Wednesday, June 29, 2011

Last Call

President Obama finally went on offense today, and it's about damn time.

The primary goal of President Obama’s presser, which just wrapped up, was obvious: He was clearly out to pick a major public fight with Republicans over tax cuts for the rich. Obama mounted a surprisingly aggressive moral case for ending high end tax cuts, casting it as a test of our society’s priorities, and argued — crucially — that anyone who fails to support ending them is fundamentally unserious about the deficit.

He also went out of his way to highlight GOP opposition to raising revenues by ending a perk for corporate jet owners. This proposal would raise only $3 billion, which means it’s trivial in the larger scheme of things, and Obama’s mention of it seemed deliberately designed to provoke howls of outrage and cries of “class warfare” from Republicans — with the obvious goal of maneuvering Republicans into the role of arch defenders of the interests of the wealthy.

Obama is picking this fight in order to reframe the deficit and debt ceiling debate as a battle not over government spending — losing turf for Dems — but over who has the most balanced priorities and who is really working in the interests of the whole country.

And it's long time past for this as well. These are the arguments Obama should have been making in January, and making them at this volume.  Republicans don't care about the deficit.  They care about transferring money for social programs to the poor and for seniors to create more tax cuts for the rich.  That's it.  That's the whole damn thing.

So now, finally, Obama has thrown this gauntlet in the face of the Republicans who walked out like petulant babies from debt ceiling talks.  Good.  They only deserve national scorn right now.

More of this, Democrats.

The Butcher's Bill Arrives

A new study shows the total monetary cost of our adventures in the Middle East could hit $4.4 trillion. The human cost is just as terrible.

When President Barack Obama cited cost as a reason to bring troops home from Afghanistan, he referred to a $1 trillion price tag for America's wars.

Staggering as it is, that figure grossly underestimates the total cost of wars in Iraq, Afghanistan and Pakistan to the U.S. Treasury and ignores more imposing costs yet to come, according to a study released on Wednesday.

The final bill will run at least $3.7 trillion and could reach as high as $4.4 trillion, according to the research project "Costs of War" by Brown University's Watson Institute for International Studies. (

In the 10 years since U.S. troops went into Afghanistan to root out the al Qaeda leaders behind the September 11, 2001, attacks, spending on the conflicts totaled $2.3 trillion to $2.7 trillion.

Those numbers will continue to soar when considering often overlooked costs such as long-term obligations to wounded veterans and projected war spending from 2012 through 2020. The estimates do not include at least $1 trillion more in interest payments coming due and many billions more in expenses that cannot be counted, according to the study.

In human terms, 224,000 to 258,000 people have died directly from warfare, including 125,000 civilians in Iraq. Many more have died indirectly, from the loss of clean drinking water, healthcare, and nutrition. An additional 365,000 have been wounded and 7.8 million people -- equal to the combined population of Connecticut and Kentucky -- have been displaced.

But we got Saddam, the man behind 9/11, or something.  And any member of Congress who has been there for more than a half-dozen years will tell you it was worth every dime and every drop of blood to defend "American freedom."

Keep that $4 trillion price tag in mind when the austerity hacks proclaim it was social spending that broke our economy, and that we have to cut millions of poor and elderly Americans loose to save "the greater good."

Taxing Bachmann's Logic

The ad infinitum goes something like this:  If cutting taxes causes job growth, then eliminating taxes should cause infinite job growth.  Sadly, that's what President Michele Bachmann thinks is a "great idea."

Her comments on the income tax came in response to a question from Don Gorman, a former New Hampshire state representative from the Libertarian Party. Gorman asked Bachmann to comment on his suggestion to improve the economy: “Put a moratorium on the entire income tax for one year for every citizen in this country and watch this country take off.’’
“That’s awesome,’’ Bachmann responded. “You will be happy to know that a colleague of mine from Texas, [Representative] Louie Gohmert, gave that suggestion.’’
Bachmann said Gorman’s prediction about the proposal’s effect on the economy was on target. “If we would have allowed every American to take that much more money home in their pockets, what would they have done?’’ Bachmann said. “They would have paid their bills. They would have spent it. They would have grown their businesses. They would have grown the economy.’’

We have evidence of course that this is a crock.  There are plenty of major corporations that don't pay income taxes, and they're not exactly helping the economy.  Well gosh, we know what corporations who pay zero taxes do:  they sit on their cash and don't spend it, and don't grow their businesses, and don't grow the economy, and don't hire people.

There's also the fact that eliminating income tax for a year would add to the deficit, big time.

Curtis Dubay, senior tax policy analyst at the conservative Heritage Foundation, said advocates of a tax moratorium in 2009 said it might have stimulated the economy more than a stimulus program, but today the idea of a one-year income tax holiday is not being discussed because of its cost. Without the tax, the deficit would rise from $1.7 trillion to $2.7 trillion this year, Dubay said. Bachmann has been a leading advocate for cutting the debt and deficit. Her campaign did not respond to a request to clarify her stance on the income tax.

A trillion bucks added to the deficit.  Yes, that would qualify as a "revenue problem."  But hey, since Bachmann wants to get rid of the minimum wage and wants as many Americans as possible earning under the amount where they would have to pay taxes on it in the first place, exactly who would this tax moratorium help?

Here's a hint:  not the poorest 50% of Americans.

Turn On The Lights, Watch The Roaches Scatter Part 72

Bank of America not only admits to mortgage fraud in Foreclosuregate, but will pay $8.5 billion dollars to settle with the big hedge fund lords that took it in the shorts on CDOs.

Bank of America and its Countrywide unit will pay $8.5 billion to settle claims that the lenders sold poor-quality mortgage-backed securities that went sour when the housing market collapsed.

The deal, announced Wednesday, comes after a group of 22 investors demanded that the Charlotte, N.C. bank repurchase $47 billion in mortgages that its Countrywide unit sold to them in the form of bonds.

The group, which includes the Federal Reserve Bank of New York, Pimco Investment Management, and Blackrock Financial Management, argued that Countrywide enriched itself at the expense of investors by continuing to service bad loans while running up servicing fees.

Bank of America, which bought Countrywide in 2008 for $4 billion, has denied those claims.
Bank of America CEO Brian Moynihan said Wednesday that the settlement would minimize "future economic uncertainty" in the banking business and "clean up the mortgage issues largely stemming from our purchase of Countrywide."

Expect more banks to choose to settle with Pimco and the other hedge fund giants.   More importantly, this could be the crack in the dam that leads to all kinds of other legal actions against the mortgage banks.  Granted, BoA is getting away with less than 20 cents on the dollar here, but considering there's trillions of bad loans out there overall, expect to see a lot more settlements like this.

And soon.  Oh, and BoA doesn't have the $8.5 billion in cash laying around, either.  Things ought to get very very interesting.

This Week's WTH - A Collection

A Melbourne youth church leader who raped a 14-year-old girl, poured petrol on her and set her alight has been jailed for 21 years.

Michael Tuano Hermogenes, 25, plied the girl with alcohol before choking her with one of her stockings, raping her, taking photos of her while she was naked and unconscious, then setting her and her house alight to hide his crimes.

She suffered permanent injuries including burns to half her body, amputation of her right toes and spent almost a year in hospital.
This is when a good old mob scene (I just see the Simpsons over and over) is worth it.  I cannot verify much, there is video goodness to enjoy if you want the full story.  Believe it or not, it gets weirder.

Tracy Morgan just doesn't know when to shut up.  He went on a verbal rant on gays earlier this month, and in what I thought (at the time) was a real act of coolness, went back to apologize.  Now he has made fun of mentally challenged kids and the handicapped to a degree that he has angered people yet again.  I'm not saying humor should be sanitized, but I'm saying if you don't want mean snarks and insults, this may not be your show.  Morgan has always pushed the envelope, but he has crossed a line that his main audience doesn't appreciate, and there will be an adjustment.  

A 21-year-old Madison man went a little overboard Monday morning while using a razor-sharp Japanese sword for a video project, puncturing holes in his apartment wall all the way through his neighbor's bedroom wall.
What's great for me is that I know so many guys like this nerd that I checked in with a couple of folks that fit the general description.  Now back to your busy day, and keep your swords to yourselves... 

Greek Fire, Part 36

The Greek parliament has passed the five-year austerity measure, 155-138.

Greek Prime Minister George Papandreou won a parliamentary majority in favor of a five-year austerity plan on Wednesday, clearing a major hurdle in Greece's bid to win access to international funding to avoid default.

With voting still continuing, Papandreou's Socialist government had already reached the 151 votes it required in the 300-seat chamber to secure the passage of the framework law.

It must now win approval on Thursday for legislation detailing specific implementation measures for the 28 billion austerity package.

From here it seems the Greek people are now stuck with the bill.  Judging from the protests in Athens today, they're not happy about this vote either.

The Kroog Versus Sovereign Default

Paul Krugman reminds us of what's at stake in the debt limit hostage situation, and they don't get much higher.

Think about it. There’s a significant chance that failing to raise the debt limit could provoke a renewed financial crisis — and Republicans would rather take that chance than allow a reduction in tax breaks on corporate jets.

What this says to me is that Obama cannot, must not, concede here. If he does, he’s signaling that the GOP can extract even the most outrageous demands; he’s setting himself up for endless blackmail. A line has to be drawn somewhere; it should have been drawn last fall; but to concede now would effectively mean the end of the presidency.

Quite frankly, that's what the GOP wants.  Sen. Mitch McConnell has said in the past that the GOP's number one priority is not jobs, not the economy, not the American people, but limiting Obama to being a one-term President.  He freely admitted as such.  They figure if Obama capitulates, the GOP gets everything they want and Obama gets blamed for it, and if he doesn't then the economy goes into recession or possibly a depression and the country votes him out.

Either way, they're perfectly okay with this.  So when a Republican says "our top priority" is anything but getting Barack Obama out of office, know they are lying to you.

No Dealing On The Debt Ceiling, Part 23

The most mendacious argument the Republicans have been making on the debt ceiling hostage situation is that there is no hostage situation, that is a default scenario will have "minimal" effect on the economy, the day-to-day operations of the federal government, and lives of American citizens.

It's a massive lie, of course.

New analysis by the Bipartisan Policy Center (BPC) which has been shared extensively with members of Congress estimates that the Treasury Department would not be able to pay all its bills and would need to implement an immediate 44 percent cut in federal spending in the event of the debt ceiling is exceeded.

On an annualized basis, the cut in spending alone is a 10 percent cut in GDP, BPC scholar Jay Powell told reporters.

A 44% immediate spending cut, as the money simply wouldn't be there.  A massive 10% GDP cut, the equivalent of an instant recession.  Absolute chaos would reign.

In one scenario, if the administration tries to protect Social Security, Medicare, Medicaid, defense contracts and unemployment insurance, then no military pay, tax refunds, federal civilian pay or welfare payments can be made that month.

Protecting the social safety net including Pell Grants and welfare along with the big entitlement programs still means that no federal workers would be paid in August and no tax refunds will be issued.

In both scenarios the entire budgets of the Justice, Labor, Energy, Interior, Health and Human Services, and Commerce departments are zeroed out, as are the budgets of NASA, EPA, Federal Transit Administration and Federal Highway Administration. 

Millions of Americans would lose their paychecks.  Entire cabinet departments would be shut down. And given the already weak economy on the edge of a second recession, we would be plunged into a complete depression nightmare.

But Republicans are willing to risk a massive hit to the US economy just to "win" politically.  At some point, trying on purpose to destroy the country has to be dealt with.  We used to have a word for it.  None dare use it now.

Perhaps the President, himself a Constitutional Law scholar and professor, will get to test the fourteenth amendment.

Selling Snake Oil

Josh Marshall notes that Republicans are completely uninterested in jobs right now.

We know that congressional Republicans are saying they won't allow any more stimulus spending. That's been more or less clear since last November's election. And that doesn't surprise anyone much since, while it prevents any real action to boost the economy, it's also in line with Republican economic doctrines. The tell came when the White House pushed for a tax cut -- something which likely would not boost jobs as efficiently as direct spending but would pass Republican economic orthodoxy. That was rejected too. 

Of course Republicans aren't going to let anything pass that will improve the economy for working-class Americans.  That's a given. If they can't rule, they'll burn down the country until they are given what's left to lord over.   This isn't anything new.  Marshall goes a bit further.

Boil these statements down and they amount to: we're interested in long term structural changes to the economy not short term measures to boost jobs or growth. Nothing wrong with wanting long-term structural changes. Democrats want those too, just different ones. But I don't think anyone could get elected today in anything close to a competitive state or district writing off any kind of immediate effort to create jobs and economic growth. But that's what they're saying. 

And while this is true, the much deeper question to explore is why the Republicans are allowed to get away with this.  They ran in September on JOBS JOBS JOBS but have done nothing since being elected.  You can make the very strong case as a matter of fact that the legislation Republicans have passed in the House would only serve to cost America millions of jobs.

So again, why are Republicans allowed to get away with this?  The answer is that Republicans are now arguing that only long term structural austerity cuts, coupled with massive tax cuts for the rich, will solve our unemployment problems.  Republicans have been making this argument since 2009.  It won them the House in 2010.  They figure they can win the whole ball of wax in 2012.

The far larger problem?  The number of Democrats that agree with the above statement.  We know that cutting spending at the state level has on average cost jobs, while the states that increased spending on average gained jobs.  But you're not seeing Democrats make this argument.  Instead, they are agreeing with Republicans on the basic principle that cutting spending during a recession will improve the economy.  It won't.

We also know that cutting taxes on the rich doesn't create jobs either.  Republican economics has failed the country on jobs time and time again.  But they continue to be treated as serious policy wonks with viable economic policies.  The numbers don't lie:  unemployment is higher when spending is cut, and it's higher when taxes on the rich are cut.  The best empirical example of this was Bill Clinton's second term, when a balanced budget was created through revenue and the country was adding millions of jobs.  But the Republicans are going to try the opposite of that.

The best part?  When it fails to work, Republicans will simply say more cuts were needed.  Until the Democrats stop agreeing with the Republicans on this, the Republicans will be able to get away with the austerity snake oil again and again.  And because Americans want results and don't care who is actually responsible for tanking the economy but will judge Obama on it anyway, Republicans look like they're going to get away with doing just that.


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