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Austerity American Style

Tuesday, July 09, 2013

Austerity American Style Part 11 - The Sequester Act III


ATC is one of the agencies that got hit:

15,000 air traffic controllers are on furlough Monday due to federal budget cuts

THEN what happened?

Flight delays caused by the furloughs of air-traffic controllers are coming to an end.

The House cleared legislation Friday that allows the Federal Aviation Administration (FAA) to shift $253 million from other accounts to end furloughs that began Sunday. The vote was 361-41. The Senate approved it Thursday night.



The Shameful Sequester Vote: Bad for Democrats, Worse for Democracy
Wouldn’t it be nice if Congress protected the poor with the same verve with which they rush to protect annoyed upper-middle-class flyers?

By Derek Thompson
The Atlantic
April 26, 2013

The morality play known as “Sequester” is entering its third act this week, and what a spectacularly awful and pointless piece of theater it has been. In the pre-curtain progloue, the president cuts a deal with the GOP to avoid a debt ceiling crisis in 2011. They schedule a law so stupid, so unfair, and so blatantly misguided that Washington could ever allow it to become law, right?


Wrong. Act I opened in March of this year, on the eve of sequester’s across-the-board spending cuts. With the parties as entrenched as ever—Democrats: “Raise taxes”; Republicans: “Never”—the unthinkable law didn’t just become thinkable. It actually became the law.

In Act II, the White House warned of sequester’s chaos—flight delays! furloughs! relentless cable news coverage!—but as the spending cuts faded in slowly, the effects were small, and people began to wonder whether the they will have any effect whatsoever.

But now it’s Act III, and Chekhov’s gun has gone right off: FAA furloughs and the specter of massive flight delays screamed across cable news tickers this week. The House immediately voted overturn the FAA cuts.

This vote is bad for Democrats, but more importantly, it’s bad for democracy. It’s bad for Democrats because, as Jon Chait notes, excluding the most painful cuts from sequester obviates the whole point of sequester. Sequester was supposed to be so stark and painful nobody could stand it; not pretty painful but easily tolerated with some fixes. If Republicans can pick and choose which cuts to reverse, Democrats will have utterly lost their grand strategy to force the GOP to accept higher taxes.

But, far more importantly, the vote was bad for democracy. A Congress reacts to flight delays but not to low-income families losing housing vouchers and unemployment check cash is a body of elites representing elites. Matt Yglesias passes along a relevant graph from Larry Bartels’ 2005 paper on “Economic Inequality and Political Representation” that found both Democrats and Republicans are particularly good at representing their middle-class and high-income constituents, but not so responsive to what poor people want or think.


And, of course, the other loser of sequestration in 2013 will be the U.S. economy. Today’s GDP report put U.S. growth at a plodding 2.5 percent. The unemployment rate is still in the high 7s. Meanwhile, with inflation and interest rates low, it is the perfect time to run higher deficits rather than pass austerity legislation that was designed to be an unthinkably bad law, anyway.

In the end, I have to agree with Chait. This play’s finale was written by the prologue, when the White House agreed to negotiate with Republicans over the debt limit and gave birth to this awful policy. Sequestration theater was fated to end poorly for all of its principals.



The Sword Drops on Food Stamps

By George Zornick
Tha Nation
June 11, 2013

It’s official: Congress will slash food stamp funding in the midst of a deep economic recession, when more people rely on food stamps than ever before.

Monday night, the Senate passed a five-year farm bill that contained $4.1 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP) over ten years. This ensures that the only debate now will be about how much to cut - and its likely to result in cuts much deeper than $4.1 billion.

The House Agriculture Committee passed a farm bill last month that cut $20.5 billion from SNAP by removing categorical eligibility (more on that SOURCE), which would take food stamps away from 2 million Americans and hundreds of thousands of children.

That bill has yet to be fully debated and passed on the House floor, and the push to make the cuts even deeper will be strong - conservatives have insisted on even deeper cuts. Representative Paul Ryans 2013 budget, for example, CALLED FOR $135 billion in food stamp cuts, and on Tuesday, twenty-five House Republicans wrote to House Speaker John Boehner to remove food stamp funding from the bill altogether. (They just want the program debated on a separate track, but the barely implicit message in the letter is that they don’t want to be forced to agree to only $20.5 billion in food stamp cuts at the risk of killing the farm bill.)

The House bill, once passed, will head to conference committee, and the negotiators will have to reach a consensus number. Without question, it wont be lower than $4.1 billion.

Why did Democrats in the Senate head down this road? Some attempted not to - Senator Kirsten Gillibrand introduced a bill last month that blocked any food stamp cuts, but only twenty-five of her colleagues, and zero Republicans, voted for it. It failed 70-26.

Senator Debbie Stabenow, chair of the Senate Agriculture committee, has defended the cuts as designed “only to stop waste, fraud and abuse” in the SNAP program, and urged Democrats to vote against Gillibrands bill. “Every family that currently qualifies for nutrition assistance in this country continues to get that assistance,” she said. “We do make sure there is integrity in the programs.”

That’s not really what the bill does, however. It cuts $4.1 billion by eliminating the “Heat and Eat” programs adopted by several states that coordinate low-income heating assistance with SNAP benefits, thus allowing a slightly larger benefit. The Coalition on Human Needs explains:

Fifteen states and the District of Columbia have opted to provide SNAP households with a nominal [Low Income Heating Assistance Program] payment, so that instead of having to provide burdensome monthly documentation of their shelter and heating/utility bills, they can deduct a standard allowance from their income, thereby increasing the amount of SNAP benefits they qualify for. This Heat and EatӔ approach disproportionately helps seniors and those with disabilities, who pay a high proportion of their income on shelter costs. Without this coordinated approach, such households may lose $50$75 a month in SNAP benefits.

Aside from being, well, cruel, the food stamp cuts in the Senate bill are also damaging to the economy. The Center for American Progress, in a study released in March, found that for every $1 billion cut from SNAP, 13,718 jobs are lost:


So the Senate bill, by that calculation, will cost 56,243 jobs. CAP noted the losses will likely have the greatest impact on younger workers, since they account for a disproportionate share of workers in food-related industries.

The only hope now to at least moderate the cuts is a band of House Democrats who have pledged to fight the food stamp cuts ferociously, as we reported last month.



Furloughs are here for Defense Department workers

By Laura Clawson
Daily Kos
July 8, 2013

That GIANT SUCKING SOUND you hear is the paychecks of around 650,000 civilian Defense Department workers:

Furloughs for Department of Defense civilians begin Monday, a move that amounts to a 20 percent cut in pay for hundreds of thousands of defense workers over the next three months and will disrupt operations at installations around the country, Pentagon officials warn.

It was almost worse - the furloughs will total 11 days per worker, but originally the plan was for a whopping 22 days of furloughs. But a 20 percent pay cut over three months is going to be, for most workers, more than can be made up for by just not saving or by cutting the obvious luxuries. A 20 percent pay cut hurts. Which is what Republicans wanted, to protect corporations from more taxes by hurting working people.


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
[PART 11] - The Sequester ACT III
[PART 12] - The Sequester ACT IV

Posted by Elvis on 07/09/13 •
Section Dying America • Section Austerity American Style
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Thursday, April 11, 2013

Austerity American Style Part 10 - The Grand Betrayal


Bi-Partisanship We Don’t Need: The President Offers to Cut Social Security and Republicans Agree

By Robert Reich
April 9, 2013

John Boehner, Speaker of the House, revealed why its politically naive for the President to offer up cuts in Social Security in the hope of getting Republicans to close some tax loopholes for the rich. “If the President believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Boehner said in a STATEMENT released Friday. 

House Majority Leader Eric Cantor agreed. He SAID on CNBC he didn’t understand “why we jus’t don’t see the White House come forward and do the things that we agree on,” such as cutting Social Security, without additional tax increases.

Get it? The Republican leadership is already salivating over the Presidents proposed Social Security cut. They’ve been wanting to cut Social Security for years. 

But they won’t agree to close tax loopholes for the rich.

They’re already characterizing the Presidents plan as a way to “save” Social Security - even though the cuts would undermine it - and they’re embracing it as an act of “bi-partisanship.”

I’m encouraged by any steps that President Obama is taking to save and preserve Social Security, cooed Texas Republican firebrand Ted Cruz. “I think it should be a bipartisan priority to strengthen Social Security and Medicare to preserve the benefits for existing seniors.”

Oh, please. Social Security hasn’t contributed to the budget deficit. And its solvent for the next two decades. (If we want to insure its solvency beyond that, the best fix is to lift the cap on income subject to Social Security taxes Җ now $113,700.)

And the day Ted Cruz agrees to raise taxes on the wealthy or even close a tax loophole will be when Texas freezes over.

The President is scheduled to dine with a dozen Senate Republicans Wednesday night. Among those attending will be John Boozman of Arkansas, who has already praised Obama for starting to “throw things on the table,” like the Social Security cuts.

Thats exactly the problem. The President throws things on the table before the Republicans have even sat down for dinner.

The President’s predilection for negotiating with himself is not new. But his willingness to do it with Social Security, the governments most popular program - which Democrats have protected from Republican assaults for almost eighty years - doesn’t bode well.

The President desperately wants a “grand bargain” on the deficit. Republicans know he does. Watch your wallets. 


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
[PART 11] - The Sequester ACT III

Posted by Elvis on 04/11/13 •
Section Dying America • Section Austerity American Style
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Printable viewLink to this article

Thursday, February 21, 2013

Austerity American Style Part 9 - Inflicting Pain and its Aftershock


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.

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.



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.


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

By Jeff Spross
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.



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.


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.


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.



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.



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.



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.


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


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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Monday, February 11, 2013

Austerity American Style Part 8 - The Red State Model


The GOP Plan to Flush Your States Economy Down the Toilet
The new “red-state model” seeks to turn your state into Mississippi.

By Lynn Stuart Parramore
February 11, 2013

The GOP has plans for a comeback. But it may cost you a lot. The idea is to capitalize on recent Republican state takeovers to conduct an austerity experiment known as the new “red-state model” and prove that faulty policies can be turned into gold. 

There will be smoke. There will be mirrors. And there will be a lot of ordinary people suffering needlessly in the wake of this ideological train wreck.

We already have a red-state model, and its called Mississippi. Or Texas. Or any number of states characterized by low public investment, worker abuse, environmental degradation, educational backwardness, high rates of unwanted pregnancy, poor health, and so on.

Now the GOP is determined to bring that horrible model to the rest of America.

In Kansas, the Wall Street Journal REPORTS that Governor Sam Brownback is aiming to up his profile “by turning Kansas into what he calls Exhibit A for how sharp cuts in taxes and government spending can generate jobs, wean residents off public aid and spur economic growth.” In remarks quoted in the same article, Brownback announced that “My focus is to create a red-state model that allows the Republican ticket to say, ‘See, we’ve got a different way, and it works.’”

Brownbacks economic inspiration is Reagan-era supply-side economist Arthur Laffer and the folks at Americans for Prosperity, the conservative outfit backed by the deep coffers of the Koch brothers.

This new austerity talk focused on “fiscal innovations” is emboldening Republicans in other states that have been GERRYMANDERED IN TO SUBMISSION to the GOP, including Indiana, Louisiana, Nebraska, Ohio, Oklahoma, and alas, my home state of North Carolina.

Republications have been eyeing the Tar Heel state with interest due to its recent swing status in presidential elections. The state was also the target of a gerrymandering strategy that worked out wonderfully for the Republicans, but not so well for democracy. Sam Wang, the founder of the Princeton Election Consortium, WROTE RECENTLY in the New York Times about how Republican redistricting thwarted Democratic voters:

“Although gerrymandering is usually thought of as a bipartisan offense, the rather asymmetrical results may surprise you....I have developed approaches to detect such shenanigans by looking only at election returns. To see how the sleuthing works, start with the naive standard that the party that wins more than half the votes should get at least half the seats. In November, five states failed to clear even this low bar: Arizona, Michigan, North Carolina, Pennsylvania and Wisconsin. ... In North Carolina, where the two-party House vote was 51 percent Democratic, 49 percent Republican, the average simulated delegation was seven Democrats and six Republicans. The actual outcome? Four Democrats, nine Republicans - a split that occurred in less than 1 percent of simulations. If districts were drawn fairly, this lopsided discrepancy would hardly ever occur.”

The lesson of North Carolina tells you that the GOP red-state model is based, first and foremost, on efforts to flagrantly disregard the will of the people. NC’s discount-store mogul Art Pope, a longtime GOP donor and champion of free-market fundamentalism, has been appointed state budget director by the new Republican governor, Pat McCrory. In an incredible display of money buying political influence, Pope has gone well beyond his donor-counterparts in other states. Instead of just funding the politicians he wants, he has gone for direct rule by occupying government himself. Tax repeal is the centerpiece of his announced plans, but his hatred of public investment means he has much more than that in store for one of the most progressive states in the South. Pope is said to be MORE POWERFUL THAN THE GOVERNOR, giving rise to the term “Pope administration” to describe the new political reality.

GOP pols are vying to out-do each other in extreme red-state programming. NC state senator Bob Rucho is pushing a plan to ELIMINATE THE STATE’S INCOME TAX ALTOGETHER. Such plans go hand-in-hand with calls for increasing the sales tax. Because low-income people pay a higher proportion of their income in sales taxes, abolishing income taxes and raising sales taxes shoves tax burdens onto them. Obviously, the Republicans will not give up on their passionate desire to cut taxes on the wealthy and stick it to the poor and the middle class.

Popes ideological opposition to public investment is ringing alarm bells. North Carolina, a state where progressives have fought conservative forces tooth and nail to achieve an enviable university system and a reputation for high-tech and research, is now in danger of being thrown into a period of regressive darkness. University of North Carolina sociologist Andrew Perrin put it this way: “Public investment is part of what has set North Carolina apart from our neighbors in the South.”

But Pope is hell-bent on turning North Carolina into Mississippi.

The GOP economic plans not only subvert common sense and the lessons of history (being PLAYED OUT RIGHT NOW in places like the U.K., where austerity has failed dramatically), they also flip a giant middle finger at the American voter. Unable to win support at the national level for their foolhardy economic programs, Republicans have turned their attention to state-level action because that’s where gerrymandering really works wonders.

Red-state model proponents claim that their maneuvers will spark economic growth. But that was basically what George W. Bush had in mind when he supported a similar program for cutting taxes on the rich. That didn’t work out so well, and increased the very deficits Republicans decry.

But here’s the really scary part. Slashing taxes, squeezing workers and throwing out environmental protections can indeed lure businesses to states where they wont have to pay their fair share and can get away with all sorts of abuse. If a state like North Carolina promotes such policies, businesses from nearby states like Virginia may indeed move their operations down the road. Unless you believe in the “Confidence Fairy,” as Paul Krugman calls the naive GOP faith that making everybody poorer is the way to become rich, then you know that what results is simply trade diversion, not genuine growth. In other words, one states gain is another state’s loss. The result is a headlong race-to-the-bottom whereby the states losing business will be pressured to slash their taxes and burden their workers and ordinary citizens, too. Nobody wins in that game—except the 1 percent.

The blue-state model, evident in high-income states like Massachusetts, has long been associated with high levels of state investments in education, transportation and other public goods. And guess what? It’s also associated with economic strength. The red-state model, on the other hand, is linked to backwardness, second-rate educational systems and economic weakness.

What the GOP wants to do is create an image-problem for blue states where taxes have been raised to balance budgets and continue vital services and jobs by crying “Look, Ma! No taxes!” in the states where they’ve taken control.

They’ll soon be able to say, “Look, Ma! No economy.”

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of ‘Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.’ She received her Ph.d in English and Cultural Theory from NYU, where she has taught essay writing and semiotics. She is the Director of AlterNet’s New Economic Dialogue Project. Follow her on Twitter @LynnParramore.


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] - Showdown

Posted by Elvis on 02/11/13 •
Section Dying America • Section Austerity American Style
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Monday, January 14, 2013

Austerity American Style Part 7 - Big, Bad Cronies


“Failure of Epic Proportions”: Treasury Nominee Jack Lews Pro-Bank, Austerity, Deregulation Legacy

Democracy Now
January 11, 2013

Former bank regulator William Black and Rolling Stone’s Matt Taibbi join us to dissect the career of Jack Lew, President Obamas pick to replace Treasury Secretary Timothy Geither. Currently ObamaҒs chief of staff, Lew was an executive at Citigroup from 2006 to 2008 at the time of the financial crisis. He backed financial deregulation efforts while he headed the Office of Management and Budget under President Bill Clinton. During that time, Clinton enacted two key laws to deregulate Wall Street: the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000. Black, a white-collar criminologist and former senior financial regulator, is the author of “The Best Way to Rob a Bank Is to Own One.” A contributing editor for Rolling Stone magazine, Taibbi is the author of “Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History.”

JUAN GONZLEZ: President Obama is facing criticism for nominating another former Wall Street executive to become treasury secretary. On Thursday, Obama tapped his own chief of staff, Jack Lew, to replace Timothy Geithner. Lew was an executive at Citigroup from 2006 to 2008 at the time of the financial crisis. He served as chief operating officer of Citigroup’s Alternative Investments unit, A GROUP THAT BET ON the housing market to collapse.

Lew has also long pushed for the deregulation of Wall Street. From 1998 to January 2001, he headed the Office of Management and Budget under President Clinton. During that time, Clinton signed into law two key laws to deregulate Wall Street: the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000.

On Thursday, independent Senator Bernie Sanders of Vermont criticized Lews nomination, saying, quote, “We donҒt need a treasury secretary who thinks that Wall Street deregulation was not responsible for the financial crisis.”

At a press conference at the White House Thursday, President Obama praised Jack Lews record.

PRESIDENT BARACK OBAMA: Jack has the distinction of having worked and succeeded in some of the toughest jobs in Washington and the private sector. As a congressional staffer in the 1980s, he helped negotiate the deal between President Reagan and Tip OҒNeill to save Social Security. Under President Clinton, he presided over three budget surpluses in a row. So, for all the talk out there about deficit reduction, making sure our books are balanced, this is the guy who did itthree times. He helped oversee one of our nationגs finest universities and one of our largest investment banks. In my administration, hes managed operations for the State Department and the budget for the entire executive branch. And over the past year, IҒve sought Jacks advice on virtually every decision that IҒve made, from economic policy to foreign policy.

AMY GOODMAN: For more on the nomination of Jack Lew, as well as other news about Wall Street, were joined by two guest. William Black, author of The Best Way to Rob a Bank Is to Own One_, heҒs associate professor of economics and law at the University of Missouri-Kansas City, former senior financial regulator. His recent 2446848.html">article for the Huffington Post is called “Jacob Lew: Another Brick in the Wall Street on the Potomac.”

Were also joined by Matt Taibbi, contributing editor for Rolling Stone magazine, his latest piece, “Secrets and Lies of the Bailout,” which weҒll talk about in a bit, author of Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History.

We welcome you both to Democracy Now! Professor Black, lets start with you. Your assessment of Jack Lew?

WILLIAM BLACK: Well, on financial matters, Jack Lew has been a failure of pretty epic proportions, and he gets promoted precisely because he is willing to be a failure and is so useful to Wall Street interests. So, youҒve mentioned two of the things in terms of the most important and most destructive deregulation under President Clinton by statute. But he was also there for much of the deregulation by rule, and a strong proponent of it, and he was there for much of the cutting of staff. For example, the FDIC, the Federal Deposit Insurance Corporation, lost three-quarters of its staff, and that huge loss began under Clinton. And the whole reinventing government, Lew was a strong supporter of that. And, for example, we were taughtinstructed by Washington that we were to refer to banks as our “clients” in our role as regulators and to think of them as clients.

He goes from there to Wall Street, where he was a complete failure. You noted that part of what Citicorp did was bet that housing would fall. That was actually one of their winning bets. But they actually made a bunch of losing bets, as well. And the unit that he was heading would have not been permissible but for the deregulation of getting rid of Glass-Steagall under President Clinton. And you saw, as an example of Citicorp, why we shouldnגt be doing this. Why would we create a federal subsidy where all of us, through the U.S. government, are on the hook for Citicorps gambling on financial derivatives for its own account, you know, running a casino operation? That makes absolutely no public policy sense.

Then he comes into the Obama administration, and he was disastrously wrong. He tried very hard to impose austerity on the United States back in 2011, which is - he wanted, you know, THE EUROPEAN STRATEGY, which has pushed the eurozone back into recession, and Spain, Greece and Italy into Great Depression levels of unemployment.

And this is the guy, after all of these failures, who also is intellectually dishonest. He will not own up to his role and deregulations role and de-supervisionҒs role in producing this crisisand not just this crisis, but the Enron-era crisis and the savings-and-loan debacle.

JUAN GONZׁLEZ: Well, Matt Taibbi, your reaction to the nomination of Jack Lew by President Obama?

MATT TAIBBI: I think theres a couple things. I agree with everything that Professor Black said. I think itҒsthe symbolism of this choice is, I think, very important for people, just the mere fact of picking somebody from Citigroup and from that same Bob Rubin nexus that Timothy Geithner came from. And, you know, you heard Barack Obama, as heגs introducing Jack Lew, praising Tim Geithner as somebody whos going to go down in history as one of the great treasury secretaries of all time. I think what this tells everybody is that Jack Lew is going to represent absolute continuity with the previous treasury secretary, who had a very specific agenda when it came to Wall Street. And I think weҒre just going to expect more of the same, more of the same really being overt and covert support of these too-big-to-fail institutions that Lew worked for, Citigroup being the worst and most disastrous example of that kind of company. So I think it’s the choice of somebody from that particular firm is fraught with pretty upsetting symbolism for the country, I think.

AMY GOODMAN: I want to go back to 2010, when Jack Lew appeared before the Senate Budget Committee for a confirmation hearing after he was nominated by President Obama to head the Office of Management and Budget. During the hearing, he was questioned by Senator Bernie Sanders.

SEN. BERNIE SANDERS: Do you believe that the deregulation of Wall Street, pushed by people like Alan Greenspan, Robert Rubin, contributed significantly to the disaster we saw on Wall Street several years ago?

JACK LEW: Senator, Ias when we discussed, I mentioned to you, I donגt consider myself an expert in some of these aspects of the financial industry. My experience in the financial industry has been as a manager, not as an investment adviser. My sense is, as someone who has, you know, generally been familiar with these trends, is that the problems in the financial industry preceded deregulation. There was an increasing emphasis on highly abstract leveraged derivative products that got us to the point that, in the period of time leading up to the financial crisis, risks were taken. They werent fully embraced. They werenҒt well understood. I dont personally know the extent to which deregulation drove it, but I donҒt believe that deregulation was the, you know, proximate cause. I would defer to others who are more expert about the industry to try and parse it better than that.

AMY GOODMAN: Thats Jack Lew responding to Bernie Sanders, who, when President Obama announced his nomination of treasury secretaryҗto treasury secretary of Jack Lew, Senator Sanders said, “We dont need a treasury secretary who thinks that Wall Street deregulation was not responsible for the financial crisis.” Professor Black?

WILLIAM BLACK: Well, I mean, we can agree that he lacks expertise in the area, but he was supposed to have expertise. This was supposed to be his area of expertise, both in his role as OMB head under Clinton, and then, of course, as being in the industry and actually implementing the fruits of this deregulation.

So - and he has the history, in one sense, correct. He says the problem arose before deregulation. Thats true that derivatives were already a problem before deregulation. And so, Brooksley Born proposes to deal with the problem by having a regulation to deal with credit default swaps. And then the Clinton administration, in league with Greenspan, in league with Phil Gramm, and with one of the important architects of all of this being Jack Lew, squashes Brooksley Born to destroy the proposed regulation and to pass something, the Commodity Futures Modernization Act - talk about a dishonest phrase that not only said, “You, Brooksley Born, cannot go forward with this particular regulation,” the statute actually said, “We hereby withdraw all regulatory powers to protect the nation, period. From the federal government, from the state and local governments, we exempt you from the gambling laws. We exempt you from the boiler room laws to prevent fraudulent operations.” It’s one of the most extraordinary abusive things in the world, heavily involved with AIGs ability to produce not just the disaster at AIG, but the disaster of credit - of the CDOs that blew up a larger portion of the world. And those CDOs would not have been possible without these credit default swaps.

So, this is a guy who designed the disaster, participated in the disaster on Wall Street, was made rich by it. We havent talked about the fact that he got a huge bonus for destroying - helping to destroy the world at Citicorp. And he got it through the bailout of Citicorp by the U.S. government. So he produces disaster, profits from the disaster, we pay him bonuses for causing the disaster, and then we have the absurdity of the president of the United States saying that this is a man with a track record of unmitigated success. It is exactly the opposite, in terms of finance. He is a worthy successor to Tim Geithner, in that he has screwed up everything substantively he has ever touched.

JUAN GONZLEZ: William Black, IRd like to ask you about another aspect of Lews portfolio: his stance on austerity. You have raised questions in terms of his continued support of austerity measures, as opposed to efforts by the government to stimulate the economy. Could you talk about that?

WILLIAM BLACK: Yeah, and this is an irony, as well, in terms of the political aspects and Obama. So, under Lew, in his new incarnation a while back as OMB head of - for Obama, I have a piece that talks about how OMB under Obama sounds almost exactly like the tea party. So, it adopts all of their rubric about, you know, these terrible social programs, this terrible safety net and how its going to imperil our nation, and what we need to do is be balancing the budget - in other words, austerity.

Now, had Obama succeeded in following Lews recommendation in July 2011, when they were trying to negotiate the so-called “grand bargain,” which is really the grand betrayal of the safety net - unemployment in July 2011 was 9.1 percent. AUSTERITY in the United States would have done just what it did in Europe. Unemployment would have surged. So, all through 2012, the election year, unemployment would have been going up well above 10 percent, quite possibly into the 11 and 12 percent range, which is where it is in Europe. Obama would have been toast; would have been no chance. He would have been crushed in the election. The Democrats would have lost control of the Senate, and such. And these folks, even today, are claiming that the failure to achieve the grand betrayal and to cut the safety net is their great disappointment. So, they not only tried to destroy themselves and the country, they are continuing to do that, and indeed, but for Harry Reid literally throwing the Obama administrations suggestion that they do cuts to the safety net in the fireplace and burning it up, they would have gotten it as part of this interim austerity deal that was just done about eight days ago.

AMY GOODMAN: We’re going to break, then come back to this discussion with William Black, professor at University of Missouri-Kansas City, and Matt Taibbi, Rolling Stone editor. “Secrets and Lies of the Bailout” [is] his latest piece. This is Democracy Now! Back in a minute.



No More Corporate Welfare

By Sheldon Richman
The Project to Restore America
January 15, 2013

When Congress and President Obama came up with their beyond-the-last-minute deal to put off addressing the coming fiscal crisis, the Wall Street Journal TURNED THE SPOTLIGHT ON a little-noticed, yet too typical aspect of Washington’s machinations: “The bill’s seedier underside is the $40 billion or so in tax payoffs to every crony capitalist and special pleader with a lobbyist worth his million-dollar salary. Congress and the White House want everyone to ignore this corporate-welfare blowout,” the Journal reported. 

So a bill that was represented as the first steps toward fiscal responsibility (try not to laugh too hard) contained billions of dollars in corporate welfare. And it was a bipartisan affair.

How sad. How Washington! 

Beneficiaries of the various special tax treatments and exceptions includes owners of NASCAR speedways, companies in American Samoa, rum producers, businesses on Indian reservations, railroads, Hollywood moviemakers, and green-energy firms, including wind-power equipment producers.

As the Journal commented, “The great joke here is that Washington pretends to want to pass ‘comprehensive tax reform,’ even as each year it adds more tax giveaways that distort the tax code and keep tax rates higher than they have to be.”

CORPORATE WELFARE is nothing new, of course, and according to Cato Institute budget analyst Tad DeHaven, in “Corporate Welfare in the Federal Budget,” fiscal 2012 saw $98 billion in “programs that provide payments or unique benefits and advantages to specific companies or industries.” (DeHaven acknowledges that defining and calculating corporate welfare is “not an exact science.” Indeed, not. To the extent the U.S. military safeguards access to, say, Middle East oil fields, that portion of the Pentagon budget can be regarded as corporate welfare, but it’s not usually thought of that way. Similarly, highway subsidies to commercial shippers may give certain firms advantages over firms that don’t engage in lost-distance shipping.)

Manipulating the tax code to benefit particular interests has obvious appeal for politicians - it’s a source of power and influence - and a code that did not permit such manipulation would be much less attractive to them. Outright cash subsidies from the taxpayers, while not unheard of, smacks too much of cronyism and is more likely to alienate taxpayers. But complicated exceptions written into the tax laws can be presented as creative governance on behalf of the public interest. But it is cronyism as offensive as outright subsidies.

The benefits of a market economy lie in free competition. When the market is rigged by politics, benefits are diverted from consumers to politically chosen producers (who can be counted on to reward their patrons). This is what CORPORATE WELFARE accomplishes. In a freely functioning market economy, all products compete with one another, and producers compete not only for customers, but also for scarce factors of production, including labor, land, and materials. Remember: We live in a world of scarcity. Factors used for one purpose cannot be used for another. Tradeoffs are necessary. The price system, which is ultimately configured by consumer preferences, guides the competitive process by which the factors of production are employed in their various purposes. For example, an entrepreneur who expects her product to be more profitable than a rival’s product will be in a better position to bid factors away from the rival, and if the entrepreneur’s forecast is correct, consumers will have been well served. 

But if the government intervenes with corporate welfare to lower the rival’s costs, whether by specially reducing taxes or some other manipulative method, consumers will be defied because products they prefer will not be produced or not produced in the quantities desired. The politically connected businessperson will profit at their expense, as well as the expense of the competitors who were treated discriminately by the tax code, especially if the government buys the favored product. 

Corporate welfare is not primarily about lowering taxes. That would be a worthwhile goal, of course, and could be achieved simply by slashing tax rates and simplifying the code. But when taxes are lowered selectively by writing complicated exceptions into the law, the goal is to bestow privileges on cronies, not to reduce the burden of government on all. Corporate welfare, among its many sins, violates equal protection under the law.

Essential to a free society is people’s ability to go about their peaceful business unmolested by government. A good part of that activity includes producing goods and services for consumers, who in turn are free to say yes or no to the offerings. Corporate welfare is a way for politicians to maintain the faקade of a free economy while rewarding some activities and punishing others. The politicians substitute their preferences for the preferences of consumers, distorting relative prices in the process. Thus if government artificially makes it more profitable to produce wind turbines than washing machines, political judgments replace economic judgments. This is not something to be welcomed. Such political judgments are made by men and women who never face the market test and who risk no capital of their own. The failures of their schemes will not be easily traceable to their decisions (what politician or bureaucrat suffered because of the Solyndra fiasco?), and much of the cost of those policies will be in the form of goods and services not produced because of the diversion of resources. Thus voters will be in a poor condition to assess the performance of politicians, making officeholders largely unaccountable for their economic meddling. Inevitably, the authors of corporate-welfare schemes will blame the nonexistent “the free market.”

Even if a particular citizen were to understand the source of the problem, it would take a herculean effort to unseat the politician(s) responsible, and if even that exceeded, it would not necessarily change anything. That citizen would still be forced to support the meddlesome system.

Contrast this with the free-functioning market economy. If entrepreneurs err and destroy value by misusing scarce resources, consumers’ retribution may be swift: They can simply withhold their money and reject the ill-conceived products, forcing the entrepreneur out of business and shifting resources to more able hands. Ironically, it is the free market that puts control into the hands of the people. Political democracy is only the palest approximation of the “true democracy” of the marketplace.

As we can see, consumer clout far exceeds voter clout, and therefore economic producerswhen they have no access to government privilege or shelter from competitionחare far more responsive to the people than are politicians. Officeholders create theatrical effects to impress voters. Entrepreneurs have to produce results. 

Tax benefits directed at particular interests are often defended on grounds of “market failure.” It’s said that under some circumstances rational individual behavior in the market yields a less-than-optimal outcome for the whole public. This can be answered in several ways. First, if such failures truly exist, they represent profit opportunities to entrepreneurs. There’s a general principle here that is often overlooked. The case for competitive markets is not that they are perfecthow could they be when they are filled with fallible human beings? Rather, the case is that discovery and correction of errors produces entrepreneurial profit. No lure is more powerful than the prospect of profit. 

Moreover, even in the unlikely event a market failure couldn’t be corrected, it would not follow that a government solution would be better than adapting to the situation. Why assume politicians won’t make things worse, particularly in light of the perverse incentive system described earlier? There is simply no reason to believe that political operatives can have the incentives or information needed for ameliorating undesired market outcomes. One cannot invoke market failure without coming to grips with government failure.

Sheldon Richman is the vice president of The Future of Freedom Foundation (FFF) and editor of its monthly, Future of Freedom. He is the author of three books published by FFF: Separating School & State: How to Liberate America’s Families (1994); Your Money or Your Life: Why We Must Abolish the Income Tax (1999); and Tethered Citizens: Time to Repeal the Welfare State (2001). Previously, Richman was the editor of The Freeman (Foundation for Economic Education), 1997-2012.



Obama Nominates Americas Biggest Walmart Cheerleader as His Chief Economic Adviser
Jason Furman thinks Walmart is a ғprogressive success story.

By Lynn Parramore
June 11, 2013

On June 10, 2013, President Obama announced his intention to nominate Jason Furman to become the next chairman of the Council of Economic Advisers. This is a big-time, highly influential post. So what kind of economist is Furman?

One who thinks Walmart is the best thing since sliced bread.

For Furman, Walmart is nothing short of a miracle for America’s poor and working-class folks. For him, progressives should be cheering the firm: he even wrote a 16-page paper titled, ”Walmart: A Progressive Success Story,” which was posted on the Center for American Progress website. Heres a sample of Furmanomics:

“By acting in the interests of its shareholders, WalMart has innovated and expanded competition, resulting in huge benefits for the American middle class and even proportionately larger benefits for moderate-income Americans.”

Furman has championed the company’s low prices as a big boost to lower-income folks, and views Walmart jobs as good opportunities, never mind the low wages. In 2006, Jason Furman wrote a letter to author Barbara Ehrenreich, published on Slate, in which he extolled the Walmart business model:

A range of studies has found that Wal-Mart’s prices are 8 percent to 39 percent below the prices of its competitors. The single most careful economic study, co-authored by the well-respected MIT economist Jerry Hausman, found that grocery sales by Wal-Mart and other big-box stores made consumers better off to the tune of 25 percent of food consumption. That doesn’t mean much for those of us in the top fifth of the income distribution we spend only about 3.5 percent of our income on food at home and, at least in my case, most of that shopping is done at high-priced supermarkets like Whole Foods. But that’s a huge savings for households in the bottom quintile, which, on average, spend 26 percent of their income on food. In fact, it is equivalent to a 6.5 percent boost in household income - unless the family lives in New York City or one of the other places that have successfully kept Wal-Mart and its ilk away.”

In Furmans view, ғthe US productivity miracle and the emergence of Wal-Mart-style retailing are virtually synonymous.

For the man who will have President ObamaԒs ear on vital matters like jobs, the evidence of whether Walmarts wages and benefits are substandard is ғmurky. And he doesnԒt much care for those who question Walmarts approach: In the 2006 dialogue with Ehrenreich on Slate, he upbraided activists who had pushed the firm to increase wages and offer better benefits:

“The collateral damage from these efforts to get Wal-Mart to raise its wages and benefits is way too enormous and damaging to working people and the economy more broadly for me to sit by idly and sing ‘Kum-Ba-Ya’ in the interests of progressive harmony.Ҕ

Unsurprisingly, most progressives do not share Furmans rosy view of Walmart. As activist and philanthropist Leo Hindery, Jr. wrote in his article ғ WalMarts Giant Sucking Sound,Ҕ the companys business model has been detrimental to the American economy and sucks the vitality our of our communities. Yes, Walmart has lowered prices for American customers, though not as much as Furman claims, but it has also helped to kill the American labor movement which ensures workers a fair shake, it has helped to send jobs overseas, and it has instilled practices, like relying on part-time employees whose wages are so low they can’t sustain themselves without relying on government assistance, that spread misery everywhere. In the maniacal quest to lower prices, it has pioneered the use of ever-cheaper materials and lowered the quality of consumer goods. It has been accused of predatory pricing, a practice in which a business sets a price on an item very low, even incurring a loss, in order to drive a competitor out of business and establish a monopoly. In emphasizing shareholder value over all else, it has forgotten its responsibiltiy to other stakeholders in the company, like workers or taxpayers whose investments help the company succeed. The negative impact of Walmart’s business model impacts people whether or not they shop at the store, a phenomenon explored by Charles Fisher in his book, The Wal-Mart Effect.



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 7] - Red-State Model

Posted by Elvis on 01/14/13 •
Section Dying America • Section Austerity American Style
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