Article 43

 

Tuesday, February 26, 2013

Challenging The IRS

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I believe in conspiracy theories about as much as SANTA CLAUS or the Easter Bunny. But I do believe in JUDICIAL CORRUPTION.

Funny how a TENNESSEE MAN man allegedly challenged the IRS that taxes are illegal, won in court, and mainstream America didn’t catch on.

Click HERE for the alleged transcripts copied from THIS WEBSITE.

If you think there’s any truth to THIS STUFF, write me.

Until then, I take stories of getting over on the IRS with a GRAIN OF SALT.

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TENNESSEE MAN FREED ON TAX CHARGES
Case Number CR-1-03-91, U.S. v. Lloyd Long.

Following is a recent victory for the People, filed in the United States District Court, Eastern District of Tennessee, on October 15, 1993.

This story appeared in the “Independence Newspaper” Jan. 1994
(257 Ringwood Drive, Winter Springs Florida 32708).

TENNESSEE MAN FREED ON TAX CHARGES

In an amazing court case involving the “income tax,” a Chattanooga jury agreed with the argument by the defendant that the “income tax” is actually an excise tax which only applies to certain classes of people.

Nationally prominent attorney, Lowell Beacraft of Huntsville, Alabama, assisted by attorney Russell J. Leonard of Sewanee, Tennessee, defended Lloyd R. Long of Decherd, Tennessee, who was charged by the Internal Revenue Service with willful failure to file income tax returns for the years 1989 and 1990.

In presenting the case for the Internal Revenue Service, assistant U.S. Attorney Collier, assisted by special agent Michael Geasley of the IRS, declared that Mr. Long had gross income in excess of $49,000 for each of the years, 1989 and 1990, and that he had “willfully” failed to file income tax returns. The defense admitted that Mr. Long did, in fact, earn such income and that he did not file a return. Long then proceeded to prove to the jury, beyond a reasonable doubt, that he was not “liable” for an income tax, nor was he “required by law” to file.

Defense testimony presented A CASE titled, BRUSHABER V. UNION PACIFIC RAILROAD, wherein it was the unanimous decision of the U.S. Supreme Court that the Sixteenth Amendment did not give Congress any new power to tax any new subjects. It also showed that the income tax was, in fact, an excise on corporate privileges and privileged occupations. The defense then brought out a case entitled Flint v. Stone Tracy wherein an excise tax was defined as a “tax being laid upon the manufacture, sale and consumption of commodities within the country, upon licenses to pursue certain occupations and upon corporate privileges”.

Mr. Long’s attorneys also brought out a case entitled Simms v. Arehns, wherein the court ruled that the income tax was neither a property tax nor a tax upon occupations of common right, but was an excise tax. The defense then brought out a case entitled Redfield v. Fisher, wherein the court ruled that the individual, unlike the corporation, cannot be taxed for the mere privilege of existing but that the individual’s right to live and own property were natural rights upon which an excise could not be imposed. Defense also pointed to studies done by the Congressional Research Service that confirmed that the income tax is an excise.

Next, the defense pointed out that in the Tennessee Supreme Court case, JACK COLE V. COMMISSIONER, the court ruled that Citizens are entitled by right to income or earnings and that rights could not be taxed as privileges. In another Tennessee Supreme Court case, Corn v. Fort, the court ruled that individuals have a right to combine their activities as partnerships and that this is a natural right, independent and antecedent of government. The Government Prosecutors did not challenge or attempt to refute anv of the cases cited or the conclusions of the courts.

Long’s defense brought out in testimony, the fact that nowhere in the entire Internal Revenue Code, was an American Citizen made liable for the graduated income tax. They showed that, in the IRS’s own Privacy Act notice, only three sections were cited, and that none of these sections made anyone liable for the income tax. They also proved that this was not an oversight by showing that the alcohol tax was worded so clearly that no one could misinterpret who was made liable for the alcohol tax. The prosecution didn’t challenge or attempt to refute this point, nor were they able to show a status that made anyone liable for the income tax.

Mr. Long’s defense then presented the mission statement of the Internal Revenue Service, stating that the income tax relied upon “voluntary compliance” and a statement from the head of the alcohol and tobacco tax division of the IRS which showed that the income tax is 100% voluntary as opposed to the alcohol tax which is 100% enforced.

Mr. Long stated that in 1988 he knew that the income tax was an excise tax that could only be imposed upon the exercise of a privilege. He was aware that he was not enjoying any corporate privilege nor was he engaged in any privileged occupation. Long realized that he was merely engaged in an “occupation of common right” that was not taxable as an excise or otherwise. He knew that there was nowhere in the Internal Revenue Code that he was made liable for the income tax and he knew that the income tax was voluntary. However, in spite of these facts, Mr. Long was so intimidated by the IRS that he filed and paid a voluntary assessment.

Long then began writing a series of letters to the IRS explaining that he had no licenses or privileges issued to him by the federal government. He asked for direct answers to simple questions. Instead the IRS inferred, insinuated, extrapolated, beat around the bush and avoided answering his questions. So, Mr. Long testified, he decided to stop “volunteering”.

The IRS brought in two “expert” witnesses. Both were actually IRS employees who had received training as professional witnesses. Upon cross-examination by Mr. Becraft, one witness, Ms. Jeu, (after avoiding the question, frustrating the jury and finally being ordered by the judge to answer), admitted: There was, in fact, a secret code known only to the IRS and encoded on Mr. Long’s permanent record, that showed that the IRS knew Mr. Lone was not required to file a return!

In summation, Mr. Becraft acknowledged that what the jury had heard, may be in conflict with what the Government had mislead them into believing was true. However, Mr. Beacraft reminded them that Galileo was imprisoned for holding a belief that conflicted with what everyone else believed was fact and that Colwnbus, acting on a contrary belief, discovered a land that no one thought existed.

In a monumental victory, the jury agreed with Long’s defense and found Lloyd Long NOT GUILTY on all counts! Mr. Lloyds final statement to a reporter was, “To God be the glory!”

In a blatant example of governmental corruption, and in direct violation of the People’s Right to freedom of Speech, the federal government issued a “gag order” on this case. However, as Lila Buchanan, the publisher of the Independence Newspaper stated, “fortunately a transcriptof the trial was whisked out of the Courtroom prior to the gag order!” We the People have a complete copy of this transcriptavailable.

SOURCE

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IRS Loses Challenge To Prove Tax Liability
Lawyer is acquitted after arguing income levy lacks legal foundation

By Bob Uhrue
WMD
July 26, 2007

The Internal Revenue Service has lost a lawyers challenge in front of a jury to prove a constitutional foundation for the nation’s income tax, and the victorious attorney now is setting his sights higher.

“I think now people are beginning to realize that this has got to be the largest fraud, backed up by intimidation and extortion and by the sheer force of taking peoples property and hard-earned money without any lawful authorization whatsoever,” lawyer Tom Cryer told WND just days after a jury in Louisiana acquitted him of two criminal tax counts.

“And before you consign him to the legions of tin foil hat brigades” who argue against paying taxes, and then want payment to explain how to do that, he addresses the issue up front.

“These snake oil peddlers have conned millions of dollars out of many well-intended patriots and left a trail of broken lives in their wake. These charlatans should be avoided, not only because they will lead you to bankruptcy and prison, but because by association they discredit those who are telling the truth,” he said.

“The truth,” he said, is where he comes in, with the launch of a new Truth Attack website that is intended to build on his victory, and create a coalition of resources to defeat - ultimately - the income tax in the United States.

Although the legal citations in the case tend to run the length of paragraphs, Cryer told WND the underlying issue is not that complicated. Essentially, he argued that income is not necessarily any money that comes to a person, but rather categories such as profit and interest.

He said the free exchange of labor for compensation has been upheld as a right by the Supreme Court, but that doesn֒t necessarily make the compensation income.

If ever such an argument were to be presented widely, Cryer said, the income to the federal government would plummet. But not to worry, he said, the expenses could be reduced equally by eliminating programs, departments and agencies that also have no foundation in the Constitution.

The Founding Fathers intentionally restricted the taxing powers of the new federal government as a measure of restraint on its size. By exceeding that limited taxing authority the federal government has been able to obtain resources beyond its intended reach, and that money has enabled the federal government to exceed its authority,Ӕ he said.

For example, he said, the Constitution does not empower the federal government to regulate education, or employment, and agriculture, yet it does so.

The jury in U.S. District Court in Louisiana voted 12-0 to find Cryer, of Shreveport, not guilty of failure to file income taxes for two years. He had been indicted in 2006 on charges of failing to pay $73,000 to the IRS in 2000 and 2001. The next step in his personal case will be up to the IRS and prosecutors, if they choose to continue the issue, he said.

But for the rest of the nation, hes working with SAVE-A-PATRIOT, the FREE ENTERPRISE SOCIETY, LIVE FREE NOW, and his own LIE FREE ZONE to spread the message of the truth.

“There are three points that are important,” he told WND. “There’s no law making the average working man liable [for income taxes], there’s no law or regulation that allows the IRS to contend that earnings are 100 percent profit received in exchange for nothing, and the right to earn a living through any lawful occupation is a constitutionally protected fundamental right, and it is exempt from taxation.”

Spokesman Robert Marvin in Washington’s IRS office told WND the Internal Revenue Code provides for taxation on salaries or wages, but when pressed for a specific citation, or constitutional provision, he said, I can’t comment.

Cryer’s encounter with tax law began more than a decade ago when a friend told him the income tax was sham. Cryer started researching, hoping to keep his friend out of trouble. But his conclusions, after years of research, were exactly what his friend told him.

He researched not only tax laws, but also the documents pertaining to the drafting of the U.S. Constitution as well as the first income tax.

He said throughout his battle, hes offered at every turn to pay taxes if the IRS could show him the authorization, and that never has happened.

“The Criminal Investigation Division and Department of Justice both responded only with your position is frivolous. I had never stated a position, so how could they know whether it was frivolous?” he said. “Imagine my sending you a bill for $1,000 and when you call me and ask what the bill was for I simply said, that position is frivolous, just writethe check and send it in.”

His acquittal, he said, was a precedent because it means “people can see and recognize the truth.”

He said “multiple Supreme Court opinions have affirmed an individual’s ownership of his or her own labor, and exercising your fundamental rights is not taxable. It is definitely a trade. What most people receive in the form of wages, salaries or in my case fees that they personally earned for their labor is not received in exchange for nothing.”

He said there might be a profit that should be taxable, but there might not.

The IRS lets Wal-Mart sell a trillion dollars worth of goods, but they can back out their cost of goods [before being taxed,]” he said. “The IRS considers, in the case of a Wal-Mart wage earner, 100 percent of what he takes in is profit.”

“But he’s using his life, energy and work lifespan, and depleting it as he goes,” Cryer told WND. “[Working] is a God-given fundamental right that is protected under the Constitution and cant be taxed any more than exercising freedom of speech.”

While he waits to see what, if anything, the IRS and Justice Department will do next in his case, hes working to coordinate the groups that are battling taxation as unconstitutional.

ғI have started a campaign to unify [the work] and weve got a number of organizations that are sponsoring and supporting this campaign,Ҕ he said. The goal is to get everyone who is aware of the truthӔ organized so they can spread the word.

He warned without a restoration of constitutional basics, the nation is lost.

“Read your Constitution and you will see that the federal role does not include ANY authority to regulate or tax any citizen directly and that WE expressly reserved the right to rule and govern ourselves as States, not as mere political subdivisions,” his website says.

“The Constitution does not allow the government to run your lives, but the money it is stealing from millions of Americans is the fuel for its over-reaching and kibitzing. Take the money back and we and our states and communities can again be free,: he said.

“The fight is over our FREEDOM from rule by a DISTANT RULER, just as we fought to free ourselves of a distant England over 200 years ago,” he said.

SOURCE

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Taxpayers take the IRS to court—and actually win

By Kelly Phillips Erb
Daily Finance
January 20, 2010

It may be hard to believe, but it turns out that your chances of fighting the IRS in court—and winning—are actually better than getting hit by lightning (1 IN 6,250), dying after a shark attack (9 IN 152) or even having twins (3 IN 100). In fact, the National Taxpayer Advocate’s office found that over the course of a year, taxpayers won some portion or all of their cases roughly 14% of the time.

Taxpayers who were represented by counsel won about 20% of those cases, while those who represented themselves, referred to as pro se, prevailed in about 12% of them (download the entire report HERE). The predictable losers, with only a 6% success rate, were tax protesters who attempted to litigate based on frivolous arguments. On the other end of the spectrum, requests for “innocent spouse” treatment or other types of separation from joint liability were granted nearly 45% of the time.

Maryland Nurse Takes on the Tax Man

Among that sliver of people boldly taking on the IRS is Lori A. Singleton-Clarke, a nurse from Maryland, who fought the IRS in court, represented herself—and won.

Singleton-Clarke’s David and Goliath story began in 2006, when the IRS notified her that they would be auditing her 2005 tax return. On her federal income tax form for that year, she had reported $50,000 in income offset by a number of deductions, including $14,787 in educational expenses associated with her pursuit of an MBA/HCM (an MBA for health care management professionals) from the University of Phoenix, an online school. But the IRS wasn’t buying it. After reviewing her filing, the IRS claimed she owed an additional $2,126 in income tax for 2005.

Singleton-Clarke agreed to eliminate some of her deductions but refused to budge on those related to her education expenses. After receiving several notices, including a Notice of Deficiency, Singleton-Clarke filed a challenge to the IRS in U.S. Tax Court. Since she couldn’t afford an attorney, she represented herself.

In court, the IRS said that the educational expenses Singleton-Clarke claimed for deductions weren’t sufficiently connected to her job as a nurse since an MBA isn’t a nursing degree—they cited TREAS REG. 1.162-5(a), which states that, to be deductible, your expenses must be for education that either maintains or improves your job performance or is required by your employer or by law to keep your salary, status or job. The IRS specifically focused on the idea that the expenses can’t be part of a program that will qualify you for a new job.

Singleton-Clarke argued that the educational expenses were indeed work-related. She had earned a bachelor of science degree in nursing from New York University in 1984 and had worked as a registered nurse at several hospitals and medical facilities for 24 years. She said she took the MBA courses at the University of Phoenix in order to gain greater credibility and make her more effective in her current position. After all, the University of Phoenix advertised the MBA/HCM degree as providing students “with the business management skills needed to manage successfully in today’s health care delivery systems.”

After reviewing Singleton-Clarke’s job history, the Tax Court found that the MBA/HCM degree may have improved her preexisting skillset, but didn’t qualify her for a new trade or business, as the IRS alleged. With that finding, the Tax Court allowed the expenses. You can read the Singleton-Clarke Tax Court opinion here.

Man Crashes Truck, Gets Cited for DUI and Beats the IRS

Like Singleton-Clarke, Justin M. Rohrs successfully represented himself in Tax Court after the IRS rejected a deduction that he made on his tax form and demanded that he pay additional taxes, plus a penalty.

Rohrs had taken a casualty loss deduction for his 2006 Ford F-350 pickup truck after he failed to properly negotiate a turn and went off the side of the road and into an embankment, totaling his truck. He was cited for the crash when his blood alcohol limit tested at .09, just over the legal limit in California.

Rohrs filed a loss with his insurance carrier, which was turned down. He then attempted to recover his loss by filing for a casualty loss deduction of $33,629 on his federal income tax return. The IRS disallowed the deduction and assessed a $6,230 federal income tax deficiency, plus a $1,246 penalty. Rohrs took the matter to court.

The pivotal question of the trial was whether Rohrs’ drunk driving was considered a willful act. The IRS’s case relied on TREAS REG. 1.165-7(a)(3), which states that you can claim a casualty loss for damage to a vehicle only if the damage is not due to the willful act or willful negligence of a taxpayer.

After listening to Rohrs’ testimony, the judge found that “[w]hile petitioner’s decision to drive after drinking was negligent, that alone does not automatically rise to the level of gross negligence.” The judge also said there was no evidence that Rohrs’ drinking was the cause of the accident and ruled in his favor. (You can read the Rohrs Tax Court opinion HERE.)

Couple Discovers That Not All Tax Advice Is Right

Of course, pro se appearances don’t always result in a win.

When Kenneth and Trudi Woodard filed a joint federal income tax return for 2004, they failed to include $150,000 in distributions from Kenneth’s IRAs. The IRS subsequently assessed the Woodard’s tax in the amount $27,606, plus a penalty. In response, the Woodard’s filed an appeal at Tax Court, representing themselves.

Kenneth told the court that he had relied on information that he claimed he found after a search on Google, and decided not to include the money on his tax return. Instead, he referred to the money as a “self-directed IRA” and claimed it wasn’t reportable. He eventually agreed the income should have been reported, but argued the penalty shouldn’t apply.

Relief from penalties can be granted in certain circumstances. Relying on third party tax advice may be a good excuse for abating a penalty so long as you use “ordinary business care and prudence.” Unfortunately, Kenneth failed to provide the web site links he allegedly relied on, nor could he point to any other evidence that supported his claim. The court didn’t believe he exercised ordinary business care and prudence when failing to report the IRA withdrawals. As a result, he lost the entire case. (You can read the Woodard Tax Court opinion HERE.)

Perseverance Will Help You Through

As encouraging as some of these cases may be, you can’t rely on them to prove your own case. BY LAW, a Tax Court opinion for a small case, or a dispute under $50,000, cannot be treated as precedent for other cases. There are, however, some good lessons to be learned from these taxpayers:

Stick to your guns. When you believe you’re making the right decision, don’t be intimidated. A majority of the cases filed in Tax Court are filed by pro se taxpayers; if you don’t have the money to pay for an attorney, don’t assume your case is a lost cause.

Be patient. It can take up to a year before your case is assigned a date once you file your petition. Singleton-Clarke didn’t receive a favorable result until nearly three years after the IRS audited her return. Don’t be put off by the passage of time. You might even take the time to try and resolve your case directly with the IRS; a majority of cases are settled before reaching Tax Court.

Be thorough. A case can turn on facts and circumstances. Be sure you understand the argument from the IRS and that your facts support your answer. Don’t leave out key facts or evidence. Even if the evidence isn’t necessarily flattering, such as Rohrs’ blood alcohol content, it’s part of your story. You need to offer sufficient detail for the court to understand your position.

Keep good records. When you get advice, writeit down or ask your tax pro to put it in writing. Don’t attempt, as Kenneth Woodard did, to rely on your memory.

Know enough to know when you’re in over your head. I’m certainly not going to tell you that you have to hire an attorney to beat the IRS. Singleton-Clarke and Rohrs have proven that’s not true. But if you’re overwhelmed or you feel you need help, get an attorney. The IRS will certainly have one on their side.

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Posted by Elvis on 02/26/13 •
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Sunday, February 24, 2013

Big Bank Corporate Welfare - $83 Billion

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Why Should Taxpayers Give Big Banks $83 Billion a Year?

By the Editors
Bloomberg
February 20, 2013

On television, in interviews and in meetings with investors, executives of the biggest U.S. banks—notably JPMorgan Chase & Co. Chief Executive Jamie Dimon—make the case that size is a competitive advantage. It helps them lower costs and vie for customers on an international scale. Limiting it, they warn, would impair profitability and weaken the countrys position in global finance.

So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?

Granted, it’s a hard concept to swallow. Its also crucial to understanding why the big banks present such a threat to the global economy.

Let’s start with a bit of background. Banks have a powerful incentive to get big and unwieldy. The larger they are, the more disastrous their failure would be and the more certain they can be of a government bailout in an emergency. The result is an implicit subsidy: The banks that are potentially the most dangerous can borrow at lower rates, because creditors perceive them as too big to fail.

Lately, economists have tried to pin down exactly how much the subsidy lowers big banks borrowing costs. In one relatively thorough effort, two researchers—Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz—put the number at about 0.8 percentage point. The discount applies to all their liabilities, including bonds and customer deposits.

Big Difference

Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $83 billion a year. To put the figure in perspective, it;s tantamount to the government giving the banks about 3 cents of every tax dollar collected.

The top five banks—JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. - - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry—with almost $9 trillion in assets, more than half the size of the U.S. economy—would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

Neither bank executives nor shareholders have much incentive to change the situation. On the contrary, the financial industry spends hundreds of millions of dollars every election cycle on campaign donations and lobbying, much of which is aimed at maintaining the subsidy. The result is a bloated financial sector and recurring credit gluts. Left unchecked, the superbanks could ultimately require bailouts that exceed the governments resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009.

Regulators can change the game by paring down the subsidy. One option is to make banks fund their activities with more equity from shareholders, a measure that would make them less likely to need bailouts (we recommend $1 of equity for each $5 of assets, far more than the 1-to-33 ratio that new global rules require). Another idea is to shock creditors out of complacency by making some of them take losses when banks run into trouble. A third is to prevent banks from using the subsidy to finance speculative trading, the aim of the Volcker rule in the U.S. and financial ring-fencing in the U.K.
Once shareholders fully recognized how poorly the biggest banks perform without government support, they would be motivated to demand better. This could entail anything from cutting pay packages to breaking down financial juggernauts into more manageable units. The market discipline might not please executives, but it would certainly be an improvement over paying banks to put us in danger.

SOURCE

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About That $83 Billion Bank Subsidy. We Still Mean It.

By the Editors
Bloomberg
February 27, 2013

Our estimate that the largest U.S. banks get a taxpayer subsidy worth about $83 billion a year remains a subject of some interest. Notably, Dealbreaker’s Matt Levine posted a RESPONSE to our RESPONSE to his RESPONSE to our original editorial.

In the latest installment, Levine makes the interesting observation that even poorly rated small banks enjoy lower overall funding costs than big banks. Specifically, he selects a group of small banks with BBB-minus credit ratings, and finds that they pay about 0.2 percentage point less to borrow money than do the five largest U.S. banks by assets. From this, he concludes that the big banks dont get a subsidy, but actually pay more for their bigness.

Problem is, Levine’s analysis doesn’t address the question we posed in our analysis. He is asking whether big banks pay more for their funding than small banks. We were asking what big banks would pay for their funding if they didnt get government support.

This is an important distinction. As Levine rightly notes, big and small banks get their funding from different places. According to the Federal Deposit Insurance Corp., the small banks he chose—Associated Banc Corp., TCF Financial Corp., First Horizon National Corp. and Zions Bancorporation—get nearly 70 percent of their funding in the form of federally insured customer deposits, the cheapest type of unsecured financing available. By contrast, Bloomberg and FDIC data suggest that the five largest U.S. banks get less than 30 percent of their funding from insured customer deposits (they get 57 percent of their funding from deposits, only about half of which are insured).

In other words, the big banks use a mix of funding that naturally costs more than the mix used by small banks. Our point is that the big banks would pay even more without government support. Levine’s analysis does not refute this.

Getting at the true value of the subsidy is much tougher. The STUDY we cited in our original analysis attempts to do so by looking at two different kinds of credit ratings Fitch issued to the same banks: One that takes government support into account, and one that doesn’t. The study then used the differential to estimate the benefit to banks when they go into the market to borrow.

Levine makes the point that it’s silly to rely on demonstrably fallible credit-rating companies. Just because Fitch says a bank would have a BBB-minus rating in the absence of government support, that doesn’t mean the market agrees.

We’re under no illusions as to the reliability of credit ratings. That said, they are more likely to be skewed in favor of the largest banks which, after all, pay handsomely for the ratings. Why would Fitch, or any other rating service, risk being tougher on its customers than it needs to be? Indeed, Bloomberg’s proprietary default-risk model, which is driven by market data, deems the largest U.S. banks more likely to renege on their obligations over the next year than Fitch’s ratings imply. This means we might have lowballed the size of the big banks’ subsidy.

Again, there’s no perfect way to do the analysis. The broader point—with which Federal Reserve Chairman Ben Bernanke and other senior officials appear to agree—is that the subsidy is too big and should be ended.

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Posted by Elvis on 02/24/13 •
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Friday, February 22, 2013

Capitalism Hits The Fan

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“The real damage is done by those millions who want to ‘survive.’ The honest men who just want to be left in peace. Those who don’t want their little lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those who don’t like to make waves-or enemies. Those for whom freedom, honour, truth, and principles are only literature. Those who live small, mate small, die small. It’s the reductionist approach to life: if you keep it small, you’ll keep it under control.

If you don’t make any noise, the bogeyman won’t find you. But it’s all an illusion, because they die too, those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what? Life is always on the edge of death; narrow streets lead to the same place as wide avenues, and a little candle burns itself out just like a flaming torch does. I choose my own way to burn.”
- Sophie Scholl - 1921 - 1943 - German student, a member of the White Rose society, a non-violent anti Nazi resistance group.

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Richard Wolff on Fighting for Economic Justice and Fair Wages

Bill Moyers
February 22, 2013

Economist Richard Wolff joins Bill to shine light on the disaster left behind in capitalisms wake, and to discuss the fight for economic justice, including a fair minimum wage. A Professor of Economics Emeritus at the University of Massachusetts, and currently Visiting Professor in the Graduate Program in International Affairs of the New School, Wolff has written many books on the effects of rampant capitalism, including Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It.

“We have this disparity getting wider and wider between those for whom capitalism continues to deliver the goods by all means, [and] a growing majority in this society which is facing harder and harder times,” Wolff tells Bill. “And that’s what provokes some of us to begin to say it’s a systemic problem.”

Febraury 22, 2013 show TRANSCRIPT

BILL MOYERS: Welcome. There’s hardly a sentient grown-up in this country who isn’t aware that our economy is no longer working for vast numbers of everyday people. The rich and powerful have more wealth and power than ever; everyone else keeps losing ground. Between 2009 and 2011 alone, income fell for the 99 percent, while it rose eleven percent for the top One Percent. Since the worst of the financial crisis, that top One Percent has captured the increases in income while the rest of the country has floundered. Stunning, isn’t it? The behavior of many of those One Percenters brought on the financial crisis in the first place. We turned around and rescued them, and now their wealth is skyrocketing once again. At the bottom, working people are practically flat on their back. President Obama has finally recognized they need help. In his State of the Union, he proposed an increase in the minimum wage:

PRESIDENT OBAMA: Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to nine dollars an hour.

BILL MOYERS: But as the economist Dean Baker points out this week, “If the minimum wage had risen in step with productivity growth it would be over $16.50 an hour today.” We talk a lot about whats happening to the middle class, but the “American Dream” really become a nightmare for the poor. Just about everyone has an opinion about the trouble were in - the blame game is at fever pitch in Washington, where obstinate Republicans and hapless Democrats once again play kick-the-can with the problems we face. You wish they would just stop and listen to Richard Wolff.

An attentive and systematic observer of capitalism and democracy, he taught economics for 25 years at the University of Massachusetts and has published books such as “Democracy at Work,” “Occupy the Economy,” and “Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It.” He’s now visiting professor at The New School University here in New York City where he’s teaching a special course on the financial crash. Welcome, Richard Wolff.

RICHARD WOLFF: Thank you, Bill.

BILL MOYERS: Last night, I watched for the second time the popular lecture that is on this DVD, “Capitalism Hits the Fan.” Tell us why you say capitalism has hit the fan?

RICHARD WOLFF: Well, the classic defense of capitalism as a system from much of its history has been, okay, it has this or that flaw. But it quote, unquote, “delivers the goods.’”

BILL MOYERS: Yeah, for most everybody.

RICHARD WOLFF: Right.

BILL MOYERS: That was the argument.

RICHARD WOLFF: And so you may not get the most, but it’ll trickle down to you, all the different ways

BILL MOYERS: The yachts will rise.

RICHARD WOLFF: That’s right. The ocean will lift all the boats. The reality is that for at least 30 years now, that isn’t true. For the majority of people, capitalism is not delivering the goods. It is delivering, arguably, the bads. And so we have this DISPARITY getting wider and wider between those for whom capitalism continues to deliver the goods by all means, but a growing majority in this society which isn’t getting the benefit, is in fact, facing harder and harder times. And that’s what provokes some of us to begin to say, “It’s a systemic problem.”

BILL MOYERS: So we put together some recent headlines. The merger of American and US Airlines, giving us only four major airlines and less competition. Comcast buying NBC Universal, also reducing competition. The very wealthy getting a trivial increase in taxes while the payroll tax of working people will go from 4.2 percent to 6.2 percent. Colossal salaries escalating again, many subsidized by tax breaks and loopholes. The postal service ending service on Saturday. What’s the picture you get from that montage of headlines?

RICHARD WOLFF: Well, for me it is captured by the European word “austerity.” We’re basically saying that even though the widening gap between rich and poor built us up, many of the factors that plunged us into a crisis, instead of dealing with them and fixing that problem, we’re actually ALLOWING the crisis to make the inequality worse.

The latest research from the leading two economists, Saez from the University of California in Berkeley, and Piketty in France confirms that even over the last five years of the crisis, through 2012, the inequality of wealth and income has gotten worse, as though we are determined not to deal with it. All of those headlines you talked about are more of that.

I mean, the astonishing capacity to make it harder for people to have a delivery of their mail on Saturday, to save what is in a larger picture, a trivial amount of money, but that will really impact - thousands of people will lose their jobs, everyone will lose a service that is important, particularly in smaller places around the United States that are not served by anything comparable to the Post Office.

And then as you pointed out, and I have to say a word about it, this amazing display in which we raise the top income tax on the richest people from 35 percent to 39.6 percent only for those over $450,000 a year, while for the 150 million Americans who get a weekly or a monthly check, their payroll tax went up a whopping 48 percent from 4.2 to-- this is so grotesque an inequality that you’re watching a process that is sort of spinning out of control in which those at the top have no limits, don’t recognize any constraint on how far they can take it.

BILL MOYERS: If workers at the bottom get the increase in the minimum wage that President Obama proposed in his State of the Union message, they will still be faring less well than their counterparts did 50 years ago.

RICHARD WOLFF: That’s right.

BILL MOYERS: What does that say to you?

RICHARD WOLFF: The peak for the minimum wage in terms of its real purchasing power was 1968. It’s been basically declining with a couple of ups and downs ever since. So that if you adjust for the current price, the minimum wage was about $10.50 roughly, back in 1968 in terms of what it could buy.

And it’s $7.25 today in terms of what it can buy. So you’ve taken the folks at the bottom, the people who work hard, full-time jobs, and you’ve made their economic condition worse over a 50-year period, while wealth has accumulated at the top. What kind of a society does this? And then the arguments have come out, which are in my profession, a major staple for many careers, are arguments that, “Gee, if you raise the minimum wage, a few people who might’ve otherwise gotten a job won’t get it because the employer doesn’t want to pay the higher wage.”

Well, if that logic is really going to play in your mind, then you should keep lowering the wage. Because if you only made it four dollars an hour, just think how many more people could get a job. But a job under conditions that make life impossible.

BILL MOYERS: Who decided that workers at the bottom should fall behind?

RICHARD WOLFF: Well, in the end, it’s the society of the whole that tolerates it. But it was Congress’s decision and Congress’s power to raise the minimum wage, as has happened from time to time.

Even this time, not to be too critical of our president, but when he was running for office, he proposed a $9.50 minimum wage. Here we are in the beginning of his second term, and something has happened to make him only propose a nine dollar minimum wage. So even he is scaling down, perhaps for political reasons, what he thinks he can accomplish. When, if we just wanted to get it back to what it was in 1968, it would have to be $10 or $11 an hour.

BILL MOYERS: Many economists say, “We just can’t do that because it would be devastating.”

RICHARD WOLFF: Well, the truth of the matter is that there’s an immense economics literature, I’m a professional economics person, so I’ve read it. And the literature goes like this. On the one hand, there may be some jobs that are lost because an employer having to pay a higher minimum wage, will not hire people or will hire fewer. That will happen in some cases. But against that, you have to weigh something else. If the 15 million, that’s the estimate of the White House, the 15 million American workers whose wages will go up if we raise the minimum wage, we have to count also, the question, those people will now have a higher income.

They will spend more money. And when they spend more money on goods and services, that will create jobs for people to produce those goods and services. In order to understand the effect of raising the minimum wage, you can’t only look at what will be done by some employers in the face of a higher wage in lowering the employment. You have to look at all the other effects.

And when economists have done that, economist from a wide range of political perspectives, you know what they end up with? There’s not much effect. In other words, the two things net each other out and so there isn’t much of a change in the employment situation overall. To which my response is, “Okay, let’s assume that’s correct. At the very least though, we have transformed the lives of 15 million American working people and their families from one of impossible to get most of what America offers, to a situation where at least you’re closer to a decent minimum life.”

BILL MOYERS: Are you suggesting then that there is no economic reason why those at the bottom should not share in the gains of economic growth?

RICHARD WOLFF: Absolutely. There is no economic reason. And in fact, I would go further. We know, for example, that the lower the income of a FAMILY, the more likely it is to cut corners on the education of their children because they don’t have the resources. So here’s an unmeasurable question about the minimum wage.

How many young people who are born into a minimum wage family, that is it’s so low as we have it today, will never get the kind of educational opportunities, the kinds of educational supports, to be able to realize their own capabilities and to contribute to our society? That alone is a reason, whether you think of it in terms of the long-term benefit of the country, or you just approach it as a moral question or an ethical question. By what right do you condemn a whole generation of young people to be born into families whose financial circumstances make so much of what they need to become real citizens impossible?

BILL MOYERS: You remind me of something that President Obama said in his second inaugural address.

PRESIDENT OBAMA: We are true to our creed when a little girl born in the bleakest poverty knows that she has the same chance to succeed as anybody else, because she is an American. She is free and she is equal. Not just in the eyes of God, but also in our own.

BILL MOYERS: That’s ELOQUENT, but hardly true.

RICHARD WOLFF: That’s right. And it’s painful for some of us to hear that, because it is so obviously untrue. It is so obviously contradicted by the realities, not just of those who work at the minimum wage, but all of those who work at or even at 50% above what we call the poverty level. Because when you look at what families like that can actually afford, they have to deny huge parts of the American dream to their children and to themselves as a necessary consequence of where they are put.

And I don’t need to be an economist to put it as starkly as I know how. We can read every day that in the major cities of the United States, apartments are changing hands for $10 million, $20 million, $30 million, $40 million. People have enormous yachts that they cruise—we all see it. We all know it. We even celebrate it as a nation. How does that square with millions of people in a position where they can’t provide even the most basic services and opportunities?

We don’t have equality of opportunity. Because there is no shortcut. If you want equality of opportunity, you’re going to have to create equality of income and wealth much closer to a genuine equality than anything-- we’re going in the other direction. And so I agree with you. It’s stark if our president talks about something so divergent from the reality.

BILL MOYERS: When study after study has exposed the myth that this is a land of opportunity, how does the myth keep getting perpetuated?

RICHARD WOLFF: Well, my wife is a psychotherapist. And so I ask her that question often. And here’s what she says to me. Often, people cling all the harder to an idea precisely because the reality is so different and becoming more different. In other words, I would answer the myth of equal opportunity is more attractive, more beautiful, more something people want to hold on, the more they know it’s slipping away. And they would like to believe that this president or any president who says it, might somehow bring it back.

BILL MOYERS: When you say that there’s no economic argument that people should be kept at the - should not share in the gains of economic growth, the response is, “Well, that’s what the market bears.”

RICHARD WOLFF: Well, you know, in the history of economics, which is my profession, it’s a standard play on words. Instead of talking about how the economy is shaped by the actions of consumers in one way, workers in another way, corporate executives in another way, we abstract from all of that and we create a myth or a mystique. It’s called the market.

That way you’re absolving everybody from responsibility. It isn’t that you’re doing this, making that decision in this way, it’s rather this thing called the market that makes things happen. Well, every corporate executive I know, knows that half of his or her job is to tweak, manipulate, shift, and change the market.

No corporate executive takes the market as given. That may happen in the classroom, but not in the world of real business. That’s what advertising is. You try to create the demand, if there isn’t enough of it to make money without doing that. You change everything you can. So the reference to a market, I think, is an evasion.

It’s an attempt to make abstract the real workings of the economy so nobody can question what this one or that one is doing. But let me take it another way. To say that it’s the market is another way of saying, “It’s our economic system that works that way.” That is a very dangerous defense move to take.

BILL MOYERS: Why?

RICHARD WOLFF: Because it plays into the hands of those like me who are critical of the system. If indeed it isn’t this one or that one, it isn’t this company’s strategy or that product’s maneuver, but it is the market, the totality of the system, that is producing unconscionable results, multi-million-dollar apartments next door to abject poverty, then you’re saying that the system is at fault for these results.

I agree with that. But I’m not sure that those who push this notion of “the market makes it happen,” have thought through where the logic of that defense makes them very vulnerable to a much more profound critique than they will be comfortable with.

BILL MOYERS: You graduated from Harvard.

RICHARD WOLFF: Right.

BILL MOYERS: Then Stanford.

RICHARD WOLFF: Right.

BILL MOYERS: Then Yale.

RICHARD WOLFF: That’s it.

BILL MOYERS: Was this the economy you were taught at those three elite institutions to celebrate?

RICHARD WOLFF: No. No, this is the economy that I came to understand is the reality. For me, and I learn things at all those institutions, it’s not that. I came to understand that in America, economics is a split, almost a schizophrenic kind of pursuit. And let me explain. On the one hand, there are the departments of economics in colleges and universities across America.

But side by side with them is an entire other establishment that also teaches economics. You don’t have that in other disciplines. There aren’t two history departments or two anthropology departments, or two philo-- so what is this? I looked into this. It’s because there are two separate functions performed by the economics departments and then by the other ones.

And the other ones are called business schools and business departments. In fact, in most universities, in all those I’ve been at, the economics department is in one set of buildings, and across the campus in another is the business school. And there’s actually tension in the university about who teaches the basic courses to students that they’re required to take and so on.

Here’s what I discovered. The job of economics, to be blunt but honest, is to rationalize, justify, and celebrate the system. To develop abstract theories of how economics works to make it all like it’s a stable, equilibrium that meets people’s needs in an optimal way. These kinds of words are used. But that’s useless to people who want to learn how to run a business, because it’s a fantasy.

So they are shunted someplace else. If you want to learn about marketing, or promotion, or advertising, or administration, or personnel, go over there. Those people teach you how the economy actually works and how you’ll have to make decisions if you’re going to run a business. Over there, you learn about how beautiful it all is when you think abstractly about its basic principles.

BILL MOYERS: The invisible hand.

RICHARD WOLFF: Yeah.

BILL MOYERS: The market.

RICHARD WOLFF: All of that. So for me, I began to realize, “Okay, I’m an economist. I’m in that one. But I want to understand how the real economy works.” And then I discovered that I needed to reeducate myself. I had to go learn things that I was never assigned to read.

BILL MOYERS: After Harvard? After Stanford? And after Yale?

RICHARD WOLFF: It actually happened while I was there. I was already, there were a few people--

BILL MOYERS: --as heretics.

RICHARD WOLFF: Yes, they do.

BILL MOYERS: A few.

RICHARD WOLFF: You know, but you know, capitalism-- I like to say to people, capitalism, like all systems, when it comes into being, is born a few hundred years ago in Europe and spreads around the world, like other systems before it. It has always produced those who admire and celebrate it and those who are critical of it.

I used to say to my students, “If you want to understand the family who lives down the street, suppose there’s mama, papa, two children. And one of the children thinks it’s the greatest family there ever was, and the other one is quite critical. If you want to understand the family, do you choose only one child to interview, or do you think it might be wise to interview both of them?”

For me, I began to interview the critics of capitalism, because I thought, “Let’s see what they have to say.” And that for me opened an immense door of critical insights that I found invaluable. And I’ve never forgiven my teachers for not having exposed me to that.

BILL MOYERS: But so few have done that. As you know, as you’ve written, as you have said, we’ve not had much of a debate in this country for, I don’t know, since the Great Depression over the nature of the system, the endemic crisis of capitalism that is built into the system. We have simply not had that kind of debate. Why do you think that is?

RICHARD WOLFF: Well, I think we have had it from time to time. We have had some of the greatest economists in the tradition, for example, Thorstein Veblen, at the beginning of the 20th century, a great American economist, very critical of the system. Someone who taught me, Paul Sweezy, another Harvard graduate. These are people who have been around and at various times in our history, the beginning of the 20th century, during the 1930s, again in the 1960’s, there was intense debate.

There has been that kind of thing in our history. I mean, we as Americans, after all, we take a certain pride, which I think is justified, we criticize our school system. We just spent two years criticizing our health delivery system in this country. We criticize our energy system, our transportation system.

And we want to believe, and I think it’s true, that to criticize this system, to have an honest debate, exposes flaws, makes it possible to repair or improve them, and then our society benefits. But then how do you explain, and that’s your question, that we don’t do that for our economic system?

For 50 years, when capitalism is raised, you have two allowable responses: celebration, cheerleading. Okay, that’s very nice. But that means you have freed that system from all criticism, from all real debate. It can indulge its worst tendencies without fear of exposure and attack. Because when you begin to criticize capitalism, you’re either told that you’re ignorant and don’t understand things, or with more dark implications, you’re somehow disloyal. You’re somehow a person who doesn’t like America or something.

BILL MOYERS: That emerged, as you know, in the Cold War. That emerged when to criticize the American system was to play into the hands of the enemies of America, the Communists. And so it became disreputable and treasonous to do what you’re doing today.

RICHARD WOLFF: And for my colleagues, it became dangerous to your career. If you went in that direction, you would cut off your chances of getting a university position or being promoted and getting your works published in journals and books, the things that academics need to do for their jobs. So yes, it was shut down and shut off. And I think we’re living the results. You know, if I were--

BILL MOYERS: Of the silence? Of--

RICHARD WOLFF: Yes. Of the lack of debate. We’re living in an economic system that isn’t working. So I guess I’m a little bit like one of those folks in the 12-step programs. Before you can solve a problem, you have to admit you got one. And before we’re going to fix an economic system that’s working this way, and producing such tensions and inequalities and strains on our community, we have to face the real scope of the problem we have. And that’s with the system as a whole and at the very least, we have to open up a national debate about it. And at the most, I think we have to think long and hard about alternative systems that might work better for us.

BILL MOYERS: I was intrigued to hear you say elsewhere that this is not just about evil and greed. And yet you went on to say capitalists and the rich are determined not to bear the costs of the recent bailouts or the crisis itself. You even go so far as to suggest, as to question their patriotism, and that they may not have the country’s interest at heart. If that’s not greed, what is it?

RICHARD WOLFF: Oh, I think it isn’t greed. It’s-- and let me explain why. Yes, I’m critical of corporations and the rich because they do call the shots in our society, and so that brings on them a certain amount of criticism, even though they don’t like it. So I will do that. But beyond that, let me absolve them in the following way. Bankers do what this system goads them to do.

If you talk to a banker, he or she will explain to you, “These are the things that will advance the interests of my bank. These are the problems I have to overcome. And that’s what I try to do.” And my understanding, and I’ve looked at this in great de-- is that-- that’s correct. They’re not telling a story. They’re doing. They’re following the rules. They do the things that advance their interests and they avoid the things that would damage their interests.

That’s what they’re hired to do as executives or as leaders of their institutions. And that’s what they do to the best of their ability. So for example, I’m not enthused about arresting these people or punishing them in this or that way. And the reason is simple, if we get, I won’t mention any names, but we get some banker and we haul him up in front of a court, and we find out he’s done some things that are not good.

And we substitute the next one. He gets arrested though, he gets fined, he gets removed. The next one is subject to the same rewards and punishments. The same inducements. The same conditions. If we don’t change the system, we’re not going to change the behavior of the people in it. So in a sense, I do absolve them even when they are greedy, because they’re doing what this system tells them to do. And if we don’t change the system, substituting a new crop will not solve our problem.

BILL MOYERS: You’re also not enthused about regulation, which is what so many liberals and others are calling for now. Is there some parallel reason for that?

RICHARD WOLFF: Yes. I find it astonishing to hear folks talk about regulation. We regulated after every one of our great panics in the 19th century. By the way, in those years, we were more honest. We didn’t refer to a “Great Recession.” We used much more colorful language, “The panic of 1857.” I mean, that describes what people felt. Anyway, after every one of our panics, crises, recessions, depressions, we have regulated. And the regulations were always defended, first by lower-level officials and eventually by the president and the highest authorities, usually on two grounds. “With this regulation, not only will we get out of the crisis we’re in, but,” and there was a pregnant pause, “we will prevent a recurrence of this terrible economic dilemma.” It never worked. The regulations never delivered on that promise. We’re in a terrible crisis now. So all the previous promises about all the previous regulations didn’t work. And they didn’t work for two reasons.

BILL MOYERS: Yeah, why?

RICHARD WOLFF: Either the regulations that were passed were then undone, or they were evaded. And that’s the history of every regulation. During the Great Depression, it was decided, as it has happened again now, that banks behaved in an unfortunate way that contributed to the crisis.

So in the Great Depression, a bill was passed, a regulation called the Glass-Steagall Act, 1933 Banking Act, which basically said, “There has to be two kinds of banks, the banks that takes deposits cannot make risky investments. For that we need something separate called an investment bank. The first thing will be a commercial bank, takes deposits, and we’ll make a wall between them.”

Okay. The bill was passed. For the banks, this was trouble. This was a problem. They didn’t like this. So they spent the first 30 years, 20 to 30 years evading it in a hundred different stratagems. Meanwhile, they began to realize that with some work with politicians, they could weaken it.

And after a while, they decided that even better than evading and weakening, why don’t we just get rid of it? And so in the 1990s, they mobilized, led by some of our biggest banks, whose names everybody knows, and they finally succeeded. The Congress repealed the Glass-Steagall Act, and President Bill Clinton signed the repeal.

BILL MOYERS: It was a bipartisan repeal.

RICHARD WOLFF: Right. It’s a joke. That allowed the banks to make risky bets with their depositors money. Eight years later, our financial system collapsed. It’s like a joke. This is a system that creates in the private enterprise a core mechanism and a logic that makes them do the very things that need regulation and then makes them evade or undo those regulations.

BILL MOYERS: You probably saw the recent story that Facebook, which made more than one billion dollars in profits last year, didn’t pay taxes on that profit. And actually got a $429 million rebate from you and me and all those other taxpayers out there. GE, Verizon, Boeing, 27 other corporations made a combined $205 billion in profits between 2008 and 2011 and 26 paid no federal corporate income tax. What will ultimately happen, Richard if the big winners from capitalism opt out of participating in the strengthening, nurturing, and financial support of a fair and functioning society?

RICHARD WOLFF: Well, the worst example I just learned about a few days ago. And I got it actually from Senator Bernie Sanders from Vermont. That during the very years 2009, ‘10, ‘11, that the federal government was basically bailing out the biggest banks in the United States, they were busily establishing or operating subsidiaries in the Cayman Islands, in the Caribbean, in order to evade taxes.

And it’s a wonderful vignette in which the very government pouring money to salvage these private capitalist institutions is discovering its own revenue from them being undone by their evasion of the regulations about income tax by moving to Cayman Islands where the corporate tax is zero instead of paying their corporate tax in New York or wherever they’re based.

BILL MOYERS: Your assumption that runs through your books, through your teaching, through this very interesting DVD, is that democracy, theoretically if not practically, but you hope practically, acts as a brake, B-R-A-K-E, a brake on private power and greed. And it’s clear that that brake doesn’t work anymore. That it’s not slowing down the growth of power to the capitalist class.

RICHARD WOLFF: Right. And I think it’s very poetic here in the United States. In the 1930s, when we after all had a crisis even worse than the one we had now by most measures, higher unemployment, and greater incidents of poverty and so on, we did still have a political system that allowed pressure from below to be articulated politically.

We had the greatest unionizing drive in the history of the United States, the CIO. We had strong socialist and communist parties that work with the CIO, that mobilized tens of millions of people into unions who had never been in unions before. And they went to the power structure at the time, President Roosevelt as its emblem.

And they said, “You have to do something for us. You just have to. Because if you don’t, then the system itself will become our problem. And you don’t want that. And many of us in the union movement don’t want it either.” Although some of the Socialists and Communists might have been quite happy to go that direction. And I think Roosevelt was a genius politician at that time.

He understood the issue. He went to the rich and the corporations of America, the top, who had become very wealthy at that time, and he basically said to them, “You must give me, the president, the money to meet at least the basic demands of the massive people to be massively helped in an economic crisis. Because if you don’t, then the goose that lays your golden egg will disappear.”

And he split the corporations and the rich. Half of them were not persuaded. And I believe they represent the right wing of the Republican Party to this day. But the other half were. And they made the deal. And so we had this amazing thing. Politics, the threat of the mass of people from below to politically act to change the system led us to see something we’ve almost unimaginable today.

A president, who in the depths of the Depression, creates the Social Security System, giving every American who’s worked a lifetime of 65 years a check for the rest of their life every month. He created unemployment compensation to give those millions of unemployed a check every week. And then to top it off, he created and filled 12.5 million federal jobs because he said, “The private sector either can’t or won’t do it.”

So in the midst of a terrible depression, when every level of government says, “There’s no money,” Mr. Roosevelt proved there is the money. It’s just a question of whether you have the political will and support to go get it. And when people listen to me explain this history, and it’s always amazing to me how many Americans kind of never got that part--

BILL MOYERS: Don’t know it.

RICHARD WOLFF: But when I do that, and they say, “Well, that’s a very risky thing for a politician to do, support the mass of people by taxing the rich, unthinkable.” And then I remind them, Roosevelt is the most popular and successful president in American history. Nobody had ever been elected four times in a row before that.

And it was so upsetting to the Republicans that after Mr. Roosevelt died, they pushed that law through that gives us a term limit of two presidential terms. So it wasn’t the end of his political career, it made him the most powerful popular president we’ve ever had. There must be a lesson here somewhere.

BILL MOYERS: Well, it was one of the few times in history in which the political elite and a few financial elite formed an alliance for the people.

RICHARD WOLFF: Right.

BILL MOYERS: And yet, Richard, it still took the war the create the spending that pulled us out of the depression, right?

RICHARD WOLFF: Right. Because they were always large groups of corporations and the rich who were angry at all of this, like they are today, who didn’t want to pay higher taxes, much higher than corporations pay today, who didn’t want to pay high personal income tax rates, much higher than they are today. But they had to. Right, people don’t remember in 1943, President Roosevelt proposed a top income tax bracket of 100 percent.

BILL MOYERS: Yeah.

RICHARD WOLFF: His bill that he sent to the Congress, a proposal, was that anyone who earns over $25,000, which would be roughly $350,000 a year now, in current dollars, would have to give every nickel of it, beyond the $25,000, to the government, 100 percent. That’s maximum income. The President of the United States, with massive popular support. And when the Republicans said, “No, we can’t do that.” They fought. And the compromise was a 94 percent top rate.

RICHARD WOLFF: Compared to the 39 percent, and .6 percent that we have today. I mean, you can see there that that-- that was a lesson. That I believe the corporations and the rich in America have learned. They saw that they were forced between two choices. A real revolutionary possibility, or a compromise. They voted for the compromise. They gave the mass of people real support, far better than anything they’re getting now.

And they did that because politics was a real possibility to undo their economic system. After the war, I think our history is the history of a destruction of the Communist and Socialist parties first and foremost, and of the labor movement shortly thereafter. So that we now have a crisis without the mechanism of pressure from below. And that may look to those on top as an advantage because they don’t have that problem.

They don’t have a C.I.O. They don’t have Socialists and Communists, the way they do in Europe. But I think it’s a Pyrrhic victory, because what you’re teaching the mass of the American people is that politics, debate, and struggle, is a dead end. And if you think people are just going to sink into resignation, that’s wishful thinking. They’re going to find other ways to protest against the system like this, because the pressures are building in that direction. I think this is a capitalism that I would say has lost its sense of its social conditions, its social limits. It’s killing the mass support without which it cannot survive.

So it is creating tensions and hostilities that will take left wing, right wing, a variety of forms. But it’s producing its own undoing and doesn’t imagine it because it focuses so much on making more money in a normal way of business that it somehow occludes from itself. It doesn’t see the larger social conditions and what its behavior is doing to them.

BILL MOYERS: For a moment, wasn’t there kind of quirky or eccentric symbiosis between the Tea Party and Occupy Wall Street? That, ‘cause in their own different ways, they were reacting to the colossus that was coming apart all around them. And upending their lives.

RICHARD WOLFF: Absolutely. I think in country after country going through this crisis, you’re seeing more or less the same thing. An upsurge of right wing agony and hostility and opposition to what’s happening in this capitalist system and a left wing one. But only difference from country to country is the balance between the two.

And I think the Tea Party comes first because being a right wing party in this country’s much easier, much more socially acceptable to form, and there’s the old roots of it, anyway, in the John Birch societies and all the rest in American history. So we have a Tea Party resurgence.

Then echoed a couple years later by the Occupy Wall Street, which is a left wing response to all of this. And I don’t think we’ve seen the end of either of these. I think these were the first explosions of this process, the first reflections and signs of a society coming apart because capitalism can’t deliver the kind of society and results that people want. And I think we’re going to see more of it and there may be difficult forms of it. But it is part of a system that has come, I think, closer and closer to its historical if not end, then a severe crisis.

BILL MOYERS: But there is no agitation here. People seem not to know what to do here.

RICHARD WOLFF: I think Americans are a little bit like deer caught in the proverbial headlights. They thought that they were in a society that kind of guaranteed that each generation lives better than the one before.

That the American dream gets better and better and is available. They promised when they got married to one another to provide the American dream to each other. And then they promised their children to provide it to them, that the children would have a good education, that children would have the opportunity. They can’t quite believe that it’s not there anymore.

You know, for 30 years, as the wages in America stopped rising since the 1970s, Americans reacted by doing two things. Because they couldn’t give up the idea that they were going to get the American dream. How do you buy the American dream, which becomes ever more expensive, if your wages don’t go up, per worker, per hour? Which they haven’t since the ‘70s.

The first thing you do is send more and more people out to work.
The women went out in vast numbers. Older people came out of retirement. Teenagers did more and more work. Here’s a statistic. The OECD, leading agency gathering data on the world’s developed economy shows that the average number of hours worked per year by an American worker is larger than that of any other developed country on this planet.

We work ourselves like crazy. That’s what you do if the wages per worker don’t go up. You send out more people from the family in order to be able to get that American dream. But of course if you do that, everybody’s physically exhausted.

The stresses in your family become more powerful. What’s happened to American families is a well-known result over the last 30 years. But the other interesting thing, to hold onto the American dream that Americans did when their wages didn’t go up anymore, was to borrow money like it’s going out of style.

You cannot keep borrowing more and more if your underlying wage is not going up. Because in the end, it’s the wage that enables you to pay off what you’ve borrowed. And it was only a matter of time, and 2007 happened to be that time, when you couldn’t do it anymore. You couldn’t borrow anymore because you couldn’t pay it back.

And so you stopped your mortgage or you stopped your credit card payment or you couldn’t make your car payments. And this is a situation that explodes the expectations of a good life. And I think Americans are stunned. And they haven’t yet kind of gotten their heads and their arms around the reality they face. And so what-- we see people in shock, if you like. I mean, I’m stretching the metaphor, but--

BILL MOYERS: That’s all right.

RICHARD WOLFF: The American dream that they thought they could access, that they were told they could access, if they just worked hard or went to school or both of the-- it’s not there. A whole generation of young people is learning that in order to get the education, without which the American dream is not possible, you have to borrow so much money that your whole situation is put in a terrible vice.

Then you discover, at the end of your four years and you have your bachelor’s degree, that the job you had thought you were then entitled to and the income you thought would go with it, they’re not there. And yet you have the debt, the effects of this on our society, not just for the young people confronting it daily, but for the parents who helped them, who led them to expect something, that is producing a kind of stasis, immobility, shock.

But beware, if my psychiatrist wife is right, as she usually is, what happens after that period of stasis, of shock, is a boiling over of anger, as you kind of confront what has happened. And that you were deceived and betrayed in your expectations, your hopes. And then the question is, where does that go?

BILL MOYERS: I’m struck by the fact that you give a fairly dire-- not fairly, a dire analysis of what’s happened to us in the last several years. But at the end of both your book and of your lecture, you don’t wind up cynical or pessimistic. You--

RICHARD WOLFF: Not at all.

BILL MOYERS: You sound like you’re saying, “Let’s take to the barricades.”

RICHARD WOLFF: Yeah. I think there’s a wonderful tradition here in the United States of people feeling that they have a right, even if they don’t exercise it a lot, to intervene, to control. There is that democratic impulse. And I put a lot of stock in the hope that if this is explained, if the conditions are presented, that the American people can and will find ways to push for the kinds of changes that can get us out of this dilemma. Even if the political leaders who’ve inherited this situation seem stymied and unable to do so.

BILL MOYERS: Richard, I want you to come back in a few weeks. Before you come back, I want to alertour of readers of our website, have them submit some questions. You’ve opened so much of it, I know they’ll have some questions.

RICHARD WOLFF: Well, I’ll--

BILL MOYERS: But I’ll bring them here and we’ll deal with this. ‘Cause I know you have some alternatives, that you’ve given a lot of thought to the critique, but you’ve also given a lot of thought to the correcting of our system. And will you do that?

RICHARD WOLFF: I would love to, because one of the things that has happened to me in the last two years is as we’ve developed the criticism and people see the process of how we got here, the most insistent questions is, “What do we do? Where do we go? If regulation isn’t the solution and if punishing this one-- if it is a systemic process, how can we conceive and talk about an alternative system?”

BILL MOYERS: Richard Wolff, I’ve really enjoyed this conversation. The DVD is “Capitalism Hits the Fan.” And the book is “Democracy at Work: A Cure for Capitalism.” Thank you for being with me.

RICHARD WOLFF: Thank you, Bill, for the opportunity.

SOURCE

Your Turn: Got a Question for Richard Wolff? Click HERE.

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Richard Wolff on Curing Capitalism

Bill Moyers
March 22, 2013

Richard Wolff’s smart, blunt talk about the crisis of capitalism on his first Moyers & Company appearance was so compelling and provocative, we asked him to return. This time, the economics expert answers questions sent in by our viewers, diving further into economic inequality, the limitations of industry regulation, and the widening gap between a booming stock market and a population that increasingly lives in poverty.

“We ought to have much more democratic enterprise,” Wolff tells Bill, in response to a question from a viewer in Oklahoma. “We ought to have stores, factories and offices in which all the people who have to live with the results of what happens to that enterprise participate in deciding how it works.”

Addressing a question about capitalism and climate change, Wolff says,“Capitalism is a system geared up to doing three things on the part of business: get more profits, grow your company and get a larger market share If along the way they have to sacrifice either the well-being of their workers or the well-being of the planet or the environmental conditions, they may feel very bad about it - and I know plenty who do - but they have no choice.”

SOURCE

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Obama The Faux Job Savior

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I hear the words “jobless recovery” thrown around a lot describing the economy the past few years. What the heck is that oxymoron SUPPOSED TO MEAN? If it means the rich get richer, the poor aren’t getting any richer, and the unemployed remain jobless - that would be an accurate description of this generation.

FAKE JOBS plans aren’t new to this administration.  Can’t wait to see this “Rebuild America Partnership.” Will that be The President taking credit for the few manufacturing jobs coming back from China because AMERICAN WORKERS ARE MORPHING INTO THE CHEAPEST LABOR ON THE PLANET - attractive to employers like third world countries USED TO BE?

It’s President Obama’s fifth year in office. Long-term unemployment is at 38.1 percent, and those people - jobless for years - are still ignored by his administration. 

‘Nuff said.

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Fact Sheet: The Presidents Plan to Make America a Magnet for Jobs by Investing in Infrastructure
The President’s Plan to Make America a Magnet for Jobs by Investing in Infrastructure

White House
February 20, 2013

Investing in infrastructure not only makes our roads, bridges, and ports safer and allows our businesses and workers to be as competitive as they need to be in the global economy, it also creates thousands of good American jobs that cannot be outsourced.  Since the President took office four years ago, America has begun the hard work of rebuilding our infrastructure.  But theres more to do, and thatҒs why the Presidents plan ensures that the money we invest in infrastructure is spent wisely by adopting a “fix-it-first” policy.

Repair and maintenance of our existing roads, bridges and public transportation systems should take priority before we consider investing in new facilities.  This will ensure that our cities are safer and more modern.  But taxpayers shouldnt have to shoulder the entire burden either.  We also know that America works best when we’re tapping the resources and ingenuity of a vibrant private sector.

Thats why the President’s infrastructure plan calls for a Rebuild America Partnership that will attract private capital to build the infrastructure our businesses need most.  By acting on the Presidents plan, together we can prove that there is no better place to do business and create jobs than right here in the United States of America. 

Investing in a “fix-it-first” policy:  The President’s plan will immediately invest $50 billion in our nations transportation infrastructure, with $40 billion targeted to the most urgent upgrades and focused on fixing our highways, bridges, transit systems, and airports most in need of repair.

Attracting private investment through a “Rebuild America” Partnership:  The President’s plan will partner federal, state, and local governments with businesses and private capital to provide America with the best transportation, electric, water, and communications networks in the world.

Cutting red tape:  The Presidents plan will cut timelines in half for infrastructure projects and create incentives for better outcomes for communities and the environment through a historic modernization of agency permitting and review regulations, procedures, and policies.

The President’s Plan to Put Workers Back on the Job & Build the Infrastructure we Need to Succeed in the Global Economy

Despite progress over the last four years, too many construction workers remain out of work and too many of our nations infrastructure needs remain unmet.  The President’s plan would help put workers back on the job in the near term, while also building the infrastructure our businesses and workers need to succeed in the global economy:

Investing in a “fix-it-first” policy.  The national transportation system faces an immense backlog of state-of-good-repair projects, a reality underscored by the fact that there are nearly 70,000 “structurally deficient” bridges in the country today.  The Presidents plan for $50 billion in frontloaded transportation infrastructure investment would direct $40 billion towards reducing the backlog of deferred maintenance on highways, bridges, transit systems, and airports nationwide.  For example, the President’s proposed investments could bring almost 80 percent of structurally deficient bridges up to date, getting Americans home faster and making the flow of commerce speedier.

Attracting private investment through a “Rebuild America Partnership.” The Presidents plan will bring together an array of new and existing policies all aimed at enhancing the role of private capital in U.S. infrastructure investment as a vital additive to the traditional roles of federal, state, and local governments:

Create a National Infrastructure Bank:  The President continues to call for the creation of a bipartisan National Infrastructure Bank.  The Bank will have the ability to leverage private and public capital to support infrastructure projects of national and regional significance.  In addition, the Bank will be able to invest through loans and loan guarantees in a broad range of infrastructure projects, including transportation, energy, and water, and will operate as an independent, wholly owned government entity outside of political influence.

Enact America Fast Forward Bonds:  Recovery Act funding for “Build America Bonds” (BABs) helped to support more than $181 billion for new public infrastructure.  The program’s innovative design ensured that all taxpayersand not just the wealthiestחreceived the best bang-for-the-buck when the federal government helped states, localities, and their private sector partners invest in new infrastructure.  The Presidents new America Fast Forward (AFF) bonds program would build upon the successful example of the BABs program, broadening it to include similar programs like the qualified private activity bonds program and relaxing certain limitations in the way the combined program could be used.  AFF bonds would attract new sources of capital for infrastructure investment - including from public pension funds and foreign investors that do not receive a tax benefit from traditional tax-exempt debt.

Implement the newly expanded TIFIA program:  The TIFIA program - which provides direct loans, loan guarantees, and lines of credit to regionally or nationally significant transportation projects - received an eight-fold increase in funding in the recent surface transportation reauthorization.  The program, which is especially important to mayors and local leaders, highlights the important role that infrastructure financing can play in catalyzing private investment, and its expansion was a significant step towards more innovative infrastructure financing.

Cutting red tape.  The Administrations infrastructure permitting initiative has shown that we can cut federal review and permitting timelines for construction projects such as highway, bridges, railways, ports, waterways, pipelines, and renewable energy by several months to several years.  This modernization effort will achieve time savings of 50 percent in the federal permitting and review process, while ensuring projects create better outcomes for communities and the environment.  The effort will bring federal permitting and review procedures into the 21st century through expanded use of integrated planning, landscape and watershed-level mitigation, information technology, and publication of public timelines for permitting and review decisions to improve transparency and predictability.

Building on the Progress Wev’ve Made

The Recovery Act was the most significant transportation public works program since the New Deal, providing $48 billion in Recovery Act dollars to more than 15,000 projects across the country.  Between Recovery Act and core infrastructure funds, American workers have improved over 350,000 miles of U.S. roads and repaired or replaced over 20,000 bridges since the President took office.  Over the last four years, the Department of Transportation has built or improved more than 6,000 miles of rail, 40 rail stations, and purchased 260 passenger rail cars and 105 locomotives.  In addition, the Obama Administration has made an unprecedented commitment to strengthen public transportation across the United States, investing in more than 350 miles of new rail and bus rapid transit, and helping to revitalize the American manufacturing industry by investing in 45,621 buses and 5,545 rail cars.

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Thursday, February 21, 2013

Austerity American Style Part 9 - Inflicting Pain and its Aftershock

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A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to fear. The traitor is the plague.
- Cicero

Coming Sequester Cuts Will Make Most of Americans’ Lives Worse - And People Are Mobilizing
In just over a week the government is probably going to enter full-scale austerity.

AlterNet
February 20, 2013

In just over a week the government is probably going to enter full-scale austerity. Republicans are refusing to end tax loopholes for big corporations and billionaires, choosing to let the sequester occur instead. Unless something changes, and soon, $1.2 trillion in cuts to defense and domestic spending begin to kick in. This will hit jobs, growth, and above all it will hit real people.

Starting today, real people started pushing back through a series of more than 100 events that were scheduled in 23 states around the country. They are sponsored by a coalition that includes national labor groups, Americans for Tax Fairness and Health Care for America Now. You can see a list of events at AMERICA WANTS TO WORK or 99 UNITING.

The events come on the heels of our own campaign to SEND MESSAGES to members of Congress.

Actual People

This sequester resulted from one more of those Republican hostage-taking crises. They took the debt-ceiling hostage in an attempt to force cuts in spite of polls showing that We, the People wanted taxes raised on the wealthy and no cuts in essential things government does for people. As part of the deal to release the hostages they demanded that this looming sequester be set up, to bring pressure on Congress to gut other parts of the budget.

People feel squeezed, and rely on essential government services, because 40% OF AMERICANS NOW MAKE LESS THAN 1968 MINIMUM WAGE. That’s right, the linked post explains that if the 1968 minimum wage had increased along with gains in productivity, the minimum wage would be $16.50 an hour today. Between that, the continuing effects of the recent Great Recession, the decline of union bargaining power, and the austerity cuts that have already been forced on us by Republicans people are already stretched to the limit. And now this.

The effect of these things on actual people has not been a part of the national budget discussion for quite a while. After all, by definition in a democracy all government spending is things We, the People decide to do to make our lives better. But also by definition in a plutocracy the things We, the People want just don’t count.

But anyway, here are some numbers, from a fact sheet I received from the COALITION ON HUMAN NEEDS:

A new round of federal budget cuts is slated to start on March 1. If nothing is done, the cuts will deny food to young children, turn low-income families out of their homes, and reduce funds for education and training. These indiscriminate across-the-board cuts (called sequestration) come on top of an average 7.6 percent cut in federal funds to states since 2010. The looming federal cuts would make things worse, hurting vulnerable people, shifting burdens to states and localities, and threatening economic growth.

· Children and mothers losing WIC nutrition aid: 600,000

· Low-income families losing rental housing vouchers: 125,000

· Formerly homeless people losing housing: 100,000

· Children denied Head Start: 70,000

· Funding cut from Head Start: $406m

· Children denied affordable child care: 30,000

· $ cuts deep enough to end services to these many low-income K-12 children: $1.2m

· Fewer people with disabilities served by Vocational Rehab: 75,700

· Fewer meals on wheels served to seniors: 4m

· Adults and children with serious mental illness losing treatment: 373,000

· Unemployment benefits cut for long-term unemployed: 9.4%

· Jobs lost because of sequestration: over 1m

Media Matters has also assembled just a few things THAT WILL BE CUT:

70,000 children kicked off Head Start and 1.2 million kids seeing their schools lose education funds, which mean fewer teachers, crowded classrooms, and less learning time. What if its your child’s school?

Emergency responders lose their jobs, which means slower response times and weaker disaster preparedness. What if your neighborhood is the next one hit by a weather disaster?

Layoffs of airport traffic controllers and transportation security workers. Do you want longer lines and more hassles at the airport?

Layoffs at the Social Security Administration, which mean delays and hassles for seniors enrolling in Medicare or calling about their Social Security benefits. What if its your parents?

Up to 2,100 fewer food inspections. Do you want to worry about the safety of the food you put on your family’s dinner table?

Fewer FBI agents and law enforcement to protect our families from violent criminals. What if its your family?

Media Matters asks this question: Wouldn’t you rather get rid of special interest tax loopholes for corporations and millionaires?

Jobs And Economic Growth

As Atrios says repeatedly at his Eshaton blog, CONTRACTIONARY POLICY IS CONTRACTIONARY. Austerity cutting back on the things government does to make our lives better - cuts back on jobs and growth. England has learned this. The rest of Europe has learned this.

When you slash government the economy slows, tax revenue decreases, safety net program costs go up, and deficits increase. It is just a fact. It is just math. And now it is proven by what has happened in all the countries that have tried it.

Even Defense Cuts Done Wrong

Yes, we need to cut the defense budget, but in a planned way, not all at once with a meat-ax that lays off thousands of people who work in this area. The Pentagon has announced it will furlough 800,000 people. That is 800,000 paychecks that will be cut people who pay rent or mortgages and shop at local grocery stores and clothing stores. Those stores will have to cut back, etc.

Republicans Caused It, Try To Blame Obama

The sequester is spending cuts that Republicans have been demanding, to דreduce the size of government. But now that it is actually occurring, they are trying to deflect blame.

Even though it is Republicans who want government cut, who brought this on by taking the debt ceiling hostage and demanding cuts, who constantly demand cuts to make government smaller, who harp on the evils of government in general, and overwhelmingly voted in favor of the Budget Control Act of 2011 that is forcing this and Democrats overwhelmingly voted against it, are trying to say this isn’t their doing.

But John Avlon, at The Daily Beast, writes in The PowerPoint That Proves Its Not Obama’s Sequester After All,

the whole self-defeating exercise was carried out in response to Tea Party Republicans’ insistence that we play chicken with the debt ceiling, which ultimately cost America its AAA credit rating.

But heres the thing. I happened to come across an old email that throws cold water on House Republicans’ attempts to call this Obama’s Sequester.

It’s a PowerPoint presentation that Boehner’s office developed with the Republican Policy Committee and sent out to the Capitol Hill GOP on July 31, 2011. Intended to explain the outline of the proposed debt deal, the presentation is titled: “Two Step Approach to Hold President Obama Accountable.”

It’s essentially an internal sales documentfrom the old dealmaker Boehner to his unruly and often unreasonable Tea Party cohort. But its clear as day in the presentation that sequestration was considered a cudgel to guarantee a reduction in federal spending - the conservatives necessary condition for not having America default on its obligations.

The presentation lays out the deal in clear terms, describing the spending backstop as automatic across-the-board cuts (sequestration). Same mechanism used in 1997 Balanced Budget Agreement.

The Choices

The President says Republicans have a choice: compromise and close loopholes for corporations and billionaires or let the sequester kill jobs and growth and hurt people. From The Hill, Pentagon informs Congress of plans to furlough 800K civilians

“Republicans in Congress face a simple choice,” the president said Tuesday. “Are they willing to compromise to protect vital investments in education and healthcare and national security and all the jobs that depend on them? Or would they rather put hundreds of thousands of jobs and our entire economy at risk just to protect a few special interest tax loopholes that benefit only the wealthiest Americans and biggest corporations?”

The problem with the President’s plan is he is offering what he calls a balanced approach of closing loopholes and then offers additional cuts to try to get them to go along. In effect, Obama Says Cuts Bad, Proposes Cuts,

Common sense might suggest that if a thug is holding a kid hostage and demanding money you dont offer him half the money and say he can shoot half the kid. That is a balanced response to hostage-taking. But it is not the correct response.

There is one more choice and it is the right choice: just don’t do this. Repeal the sequester. Stop the cuts.

SOURCE

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Businessweek published AN ARTICLE today suggesting common sense sequestration cuts:

1. Ground the glitch-ridden F-35 Joint Strike Fighter program. The F-35 was supposed to produce state-of-the-art stealth jets. It is seven years behind schedule and 70 percent over cost estimates. At almost $400 billion, the F-35 has become the most expensive weapons system in U.S. history and one that offers only marginal improvements over existing aircraft, according to Barry Blechman, co-founder of the Stimson Center, a nonprofit policy institute in Washington. (On Friday, the Pentagon GROUNDED its nascent 51-plane fleet of F-35s after discovering a cracked engine blade in one jet.) “The F-35 is worth killing, particularly given its technical problems,” Blechman said. “Putting the F-35 into production years before the first flight test was acquisition malpractice,” Frank Kendall, the Pentagons acquisition undersecretary, said in February 2012. So, um, let’s do something about it, Frank.

2. While were at it, how about parking the Ground Combat Vehicle? With wind-downs in Iraq and Afghanistan, the Army’s strength is due to decline by some 72,000 by 2017. Still, were poised to spend as much as $32 billion to buy 1,904 new Ground Combat Vehicles, tank-like replacements for the Bradley Fighting Vehicle. What the Army actually needs is improved, smaller vehicles to get modest-sized forces into trouble spots with greater alacrity. “The 70-ton Ground Combat Vehicle won’t be easily transportable by air or sea, raising questions about how quickly it could be deployed in the event of a conflict,” according to a REPORT issued in January by the Congressional Research Service.

3. On the topic of Army gas-guzzlers: Even the generals admit that they dont want or need an updated version of the familiar M1 combat tank. The M1 was originally built to face off against Soviet tanks in a land war in Europe, which thankfully never happened. Congress, however, intends to keep doling out billions to gut and renovate old M1s. That makes no sense.

4. Dock the Littoral Combat Ship. The Navy is building two versions of the troubled vessel that was once billed as a low-cost, versatile coastal patrol ship. The LCS has DOUBLED IN PRICE, to more than $440 million a ship. Evaluators have determined that its guns aren’t effective, meaning it might not survive in combat.

5. Excess bureaucracy must go. “One need only spend 10 minutes walking around the Pentagon or any major military headquarters to see excess and redundancy,” former Defense Secretary Robert Gates said in September at an event organized by the Center for Strategic & International Studies in Washington. He should know. As defense chief in 2009, he culled 20 weapons systems he thought unnecessary or too expensive, including the F-22 fighter. One place to start thinning the bureaucracy: the staff of the Joint Chiefs of Staff. That office has more than tripled in manpower, to 4,244 in 2012 from 1,313 in 2010, according to the Pentagons annual manpower report. (Fewer bureaucrats means fewer memos and fewer meetings. Win-win-win.)

Why is sensible military budgeting so difficult? Because lawmakers, including small-government Republicans, protect defense business in their home states with the ferocity of Spartans. Even if the Pentagon offered up the cuts we’ve outlined here, Congress would almost certainly reject them. The senators and representatives dont have the political courage to face voters and tell them that the republic simply does not need the weapon under construction in their hometown.

Consider the F-35. Primarily made by Lockheed Martin (LMT), the plane has 1,300 suppliers in 45 states supporting 133,000 jobs, according to Lockheed. “It’s got a lot of political protection,” according to Winslow Wheeler, director of the Project on Government Oversights Center for Defense Information in Washington. “Very, very few members of Congress are willing to say this is an unaffordable dog and we need to get rid of it.”

So rather than making strategic spending reductions that might produce a leaner, more effective military, sequestration will result in fewer pilot training hours and under-prepared soldiers. The generals light their hair on fire, and lawmakers protect the pork. Ah, democracy.

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Guess What? The Debt Everyone Is Freaking Out About Does Not Exist
What nobody talks about.

By Jeff Spross
AlterNet
February 25, 2013

Between the NEW AND IMPROVED Simpson-Bowles plan, Joe Scarboroughs FEUD with Paul Krugman, the relentless drumbeat of the entire Republican Party, and the media blitzkrieg launched by the BILLIONAIRE-DRIVEN “Fix the Debt” CAMPAIGN, one might think no serious and responsible American can ignore the unassailable truth: America faces a debt crisis, which we must act on immediately and decisively.

Well, not quite. The actual truth is that the debt everyone’s freaking out about does not exist.

Some of the debt certainly exists, like the roughly $11.6 trillion OWED to foreign and private creditors. But that isn’t the debt anyone’s worried about. If we stopped adding to it tomorrow, the debt as it stands would pose essentially zero threat to the country’s fiscal health, as the ongoing growth of the economy would send our debt-to-GDP ratio dropping like a rock.

So the debt that’s got everyone worried is the part we haven’t yet incurred. And that debt, by definition, does not exist. It’s not a certainty, its merely a projection by the Congressional Budget Office. And trying to model how the federal budget, not to mention the entire American economy, will behave years or even decades in the future is a devilishly treacherous business.

For instance: one of Rep. Paul Ryan’s (R-WI) FAVORITE TALKING POINTS in 2011 was that the computer simulations CBO uses to model the economy crash when they attempt to account for the debt load in 2037. Imagine trying to model the 2011 economy in 1985. Things you’d never see coming include (among other things) the Internet, fracking, massive advances in computing power, the renewable energy boom, three wars, a massive recession, and Harry Potter. And predictions can be hard even over shorter time frames. In 1995, CBO PREDICTED the deficit in 2000 would be well over $200 billion. We RAN A SURPLUS of $236 billion.

In fact, Ryan plastered dramatic graphs of debt going out 75 years onto EVERYTHING INSIGHT while stumping for his last budget. Forget predicting 2011 in 1985. That’s LIKE PREDICTING 2011 in 1940.

So neither the impending Baby Boomer retirement nor growing health care costs make astronomical debt a certainty, despite the insistence of the conservative and centrist punditariat. With respect to the Boomers, economist Dean Baker RAN THE NUMBERS and found that if productivity growth in the economy clocks in at one percent until 2035 (a very conservative estimate) the resulting gains will swamp the added retiree burden.

As for health care cost growth, its perhaps the best example available to explain why the debt doesn’t actually exist. The Congressional Budget Office (CBO) projects, based on current trends, that EXCESS COST GROWTH will become the lead driver of Medicare and Medicaid spending by 2037 the primary cause of our long-term debt, and the thing that keeps budget hawks up at night. But if you look at CBO’s fine print - PAGE 60, if you’re interested - their complex formula for making this projection essentially boils down to looking at past trends in health care costs and assuming they’ll be similar going forward.

The catch? The entire purpose of health care reform, whether we keep Obamacare or get Ryans preferred replacement, is to change those trends by changing the structure of health care markets - how we buy, sell, and deliver care. That should slow health care cost growth, making it less expensive for the government to pay for health care through Medicare and Medicaid.

But CBO really doesn’t have the tools to model those kinds of structural changes. Its analyses are generally limited to hard spending cuts or revenue increases. CBO Director Doug Elmendorf TOLD Ryan as much during a hearing, which Ryan took to mean his premium-support scheme for Medicare might work better than CBO estimated. But the point applies equally to OBAMACARE’S REFORMS, for example.

In other words, the general assumption within the Beltway that we’ll writelegislation, the CBO will tell us it solves the problem, then well pass it and the problem will be solved - gets it backwards. The central debt problem of growing health care costs is something CBO probably can’t tell us whether we’ve solved until we’ve already solved it. Case in point: CBO just significantly DOWNGRADED its projections for Medicare and Medicaid spending over the next decade, precisely because growth in HEALTH CARE CRISIS has unexpectedly SLOWED to a 50-year low since 2009. A big part of the slowdown is the recession, and so probably temporary, but lots of economists think a big part is also durable, structural change to health care markets. We probably have Obamacare TO THANK for that.

It should be said that this situation certainly isn’t CBO fault. They’re a sober organization well aware of their own limits, and regularly try to remind us (PAGE 59) that even without policy changes, actual spending for health care could be much lower or much higher than the figures contained in CBO’s and other analysts’ projections. We just never pay attention. And as a consequence, we’re currently obsessing over a problem that might not exist.

But doesn’t uncertainty cut both ways? Like CBO said, spending could be much higher in the future - suppose, for example, we fight a war with Iran. That sort of unpredictable policy shift could make the future debt even bigger than CBO currently projects.

Well, its not all that clear that’d be bad: contrary to popular belief, THERE’S no MAGIC debt-to-GDP RATIO that would trigger an economic crisis. JAPAN, BRITAIN, and FRANCE - have all carried far larger debt burdens than ours for extended periods of time without calamity arriving. America’s own borrowing costs ARE LOWER NOW than in the 90s, despite lower debt then. And because we control our own currency, its not even clear that the United States COULD EVER SUFFER A DEBT-INDUCED ECONOMIC COLLAPSE. We could eventually run ourselves into high inflation, presumably, but we have MORE THAN ENOUGH ROOM to maneuver there as well.

By fixating on a problem that may or may not exist, Washington has trapped policymaking in a weird, postmodern dilemma. We’ve declared there’s a crisis because we’ve produced a hypothetical number, tethered to reality only by a host of assumptions and guesswork about what will happen in the next several decades. Then we insist this crisis isn’t solved until we’ve made policy changes that shift the math designed to spit out said hypothetical number. Policymaking becomes less about solving concrete problems (more on that in a bit) and more about made-up numbers on an Excel spreadsheet.

This choice to prioritize a phantom number over real-world evidence has consequences. In a depression, spending cuts suck demand out of the economy, LEADING TO SLOWER GROWTH. Remember: the denominator counts as much as the numerator in the debt-to-GDP ratio. EUROPE HAS so far PURSUED austerity with markedly more enthusiasm than the United States, and its economic performance predictably tanked as a result. Spain and France ARE ANTICIPATED to miss their latest debt-cutting targets, and the Continent as a whole will probably not see renewed economic growth for another year.

Both in Europe and here in America, we have tax codes that BY THEIR NATURE bring in less revenue when the economy goes into a downturn, and a series of safety net programs designed TO RAMP UP when unemployment rises. The VAST MAJORITY of the deficits we’ve seen since President Obama took office were due to the 2008 collapse. Under depression conditions, deficits are a feature, not a bug.

Yet we’ve ALREADY cut NON-DEFENSE DISCRETIONARY SPENDING to 40-year lows, ENDANGERING all SORT’S OF INVESTMENTS in America’s infrastructure, health, safety, communities, and future productivity. And that’s before THE SEQUESTER kicks in. This massive failure to invest or aid saps the economy’s skills, education, networks, and future prospects. The longer unemployment and stagnation drags on, THE MORE DAMAGE WE DO to Americans’ abilities to prosper, and the less well be BE ABLE TO GROW the denominator over the coming years.

Refusing to tackle that all-too-real crisis with the full range of economic resources at our disposal is a shameful moral and political failure. Especially when the reason we’re refusing is fear of shadows cast on the wall.

SOURCE

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Hail Armageddon

By Charles Krauthammer
Washington Post
February 28, 2013

“The worst-case scenario for us,” a leading anti-budget-cuts lobbyist told The Post, “is the sequester hits and nothing bad really happens.”

Think about that. Worst case? That a government drowning in debt should cut back by 2.2 percent and the country survives. That a government now borrowing 35 cents of every dollar it spends reduces that borrowing by two cents - and nothing bad really happens. Oh, the humanity!

A normal citizen might think this a good thing. For reactionary liberalism, however, whatever sum our ever-inflating government happens to spend today (now double what Bill Clinton spent in his last year) is the Platonic ideal - the reduction of which, however minuscule, is a national calamity.

Or damn well should be. Otherwise, people might get the idea that we can shrink government and live on.

Hence the president’s message. If the “sequestration” - automatic spending cuts - goes into effect, the skies will fall. Plane travel jeopardized, carrier groups beached, teachers furloughed. And a shortage of junk-touching TSA agents.

The Obama administration has every incentive to make the sky fall, lest we suffer that terrible calamity - cuts the nation survives. Are they threatening to pare back consultants, conferences, travel and other nonessential fluff? Hardly. It shall be air-traffic control. Meat inspection. Weather forecasting.

A 2011 Government Accountability Office report gave a sampling of the vastness of what could be cut, consolidated and rationalized in Washington: 44 overlapping job training programs, 18 for nutrition assistance, 82 (!) on teacher quality, 56 dealing with financial literacy, more than 20 for homelessness, etc. Total annual cost: $100 billion-$200 billion, about two to five times the entire domestic sequester.

Are these on the chopping block? No sir. Its firemen first. That’s the phrase coined in 1976 by legendary Washington Monthly editor Charlie Peters to describe the way government functionaries beat back budget cuts. Dare suggest a nick in the city budget, and the mayor immediately shuts down the firehouse. The DMV back office, stacked with nepotistic incompetents, remains intact. Shrink it and no one would notice. Sell the firetruck the people scream and the city council falls silent about any future cuts.

After all, the sequester is just one-half of 1 percent of GDP. It amounts to 1.4 cents on the dollar of nondefense spending, 2 cents overall.

Because of this year’s payroll tax increase, millions of American workers have had to tighten their belts by precisely 24 percent. They found a way. Washington, spending $3.8 trillion, cannot? If so, we might as well declare bankruptcy now and save the attorney’s fees.

The problem with sequestration, of course, is that the cuts are across the board and do not allow money to move between accounts. It’s dumb because it doesn’t discriminate.

Fine. Then change the law. That’s why we have a Congress. Discriminate. Prioritize. That’s why we have budgets. Except that the Democratic Senate hasn’t passed one in four years. And the White House, which proposed the sequester in the first place, had 18 months to establish rational priorities among accounts - and did nothing.

When the GOP House passed an alternative that cut where the real money is - entitlement spending President Obama threatened a veto. Meaning, he would have insisted that the sequester go into effect - the very same sequester he now tells us will bring on Armageddon.

Good grief. The entire sequester would have reduced last years deficit from $1.33 trillion to $1.24 trillion. A fraction of a fraction. Nonetheless, insists Obama, such a cut is intolerable. It has to be “balanced” - i.e., largely replaced - by yet more taxes.

Which demonstrates that, for Obama, this is not about deficit reduction, which interests him not at all. The purpose is purely political: to complete his Election Day victory by breaking the Republican opposition.

At the fiscal cliff, Obama broke - and split - the Republicans on taxes. With the sequester, he intends to break them on spending. Make the cuts as painful as possible, and watch the Republicans come crawling for a “balanced” (i.e., tax-hiking) deal.

In the past two years, House Republicans stopped cold Obama’s left-liberal agenda. Break them now, and the road is open to resume enactment of the expansive, entitlement-state liberalism that Obama proclaimed in his second inaugural address.

But he cannot win if nothing bad really happens. Indeed, he’d look both foolish and cynical for having cried wolf.

Obama’s incentive to deliberately make the most painful and socially disruptive cuts possible (say, oh, releasing illegal immigrants from prison) is enormous. And alarming.

Hail Armageddon.

SOURCE

It’s 1948 Again....Wake Up!

By Thom Hartmann
March 1 2013

Today, the battle lines are drawn pretty much the same as they were in 1948 and 1932. Millions of Americans are struggling to survive, to get a proper education, and the very rich are making out like bandits, all thanks to Republican “misrule and inaction.”

Watch the video report HERE.

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Sequester cuts: A new stage in the assault on the US working class

By Andre Damon and Barry Grey
World Socialist Web Site
March 2, 2013

With the launching of $85 billion in domestic spending cuts this year, and $1.2 trillion over the next decade, the American ruling elite has dramatically escalated its drive to place the full burden of its crisis on the working class. The across-the-board cuts in health care, housing, education, public transit, jobless benefits, nutrition assistance and other social services, under the so-called budget sequestration that took effect on Friday, have been presented as temporary reductions pending a bipartisan deficit-cutting deal.

In fact, these cuts will never be fully restored. On top of the $1.2 trillion in cuts enacted by the Obama administration and Congress last year, they establish a new base line for even deeper cuts to come.

At the same time, the escalating impact of the cuts, including mass layoffs and furloughs of federal workers and a chain reaction of cuts and layoffs at the state and local level, will be used to generate a crisis atmosphere and soften up the population for the imposition of historic attacks on the basic health and retiree benefit programsso-called entitlements - upon which tens of millions people rely.

No less devastating will be the economic aftershocks of the spending cuts, which are expected to cause close to a million job losses after the worst quarter of economic growth since the 2008 crash.

Absent in the phony debate and media blather on the deficit is any reflection of the social crisis bearing down on ever wider sections of the population, or any expression of the needs and interests of working people.

Behind the partisan mud-slinging, the stepped-up offensive against the working class is the product of a conspiracy between the Democrats and Republicans, spearheaded by the Obama administration. In a press conference Friday, Obama professed concern over the impact of the cuts on ordinary people. He postured as the proponent of a “fair” and “balanced” approach to deficit-cutting, and the defender of the “middle class.”

This pose amounts to calls for token tax increases on the rich in addition to spending cuts, and attempts to shift all blame for the sequester cuts on the Republicans, who reject any tax increases.

At the same time, Obama signaled to his real constituencythe corporate-financial aristocracy - that the cuts will be permanent. “In the absence of a decision on the part of the speaker of the house and others to put middle class families ahead of whatever political imperatives he might have right now”, Obama said, “we’re going to have these cuts in place.”

He reiterated that his central targets are the core social programs remaining from the reforms of the 1930s and 1960s - Medicare and Social Security. Any eventual bipartisan budget deal, he made clear, would include major cuts in these entitlement programs.

Obama stressed that previous White House proposals - including slashing hundreds of billions of dollars from Medicare, raising the eligibility age for the program, and cutting Social Security benefitsremained on the table.

“I’m prepared to take on the problem where it exists on entitlements, and do some things that my own party really doesn’t like,” he said.

Cuts to these programs, something opposed by close to 90 percent of the population, according to opinion polls, were previously seen as the “third rail” of American politics. The Democrats and Republicans under Obama have conspired to create a series of manufactured crises - the 2011 debt ceiling deadline, the January 1 fiscal cliff, and now the sequester - to blackmail the population into accepting the slashing of these programs as the long-term - “solution” to what they portray as a looming deficit disaster.

Obama’s cynicism knows no bounds. His pretense of concern for working people bears no relation to what he has done in the White House - overseeing handouts to the rich and attacks on workers - and what he intends to do.

The sequester cuts are entirely in line with the agenda Obama brought with him when he entered the White House in 2009. The budget projection he presented that year called for a reduction in domestic discretionary spending to 7.4 percent of the US gross domestic product by 2013, and to just 6.3 percent by 2019. This compares to 7.9 percent in the final year of the Bush administration.

It was, moreover, the White House that proposed the sequestration cuts as part of the budget-cutting deal reached with the Republicans in 2011.

Obama has repeatedly boasted of bringing domestic discretionary spending to its lowest level as a share of the economy since the Eisenhower administration. Since taking office, he has overseen the elimination of 719,000 federal, state and local government jobs. If the pre-2008 trend in government hiring had continued through Obama’s first term, there would be two million more government employees than there are now.

It is no accident that Obama made gestures in support of gay marriage and women’s rights on the eve of the sequester cuts. “I was pleased to see that the House passed the Violence Against Women Act yesterday,” he said at his Friday press conference, and noted that his administration had filed a brief the previous day urging the US Supreme Court to overturn a California law banning gay marriage.

These were calculated moves to shore up his support among liberals and middle-class pseudo-left groups, such as the International Socialist Organization, whose obsession with racial and gender politics has provided the ideological framework for their transition into the camp of US imperialism. Obamas sops to gay and womens rights were designed to provide these forces with political cover for their support for his austerity agenda.

The World Socialist Web Site and the Socialist Equality Party call on workers and youth to reject the entire framework of the so-called debate on the deficit. Working people are not responsible for and must not be made to pay for the failure of the capitalist system.

The central claim of the ruling elite and its political mouthpieces - that “there is no money for jobs, education, health care, housing, pensions” - is a lie. The American financial elite has never been richer. Even as the government was launching its attack on social programs, the Dow Jones Industrial Average was heading for a new record high. Corporate profits and CEO pay continue to soar, subsidized by trillions in virtually free loans and bailouts from the Treasury and the Federal Reserve.

The resources exist to provide good-paying jobs, decent education, housing, health care and pensions for all. These resources are, under the profit system and the two-party monopoly that defends it, concentrated in the hands of a tiny parasitical elite.

Workers should reject all demands that they “sacrifice” to bail out this modern-day aristocracy. Instead, they should demand that all of the cuts already enacted be fully restored and hundreds of billions of dollars be made available to secure their basic social rights to jobs, education, housing and health care.

These demands can be met only through the united mobilization of the working class in opposition to the Obama administration, the two parties of big business, and the entrenched wealth and power of the financial oligarchy. The Socialist Equality Party fights for the development of a mass socialist movement of the working class to establish a workers government and nationalize the corporations and banks under the democratic control of the working population. This is the only basis for reorganizing economic life on the basis of social need, not private greed.

SOURCE

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Nobody in Europe sees a contradiction between austerity and growth

By Roberet E Black
New Economic Perspective
April 10, 2013

The two most revealing sentences about the gratuitous Eurozone disaster the creation of the deepening ּber-Depression was reported today. The context (rich in irony) is that U.S. Treasury Secretary Lew spent his Spring Break in Europe meeting with his counterparts.  The Wall Street Journal֒s articles title explains LewҒs mission and its failure:U.S. Anti-Austerity Push Gets Cool Reception in Europe.Ӕ Here are the sentences that capture so well why Germanys destructive economic policies caused the Ҽber-Depression: ӓNobody in Europe sees this contradiction between fiscal policy consolidation and growth, said Mr. SchԤuble. We have a growth-friendly process of consolidation.Ӕ

Wolfgang Schuble is Germanys finance minister.  “Fiscal consolidation” is his euphemism for austerity.  “Austerity is an infamous word to tens of millions of Europeans.  Growth-friendly is his euphemism for causing the ber-Depression.” I have explained in a recent column that current unemployment rates in the European periphery are often multiples of the average unemployment rates in large European nations from 1930-1938.  Current unemployment rates in the U.K. and France are broadly comparable to their average unemployment rates in 1930-1938. 

Schubles economic policies (austerity) have proven catastrophic.  They are contrary to everything we have learned in economics.  In my April 9, 2013 column criticizing the New York TimesԤҒcoverage of the self-destructive austerity the EU and the IMF inflicted on Cyprus I quoted Paul Krugmans devastating criticism of the EU austeriansҒ dishonest response to their failures and the massive misery they have inflicted.

Thus in January 2011 Olli Rehn, a vice president of the European Commission, praised the austerity programs of Greece, Spain and Portugal and predicted that the Greek program in particular would yield ӑlasting returns. Since then unemployment has soared in all three countries җ but sure enough, in December 2012 Mr. Rehn published an op-ed article with the headline Europe must stay the austerity course.ђ

Oh, and Mr. Rehns response to studies showing that the adverse effects of austerity are much bigger than expected was tosend a letterto finance minsters and the I.M.F. declaring that such studies were harmful, because they were threatening to erode confidence.Ҕ

Schubles claims about austerity repeat two of the great lies that are driving the 䒼ber-Depression: (1) austerity in response to the Great Recession stimulates economic growth and (2) everyone agrees this is true.  The third great lie is that there is no alternativeӔ to austerity. 

Economists have known for at least 75 years that austerity is likely to make economic contractions more severe.  The eurozones infliction of austerity has produced precisely the self-inflicted damage that economists predicted.  The European leaders who caused this wholly gratuitous economic disaster, unsurprisingly, will not admit or remedy their errors.

But America has its own variant of this insanity and Lew is one of our most self-destructive austerians.  Like SchҤuble, Lew is a lawyer.  As Obamas OMB Director, Lew prepared a budget and a rationale for that budget that was an ode to austerity.  I demonstrated this in detail in a prior column.

Lew was also one the group of Obama aides noted for their protection of Wall StreetҒs interests who led the effort to inflict austerity and begin to unravel the safety net through what they called the Grand BargainӔ (actually, the Great Betrayal).

Obamas decision to send Lew, the great proponent of self-destructive austerity, to Europe to urge them to end their self-destructive austerity exemplifies the incoherence of the administrationҒs financial policies.  The fact that Obama is simultaneously proposing the Great Betrayal its sixth form of austerity that Obama has agreed to inflict on our Nation since 2011 ֖ produces a level of incoherence, incompetence, and hypocrisy so epic that it is likely to cause economists to act like manic depressives bouncing between wild-eyed gales of laughter and crying jags.

Putting two lawyers together to discuss macroeconomic policy also leads to discussions that cause economists jaws to drop in shock.  If you understand economics you may wish to put on a neck brace before reading the next passage lest its incoherence cause whiplash.

ғStanding next to Mr. Schuble, Mr. Lew said pointedly that deficit reduction needed to be balanced with growth and investment policies. While growth targets may be different for different countries, he said, I think it is fair to say that zero isn䑒t a good target for anybody and negative is very bad.Ҕ

Growth targets are meaningless in this context.  You cannot counteract austerity dragging your economy deeper into recession or depression by saying: “we are targeting a growth rate of four percent.” There is no magic incantation that can remove austerity’s destructive effect.  A country cannot balance austerity with growth and investment policies.  Austerity is an anti-growth policy. It frequently makes the debt-to-GDP ratio larger because it causes such a large fall in GDP.  Krugman explained this in the same article I cited above.

“Meanwhile, austerity hasn’t even achieved the minimal goal of reducing debt burdens. Instead, countries pursuing harsh austerity have seen the ratio of debt to G.D.P. rise, because the shrinkage in their economies has outpaced any reduction in the rate of borrowing.”

Investment programs can be very helpful in conjunction with overall stimulus budgets, but they cannot counteract austerity.  This has been one of Obamas recurrent blind spots.  He seems to believe that if he can implement a new $2 billion infrastructure investment or jobs program that can overcome the damage to the economy caused by austerity in the form of a combined $300 billion in reduced spending and increased tax revenues.  The net effect is $288 billion in lost demand due to austerity.  This slows growth.  If the austerity is large enough it causes growth to turn negative and throws the Nation back into recession or depression.  We may know why Obama has this blind spot about the damage he is inflicting through austerity Җ he gets his advice from Lew.

SOURCE

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Sequestration Air Traffic Controller Furloughs Kick In, Delays Expected

Progress Illinois
April 22, 2013

The Federal Aviation Administration started furloughing some of its air traffic controllers Sunday due to the federal sequestration, and delays at O’Hare International Airport may average at 50 minutes per flight this week, the Chicago Tribune reported.

Specific projected delays at Midway Airport as a result of the controller furloughs have not been released but “are expected on average to be significantly shorter than O’Hare delays,” FAA spokesman Tony Molinaro told the Chicago Tribune.

On average, about 1,200 to 1,500 controllers at major U.S. airports will be staying home each day, Paul Rinaldi, president of the Air Traffic Controllers Association, told Reuters. Rinaldi added that some airports might be able to move around staff to alleviate some of the effects of the furloughs, which are set to last through the end of the U.S. fiscal year in September.

As part of the across-the-board spending cuts, the FAA must cut $637 million from its $16 billion budget, and the furloughs are expcted to save about $200 million, the FAA said last week.

SOURCE

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Harris To Layoff Workers Because Of Sequestration

By SpaceCoastDaily
April 12, 2013

Melbourne-based defense contractor Harris Corporation, with a purpose to reduce the companys expenses, announced yesterday they would reduce its workforce through layoffs.

This action by one of Brevard County’s major employers is to make up for the automatic cuts in government spending that began with sequestration last month.

“Operating under a continuing resolution followed by sequestration and the related indecision surrounding how sequestration budget cuts will be implemented has delayed U.S. Government procurement decisions and reduced spending,” said William M. Brown, president and chief executive officer.

“The uncertainty is unprecedented, and the political budgetary process is progressing slowly. As a result, we are not anticipating a return to typical procurement processes before the end of our fiscal year.”

Harris, which employs more than 15,000 people, didnt say precisely how many workers would be getting pink slips. The company also indicated that they would close offices and facilities in the face of less than expected performance in HarrisҒ first quarter revenues, as their stock dipped 6.5 percent.

INTERNATIONAL COMPANY

Harris is an international communications and information technology company serving government and commercial markets in more than 125 countries. Headquartered in Melbourne, Florida, the company has approximately $5.5 billion of annual revenue, and among the approximately 15,000 employees, are 6,000 engineers and scientists.

According to Harris.com the company is, Dedicated to developing best-in-class assured communications products, systems and services.

SOURCE

Austerity American Style
[PART 1] - Ending The Safety Net
[PART 2] - Enough Is Enough
[PART 3] - Big, Bad Businessmen
[PART 4] - Big, Bad Banks
[PART 5] - Selling Out The Public
[PART 6] - No Jobs Plan
[PART 7] - Big, Bad Cronies
[PART 8] - Red-State Model
[PART 9] - Inflicting Pain
[PART 10] - The Grand Betrayal

Posted by Elvis on 02/21/13 •
Section Dying America • Section Austerity American Style
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