Republicans

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The Answer Is: No

Huh?

No appeasement.

We have already moved on from the Democrats sweeping victory in Tuesday’s election. And have no doubt the win was indeed sweeping. The margins were small in some states, tiny in Florida, but that they existed at all is the fact to focus on. Obama ought never have won this election. The economy is weak and unemployment still lingers in a zone that, in the past, spells doom for incumbent presidents. But he won. Handily. Not only this, but in a year when the Democrats were expected to lose control of the Senate they actually added to their majority.

Something went horribly wrong for the Republicans. It wasn’t that Romney, despite his vaunted business and analytical acumen, ran an ineptly organized campaign. It was, to put it bluntly, a day of reckoning for the extreme right. Their wild eyed radical agenda, from their misogynistic views on social issues, to their emphasis on ever more defense spending, on through to their open desire for the wholesale destruction of entitlement spending, was rejected. It was rejected wherever is was explicit. It was rejected in toto.

Yet a legacy of Obama’s own inept management of his early years was that in 2010 Republicans surged into power at the state level. This allowed them to rig upcoming Congressional elections via the time honored tool of re-drawing the boundaries of Congressional districts in order to make them Republican friendly. This paid off handsomely on Tuesday. Despite being handily beaten at the polls in terms of numbers of votes cast, the Republicans kept hold of the House.

So we enter the next two years with a split government.

This has brought forth a rush of calls for Obama to make a deal with the Republicans on the so-called upcoming fiscal cliff. This is the self-inflicted budget crisis that is also a legacy of the deadlock we suffered through during the last four years and in particular is a result of the breakdown in negotiations over budget policy in 2010 and 2011. Basically the ‘cliff’ is a term describing a series of spending cut and tax increase measures that automatically come into law on in January 2013 unless alternative, and presumably more sensible, measures are agreed to beforehand. With beforehand meaning the next few weeks.

The danger of rushing to cut a deal in a few weeks – a deal that would re-define our tax and spending profile for the best part of a decade – is that there is no time for a considered discussion. A grand bargain of such importance surely needs to be the outcome of a few months not a few weeks of negotiations.

Worse, the psychology of such a compressed debate gives the upper hand to the extremists who can force concessions from their more moderate counterparts by waiting to the last moment to make a deal. Brinkmanship becomes the order of the day and undermines the likelihood of the ultimate bargain not containing some very bad deals.

This, of course, is less of a problem were Congress not infested with a phalanx of Tea Party extremists.

Therein lies the reason for no appeasement.

The central problem we all face as we seek to strike a deal on the budget is that the extreme right is not concerned about the deficit. Despite what they say publicly about burgeoning debt and other right wing red flags, they have never been worried about the level of debt or the size of the annual deficit. These issues are simply a veil over the real agenda: the destruction of the welfare state. In recent decades it has been the Republican Party responsible most for the emergence of a long term rise in the deficit. First under Reagan and then under George W. Bush they forced through massive reductions in government revenues  without tackling a concomitant cut in spending. Reagan oversaw a massive defense build up that was paid for, not through taxation, but through borrowing. Then, after Clinton had stabilized the budget and even produced a rather lucky surplus, Bush used the existence of that surplus to argue that the government was taking in too much revenue and thus could cut taxes. He cut taxes way beyond the level needed to balance the books. In a deliberate effort to defund government and thus produce a budget crisis he cut taxes drastically in two rounds. Each added to the deficit. Each was supported wholeheartedly by the entire Republican delegation in Congress.Some of those Republicans, in a stunning volte face, have become the most vocal champions of deficit reduction. So we know that the Republicans do not worry about deficits. Recall it was Dick Cheney who said that deficits don’t matter.

Creating a funding crisis was the goal. It was a strategy that succeeded and then some when the economy fell to pieces and the long term deficit was compounded by the normal short term deficit associated with a recession. The extremists had set the game up perfectly for themselves. The chatter amongst our elite became the burden represented by the entitlement programs whose cost now looked unbearable in the context of all that lost revenue. Social Security was quickly branded as being on the verge of bankruptcy. Medicare was declared impossibly costly. The handwringing began. Earnest and sober people began to regret the harsh reality that America could no longer afford the New Deal and New Society programs. Yes, we were told, we would like to protect the poor, the young, the elderly, and the sick, but we just can’t afford it anymore. Something has to give. Someone has to pay the price for America’s diminished fiscal capacity. Just not the wealthy job creators and their friends in Wall Street.

Thus the sick, the poor, and the elderly, and the children were singled out for punishment. They were to be sacrificed so that we could get our fiscal house in order.

All the pronouncements, reports, and analyses that have flooded Washington these past two years as we began the debate over the budget have had the same target. All have taken as a truth that we have a diminished revenue raising capacity. Yes they have all talked about raising revenues, but they all, ultimately, throw the burden on the same target: the weakest parts of our society.

In other words the enormity of the Republican Party’s cynical strategy has been overlooked. The radical agenda is perilously close to being fulfilled. Had Romney won on Tuesday victory for the far right would have been certain. The credit markets and the plutocrats would have protected their privilege and the rest would have been made to pay.

But democracy is a funny thing. It gives the weak a chance to express what they think.

And they thought poorly of the entire radical right’s enterprise. They realized that they were being sold a bill of goods. Only one in ten voters mentioned the deficit as an issue. Seven in ten thought job creation was the priority. In my mind that’s a fairly good indicator for what public policy ought to be doing.

Stimulus. Not austerity.

So. As we are rushed headlong into this unnecessary panic called the ‘fiscal cliff’ we ought to listen to the voters.

Say no to cuts in entitlements. No.

Do not allow this artificially and carefully crafted moment be the excuse for ending the welfare state.

No appeasement of extremists. It never works. They always want more.

If that means going over the cliff, so be it. There is nothing that cannot be undone later. Let taxes go up. Put the blame on the intransigence of the right. Then cut them back where needed and bask in the victory of handing a tax cut to the middle class. Raise capital gains tax to the same level as income tax. After all income is income so tax it all the same. Stretch the tax code out progressively. After all the research shows definitively that higher taxes on the wealthy has no effect on the economy. Fix the tax code to plug loopholes for big business. Use the revenue to lower tax rates if you want. Get rid of the cap on payroll taxes to juice revenues into Social Security, but extend last year’s payroll tax cut as a stimulative measure. The list goes on.

But never, ever, appease the extremists. This is their last chance to execute the Reagan/Bush agenda. This is our chance to end the entire Reagan era. The stakes extend way beyond the mere budget. This is the time to re-define the American social contract.

So start by resisting the temptation to rush into a hasty deal.

The answer is: no.

 

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The FEMA Worm Turns

Every time you have an occasion to take something from the federal government and send it back to the states, that’s the right direction, and if you can go even further, and send it back to the private sector, that’s even better. – Mitt Romney, June 2011

Oh Dear.

That phrase, music to the ears of right wingers at the time, has come home to roost. Big time. Romney has been dogged by packs of reporters since hurricane Sandy blew into town asking him whether he still believes what he said back last year in the heat of the Republican primary race.

That was before hurricane Irene. That was before hurricane Sandy. Two once-in-a-lifetime events in back to back years. Once in a lifetime my foot.

The current Republican party imbibes deeply from the orthodox economic cup. It believes whole heartedly that whatever a government thinks it can do, private enterprise can do better. Except for massive and expensive defense spending of course. On all matters civilian it is GOP gospel that the government is both costly and inefficient. This is because there is not such thing as a costly or inefficient private sector bureaucracy. I guess none of them have been to the bank lately.

So, with this philosophy driving the search for right wing voters, Romney stood tall in one of the primary debates and, to a rousing round of applause, turned his ideological guns on FEMA which is that part of government responsible for disaster relief.

Poor old FEMA gets the butt end of Republican extremism all the time. Long serving employees must get whiplash. Father Bush trashed the place and stuffed it full of incompetent cronies. Bill Clinton rescued it, gave it competent leadership, and a budget worthy of its responsibilities, only for son Bush to trash it again, starve it of money and put the legendarily useless Brown in charge. After the humiliating failure of a response to hurricane Katrina Obama resuscitated the place just in time for Irene and Sandy. And so it will likely continue.

The Republicans see things like FEMA as wholly unnecessary. They argue that the states themselves are better positioned to deal with crises like hurricanes. If the Feds want to help then they can chip in with cash. But crisis management and response ought be left to the locals. Even better, as Romney said when he was playing to the extremist crowd, crisis response is one of those things best left to a private company.

Really?

I have no idea how to envisage a business model for disaster relief that works. Who would pay for it? How would it manage across a crisis the size of Sandy? Where would all that equipment come from? The questions go on.

It doesn’t matter. FEMA is getting glowing reports as it gets to grips with Sandy. And one of its biggest fans now happens to be Chris Christie governor of the much stricken state of New Jersey. His plaudits for FEMA, and for Obama, have been both profuse and heartfelt. They have been plastered across the media and repeated on every major news channel. Governor Christie just loves President Obama. He loves the help he’s getting from the Feds. Loves it.

Which is fun to hear.

Christie is a Republican. Not just any Republican, but one with well known ambitions for the presidency in 2016. He gave the keynote speech at the Republican convention nominating Romney. He has gone on the election trail on behalf of Romney. Just a week ago he, in a speech to boost Romney, called Obama all sorts of names and particularly pointed to Obama’s ineptitude as leader. Obama is, Christie told us in that speech, someone who fumbles in a crisis.

Whoops.

This is typical of modern Republicans. Welfare and aid is great when it flows into their pockets. It is immoral and a scourge when someone else gets help. It builds debilitating dependence on the government on the one hand, yet is vital and life-saving on the other.

So they tell their rabid supporters that hate things like FEMA, and then reach out for a helping hand when they need to.

There is nothing unusual about this. It follows a well known and documented pattern. Staunchly Republican states thrive off Federal aid and welfare programs. And continue to send extremists to Washington determined to kill off those very programs. Its a weird pathology.

Meanwhile it will be fun watching Romney dodge the reporters asking him whether he still believes we should get rid of FEMA. Add it to the growing list of topics he is trying to avoid.

My how the worm turns.

 

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Obama is Scared

Dean Baker goes overboard. Well he suggests that Obama is failing to defend Social Security because of his fear of retribution from the policy elite.

Baker is right.

This is an issue that extends beyond Social Security. Many of us have been saying for a while that Obama is too beholden to an elite whose view of the world is vastly different from that of the average voter. As a result he fails to provide a narrative for the majority. Instead he constantly trims to avoid conflict with the elite.

In the rarified air of the elite – which includes the media, big business, and academia as well as Washington policy circles – it is commonly understood that our entitlement programs need fixing. For decades the Republicans have hammered away at the imminent ‘bankruptcy’ of those programs is a thinly veiled attempt to get rid of them. It is also common for them to conflate Social Security and Medicare, two programs that have very different problems.

Also inside the bubble the Federal deficit looms as a massive problem – the talk is constantly of a ‘need’ to cut spending and    thus reduce the debt. Inflation also seems to exert a terrible pull on elitist thought. Deficit hawks often cite imminent rampant inflation as a reason we have to rein in our debt and  raise interest rates. Oh, and according to these same folks we need to get the Fed to behave responsibly and end its support of the economy.

Outside the bubble none of these things matter.

Indeed shoring up entitlements matters much more than reducing them. Average folks have ben slammed by the steady erosion of their earning power. They are steadily sinking beneath debt taken on in a false attempt to keep living standards rising. Recent students are swamped by student loans and will have to postpone home ownership for years if not decades. Health care and education costs cripple most middle class families. And the relentless pursuit of profit has siphoned off most of our productivity gains for capitalists who pay a reduced rate of tax on their gains because of the privileges bestowed on them.

The simple fact is that outside of the elitist bubble America’s decline is a very real phenomenon. It is not an arcane topic for Sunday morning talk shows or for long and unnecessary academic discussion.

It is palpable. It is obvious. And it is painful.

Yet it is ignored.

The reasons seem clear.

Inside the bubble, which consists of our highest paid citizenry, wages have risen. The stock market has recovered. Employers give more generous benefits in order to attract ‘talent’. Savings are more substantial. And prospects are decent if not downright rosy. These are the folks who brought us the financial crisis. They are the ones who abolished defined benefit retirement plans and gave us the defined contribution plans that are hopelessly inadequate, much more risky and expensive. These are the people who bemoan the common folk who don’t save enough and who berate those poor savings habits as being self-destructive. Yet they are also the ones who squeeze wages at every opportunity in order to meet reckless stock market profit targets and to meet bonus thresholds that support their own conspicuous consumption. They are the ones who ship jobs abroad in search of lower costs and then who complain about the inadequacy of our worker’s skills.

The delusion inside the bubble is that those outside are somehow dependent, and lazy. They see a person not paying income tax and complain, not about the lack of income on which to pay that tax, but about the lack of tax. They fret about the lack of incentives for themselves were tax rates to be raised, but not about the block on opportunity that the oppression of poverty brings.

In short they have no idea about how America has been driven off the cliff by the policies from which they benefit. Why would they? They simply focus on the issues that affect them.

Like inflation and it corrosion of credit. Like taxes that intrude on their capital accumulation. Like entitlements that are merely afterthoughts to them as they plan for retirement. Like welfare that transfers cash from their pockets into those of the poor and the ‘underserving’. Like the low interest rates that prevent them earning a ‘healthy’ return on their many investments. Like the tax laws that ‘force’ them to ship their savings abroad to tax havens. Like the regulations that prevent them from selling products for profit that have no social value. Like laws that prevent them from dumping pollution into the environment where taxpayers not shareholders carry the cost for clean up. And like the Federal budget that looms over the credit markets as what they perceive as a threat to the allocation of capital.

It is this group that leeches not the rest of us. They profit from rigging the rules. They pervert our democracy by swamping our elections with money. They divert and suborn legislation for their own advantage. And they resist any attempt to push back as being an attack on the manifest – to them – benefits of capitalism. They laud the American Dream while they crush it. And then they have the temerity to pretend to be concerned.

This is what Dean Baker meant to say.

It is this that makes Obama a disappointment. Instead of leading the people he indulges the paranoia of the wealthy. He dances to their tune and addresses their issues. This is why he can agree with Romney – as he did – that Social Security needs ‘fixing’, and that unless we do something to ‘fix’ it  it will go bankrupt.

This is preposterous and untrue. Yet he perpetuates the Republican narrative.

Why?

I think it’s because he is scared of the power of the plutocracy. Or, perhaps, it’s just that he lives inside the bubble.

Which do you think?

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Pity Romney

Maybe not.

But on purely humanitarian grounds you have to feel sorry for him. Such is the toxic mix of the Republican platform that in order to make himself appear less plutocratic and to show his common touch he has to talk glowingly of his Romney care health reforms in Massachusetts, which is anathema to his party’s base.

Damned if you do. Damned if you don’t. What fun.

One the one hand he has to appear in public and berate those reforms as being anti-American, and on the other he has to appear in public to laud them as being a product of his socially aware and sensitive side.

This ought to be easy for him by now.

After all he has argued we don’t need to do anything for the uninsured because they have access to emergency rooms; whilst during a prior incarnation he argued that reliance on emergency rooms was akin to socialism – gasp – because it meant that society as footing the bill collectively, hence the need for the reform that became known as Romney Care.

At least it’s entertaining. You never know quite what he’ll promise next as he flips and flops about on the shifting sands of the GOP’s policy beach.

Meanwhile there is at least one area where he doesn’t contradict himself. Not yet. Not publicly. That is in his much hyped tax plan. He promises to reveal the content of this black box during the presidential debates. Up until then he won’t add any detail at all. I look forward to his revelation with bated breath. As far as I can tell, and admittedly this is based on what little information I have, he will have to repeal the rules of arithmetic and toss out the laws of physics to make his policy work. This is because of his avowed intention to make it revenue neutral. Quite how you cut taxes for everyone yet keep tax revenues constant is beyond me. But that’s because I don’t believe in supply side magic. I guess, as they say, you make it up in volume.

Magic, self-contradiction, and a willingness to be vague. That’s the ticket!

Actually we ought not take pity on him. His delusions of grandeur and his plutocratic arrogance are what drove him into the morass. This is s self-inflicted drubbing. Let’s hope it gets him off the stage for good.

Addendum:

Perhaps we ought to pity Fox News also. The recent trend in the polls showing a sharp turn towards Obama defies their preferred narrative. So much so that they’ve taken to calling the polls false, misleading, and probably rigged by the left leaning media. They argue that the purpose of this rigging is to discourage Romney supporters and assure Obama of an unearned victory. The only problem with this story is that Fox’s own poll say the same thing: it has Obama up by a 6%+ and growing lead. Maybe Fox is too honest to rig its poll? Maybe it is too incompetent? Maybe it can’t be bothered? Or maybe, just maybe, Obama is more popular than Romney. Nah. That can’t be right.

Oh well.

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Puff The Magic Romney

Well what a week that was. Mitt Romney has not yet lost the election, but he has come perilously close. If he pulls out a win, which is now looking like a long odds bet, it will not be because of his economic plan. This is because he doesn’t have one. Or, rather, that his plan is vacuous, vague, incoherent, and lacking in anything we can reasonably call a plan.

Or perhaps I just misunderstand what a plan is.

In my lexicon a plan is something with concrete steps – causes – that have some semblance of connection with a desired results – effects. Cause and effect. I realize in this uncertain world that plans have to have some latitude so that the unexpected can be accommodated nicely within the overall goal, but the entire plan ought not to consist of latitude. There’s such a thing as being too loose.

And Romney’s plan is loose in ways that make it impossible to understand.

The main thrust of it is that simply by ousting Obama things will look up. That is to say that our business leaders are so in a funk over Obama’s supposed anti-business rhetoric and policies that once he is swept away they will stop cowering and sulking and come roaring to life. They will repatriate all their off shore bank accounts. They will unleash the hounds of investment. They will build new factories, buy new equipment, open up the throttle and drive us happily out of the doldrums.

This is stupid. And it’s not a plan. But it is exactly what Romney appears to believe. In which case he is an incompetent dolt, and an ignoramus to boot.

Which he is not.

So why the stupid plan?

Because he is strapped into the cockpit of the Republican party’s economic aircraft, which, dodo-like, cannot fly. Ever.

The rickety contraption called  Republican economic policy is riven through with massive contradictions. It is a kluged together mash-up of  elements each of which is designed to appease a different part of the whacky coalition we know as the Republican party. And since that coalition is full of disparate and often contradictory pieces, so too is its economic platform.

So continued tax cutting sits uncomfortably beside budget austerity without any attempt to reconcile the yawning gap between them. On the one hand the Republican party’s rabid Tea Party base wants lower taxes – especially for the ‘job creators’ – and on the other it’s ultra conservative fiscal hawks want to balance the Federal budget. Without cutting defense spending of course. This is simply not plausible without gutting Federal entitlement programs, which the libertarian part of the GOP salivate at, but nowhere does Romney mention abolishing those entitlement programs. Instead he talks about ‘reform’ of insufficient scale to close the budget gap his proposed tax cut would open up. Worse, he attacks Obama for having cut those entitlements – wrongly as it turns out.

If part of the Republican plan to balance the budget they will cause first to make worse is by slashing entitlements, then criticizing Obama for slashing entitlements is not a very clear way of articulating what they plan. In fact it is lying.

But at least they are lying with some clarity.

The rest of the plan is foggy to say the least.

It really can be summed up as a confidence trick. It relies entirely on the boost in confidence that business will get – presumably – from ditching Obama and his socialist ways.

It takes a very complex mind to take the current economy, in which business investment is growing decently, where profits are strong, and where banks are knee deep in resources awaiting lending, and make the lack of investment, profit opportunity, and loans the source of all our problems.

Maybe complex is the wrong word. Perhaps deluded is better.

The problem the Republicans have is that they have become the poster child for one trick ponies. They have precisely one economic policy. Cut taxes. They remind me of Samuel Beckett when he talked about failure as being worthy if we learn from it. His saying was: “Try again. Fail again. Fail better.” The Republicans have turned this into “Try again. Fail again. Fail again. Fail again …”. They forgot the better part. They forgot to learn. So they are stuck with a self-contradictory policy that we know, a priori, will fail. It has failed in the past. Re-branding it the ‘Ryan Plan’ doesn’t alter its rottenness. Call it ‘supply side’. Call it ‘trickle down’. Call it what you will. It still won’t work.

The deeper issue for the Republicans then becomes clear. They cannot solve our problems because they are ideologically committed to the course of action that created those problems. So they are boxed in. The facts don’t fit their narrative, so they are forced to invent facts. Hence the slurs against Obama. Hence his demonization as being anti-business, when in fact he is nothing of the sort.

This is not to argue that confidence and expectations are not part of economics. They are. But business expectations are far more pragmatically based than right wing economists and politicians like to believe. They are based on hard-headed estimates of demand. Absent the prospect of strong demand and any sensible business leader will avoid the risks associated with new investment. Instead they will try to squeeze every last drop of profit from their existing operations. They will cut costs, lengthen the work week for existing employees, use older equipment beyond its original expected life, and otherwise coax cash out from the corners they would normally ignore.

This pragmatic picture fits well with the data. It is exactly what we would expect to see were demand the driver of activity. It is exactly what we find when we examine the facts. We do not live in a supply driven economy. We live in a demand driven economy. One where the Republican economic ideology does not fit. Which is why, ever since Reagan first foisted it upon us, it has failed – repeatedly – to deliver the nirvana we were told it would. Instead it has delivered huge inequality, social regression, and hardship for everyday workers. We got the unintended consequences – and I am being polite – without any of the intended consequences.

In face of these facts it is hardly surprising that Romney cannot articulate an economic plan worthy of being called a plan. He couldn’t. It isn’t possible. So he is condemned to being vague, vacuous, and incoherent. He doesn’t look comfortable with his situation. He is far too much of a control freak to feel at ease with the mess that is Republican economics.

But that’s his problem, not mine. So I don’t care about that.

It also means he’s being dishonest. And that I care about.

He deserves the mess he’s in.

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