s campaign, a step Republican challenger Mitt Romney declined to take.

    “President Obama repeatedly and, in the case of the State of the Union, memorably advocated campaign finance reform to prevent large quantities of undisclosed money from drowning out the voices of average Americans,” said White House spokesman Josh Earnest. “We’re hopeful that in his second term, congressional Republicans will drop their opposition and work with the president on an issue that has traditionally earned bipartisan support.”

    Reform advocates say Obama needs to do more. The administration has yet to replace five members of the Federal Election Commission who are serving expired terms. The six-member panel is deeply polarized and deadlocks on most major regulatory issues.

    A draft executive order requiring companies with federal contracts to disclose political spending was shelved after push back from the U.S. Chamber of Commerce. And Obama has put little capital into building support for stalled legislation that would require more disclosure by politically active groups.

    The third anniversary of the decision falls on Jan. 20, the same day Obama is officially sworn in for a second term. “The Big Money influence in politics is far, far worse than it was, making the absence of leadership all the more noteworthy and troubling,” said Robert Weissman, president of Public Citizen.

    Administration officials argue that more pressing challenges topped Obama’s to-do list when he took office: The economy was in free fall, the auto industry was failing and the moment seemed ripe for healthcare reform. After Citizens United, the president decided that a major legislative overhaul of the campaign finance system could not get through Congress, and the White House dropped the idea of trying to tinker around the edges.

    “I cut the president some slack because there have been so many other issues on his plate,” said Rep. Chris Van Hollen (D-Md.), House sponsor of the Disclose Act, a measure that, among other things, would require groups to list their top donors in political ads. “But I will push to make sure this is part of the agenda in the next year. It does require presidential attention.”

    Obama is frequently pressed by supporters to take on the issue. On the campaign trail last year, donors at closed-door fundraisers asked what could be done to keep the other side from “buying” elections, as they often put it. The president, a constitutional lawyer by training, frequently replied that the only solution was a constitutional amendment to overturn Citizens United.

    Obama floated that idea on the social news site Reddit in August.

    “Even if the amendment process falls short,” Obama wrote, “it can shine a spotlight … and help apply pressure for change.”

    White House advisors say the remark just reflected Obama’s grim analysis of what would be needed to change the system. Now that he has been reelected, his team is focused on the federal budget deficit, gun violence and immigration — not campaign finance reform.

    Such thinking infuriates advocates of stricter fundraising rules. Obama’s legislative agenda will not succeed without changing “a campaign finance system that puts enormous power behind special interests,” said Larry Noble, former general counsel to the FEC and president of Americans for Campaign Reform.

    Some of those deep-pocketed interests will have a role in the inauguration: A half-dozen corporations have donated money to the Presidential Inaugural Committee, which puts on the official parade and balls. This year, the committee aims to raise about $50million, according to fundraisers involved — similar to the $53.2 million raised for the 2009 inauguration, which drew an estimated 1.8 million people to the National Mall.

    To raise the cash, party officials were reluctant to lean too heavily on the same weary major supporters who helped bring in a record $1.1 billion for Obama’s reelection.

    As the discussions unfolded last fall, the president’s advisors agreed that taking money from a handful of corporations was palatable, especially since the donations were not linked to his reelection.

    Unlike four years ago, however, the inaugural committee is not releasing details about how much donors have given, but it will have to report that to the FEC in April.

    The committee’s looser rules dismay campaign finance reform advocates, who had hoped Obama would renew his quest to limit the role of Big Money in Washington.

    “The current system is unacceptable,” Noble said. “President Obama said that at one time, and I’d like to believe the president still believes that. If so, you do something about it. You at least put up a fight.”

  64. And in case you thought I was exaggerating about the “two faced” comment, here is the complete LA Times editorial.

    “Time and again, President Obama has promised to curb the power of special interests, a stance more consistently breached than honored. The latest — which comes after Obama reneged on his pledge to accept only public financing for the 2008 general election if his GOP opponent did the same, and after his reelection campaign in early 2012 began urging donors to send money to a super-PAC, a financing mechanism he had spent years decrying — is his decision to accept corporate money to pay for events at the presidential inauguration this month.

    It’s a notable shift from four years ago, when the newly elected president limited individual contributions to $50,000 and barred corporate entities entirely; this year, the Presidential Inaugural Committee cares less about where the money comes from than whether it’s green, accepting unlimited donations from corporations or individuals. This has good-government organizations up in arms, not to mention conservative groups that accuse the president of hypocrisy. They aren’t wrong, even if their cause is a little overblown.

    On the subject of hypocrisy, Obama does have a disturbing tendency to harshly criticize his opponents for behavior that he later imitates; that may not be terribly unusual in presidential politics, but it at least seems worthy of note, or an explanation, or even an apology. On the subject of good governance, the inauguration decision sets yet another terrible precedent, signaling to insiders that the president’s rhetoric about curbing special interests is nothing more than campaign blather to be swiftly ignored after the oath of office is administered — or in this case, even before.

    Yet now that we’ve almost managed to work up a head of steam about the inauguration switch … comes the crashing realization that it doesn’t really make much difference. The events hosted by the Presidential Inauguration Committee — the swearing-in ceremony, a parade and assorted balls — represent only a tiny portion of the Inauguration Day activities. They will go off without a hitch just as they did in 2009. And despite the committee’s precautions that year, it’s unlikely that the ban on corporate contributions led to much of a reduction in lobbying; most of the money raised by the inauguration committee came from bundlers working for Wall Street firms such as Goldman Sachs that were then in need of government assistance.

    Symbolism is everything. In 2009, corporate America was being blamed for causing the economic downturn and Obama was elected with a mandate to crack down. Today, he may be seeking to mend fences and bring CEOs back to the negotiating table after a bruising campaign pitting “job creators” against the working man and woman. Or maybe he’s just being two-faced.

    Time and again, President Obama has promised to curb the power of special interests, a stance more consistently breached than honored. The latest — which comes after Obama reneged on his pledge to accept only public financing for the 2008 general election if his GOP opponent did the same, and after his reelection campaign in early 2012 began urging donors to send money to a super-PAC, a financing mechanism he had spent years decrying — is his decision to accept corporate money to pay for events at the presidential inauguration this month.

    It’s a notable shift from four years ago, when the newly elected president limited individual contributions to $50,000 and barred corporate entities entirely; this year, the Presidential Inaugural Committee cares less about where the money comes from than whether it’s green, accepting unlimited donations from corporations or individuals. This has good-government organizations up in arms, not to mention conservative groups that accuse the president of hypocrisy. They aren’t wrong, even if their cause is a little overblown.

    On the subject of hypocrisy, Obama does have a disturbing tendency to harshly criticize his opponents for behavior that he later imitates; that may not be terribly unusual in presidential politics, but it at least seems worthy of note, or an explanation, or even an apology. On the subject of good governance, the inauguration decision sets yet another terrible precedent, signaling to insiders that the president’s rhetoric about curbing special interests is nothing more than campaign blather to be swiftly ignored after the oath of office is administered — or in this case, even before.

    Yet now that we’ve almost managed to work up a head of steam about the inauguration switch … comes the crashing realization that it doesn’t really make much difference. The events hosted by the Presidential Inauguration Committee — the swearing-in ceremony, a parade and assorted balls — represent only a tiny portion of the Inauguration Day activities. They will go off without a hitch just as they did in 2009. And despite the committee’s precautions that year, it’s unlikely that the ban on corporate contributions led to much of a reduction in lobbying; most of the money raised by the inauguration committee came from bundlers working for Wall Street firms such as Goldman Sachs that were then in need of government assistance.

    Symbolism is everything. In 2009, corporate America was being blamed for causing the economic downturn and Obama was elected with a mandate to crack down. Today, he may be seeking to mend fences and bring CEOs back to the negotiating table after a bruising campaign pitting “job creators” against the working man and woman. Or maybe he’s just being two-faced.”

    Or as Pogo might have said, “We have met the enemy and he ain’t us”.

  65. if History teaches us anything, we might note that the demise of social security is at the hands of the privatizing agenda and the think tanks and foundations that run tax free havens of self interest and pure political programs for the rich. Thatcher, Friedman, Reagan and others are routinely given credit for legitimating this movement…, but check out this passage from an ECONOMIC JOURNAL in 1943:

    “In 1943, in an analysis of Hitler’s programme in the Quarterly Journal of Economics, the word ‘privatisation’ entered the academic literature for the first time. The author, Sidney Merlin, wrote that the Nazi Party ‘facilitates the accumulation of private fortunes and industrial empires by its foremost members and collaborators through “privatisation” and other measures, thereby intensifying centralisation of economic affairs and government in an increasingly narrow group that may for all practical purposes be termed the national socialist elite’.The gung-ho free marketeers who rode to power with Thatcher in 1979 don’t seem to have been aware of the Nazi prelude, although they would have known of later privatisations in Pinochet’s Chile.”

    Splice and Dice kids; this should be circulated Nationally and Globally!

  66. Not concentrating on revenue might not make him a bad person, at least to you. But he’s also hand picked Simpson and Bowles and has been pushing for cuts to social security and medicare. And he will offer them again. That makes him a very bad person. Downright evil.

  67. http://www.commondreams.org/headline/2013/01/11-2
    Published on Friday, January 11, 2013 by Common Dreams
    ‘Idle No More’ Actions Sweep Canada
    Protest movement takes message to Canadian capital and beyond
    – Common Dreams staff
    “Hundreds of First Nations protesters took to the streets Thursday in London, Ontario. Speakers rallied up the crowd, calling for unity and demanding greater respect for the planet, before a massive round dance kicked off, blocking traffic in the downtown area.

    In one particularly fiery speech, a demonstrator announced that the “genocide is near complete people,” adding:

    We don’t have anymore luxury to sit around. And we’re not in this alone. You can’t drink the water, you can’t breath the air and there’s hardly any food to eat. We’re in this together; we’re each others people. She’s our mother, the Earth. How do you own her? How do you continue to rape her without any just cause besides your own greed? It’s not right.

    It’s not right to burden our mother, the Earth, with our own stupidity. Up yours Stephen Harper.”
    Ditto: Koch Bros. and all the crony Government puppets across this Nation as well!

  68. Bruce raised an extremely important point when he said earlier, “there is something profoundly wrong with the mainstream economics profession’s understanding of how modern economies work.”

    And here is the answer. When Adam Smith started this whole thing with his Wealth of Nations, he described what he saw in words. When David Ricardo understood why it was to everyone’s benefit for nation’s to specialize in things they can do best, he described his ideas in words in The Comparative Advantage of Nations. When John Maynard Keynes wrote his opus, he used words.

    But after WWII, macroeconomists decided that they could create mathematical models of the economy. This idea has had 99.9% agreement in the economics profession. You cannot get a job in a university economics department without evidence of work on mathematical models, nor can you get tenure, or promotion, or publication.

    The problem, as Bruce pointed out, is that they do not work!!

    And they do not work because economics is based on people’s behavior, not mathematics, finance or anything else with numbers. That is to say economics is based on psychology, not numbers.

    And it is really simple. For awhile everybody says everything is going to get better, and it does, for awhile. In this way the economy grows. Then, for some reason, people say that everything is going to get bad, and it does, and the economy shrinks, or stagnates.

    This behavior is called The Business Cycle, and the idea is profoundly hated by macroeconomists because it demonstrates the uselessness of their mathematical models.

    For years ago, I wrote “The Great Recession Conspiracy”, in part, to explain in layman’s language how the Business Cycle works. At the same time, Carmen Reinhart and Kenneth Rogoff wrote a very readable and scholarly book called “This Time Is Different” to make exactly the same point.

    Ben Bernake went out of his way to deny the Business Cycle years ago. Interestingly, almost the entire profession has gone out of its way to denigrate This Time Is Different.

    This is the simple, but extremely accurate, answer to Bruces’s question. I wonder what Simon’s take is on this whole thing??

  69. There are very interesting titles from legal / economic papers for anyone interested. It is an open source worth exploring:

    SSRN eLibrary Search Results
    Singapore Management University School of Law Legal Studies Research Paper Series

    View Papers: http://www.ssrn.com/link/Singapore-Mgmt-U-LEG.html
    Subscribe: http://hq.ssrn.com/jourInvite.cfm?link=Singapore-Mgmt-U-LEG

    Founded in 2007, the Singapore Management University School of Law is a young and vibrant community of academics, students and alumni whose mission is to build a collegial team of excellent researchers and teachers to nurture lawyers who will lead and serve the community with distinction. The SMU School of Law is helmed by a dynamic and international faculty with a diverse range of research interests, ranging from the private law of obligations, international trade law, international criminal justice, to note just a few. The Singapore Management University School of Law eJournal contains abstracts, works in progress, and published papers from our faculty and visiting scholars. The papers are published electronically and are available online or through email distribution.

  70. A big storm is blowing in from the north. The wind rises and bears down on this house, which is not much protected on the north. It’s an old house, and as it takes the weight of the wind, it’s boards and timbers creak and crack as if it were one of the clipper ships that were making news when the house was even then not new, but not yet old.
    This house was built a little more than 200 years ago by a race of frontier farmer-artisans, a people whole skill, strength, and sheer capacity for hard work I can imagine only imperfectly.

    Those who built the house, knew exactly what they were about though.

  71. @James Taylor, “…And they do not work because economics is based on people’s behavior, not mathematics, finance or anything else with numbers. That is to say economics is based on psychology, not numbers….”

    Which is retarded. “Economics” is the management of finite resources and renewable resources in a sustainable and balanced way – LIFE-MAINTENANCE COMMERCE! It should be SCIENCE, not psychobabble turning perfidy and iniquity into “law” ala “politics” played by deranged and depraved egoists. TRUTH. Got some?

    “There’s always a guy….”


    cut and pasted from that wiki article, “….On September 20, 2006, the Council on Foreign Relations hosted a small meeting of select council members with Iranian President Mahmoud Ahmadinejad. While giving his speech, President Ahmadinejad expressed doubt that the holocaust had occurred. Greenberg responded: “Listen, I went through Dachau during the war. To suggest it didn’t occur is simply a lie.” President Ahmadinejad responded by asking if Greenberg was old enough to have participated in the liberation of Dachau….”

    And his wife is fixated on homosexuality….

    Is this any way to run a country? To have it boil down to a snark-filled cocktail party at one of the wanna-be-a-trillionaire’s place where their LACK of a culture means that they do NOT acknowledge any other culture? What is “normal” about these two? They LIVE to ruin CULTURE via their FIAT $$$$ delusional CULT!

  72. http://www.alternet.org/economy/shady-inside-deals-are-protecting-goldman-sachs-your-expense?akid=9920.147584.tyqMra&rd=1&src=newsletter775831&t=9

    “Get it? They’re privately protecting their interests as they publicly urge austerity on everyone else.

    Lloyd Blankfein, CEO and chair of the global investment giant Goldman Sachs, is on Fix the Debt’s Fiscal Leadership Council. Here’s what he said when asked by CBS News’ Scott Pelley about how he would reduce the federal deficit: “You’re going to have to undoubtedly do something to lower people’s expectations — the entitlements and what people think that they’re going to get, because it’s not going to — they’re not going to get it… Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career… in general, entitlements have to be slowed down and contained.”

    Yes, but Blankfein and Goldman Sachs make sure their entitlements aren’t touched! ”
    Excerpted from:
    BillMoyers.com / By Bill Moyers, Michael Winship
    with comments_image 10 COMMENTS
    The Shady Inside Deals That Are Protecting Goldman Sachs at Your Expense
    They’re privately protecting their interests as they publicly urge austerity on everyone else.
    January 12, 2013

  73. http://news.firedoglake.com/2009/12/02/major-push-to-stop-pete-petersons-cat-food-commission/
    Major Push To Stop Pete Peterson’s Cat Food Commission
    By: David Dayen Wednesday December 2, 2009 12:34 pm

    “As Dean Baker points out, this commission is the brainchild of former Nixon cabinet official Pete Peterson, a Wall Street investment banker who has been trying to destroy Social Security and Medicare for two decades.

    Peterson’s effort in this area are especially offensive because he personally has profited enormously from the “fund managers’ tax break,” a loophole in the tax code that allowed Peterson to be taxed at a lower rate than most school teachers and firefighters. Peterson not only personally profited from this tax break, he has lobbied Congress to ensure that it remains in the code for future Wall Street tycoons. No doubt much of the money he is using to cut retirees’ Social Security and Medicare are attributable to this loophole.”


    “In 1969, Peterson was invited by philanthropist John D. Rockefeller 3rd, CFR Chairman John J. McCloy, and former Treasury Secretary Douglas Dillon to chair a Commission on Foundations and Private Philanthropy, which became known as the Peterson Commission. Among its recommendations adopted by the government were that foundations be required annually to disburse a minimum proportion of their funds.

    There’s is way too much Rockefeller and Council on Foreign Relations and Chicago and legacy of Friend-O’-the-Nazis John McCloy and his buddies in this Peterson Institute world we’re living in here
    NAM Round Table
    The NAM Round Table consists of news, insights, visions, ramblings and rants from the writers at New America Media.
    ‘Bipartisan’ Purple Dogs Go Rogue with ‘Task Force’ on Social Security, Medicare
    Posted on Nov 20, 2009 11:17:00 AM by Eming Piansay
    [ filed under: health ]

    Progressive advocates for elders must be wondering, “With Democrats like that, who needs Republicans?”

    “… The Peter G. Peterson Foundation, the Concord Coalition and the Committee for a Responsible Federal Budget—all three them connected to and funded by Wall Street Pete Peterson.

    The grandfatherly octogenarian Peterson, who was Richard Nixon’s Secretary of Commerce and went on to found the private equity giant, The Blackstone Group, endowed his Peterson Foundation three years ago with $1 billion. Cutting and partially privatizing entitlement programs for elders is one of three stated missions of the tax-exempt organization. Peterson promptly hired then U.S. Comptroller General David Walker to head the foundation.

    “This is really the Peterson Commission,” said anti-task force committee of eight in a background release. Peterson has spent almost three decades militating against Social Security and other federal supports for elders, …”

  74. Your perspective like that of must of the “important people” who comment in public is, in fact, very myopic. The federal government devotes huge amount of resources not only to the bloated military, but to “homeland security” from the many overlapping agencies and contractors to the airport screeners. This effort employs a vast population but is in some large part a non productive endeavor, sort of like building pyramids. There is no discussion about making this governmental function lean and mean, only about taking meager resources away from the sick and elderly. Come on! There are many other beneficial ways to cut government spending.

  75. @James Taylor, “…No, what is retarded is to not understand that mathematical macro-economic models have nothing to do with resource allocation in the real world….”

    Okay, so macro-economic models are USELESS, but it still is not retarded to spend so much time on USELESS mathematical modeling because 1% racked it in for themselves from the scam?

  76. What is bizarre, is when people hear others talking confidently, and then use those same words in hopes that they will be as persuasive as they were when they were hearing them. We reply with “Ignorance is bliss”.

  77. @Woych, “…Cutting and partially privatizing entitlement programs for elders is one of three stated missions of the tax-exempt organization. Peterson promptly hired then U.S. Comptroller General David Walker to head the foundation….”

    How is this not TYRANNY to upend the laws of the nation he lives in and replace it with disgusting craven avarice?

    wtf are YOU, Peterson…?

    wiki’s bottom line on monkey brain made up crap:

    “Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions.”

    WHY are people doing this? To STEAL. This is a predatory function in and of itself. You have to be utterly without CULTURE to think this is a worthwhile activity. It’s NOT. But then the kind of people who do this are without the inherent genetic talents to comprehend how people of CULTURE (multi-dimensions of truth, beauty and goodness) have evolved. Bottom line is that two-dimensional, can only see black and white and no colors mammals are NOT CAPABLE of doing anything that is *right* in the civilizations of CULTURE. They truly are functioning as parasites and a parasite is RETARDED when compared to a NORMAL Human Being.

    A parasite is pre-programmed to function in a unilateral manner – there is no capacity in that “mind” – the computer, if you will – to add “code” that is USEFUL to managing the resources – ON A MACRO LEVEL – that sustain life the way all of life was CREATED to sustain itself. It truly is all made-up crap. ANd the one example I always give is the all of these “economists” could not and WOULD not create a planetary atmosphere that allows the perfect amount of sunlight to reach the earth in order to sustain life. Look at how they ARGUE why they DESTROY what they don’t understand!

    If any 20 year old spends a nanosecond listening to anything about people like Peterson, their FUTURE is dead before it even lived. THAT is the power of real science that these “economists” are terrified might catch on.

    Future “power” of all kinds is in the hands of the REALISTS who will understand the importance of taking out the parasites that will always be with us, but have NO RIGHT to proceed unabated.


    Do you REALLY want to be *managed* by parasites and predators? Two-dimensional math models that EXTRACT until all LIFE is depleted?

  78. @Annie: When a psychopathic impulse attacks people we take it seriously, but when a megalomaniac creates a billion dollar buffer between him and all of society we accept it as idiological capitalism enabled by the vast power assemblage that he supports in a path (pathological) dependent suspension of disbelief. It is a game of conquest and everything is fair in love, war and business. Pirates used to raid on the Ocean by ships, now it is from corporate raiding centers offshore. The entire arrangement is a perverted attack mode where nothing is left but total control as an option…regardless of the cost to the world itself. For Pete’s sake…He is the World!

  79. @Woych – These two media spaniels are the worst, but the Rat worm does bottom line how more and more trillions get “privatized” – and this graph shows how the last trillion was STOLEN in the shell game called “congress”:


    @you-know-who – “…Some big dumbass sewer mouth blond??….”

    On the scale of sentient beings with free will – a CHILD of the God you don’t BELIEVE in – I’m still far ahead of you and your FIAT $$$$ “power”.

  80. Oh look, you just said his name out loud again, it’s fair time to pay the piper, I would say. And since you obviously have no money, will that be payment in blood or stone?

  81. @anonyomousy – you are insane and should be institutionalized as soon as possible.

    YOU are the one who promised the SS fund to primate-brained global war/drug/slave lords and can’t pay out – so yeah, they’re coming for YOU, not me.

    God and his kids don’t need no stinkin’ filthy blood soaked FIAT $$$$….

  82. Anyone can be bought, you know that. Besides, he makes a good hostage.
    I agree about the $$$$, but you must realize that you yourself are part of the FIAT money, and therefore are included with the timer that goes with the consequences of that money.
    Enjoy it, while you have it, for it shall soon be gone.

  83. @Annie: The News sells …it’s bio-terrorism via flu season and mercury contaminated shots; the fiscal cliff hanger was churned into a cash cow handout for the wealthy, and more anxiety for the working class that has been inundated with the “news” that their paycheck will be smaller now…quickly verified with the dawn paystubs of 2013…and onward to fiscal debt reduction seamlessly…more fiscal terrorism!

    ?meanwhile?; back on the ranch:Sheila Bair: From Regulator To Watchdog June 12, 2012, 4:19 pm ET by Jason M. Breslow
    …So where is the News covering this?

    …Where are the expose reports on this sleight of hand political game play…false flag tactics between parties…Fox in the Hen House &
    ….taxation without true representation! Where did I hear THAT before?
    Revolting…turn of events! check this one too:

  84. http://www.alternet.org/economy/matt-taibbi-bill-black-obamas-new-treasury-secretary-failure-epic-proportions?akid=9920.147584.tyqMra&rd=1&src=newsletter775831&t=3

    …independent Senator Bernie Sanders of Vermont criticized Lew’s nomination, saying, quote, “We don’t need a treasury secretary who thinks that Wall Street deregulation was not responsible for the financial crisis.”
    Matt Taibbi & Bill Black: Obama’s New Treasury Secretary a ‘Failure of Epic Proportions’
    Taibbi and Black dissect the career of Jack Lew, who has been a cheerleader for the financial industry at the public’s heavy expense.


  85. If we can get Greenspan on that board, the Fed just might buckle under. As pressure to raise rates overwhelms it’s ability to manage the last two balls left to juggle, by the Federals, drop one, and it’s game over you wern’t ready for that.

  86. The next move in USA is concentration camps for those who were permanently impoverished by the economic genocide called “unemployment”. They’ll be harvesting your bio-matter because most of you are the “normals” with good genes. This is a fact. Who believed ahead of time what the Germans did?

    So I strongly encourage everyone who can safely leave the USA because they have friends or family in a sane country to do so as soon as possible. And even if you don’t know anyone, pick a country that isn’t criminally insane and start walking.

    USA is over. It’s Global Criminal Inc. and nastier than both Stalin and Hitler and every other white man psychopath combined because it’s now East and West with a healthy dash of Mexican Drug Lords….the “changing demographics”…

    Good luck to all who get out. The “cold war” many countries in the world are going to wage with USA is a nitrogen flash freeze….

  87. @Woych – want to know what is happening inside USA, watch the moves Putin makes – like closing the door on some cult in USA “adopting” Russian orphans – who knew 10,000 Muscovites depended on the global slave trade and could march in protest on the streets in Moscow because they properly filed for permission first? The only “Russians” to worry about are the ones in the USA, it seems….

    @insaneomousy – and the smallest world of all is the brain inside your skull – good luck to skinning alive the next generation of “slavs”….oh, wait – that WON’T be the next wave of “middle class” immigrants….never mind….

    Interesting that the French are playing the uni-lateral game in Mali – expect the unexpected, y’all….who knows what will happen once the USA is no longer Eurocentric, demographically speaking. A big discussion already afoot, 2,000 light years from home :-)) as to the WISDOM of trusting the deadliest military in the world (one that economically skinned alive it’s white population of BOGUS-designated “anti-wha’evers” – via “taxes” to build the deadly military) to Mexican Drug Lords, Chinese Slave Lords and former African Slaves that will be the next generation USA. I say let the Persian Empire have some nukes :-))

  88. Back to basics, Annie: Dean Baker just released some perspective:

    Dean Baker
    The 3 Percent Cut to Social Security: A.K.A. the Chained CPI
    Posted: 01/14/2013 7:45 pm
    “According to inside Washington gossip, Congress and the President are going to…[] …cut Social Security by 3 percent. You don’t remember anyone running on that platform? Yeah, well, they probably forgot to mention it.”

    “The bottom line is that President Obama and many leading Democrats are prepared to give seniors a larger hit to their income than they gave to the over $250,000 crowd. And the whole reason it is necessary is that the Wall Street types who wrecked the economy say so. Is everybody happy?”

  89. Are we having fun yet? Comfortable in your own skin?? Enjoying the weather??? Deciding where to go, or what to do, after a short squeeze????
    When the day arrives, I won’t miss your fat fannie, or the joy in letting you know, it’s time for you to go.

  90. @Woych – how can a bunch of Ponzi “macro-economists” PREDATORS leave alone ANY savings account? They EMPTIED out the SS fund – I’m positive that when the critical knowledge mass is reached – enough people realize it – to borrow the phrase – “there will be blood”.

    @insanomousy – “…….or the joy in letting you know, it’s time for you to go…..”

    Hey, good morning to you, too. SO how many lives have you ruined already? Time for the bagel?

    Yet more evidence you are INSANE – you have NO SAY in who goes or stays and the grim reaper will be the one to prove it to you.

    My name is not really annie, my gene pool does not grow big a—s, I am fluent in 3 languages, and I have more options than you can imagine outside of USA. That’s the point – EVERYONE has better options than to pay for a 1% military doing nothing but stalking people’s bank accounts via The Patriot Act to pay themselves and then on top of that, all the Bushmasters out there among the “DeliveranceBoyz” – yeah, I want to stick around in such FILTH.

    You violent narcissistic misogynistic RICH MAN, NOT ONCE have you stopped to question why you started slapping me around for NO REASON other than you think you can – the COWARD on the internet….

    You will be taken out.


  91. Don’t mind me, and sorry, i’m already out. And if that’s not your name, why do use it so much?
    And he waits, and he waits,


    I have NO CLUE who this poltergeist called filth or insanomousy or whatever other name he goes by (while he JUDGES me for using the name “annie”) is in real life who attached himself to me – obviously the amount of information he IMAGINES is real about me is never-ending. Wil he ultimately convince himself to riddle 6 year olds with a Bushmaster because of his “intel” on who he IMAGINES that they are? Who knows? Seems he is from the same gene pool capable of such actions in the name of his “My Precious”.

    More likely his old man bloated beer stomach is sitting in front of some computer that he uses to STEAL and manipulate the fruits of HONEST LABOR in the name of the predatory gambling game called “economics” protected by Patriot Act GOONS because that’s how they pay themselves.

    I never sat around waiting for a call. The day I sold an AVON stock that I had was the same day of the FLASH CRASH because my transaction was LEGIT and not part of some matrix GAME. The day I folded my SMALL business in a bankruptcy is the day the “London Whale” lost a couple of billion. Don’t tell me these were “coincidences”. So who was sitting around “waiting” for “annie” to be skinned alive is the question, not who annie was sitting around waiting for….

    And personally, I don’t give a flying fig about any of it because USA is NOT the place to be as the “demographics” change in the “leadership” of the blood soaked hands controlling the deadliest military force in the world. It’s CLEAR that they wiped out their own citizens – FINANCIALLY – and now who is their “buffer” against the 7 billion greedy hate-filled and savage hoard coming to take what they took – the cycle of life in USA, right?

    There will certainly be a “convergence” in when the new demographcs of USA take over and in how the rest of the world prepared to have a “relationship” with them. I care about GenY – we got ours OUT of USA. Everyone else needs to think about it, and they are. It’s almost as if “angels” are whispering int he ears of those worth saving from this filth that is USA torture cult and get us all in one place to create the future we deserve without the constant ripping at our skin from the FINANCIAL predators of USA. And to use the cowboy phrase “fk you and the horse you rode in on”.

    “….squeeeel like a pig, America…..”

  93. Kwak cites Krugman saying, “Democrats want….and Republicans want….” Blah, blah, blah. In other words, Kwakman says keep your eyes on the shiny little object as it swings left and right…are you feeling sleepy yet? Good. Now that we’ve hypnotized you with left/rigfht moronism, your’re ready for programming.

    Kwakman pushes the same left/right propaganda as Rush to Limbo. Bifrocation has its place, but in politics, it’s all about divide and conquer. For non-partisan information on the collapse of America’s social safety net, go to:


  94. Published on Thursday, January 17, 2013 by Common Dreams
    Corporate CEO ‘Extremists’ Target Social Security, Medicare
    ‘For the wealthy, pampered, and narcissistic CEOs of the Business Roundtable, sacrifice is always for someone else.’
    – Jacob Chamberlain, staff writer
    The Business Roundtable, comprised of more than 200 chief executives and some of the nation’s wealthiest individuals, began lobbying DC lawmakers Wednesday in a press conference calling for major cuts to Social Security (including a raise in elgibility age to 70) and a new push to privatize Medicare.
    “The demands of the group mirror those of the recent ‘Fix the Debt’ campaign, which lobbied to “reduce corporate taxes and shift costs onto the poor and elderly,” ahead of the so-called ‘fiscal-cliff’ talks in December.”

  95. http://www.huffingtonpost.com/rj-eskow/how-extreme-is-the-busine_b_2490942.html
    Richard (RJ) Eskow
    How Extreme Is the Business Roundtable? Check Out Its Attack on the Elderly
    Posted: 01/16/2013 6:29 pm
    Rich CEOs have used every tax loophole in the book to add to their own wealth, have been bailed out directly or indirectly by the American taxpayer, and have rigged corporate governance so that they make far more than they’re worth.

    Now, to make sure the milk and honey keeps flowing their way, they want to cut Medicare and Social Security benefits for the beleaguered American majority. Sounds crazy, right?

    Meet the CEOs of the Business Roundtable.

    They hate our freedoms benefits.

    Matt Yglesias is right: There’s a special hatred for Social Security out there — and for Medicare, too. They’re hated because, as Yglesias says, some people don’t consider them “economically valuable.”

  96. More: http://www.huffingtonpost.com/rj-eskow/how-extreme-is-the-busine_b_2490942.html
    A tune from the Peterson songbook …
    Loveman expanded on the Roundtable’s anti-elderly agenda in a Wall Street Journal editorial. Not coincidentally, that agenda corresponds exactly with that of right-wing billionaire ideologue Pete Peterson, who has funded many such anti-“entitlement” initiatives. They include:
    Raise the Social Security age even more than currently scheduled — presumably from 67 to 70;
    Raise the Medicare eligibility age;
    Partially (or totally) privatize Medicare;
    Implement the “chained CPI,” which cuts Social Security benefits by three percent and raises taxes on the middle class (but not on Loveman or other members of the Business Roundtable)”


    The Roundtable was founded in 1972 by John Harper, the head of ALCOA Aluminum, and Fred Borch, CEO of General Electric, who were concerned about growing public hostility toward corporations as evidenced by support for government regulation of the workplace environment, and about the power of unions to squeeze corporate profits in an increasingly competitive international market. The two CEOs talked with John Connally, President Nixon’s Secretary of Treasury, and Arthur Bums, the Chairman of the Federal Reserve, who advised them to set up a lobbying organization that would specifically represent large banks and corporations. Harper was the first president, followed by Thomas Murphy of General Motors, Irving Shapiro of Du Pont, and Clifford Garvin of Exxon.

    The group was formed through the merger of three existing organizations: the March Group, consisting of chief executive officers who met informally to consider public policy issues; the Construction Users Anti-Inflation Roundtable, a group devoted to containing construction costs; and, the Labor Law Study Committee, largely made up of labor relations executives of major companies.[5] The group is called President Obama’s “closest ally in the business community.”[6] http://en.wikipedia.org/wiki/Business_Roundtable

    (did you folks get that last line)::

    “The group is called President Obama’s “closest ally in the business community.”[6]”

  98. Still as good today, as it was then,

    because it’s the DOCTOR, makin a House Call.

  99. Four years ago, I wrote an ebook called “The Great Recession Conspiracy” to make two points. One was that all the macro economist’s promises to end the bubble were crap and the second was to explain how Wall Street has taken over the Treasury Department. Over these four years, I am continually amazed at how right I was/am. And Jack Lew is absolute confirmation. There was a two year period between administrations when he didn’t have a government job. So they parked him at a Wall Street bank (Citi) for those two years. At a salary of $TWO MILLION!!!!

    Did I call it a cabal the other day?????

  100. http://www.hangthebankers.com/economic-collapse-is-inevitable-heres-why/
    “I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people, until the wealth is aggregated in a few hands, and the republic destroyed.”
    – Abraham Lincoln, 16th President of the United States
    “History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.”
    – James Madison, Founding Father and 4th President of the United States
    “You are a den of vipers. I intend to rout you out and by the Eternal God I will rout you out. If the people only understood the rank injustice of our money and banking system, there would be a revolution before morning.”
    -– Andrew Jackson, 7th President of the United States
    George Carlin

  101. NO NO NO
    healthcare costs are NOT an economic cost thing – they are a technology thing

    There is no reason whatsoever why we can’t reduce the cost of healthcare 10, 20, 40 fold (not %, fold)

    The only thing limiting us is our timidity and refusal to be bold

    do I know whereof I speak ?
    I have a PhD in molecular biology, and have worked on drug development.
    There is no reason whatsoever we can’t reduce the cost of drug development 100 fold (100 X).
    some of the tools we need: hi resolution xray crystal or NMR structures of 50,000+ human proteins and protein complexes (ok, I’m neglecting the huge combinatiorial complexity of PTMs and alternate splice forms etc)
    Computer methods tht let us dock small molecules to the strutures with realistic Kd values generated in silico

    I could go on

Comments are closed.