Paul Heise

Romney: The Ideological Pragmatist

2012-01-18T18:49:00.001-08:00

The conventional wisdom says Romney is the candidate. That's probably right. The other, still standing candidates are too flawed to be taken seriously. The long string of entertaining debates did what the process is supposed to do. It exposed those flaws and gave us a fairly clear picture of who Mitt Romney is and what he purports to stand for.

And the economy is to be the issue. Presidential elections with an incumbent running are normally a referendum on how well the economy is doing. Everyone presumes that the economy will continue a jobless recovery and remain on the cusp of a double-dip recession. In essence, the economy is not generating the aggregate demand necessary to restart itself. And that is the struggling economy that Obama is going to have to defend.

The president will probably argue that decisive action pulled the world economy back from depression's edge and rescued our financial system. But the ensuing stimulus package and other actions were, because of Republican obstinacy, simply not big enough to handle a full-bore depression and a politically impregnable banking system. The economy therefore stumbles along, buoyed by a weakened attack on healthcare costs, a successful rescue of the auto industry and a cowardly attempt to rein in the financial sector.

Romney presents himself as the practical, pragmatic businessman and efficient manager. He actually believes, with Calvin Coolidge that: "The chief business of the American people is business." He believes that the country needs little more than low taxes and free markets to achieve and maintain economic prosperity. He sees lax management as the problem The American economy just needs tough management, like the firms he salvaged at Bain & Company. He really believes and you see that faith when he will not back off from statements like "Corporations are people, my friend" and "I love to fire people."

Unfortunately for Mitt Romney's position, that business model can be and is always manipulated to serve an agenda: we call it politics. It is politics when his campaign promises fall in line with the tea party mantra: smaller government (abolish some agencies, especially those serving the poor and elderly), lower taxes for the wealthy (reduce the corporate income tax and eliminate many taxes on capital gains, interest and dividends) and less regulation (eliminate regulations that "unduly burden the economy" or favor organized labor. So, will Romney govern as a real conservative or as a pragmatist?

"Romney is," according to the Washington Post, "far to Bush's right" on taxing and spending. He has not flip-flopped but just moved to the right with the times and his party! The tea party should appreciate.

Romney may be boring but he is not subtle. He is proposing total tax cuts of $6 trillion over the next 10 years. He would not just keep the Bush tax cuts for the wealthy, he would do away with the estate tax and lower the corporate income tax. He would also cut overall discretionary spending and begin to privatize Social Security, Medicare and Medicaid. That is a lot more than pragmatism and efficiency.

What Romney and the Republicans are going for is the shift of wealth and power that comes with shifts in income distribution. It is not so much the economy as their share of it and that's what we are fighting about. Alan Krueger, Chairman of the Council Economic Advisers, has shown that income inequality in the United States is greater than at any time since the 1920s. Over the past 10 years, $1.1 trillion of income has shifted annually from the rest of us to the top 1% of families. They just want more.

This has enormous consequences. Intergenerational mobility has fallen in America and is now lower than in Europe. We can no longer claim to be the land of opportunity. Similarly, inequality affects aggregate demand. The rich have a higher propensity to save so each year they spend less of that $1.1 trillion than the middle class would have. If the middle class had gotten that money, they would have spent more of it and annual consumption would have been about $440 billion higher each of the past 10 years. This would boost GDP by about 5% per year and the great recession would be over.

This platform will get Romney the nomination. But implementation of the platform would be perverse. It would exacerbate income inequality. It would starve the economy of spending in the face of high unemployment and anemic growth. It would impose austerity on an already hurting middle-class. It could even bring the crash that we so narrowly avoided in the fall of 2008.

Let us hope that, if elected and facing reality, Romney would be smart enough to become the pragmatist and flip-flop. This is not the time for ideology to determine our taxing and spending.

Challenge: Opportunity and Threat

2012-01-18T18:34:00.000-08:00

The new year is a good time to seek out and celebrate the opportunities that life presents us. The actual happiness of this new year will depend not on fate or accident but on how we response to the opportunities we face. The opportunities are there and we face a bright future so long as we do not panic and retreat into fear.

Certainly, our highest hopes flow from the physical sciences because they are the base of the technology that sustains us. The theoretical scientists, working in real time, promise new worlds as yet undreamed of. For example, in biology DNA research offers the opportunity to change the very nature of humanity. In physics, the search for the boson particle offers us the excitement of a possible fifth dimension. These opportunities are so stunning that they are and should be frightening.

America as a nation spends huge sums on scientific research. While too much of that is military, a lot does spill over to the private sector. Advances in robotics in regard to artificial limbs have been applied to the general population. GPS technology is good for more than just smart bombs targeting terrorists. Similarly, drone technology has been applied to rescue people as well as to slaughter them. Managing these technologies promises a future of both jobs and wealth, if we are willing to spend the research money directly on domestic needs.

Technically and economically, the world can produce enough to feed, clothe, house, medicate and educate everyone to a reasonable middle-class standard. The only problems in the way of that are political. The 30 year stagnation of the wages of the middle-class and therefore much of our poverty are not accidental. They are the result of class warfare.

We now live in a plutocracy, government by the wealthy, with extremes of inequality in wealth and income not seen for over 80 years. These inequalities are also the underlying cause of our current depression. America will get a growing, prosperous economy in 2012 only if we give the middle-class a wage increase commensurate with their increased productivity.

If we want to have a prosperous new year, we must put our political house in order. The financial sector does not have a right to the money it stole or the political power it purchased with that money. We need to demand accountability for the criminal behavior of bank presidents and not just crack addicts. Our Constitution and all of our universal and unalienable rights, especially freedom from warrantless search and seizure, must be defended and not given up because we are afraid. Corporations have limited liability, uncontrolled size and immortality; no person I know has any of those attributes. The Tea Party and the Occupy Wall Street movement agree on at least this much so the country is surely ready to fight those battles. Coordinated SWAT team action and pepper spray should not deter us.

America is still the most powerful cultural force for good in the world and politically the world is going our way despite what you hear. The Occupy Wall Street movement with its attack on income inequality was quickly copied across the developed world. Divergent forms of democratic capitalism are emerging and being welcomed. The repressive aspects of Chinese state capitalism are being challenged by the Chinese people themselves. India's combination of socialism and capitalism is still emerging. Latin America is quietly slipping free of the IMF and North American corporate control. A democratic Arab Spring is outperforming militant Islamism. Across the world, the creation and spreading of wealth is becoming more important than political ideology.

If we revive the middle class here at home and reach out to others, we will have a great year and the world will go along. Instead of projecting power in the Far East with aircraft carriers, we will share with China the development of an emerging Southeast Asia. Instead of threatening Iran, we will recognize its natural position as a leader in the Middle East. Instead of fighting the world consensus on global climate change, we will be leading the repair of the planet. Instead of fearing science, we will complete that stalled particle accelerator down in Texas. Instead of closing our borders and our hearts, we will open them so we are still the land of the free. List your own favorite tasks and we will all have a daunting but exciting agenda.

America and the world face the prospect of a prosperous and peaceful world. But America is still the only country that can lead us all forward. If we succumb to a bickering fear -- of technology, of dark skinned people, of ourselves -- we will not lead.

Let ‘s look at the new year not just as a gift of opportunity but as a task to be accomplished. Then it will be a really Happy New Year!

The Drone Wars

2011-12-21T06:54:00.000-08:00

Peace, peace; but there is no peace. The war in Iraq, the president tells us, is over and America "will shrink the foreign footprint in Afghanistan by 40,000" in 2012. But we are still in armed conflict in Ethiopia, Yemen, Pakistan, Libya, and Iran. Peace is a long way off and these wars are affecting us in ways we do not recognize.

Our cyber and robotic technology is changing us as it changes everything about war. It has created an ever-expanding battlefield, redefined to include even our homes. It has separated our citizenry and even our military from the actual warfare. And we, the citizens, are not asking or being informed what the consequences of these technologies really are. The drone wars are a good example.

In 2002, the US had only 167 drones. Now there are upwards of 7000. Ever more intelligent unmanned aircraft could eventually replace every type of manned aircraft. At least 40 countries have the technology. Even Hezbollah has received 24 drones. At the unmanned aircraft industry show last year, China showed up with a surprising 24 different drones. Iran will probably share with China the technology of the US, super stealth RQ 170 drone that they somehow downed early this month.

Drones are not just weapons. They can and are amazingly useful. They are already patrolling the Canadian and Mexican borders and monitoring weather, natural disasters and industrial accidents. For the military, they are gathering electronic messages, reporting battle conditions to local commanders and doing a wide range of reconnaissance tasks.

Let's recognize that drones are a technological advance comparable to, in their day, the machine gun and even the crossbow. Are they so inhumane, like poison gas, cluster bombs and landmines, that they should be outlawed? Unlikely.

So, are remotely controlled battlefields and targeted killings an effective, legal and moral way to fight a war? Drones have been particularly effective in the targeted killing of high-ranking Taliban and Al Qaeda officials. Collateral damage, the euphemism for civilian deaths, is, however, in dispute. Some claim, absurdly, that there are no civilian deaths. Other estimates put the civilian casualties at half the level of militant casualties.

The legality of drones challenges both international humanitarian law and the principle of national self-defense. International law and conventions on war, the so-called law of armed conflict, allow lawful combatants, i.e., uniformed military, the right to attack other combatants on the battlefield. Critics claim that a civilian CIA employee piloting a drone in Afghanistan from a site in Arizona is not a "lawful combatant" nor is he on a "battlefield." The law of armed conflict doesn't make much sense in the context of a robotic war.

The principle of self-defense in regard to warfare means that a nation has the right to use deadly force both in an active combat zone as well as elsewhere to protect vital national interests. The US State Department demands "the right of a state to strike terrorists within the territory of another state where the terrorists are using that territory as a location from which to launch terrorist attacks and where the state involved has failed to respond effectively to a demand that the attacks be stopped." The US would define terrorism and decide, of course, when all those conditions are met.

This is a stretch. The governments of Yemen, Pakistan, Afghanistan or Iran (or any of those countries where we have targeted and killed individuals) could target former President Bush or a CIA drone pilot, based on their definition of terrorism.

In any event, whether moral and/or legal, robotic warfare has far-reaching social and political consequences. The ugly reality of drone strikes becomes like a PlayStation game, something that American youth are already addicted to. The "Call of Duty: Modern Warfare 3," a video wargame, had $775 million in sales in just the first five days.

Unlike the games, real people are dying in the drone-strike videos our kids see on YouTube. But Afghanis are being killed by people sitting in perfect safety in bunkers in Arizona. With our standing army of volunteers, we already exempt 99 percent of our population from military service and the real dangers of war. Remember, we stopped the draft after Vietnam because of opposition to the war by those who had to serve. What if no one has to be in danger?

A robotic, remote war will detach us even further from the horrors of war. It will mask the hard facts on which we base our opposition to war. With drones doing our dirty work, it will be easier, cheaper and more likely we will go to war.

We can't stop the drones but we can fight the consequences. We can still pray for peace this Christmas.

Call It Tyranny

2011-12-09T06:18:00.000-08:00

Tyranny is not a word to be used lightly. It is an accusation of a deliberate attack on basic liberty. It is especially not to be used in regard to partisan politics. Tyranny is something more fundamental and more noxious. So why did the Lebanon Daily News use that accusation in an editorial last Sunday?

The paper was condemning as tyranny and as "extremism writ large," Senate Bill 1867, The National Defense Authorization Act. That bill, which passed the Senate on a vote of 93 – 7 deserves the accusation and an appropriate response.

Senate Bill 1876 authorizes the military to detain American citizens indefinitely anywhere in the world – including US soil – without any of the rights that surround habeas corpus. These are found most explicitly in Article VI of the Bill of Rights: the right to a public trial, an impartial jury, the nature of the accusation, the right to confront witnesses and have the assistance of counsel. This bill puts the military in charge of policing the US for terrorism. It suspends basic constitutional rights for the length of a war with no end and on a battlefield with no border.

It is tyranny to require that all suspected terrorists be turned over to the military. It is tyranny to, in the end, authorize disappearances, renditions and other tools of vicious dictators.

The bill is so shrouded in stealth and duplicity that it has the smell of conspiracy. The main provisions were drafted in private by Senators Carl Levin and John McCain but without consultation with the Senate Judiciary Committee, the Intelligence Committee, the Defense Department, the FBI or the Intelligence Community. The word is apparently out that no one is to challenge or discuss this bill. And the entirety of the mainstream media is a willing accomplice.

The whole of Washington's normally noisy press corps is joining with the Congress in ignoring or withholding information on this bill. The news services such as AP, McClatchy and Bloomberg report nothing. The New York Times, the Washington Post and the Wall Street Journal are silent. Of national newspapers only the Christian Science Monitor and Agency France-Presse have at least touched the content and politics of the story. The blogosphere is a-fire with dire warnings from both the right and the left but the mainstream is suspiciously silent. Why do I learn this only from the Lebanon Daily News? What is going on?

This is not partisan. Both parties overwhelmingly support this power grab! Only seven voted for the Constitution. Three are Republicans: Tom Coburn of Oklahoma, Michael Lee of Utah and Rand Paul of Kentucky. The three Democrats are: Tom Harkin of Iowa, Jeff Merkley of Oregon and Ron Wyden of Oregon. Bernie Sanders, independent of Vermont, was the seventh vote.

Where are the other normally outspoken senators who claim to take the Constitution seriously? Among the liberals, where are Senators Dianne Feinstein, Dick Durbin, Al Franken and Bob Casey? Among the conservatives, where are Senators Pat Toomey, Scott Brown, Orrin Hatch and Jim DeMint? Why is the Senate so determined to pass this tyrannous attack on our liberty and why so quietly?

In the immediate aftermath of 9/11, it was natural that our leaders would overreact and suspend some constitutional liberties. After all, they did not know what other attacks were impending. But at this point, the war on terror is winding down. Osama bin Laden is dead, law enforcement has thwarted all the serious attacks, Al Qaeda has been virtually wiped out and we are pulling our troops out of Iraq and Afghanistan. Why put more restrictions on our liberties now?

Something is going down and we have to respond. When elected officials attack our most sacred constitutional rights, then it is time to turn from the Constitution with its rights and protections to the Declaration of Independence and its responsibilities.

The Declaration of Independence is a call to action. "[W]hen a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce [the people] under absolute despotism, it is their right, it is their duty, to throw off such government and to provide new guards for their future security."

If we want to get our country headed in the right direction again; if we want to begin to work together to resist tyranny, then this is the best opportunity likely to come along.

Conservative Republicans should go to liberal Democrats, and vice versa, and agree that liberty is our common goal. The road to liberty should, first, be voting out of office every single person who voted yes to S.1867. If that doesn't work, then we may have to pledge “our lives, our fortunes, and our sacred honor.” It is that serious.

What to Be Thankful For

2011-11-23T19:16:00.001-08:00

Thanksgiving is our harvest festival. Originally, it was the day we set aside to recognize and appreciate the bounty of our land and the richness of the harvest. It is a good thing to do.

In this modern industrial era, however, we recognize and are thankful not just for God's goodness but for the ingenuity of our innovators, the risk taking of our investors, and the productivity of our workers, as well as the farmer's harvest. On those grounds, we have some problems.

Our economy continues to produce great wealth but a fair share is not going to the people who produce it. Total real output may be large ($13 .4 trillion) and more than twice what it was in 1980 ($5.8 trillion), but the the working people of America have seen very little of that $7.5 trillion increase. As a consequence, the working people of America are suffering a depression – a depression that the 1% and the politicians don't seem to have noticed. That's not to be thankful for.

Yet, there is good news and I have much hope. The governing elite, the politicians and that 1%, have made such a mess of things that they have awakened the American people. The Tea Party Movement and the Occupy Wall Street are Americans, both right and left, who care about our country and how it is governed. Politicians beware, the citizenry are doing this outside the confines of our broken political system.

Both sets of protesters are having a real impact. We must be thankful that real Americans have shoved. As a result the national dialogue has been able to move on from the fraudulent debt/deficit fandango to the real problems of jobs, income inequality and growth.

Neither the deficit nor the job crisis was the focus of the Budget Control Act of 2011 (Debt Ceiling Deal). That deal was set up to absorb the political heat to cut spending and decrease the deficit. The politicians were afraid to choose between cutting entitlement spending and cutting taxes for the rich. Neither political party would yield and the Congressional super committee failed. So, hooray! that is something to really be thankful for.

The super committee was a bad idea, outside the rules and probably unconstitutional. Any instability in the stock market is more likely to be a response to the euro's problems in Greece. The much feared Wall Street bond vigilantes are still willing to lend the United States government all the money it wants at the almost cruel interest rate of 2%, or less.

Be thankful, the failure to agree was the smart thing to do! Think about the options. Option one, if the super committee had succeeded, Congress would have agreed to reduce the budget by $1.2 trillion over 10 years. That was not a whole lot and it included no revenue increases.

Now that the super committee has failed, option two kicks in, setting up $1.5 trillion worth of automatic cuts that are supposed to occur over the next 10 years. If you really care about the debt, that is the better deal. Besides, half of that will come from the Defense Department budget while there are important exemptions for Social Security, Medicare and some other entitlements.

If you really, really care about deficits, and you want something to be thankful for, then go for the third option. Let the Bush era tax cuts expire as they are scheduled to at the end of 2012. That will cut the deficit and debt by $4 trillion over the next 10 years. And the cut will be in taxes which have minimal effect on jobs. Now that would be something to be thankful for.

For a lot of people, these are hard times. They, and we, can be thankful that we still have in place many of the New Deal measures that were created to soften the impact of hard times. Were it not for the 45 million Americans getting food stamps, we would see far more soup kitchens and sandwich lines. I remember the unemployed, hungry men coming to the back door of our house and begging for food. Sometimes my mother could give them a jelly sandwich – and sometimes she couldn't. So be thankful that we now have unemployment compensation, the right to organize and bargain collectively and all those regulations that protect us in an industrial society.

Be thankful for Social Security, that crown jewel of the New Deal. And be thankful for Medicare and Medicaid, the modern additions. These programs keep 13 million elderly Americans out of destitution and provide otherwise completely unavailable healthcare.

Partisan politicians have little to be happy about this Thanksgiving. They are being called to task. Bankers are, unfortunately, still celebrating their profits and bonuses. A year from now an aroused citizenry should be thankful for the downfall of both.

Let us also be thankful for all our freedoms especially the freedom of speech and the Lebanon Daily News.

The Defense Budget and Politics

2011-11-14T18:54:00.000-08:00

Budgets are the quintessence of politics. They are the consequences of elections. They confer the ability to allocate public resources according to the winner’s values. Budget allocations, especially that of the Department of Defense reflect the power balance of domestic politics. The defense budget has, since 1980, answered to the conservative position that would redistribute wealth upward, cut the social infrastructure and attack New Deal reforms.

From the start of the Cold War in 1950 and until 1980, the Department of Defense budget reflected a perceived Soviet threat. To that end, America fought wars in Korea and Vietnam and built a nuclear strike force. The military industrial complex as President Eisenhower feared, took the money and ran.

Economically, defense department spending acted as a sustained and powerful economic stimulus. This was the definition of military Keynesianism and it worked its magic, bolstering the economy through those early years and continuing even to today. But through those years some relationship between spending and war or threats of war remained. Then the spending lost touch with reality.

After1980, the Soviet empire was collapsing from within but that did not fit our shifting domestic political agenda. By 1990, the Soviet boogie man had collapsed and we started talking about a peace dividend. Instead, keeping with the power of the conservative forces, the defense budget rose sharply, completely ignoring the fact that the threat was diminishing. The defense budget became a way to transfer money upward.

Over the more recent years 1980 to 2011, annual defense spending went from $131 billion to $700. America ended up with an empire of 1.5 million military personnel, 6000 domestic bases, 700 bases in 130 countries and 11 carrier task forces projecting American power over the globe. The Department of Defense budget is 4.7% of GDP, 19% of the federal budget and 28% of tax revenue. Our defense budget is larger than the next 17 largest countries combined. In fact, we spend more on defense than the rest of the world combined.

The defense budget knew no controls. Until very recently, “supporting the troops” meant spending what was requested. Cuts in defense spending were off the table. There was the opposite of gridlock, there was collusion by all political interests. The result was that spending grew almost exponentially with little or no regard to the level or nature of the threat being defended against.

Well, If budgets reflect domestic political priorities and the budget bears no resemblance to the size or nature of the threat, then this horrendous, even obscene, annual expenditure can only reflect domestic forces.

A recent book rounded up the usual suspects to blame: the neo-cons who want to spread their brand of capitalism and democracy, George Bush who wanted to be a war President, Zionism (always some one has to blame the Jews) and, the most popular, oil. But none of these are adequate to explain the extent of our empire. Only domestic politics will do that.

Meanwhile, the conservative agenda of trickle down was doing what it was intended to do. Since 1980, income of the 1% increased by 176% and their share of national income rose from 7.5% to 14%. The working class saw little or no income increase and eventually went broke. Having lost all that income, workers could no longer buy what they were producing and we ended up headed for a new depression. In a move to distract the populace from their desperate situation, the politicians turned to a ginned-up “debt -ceiling crisis.”

The impasse and gridlock of the ceiling controversy led Congress to appoint a “Supercommittee,” the Joint Select Committee on Deficit Reduction. It Is charged to come up with $1.5 trillion in spending cuts by November 23. Cutting the budget with 9% unemployment is perverse.

The politicians of the right insist that the workers overspent and must be disciplined with austerity. The rich got richer and the poor got poorer but it's the poor who are told they have to tighten their belts. At the time that the economy is slipping over the cusp toward recession because of high unemployment and lack of consumer spending, the politicians want to cut workers wages and benefits. They want to deny the stimulus effect of defense spending at the same time they cut social security, Medicare and Medicaid. This is perverse. It is exactly the wrong thing to do. But it pushes that conservative agenda.

We are now supposed to be in political gridlock. None of the factions in Congress supposedly have the power to control the allocation of wealth. No! The coalition that brought you a fraudulent debt ceiling crisis will ensure that the solution rewards the rich. That’s what the defense budget exists for.

The Best and the Worst Of Republican Candidates

2011-10-26T18:32:00.000-07:00

“The best lack all conviction, while the worst are full of passionate intensity.” Never was Yeats' quote more appropriate than in this election. Think Mitt Romney and Rick Perry.

In this election process, the Republicans face a conundrum. They are caught between nominating a "true" conservative as against someone who can win and make Obama a one-term president. That is, they face a trade-off: those who meet the conviction test and so can get nominated are those least likely to be able to defeat President Obama. Unfortunately for the Republicans, there is no one out there who meets both criteria.

The Republican Party is facing this dilemma because it is being manhandled by the tea party movement. That right-wing of the Republican Party is imposing a litmus test – a demonstrated passion for small government, balanced budgets and lower taxes. They believe with some justification that electing those 89 new Republican Congressmen gives them the right to demand that the presidential nominee reflect their ideology.

Parsing the polls in this election has consistently demonstrated this split: Mitt Romney gets his constant 25% on the basis of the fact that he is, after flip-flopping, a vocal conservative. But he remains moderate enough to leave the New Deal in place and therefore get elected. In effect, the other 75% of Republicans say this is not enough and vote for "anybody but Romney." They believe he has neither the conviction nor the passionate intensity to deserve the nomination.

That anti-Romney vote then again splits with 50% going to a pack of unelectables and 25% going to whoever is the latest entry phenomenon. One after another, candidates as far-fetched as Donald Trump or as unwilling as Chris Christie have entered or been dragged into the polling process. The "hopeful vote" then makes up an immediate 30%. The hopeful are then disappointed and the candidate drops out completely or joins the pack of unelectables.

First, let's go through the unelectables, most of whom are full of passionate intensity almost as much as they are full of themselves. Michele Bachmann has the conviction, but has proven herself something of a flake. Herman Cain may be leading in the polls but serious people consider him a huckster. Newt Gingrich is yesterday's news. Sarah Palin now appears never to have had either conviction or passion. Ron Paul flashes with the passion of truth and logic but, because he is so honest, he will never get more than his 10-15% of those diehard libertarians. Rick Santorum is probably running to keep right-to-life alive in the party.

Mitch Daniels, Jon Huntsman and Tim Pawlenty are out of step with the Republican zeitgeist and do not meet the conviction test for nomination. All three could be positioning themselves to be viable in 2016.

That leaves the two real front runners, Rick Perry and Mitt Romney. Romney may be one of the best but, as far as the right wing and many others are concerned, he lacks all conviction. His tenacity in seeking the presidency may have been proven. But he is running, as he states, primarily because "I want to be president." There is no passion for the chase; there is no killer instinct. He has the charisma of a Tom Dewey. Despite his flip-flopping on virtually everything, he is the default candidate the Republicans are left with. And he and Rick Perry are the only ones presidential in presentation and experience.

Rick Perry, on the positive side, has never lost a political race. In the process, he defeated some of the best politicians and campaigners Texas had to offer, including Ann Richardson and Jim Hightower. He has won, not because anybody loves him but because he is an intense campaigner who has a very real and effective killer instinct. To win Mitt Romney will have to get very nasty, very fast and given his character and history that seems problematical.

On the negative side, Perry may still be new to the campaign but when he was challenged in the Republican debates, he failed the test. He could be in a class with Sarah Palin who was also a popular governor who won elections. They would then have to be careful when letting him out on his own.

Romney is among the best but lacks all conviction. Perry is the worst, full of passionate intensity. It is still Barack Obama's to lose.

Wall Street Versus the World

2011-10-13T19:29:00.001-07:00

So now we have Occupy Wall Street. Thousands of people are taking to the streets in hundreds of cities to express their anger. Everybody knows what the problem is. Our political system is broken. The electoral and legislative processes have been purchased by corporate America, especially the Wall Street banks. Press reports, however, consist of putdowns, confrontations and sensationalism. The real story of who these people are, where their anger comes from and what they want is being suppressed.

For just a moment, President Obama got it back in 2008-09 but then he lost it. Almost 80% of the people in this country still want that "Change You Can Believe in." It is now the turn of the liberals, progressives or whatever you want to call the Left, to give up on the political process as a captive of Wall Street. They are following the example of their fellow Americans in the Tea Party Movement.

Both Occupy Wall Street and the Tea Party are Americans rising up in frustration. Though similarities to the Tea Party Movement might be embarrassing to both sides, they share a lot. In the end, in both cases, we can say proudly, it is Americans exercising their constitutional right to petition their government.

Americans are slow but certain to do this when the government and the corporate press ignores them and their problems. The President, Congress and the courts are all taking their marching orders from corporate and Wall Street money. The government is ignoring the millions in bankruptcy, the tens of millions unemployed and the growing hopelessness of the people. At the same time the government is rescuing the too-big-to-fail Wall Street banks that caused the problem. It is that simple, that horrendous and that obvious. No wonder the Tea Party wants to get rid of the government!

Occupy Wall Street with its anti-corporate attitude, did not come out of nowhere, it did not begin just three weeks ago nor is it likely to go away shortly.

The idea to "occupy Wall Street" was proposed in mid-2011 by Adbuster, an anti-corporate Canadian protest magazine. It called for protesters to "flood lower Manhattan, set up tents, kitchens, peaceful barricades and occupy Wall Street," which is pretty much what happened.

Citizen activism was occurring but it had been ignored. A group called US Uncut, a decentralized direction action group, has for months been targeting corporate America and particularly Bank of America with demonstrations, sit-ins and pranks. Uncut and other groups formed a loose coalition that eventually included UnitedNY, The Strong Economy for All Coalition, the Working Families Party and New York Communities for Change. The coalition has taken action in over 100 cities against firms like Verizon, BP, FedEx and Target. They were there; they just got no press.

The group has specific complaints centered around the injustice and unfairness of a politics controlled by corporate and Wall Street money. They don't propose any technical or simplistic solutions. In fact, Occupy Wall Street is criticized for being too vague. But the movement itself is quite explicit that there be no official demands. Such a list of demands would be a mistake for it would be an attempt to work within the system when, to borrow language, "It's the system, stupid!"

Where it all goes from here is completely unknown. The Republican Party is having trouble digesting the Tea Party's strong right-wing dogma. Those demands are certainly destabilizing the Republican presidential primary season. At present, the Democrats are warily endorsing the Occupy Wall Street actions but the Democratic Party, as bought and paid for as the Republicans, will eventually have to face their own. activists.

How the people will get government back from corporate power is yet to be determined. However, market-based solutions are all the rage and that might work. When Sen. Durbin (D – IL) denounced the Bank of America and its five dollar per month fee on debit cards, he told people to "vote with your feet" and take your business elsewhere. Many are doing that. Similarly, Morgan Stanley, Bank of America and Goldman Sachs are paying junk bond prices to insure against default on billions of dollars of debt. That is bottom-line language they understand.

The Tea Party Movement and the Occupy Wall Street movement should show a little mutual respect for all those Americans who agree that our political system is broken but disagree on the solution. I happen to think that Occupy Wall Street is going after the real villains and their frontal assault on Wall Street is more likely to get us our country back.

If you bank with any of those big New York banks, find a nice local bank or credit union. If millions did this, we would be halfway home.

2011-10-08T17:27:00.001-07:00

Final8-30-11 Perversity, Harshness and Finding the Right SOB

Americans have lost confidence in ourgoverning elites. The Republicans, with their harsh austerity agenda,are putting the burden of recovery on the people. President Obama hasto learn to be harsh with the the real culprits, the bankers who arestill whip sawing his Administration and the economy.

For the past 30 years, through everyPresident and Congress, bankers conspired with the politicians toderegulate the economy. Our governing elites, especially ourderegulated financiers, were able to take so much money forthemselves that their greed caused a financial crisis and aDepression. Before 1985, the financial sector never received morethan 16 percent of corporate profits. By this decade they weregetting 41 percent of the total. This greed almost brought the globaleconomy down. It still could, for this is not over, not by a longshot.

We have been here before. We are livingthrough a "lesser" repeat of the Great Depression. The 10 years from 1998 to 2008 reflect the same crushing income inequality,the same investment bubbles, the same banking crisis, the same globalcontagion, the same corruption, and the same extravagance as the"Roaring 20s." But 2008 is not 1929. The economy and therules changed. This time we did significantly better because FederalReserve Chairman Ben Bernanke knew what to do and did it, up to apoint.

The economy did not spiral down into aGreat Depression. Output dropped by 4 percent, not 40 percent.Unemployment rose to 10 percent, not 25 percent. The banking industrydid not collapse. The stock market dropped sharply but nothing thatcompared to 1929-31. Then the Dow fell from 381 on September 3, 1929to 41 on July 8, 1931, almost 90 percent. The extraordinary, andsometimes extralegal, action by Chairman Bernanke and the FederalReserve was bold and effective. Of course, the New Deal alphabet soupof SEC, FDIC and other safeguards were in place and worked.

The Bush and Obama administrations werenot so bold. Their proposals were and are perverse. They will clearlynot create the jobs and purchasing power necessary to end therecession. This perversity, doing the worst thing possible, arisesfrom a strange coalition of Republicans, their Tea Party right wing,Obama's curious obsession to compromise and a completely unrepentantfinancial sector. Together they conspired to let the debt and deficitcrisis, a problem for 20 years from now, overshadow the desperateneed for an economic stimulus that would create jobs.

The financiers demanded and gottrillions of dollars of government bailout money to rescue them froma financial crisis their incompetence and greed created. Now they arenegotiating with the 50 state attorneys general to buy complete civiland criminal immunity for a measly $20 billion. They were able to sowater-down Obama's Wall Street Reform and Consumer Protection Act(Dodd-Frank) that it perversely ensures continuation of the statusquo, another financial crisis and a continuation of our currentDepression.

So far, there is no plan in place oreven being discussed to repair our morally and financially bankruptfinancial sector. It continues careening lawlessly through our lives,fraudulently creating foreclosure documents, making huge profits onthe trillions of dollars the Federal Reserve lent them and, at thesame time, not doing their job of providing investment funds thatwould provide work and wages.

All the powers-that-be are focused onthe debt ceiling crisis. They are determined to force austerity onworking families. But lower wages, smaller benefits, and slashedentitlements will destroy, not create jobs. The bankers who actuallycreated the crisis are being rewarded with privileged access to theFed's piggy bank, extraordinary profits, legal immunities andcontinued domination of our economy. All offer perverse outcomes anda slower economy.

John Maynard Keynes once stated thehope that economists would someday be as useful and exciting asdentists. So shouldn't be with bankers. We should hope the bankingwill someday generate all of the excitement of the public utilitylike water and sewer.

Banking was close to this from the 1934formation of the SEC to the deregulation of the 1980s. There werecontrols on how much interest could be charged, what kind offinancial instruments could be offered and how banks could organizeand risk their own money versus their customers' money. The banks;used a 3-6-3 system; they paid 3 percent interest to borrow money,lent that money at 6 percent and played golf at 3 PM.

That system worked for all of us andfinanced the most prosperous, most stable and longest period ofmiddle class middle class middle class growth in American history.Yet no one is prepared to be harsh with the financial sector: it isnow too rich to be bought, too strong to be controlled and too bigto fail.

FDR appointed Joe Kennedy, Jack'sfather and one of the nastiest traders ever to stride Wall Street, tohead the SEC when it was formed. Why can't President Obama find anSOB like that when we need him.

Final 9-13-11 A Crime against Ourselves

It wasn't that long ago, the 1990sleading up to 2000, that things were pretty good. Economically, theAmerican economy was growing in size and efficiency, with a budgetsurplus and little or no inflation. Militarily, the Soviet Union andthe Cold War had melted away; no military foe could threaten us. Inforeign affairs, the European Union was completing its politicalunification and China was moving toward a market-oriented economy.Politically, the most serious problem seemed to be lying about sex.America stood as a colossus, the envy of the world.

Then came 9/11 and all bets were off.Ten years later we have depression-level unemployment, a "LongWar," an intrusive national security state and the expectationthat things will get worse with a further loss of civil, human andprivacy rights. You can tell how bad it is from the politically mutedcommemoration of 9/11, especially the lack of self congratulation orthe usual American triumphalism.

The conventional wisdom on the causesand consequences of the 9/11 attacks and these subsequent 10 yearsreflects the spin of those who were in charge and making some verybad decisions. The official line, as presented by the pundits andpress, says that the president found his voice at the attack site andrallied a united America to face a forever changed and insecureworld. The extremist Muslim terrorists were met firmly with a GlobalWar on Terror. The president quickly and effectively carried theattack to the Al Qaeda haven in Afghanistan and by invading andoccupying Iraq removed the possible threat of the use of weapons ofmass distruction by Saddam Hussein.

The president told us that nothing wasthe same but that we could and should act as though it were the sameand go shopping.

The actual narrative is something quitedifferent. It is a different world after the 9/11 attacks because wechose to call those atrocities acts of war rather than crimes. Weessentially militarized our response. We claimed the right to dowhatever we thought appropriate to protect our national interest. Weacted without any regard to the rules of warfare, the Genevaconventions or common sense. We set up the National Security Statewhich gave us a permanent state of war or what the Bushadministration hopefully called "The Long War." Thoseatrocities turned the world against us.

That "permanent state of war"became the excuse for everything. The invasion and occupation of Iraqmay have cost us $3 trillion but we are going to eventually, andmaybe even shortly, leave Iraq and the mess we made. But if Iraq istransitory, the Long war is not. America now has armed forces inalmost a 100 countries and is fighting in a half-dozen wars (Libya,Yemen, Somalia, Afghanistan, and Pakistan) that we know of.

In the attempt to maintain normalcy inAmerica, the response to 9/11 was outsourced to corporate America,the military-industrial complex. The response was privatized andoffered to the highest bidder. Pres. Eisenhower warned us about the"acquisition of unwarranted influence" by themilitary-industrial complex. Terrorism replaced the communist menaceto ensure that that influence continued and remained beyond politicalcontrol. It is the reason we have a Long War. We now spend wastefullyon security to the neglect of everything else. We can't affordschools, highways or public service but we can afford anything thatsupposedly heightens security. We have to feed the beast we havecreated with profits and the lives of the young and the poor.

In 10 years we have gone from an open,almost carefree society to a locked down, closed off community ofshared fear. The security industry dominates our lives. We have to bescreened by metal detectors before entering any public building.Every community has to have a black-hooded, armored SWAT team Atlast count there were 1, 271 government organizations and 1, 931private companies in the counterterrorism and intelligence community.

The legacy of 9/11 is that America gaveup, to quote Benjamin Franklin, "essential liberty to purchase alittle temporary safety." We got neither. We have to end thiswar on ourselves and find a way, to use a World War II phrase, to"return to normalcy."

A Banana Republic

2011-09-27T19:15:00.000-07:00

All the economic indicators are pointing to a double dip recession, really the second stage of a depression. Our economy is in real trouble and our politicians and economic elite are treating the situation as though it were an opportunity to score political points. They are showing all the responsibility of the ruling oligarchs of a banana republic. With the same potential for an economy-destroying outcome that you would expect.

This is serious. The unemployment rate is at 10% or 20%, depending on how you measure it. The IMF World Economic Outlook projections have just lowered the expected US growth for 2011 from an anemic 1.5% to a dismal 1.1%. A lot more people are going to suffer. A lot of people are subsisting on food stamps now. That's the only reason there are not soup kitchens and bread lines all over the place.

Let's be clear. This is a depression. It is not a recession. A recession is something that the Federal Reserve causes and can be cleared up with monetary policy as part of the normal business cycle. A depression is different; it is a failure of aggregate demand. Only a vigorous fiscal or incomes policy can do the job.

Over the last 40 years wages have been stagnant. Workers finally got to the point where they could not borrow any more and could not meet the payments on the bubble value of their homes. The Federal Reserve took extraordinary action and saved the financial system. To what purpose, is a good question. The Fed spent trillions shoring up rich criminal bankers. They did not bail out the poor, underwater and foreclosed homeowners. Housing prices in some areas are still falling and thousands of homes sit empty.

The last two depressions were the Long Depression of the 1870s and the Great Depression of the 1930s. Both lasted for 10 years and ended only when something extraordinary happened to the economy. We should not have to wait that long.

The political response to the depression has been pathetic. The Republicans are advocating the very policies that almost destroyed our financial system at the beginning of the century. It is an ideology that will not entertain reality. The perfect market hypothesis, so beloved during the first decade of this millennium, proved to be a destructive delusion. Markets do not automatically lead to equilibrium. Nor do they lead to productive or distributional efficiency.

Yet the Republican debaters continue to argue that deregulation of virtually all markets is desirable. The attacks on the Environmental Protection Agency in the face of crushing scientific evidence of deadly and costly pollutants are scary. The evidence for global warming is way beyond doubt but not to the committed ideologues. Global warming, climate change or whatever you want to call it, should be among the largest of government expenditures for research and survival.

The macro economic policies that slash wages and weaken unions, that cut government spending on education and green technology, that maintain a humongous wasteful military undermine the productive sector of the economy. These policies do not create jobs, they destroy jobs.

President Obama gave direction of the economy over to the very men who had deregulated and destroyed it. In his campaign, we will surely see all of the hopey-changey things he promised us the first time. The financial and corporate sectors already knows that what he says does not apply to them. .

We suffer from banana republic politics. A banana republic is a corporate-run, compliant state with a dysfunctional political system based on a destructive income inequality, a wasteful and inappropriate military and a disdain for the law. That is our response to this depression. But it doesn't have to be that way.

The emerging markets of the world are growing and it isn't just India and China with their 7-9% rates of growth. The emerging economies are projected to grow at 6.4% next year. Latin America and the Caribbean will be growing at 4%, the Middle East and North Africa at 3.6% and sub-Saharan Africa at almost 6%.

Yet we have the technology and products, the know-how and skills to produce what they want and can now afford. If we get our act together and spend the money on research and education, on plant and equipment on a realistic appreciation of the technology of the future, we can score big in exports to them.

The more we advocate or implement government-cutting, budget-balancing, government-hating, war-mongering policies, the less we will have to export and the more we are embracing the banana Republic model. All we have to do is make sure we stick with those perverse remedies: undermine aggregate demand by slashing wages and weakening unions, cut government spending particularly on green technology and education, maintain a humongous military and run away from any shared political vision.

If we bow down in front of crazy ideologies like creationism and reject the common sense of modern science, we will deserve what we get.

Then, in 30 years, we will be to China what Mexico now is to us.

A Crime against Ourselves

2011-09-27T19:14:00.001-07:00

The attacks on the World Trade Center, the Pentagon and Flight 93 were horrendous crimes. Nothing was supposed to be the same again. In reality, the potential impact should not have been financially, militarily or politically consequential. The impact became enormous only because we made it that way. We chose to turn a politically motivated crime into a system-threatening act of civilizational war, which it certainly was not. From there it has been all downhill and we have no one to blame but ourselves.

It wasn't that long ago, the 1990s leading up to 2000, that things were pretty good. Economically, the American economy was growing in size and efficiency, with a budget surplus and little or no inflation. Militarily, the Soviet Union and the Cold War had melted away; no military foe could threaten us. In foreign affairs, the European Union was completing its political unification and China was moving toward a market-oriented economy. Politically, the most serious problem seemed to be lying about sex. America stood as a colossus, the envy of the world.

Then came 9/11 and all bets were off. Ten years later we have depression-level unemployment, a "Long War," an intrusive national security state and the expectation that things will get worse with a further loss of civil, human and privacy rights. You can tell how bad it is from the politically muted commemoration of 9/11, especially the lack of self congratulation or the usual American triumphalism.

The conventional wisdom on the causes and consequences of the 9/11 attacks and these subsequent 10 years reflects the spin of those who were in charge and making some very bad decisions. The official line, as presented by the pundits and press, says that the president found his voice at the attack site and rallied a united America to face a forever changed and insecure world. The extremist Muslim terrorists were met firmly with a Global War on Terror. The president quickly and effectively carried the attack to the Al Qaeda haven in Afghanistan and by invading and occupying Iraq removed the possible threat of the use of weapons of mass destruction by Saddam Hussein.

The president told us that nothing was the same but that we could and should act as though it were the same and go shopping.

The actual narrative is something quite different. It is a different world after the 9/11 attacks because we chose to call those atrocities acts of war rather than crimes. We essentially militarized our response. We claimed the right to do whatever we thought appropriate to protect our national interest. We acted without any regard to the rules of warfare, the Geneva conventions or common sense. We set up the National Security State which gave us a permanent state of war or what the Bush administration hopefully called "The Long War." Those atrocities turned the world against us.

That "permanent state of war" became the excuse for everything. The invasion and occupation of Iraq may have cost us $3 trillion but we are going to eventually, and maybe even shortly, leave Iraq and the mess we made. But if Iraq is transitory, the Long war is not. America now has armed forces in almost a 100 countries and is fighting in a half-dozen wars (Libya, Yemen, Somalia, Afghanistan, and Pakistan) that we know of.

In the attempt to maintain normalcy in America, the response to 9/11 was outsourced to corporate America, the military-industrial complex. The response was privatized and offered to the highest bidder. Pres. Eisenhower warned us about the "acquisition of unwarranted influence" by the military-industrial complex. Terrorism replaced the communist menace to ensure that that influence continued and remained beyond political control. It is the reason we have a Long War. We now spend wastefully on security to the neglect of everything else. We can't afford schools, highways or public service but we can afford anything that supposedly heightens security. We have to feed the beast we have created with profits and the lives of the young and the poor.

In 10 years we have gone from an open, almost carefree society to a locked down, closed off community of shared fear. The security industry dominates our lives. We have to be screened by metal detectors before entering any public building. Every community has to have a black-hooded, armored SWAT team. At last count there were 1, 271 government organizations and 1, 931 private companies in the counterterrorism and intelligence community.

The legacy of 9/11 is that America gave up, to quote Benjamin Franklin, "essential liberty to purchase a little temporary safety." We got neither. We have to end this war on ourselves and find a way, to use a post-World War I phrase, to "return to normalcy."

A Crisis Not of Debt But of Faith

2011-08-19T09:33:00.000-07:00

A Crisis Not of Debt But of Faith

America doesn't have a debt crisis; it has a financial and political crisis. Our financiers and politicians, the elite experts we trust to manage our finances and politics, have proven to be incompetent and corrupt. We are losing faith in our system. To salvage our money and our politics, the corrupt elites are going to have to be kicked out of their jobs and stripped of their criminal gains.

Our governing financial and political elites failed us. A governing class, an elite, is essential to any nation state, including ours, however much we might wish otherwise. Citizens have faith in an elite, if it manages the particular financial, political or military sector it is in charge of to serve the common good. An elite is incompetent and failing, if it destroys the sector it is meant to protect. It is corrupt if it places its self-interest before the good of the country.

Beginning about 1980, the financial elite began gaming the political system to remove any regulation or control on its freedom to loot the system. This take over has been noted. First, they bought and paid for the political elite with campaign donations. Second, they staffed the financial regulatory bureaucracy (SEC, Treasury, OCC, the Fed, etc.) with their own people. And third, they sold us on an ideology that teaches markets are always good, fair and efficient. Any and all regulation is, therefore, unjustified.

The elite of the finance, insurance and real estate industries then, in an orgy of greed, used this power over the next 30 years to take for themselves almost all the increase in wealth the economy produced. The mean after-tax income of the top 1 percent increased by 176 percent compared to 6 percent for the bottom 20 percent. For the same 30 years, the share of income received by the top1 percent increased from 7.5 percent to 14 percent of the total. No other industrialized country has seen such a malignant redistribution of income. The problem is peculiar to America.

In a very real sense, our financial elite stole this purchasing power from the workers of America whose income is still stagnating. Financial sector profits continue to rise This redistribution of wealth, from us to them, brought the financial system near to collapse while rewarding the bankers with riches beyond imagination. But, more importantly, the elite parked the money in cash, Treasury bonds or foreign tax havens. This starved the economy for spending and brought on the present Depression.

This loss of income is at the heart of our current Depression. For this is a depression and not a recession. The difference is analytical and not merely a question of size. The failure to make this distinction is a serious flaw in the mainstream analysis of our problems.

A recession is part of the normal, Federal Reserve-managed business cycle. A recession is, like inflation, a monetary phenomenon that we know how to cure. When an overheated economy produces inflation, the Federal Reserve steps in, cuts the money supply and raises interest rates. The consequent recession dampens inflation by discouraging investment and the bidding for resources. Whereupon the economy repeats the cycle.

A depression, on the other hand, arises from an exogenously generated decline in aggregate demand. It involves the real economy and requires fiscal action. Depressions are not well understood by the economics profession. But, if anyone can "cure" a depression, it has to be the Congress and the Administration rebuilding aggregate demand. In this case, that means putting purchasing power in the hands of working families. The economist's call for job creation is really the call for wages and spending.

But our political leaders also failed us. The political elite are responsible for imposing and policing a system that works for the public good and brings to justice those who violate the rules. The financial sector had an established set of rules that, until about 1980, were well enforced by the bureaucracy. But with their takeover of Washington, the financiers were able to eliminate or ignore those rules and pay petty fines for enormously profitable criminal activities. This failure and those crimes continue to this day.

Politics and money are based on trust; the confidence that the elites can and will do their job. Our politicians and our financiers have seriously undermined that faith in our money and in our government. Over 80 percent of Americans believe our government has gone wrong. Our money is being questioned not just by the Chinese and other investors but Americans themselves.

The most serious question facing us as a people is not the amount of debt, that is trivial, but how we are going to rebuild aggregate demand, bring the system to justice and reestablish trust in our financial and political systems.

The Ridiculous Crisis

2011-08-04T09:22:00.000-07:00

What they are doing in Washington is ridiculous nonsense; why they are doing it is not. A really important, knock-down, drag-out political fight is at the heart of it. This is a fight that is only in its opening round and, as a result of this agreement, promises a sequence of crises through the next decade. Our politics are not in crisis; our values are.

The New Deal served us well through War II and the postwar era. That structure moderated and protected society from the abuses and excesses of the market. It set up a social safety net for the poor, the ill and the elderly and assumed responsibility for the macroeconomy. It advocated and fostered equal opportunity for all.

Then, in the 1970s and 80s, that New Deal structure came under attack by a group of home-grown ideologues who believe that government is inherently hostile to individual freedom. The solution these neo-conservatives offer for every problem is to continuously cut taxes, and therefore spending, in search of an ever smaller, less intrusive and less effective government. This is a clear attack on the New Deal safety-net society.

The neo-conservatives have now set the agenda for the Tea Party, the Republican Party and our national politics. Politics is now about the size of government and the amount of taxing and spending. The normal political agenda of education, health, infrastructure and other public goods addressed by democratic societies has been set aside because less government is presumed to be better government. More importantly, the conservatives welcome crisis with its political and economic disruption as a justified means to achieve smaller government.

The operative phrase in Washington for this disruption is “economic catastrophe.” If the federal government had not raised the debt ceiling, the pundits assure us, America would be in default, and the world economy would have come tumbling down in an economic catastrophe. If we do not get control of our deficits and debt, if we do not control Medicare costs, if we do not control entitlements, we are headed for and an economic catastrophe. The Tea Party stands ever ready to bring on such catastrophes.

The latest and continuing debt ceiling crisis was created as a convenient excuse for the Tea Party manipulators to try to force cuts in social spending that they can't get through the regular legislative process. In this round, they succeeded. One way or another, there will be $1.2 trillion in spending cuts over the next 10 years. But it is ridiculous to cut spending now. The fragile economic recovery is faltering for lack of spending by the middle class. It would be like bleeding the patient.The government should be doing just the opposite, giving a $1 trillion stimulus transfusion.

As soon as President Obama accepted the Tea Party agenda of budget cuts, he committed the country to a series of crises points where the Tea Party can again and again blackmail our government into an ever worsening series of crises. That Joint Committee on Deficit Reduction, made up of six each Republicans and Democrats, is supposed to identify $1.5 trillion in cuts by November 23. Quite aside from the fact that it is a cowardly refusal by Congress to face accountability, there is no way they can come to agreement. We are facing $1.2 trillion in automatically triggered across-the-board reductions over 10 years.

This whole debt crisis exercise is ridiculous. Clearly, there is no debt crisis. Letting the Bush tax cuts expire, as they will automatically on December 31, 2012, will provide $4 trillion in revenue over 10 years, almost twice the total $2.1 trillion proposed in the deficit reduction package. Without doing anything, we can have the funds to write down about $2 trillion of debt, not that we would want to. The 10 year span is likewise ridiculous. Ten years ago we had a fiscal surplus and were worried about the consequences of paying off the entire debt. And no Congress can bind the next one to anything anyway.

Our political system is poised to stumble through reoccurring manufactured crises that will also be ridiculous and have no relationship to reality. But this is not the kind of political wrangling we are accustomed to. It is not an “in the family” dispute. The Tea Party movement is based on ideology. It sees not an opponent but an enemy, someone not to be trusted, not to be respected and not to be negotiated with. It is visceral, nasty and ideological. I would even say, un-American.

Yet here we are, fighting to maintain the New Deal against accusations that have no basis in fact and with a president who values the perception of compromise as his greatest achievement.

Patriotism and the Rule of Law

2011-07-21T18:24:00.000-07:00

Patriotism and the Rule of Law

2011-07-11T19:09:00.001-07:00

In America we have a Rule of law: no person is above the law and no one can be punished except for breach of the law. Or as John Adams put it: we are “a government of laws and not of men.” From the principles enshrined in the Declaration of Independence and the Gettysburg Address to the rights and obligations in the Constitution and the government it set up, we present ourselves as a people joined together by the law.

The true patriot, in his or her love for country, should cherish the rule of law. Adherence to the rule of law makes us American. Now though our society is in danger because the rule of law is breaking down.

The Congress, the President and the Supreme Court are all guilty of violating our most basic laws. And everyone, not just the politicians, is to blame. It is not a question of Republicans and Democrats or the right and the left. We have all watched this breakdown going on for some time and it is getting progressively worse. Law now seems to be based on politics and ideology rather than common sense and legal principle.

The deliberate violation of the law covers the full range of governmental responsibilities: economic, political and military. As an example, the Federal Reserve Act of 1913 is a blatantly unconstitutional delegation of the congressional responsibility “To Coin money [and] regulate the value thereof.” It may be politically convenient for a Congressman to hide in a crowd of 435and vote with the majority but his mother surely told him why you don't just go with the crowd.

To take a more recent case, there is the failure to prosecute the blatant fraud that brought on the financial crisis or to take any meaningful action to prevent a recurrence. Too many in the Obama administration were bankers and are still complicit.

No president since Harry Truman has bothered to declare war in what were in any commonsense definition very real wars. All the presidents chose to declare a state of emergency but only because it gave them additional power. Maybe, in a time of emergency, be it economic or military, there is an argument for something akin to “martial law” to preserve the country. But even such times and such action are certainly going to be abused and in the end weaken the political system.

The WWI emergency lasted into the 1920s and “legalized” the infamous Palmer raids, the establishment of detention camps on Long Island and the deportation of American citizens without any hearing. The 1950s Korean War emergency was in force until 1978, well past the end of the Vietnam War. The War on Global Terrorism emergency declared in 2001 by President Bush has been continually extended by Presidents Bush and Obama.

The USA Patriot Act not only authorized numerous unconstitutional invasions of privacy, it also created a context that led to what is now call the “security state.” NSA, the CIA and agencies we have deliberately never heard of now have Presidentially created rights to invade virtually anybody, anywhere, at anytime, domestic or foreign. National Security Letters are like subpoenas but they are secret and you are not allowed to discuss the letter or its contents with anyone else. Such demands sound like something Thomas Jefferson would have cited as a reason for the Declaration of Independence!

The atrocities committed in the name of the Global War on Terror cry out for prosecution. Yet, the Obama administration has instructed the Justice Department that they are not to prosecute any war crimes of the Bush Administration. Presidents Bush and Obama have both condoned waterboarding, the same crime for which we have prosecuted and hanged our enemies. We have made a mockery of our signature on the Geneva Conventions.

Much of this is cloaked in a mantle of national security secrecy. Virtually every time the courts have pierced this curtain, they have discovered that national security was not involved.

The US Supreme Court, all nine of them, made a political decision in regard to the 2000 election.They have all sworn, in obvious perjury, in their confirmation hearings that they would stand on precedent and be some kind of impartial judge.

The President refuses to enforce the law. The Congress refuses to legislate. The Supreme Court is an activist legislator. The rule of law, our most prized possession, is breaking down.

If you would be a patriot this Independence Day, stop waving the flag and object to illegal wars, to financial fraud and to the absurd personification of corporations.

Final 6-21-11 Markets Require More Government, Not Less

An anger against “government” infects our politics. Whatever government does is now wrong and whatever is wrong is now government's fault. This is strange for a people who invented the idea of popular sovereignty and who purportedly believe in a government that belongs to the people. The proposed antidote is more markets, less government spending and less regulation. But the underlying theory for these policies is wrong and the expected outcome is perverse.

Nowhere is this anger more damning than in our political campaigns. The Republican would-be presidential candidates are competing to see who can condemn most completely the government they are seeking to lead. They are rallying the Republican faithful to a visceral condemnation of government itself.

This blame-your-government attitude began with Ronald Reagan's infamous claim that "Government is not the solution to our problem, government IS the problem." Reagan's position grew overtime into the modern conservatives' popular mantra of “free markets, small government and lower taxes.”

This modern conservative dogma is based on the belief that the expansion of government over the past 80 years is, by its very nature, both an infringement of political freedom and a drag on economic efficiency. Hence the call for less government and more markets.

The argument is at two levels. First, the free-market argument and then the less government argument. The short answer is: there are no free markets. It is a question of who benefits from control of the market, be it a corporation, a class or country. Second short answer: economists can no longer cite the “efficient market hypothesis” as justification for replacing regulation with “free” markets. More markets, by their nature, require more government.

The unregulated, free market that is supposed to replace government regulation is actually a fantasy, an oxymoron, an impossible contradiction. Government and markets are intimately interdependent. That is the reason we talk about a political economy. Markets do not exist unless, at a minimum, the government protects the individual's right to hold and exchange property, enforces contracts and enables the whole of commercial law. In the absence of such government protection, an exchange economy degenerates into lawless violence.

The important point is that the laws defining markets also define power in our society. That power can be organized in an infinite variety of ways and the rule of law will vary to meet the needs of the time, the place and the interest of those writing the law. Those who advocate free markets do so because the existing legal structure that we take for granted serves to protect them and their property. But they hide that behind "free" trade.

No market is static enough to be left “free.” We can and should reform patent and copyright law to meet the needs of a modern technology economy. We can and should reform corporate law to control the power exercised over our politics. We can and should change labor law to put more power in the hands of workers. And we must always acknowledge that when we legislate we are empowering some over others in the marketplace.

In effect, the rule of law, that is the government, will be defined by the size and needs of the market and those who control the law. In colonial America, when the market was the size of the local community, government could be small and unintrusive. In the 19th century, when the railroads, telegraph and canals expanded the size of markets, the government expanded to serve those needs from land grants to antitrust.

In the 20th century it was containerization, aircraft and the internet which globalized markets. This led to the WTO and its governmental functions such as the protection of intellectual property and the control of the flow of capital.

Legal structures and therefore institutions, market structures and commercial practices vary by country. Other countries admit they control their markets to their benefit. Similarly, labor Law and markets vary by country but no one advocates free trade in labor, except maybe along the Mexican border.

As markets expand in time and space, the range of government activities must expand with them and interfere ever more in our daily life. As more of our lives become subject to markets, the less free we feel. It is then that we require not less but more government.

The demand for lower taxes is a question for another time. For now, the refusal to pay our way or accept the costs and constraints of a modern political economy reflects an anger that is being stoked by incendiary politicians.

This culture of anger corrodes our belief in the goodness of American and mocks the pride in our exceptionalism. It leads us to distrust our leaders and drives good people from seeking office. It leads us to revolt against all taxes and supporting the common good. Those who fuel that anger sin against America.

Final 6-1-11 How the Middle Class Lost Its Affluence

"Mass affluence," the age of the great, American worker-consumer class, "is over." The first affluent middle class in history has been declared irrelevant by no less an authority than Advertising Age. That's bad; it means the marketers, whose job it is to know, recognize that the middle class has no money. The middle class did not lose its affluence by accident: it was taken from them. Until the workers again get their fair share of income and can buy the product of their labor, America will stay mired in recession and decline.

In the post-World War II era, America spread the wealth to the working class. Our system of market-based democracy awarded the huge productivity gains of that era proportionately to owners, managers and workers. Everyone got their share. Their share meant an "Annual Improvement Factor" based on productivity gains. The theory is called the "principle of marginal productivity" and it worked.

Competitive markets provide a reasonable distribution of income but only so long as no private or political power is manipulating them. That's the point, beginning in 1980, something happened to shift income distribution away from its long-term trend and away from the outcomes that were predicted by economic theory.

After1980, productivity and output continued to increase so wages should also have increased. After all, GDP per capita increased by 65 percent between 1980 and 2000. Unfortunately for workers, all of that increase in output, including the workers' share, went to owners and managers in the form of soaring profits and huge salary/bonuses that continue to this day.

What happened over the past 30 years is not the result of Adam Smith's invisible hand. If we look at the major changes in law and government over these years we see a strong and clear bias redistributing power from workers to management and owners. The loss of income results from that loss of bargaining power by the workers. Trade and investment patterns, political power structures and economic institutions were all reconfigured to take power away from workers and redistribute it to the rich. This was deliberate.

BusinessWeek reports, unfortunately, that: "Over the past two decades, corporate America has perfected its ability to fend off labor groups." As a consequence there is no longer any countervailing force to balance corporate power in our economy and politics. This loss of worker bargaining power is probably the most important factor holding down wages and working conditions for the entire middle-class. We just have to look at where government has been taken over by the rich and used to crush worker power.

Trade agreements and treaties such as NAFTA and WTO are explicitly intended to push down American wages in exchange for raising the return to American capital. The theory being implementing so successfully is called the "factor price equalization model." The price of labor in America is being deliberately and successfully pushed down to equal the price of labor in countries like Mexico, India and China.

Taxes have been slashed with the express purpose of "starving the beast." The intent being to close down ever more programs for lack of revenue and to make our government look inefficient and incompetent. As a result, government provided public goods such as the air we breathe, the water we drink, our safety in the workplace or on the road, and our use of the entire infrastructure now costs increasingly more for the worker to use. The rich can afford an exponentially increasing cost of education and health care. The middle class cannot.

This privatization of the commons and of functions such as the student loan program and home mortgages or the sell off of utilities and resources such as natural gas, highways and schools are really intended to take control away from the people, put it in the hands of the rich and then blame government.

The Bush tax cuts for the wealthy are the major cause of the present and projected budget deficits which are the reason given to make the workers pay higher taxes. The tax burden is also being pushed further down the economic chain so that more of the school and local needs must be provided by increases in property and consumption taxes.

Where workers have remained strong, as among service workers, a union maid in New York can stand up against one of the most powerful men in the financial world. Her union contract guaranteed her that right. Bargaining rights really matter. That's why the service workers and public employees are under attack.

The Great Recession and the end of middle-class affluence are a direct result of the middle-class loss of power and income. It all goes back to a loss of worker bargaining power, taken away by a bought and paid for government. Little wonder that there is a revolt against government.

Final 5-24-11 Faith Calls the Workers to Sin, Suffer and Repent

The world did not end this past weekend. The people who thought the end times were coming put their faith above common sense. This kind of mistaken faith is not all that rare. It happens to us all the time when we let our economic and political ideology crowd out plain facts.

This is happening now to the Republican Party, and especially the Tea Partiers. The Republicans seem to be, if you'll pardon the phrase, hell-bent on clinging to their religious call for workers to sin, suffer and repent, the facts be damned.

The Republicans and their conservative allies believe the financial crisis and Great Recession occurred because the poor were induced to buy houses and the government taxed and spent wastefully. The American workers and especially union members are called to repent and suffer through a period of fiscal restraint, diminished expectations and less of a government safety net. America will return to a state of grace only when the government stops meddling and markets are allowed to do their magic. It takes a lot of faith to believe all that.

The Democrats have their own narrative. But they lack a shared orthodoxy and follow Will Rogers with his claim: "I am not a member of an organized political party. I am a Democrat." Democrats believe that inequality among individuals and government deregulation of markets starved the economy for purchasing power and caused the crisis. Democrats celebrate government and community.

The present political turmoil arises from these incompatible visions that the parties have watched play out over the past 80 years and both are still clinging to as a matter of faith.

The story starts in the excesses of the 1920s. Growing inequality and deregulation led to the bubble economy that brought on the 1930s and the Great Depression. The New Deal, which was conceived in the 1930s, was implemented in the 1940s, 50s and 60s. The New Deal brought the Great Moderation and with it riches, stability and growth to the American middle class. Individualism was out; government was in and we got everything from the EPA to the Clean Air Act, the Americans with Disabilities Act and even Medicare.

Starting about 1980, memories of the depression faded. When Republicans took over, government became the problem rather than the solution. They resurrected the austerity gospel and removed the protections and controls that curtailed the abuses of the 1920s.

The decade 2000-10 replayed the 1920s with the financial crisis and Great Recession the natural consequences. This time the government had the tools, a whopping big stimulus package and a Federal Reserve ready to pump trillions of dollars into the financial sector. These actions prevented another 1930s type depression. Republicans and Democrats together did well to implement this rescue even when it did not fit the orthodoxy of either party.

This bold and effective avoidance of a depression had a strange political response. The emergence of the Tea Party calling for the Republican solution of sin, suffer and repent seems weird even perverse. The Tea Party agenda of smaller government, less taxes and less regulation is what caused the disaster. The Tea Partiers are angry at the actions that prevented a depression. They are calling for austerity when they are the people who have the most to lose. But they are faithful to the Republican creed.

Rep. Paul Ryan laid out a proposal that the Republicans claimed would achieve the necessary budget cuts and solve the fiscal problems. In a cynical move, the Ryan proposal would leave Medicare in place for those over 55 years of age. For the next generation, however, Medicare would become a voucher-based, underfunded shadow of its former self. The Republicans passed a resolution advocating this plan 235 to 4. They kept the faith.

In addition, the 11 newly elected Republican governors have aggressively adopted the Republican austerity program that would abolish Medicare and slash Medicaid, education, healthcare and infrastructure investment. One Republican governor dismissed complaints stating that the people were now "more willing to accept pain and difficulty." The governors' attack on public service employee bargaining rights seems gratuitous and coordinated. These unpopular but bold moves were responsive to a shared faith.

In this process, Republican sloganeering became the Ryan proposal and the political scene tipped. The town meetings in Republican-led congressional districts erupted in angry denunciation. The Republican governors found newspaper headlines talking of "buyer remorse." And to cap it all, Democrat Kathy Hochul defended Medicare in the Republican heartland and won. The electorate appears to have awakened to the fact that the end of Medicare would be the end of the world for many of them.

But the Republicans are keeping the faith, whatever it costs the working class.

Final 5-10-11 After bin Laden: An American Renaissance

The American political and economic trajectory just tipped. Osama bin Laden's execution marks the end of our national funk and the opportunity to reach for a new birth of freedom. An American renaissance is in the offing.

For a long time, most Americans have feared our country was headed in the wrong direction. We felt a sense of decline and saw a future less than our past. Nothing seemed to be going right. Our "victory" in the Cold War proved to be empty, without any peace dividend. The Clinton impeachment was an embarrassment to everyone. The 2000 election left half the American people angry, frustrated and in doubt about our democracy. Our economy was faltering, going deeper and deeper into debt to our foreign competitors. Out-sourcing and off-shoring were gutting our manufacturing base. The pay of the middle and working class stagnated.

Then came 9/11. A clever group of fanatics armed only with box cutters brought down the topless towers of New York and breached the walls of the Pentagon. Freedom and our confidence took a hit.

The ensuing Global War on Terror turned out to be a costly and inept meddling in regime change across the Middle East. This obsession with Arabic-Islam led us to neglect the rise of Southeast Asia, the buying up of Africa by China and the anti-American drift of Latin America. Domestically, the Patriot Act frayed the freedoms that define who we are. We lost trust in our fractious politics.

Finally, in the midst of a presidential campaign, the financial system went into near collapse and the economy went into a Great Recession. It was then that we chose, mostly by default, a young, eloquent and black President. Our doubts about ourselves grew even stronger when, almost immediately, he met with a deep and disturbing hatred.

Then in this political turmoil, a political awakening began. Early on, disaffected conservatives coalesced into a cyberspace-like cloud called the Tea Party. Its members, rejecting the New Deal, advocated the economics of President Hoover: cut the size of government, deregulate and balance the budget.

Congressional Republicans tried to produce a workable program using this Tea Party agenda. It meant downsizing or eliminating Medicare and Social Security and drastic cuts or even elimination of spending on food stamps, Head Start, Pell grants and the EPA. The Republican Party bought into all this. Newly elected Republican governors cut business taxes and blamed the ensuing deficits on public employee bargaining rights. All this became a hopeful sign when more people began to care about politics.

Politics and turmoil flared up across the world. The Arab Spring erupted in Tunisia and spilled over into Egypt, Syria, Yemen, Bahrain and Libya. The terrorism and violence that some claimed to be at the core of Islam turned out to be illusory. Libyan youths brandishing AK-47s showed their willing to die for representative democracy, not radical Islam.

The resurgence of political activism was accompanied by an economic steadying. The economy began to turn around. A falling dollar may have raised gas prices but it also encouraged exports, cut energy and other imports and even lessened world trade imbalances.

Then, much like 9/11, we were startled with the news of the execution of Osama bin Laden. That gutsy, well-completed piece of business is, again much like 9/11, more symbol than cause or effect. Yet it can be as important as 9/11 for it re-engendered confidence in our government and our military. It marks, I think, the end of our era of doubt and rancor. Hopefully, we will grasp this opportunity for a new agenda and put aside our fear of terrorism.

The future is bright, economically as well as politically.. The whole world is in the midst of a technological revolution that America is still leading. It isn't just information and computers; it is chemistry, biology, transportation and natural resources. It is the Green Revolution writ large. Rather than increasing costs as some fear, that revolution will cut costs everywhere and so leave room to pay our debts, open investment opportunities and create jobs for coming generations.

The necessary openings are appearing. President Obama, the Tea Partiers and congressional Republicans all agree that our tax system is ridden with hidden tax expenditures, special-interest subsidies and disincentives of the worst sort. They also agree it is ripe for reform. They even agree it is the place to begin. Another promising sign, weapons systems are for the first time in generations on the agenda for cutting. We might finally get that peace dividend. We can stop scape-goating entitlements as the cause of all our woes.

With the execution of bin Laden, America's latest boogiemen, radical Islam, evaporated like the Soviet Union. We can again harness our optimism, our native ingenuity and our freedom to lead a new birth of freedom in the world that is emerging around us.

Faith Calls the Workers to Sin, Suffer and Repent

2011-06-04T13:26:00.000-07:00

The world did not end this past weekend. The people who thought the end times were coming put their faith above common sense. This kind of mistaken faith is not all that rare. It happens to us all the time when we let our economic and political ideology crowd out plain facts.

This is happening now to the Republican Party, and especially the Tea Partiers. The Republicans seem to be, if you'll pardon the phrase, hell-bent on clinging to their religious call for workers to sin, suffer and repent, the facts be damned.

The Republicans and their conservative allies believe the financial crisis and Great Recession occurred because the poor were induced to buy houses and the government taxed and spent wastefully. The American workers and especially union members are called to repent and suffer through a period of fiscal restraint, diminished expectations and less of a government safety net. America will return to a state of grace only when the government stops meddling and markets are allowed to do their magic. It takes a lot of faith to believe all that.

The Democrats have their own narrative. But they lack a shared orthodoxy and follow Will Rogers with his claim: "I am not a member of an organized political party. I am a Democrat." Democrats believe that inequality among individuals and government deregulation of markets starved the economy for purchasing power and caused the crisis. Democrats celebrate government and community.

The present political turmoil arises from these incompatible visions that the parties have watched play out over the past 80 years and both are still clinging to as a matter of faith.

The story starts in the excesses of the 1920s. Growing inequality and deregulation led to the bubble economy that brought on the 1930s and the Great Depression. The New Deal, which was conceived in the 1930s, was implemented in the 1940s, 50s and 60s. The New Deal brought the Great Moderation and with it riches, stability and growth to the American middle class. Individualism was out; government was in and we got everything from the EPA to the Clean Air Act, the Americans with Disabilities Act and even Medicare.

Starting about 1980, memories of the depression faded. When Republicans took over, government became the problem rather than the solution. They resurrected the austerity gospel and removed the protections and controls that curtailed the abuses of the 1920s.

The decade 2000-10 replayed the 1920s with the financial crisis and Great Recession the natural consequences. This time the government had the tools, a whopping big stimulus package and a Federal Reserve ready to pump trillions of dollars into the financial sector. These actions prevented another 1930s type depression. Republicans and Democrats together did well to implement this rescue even when it did not fit the orthodoxy of either party.

This bold and effective avoidance of a depression had a strange political response. The emergence of the Tea Party calling for the Republican solution of sin, suffer and repent seems weird even perverse. The Tea Party agenda of smaller government, less taxes and less regulation is what caused the disaster. The Tea Partiers are angry at the actions that prevented a depression. They are calling for austerity when they are the people who have the most to lose. But they are faithful to the Republican creed.

Rep. Paul Ryan laid out a proposal that the Republicans claimed would achieve the necessary budget cuts and solve the fiscal problems. In a cynical move, the Ryan proposal would leave Medicare in place for those over 55 years of age. For the next generation, however, Medicare would become a voucher-based, underfunded shadow of its former self. The Republicans passed a resolution advocating this plan 235 to 4. They kept the faith.

In addition, the 11 newly elected Republican governors have aggressively adopted the Republican austerity program that would abolish Medicare and slash Medicaid, education, healthcare and infrastructure investment. One Republican governor dismissed complaints stating that the people were now "more willing to accept pain and difficulty." The governors' attack on public service employee bargaining rights seems gratuitous and coordinated. These unpopular but bold moves were responsive to a shared faith.

In this process, Republican sloganeering became the Ryan proposal and the political scene tipped. The town meetings in Republican-led congressional districts erupted in angry denunciation. The Republican governors found newspaper headlines talking of "buyer remorse." And to cap it all, Democrat Kathy Hochul defended Medicare in the Republican heartland and won. The electorate appears to have awakened to the fact that the end of Medicare would be the end of the world for many of them.

But the Republicans are keeping the faith, whatever it costs the working class.

The Money Revolution

2011-04-28T06:03:00.000-07:00

The extraordinary Federal Reserve response to the financial crisis of 2008 forever changed our concept of money and, in effect, started the revolution. The fight will be over the changing nature of our money and who will control it.

Traditionally, the Congress taxes and appropriates money which the treasury then spends to maintain the government, buy our wars, maintain a social safety net and manage fiscal policy. The Fed manage monetary policy using the money supply and interest rate. (I wrote,12-11-08, about the differences between treasury appropriated money and Fed created money.) These two types of money did not intersect until the Great Recession of 2008 when the Fed used the full constitutional power that Congress had delegated to issue and regulate money.

Fiscal and monetary policy use money differently. Fiscal policy spending puts money that is taxed, appropriated or borrowed and paid back directly into the real economy. It goes into the production of goods and services. The Fed on the other hand creates and destroys money to maintain the financial system and manage monetary policy. The action of the Federal Reserve is supposed to be the application of technical expertise free of politics. That is why the bank maintains that it must have independence from the Congress or administration.

In 2008 all that changed. The Great Recession and the financial crisis presented a unique threat to the system itself. The Bush and Obama administrations, in consort, proposed and implemented a stimulus package of an un-heard of proportion, a proposed $700 billion. This stimulus may have ended up something less than that but it was still enormous in traditional terms. It was not, however, large enough to make up the lost aggregate demand or to adequately stimulate the economy. In any event, it is peanuts compared to what the Fed can and did do.

The Fed not only did all the traditional quantitative easing that takes place in the presence of a deflationary threat, but it turned on the money spigots full blast. The Fed sprayed trillions of dollars it created into not just the banking system but, and this is important, also into the real economy. The Fed was not just managing monetary policy. It mingled tax money and created money as though they were interchangeable. In effect, the Federal Reserve system changed our understanding of the nature of money.

Two lessons are particularly important. First, the Fed can now do with created money anything that the treasury can do with appropriated money. Second, this makes the present system of appropriation, deficits and debt obsolete.

This raises serious political questions. What is the sense of scraping and scrimping over borrowing and spending $38 billion or $60 billion or even $100 billion when the Fed is handing similar sums to individual firms with only the vaguest guarantee that loans and grants will be repaid?

The Federal Reserve injected at least $3.5 trillion into the economy since the crisis began. Most of that has remained in reserves at the Fed, collecting interest, of course. Yet much of it, and no one knows how much, went into the real economy.

The important fact is that there is no longer any distinction in use between money collected in taxes and money created by the Fed. There is no longer any distinction between borrowed money which has to be repaid and created money which never has to be accounted for.

The Fed may now be in a position to govern the country but this political attack by the financial industry has not gone unnoticed by the politicians. Those who have spoken out include as disparate a group as Senators Al Franken, Bernie Sanders and Rand Paul, all of whom want to rein in the Fed. These senators have forced the Fed to publish a list of those who got money and how much they got. But, there is still not the badly needed audit of the Fed. Nor have the Senators, and a good number of House members, yet aroused the citizenry but they are working on it.

I don't know who will take control of our money. Nor do I know a candidate who should. It could be the bankers, the great multinational corporations, the military-industrial complex, an independent commission or who knows. It is unlikely to be the Congress which failed so badly to manage treasury money nor is it likely to be Ben Bernanke and an independent central bank, though the Fed did a better job with created money than Congress did with tax money.

The War in Libya

2011-03-31T13:41:00.001-07:00

President Obama had the benefit of seeing what the Bush presidencies did right and wrong in Iraq. That is how he got it right in Libya.

For the first Iraq war, President George H. W. Bush put together a coalition that included Arab states to respond to Saddam Hussein's invasion of Kuwait. He then invaded with that multinational coalition. But he had the good sense not go to Baghdad. Instead he set up a no-fly zone over most of Iraq and imposed strict economic sanctions. The press in the United States paid scant attention to that decade-long no-fly zone and economic sanctions. But it was real and it crippled Saddam Hussein's ability to make war or build weapons of mass destruction.

During and following the first Iraq war, the United States publicly encouraged the Arabs in southern Iraq – Basra and the marsh Arabs – to rebel. They did so and were massacred when the West chose not to intervene on the ground but only maintain a no-fly zone. That was a cruel mistake.

For the second Iraq war, President George W. Bush could only put together a very limited coalition. He then invaded while stretching a UN Resolution and not waiting for a report from the weapons inspectors. President George W. Bush did go to Baghdad. We became an occupying power and 10 years later, American boots are still on the ground there.

President Obama called the second Iraq war a "dumb" war. He was right. And it taught him what a smart war in the Arab Middle East should look like.

President Obama waited. He was then accused of "dithering" and allowing Moammar Gadhafi to attack the rebels in Benghazi and reassert his antic authority over Libya. Others did not want us to go in at all and he was damned if he did and damned if he didn't. But he waited.

While supposedly dithering, the president was letting the French and English take the lead. They tested support for multinational action and America became the moderating influence and not the bellicose bully. This waiting gave time for the League of Arab States and the African Union to go public with their support for a no-fly zone.

When the United States took the leadership to put the puzzle together, all of the parts were there. There was a broad-based international coalition; the UN Security Council resolution approving a no-fly zone passed with no negative votes; there was already evidence that airstrikes could stop Gadhafi forces.

The concept of a no-fly zone over originally referred to restricting air flights over the territory cited. In Bosnia and Herzegovina, however, the United Nations and NATO stretched the concept to include giving close air support and airstrikes on targets in Bosnia.

President Obama did not abandon the rebels to face alone the organized military forces of Moammar Qaddafi. The president and our NATO allies applied this expanded definition to include Tomahawk missile and fighter bomber attacks. These attacks broke up Qaddafi's offensive and prevented a massacre in Benghazi. The burning armored columns we can see on our TV demonstrate the effectiveness of the attack. The rebel forces were then able to regroup and counterattack, changing momentum of the war.

The official reason given by the president for our action, or any action by the UN, NATO and others, is the protection of the civilian population from attacks by Col. Gadhafi. This humanitarian task is the reason first cited by Secretary of State Hillary Clinton and the other women in the administration who pushed for military intervention. However, the president and his press staff might spin the issue, the president's actual goal clearly includes the removal of Col. Gaddafi. But the president prefers to let the Libyan people do that.

The most compelling subtext is, of course, keeping alive the still spreading uprising of Arab peoples that began in Tunisia and Egypt. The popular movements that have now taken to the streets in Bahrain, Yemen and Syria would be crushed unmercifully by their rulers if Qaddafi were able to put down the rebellion in Libya. The president had to act or the spread of democracy would stall and what could him him him him him him him him him &be a new birth of freedom would be lost.

President Obama should be given credit for the deft, nuanced and successful way his administration is handling the whole Arab uprising. But he did have the example of the successes and failures of the two Bush administrations to guide him.

John Boehner and Scott Walker as The Walrus and the Carpenter

2011-03-18T19:39:00.001-07:00

In the poem The Walrus and the Carpenter, Lewis Carroll told of how the Walrus and the Carpenter, walking by the sea, convinced the oysters to join them. The Walrus and the Carpenter then ate all of the oysters and wept at their own trickery and the fate of all the oysters they had eaten. So let's apply that morality tale to our politics.

The time has come, the Walrus said, to talk of many things: especially of deficits and debt. For it is fear of debt that is driving our politics today. If you want to know what Speaker of the House John Boehner is asking you to go along with, you have to understand how debt is being manipulated for political ends. All the rest is just jabberwocky nonsense.

The conservative wisdom proclaims, first, that debt is bad, bad, bad and the annual deficits are out-of-control, promising future bankruptcy. The deficit hawks established that political truth with the outcome of the last election. Now House Speaker Boehner and President Obama are haggling about how to respond to that "truth."

Second, the conservatives maintain, it is overspending by the middle class and the Democrats on entitlements and on public services like police, health and education that is causing our near bankruptcy.

Third, they claim, we are now so far in debt that only draconian austerity with regard to public services will permit us to get the deficit under control.

A lot of people are, like the oysters, willing to go along on that walk with Gov. Scott Walker and company. The Republicans are cocky enough to admit that their goals are not fiscal but political: right now, crush the public service employee unions as a source of Democratic party support and, in the long run, "shrink government down to the size where we can drown it in the bathtub." The debt crisis is an important tool in achieving that future. But fear-talk about the deficit is just a head fake to hide the fact, as the walrus said, that pigs don't have wings and that it would be a dismal thing to do.

The Republicans were complicit in creating the debt. They deliberately caused the current "crisis" – they called it "starving the beast." Now, like the Walrus and the Carpenter, they shed a bitter tear and say come and walk with us!

To understand what the Republicans are doing, you have to understand the nature of debt. Debt is, of a necessity and equally, the rich man's wealth. All debt is in essence a contract that obliges one person to give something to another person at a future date. The ownership of debt determines the redistribution of income in the future. Debt is important because it reflects who owns and controls the future.

So now let's apply this to our national debt. The wealthy have in the past lent about $14 trillion to the federal government. That is, besides their assets, they own $14 trillion worth of future output. This debt represents power and the future. The bondholders see the government as a countervailing force.

The wealthy fully realize that the government is the only power that threatens their control over the future. By control of the money supply, by regulation of businesses, by promises inherent in Social Security, Medicare and the entire social safety net, the government is committed to redistributing income in the future. That threatens the future ownership and control of our society by the wealthy of today.

More often than bondholders want to admit, however, sovereign national debt is paid off with inflation diminished dollars. That is the way we paid off the World War II debt and, the bondholders fear, it is the way we will pay off the debt created by the Bush tax cuts and the Iraq/Afghan wars: the debt they are now holding.

From 1946 to 1960, a low and steady inflation and real growth in GDP made the debt relatively smaller. In the decade 1970 – 80, serious inflation roared through the economy and the consumer price index more than doubled, effectively cutting in half the real wealth held by the bondholders. The Republicans and the wealthy see government spending as the cause of that inflation. Curtailing government spending is seen as a means to control the future.

So, all of us – the Walrus, decided in the last election to starve the government commitment to the poor and needy, to forget about equality of opportunity and to drown the government in the bathtub. The wealthy are going to eat us alive just as the Walrus and the Carpenter ate every oyster who went along with them.

I weep for you, John Boehner said: I deeply sympathize. But he has to control the future for his constituents and he does that by eating all the oysters.

I say, a little more inflation is my oyster

Why Are We Broke?

2011-03-18T19:35:00.001-07:00

To listen to the discord, contention and nastiness about taxes, the economy and government you would think the country is in dire economic straits and about to collapse. You would think that we can't afford to have a government, that we can't afford guns or butter, our old folks or healthcare, our children or our own security. That simply is not true. We are still the richest country in the world and it is high time we acknowledged that.

Someone with an agenda is trying to scare us into accepting their political agenda on the grounds that we cannot afford freedom and security.

The commonly accepted political narrative features Tea Party complaints about the heavy burden of taxation and the size and cost of government, which then segues to corrupt public service unions and state and local communities facing bankruptcy. On the national scene, the fear mongers rail that the federal deficit and national debt are so burdensome that the dollar is about to collapse. Again, none of it is true.

At the end of 2008, we did have a serious crisis in our financial sector but those problems were related to the financial bubble and besides the financial sector got bailed out. Of course, we are still in the Great Recession, at least in regard to unemployment. But the stimulus package worked, new jobs are being created and the economy is growing again. I repeat, there is no reason to panic over our financial situation. All of the financial and economic problems are manageable. There is no need for any drastic benefit cuts and so-called austerity programs.

Let's put things in perspective. In earlier times, we faced similar difficulty but with a whole lot more confidence. For instance, in National Security Council Memorandum 68 of April 14, 1950 the United States took a serious look at what we could or could not afford as an economy. That document specifically stated that "the necessary (defense) build up could be accomplished without a decrease in the national standard of living." The United States officially decided that it could afford guns and butter. We did that with an output of about one quarter per capita of what we have now.

The GDP-to-debt ratio is exactly the same now as was in 1950 when we could not only afford to maintain a rising standard of living but at the same time we could face-off with the Soviet Union. At that time national defense was about 4.5 percent of GDP, almost exactly what it is now. Defense spending is not the problem.

Nor is the burden of taxation the problem. Federal government tax receipts amount to 14.5 percent of GDP. This is the lowest level in 50 years. Tax receipts for 2009 for all federal, state and local governments are only 17.1 percent of GDP, down from the normal 20 to 22 percent because of those tax cuts for the rich. The burden of taxes in the United States of America is now lower than they have been in 50 years. Those who claim they are "Taxed Enough Already," are either misinformed about taxes or don't want to pay their fair share.

The federal deficit and national debt are similarly not a serious problem. We are fed very large numbers, which are essentially meaningless, in order to panic us into accepting someone else's political agenda, mainly cutting Social Security, Medicaid and Medicare. Privatizing Social Security merely hands overpaid New York bankers part of your retirement.

So if there isn't a problem, why is everyone complaining and feeling so hard up? Well, actually two real problems exist and converge: the lack of income and the increased cost of health care. The working class has not had a pay raise since 1980 and does not have the money to maintain its standard of living. Our economy in 2010 is producing more than twice as much as it was in 1980 but all of that increase went to the richest 10 percent of the people. The rich took all the money and now they want to cut Social Security, Medicare and Medicaid as un-affordable.

The other and related problem arises from a profit-bloated health care system. The pharmaceutical companies charge monopoly prices and make monopoly profits. The health insurance companies charge $300 billion a year for which they contribute nothing to health care. They, in fact, make the "death panel" decisions when they refuse coverage.

Gov. Thomas Corbett will take the $1 million from the gas companies and not tax Marcellus Shale. President Barack Obama will take his payment from Goldman Sachs who then become too big to fail.

Maybe the blatant effort to destroy the public service employees unions will raise the political temperature and we will start fighting for what has been stolen from us.

The War on the Wage Earning Middle-Class

2011-02-16T19:55:00.000-08:00

The establishment, the elite, the rich or whatever you want to call those who have the money and call the shots, are at war with the American wage earning middle-class. This war is real and at the moment the near bankruptcy of state and local governments is being used as an excuse to attack the public-sector unions.

Make no mistake. The rich do see this as a war. The newly elected Republican governor of Wisconsin, Scott Walker, without any provocation threatened to call out the National Guard "if there is worker unrest" or "problems with workers" when he imposes his austerity budget. Austerity is the code word for attacking public-sector unions on a spectrum of issues. These range from defaulting on contractual wage and benefit agreements to taking away most of the union's ability to negotiate.

The anti-union narrative goes like this.The public sector unions and their political enablers conspired during the good times to negotiate overly generous wage settlements and absurdly expensive healthcare and retirement benefits. These wages and benefits are now way out of line with the private sector and the states can no longer afford to coddle these workers. Austerity is now necessary to make up for the decades of wasteful spending.

The crisis is really just an excuse. The strategic goal, which is much older than this crisis, is the destruction of the labor movement, the most significant remnant of which is the public sector unions. The private sector unions have, for the most part, already been crushed and can no longer put upward pressure on wage levels. More telling, the unions were not able to hinder the greatest upward redistribution of income in our history.

The rich are winning what was until recently a war of attrition. The union movement as a whole is no longer large enough to matter. In the 1940s, the high point of the labor movement, the total union membership reached as high as 40 percent of the workforce, with the public-sector then only about 10 percent. By 2010, things had reversed and total union membership fell to only 11.9 percent. Now the private sector is only about 6.9 percent unionized and the much smaller public-sector has grown to 36 percent.

The private/public benefit packages are indeed out of line. But that is because private sector workers are underpaid, not because public-sector workers are overpaid. Private sector workers were more vulnerable to attack and could be fired more easily for union organizing. But wage earners have lost most seriously in regard to income.

From 1946 to 1980, when America was building the great middle class, the richest 10 percent of Americans received 32 percent of the income increase while the other 90 percent received 68 percent of that increase. That ratio remained constant for 30 years and the country prospered. Then around 1980 the war on the middle class began and the great upward redistribution of income occurred. Between 1980 and 2008, GDP grew, in constant dollars, from $5.8 trillion to $13.3 trillion, an increase of $7.5 trillion. The workers received just 14 percent of that increase. The top 10 percent got 86 percent.

In the years 2000 to 2007, GDP increased by a total of $2 trillion. The richest 10 percent of Americans received all of that; the other 90 percent received absolutely nothing. Had the previous 62/38 ratio continued, the wage earners would have received $1.2 trillion additional in income. That $1.2 trillion, about $8000 per worker, is the booty that the top 10 percent seized as a result of their looting in the war on wage earners.

The war on the middle class is more than an attack on unions and is being waged on a number of fronts. For instance, the Federal Reserve made the goal of full employment subservient to fighting inflation. The real minimum wage is falling because it is not indexed. Deregulation – of money, of the workplace, of food and consumer products and across our economy – shifts the cost of public goods to the working class. Federal tax policy, globalization and trade/investment agreements encourage passing that $1.2 trillion to off-shore investment or foreign tax havens. The working class has born virtually the entire cost of this financial crisis and the Great Recession.

The states have to close their budget gaps. The real austerity option is to increase taxes on those who have all the money. Our politicians will talk about that but the cheap shot is accusing the public-sector unions. Wage earners will then be the docile workers and citizens the corporations want.

On Being Revolutionary

2011-02-02T18:18:00.000-08:00

Revolutions tend to be messy and and what is happening in Egypt is no exception – as we can see on our television screens. But we should recognize that it is not chaotic. Specific interest groups with specific political agendas are fomenting and leading this revolution. What we should be thinking about now is the part America has and should play in Egyptian and other democratic revolutions and where we go from here. Really, what should we learn from this?

First, we have to take Egypt seriously for it is an anchor point in our relationship with the world's Arabs. Egypt sits geographically, economically and ideologically at the center of the Arab world. With 80 million people, it accounts for 20 percent of the Arab population and, leaving aside Saudi Arabia's oil output, Egypt has the largest economy among the Arabs. Ideologically, Egypt has remained determinedly secular even as it has been, with Al-Azhar University, the source of Islamist philosophy and theology. Lest we forget, in 1956 the US opposed the Anglo French attack to "take back" the Suez Canal and, post-Nasser, Egypt has been a faithful ally of the United States. In 1978, it took guts to oppose the Arab world and sign the US brokered peace treaty with Israel. Egypt continues to observe that peace treaty.

Under Presidents Anwar Sadat and Hosni Mubarak, Egypt has been determinedly secular even if quite dictatorial. Now, at least a half a dozen opposition groups have surfaced to share the management of this revolution. The Egyptian opposition factions – a mixture of new and old, secular and Islamist – represent the full range of political Arab-Islam. In the euphoria and acceptance of revolution, they have come together to propose Dr. Muhamed ElBaradei as their negotiator with the government. ElBaradei is expected to negotiate the departure of Pres. Mubarak and set the stage for a new constitution.

On the other hand, Egypt is also the home base of the Muslim Brotherhood, which was officially banned but unofficially tolerated. The Muslim Brotherhood has supplied the theological base for Islamism and the anti-western Jihad movement, though it remains officially nonviolent. Sayyid Qutb, the theologian of the Muslim brotherhood, was the inspiration for the hatred of the United States by Osama bin Laden and Al Qaeda. The Egyptian government executed him.

Egypt is a mixed bag, full of contradiction and this revolution can go in any political direction. This will be a real test of American foreign-policy and our Nobel Peace Prize President.

Traditionally, American foreign-policy chooses the status quo over revolution. That choice of security over freedom has meant that we continually support repressive regimes. We have supported some really nasty dictators: in Latin America (the Somozas and Pinochet), in Africa (Mobutu and Mugabe), in the Middle East (Sadat/Mubarak and the Shah) and in the Far East (Diem, Marcos and even Pol Pot). Already before Secretary of State Henry Kissinger's realpolitik, our foreign policy sought primarily a stable world in which American business can continue to operate profitably.

Then, when those regimes fall, as they all eventually do, we scramble to try to influence the choice of the next regime, talking always about freedom and democracy, as long as it doesn't cost us anything. Superpowers learn to live with a great deal of hypocrisy.

But revolutions have a logic of their own. The first part of a revolution is usually a popular uprising that undoes the status quo. With popular support, the security forces are emboldened to desert the regime and its leaders then flee. These popular uprisings are usually a "surprise" to Western analysts and pundits because the suppressed opposition has been quiet, carefully organizing and saving its strength for the post-chaotic competition for power that they clearly see coming.

In the ensuing scramble, power flows to the faction that is well-organized, highly disciplined and absolutely ruthless and not to the good guys who led the revolution or who we support. In Russia, it was the Bolsheviks; in Iran it was the ayatollahs; in El Salvador, the Sandinistas; in Cuba the Fidelistas; and in Egypt it could well be The Muslim Brotherhood. Revolutions tend to get hijacked.

Already the Brotherhood has specifically supported Dr. ElBaradei because he presents "an unthreatening face to the West." We can expect to see a continuation of this moderation, until it is time to do otherwise.

As in virtually every other area of politics, a sincere move to support democracy and freedom, especially before the revolution, is the best way to avoid ugly revolutions. It certainly is far better than supporting dictators with military arms because they are willing to protect the rights of American corporations.

Our foreign-policy should take the Declaration of Independence more seriously.

The Morality of Fiscal Austerity

2011-01-22T19:37:00.000-08:00

All across America, in this new year and in this new Congress, there is a call for fiscal austerity on the part of local, state and federal governments. We are told that because of wasteful spending of years past we now have to cut spending in order to balance budgets and avoid raising taxes. This fiscal austerity is seen as a call to virtue even if it means cutting the services and benefits of the working and middle classes.

This austerity is considered virtuous because it is consistent with free-market principles. On the contrary, it is morally wrong. There is nothing automatically moral or deserving about market outcomes. Market principles, that is, the right of the individual to private property and the right to maximize individual well-being have become first principles, taking precedence over the rights and well-being of the community. We are choosing free-market principles over community-based morality.

This conflict between free-market principles and community-based morality is at the heart of what is dividing our country. It is what is driving the national debate that leads people to say our country is going in the wrong direction.

About 30 years ago America began a shift to values rooted in individualism and the logic of the free market. At its heart is President Ronald Reagan's "government is the problem" and Margaret Thatcher's "there is no such thing as society."

If there is no society and government is the problem, society cannot be blamed for any social problems.There are no common goods, no common responsibilities, no common failures. Individuals are responsible for society's problems. Therefore, punishing the poor for failing the market test is appropriate. Imposing austerity is the only logical remedy.

I used to wonder why no one was angry at the rich for taking all of the increase in income over the past 30 years or why no one was up in arms at the bankers for skimming off billions of dollars while abusing the economy into near collapse. It seems so unjust.

Market morality explains it: the rich are, by free-market standards, efficient and therefore they "deserve" what they get. They have the right to use the money they earned as they see fit, even for buying government subsidies and lower taxes. The poor, the unemployed, the bankrupt are, judged by market outcomes, to be inefficient. By the very fact that they are poor, they demonstrate that they have failed. This market morality punishes the needy poor with austerity and cuts taxes for the successful rich. Accident, illness and the natural hardships of life are just part of the game.

This is being presented, with some justification I think, as a constitutional question. We are asking: what is the place of government in our daily lives? Is there a moral obligation to our community of fellow citizens or do we just accept market outcomes?

The divide in America's civil society thus arises from the fact that these two different value systems are competing to establish the character of American political and economic discourse. In which mold do we cast our values: individualism or community?

Political reality says that we make economic and moral choices by picking some point along that spectrum from individualism to community. The right and the left, Democrats and Republicans, conservatives and liberals are in a tug-of-war trying to pull the country in one direction or the other.

The positive response to candidate Obama's call for change was clearly a rejection of the market values and market morality, that too root during the past era. The move to individualism, smaller government and deregulation went too far under Presidents Reagan, Clinton and Bush I and II. It was a central fact in the economic and financial crisis that still dominates our economy and politics. This failure led very clearly to a demand for community oriented values. Social progress is again being defined in terms of the common good. Healthcare and financial reform were necessary because they are moral issues

The Great Recession seriously cut government revenue. Now when we should be spending more to bolster aggregate demand, we are called upon to spend less in order to be virtuous and balance budgets. In the current political debate, this call to austerity and limiting government debt are the individualistic, market-oriented choices.The community choice would be government action to address the problems and a significant stimulus package to maintain the recovery.

This fiscal austerity is not virtuous; it is immoral.

Misusing the Debt To Attack Social Security

2011-01-08T13:02:00.000-08:00

Look out! The big story of the coming year is that the Republicans are coming after your Social Security and Medicare. The Republicans fought Social Security when it was founded; they fought it when it was expanded to include Medicare; they are still fighting the Obama health care program. They are going after Social Security under cover of a fiscal crisis. We may have some serious economic problems, specifically unemployment of almost 10 percent and a runaway financial sector, but we do not have a fiscal crisis.

The important point to remember – the Republicans do not care in the slightest about the debt and deficit. Both the Reagan administration and the Bush administration ran record-breaking deficits and VP Cheney maintained: "Reagan proved deficits don't matter." They really care about cutting Social Security.

Yet it is these same Republicans who have convinced the people that the greatest threat facing this nation is the federal debt and deficit and that the only way the country can be saved is to cut Social Security, Medicare and other parts of the social safety net. The baby boomers in particular are convinced that Social Security and Medicare will not be there when they become eligible. This is all nonsense concocted to preserve the wealth that was seized since 1980.

The rich themselves don't believe there is any crisis. They continue to bid stock prices ever higher. To the rich and officially, the recession has been over for a more than a year. The only problem is unemployment but that just keeps wages down and profits up. And profits are way up, up, up. The markets are telling us that the corporate community is saying: what crisis?

The fiscal argument against Social Security is simple but flawed. The politicians argue, look at the national debt of $13.9 trillion with debt service of $3.5 trillion. Look at the federal budget: $3.5 trillion in spending, only $2.2 trillion of revenue and the consequent deficit of $1.3 trillion for the year. That is the largest deficit ever and it pushes the gross national debt to $14.0 trillion, which is 95 percent of GDP. Something must be wrong and, they say, that kind of deficit is certainly not sustainable.

The United States of America is not in fiscal crisis. All of those numbers are ginned up to create fear among the people and foment an attack on all government. Over a third of the national debt, $4.5 trillion is held by the Federal Reserve; we owe that money to ourselves. A third of the interest payments are therefore returned by the Federal Reserve to the treasury each year. The Federal Reserve buys up the federal debt and effectively retires it to create our money supply. That is what the Fed is supposed to do.

The fiscal crisis advocates are actually claiming that we as an economy cannot care for our elderly, educate our young or provide for our security. Yet the gross domestic product, in real terms, grew from $5.8 trillion in 1980 to $13.1 trillion at the beginning of 2010. That is an increase of 66 percent in per capita GDP. Admittedly, virtually all of that increase went to the top 10 percent of income earners. But that is the result of a corrupt political system that pays off to the wealthy.

The problem for the Republicans at this point is that they have fired up their base when "an aroused citizenry is the worst nightmare of tyranny." The Tea Party movement is the unintended consequence of their fear mongering. Their overblown crisis rhetoric convinced the Tea Partiers that the country is in danger and its members are rising in defense of their country. They really believe.

In the coming year the Republican party will call for cuts in spending as an excuse to cut Social Security. They will continue the same tactics and crisis mongering. They will again avoid the fact that the Bush tax cuts for the rich are even more important than spending as a cause of the deficit. They will ignore the fact that subsidies like those to the oil companies, agriculture and offshore tax havens are also important in causing the deficit.

Then, we will see the Tea Party, that "aroused citizenry," do its best to entangle the Republican Party in honest attempts to balance the budget and, maybe, rewrite the tax code. The Tea Party and the progressives have a lot more in common than either of them is yet willing to admit.

Politics is the most compelling of spectator sports – because winning and losing has consequences.

Christmas 2010

2010-12-22T13:46:00.001-08:00

Well now, it looks like president Obama is having a very nice Christmas season. This president, who the political class had dismissed as whiny and weak, has suddenly turned out to be savvy and strong, and Santa Claus is treating him as not naughty but nice. Obama is getting things done and people, including Republicans, are recognizing it.

Something is happening, and it looks much deeper than "politics as usual." The presents are turning up under our political Christmas tree in the form of progress or passage of: the tax bill, Don't Ask Don't Tell, the 9/11 health-care bill, the food safety act, and possibly even the START treaty. That's just this week and in a short lame-duck session. And most important, none of this could have been done without some Republican help. What happened?

That's a good question because the gridlock, antagonism and petulance were and still are pervasive. President Obama took office with 80 percent of people believing we as a country were going in the wrong direction. Most still believe that. It is not that we have a simple disagreement over some issue that can be solved by a different political movement taking control. The consensus says we're in trouble whoever is running the show.

Obama recognizes that but believes more specifically that our political process itself is broken. Obama believes that restoring the political process itself is more important than anything else on our political agenda. Other things will just have to wait.

The president has not yet convinced the political class that this is the problem. The political parties, movements and interest groups are all hung up on specific answers to specific problems. The political parties point to their inability to respond to their constituencies. The Tea Partiers accuses government of denying them the American dream with high taxes, big government and overregulation. For others it is the government getting in the way or failing to act on a wide range of challenges: the environment, our educational system, free trade and trade agreements, the gutting of our manufacturing base, our health-care system, the aging of our population, the banks, Social Security and Medicare trust funds and the debt and deficit.

Traditionally, political leaders are supposed to use the political process, negotiation and mutual accommodation, to put together the coalitions that solve problems. That's politics and the process is supposedly well-known and accepted. The negotiation is supposed to be over content. Obama thinks that the broken process and the approach it demands are more basic than can be handled with "politics as usual."

Everyone seems to have noticed by now that Barack Obama is not your normal politician. He did not begin his presidency with a frenetic 100 days as some wanted him to and others feared he would. The left faulted him for not using his mandate and the right accused him of socialism. The political class began to believe he was nothing more than a naïve glamour boy, not tough enough for the job.

President Obama did indeed eschew the power brokering and horse trading of politics. That's because he sees himself as our community organizer-in-chief and he looks at our society the way a professional community organizer would look at a dysfunctional family or neighborhood. The real problem is a lack of communication and an absence of civil discourse. You have to solve that first.

Obama insisted, rebuff after rebuff, in approaching the Republican leadership. He had to tie himself into all kinds of knots to get them to a real negotiation. He also had to give a lot. But Obama finally got the Republicans to the table talking, making concessions and attending signings. If he had to give that much, he felt getting the broken system working again was more important than anything he might have to give.

We may have turned a corner in Obama's nation sized family therapy program. The stimulus package and healthcare were like a steady job and family health insurance. You did those first to stabilize the situation. Then you start the family talking, sharing and doing something therapeutic, maybe even singing Christmas carols.

To get back to this Christmas. The kids don't want anything fancy like a Flexible Flyer, a dollhouse or, more probably, a Nintendo Wii for Christmas. They want mommy and daddy to stop fighting and get to responsible parenting where they will pay the bills, make the kids feel secure and do the other necessary parental chores, like cleaning up the house.

Let's hope and pray that this Christmas President Obama is starting our family on its way to a happy, healthy and holy Christmas, and a healthy politics.

It's the Politics, Stupid!

2010-12-09T16:07:00.000-08:00

Everything around us is full of counterfactuals, contradictions and just plain stupidity. People vigorously advocate economic programs which contradict their political values. Facts, especially economic facts, don't seem to matter. Our politics and economics are out of sync and out of control.

Take taxes, for instance. The ratio of federal income and Social Security taxes as a percent of GDP is now 14.8 percent, lower than in any year since 1950. So why are we in the midst of a tax revolt with people complaining that they are Taxed Enough Already? It is a contradiction to want to cut taxes when they are already at the lowest level in 60 years and at the same time to complain about deficits.

The national debt and deficit are mired in political contradiction. If you listen to the fiscal responsibility commission appointed by Pres. Obama, we have to cut Social Security, Medicare and health care benefits or we are headed for fiscal collapse. Yet, without those Bush era tax cuts or those wars we refuse to pay for, there would be no deficit or increase in the national debt. It is counterfactual; the social benefits have nothing to do with it.

The debt and deficit are also not an economic problem. They are a political problem but only because people chose to make them so. The gross domestic debt is $12.3 trillion dollars or 84.8 percent of GDP. However, when you subtract the $5.3 trillion owned by the Federal Reserve (that is what the government owes to itself) then the national debt is only 48.3 percent of GDP, an amount that could double with no serious economic or political consequences. What is the problem? Why are people talking about an economic breakdown?

The Federal Reserve, in turn, is being just plain stupid. Chairman Bernanke even looked scared of his projected 10 years with an 8 percent unemployment rate when he went on 60 Minutes to defend his second round of quantitative easing. QE2 would have the Fed purchase $600 billion-$1 trillion additional in federal bonds, thereby injecting that much more money into the banking system. That money would not however get into the economic system unless the banks were willing and able to lend it. The banks are already sitting on over $1 trillion worth of cash that they are not lending. The banks and borrowers are hesitating because they see a stalled economy in the US and Europe, not because of a lack of available funds or too high an interest rate.

It's the politics, stupid. The case of Speaker of the House Nancy Pelosi makes it clear. She is deeply admired as a very successful Speaker who at the same time is vilified and hated. When push came to shove, she shoved, hard and with success. So Republicans hate her for her success and they spent many millions of dollars to prove it. It is also why her caucus has stood by her. Speaker Pelosi has also been way ahead of President Obama in pushing Change You Can Believe in. It's pure politics.

Maybe the real contradiction in politics is our president. President Obama promised the Republicans well ahead of time that he would not hold out for a repeal of the Bush era tax cuts for the rich. Just the way he did not hold out for a single-payer health care system, closing Guantánamo or Don't Ask Don't Tell -- all of which he promised. The most important thing that our economic and political system needs at this time is confidence. His actions are not confidence building; they invite political attack.

Obama is trading a two-year extension of the tax cuts for the rich for continuation of unemployment compensation. The Republicans expect that in two years they will have the votes to make those cuts permanent. Why would a guy who appears to be so bright be so easily rolled by Republicans who are themselves being rolled by the likes of Sarah Palin, Rand Paul and Michelle Bachmann?

The biggest political contradiction is our continuing presence in the Middle East. Iraq has disappeared off the map of our consciousness. Afghanistan is still there only when it distracts us from Christmas shopping and the titillation of Wiki leaks of State Department documents. The continuing fiasco in Afghanistan is evidence of a crumbling military, and political, empire

The economic contradictions are created by our political needs. But our political needs are also metastasizing those economic contradictions. We can live with these contradictions only so long. Our nervous break down as a society will come not because of our economy but because of our really lousy politics.

Unfortunately, it is the money of the very rich that is buying those lousy politics

This Thanksgiving We Need Good Government

2010-11-30T18:33:00.000-08:00

This Thanksgiving we as a nation are more angry than thankful. We have a problem; we are becoming more divided politically and economically. The only thing we seem to agree on, and 80 percent agree, the country is not headed in the right direction. Someplace things have gotten off the track and we don't like it one bit. The Tea Party Movement is the most vocal and specific reflection of that anger.

It isn't just the polls. It isn't just the downside of the economy. It isn't just the last couple of elections. And it isn't just a garrulous Tea Party's disaffection with the two political parties. Something fundamental about America has been and is still changing in ways that 80 percent don't like.

Americans have always thought of our country, our nation or whatever we are, as something different. We call this American Exceptionalism. We boldly print on our currency: Novus Ordo Seculorum, Something New under the Sun. We are a country with a mission, a destiny, playing a role of moral leadership and military preparedness in the protection of world peace and freedom.

Now there is doubt. This doubt has become anger as we've watched things go wrong and discovered that we are not always the good guys.

The tipping point, where things began to go wrong, came probably in the mid-1980s and is best exemplified by the garish, nationalistic Summer Olympics in Los Angeles which popularized the cry "USA-Number One!" Before that, "exceptional" meant different and not necessarily superior and we respected the other cultures of the world. Then, with globalization and all the other technological change, and the collapse of the Soviet Union, we were misled into an American triumphalism. We proudly proclaimed ourselves the sole global superpower.

We began to believe that we were, and should be recognized as, the best at everything: we were the richest, the most free and the most innovative people in the world. We had the best educational system, the best medical system, the greatest military, the most productive economy, and most importantly "We have the best form of government in the history of mankind."

You have to be in a profound state of denial to continue to believe all that. Industrial countries around the globe are rising in wealth even as we are stagnating. We are borrowing to buy what we used to produce. We are surrendering our freedoms to Patriot Act intrusions as we violate and abuse our Constitution. Our commanding lead in productive technology is shrinking. We no longer have the tallest buildings, the fastest trains or the highest growth rate.

America still has great universities but our elementary and secondary schools are at best a disappointment. A third of our population under age 65 was without health insurance for part of 2009. In 2010, we passed up an opportunity to create a great health-care system.

America may have "the best form of government in the history of mankind" but we are trashing it with partisan politics and personal meanness.

Most importantly, however, we have surrendered the moral high ground. We have declared our right to preemptive war, which is the act of infamy the Japanese did at Pearl Harbor. Even our worst enemies were shocked that we would not only torture but that we would publicly admit it and condone it.

If we as a people are going in the wrong direction, then our government failed us. The Tea Partiers are then right to be angry with government for a lack of political, economic and moral leadership. Both Democrats and Republicans, both Senate and the House stand accused by the results of the last two elections. No one is happy with any part of our government.

We as citizens are as guilty as our government. At that tipping point in the mid-80s, when everything was churning around us economically, politically and internationally, government was the only institution able to pull it all back together. Instead, we were told that the government "is not the solution to our problems; government is the problem." We stopped trusting government. We lost our government at the point where we needed it most.

The anger that arises from that loss does not yet have an effective outlet. Smaller government, cuts in spending and deregulation are a refusal to face reality. In fact, government is our only way out. We tried a kind of center-right, small, deregulated government and it brought us crises. What we need is good government not less government.

Have a happy and hopeful Thanksgiving. At the same time, channel that anger into something constructive.

Trading Misery for Power

2010-11-14T17:37:00.000-08:00

For all the confusing factors that came into play in this election, there seems to be some kind of consensus that the basic problem is the economy. Same old, same old: "It's the economy, stupid!" That is, economics is supposed to drive politics – but that is not the way it seems to be working out.

When the economy is down, true enough, out goes the party in power. The Democrats lost over 60 seats in the House and not just because it was the midterm after a new president took office. Rather, the unemployment rate was stuck at 9.6 percent and the Democrats did not appear to recognize the need to create jobs. The voters were also well aware that the Republicans did not have a plan, beyond their usual cutting of taxes, but the Democrats were in power so it was their responsibility.

The American economy is truly in a directionless funk and there is no political or economic consensus on how to revive it. For six months, from September 2008 to February 2009, there was actually a bipartisan agreement that the economy was collapsing around us and needed direct action in the marketplace to salvage it. The ensuing salvage operation was financial. It required TARP, control of AIG, Freddie and Fannie, and it mandated bankruptcy of GM and Chrysler. The salvage operation may have been messy but it was bi-partisan and it worked. Republicans and Democrats should be happy about that. The alternative was unspeakable.

Then it came time to restart the economy and both parties fell back on politically motivated, faith-based economic platforms that are principally intended to rally and then reward their backers. The Republicans cut taxes to the rich and the Democrats give stimulus spending to the middle class. But note: politics became more important than economics.

In this election America passed up an opportunity to have an intelligent dialogue on the economics of the crisis. Now, after the election, the Republicans are treating the lingering, high unemployment of the Great Recession as a gift from the economic gods.They think it will give them what they want most, according to Sen. Mitch McConnell, a one term presidency for Barack Obama. The Republicans are quite willing to let millions suffer economic hardship for years to gain their political ends.

The Republicans are willing to pander to the Tea Partiers on their right wing and demand fiscal restraint with spending cuts, knowing that it will just push the unemployment rate higher. They want to send President Obama into the 2012 election with a fired up opposition and a very disappointed base – an enthusiasm gap, if you will. The Republicans will use the politics of no to frustrate any Democratic economic revival plan and prolonged the recession. Then they will blame the Democrats.

For their own moneyed constituents, the ill effects of the recession are long over. The Dow Jones Industrial Average is back up over 11,000, profit ratios are climbing, executive salaries are again astronomical and the rich are getting richer. Unemployment is no problem for them since, for their constituency, it operates as a wage suppressant that redistributes money from the poor to the rich.

Republicans intend to take the presidency in 2012, take credit for the recovering economy and finally, in the name of fiscal responsibility and small government, raise the wage tax, institute a regressive value-added tax and cut Social Security benefits. They will buy Tea Party political support with the misery of working families.

Democrats do, of course, have a plan. They recognize that this recession is the result of a lack of aggregate demand. The working class must somehow get the money to buy the goods they are producing. The Democratic plan therefore entails another stimulus package, subsidizing exports, encouraging domestic green production and weakening the dollar.

That clashes in every respect with the conservative Tea Party and its populist/nationalist agenda to cut spending, balance the budget, buy-American and strengthen the dollar. The mainstream Republicans intend to watch all that play out between the Democrats and the Tea Partiers and laugh all the way to the White House.

It is a bold plan the Republicans have hatched but I don't think it will work. I trust, and that trust is faith-based, that an aroused citizenry will once again recognize that the economic well-being of all its citizens is important and more important than partisan politics.

The Enthusiasm Gap

2010-10-28T19:50:00.000-07:00

For the past six months, the pundits and prognosticators have forecast a Republican sweep in the midterm elections. Democrats are expected to lose the House and perhaps the Senate because of a lurch to the political right and a so-called "enthusiasm gap." If you will permit me, the electorate has not, despite Republican daydreams, shifted to the right and, if there ever was an enthusiasm gap, it is closing fast. Democrats are not sitting this one out.

Immediately after the inauguration, even before the president had done a single thing, a harsh anti-Obama anger rose from the right. Locally the tea parties sprang up and nationally Sarah Palin took the stage on her way to the 2012 Republican nomination for president.

Those hard-core Republicans were a pre-existing condition, not part of any rightward shift. They did not and will not vote for any Democrat. Their anger reflects their unwillingness to accept that president Obama is an American or a Christian, much less the president of the United States. They voted for McCain – Palin. Remember 46 percent of the country actually voted to make Sarah Palin Vice President to an old man with a bad heart!

At the same time, the tea party is to some degree real, even if it has only a 20 percent approval rating. Like any such third-party movement, intensity can make up for lack of numbers. These movements outside our two major parties have traditionally impacted only the political narrative. Very shortly, as with Know-Nothings, Teddy Roosevelt's progressives or Eugene V. Debs' socialists, they will be absorbed absorbed by the mainstream.

Unfortunately for the president, what he did was not enough to rouse his own base but more than enough to rile up the opposition. This riled up anger on the right was met by bored dismissal and then irritation on the left. The Democrats had a hard time understanding the Republican anger. They asked, how could anyone really want to go back to the catastrophically failed policies of the Bush Republicans? This fire on the right and smoke on left generated the perception of an enthusiasm gap: Republicans all fired up and Democrats sitting at home.

The Democratic base had daydreamed real big: immediately closing Guantánamo, single-payer healthcare, a cap and trade system and a smashing of the New York financial power centers that caused the Great Recession. No way was that going to happen; our system has too many checks and balances for that.

The president had much more modest and more realistic goals. That does not mean that he did not accomplished enormous things, he did. Those things just didn't happen to be high on the priority list of either base, however necessary they may be. Nor are they as transformational as either party hopes or fears.

Is this enthusiasm gap enough of a wave to carry the Republicans to leadership in the House and Senate? Not hardly.

First, everything points to a surging Democratic awakening to the election. In the early voting states, the number of Democrats leads Republicans by 10 percent. President Obama's approval rating has risen to 54 percent when it was below 50 percent. In the generic Congressional ballot Newsweek reports that Democrats are leading Republicans 48 percent to 42 percent.

Second, the enthusiasm gap itself is suspect because the polling methodology is biased toward Republicans. Cell phones are the biggest and most serious of the culprits. Most of the polls the public hears about are telephone surveys that make little or no provision for those people who have only cell phones. That ever-growing group of people, mostly the young and well-educated, break 2:1 for Democratic candidates.

The Democrats have not been engaged because the Obama administration did not do a good job of engaging them – or the rest of the electorate for that matter. Now the administration is making the fear-based argument that the Democrats have to get out and vote, not for a positive Obama program but to avoid a return to the policies of George Bush. A "Speaker of the House" John Boehner argument conjures up government by the changelings who are being birthed in the tea party and welcomed into the Republican mainstream.

That the other guy is worse is not an argument to stir the masses. The kind of argument that stirs a march on Washington is being made by Jon Stewart and Stephen Colbert with their Rally to Restore Sanity/March to Keep Fear Alive. It all seems a bit Halloweenish and too late to impact the election but who knows what it will develop into?

There is a reasonable case for a pro-Republican bias in the polls and for a strong Democratic surge late in this campaign. This reality seriously blunts Republican daydreams of a massive conservative shift. If the trends continue, and I think they will, the Republicans will not win either house.

Scary Elections

2010-10-14T19:09:00.000-07:00

The election on November 2 and Halloween belong together. In both cases we are indulging in a collective fear of fear itself. In neither case are we dealing with reality. It is a time when we search for some hobgoblin to blame for fears we don't understand. It's not that there are not scary things out there. There are. The world remains a dangerous place; we are in the midst of a great recession; and our financial sector is awash in greed. The election, however, is a façade of Halloween-like fears.

Republicans and Democrats share a bipartisan responsibility for conjuring up the insubstantial apparitions and ghost-ridden fears we are wallowing in. Both parties are using fear to get us to vote their way. Instead they have generated an unprecedented anti-incumbent atmosphere.

Both parties face a base constituency that is out trick-or-treating. "Rid us of our fear," they say "or we will play some nasty trick on you come November 2." Republican politicians are threatened from the right by the costumed characters who fear deficit spending, taxes and the threat of a socialist takeover. The Democrats are threatened from the left by those who want universal health care now, a bigger stimulus package and for Obama to be more of the liberal that they imagined.

The established parties cannot buy off their constituents with any sweetened treats because the fears the party officials have implanted are not based on reality. The Republican base is in fearful panic of imaginary curses: deficit spending which actually does not threaten the dollar, taxes which are the lowest in years, and the fantasy of a socialist takeover which is a little more than a resurrected Cold War bogeyman.

Conservatives have no complaint. Big, new government programs exist only in self-created nightmares. Our health system will remain privately owned and operated. The auto industry and financial sector bailouts are not socialism. They are the answer to a capitalist prayer, particularly since they are generating profits like never before.

Republicans proposed nothing in the most recent congressional session because there is nothing they could propose that would respond to the demands they are facing. They are going to have their windows soaped this Halloween.

The Democrats are in the same frustrating situation. President Obama may not have closed Guantánamo Bay or repealed "don't ask don't tell" but he has accomplished far more than many want to admit.

The Democratic base is not satisfied. But they should know that health-care reform, like any major new initiative, must start with baby steps. The health care act removed benefit limits, covered pre-existing conditions and cut drug costs. Much of the rest will be phased in slowly. That is the best anyone can expect. Similarly, the stimulus package was mostly tax cuts and the increased spending is still being implemented. Unfortunately, further stimulus is hostage to the electorate's own unwarranted fears for the dollar.

Almost un-noted, Obama is also addressing the basis for much of our antigovernment sentiment. We mis-trust government not because it is big or because it taxes us but because of what corrupt politicians do behind closed doors to serve the interests of lobbyists instead of working Americans.

That corruption is very real but the president made a start. He put controls on lobbyists, pushing them off the many advisory committees that provide input to our federal agencies. He curbed federal secrecy with a Federal Declassification Center, discouraged overclassification and denied permanent secrecy to anything.

There is no way the president can turn around any faster the political debacle of the previous eight years. But just the same, the Democrats are going to have the air let out of their tires.

For the Republicans, getting tricked means that they will be pushed even further to the right than they were in the primaries where they ended up with some unelectable tea party or third-party candidates. For the Democrats it means that the core constituencies will summon up the feared "enthusiasm gap" and stay home election day, rewarding the Republicans who survived the primaries.

Obsessed with imaginary fears of witches, migrants and gays, we are neglecting the real threats to our future. We are wasting the work of generations by fighting dumb wars, discarding our workforce and rewarding financiers instead of engineers and workers.

Stephen Colbert, the Comedy Channel's fake right-wing wacko, is right to mock us with his rally to "Keep Fear Alive."

Wages, Debt and Deleveraging

2010-09-22T10:45:00.000-07:00

Something went wrong with our economy beginning in the 1980s. Over the following 30 years, wages stagnated while profits grew. The middle class got little or none of the productivity gains that should have provided a rising standard of living. Workers had to borrow to buy the goods and services of the suburban life. In 2008, it caught up with us. The Great Recession and the sogging economy that we see now are a direct result of that loss of wages and extended borrowing.

The reasons for the shift in income are debatable but the fact is not. The share of national income going to wages fell from 56 percent in 1982 to 51 percent in 2009. That 5 percent drop means that wages in 2009 accounted for $322 billion less than they would have if workers had continued to receive their share of the productivity gains. That amount of income, about $2000 per worker in 2009, shifted from wage earners to those who receive profits, interest and rent.

In order to maintain their standard of living, families first put mothers to work, then took second jobs and finally, what really has become the problem, they borrowed huge sums of money. In financial jargon, they leveraged, that is borrowed multiples of their income, savings and home equity.

Credit card debt was $55 billion in 1980, grew to $239 billion in 1990, $683 billion in 2000 and $874 billion by November of 2009. Home mortgage increased from $1.4 trillion in 1980 to $14.3 trillion at the end of 2009. Car and student loans grew as fast. It was that humongous borrowing that financed not just the housing and other bubbles in our economy but the everyday consumption of the average worker.

When wage earners ran out of borrowing power, they ran out of purchasing power. They couldn't make the next payment on their mortgage and we got a financial crisis. They couldn't buy the goods our economy was producing and we got the Great Recession. Profits took an even larger proportion of income after the recession hit.

If we are going to have a sustainable recovery, our economy needs a surge in purchasing power. Unfortunately, the middle class is going the other way and deleveraging, that is, paying off that debt, rather than buying goods and services. Credit card debt peaked at $975 billion in September of 2008 and consumers have since paid off $101 billion of that . In addition, $272 billion of mortgage debt has been paid off or foreclosed on. That doesn't help at all.

The Obama administration's $700 billion stimulus package was meant to make up for that lost purchasing power. It was enough to stave off a depression but it wasn't enough to trigger a sustainable recovery. The Federal Reserve stuffed the banks with over $1 trillion, expecting that they would lend creating a surge in investment. That didn't work either. Without a surge in purchasing power, producers have no reason to invest in expanded output or rehiring workers.

At this point, it doesn't look like the economy or wages are going to recover on their own. The corporations are sitting on billions of dollars in cash and cutting workers. The banks are not lending while they are making huge profits and paying outrageous bonuses to those who are manipulating sterile financial deals.

In this present contentious political situation, no one is offering a plan that addresses the problem. The Democrats seem afraid of the accusation of class warfare if they do anything for working class families.

The Republicans apparently believe what has happened to wages is good and that the worse the economy gets the better chance they have to win the election. What they would do then is a closely held political secret. Taxes are of course much lower than they were 30 years ago so cutting taxes is not a solution to anything except the greed of the rich.

Despite the political prognostications of a Republican sweep of both houses in the November election, you can't beat something with nothing. At this point, both parties, or three parties if you will, have nothing. The political party, group or movement that convinces the electorate that they can fix the wage growth problem will bolster the economy and win the election.

Whatever your political thinking, stagnating wages and loss of income among working people are problems we cannot ignore. Working families have not had a raise in 30 years and they are up in arms. If someone doesn't do something shortly, "up in arms" could become more than a figure of speech.

Killing the New Deal

2010-08-31T18:09:00.000-07:00

"The very rich are different from you and me. … they have more money." Ernest Hemingway.

Sometimes the consensus is just so wrong and the facts so twisted that somebody has to say: stop, think before you join the parade. The Restoring Honor rally on the mall on Sunday was just such a wrongheaded mass of twisted facts. Here, as too often, the public is following the shallowest of ranting preachers, pundits and politicians. Neither Glenn Beck nor Sarah Palin knows anything about the source of the money or ideas that they are slave to.

Publicity seekers like Palin and Beck are in fact taking the money and mouthing the cant of billionaires David and Walter Koch and, of course, Rupert Murdoch and Fox news. The Koch brothers have spent hundreds of millions of dollars convincing people to attack the government itself rather than the corporations who own their government.

In the 1930s, President Roosevelt was able to pass the New Deal because he convinced the people that they would be more free and secure if they had a countervailing power in unions, if they had someone watching their food, air and water and if the financial sector were held to a minimum standard of decency. That is, if they had a New Deal.

The very rich have been trying to kill the New Deal from its beginning. The DuPont brothers in the 1930s, exactly like the Koch brothers today, warned of dangerous un-American socialism. The DuPonts set up the Liberty League and the Koch brothers set up Americans for Prosperity. The agenda was the same then as now: lower taxes, smaller government and deregulation. To these billionaire families as well as the Olin and Scaife families, it is supposedly incidental that their agenda is all profit oriented.

The Tea Party is playing its assigned role when it advocates the platform of the very rich. "Lowering taxes" is a code word for budgets balanced on the backs of the poor. "Smaller government" means less services for the needy. "Deregulation of business" means leaving business free to pollute and leaving us choking and poisoned. The very rich are twisting the facts to attack, and if possible, revoke the New Deal.

Over the past 40 years, the very rich have built a powerful political and cultural machine with one purpose: regain control over the wages and working conditions of paycheck families. They expect to achieve this control by taking away the mediating influence of government which now comes between them and "their" workers.

The very rich had little hope of reversing the New Deal unless they could convince those workers that the government was their enemy, that free markets are always equitable and that come job loss, illness or accident they would be able to take care of themselves. It took big bucks to convince them that the disasters of the Bush years were caused by government interference in their lives. But the rich have largely succeeded.

Americans for Prosperity and Freedom Works are astroturf groups that are hovering around funding the Tea Partiers even when they don't know it. This is standard practice and includes the Koch brothers founding and funding of the American Enterprise Institute, the Heritage Foundation and the Cato Institute. The Koch brothers have given hundreds of millions of dollars to their conservative think tanks and institutes. For the very rich, it has been money well spent.

The rally on the mall last week contains all the elements of the battle of the last 80 years. A stealth campaign hides the source of money behind preachers or pundits, a Father Coughlin or a Glenn Beck. The deliberately vague, self-interested agenda favors the very rich. Then that agenda is cloaked in the patriotism of a Liberty League, America First or Americans for Prosperity.

In truth, employees of astroturf groups, and real grassroots organizations like much of the ea Party, often don't know where the agenda comes from anymore than they know who is paying for the buses, the publicity and costly arrangements for their rallies.

It took decades of spending to convince working families that Social Security, the right to organize a union, minimum wage, child labor regulation and Medicare were all bad for them. But the American business community has always been good at false advertising. We got to see just how good on the mall last Sunday.

Be aware, if elected in November the stooges of the rich will repeal the New Deal. Your privatized Social Security will be subject to their manipulation of financial markets, your health care will be dictated by the profit goals of the insurance industry, the well-being of your grandchildren will depend on the level of pollution manufacturers allow themselves and our national security will be set by how much production they feel like off-shoring.

The people with big bucks have purchased too much of our government. The Tea Party is right, we should demand it back.

Sarah Palin: God's Instrument

2010-08-19T14:10:00.000-07:00

Sarah Palin believes that she has a mission from God to channel Ronald Reagan and his conservative message. That is the central fact one has to draw from her book Going Rogue: An American Life.

It can hardly be a coincidence that An American Life is also the title of Ronald Reagan's own autobiography. Palin is presumptuous enough to put her American life and her book right up there on the pedestal with Reagan's. But she should have at least noted the use of the title of Reagan's book, just to avoid the charge of plagiarism. If it is a coincidence, she would claim it is just the hand of providence at work. As she says “I don't believe in coincidences.”

Sarah Palin opened herself to this kind of mission when she, early on, gave herself to God. At a youth Bible camp, she says “I made a conscious decision that summer to put my life in my Creator's hands and trust him as I sought my life's path.” That is the commitment to God's will of a very religious person.

In return for this commitment, she feels the hand of God upon her in a very special way. She quotes Jeremiah and then explicitly applies it to herself: “For I know the plans I have for you. Declares the Lord. Plans for peace and not for calamity, to give you a future and a hope. When you call upon me I will hear you, when you search for me you will find me; if you seek me with all your heart.” “I knew” she says, “that what still stirred passion in me was the desire to make a positive difference for others, not just in my family and community but the wider world as well.”

After losing her race for lieutenant governor, she renews her commitment to go and be what God wants her to be in the community and the wider world. She writes in her journal: “let me not become disconnected from you, Lord.... let there be a connecting string between you and me, so I can fly high and safe as you've created all people to do. With that string, I will go where you want me to go, I'll be what you want me to be. Thank you for your grace.”

The connection between Sarah Palin's God and Ronald Reagan's agenda is quite explicit. She says “I believed – and still do – that every person has a destiny, a reason for being. So Reagan's sense of national purpose resonated with me.” She ties her reason for being to his sense of national purpose.

Note that Palin's religion is not what we think of as Christian. There is no reference to Christianity in the references to God in the book. There is no sin, suffer and repent; no hell-fire and damnation or heavenly reward; no Jesus is Lord. This is strange because that is the tradition in which she was raised.

Palin does not preach in the common sense of that word. She does not proselytize nor try to convince others to follow her and her commitment. However, Palin's religion is not passive. There is a call to God-directed action. We are supposed to go through the doors of opportunity that Providence opens for us.

What she does preach is that those doors of opportunity are opened by individual initiative and the market system. They are opened by implementing and sticking to the commonsense conservatism of Ronald Reagan.

Throughout the book, Palin endlessly repeats, and blatantly preaches, the Reagan mantra of rugged individualism, free-market economics and a strong national defense. Her faith in Ronald Reagan and his policies is akin to her faith in God.

At the end of the book and after losing the election, Sarah Palin ends with the prayer and comment: “God, thank you. Thank you for your faithfulness … always seeing us through .. I don't know if this chapter is ending or just beginning, but you do, so I hand it over to you again. Thanks for letting me do that.” “Then I thank our Lord for every single thing we've been through that year. I believed there was purpose in it all.”

That purpose is to spread the gospel of Ronald Reagan.

The Great American Serf Class

2010-08-03T19:06:00.000-07:00

This past weekend Chelsea Clinton married Mark Mezvinsky. Young people getting married is always a hopeful and happy occasion and we wish them well. Yet we should recognize that this marriage of politics and finance for what it really is: the symbol of all that is wrong with our society. Money, money, money. For money is where the American dream intersects the national debt.

It is not really important that the wedding cost $3-5 million and the couple might choose to move into his $1.8 million loft in Manhattan. Conspicuous consumption is part of human nature so the glitzy, ostentatious rich you will always have with you. Besides, the Clintons have never been known for their self-restraint.

What is more important is the net worth of the groom and those like him. (We must note in passing that his family is also notoriously political – but he is not, yet.) If he is at all successful as a hedge fund manager, his net worth has to be in the neighborhood of $300-500 million. This money, and the $100 million that Bill and Hillary have “earned” since she lost the race for the presidential nomination, can and will be passed on to their heirs in perpetuity, paying little if any taxes from generation to generation. There are thousands of people in the financial sector who have this kind of money and will similarly pass on that money and power to their heirs. (It's called a dynasty trust.)

What is most important is that all of these people then have an entitlement to the output of the American economy and American workers stretching generations into the future. These huge entitlements have been created in just the past decade, a breathtakingly short period of time. In addition, the winnings in this casino corner of the financial sector are not based on any merit or productive contribution by either this first-generation or the entitlement holders coming thereafter.

Now, a healthy financial sector is, of course, an absolute prerequisite to a smoothly functioning capitalist economy. It is the job of the financial sector to allocate resources efficiently, that is to allocate capital to those who have the greatest opportunity to invest and meet the market test of long-term profitability.

But that is not what is happening. The shadow banking system is that unregulated sector where it is the easiest to rip off the rest of us. Most of the multi-trillion dollar derivatives market contributes absolutely nothing to the efficiency of our economy. In addition, mathematical algorithms that shave a 20th of a second off of millions of trades permit so-called traders to skim billions of dollars.

The American dream of our founding fathers was originally formulated as the physical security that comes from the rule of law and the economic security that comes from the right to accumulate and use private property. This dream finds a reality in a well-policed community with widespread property ownership. In this dream, hard work and talent eat away at drudgery and toil. This dream assumes equal opportunity and a meritocracy.

When the output of a society is allocated without reference to how it is produced or by whom, there is little room for merit. Now we are setting up, as never before, an economic elite with entitlement privileges undreamed of by previous generations. It is very much like feudalism. In the Middle Ages, about the 10th century, the nobles seized the land, and therefore the means of production. The serfs were bound to the land and permitted to work it so long as the greater part of the output went to the entitled Lord. For hundreds of years thereafter, the serfs suffered and the nobles prospered.

This meritless seizing of the future wealth of America is the link between a suffering middle-class and the burden of the national debt. The financial elite are the ones who will be holding the accumulated wealth of America as well as the national debt. The working class will just turn over most of their paycheck to the wealthy, some of it in taxes but most will go to the simple cost of maintaining the competitive excesses of that top 5%. The people don't understand now who is paying for that wedding.

The moneyed elite have the power to pervert the rule of law, undermine opportunity and merit and thereby deny the American dream. If it is government that takes us down the road to serfdom, it will be because government was bought and paid for by the financial elite. If the American people want their government back, they should look to who owns it.

This isn't the entitlement problem that the governing elite would have you be angry about.

It's the Process, Stupid!

2010-07-20T19:13:00.000-07:00

It's the process, stupid! Obama is well on his way to a transformational presidency because he is changing the process by which we govern ourselves. He is trying to put an end to government by confrontation. He does not pretend that the government can legislate solutions. Rather he is setting up a process by which we as a community can work our way to solutions. That is the change he would have you believe in.

Obama is not “politics as usual.” This community organizer recognizes that what is broken about our political system is the process. We have lost our sense of common rights and obligations, the respect for each other that comes with community. Our Community-Organizer-in-Chief is putting in place a political system that works on the basis of consensus and community.

When Pres. Obama was inaugurated I wrote that he is “a community organizer, a conciliator and a mediator and not a power broker.” I said: “Obama is the furthest thing from a bleeding-heart liberal or an ideological neo-con. ... Paying the price to stand on principle is not part of Obama's makeup. This will put off the crusaders on the Left.” And, I should have added, it will frustrate the entrenched Right. This does not fit anyone's conventional wisdom.

Nobody gets it. When the New York Times asks 16 know-it-all pundits and political operatives “How Can Obama Rebound?”, they publish conventional drivel about spin and moving to the center. In Obama's new politics, the old left-center-right spectrum is no longer a relevant paradigm. No one among these political types seems to understand that Obama is right on schedule with the process-oriented change he promised in the campaign.

Pres. Obama has achieved a great deal during the first 18 months of his presidency. He passed a stimulus bill, achieved major healthcare reform and an extension of health insurance. And now he has passed a financial reform package of historic dimensions. An energy bill is waiting in the wings. The president gets little credit for all this because he has done it without going on the political attack. In the process, he may have castigated the Republicans as the “party of no,” that is, for their refusal to participate in the process, but not for their specific values or principles. Nor has he matched the personal vindictiveness and political condemnation thrown at House Speaker Nancy Pelosi, Senate majority leader Harry Reid and personally at himself.

The financial overhaul legislation best exemplifies Obama's long-run game plan. The legislation does not attempt to remedy all the flaws that brought our financial system close to collapse. Nor does it attack the firms whose reckless and sometimes illegal behavior cost the public treasury hundreds of billions. There simply is not enough political consensus to achieve that. More important, the Obama system would not try to shove something like that down the Republican gullet.

What the legislation did do was set up the means or process by which financial stability can be achieved. The legislation sets up a multi-agency council that will be responsible for detecting and avoiding systemic risk. It does not break up the mega-companies but provides for constraining or dismantling large companies that are in trouble. In the same mode, it establishes a financial consumer protection agency rather than legislating protective devices. The purpose of these agencies and their administrative flexibility is to permit us to enjoy the benefits of innovative progress while guarding against the costs.

Sen. Dodd, the Senate leader in this financial reform, describes it best: “We can't legislate wisdom or passion. We can't legislate competency. All we can do is create the structure and hope that good people will be appointed who will attract other good people.” In this process oriented system, politics is an ongoing process where rule-making and regulation depend upon the goodwill and participation of all of us all the time.

The “unfinished” healthcare reform, the “unfinished” financial reform and other such efforts will demand the participation of all of the stakeholders for their political implementation. The administration of the programs become part of the political process.

Obama is well launched on a transformation of our politics and economics. One of these days the country is going to wake up to the fact that he is giving the government back to the people.

Changing the Way We Vote

2010-07-07T18:59:00.000-07:00

When Obama promised change I'm sure he didn't mean in the way we vote but that is what it is going to take for change you can believe in. Like so many things in our political life, it's about time this revolution got rolling.

Voting is now seen by many as not worth the bother. Voter turnout is down to 50 to 55 percent in presidential years, with 2008 an anomalous 63 percent, and 36 to 38 percent in congressional years. This is embarrassing. In Europe and even in many emerging countries, the rates are between 75 and 95 percent. American voters are effectively disenfranchised and this action shows they know it.

The voters are disenfranchised because the voting outcomes are perverse, not what was intended or voted for. The Supreme Court had to appoint George Bush president. Bill Clinton won the presidency, without a majority, only because Ross Perot was a spoiler. Many people, liberals and libertarians alike, are excluded because they are not at home in either major party.

Something is clearly wrong. Congress may have approval rating down around 15 percent but 85 percent will still get reelected! The outcomes of Congressional elections depend on proper gerrymandering, that is, denying your opponent a fair vote. Following the Texas example, it is now all right to reapportion congressional districts every time the state legislature changes hands. The US Senate can't act without a super, filibuster-proof majority.

Spoilers and tactical voting which are designed to thwart the public are rampant. The conservative candidate turned out a Republican in upstate New York and gave the race to the minority Democrats. The votes and money that Alvin Greene got for his U.S. Senate race in South Carolina stink of tactical voting and a spoiler.

So, with all that, what has the voting system got to do with it? Voting fairness and efficiency are at the heart of any political system. Unfortunately, it is simply not possible to come to the outcomes we prefer with the voting system that we have.

That system, which is a combination of ”winner-take-all,”“one person, one vote,” and plurality voting, simply does not work; its effectiveness collapses in the face of normal voting procedures.

When “winner-take-all” rules apply, there's no room for a third party to succeed. For minorities to be heard or take part there has to be room for them. That can come only through proportional representation of one form or another

Plurality voting means that the candidate with the most votes is elected even if that is only 10 percent of the total votes. Winner-take-all means that there is just one winner and he or she isn't necessarily the person the majority would prefer. Ninety percent of the electorate may be dead set against the candidate with the most votes but the election stands.

The solution is probably some kind of weighed or cumulative proportional representation. This alternative to winner-take-all is already a part of the American political scene. Maine and Nebraska divide their electoral vote proportionately according to the vote in the congressional districts. The Democratic Party uses proportional representation in its convention delegate count. Five US states have joined the National Popular Vote Interstate Compact that would lead to proportional voting in the electoral college and, in effect, the popular election of the president.

Change is coming. Consider the case of Great Britain and get your hopes up. The Commons, the lower house of Parliament, intends to: lower the number of its members from 652 to below 600; even out the number of voters in each constituency; establish a fixed term of five-years; move toward electing the House of Lords; introduce aspects of proportional voting and subject all of this to a referendum. This is happening only because a third party broke into the power set.

Some form of proportional voting is essential if we are going to represent the disenfranchised, force competition into congressional politics and in general fix our broken political system. The number of available systems is almost infinite, including weighted, cumulative and preferential voting. There is no doubt that proportional representation can get complicated but the fact that virtually all of the rest of the world is using it says the problem is solvable.

Unless we get some form of proportional representation, my conservative friends will never see smaller government, control of the deficit and a stricter adherence to the Constitution (as they see it) because they will be marginalized by the Republican Party. Similarly, my liberal friends will never see a single-payer health system or banks that are too big to fail, compliments of the Democratic Party. And your congressman will bring home the bacon, get reelected and vote against you.

Nasty, Illegal and Re-elected

2010-06-22T18:35:00.000-07:00

If the president does it,is it legal? If Pres. Obama drags the full power and office of the presidency into a shakedown of BP for $20 billion, is it criminal extortion? Can this president or any president govern and get reelected without being illegal and unconstitutional?

Not to worry. Presidents do this sort of illegal thing all the time and only the uptight legal types and now Tea Partiers get excited about it. To be realistic, the American people want a president they can count on to be as nasty as is necessary and constitutionality can wait, when national security or the general welfare is involved. Most of the presidents who won a second term have done something nasty, illegal and/or unconstitutional that is not simply accepted but is praised by the American electorate.

The list of such actions is long. Establishing such credentials might even be a condition of reelection.

In a time of economic turmoil, Harry Truman nationalized the American steel industry, an action later declared unconstitutional. Truman also seized the railroads and threatened to draft striking workers into the armed forces. He was praised for that when the striking union capitulated. It all added to the “give 'em Hell Harry” narrative and enhanced his reputation.

Pres. Kennedy failed the test at the Bay of Pigs. He made up for it first with the Cuban missile crisis and then with the inflation-threatened economy. To forestall inflation, he brokered a deal between the steel industry, which agreed not to raise prices, and the union, which agreed not to demand a wage increase. As soon as the union signed a contract, US Steel raised prices. In a raw and public display of government harassment, Robert Kennedy, according to the Wall Street Journal, set steel prices “by naked power, by threats, by agents of the state security police.” US Steel caved. Inflation was contained and American business and labor believed in John F. Kennedy as a president they could trust. His reputation was made.

In August 1971, Pres. Nixon saw an economy in crisis and instituted his New Economic Policy which included, without benefit of legislation: a 10 percent investment tax credit, removal of excise taxes, an end to fixed exchange rates, devaluation of the dollar, and a 10 percent surtax on all imports. At the time, the program was judged as exceptionally bold and much of it was later declared unconstitutional. But it had done its task, giving Nixon a bounce in the polls and the American people the reassurance that the president would act when necessary. Nixon is credited with being the first president to state: “if the president does it, it is legal.”

Pres. Ford did not wants to punish Richard Nixon for his crimes. Instead he pardoned Nixon and left the American people vulnerable to another Nixon resurrection. No one felt reassured by that pardon and Gerald Ford was not elected in his own right.

Pres. Reagan was more nasty than unconstitutional in his reassuring actions. As a candidate Reagan promised the air-traffic controllers, who supported his election, that their grievances would be heard. As President, Reagan had no time for them. In their frustration, these government employees went on strike and Reagan summarily fired all 12,000 of them. Government employees had gone on strike previously without such serious consequences. This over-the-top betrayal assured the business community that Reagan could be counted on to support them in crushing the power of labor. Reagan had made his point.

Pres. George H.W. Bush is the law-abiding, nice guy. He was very careful to include the Congress and the whole Western alliance in operation Desert Storm. He did not go beyond his authorization nor did he go to Baghdad. He did not reflect the required toughness and he was not reelected.

In the aftermath of the World Trade Center attack, President George W. Bush pushed through the Patriot Act with all of its undermining of civil liberties. Yet the people accepted it . Probably more important, he did go to Baghdad and without United Nations Security Council approval. The American people want a president who does not wait for permission to do what he believes is necessary. He was reelected.

Pres. Obama is going to have to show his mettle and be tough with BP and anyone else who gets in the way of the almost inconceivable task of cleaning up the Gulf Coast. If he does not do this and convince the American people of his willingness to step outside the law, he will be judged a wuss and will not be reelected.

Tragedy of the Blowout

2010-06-22T18:33:00.000-07:00

Tragedy does exist, the ecological catastrophe in the Gulf proves that. All that is inevitable and hopeless about human failings came together in one hole in the floor of the ocean. Theatrical tragedy is meant to teach us that the heroes can find epiphany and that audiences can find catharsis. In real life, our heroes, corporate executives and politicians, are still in denial and so we the audience still wait for the end of this drama.

The setting is simple and starts with a tragic error. On April 20, BP's Deepwater Horizon platform was drilling in mile-deep waters when the carefully balanced pressure in the well rose sharply. The crew objected but was ordered to continue drilling. The blowout preventer, meant to control the pressure, malfunctioned. The backup blowout preventer had been waived. The ensuing blowout of oil and gas exploded, killing 11 members of the crew and sinking the rig.

The flawed heroes continue the series of mistakes based on who they are. BP was the industry's most flagrant safety violator, with the number of “egregious willful” violations hundreds of times greater than anyone else. BP's profits last year were almost $17 billion and in the first quarter of 2010, $6.1 billion, double the amount of the previous year.

The media is covering the drama as it unfolds further. BP applies its various technologies to the well. None of them are successful. Long-term hopes rest on drilling a relief well that will intercept the oil flow below ground. BP says this is a “sure fix” but the federal government doesn't believe BP and orders them to start drilling a second relief well. They are unlikely, in any event, to be able to intercept the flow until the end of August. We can then expect, at a minimum, another 1.5 million barrels of oil to contaminate the Gulf. This minimum estimate of contamination will be among the 10 largest in history.

In true tragedy, the consequences have to be out of proportion even to the mistakes made.

The economic and social consequences are unimaginable and we are able to imagine 10 to 20 years and trillions of dollars. As horrendous as that is, the real fear is where the Caribbean and Atlantic currents will carry the oil. A Caribbean current just south of the blowout flows into the Gulf Stream going north along the Atlantic coast. This could carry the oil this summer as far north as the Carolinas where the Outer Banks, experts say, would act as a protective barrier for the wetlands, as though the Outer Banks themselves do not matter.

Hurricane season is upon us. From Florida to Texas, there is no limit to the impact of this tragedy.

The causes and consequences of this blowout are not just catastrophic, they are classic tragedy. In classic tragedy, the flaw in the hero is inherent in the virtues that make him the hero. The glorification of profit, the pride in American exceptionalism and the childlike wonder in our technology are the virtues and flaws that have turned on us. Greed enabled by the corruption of politics led us to abuse technology to the breaking point, and beyond.

All the players share the stage and play their part. BP in its voracious greed cut every corner, the Minerals Management Service in its political responsiveness gave every waiver and the team on board the Horizon platform in its hubris was way beyond its depth and completely innocent of the forces it was dealing with.

Our governing elite, our corporate executives and the politicians they support, and the American public are still in denial. The flawed heroes do not recognize that the excess in their pursuit of virtue is what brought on the tragedy. BP says it was just making a profit the way everyone else was and like any tragic hero, the BP CEO asked right on cue: “Why the hell did this happen to us?”

This tragic scenario hit us first in the energy and environmental sector but its preconditions exist in the nature of our society, in the military-industrial complex, the information technology sector and healthcare. The tragedy will continue to play out until we recognize that our virtues contain our flaws.

The increasing turmoil in our politics and economics and the sudden willingness to challenge the status quo may be a sign of recognition that hubris begets nemesis and pride goeth before a fall.

Disaffection with Power

2010-05-27T19:35:00.000-07:00

If there is a rising tide of political dissent, and even a spirit of insurrection, as the media and supporters of the Tea Party claim, it did not show up in this election. So what is going on? The answer: not much that is new but something different than they would have you believe.

The political disaffection seems to be a conservative thing. In fact, it seems to be centered among the hard-core conservatives and their disappointment with the Republican Party. After eight years of George Bush, and the Republican Party that supported him through it all, what honest conservative would not be disaffected?

The Democrats are showing no signs of such disaffection. They, in fact, seem undisturbed enough to stay home this election. And why should they be upset, they are the governing party and things are getting straightened out. When motivated, they were willing to turn to a solid liberal to defeat Sen. Arlen Specter, trying to run as a Democrat.

Among the signs of disaffection is the outpouring of Internet anger, frustration and pain from conservatives directed against our president. Millions of them refuse to accept Obama as our legitimate president. The “birthers” deny the plain evidence of his birth in Hawaii. The “oath takers” are ready to take up arms. Others are certain, against all evidence, that he is a Muslim.

This supposed level of disaffection is contradicted by his approval ratings. President Obama presently has approval ratings greater than 50 percent for the country as a whole. True, in some southern states it is around 40 percent but in places like California, Massachusetts and New York his approval rating is still 60 percent or higher.

Conservatives are fearful and angry and, for the first time in 150 years, they are taking to the streets to protest their grievances. Aside from the wacko groups that are crowding under the Tea Party umbrella, otherwise reasonable people are complaining about: the sharp rise in the national debt, the intrusion of the federal government into the economy and the burdensome level of taxation.

Those fears are not rational. The facts belie them. Independent economists agree that the national debt, even with the stimulus package, is not a serious threat to our economy. Medicare and Social Security can, with minor tweaking, be made whole. The debt to GDP ratio remains around 80 percent and well below the 125 percent it was in 1946 when no one worried about it. The truly staggering sums that were added to the debt in 2008 and 2009 were invested in catastrophe avoidance. We got a bargain.

In fact, the stimulus package and the bank bailouts prevented an economic collapse that would have cost us on average over $1.5 trillion in lost output in each of the next five years. Because the US Treasury and the Federal Reserve acted, recessionary losses were held to less than $500 billion. The bailout of our economy was and remains the right thing to do.

It is the same with government intrusion. Our economy was zealously deregulated starting in 1980 and continuing through 2008. That is the reason that BP didn't have to put a backup preventer in the Gulf oil well. It is why Massey Energy could get away with multiple violations of safety standards in its coal mines. And certainly it is why the financial sector was able to abuse our whole economy and bring it to crisis. It is the nature of public goods that they must be publicly protected.

Tea Partiers say that the TEA stands for “Taxed Enough Already.” It is hard to take these complaints seriously when taxes are at the lowest level in decades. The average federal income tax rate for all US taxpayers is 12.7 percent, lower than it have been in 50 years. The burden of all US taxes, 28 percent of income, is the lowest among industrial countries, with the single exception of Japan.

Times are tough and when people are losing their jobs, their homes and any hope for financial security they have a right to express their grievances. But the agenda that the conservatives are pushing will not help. This anti-government, anti-tax madness would reduce education, benefits and entitlement spending to pay for corporate and bank bailouts. It would deregulate so that corporations will not have to pay for “accidents.” And it would cut taxes so that we will have to install a regressive sales tax to pay our bills.

It took a great deal of time and Orwellian manipulation to get the average working citizen to accept that canceling the debts of the rich, endangering public safety and increasing their taxes was something they should agitate for.

Private power is the problem. It is not the solution.

Of Tea Parties and Electoral Politics

2010-05-13T19:13:00.001-07:00

The Obama Administration is in the midst of a two- level implementation of its campaign promises and, to the consternation of the Tea Party Movement, it is doing exactly what it was elected to do.

The resentful electioneering of the Tea Party Movement could make, but is just as likely to break, the Republican Party in the coming election cycle.

According to a New York Times/CBS News poll, the Tea Party Movement is at its core rich, old, well-educated white guys who think “change” means they lose their entitlement. In its totality, the Movement has drawn to itself and welcomed all the dissenting groups from across the right side of the political spectrum. It is made up of kindly grandmothers and corporate-funded astroturfers (Freedom Works and Americans for Prosperity). It is sponsored by Fox News and been joined by fringe groups, including the John Birch Society. It is just about everybody who thinks they are a conservative and has a complaint against the government.

The Tea Party Movement was, until recently, more sloganeering and marching than anything else. Now, however, it has entered the electoral process, intending thereby to “take back our country” from the usurpers. The main stream media is all excited over the impact of the Tea Party in the present election cycle. If you believe what they are reporting, and many Republicans and Democrats do believe, then the Tea Partiers are leading some kind of populist political revolution against the Obama program.

At a first and most basic level, Obama is trying to fix our broken political system. He is reaching out to conservatives on the issues – with moderate Supreme Court Justice choices, with rejection of the single-payer healthcare system, with the Republican generated cap and trade pollution proposal, with the refusal to hold voting shares in GM and with repeated attempts to bring the Republicans into the governing process. He was consistently rebuffed.

At the same time that the Obama administration was passing those big-ticket items, with little or no participation from the Republicans, they were also enacting consumer-oriented measures affecting both government and corporations. These include anti-recession measures like cash for clunkers, mortgage relief for those losing their homes and anti-fraud measures in the financial sector. They also enacted reregulation of credit card fees and interest rates,. These measures, mis-described as “big government,” have been enough to push the Tea Party into electoral politic.

The Tea Party Movement is now playing a dangerous political game. Right-wing politicians from Sarah Palin to Rupert Murdoch are endorsing, and the membership is supporting, Tea Party candidates on the hard right in opposition to mainstream Republican candidates. The way the Tea Partiers see it, if their candidates win, the Republican Party shifts sharply to the right. If they split the conservative vote and so lose the election, they have at least sent a clear message to mainstream Republicans: If you don't move to the right, we are coming after you. The Tea Party is set to purge any Republican politician, even John McCain, who associates with Obama.

The Republicans see the best of all worlds. They see the grassroots enthusiasm of the Tea Party merging with “real” Republican values to form a “Real Republican Party.” They see this scenario unfolding with the win by Scott Brown in Massachusetts and the losses by Dede Scozzafava in New York, Charlie Crist in Florida and Bob Bennett in Utah. The losers were not pure enough.

The Democrats see it differently. The loss of such senior, respected Republicans is a loss for the Republican Party, one that will undermine the party and leave it outside the mainstream, a refuge for extremists. That is not liberal wishfull thinking. The Tea Party took over the Maine Republican party convention with the result that , "The official platform for the Republican Party of Maine is now a mix of right-wing fringe policies, libertarian buzzwords and outright conspiracy theories." If that is the Tea Party platform, God help the Republicans.

Resentment is not what politics is about. In this country, when you lose an election, you respect the outcome and your opponent. You don't demonize the winners or the losers. We were supposed to learn that lesson on the playground and in sports.

Tea parties are for little girls with imaginary friends, not old, white guys with imaginary grievances. If you are such a little girl, go to the movies. If you are an aggrieved old white guy, suck it up because resentment will not serve you or your cause.

Too-Big-to-Regulate, Prosecute or Exist

2010-04-28T18:31:00.000-07:00

Some good things are happening in addressing our financial crisis. Beginning April 13, the Senate Permanent Subcommittee on Investigations held a series of four hearings on the role of high-risk home loans, bank regulators, credit-rating agencies and investment banks. Earlier in the month, the SEC charged Goldman Sachs with fraud. This week, right now, Senate Democrats and Republicans are sparring over sweeping financial reform legislation.

All this is important, even historic. In the narrative of our Great Recession, this is a “Pecora moment.” It is the moment to act. Unfortunately the action the Administration is taking is simply not enough. The banks will remain too big to exist.

Ferdinand Pecora was the chief counsel of the Senate Committee on Banking and Currency that investigated the causes of the Wall Street crash of 1929. His tenacious questioning of Wall Street's most influential bankers exposed the corruption and fraud that was pervasive on Wall Street in the 1920s.

Pecora's work made possible the regulatory regime that stabilized Wall Street from 1937 to 1980. His work is given major credit for the Glass-Steagall Banking Act separating commercial and investment banking, the Securities Act of 1933 penalizing fraud and false information and the Securities Exchange Act of 1934, which set up the SEC to regulate the stock exchanges. Pecora is the guy we want to emulate now.

Pecora is our man because, beginning in 1980, financial innovation and de-regulation made that system obsolete. These changes created what one Goldman Sachs official in the hearings this past Tuesday admitted was “a target-rich environment for fraud.”

The financial innovation was made possible by advances in information technology, worldwide markets and the sheer size of the firms and the money involved. That technology, and deregulation of course, permitted Wall Street to create new convoluted instruments, new off-the-books entities and new opaque forms of debt, especially derivatives.

Banks became super-sized. The notional value of derivatives went into the hundreds of trillions of dollars. The profits of the financial sector went from 20 to 40 percent of the national total. Most of this was outside existing regulations and the SEC, allowing and even encouraging that “environment for fraud.” The bankers, their lobbyists, the regulators and politicians colluded to keep things that way.

In the 1930s, the legislation followed by a year or more the hearings and investigations of the Pecora Commission. This time the House of Representatives has already passed a bill and the Senate expects to act within the next several weeks.

These financial reform bills are designed to avoid another near collapse. They provide the structure and money for phasing out large, bankrupt firms. They offer an institutional structure to detect threats to the system. They set up a consumer protection agency and an exchange where most derivatives would be traded. All of this is very nice standard stuff but it does not get to the point.

The banks had to be bailed out and the system rescued because the failure of any of the half-dozen largest banks would have brought down the global financial system. The fact is that Citibank, J.P. Morgan Chase, Bank of America and Wells Fargo hold $7.4 trillion in assets and that is 50 percent of our GDP. This danger to our system will still be there but that is not the only danger.

When a bank becomes too-big-to-fail, it also becomes too-big-to-regulate and too-big-to-prosecute. It becomes above the law. This was true in the old regulatory system and it will be true in the new one. The unwillingness to regulate is now legendary. The unwillingness to prosecute is newer.

The classic case of too-big-to-prosecute occurred recently in Jefferson County, Alabama. A sewer treatment plant, estimated to cost $250 million, ended up costing $3 billion. Some of this is because the county commissioners colluded illegally with the contractors. The commissioners also colluded with and were duped by the banks. The real culprit is J.P. Morgan Chase who foisted off on the unsophisticated commissioners the biggest swap deal in J.P. Morgan's history. The county is now way beyond bankruptcy.

The point being, the commissioners and contractors have been convicted and are doing jail time. Nobody at J.P. Morgan, or Goldman Sachs, who were peripherally involved, has been prosecuted or is likely to be. It would be too expensive for local or federal prosecutors.

The proposal presently before the Senate is not enough. It does nothing to limit the size of financial Leviathans. It contains a loophole on the regulation of derivatives. It does nothing to stiffen the spine of regulators and legislators.

America will not have a stable, sustainable, financial system until we shatter the banks like Standard Oil and we find some way to make the bankers pay with jail time and the failure of their institution. The bankers must be awarded the old-fashioned capitalist opportunity to fail.

It Is Neither Radical Nor Socialist To Be a Liberal.

2010-04-15T04:51:00.001-07:00

In a recent poll reported by Politico, 63 percent of Republicans said Barack Obama was a socialist; 24 percent believe that he wants “the terrorists to win” and 31 percent think he is “a racist who hates white people.” What kind of weird world do we live in?

Obama may not be getting Republican votes for his agenda but he should, since he is proposing policies basically designed by and for Republicans. So why is this center-right president accused of being a socialist!

The Obama agenda is solidly center-right. The so-called “socialist government takeover of health care” is, in its essentials, a plan first suggested by Richard Nixon and later implemented by Republican Governor Romney in Massachusetts.

In military affairs, Obama kept the Bush team in place with Robert Gates as Secretary of Defense and Generals Petraeus and McChrystal as field commanders. He continues the George Bush withdrawal from Iraq and replicated the Iraq surge in Afghanistan.

In energy, Obama has just joined the drill-baby-drill team. The “cap and trade” pollution control policy is a market-oriented, business friendly Republican alternative to the administrative command and control preferred by the Democrats.

The START nuclear weapons reduction agreement with the Russians that Obama just signed in Prague is the one-third reduction originally proposed by Ronald Reagan.

In finance, it is the Wall Street-Republican team of Summers and Geithner that is giving away hundreds of billions of dollars to shore up the banks, is refusing to close the zombie banks and is rejecting the otherwise universal call to downsize the too-big-to-fail banks.

At the Federal Reserve, Obama reappointed Ben Bernanke, a Bush appointment, as chairman and has now proposed putting the new “consumer finance protection agency” in the banker owned and controlled Federal Reserve. That is right where a Republican president would have put it over the strong objections of the Democrats.

There is no government takeover. There is no liberalism, much less socialism. There is no invasion of civil and political rights, unless it is a continuation of Bush policies – like the Patriot Act, special reditions and military tribunals, all of which Obama inherited and kept.

So why does Newt Gingrich call this “the most radical administration in America's history?”

For almost 30 years, since 1980, conservatives have been in charge and they pushed hard to the right. They inaugurated a supply-side agenda of cutting taxes for the wealthy. They reduced government regulation of the environment, workplace and finance to “free up” business. They poured money into a privatized military-industrial complex and built a foreign empire.

With some justification, conservatives got the idea that they really were the majority and that they were entitled to run the country. Unfortunately, all that brought wrack and ruin. Those policies offshored our industry, inflated our financial sector, impoverished our middle class and undermined our standing in the world. Nonetheless, these policies became embedded as the normal and even moral way that the world “should be.” Of course, they also brought a Great Recession and Democratic control.

President Obama and the Democrats may have won big but that did not undo 30 years of conservative thought, policy and action. Most importantly, in this case, it did not affect or undo the mindset of those who lost the election. When the tea partiers say they want their country back, they are objecting to the outcome of the last election.

To the conservative mindset, the idea of a Democratic congress, presidency and the right to appoint even moderate Supreme Court justices cannot be right. It would undo the Reagan revolution. It would not be what their America is about. They cannot conceive of a Barack Obama as President, the mother of six as the Speaker of the House nor an avuncular gay man writing legislation to control our financial system. It just is not right! It violates everything the conservative majority, America, stands for.

In that mindset, the Obama policies are not the real conservative policies of a Ronald Reagan or Newt Gingrich, which would be a flat tax, privatized Social Security or the revocation of Roe v. Wade. Anything less is un-American, radical and socialist. Everything about Obama becomes de facto radical or fraudulent, hence someone, probably ACORN, stole the election. A liberal president cannot be legitimate, hence the birthers.

Conservatives have to get over their sense of uniqueness and entitlement. They have to admit that, even if they did shift the political center to the right, the last election moved it back leftward. To achieve a healthy political discourse, conservatives will have to accept that their's is not the only America and it is neither radical nor socialist to be a liberal.

Iit is neither radical nor socialist to be a liberal.

2010-04-15T04:51:00.000-07:00

Final 4-13-10 Obama the Radical Socialist

In a recent poll commissioned by Politico, 63 percent of Republicans said Barack Obama was a socialist; 24 percent believe that he wants “the terrorists to win” and 31 percent think he is “a racist who hates white people.” What kind of weird world do we live in?

Obama may not be getting Republican votes for his agenda but he should, since he is proposing policies basically designed by and for Republicans. So why is this center-right president accused of being a socialist!

The Obama agenda is solidly center-right. The so-called “socialist government takeover of health care” is, in its essentials, a plan first suggested by Richard Nixon and later implemented by Republican Governor Romney in Massachusetts.

In military affairs, Obama kept the Bush team in place with Robert Gates as Secretary of Defense and Generals Petraeus and McChrystal as field commanders. He continues the George Bush withdrawal from Iraq and replicated the Iraq surge in Afghanistan.

In energy, Obama has just joined the drill-baby-drill team. The “cap and trade” pollution control policy is a market-oriented, business friendly Republican alternative to the administrative command and control preferred by the Democrats.

The START nuclear weapons reduction agreement with the Russians that Obama just signed in Prague is the one-third reduction originally proposed by Ronald Reagan.

In finance, it is the Wall Street-Republican team of Summers and Geithner that is giving away hundreds of billions of dollars to shore up the banks, is refusing to close the zombie banks and is rejecting the otherwise universal call to downsize the too-big-to-fail banks.

At the Federal Reserve, Obama reappointed Ben Bernanke, a Bush appointment, as chairman and has now proposed putting the new “consumer finance protection agency” in the banker owned and controlled Federal Reserve. That is right where a Republican president would have put it over the strong objections of the Democrats.

There is no government takeover. There is no liberalism, much less socialism. There is no invasion of civil and political rights, unless it is a continuation of Bush policies – like the Patriot Act, special reditions and military tribunals, all of which Obama inherited and kept.

So why does Newt Gingrich call this “the most radical administration in America's history?”

For almost 30 years, since 1980, conservatives have been in charge and they pushed hard to the right. They inaugurated a supply-side agenda of cutting taxes for the wealthy. They reduced government regulation of the environment, workplace and finance to “free up” business. They poured money into a privatized military-industrial complex and built a foreign empire.

With some justification, conservatives got the idea that they really were the majority and that they were entitled to run the country. Unfortunately, all that brought wrack and ruin. Those policies offshored our industry, inflated our financial sector, impoverished our middle class and undermined our standing in the world. Nonetheless, these policies became embedded as the normal and even moral way that the world “should be.” Of course, they also brought a Great Recession and Democratic control.

President Obama and the Democrats may have won big but that did not undo 30 years of conservative thought, policy and action. Most importantly, in this case, it did not affect or undo the mindset of those who lost the election. When the tea partiers say they want their country back, they are objecting to the outcome of the last election.

To the conservative mindset, the idea of a Democratic congress, presidency and the right to appoint even moderate Supreme Court justices cannot be right. It would undo the Reagan revolution. It would not be what their America is about. They cannot conceive of a Barack Obama as President, the mother of six as the Speaker of the House nor an avuncular gay man writing legislation to control our financial system. It just is not right! It violates everything the conservative majority, America, stands for.

In that mindset, the Obama policies are not the real conservative policies of a Ronald Reagan or Newt Gingrich, which would be a flat tax, privatized Social Security or the revocation of Roe v. Wade. Anything less is un-American, radical and socialist. Everything about Obama becomes de facto radical or fraudulent, hence someone, probably ACORN, stole the election. A liberal president cannot be legitimate, hence the birthers.

Conservatives have to get over their sense of uniqueness and entitlement. They have to admit that, even if they did shift the political center to the right, the last election moved it back leftward. To achieve a healthy political discourse, conservatives will have to accept that their's is not the only America and it is neither radical nor socialist to be a liberal.

The National Debt and Its Consequences: Part II

2010-04-04T13:13:00.001-07:00

Debt is at the heart of today's chaotic financial world. The Federal Reserve has simply given the banks over $1 trillion in the mother of all easy money policies. In addition, the federal deficit has grown to over $1.5 trillion a year and pushed the level of the national debt close to that of the gross domestic product (GDP), $15 trillion.

However you measure these unmeasurables, Tea Party members and liberal Democrats alike are agonizing over this unprecedented debt. What is going to happen? Well, I can't predict but I can't describe the three most probable scenarios.

The first and worst outcome is the catastrophe that fear-mongers are pushing. In effect, 1914 could happen again, with democracy playing the part of monarchy. Because globalization has made the world even more integrated, the disintegration will be even more costly than it was then. We got to see the trailer for this coming attraction when in 2009 our Great Recession quickly spread worldwide.

The cataclysm could be triggered by all kinds of acts or accidents. Imagine: Israel loses its nerve and bombs Iran, Pakistan goes Islamist and bombs India, the EU breaks up or Russia tries to reabsorb the Ukraine. The interdependencies of globalization would spread the resulting disintegration with a near breakdown of civilization. As in Germany and Japan post-WWII, all debts and assets would be wiped out. End of story.

Possible but most unlikely. It would take idiotic mistakes of biblical proportion. The United States would not wait almost three years to become involved, as it did in 1914, nor would our enormous military establishment allow worldwide military chaos. Despite the daydreams of survivalist militias and those emptying the gun shops, this is not going to happen. The Four Horsemen are not going to ride just yet.

The second scenario is the most popular and, in some version, the most likely. The people controlling our money supply could manage to get it right and we coast serenely into a jobless recovery. More realistically, they will err on the side of caution, one way or the other, and choose between hyper-inflation and depression.

Monetarists and Keynesians both agree that “too much money chasing too few goods” is the cause of inflation. The financial industry and those with money fear that the $2 trillion that the Fed and the US Treasury pushed into the economy will be “too much money.” If the monetary authorities get it just right and take the money out at exactly the right moment or, preferably, a little ahead of time, we have a soft landing and everything is fine, except for lingering unemployment. Taking the money out too little or too late means hyper-inflation, like Germany in the mid-1920s. Taking out too much money or too soon brings back depression as Pres. Roosevelt did in 1937.

What many people fear is a deliberate use of inflation to cheapen the dollar and undermine the value of the debt. Inflation is good in that it makes it possible to pay off the debt with depreciated dollars. Conventional history says that this is the way that we finally “paid off” the World War II debt.

Or the opposite could happen. The authorities could so fear inflation that they deliberately pull out the money too soon and accept the economic downturn as the inevitable and necessary way to pay off the debt.

The bankers who control our money supply have to be cautious but it depends on their priorities: do they want to be cautious to protect the value of the money and the people who loan it or do they want to be cautious to protect the jobs and the money of people who borrow it.

Since Chairman Bernanke and Secretary Geithner have already explicitly stated that their priority goal is to fight inflation, this scenario is the most likely and makes continued recession almost inevitable.

Yet, there is a way out and it is the way we really did it after World War II. The world sits on the edge of a technological revolutions in biotech, nanotech, robotics, artificial intelligence and areas yet undreamed of. The rapid implementation of these technologies could so cut costs and engender economic growth that the resulting profits could reward all the necessary investment and still pay off the debt. This is the promise of a vibrant capitalism.

The Progressive Era at the beginning of the 20th century and the economic growth period in the 1950s and 60s were not periods of small government or low taxes. During both periods, the government regularly stepped in to thwart entrenched special interests who were invested in the status quo.

So we have a choice in handling our debt: let the bankers decide between unemployment and inflation or let our government guarantee an open and competitive economy for real wealth creation.

The National Debt and Its Consequences Part I

2010-03-17T19:12:00.000-07:00

A lot of Americans, and not just those gathering under the umbrella of the Tea Party Movement, see the federal debt as a reason for panic. The 2010 federal deficit of $1.4 trilllion will cause the national debt to rise to $12 trillion. These concerned citizens see the debt not just as reason for panic but, more importantly, as a reason for fiscal discipline, that is, a balanced federal budget.

Their other concerns, supersized government and higher taxes, are seen as logically following from that supersized deficit. They see correctly, and fear, that the national debt will in the next two years become greater than the annual Gross Domestic Product (GDP). Both will reach more than $15 trillion.

First, let's recognize that these are fuzzy numbers that people badly overinterpret. Economists agree that GDP is a misleading and inaccurate measure. For instance, GDP doesn't count as much as 20 percent of output that does not go to market -- housework, drugs, the underground economy etc. GDP often values costs as output and it treats investment as an expense.

The national debt is just as bad. What we call “the national debt,” the total value of the bonds issued by the federal government, is not a measure of what we owe and have to pay back; it is a measure of what we have borrowed. For instance, at present the Federal Reserve and other government agencies own 36 percent of the national debt. The federal government owes that money to itself. For the most part, that part of the debt may never have to be paid back. Another third owed to foreigners will have to be paid back.

The national debt is, like any other entitlement, simply a claim on future tax revenue. The federal government has committed to pay out trillions of dollars in Social Security benefits, Medicare, government pensions, veteran's benefits and pensions and all the other entitlements that we have agreed that we owe people. In both the national debt and federal entitlements, we recognize a legal obligation to pay money toa specified individual or group. There is no intrinsic difference between the two.

What all should be counted? How about our military commitments. Those 700 bases in over 100 countries include promises to spend unimaginable amounts of money. Should this also be counted as part of the debt? Should we include the private sector debt of $30 trillion which we now owe to each other? What about the guarantees we have given to Goldman Sachs and others on toxic assets and credit swaps?

By using this kind of specious counting, a fuzzy $15 trillion of indebtedness becomes a phony $150 trillion. But that does not mean that we owe or have a debt of $150 trillion or even $15 trillion. It is like a young, middle-class couple looking at the cost of raising a child, $170,000 to age 17, plus college. If we did family finances the way we do national accounting that would be a parental debt of $300,000 for each child when they are born. No children would ever be born. No one could afford it, ever.

The national debt does create some problems but it has to be put into historical perspective. In 1946 the national debt was 122 percent of GDP. World War II was the reason and no one considered the debt a serious cause of concern. We did not panic and call for spending restraints during that post World War II restructuring, the Korean War or the beginning of the Cold War..

The national debt, as a percentage of GDP, fell to a low of 32.5 percent by 1981. This was accomplished, not by paying off the debt but by increasing output. Then came the tax cuts, increases in spending and rising deficits of the Reagan era. The national debt rose to 56 percent of GDP in 1990, 57 percent in 2000 and then grew to 83 percent by 2009. We are now borrowing an additional $1.5 trillion this year and the national debt will grow to over 100 percent of GDP by 2012.

Let's remember that although unemployment is approaching Great Depression levels there are no bread lines, mass migrations or serious social unrest. That is because we have that big-government safety net, however expensive it may be.

Federal expenditure and consequent deficits are what has to happen when there are wars not paid for and a Great Recession with almost 20 percent of the population unemployed or underemployed. In fact, the stimulus package was probably not large enough to do the job. In the long run, nothing will increase the national debt faster than doing nothing about a recession.

President Franklin Roosevelt heeded the fiscal conservatives and tried to balance the budget in 1937. That brought the economy crashing back into depression. Let's not panic into that kind of action.

An Anti-Government Election

2010-03-10T18:33:00.001-08:00

Polls show the country in a real funk as we head into this midterm election season. The electorate is angry and anti-government feelings are viewed as an anti-incumbency that threatens the Democratic control of the House of Representatives and, therefore, President Obama's agenda.

All the analysis starts with the elections of 1994 and 2006 and how many seats the incumbents lost then and how many the Democrats may lose this time. But the anti-government feelings of today are not the same as the anti-incumbency of those prior times. Plus that, the political conditions during those prior elections do not apply today. So what is happening?

The pervasive funk is reality-based. The government is still broken with the politicians more concerned about money for their next election than about the troubled economy. The people recognize this and the percentage who believe the country is going in the wrong direction is now at 60 percent, almost as high as the 80 percent at the end of the Bush Administration. The disapproval rating for Congress is now 75 percent which is higher than the 62 percent at the time of the 2006 election, when control of Congress did change hands.

The economy is on a life-support system consistingof a stimulus package, trillions in money-supply injection and more trillions in financial guarantees for Goldman Sachs and the other bankers. The voters recognize all of this as a short-term fix with real prospects for a long-term failure. No one feels economically secure and they don't feel it's their fault.

Now, as we head into the 2010 midterm elections, the people are going to be heard. In the Pennsylvania primary election in May the voters will tell us what is happening within the electorate. The midterm in November will be more of a money-laden slugfest between the surviving politicians. No one is sure where the people or the respective political parties are going to end up after all this.

To paraphrase, the Democrats lack all intensity while the Republicans are full of passionate conviction. The Democrats are in trouble because they are on the wrong side of the “enthusiasm gap.” The Republicans are in trouble because their convictions are alienating their base. Both political parties feel threatened and for good reason: they no longer represent the people who elected them.

The Democratic base does not believe that President Obama has delivered on his promise of change. The packages that Obama offered in regard to an economic stimulus, energy efficiency, the financial system and health-care reform, are judged to be watered-down excuses for the change people voted for. The Democratic faithful are more likely to stay home than to work to get out the vote. After the election, we will know if the Democratic voters Obama brought to the polls are still in the game. At this point it doesn't look like it.

The Republicans in Congress may think they are standing by their convictions but their conservative constituency thinks otherwise. It is leaving the GOP and splintering into 1000 small groups. It isn't just the Tea Partiers and Libertarians but many others like the Sons of Liberty, the Oath Takers, We Are Change, Campaign for Liberty, the 9/12 Project and many, many others. So far, they have shown no inclination to unite.

These people may be angry with the Democrats and, if my mail is any reflection, even hate Pres. Obama. They are, however, just as angry over what they see as betrayal of conservative principles by the Republican Party. They particularly resent attempts by the Republicans to co-opt their efforts to revive the “real” conservative faith.

So, what does this dual alienation mean for the 2010 election? In the midterm elections following the inauguration of a new president, the majority party normally loses an average of 23 seats. In this election cycle, the Democrats hold a 255-178 advantage in the House so more of them are incumbents and vulnerable. Many people think that in the present political climate, 40 seats could easily switch and give control of the House to the Republicans. This is the historical anti-incumbency argument.

It's not so simple. Elections are normally held in our two-party system to choose between alternatives. The Republicans were an alternative with ideas in 1994, as were the Democrats in 2006. In this election, the disaffected conservatives are unlikely to turn out to support Republicans despite the intensity of their feelings. Similarly, the Democrats are likely to demonstrate their lack of enthusiasm for watered-down hopes. This is the newer anti-government argument and it is compelling.

When you make the distinction between anti-government and anti-incumbency, there is clearly a misreading of history by the pundits.This is something new so it is hard to say how the election will come out. Will the passionate conviction of the conservatives drive the results or will the electorate just throw all the rascals out – and may be start something new?

Tea Party and Alienation

2010-02-21T08:49:00.000-08:00

Posted for Mel Bergheim, Alexandria VA

For what it's worth, my opinion is that the current economic collapse has mobilized a bunch of people who are suffering from a not-so-new malady: political and psychological alienation, a condition that is quantified by the number of people who don't vote.

The Tea Party movement is an oxymoron: alienated people, by definition, are not joiners, or at least not likely to be willing to subordinate their interests for the sake of the common good That leads me to predict that the Tea Parties are bound to splinter into atomized and warring factions. Hence, their influence will be expressed negatively -- they won't vote for rational candidates, hopefully at the expense of the GOP, as happened in New York's 23rd Congressional District. The danger is that they will be drawn to a demagogue -- e.g. Sarah Palin as Huey Long in drag. The posture of the Republican Party in Congress exemplifies how the negative platform plays out. Republicans on Capitol Hill are against everything Obama, but what are they for? An internally contradictory platform of smaller government, intact entitlement programs, lower taxes, a stronger military, and, miraculously, a balanced budget -- none of which can solve the real social, demographic, economic and environmental problems the nation faces. All the while, I believe, the widespread alienation, which is greatly exacerbated by economic distress, at bottom is fostered by: l.) The extreme physical mobility of the population, which has become separated from its traditional family and community roots, and 2) The depersonalization inherent in exposure to the electronic media. (The popularity of Facebook, Classmates and similar interactive platforms is attributable in significant part, I believe, to a reaction against the depersonalization and the separations generated by the mobility.)

Changing a Broken Political System

2010-02-18T14:11:00.001-08:00

What broke our democracy is not complicated. Our sense of participation was lost as we let big government and big business decide what was good for us. As decision-making became more centralized, it became more opaque and remote from the people. Everyone went about their own business and we lost all sense of the common good. Cooperation and mutual respect, the essence of democratic politics, have been lost as we think only of ourselves. It has cost us dearly.

At last the people are coming together to once more become responsible as they retake and repair their country. First, it was all those who campaigned for Barack Obama and Change We Can Believe In. They had the faith and hope.

Now it is the battle cry of the Tea Party, that “we want our country back.” They are demanding smaller government, lower taxes and a balanced budget. But what I think “take back our country” really means is the intent to regain some control over their lives. Democracy only provides that control when there is participation, transparency and accountability in our public lives. The lack of these brought on our political and economic crisis. The real question is how do we reinstall them at the center of our politics.

Right now two very different ways of doing that are being offered us, one exemplified by President . Barack Obama and “Change We Can Believe In,” the other exemplified by the Tea Party movement and Sarah Palin. Both are offering a vision of a new and very different democracy. Both have in common the central belief that the people must be more involved in their government.

A wide range of causes are coalescing around the Tea Party label. Some of the members are traditional libertarians, militias or conspiracy theorists. But most are more timely and mainstream. The Great Recession and the economic neglect that led up to it are imposing real injury; there is an accurate perception of that injury and Tea Partiers represent a growing feeling that something must be done about it.

What exactly they want isharder to determine. Simply repeating the mantra “smaller government, lower taxes, a balanced budget and a stricter interpretation of the Constitution” will not, even if achieved, restore cooperation and mutual respect into our broken political process.

In a situation where neither Sarah Palin nor anyone else in the movement is constrained by party loyalty or the responsibilities of governance, you would expect some new thinkin “g.. With the freedom to espouse anything, the Palin/Tea Party Agenda of smaller government and lower taxes seems a very weak brew.

Barack Obama is, on the other hand, constrained by the fact that he must govern in a time of political and economic turmoil. He is officially atop the structure and accountable. He sees himself as the leader of a broken political system that he has been called to repair. The problem he sees is lack of participation in the process. Obama sees decision-making in our political system moving further away from the citizen-voter. The process is what is broken.

The “Change We Can Count On” refers to the process of government and not content, principles or programs. This is what angers the crusaders of the right and the left. Obama does not stand on principle but rather he seeks to enhance the democratic process. This grows out of and reflects the fact that Obama is a conciliator and mediator. Those are the skills that he brings to the presidency; those are the skills that can bring people together in the democratic process.

The change that Obama seeks would not address the grievances of the middle class, the anger of the excluded or the bonuses of the bankers. It would address the way that legislation is drafted, the way that the executive branch interacts with the regulatory agencies and it would include big and small business, labor unions, local government, churches, community organizations and even the bankers – but not their lobbyists.

The “change” proposes bipartisanship on Capitol Hill. Obama is thus trying to drag the Republicans back into the legislative process. Change would bring transparency to government. He excluded lobbyists from many positions in the executive branch and forced the release of over-classified documents. Change is the attempt to bring more of the people into the decision-making process.

Any kind of change to more democracy cannot be done quickly for it takes the building of trust. That is why the Tea Partiers should get over their irrational hatred of Obama and the media should stop the mean-spirited treatment of Palin.

The Merger of State and Corporate Power

2010-02-09T19:11:00.000-08:00

Business corporations in conjunction with the federal government are intruding more and more into our lives. Mussolini is reported to have said: “Fascism should more properly be called corporatism because it is the merger of state and corporate power.” I don't know anyone anywhere who advocates fascism. But whether we like it or not, and whatever we call it, we seem to be marching toward a “merger of state and corporate power.”

The big problems – healthcare, the financial structure and our national security – present scenarios where a small number of very large corporations enabled by government created the problem. Those corporations now propose that they should be in charge of fixing things. Too often, their solutions fit profit projections and reelection campaigns better than they fit public needs.

We have created a monster in the American business corporation and it has teamed up with and taken over our government for its own ends. In healthcare, the insurance and pharmaceutical companies spend unbelievably large amounts of money to make sure they can control supply, set prices and feed off of entitlement programs. In the financial sector, Goldman Sachs and the other big investment companies and banks take our money, accept government guarantees and then scorn the legislature's feeble attempt to rein them in. In national security matters, Boeing and Blackwater renew their contracts even though they come in late and over budget. The American people have lost control of their government and they want it back.

Corporations can control our lives because they are, with their special privileges, economically and productively more efficient than any other form of business organization. That very efficiency is what makes them so dangerous that they must be kept in check. Our government is instead living off of and expanding that corporate power. We are granting inalienable human rights and personhood to what is in effect an artificial person where ownership bears no relationship to control and morality is not applicable

The most recent and serious grant is in the recent decision by the Supreme Court to legislate first amendment free-speech rights for corporations. The decision violates every principle of originalism, stare decisis and the conservative philosophy that condemns legislation from the bench. It confuses inalienable human and citizenship rights with artificial juridical rights.

If people are going to get their government back, they're going to have to put an end to the evil alliance of elected officials and corporate wealth. We have to turn to and work through the people, the real creators of that power.

The source of human rights is clearly stated in the Declaration of Independence: “all Men [and women] … are endowed by their Creator with certain unalienable rights...” Just as clearly, corporations are created and given their rights by the government. A state legislature or any sovereign entity passes a law that endows an artificial entity with special privileges. Foremost among these are perpetual existence, limited liability and anonymity. These privileges, these private laws, are given in exchange for whatever the state legislature thinks should be the quid pro quo. They don't have to be given at all.

Corporations are no more and no less than what the legislature says they are. This is the heart of it. State legislatures are the creator; they can grant or withhold rights or obligations as they see fit.

President Eisenhower in his farewell address pointed out the danger of the military-industrial complex. People are less familiar with a much earlier warning. Thomas Jefferson wrote: “I hope we shall … crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country.” And that was in 1816.

Corporate personhood is a fiction that the courts have made into a fact. It doesn't have to be.

For corporations to be effective they must have the right to make contracts, honor those contracts, pay debts, otherwise do business and even make a profit. But they should not have the right to vote, hold office, petition the government or enjoy free speech – unless the legislature specifically grants such privileges. It could do so. Some would give corporations all of those capabilities. But we would have a corporatist form of government.

The merger of state and corporate power is going on right in front of us. Now, in the economic and political turmoil that is not going to end soon, we have the opportunity to separate government and the corporations.

First Year Review: Effective Liberalism

2010-01-20T08:53:00.000-08:00

After a year in office, Pres. Obama gives his administration a B+ but others are disappointed not to find much Change You Can Believe In or, conversely. too much change they don't believe in. The Right is painting the president as a dangerous and even demonic collectivist while the crusaders of the Left condemn him as compromising everything and lacking a liberal core. The supposedly neutral purveyors of the conventional wisdom are planting the idea that Pres. Obama is a growing disappointment.

These people base their judgment on a review of the big, life-and-death, unsolved crises that were inherited from the previous administration. Pres. Obama may have gotten his stimulus package, they say, but this did not cure the worsening unemployment of the Great Recession. The bankers who brought on the financial crisis have kept their billions and are even giving themselves bonuses. The watered down healthcare bill hangs by a thread on the Senate reconciliation process. The ramping up of the Afghan war is seen as a short-term fix that can only lead to a long-term disaster. This is bolstered by the accusations from the Right of socialism and the trash talk of the birthers and death panelists.

People, especially Democrats, are not paying attention. President Obama is within a yard of scoring the biggest piece of social legislation in 40 years. The New Yorker magazine reports that “the Senate bill would provide about $196 billion per year in subsidies to low-income and working Americans. That's more ... than the federal government spends on the earned income tax credit, Head Start, assistance to single mothers and their children, nutrition programs like food stamps, and the National Institute of Health combined.” That's more than a start and it can be built upon. The $700 billion stimulus package may not be big enough for Paul Krugman but it was big enough to keep the economy afloat and get past the threat a of depression level collapse.

America had to change direction. The presidency had become a fiasco of secrecy, torture, ideological science, kidnapping, busy-bribing lobbyists and paid-up polluters. Doesn't anybody remember how bad it was just one year ago! Eighty percent of the people knew we were going in the wrong direction.

Pres. Obama first addressed injustice and the government mess. The first bill that he signed was the Lilly Ledbetter Act. All secret documents are to be reviewed for declassification within five years. Requests under the Freedom of Information Act now face the presumption of compliance. The Army Field Manual will be used in all interrogations. Global warming and stem cells are again legitimate areas of research. Secret prisons are being exposed or closed. Lobbyists are no longer eligible for membership on advisory committees. Ex-lobbyists are not eligible for most federal jobs without a long waiting period. The coal industry has had to stop lopping off the tops of mountains in West Virginia. That is change anyone should be able to see and believe in.

If Pres. Obama has not gotten to Don't Ask Don't Tell and gay civil rights, he has been extraordinarily busy. During their first year, the percentage of enacted presidential legislation was: Eisenhower – 89, Johnson – 93, Reagan – 82, Clinton – 86 and Obama – 97! This president is effectively pushing through his agenda. Here we have to concede the tea baggers and conservatives a point: he is changing our government.

There is one serious justifiable complaint. The banks, particularly Goldman Sachs, Morgan Stanley and J.P. Morgan, are still inexplicably at the controls of the economy in the person of Larry Summers, Tim Geithner, and Ben Bernanke.

Conservatives should really like these three guys. They are more concerned about the deficit than unemployment; more prone to raise interest rates and slow the economy than to stimulate it; and they are more likely than anyone else to bring the Obama presidency down. Progressives should hate them.

The Democrats have to tell Pres. Barack Obama that he's wrong. They should demand our government back from the bankers. Pres. George W. Bush had the problem that nobody told him he was wrong so the Republicans all marched in lockstep to perdition. The difference between Republicans and Democrats is that Republicans are politically disciplined. You don't vote with the caucus; you lose your chairmanship or whatever counts to you. Sen. Lieberman wouldn't last for a moment as a Republican. Democrats consider dissenting part of their birthright.

It's a whole new political scene, folks. Appreciate this president for his liberalism and his effectiveness but let him know, loudly, that we will not put up with the bankers continuing to steal our money and foreclosing on our homes.

More than ever, progressive activists have no reason to sit this out.

Elite Heading America into the Perfect Storm

2010-01-07T09:28:00.000-08:00

In October 1991, three dangerous weather systems -- a tropical hurricane (Grace), an extratropical cyclone (a Nor'easter) and a strong high pressure front from Western Canada – converged in the North Atlantic to form the Perfect Storm. These three individual storms converged to make a storm of historic proportion. Today, an unstable economy, a corrupt politics and an exhausted military are converging and threatening historic change to our way of life. America is sailing straight into a Perfect Storm.

The civic storms we face are real and imminent. Changing technology in every sector of our society over the past 40 years has brought what the economist Joseph Schumpeter called “gales of creative destruction.” If these winds of change are properly harnessed they bring innovation and revolutionary progress. Neglected, they bring bloody awful revolution. So far we've done little or nothing.

Unfortunately, while the nation is pulled to the center of this vortex, our governing class is betraying us. A governing class, an elite, is essential to any nation state, including ours, however much we might wish otherwise. An elite is doing its job if it puts the good of the country first; it is failing if it confuses its self-interest with the good of the country.

Our elite, the governing class of politicians and pundits, captains of industry and financiers, lobbyists and the wealthy who control the majority of our assets are not on-board with the rest of the community. They are not ready to take the good with the bad. Our financiers and the politicians that they bought are putting their own bonuses and reelection above everything else, acting as though they have a right to be above the storm.

A really big storm restructures everything and that is what is happening to our economic, political and military/security institutions in this Great Recession. This is the stuff of revolution.

The economy that we knew post-1950 is gone, washed away beginning in 1980 and completely destroyed over the last 10 years. Our once proud steel, auto and home appliance industries are gone along with their unions and their great distribution systems. The bankruptcy of General Motors symbolizes the last step in the shift from a manufacturing economy to a financial services economy.

The financial sector is the big winner. It has taken over everything and messed everything up. The revolution in financial innovations brought us collateralized debt obligations, credit default swaps and the whole panoply of toxic derivatives. This revolution washed huge, unimaginable amounts of wealth away from the working class and through the financial sector to the governing elite.

The collapsing economy needed that stimulus package, and maybe still needs another one, but the fact is that the big deficit and all that money sloshing around are undermining our political structures. President George W. Bush used the political and economic storm to strengthen the presidency at the expense of the Congress and the people. He stress tested all of our systems with his extra-constitutional signing statements, bank bailout package and novel use of presidential war powers. President Barack Obama continues too much of this.

In our military, two wars and maybe a third in Yemen have produced a subversive mix of robotics, unmanned drones, satellites and the mercenaries we euphemistically call contractors. Our military, especially the reserve and guard units, are near to exhaustion. Yet the generals clamor for ever more troops. Politics and economics, not military needs, drive military spending.

The gathering storm has driven our economy politics and the military beyond our ability to control them. The citizenry is well aware that the ship-of-state is foundering in this worsening storm. Our entire system is under extreme stress but our elites will not agree on what is to be done. Ideology is supposedly the driving force, and the sticking point, but money trumps ideology every time.

This convergence of economic and political disturbances that we call The Great Recession is still an intensifying storm, however exuberant and irrational the stock market might be. The real problem is a breakdown in community; everyone wants the benefits and no one is willing to share the costs of this revolution we are living through. We are headed for a political and economic gridlock that California is giving us a preview of.

This revolution has a ways to go. We can only hope that it will wash away the old governing class, those greedy politicians, financiers and generals who have been serving us so badly. If you fear a revolution now, you're probably on the wrong side.

Christmas and Community

2009-12-25T06:13:00.000-08:00

Christmas is set aside as a time of peace and joy, a time of sharing with family, a time of community. Christmas is a good time to talk about community in our society. There are problems celebrating Christmas as a family or as a nation because Rampant individualism is undermining our families and our country. We are losing our sense of togetherness and shared purpose..

Community is not well understood and sociologists have at least 94 discrete definitions to prove it. We do know that it is a lot more than feel-good sharing of “the holiday spirit” or even the sense of accomplishment that comes from a cooperative job well done.

The root meaning of the word explains it better than anything else. The word community comes from two Latin words, cum meaning “with” and munus meaning “gift.” A community is a group that gives the gift together. But this is a special kind of gift. It is the offering that the Roman priests sacrificed to the gods before going to war or before the planting in the spring. The expectation was that those who made the gift accepted together the outcome of the war or the harvest. Everyone shared the spoils of victory or suffered the subjugation of defeat together. Everyone shared the bounty of a good harvest or starved together.

The two communities where we still practice this kind of shared security and togetherness are the nation state and the family. Originally the tribe was the only real community, the place where we prospered or suffered and it was always together. Over time, the nation State rose to assume primary responsibility for the peace that is common security. The peace of individual security devolved from the village to the extended family and finally to the nuclear family. Now we enjoy the benefits of community only in our immediate family and that is what we are supposed to be celebrating at Christmas time.

We have in the US Constitution and in our character a streak of individualism that exists alongside of and competes with the concept of community. In our society the pendulum swings between these two poles. Over the past 30 years individualism has been in the ascendancy and our sense of community has suffered accordingly.

The erosion of family and the community it offers is probably the most important problem that we as a nation face. Yet, our shrill incivility in governing indicates that the country as a whole is losing the sense of a shared political journey.

This Christmas our government is giving us a Christmas present – a healthcare/insurance reform bill. Whether you consider this to be “universal health care at last” or coal in your stocking, we can agree that the political circus of the past several months has exposed some real problems.

The Democrats got a bill but at what cost to us as a community! Senate Majority Leader Harry Reid said "it doesn't speak well" of individual senators who didn't get a special deal for their vote. He was saying, in effect, look out for yourself, “community and nation be damned.” The whole political debacle of the healthcare bill was a parade of individuals determined to profit at the expense of the community. The Republicans were no better in their showy obstructionism.

This is now sadly government-as-usual. Our nation has become a dysfunctional community, one that refuses to pay taxes, to fight or pay for wars, or to assume any of the costs of our national community. We have lost the idea that “we are all in this together,” the essence of community.

The family remains our primary community but it too is becoming dysfunctional as we lose our sense of community. In the present difficult economic times, adult children are moving back in with their parents. If you read the advice columns, parents complaints tell it all. The returning offspring do not want to pay any rent, do the laundry or clean up after themselves. They expect to be able to blow off the responsibilities of living in community.

As we celebrate Christmas and community, let's get over the individualism and start acting like grown-ups. That would be something to celebrate.

Islam's Jihadi Problem

2009-12-09T17:23:00.000-08:00

Whether you call it "The Global War on Terror," just terrorism or even Islamofascism, the real enemy is religious extremism in the Islamic world. America cannot win militarily fighting those who truly believe they are called to a holy war. But we can stop supporting them and call on moderate Islam to curb these extremists.

Our response to the terror attack of 9/11 was to start two wars and tighten up domestic security. We favored the use of military power because that is what we are good at and we went after specific military power because that is what we could identify. The military targets we picked were Saddam Hussein, Al Qaeda which is now more symbol than substance and our former allies the hyper-Islamic Taliban in Afghanistan. None of these represents our real enemy.

Pres. Obama, with the 30,000 man surge, has made our attempt to stabilize Afghanistan militarily a major issue for his administration and America. Actually, this surge in Afghanistan is intended mainly to bolster the Pakistani. They are the real target and for good reason. Pakistan not only has the bomb, the most dreadful weapon of mass destruction, but it is also being destabilized by Islamic fundamentalists.

Again the enemy is not the Pakistani military which is actually pretty competent and pro-Western nor even its very powerful intelligence service which has at times been soft on Al Qaeda. The real enemy is a very small but powerful group of terrorists who are preaching violent holy war against the United States. These are the Jihadi.

Islamism, fundamentalist Islam, can go either of two ways: Jihad can become violent terroristic Holy War or it can remain the personal spiritual struggle it has traditionally been for most Muslims.

Some have already chosen violent jihad. The most violent and most threatening of these is Salafism or Wahhabism, followers of the 18th century scholar Abd al-Wahhab. The names and numbers of the Wahhabi and other Jihadi sects is often confusing and overlapping but it is only a very small part of Islam.

Wahhabis, the most prominent of the Jihadi, have "an absolute commitment to Jihad, whose number one target had to be America, perceived as the greatest enemy of the faith." The Wahhabi have traditionally held that Muslims not holding to the Wahhabi interpretation of Islam are subject to execution. That is what makes possible the horror of suicide bombings that kill Muslim civilians.

The threat arises from a centuries old agreement between the Wahhabi and the Saudi royal family whereby the Wahhabi control theology and the Saudis control the secular government, which includes implementing and enforcing Wahhabi teachings.

Though the Wahhabi account for only 1 percent of Islam, their influence is out of all proportion to their numbers. They hold the holy cities, Mecca and Medina, they have the Saudi petro-money for their missionary activities and they are an inspiration for Jihadi cells around the world. That petro-money funded Osama bin Laden.

The Saudis have spent tens of billions of dollars across Islam promoting Wahhabism. Over the past 50 years Saudi money has built worldwide as many as 1500 mosques. A pro-Muslim institute offered the somewhat doubtful reassurance that "most mosques in the US are not under Wahhabi influence."

The Wahhabi and those offshoots that support violent Jihad are the true enemy for they are committed to violent struggle with all of Western civilization.

Only Islam can solve the Jihadi problem and there is a no way the United States can constructively intervene in what is essentially a theological and political problem for Islamic regimes. No amount of military action in Iraq, Afghanistan or Pakistan is going to seriously weaken the proselytizing of disaffected young Muslims by these fanatics.

Military action in Afghanistan and Pakistan must be seen as a temporary expedient designed to give Islam time to rid itself of this scourge. Saudi Arabia is the principal culprit supporting the Wahhabi and we should stop holding their hand.

In the meantime, president Obama reached out to the Muslim world and our approval ratings in those countries rose significantly. This will, however, not last long if we continue to support repressive regimes such as Egypt and Saudi Arabia and cloud the Pakistani skies with drones that kill more civilians than terrorists.

The Islamic world, particularly Saudi Arabia, has to admit that suicide bombers killing hundreds of Muslim civilians every week is an atrocity that they must do something about. The Western world has to be very clear that the Afghan War is not a military occupation of Islam. We must also see that Islam spreads the petro-wealth to the people across the region rather than use it to build indoor ski slopes and skyscrapers in Dubai.

Fear and Anger

2009-11-25T14:52:00.000-08:00

Fear and anger are abroad in the land. We are falling into the trap that FDR warned us about. We are letting fear of the boogieman debt dictate our actions.

There are lots of reasons to be angry but it is unworthy and un-American of us to be afraid of anything, much less the idea that we cannot take care of our own future.

Politically, we have not done a good job of governing ourselves since the early 1980s. The idea from that time that government itself is the problem is pernicious. It undermined the idea that we can act in unison to provide the common good. It undermined our political life and we are now reaping the consequences.

That idea spawned the belief that government is always too big and taxes are always too high and that the corporate sector is always more efficient, honest and honorable than government. That is self-destructive nonsense that breeds fear of ourselves.

Economically, the government did indeed fail us but because there was too little, not too much government. Our financial sector became arrogant and greedy because that is what government allowed it to become. The banks should be nationalized until they recognize they exist to serve the economy rather than the economy existing to serve them.

The idea that markets can operate on their own gives corporations the freedom to abuse the economy in any way they want. The best way to maximize profits is to shove costs off on to the public sector through monopoly, pollution and private legislation. Now, profit levels have never been higher. The labor share of income has never been lower. We should be angry about that.

America is instead angry for all the wrong reasons. Amidst the cacophony of voices raising their specific complaints, be it of President Barack Obama, Speaker Nancy Pelosi, the health-care public option, the seizure of General Motors and Chrysler or the TARP giveaway to the banks, the anger appears directed mostly toward taxing and spending at all levels of government.

The anger seems to arise from the fear that the truly enormous budget deficits of the past two years, and into the foreseeable future, are going to bankrupt our economy and our grandchildren. The protesters see the national debt as a symbol of the chaos in our political and economic lives. They see that as our government failure.

To those of us ancient enough to remember, we've been here before.

In 1946-48 the situation was as bad or worse. A beleaguered and ill-prepared President Harry Truman was universally dismissed as alarmingly incompetent. In addition Senator Taft and the Republican Congress were determined to thwart his presidency and reverse the New Deal. He and everyone else expected that, with 6 million GIs being rapidly demobilized, .there would be a reappearance of depression level unemployment.

To show how similar times really were, Truman's campaign in 1948 focused on inflation, expansion of civil rights, aid to education, housing, the minimum wage and medical care for the poor and the elderly. Truman himself was condemned for seizing the railroads and threatening to take over the coal and steel industries. Harry Truman, of all people, was accused of being “soft on communism.” Today's problems echo that time perfectly.

In the midst of all this, the national debt was 125 percent of GDP, twice what it is now. But no one seemed to care! We were, despite that debt, able to pay for the Cold War and remobilization, fund the Marshall Plan and still increase our living standard many fold. We just were not afraid of anything. In fact, those supposedly debt-burdened years immediately after WWII were designated "The Best Years."

In today’s crisis, the TARP money, however badly spent, did keep the financial system from collapsing. The stimulus money assured business that the government was willing to bail out the economy and do whatever was necessary to avoid a depression. Two years of a real depression would see lost output the size of our GDP. It would dwarf any spending or the national debt. We have so far avoided that.

America has to get its act together; there is no doubt about that. But the people who think that the debt and taxing and spending are a problem should get some perspective. Complaining about President Obama, Speaker Pelosi and government spending is fear mongering. Put government to work.

Socialism in the Healthcare Debate

2009-11-10T18:11:00.000-08:00

Ideologies such as Socialism or Fascism are foreign to our American way of doing things. We just do not think that way. The words Socialism and Fascism make no sense in the context of our practical American politics.

American political discourse, in regard to health care and practically everything else, focuses on specific issues that have been with us from the beginning of our republic. The most basic of these issues include the role of the federal government, states rights, individual rights and the nature of property.

The answer to these questions is not predetermined because the government ownership of the means of production is a desired outcome, Socialism, nor because we prefer a constitutional role for corporate power, Fascism. Nor do we have a collective entity called the state which is prior to the individual.

It is nonsense to accuse President Obama and the healthcare reform bill of being Socialist. Opposition to, or support for, the president or his policies must be made in the context of American political discourse. In that discourse, our time is spent in pragmatic questions: how much do things cost, where will we get the money? Will it make health care better at the same time it curtails rising costs? And, if someone objects, can it pass the constitutional test?

To be sure, we do have a deep theoretical rift in the American body politic. In this present political and economic crisis we are arguing disagreements that are deeply embedded in our constitutional structure. They are there because the founding fathers knew and fought over all these same questions. They gave us the Constitution as a framework within which we could contest how we honor individual, state and federal rights and responsibilities while we govern ourselves.

US history shows two traditional ways to address these issues. Hamilton was the progenitor of the Federalist-Whig-Republican tradition. Jefferson is claimed for the Jackson-Roosevelt-Democratic tradition. Hamilton and Jefferson were fighting over the role of government, states rights and the nature of private property the same way we are.

And so it has been all through our history. The Union almost broke up over these issues and even the Civil War did nothing to resolve them.

The presidential election compromise of 1876, which withdrew federal troops from the South, turned Northern military victory into a political armistice. That compromise freed the Confederacy of constitutional restraints and resuscitated states rights while property rights in slaves were then exercised through Jim Crow and segregation. The compromise lasted until 1965 and the Voting Rights Act. That, and the Civil Rights Act violated the armistice because they forced the South to recognize and implement the equal rights provisions of the Constitution.

Nixon's Southern strategy reflected the same rift and served to sharpen the edge of our discourse.

The present political and economic crisis is forcing us to face these questions again because both of these traditions are alive and well in America today. But George W. Bush is not a fascist and Barak Obama is not a socialist. Their presidencies reflect these ongoing American, not European, political tensions. They each stand proudly on separate sides of that political divide that goes back to the founding fathers.

The difference of opinion is the reason that we have political parties and elections. The multiple failures of the Bush administration led to the election of President Obama and a Democratic House and Senate.

The rift is also regional because one set of opinions was, and still is, best expressed by the Confederacy. President Obama's favorable rating is in the 60s to 80s in every region except the South, where it is 27. Racism probably has something to do with this yet any Northern president with President Obama's agenda of national solutions for healthcare, energy, individual rights and a preference for diplomacy over military action would run into really stiff opposition in the South.

These questions will never, can never, be definitively answered because there is no correct answer. We have what is essentially a difference of opinion. Politics in a democracy are the continuing struggle about how we relate to others and try to get along when honest citizens disagree.

Socialism and Fascism are European concepts; they belong to a political discourse based on ideology and nationalism. American politics are based on pragmatism and the rule of law.

The use of these European terms is in fact an accusation of un-Americanism. It is disrespectful of the accused and the demeaning of the accuser.

Protesting Change

2009-10-30T12:57:00.000-07:00

These are hard times for many so you would think we would pull together. Instead protest and dissent are pulling us apart. Unfortunately, the protests at town meetings are noted more for their anger than their effectiveness. We know there is anger and we know specifically what the protesters don’t like. We know far less about what they do like.

To reach out and to get a feel for what is going on, I attended a debate on Medical Malpractice Lawsuits (Tort Reform) sponsored by the Citizens’ Caucus, a conservative group that provided busses for the 9/12 march in Washington.

When I got there, I introduced myself to a big-bodied man with a clean-shaven head who would have been at home in a Harley ad. He said: “I read your columns. I find them interesting." "Interesting" is, of course, a polite code word for: "I don't agree with much you say. But that's all right. It's a free country." His response demonstrated honesty and goodwill. I liked him immediately, even more so when I learned he is running for school board.

This man, like virtually every one of the 100 or so people who were there, cares about our country and community. These people are quite obviously a cross section of my neighbors, people who are committed and involved. They also share a deep concern over what they see as threats to our democracy.

Sincerity is not enough. What I saw did nothing to change my basic feeling that these conservative protesters do not recognize the structural origins of what is happening to our politics and our economy.

America and the world are in the midst of an explosion of technological innovation that is impacting our cultural, economic and social structures. What was set up to serve a simpler time and technology is becoming dysfunctional. That is the pervasive fact that feeds what is bothering conservatives and liberals alike. The force for change is technology and not malice nor ideology nor politics.

Economically, the mass production manufacturing industries are gone. GM no longer rules the roost. Goldman Sachs is now cock-of-the-walk and finance calls the shots economically and politically. It is fruitless to get angry at government for trying to clean up what is left of GM.

What happened to the auto industry is occurring across all industries – energy, finance, military, food, insurance, the media, pharmaceuticals and communications. The free market becomes a myth when the new normal installs a handful of firms that control product, price and distribution.

In banking it was the new technology of securitization and derivatives more than the lack of regulation that blew up our financial system. Our healthcare delivery system with all its paper shuffling is as obsolete as the dial telephone. Those relics are still working, but just barely, as in what kind of confusing options do you want on your mortgage, your cell phone or your health care?

It does no good for conservatives, like the sincere people at the Citizens’ Caucus, to vent their anger and frustration protesting what all this is doing to the Constitution or the concept of limited federal government. Protests that center on ideological differences, political vision or personality are futile when it is technological change that is destroying their cherished institutions.

In healthcare, the “public option” was dead in August. But then the louder the protesters screamed “socialism” and “government takeover,” the stronger the proposal became. Now a public option is in the bill that is going to the floor of congress and some version is likely to pass. Had an alternative been offered, the situation might be different.

You can’t effectively protest change itself, it is like death and taxes. You have to seek something specific to tweak and you have to offer an alternative. The conservatives do not yet have that and as a result the Republicans are being condemned as the party of no.

We are all democratic capitalists and we must admit to the honesty and goodwill of others. No one is in favor of big government, much less socialism. Nor is any one against individual freedom and initiative. We have a shared value system that operates on a mutual respect that is not much in evidence recently.

Our differences arise from the implementation. Conservatives have to come up with specific programs to meet this torrent of change. Venting anger at Obama or frustration at a Democratic congress will not have any useful effective.

The liberals have a plan for healthcare – and for the other problem like energy, finance, and recession that are rushing at us and will demand action.

Right now President Obama is the only game in town. We would all be much better off if the conservatives were part of the process and Obama were tested against a viable alternative.

Iran and Israel

2009-10-30T12:42:00.000-07:00

10-13-09

In starting direct talks with the Iranians, Pres. Obama has taken a first step to embrace diplomacy rather than confrontation in the Middle East.

When Iran complied with the Nuclear Non-Proliferation Treaty and announced that it was building a second uranium enrichment plant, Western governments and media expressed deep concern. This impelled the New York Times to call the area that stretches from Iraq to Iran, Afghanistan and Pakistan the "axis of anxiety."

That notable newspaper then reported the ensuing buildup to confrontation in tabloid language: "In a day of high drama at an economic summit meeting, American, British and French officials declassified some of their most closely held intelligence and scrambled to describe a multiyear Iranian effort, tracked by spies on the ground and satellites above, to build a secret uranium enrichment plant deep inside a mountain."

Running up to this, Iran has been painted as a dangerous, rogue state, akin to Saddam Hussein's Iraq, where weapons of mass structure were being pursued to wipe Israel off the face of the earth and interrupt the flow of Middle East oil to Western economies.

In keeping with this anxious scenario, the Western powers have been proposing ever harsher even crippling sanctions to isolate Iran diplomatically and economically. Israel continually threatened an immediate air strike against Iran's nuclear facilities.

President Obama has now hopefully put this behind us and set a course to engage the Iranians diplomatically.

On October 1 the five permanent members of the UN Security Council and Germany sat down for their first meeting with the Iranians and all the tension just fizzled. The disappointed press had to report that Iran agreed to everything asked of them in regard to uranium enrichment and then some. They agreed to on-the-ground inspectors from the International Atomic Energy Agency within two weeks.

Yet, it is not all that clear what American goals in Iran are. It often appears the US is following the Israeli geopolitical agenda: deny the bomb to any Islamic country by whatever means the Israelis find most effective and keep the United States engaged in the region to deny leadership to any emerging power, particularly Iran.

The Israeli fear of Iran seems strange. Iran has signed the Nuclear Nonproliferation Treaty. Its supreme religious leader has stated they have a "no first strike" policy and that nuclear weapons are contrary to Islamic law. The International Atomic Energy Agency inspectors have been, and will be more, active in Iran.

At the same time, Israel has already used a preemptive strike against Iraq and everyone agrees that Israel already has around 100 nuclear weapons that it has never acknowledged. Israel has not signed the non-proliferation treaty and no outsiders have ever inspected any Israeli nuclear sites.

It may come as a surprise to many but Israel and Iran are natural allies. Both of these ancient peoples, the only regional survivors from biblical times, have more in common than they have a basis for war.

Admittedly, Israel is a small nation surrounded by mostly hostile Arabs with whom they have fought a series of wars. If the surrounding Arab states, and Iran, cared anything about the Palestinians, the professed center of concern, they would have just absorbed that relatively small number of people decades ago. The Arabs use the Palestinian issue to harass the Israelis who, too often, take the bait.

Iran also has reason to feel embattled. It is Persian in a sea of Arabs. It is Shiite among the Sunnis. It is an Islamic Republic in a Christian secular world. It also has, because of its size, location and independent cultural existence, a natural regional leadership role.

Iran has in fact dominated the area off and on for the past three or four millennia. It is not possible to deny Iran a leadership role however much we, the Israelis or the Saudi's might want to.

The Israeli fear of an Iranian nuclear weapon is paranoia. The Iranians are far too smart to attack Israel with a nuclear weapon when the US would immediately and with international approval obliterate Iran.

The American task in this "axis of instability" is, as often stated, to create stable political regimes and prosperous economies. To do this, we have to first convince the Iranians that they do not need a nuclear device to prevent a US attack.

We also have to ensure a shared leadership where the Israelis have a constructive part to play and where the Saudis can represent the Arabs and the Iranians can represent the Turks and other non-Arabs.

We also have to ensure that their leadership is not military but economic and cultural. That means that we have to find a nation-building institution other than our military.

This is our long-term diplomatic task and Obama in his mediator and conciliator role has begun it well.

The Politics of Revenge

2009-10-07T08:42:00.000-07:00

The inauguration of Barack Obama was celebrated as a coming together of the American people. We now know that was at best a misreading. The people who voted against Obama resent the fact that he won. Obama’s job now is to convince them that he can share their values and respond to their needs.

Prior to the election, 80 percent of the people felt the country was going in the wrong direction. Virtually everyone wanted change. As you would expect -- but no one seemed to note at the time -- half of the people wanted to go back to the conservative future that George Bush had promised but not delivered on. The other, progressive, half wanted to get past George Bush to a more liberal future.

A wide swath of conservatives, Republicans, reactionaries and libertarians who voted for John McCain and Sarah Palin are angry about the outcome of the election and they want to do something about it

The moderate conservatives, mostly old-line Republicans just want less government and to be left alone. These people are willing to use the electoral process to achieve their ends.

The less moderate, who are really angry, have disrupted town hall meetings, attended tea parties, and marched on Washington. These people have a deep sense of unease and fear for our country. These fears arise from both the economic and political crises and the results of the election.

The least moderate are, in fact, radical know-nothings. They include the birthers, the death panelists and those who accuse Obama of being a communist and a Nazi, of setting up concentration camps and proposing to pull the plug on grandma. These crackpots are literally taking up arms, emptying the stores of guns and ammunition and even carrying sidearms and assault weapons to public meetings.

Republican politicians do not serve their constituents well when they cave in to these radicals, let Rush Limbaugh control the Republican platform and simply dismiss the Obama agenda.

These politicians use the call for small government as an excuse to oppose any and all legislation, despite the immediacy of our Great Recession. Insofar as they have an action platform, it is a hawkish nationalism: fighting illegal immigration, maintaining national security, and passing their social agenda against gays and choice.

All of these people are angry. They have a deep resentment of the fact Obama is everything a down-home conservative has been taught to hate and fear. He is a big-city Democrat, had a foreign born father who actually went back to his home country, is a Harvard Law School graduate, and, most of all, is an organizer of the poor and a union supporter. And now this guy is President! It's like we elected Saul Alinsky. They know that can't be right!

So they see Obama as a socialist or a Nazi, a communist or a liberal, but mostly as a foreigner who has usurped the Presidency of these United States of America. He is a direct threat to their nativist, isolationist, belligerent America. They would hate him even if he weren’t black.

The French have a name for this combination of hatred and hawkish nationalism. They call it "revanchism," the politics of revenge.

Revanchism describes a world where conservatives cling irrationally to old values and institutions in an age of progressivism. They look backwards, misread history and slip into resentment and what amounts to a desire for revenge.

The South misread the lessons of the Civil War. They rejected the fact that strength grows out of union and freedom. They adopted a loser’s resentment that still simmers beneath the cover of Nixon’s Southern Strategy and now poisons the Republican Party. The impeachment of President Clinton was pure retribution for forcing the Nixon resignation.

When Republican politicians impeached Clinton and when they demonize Obama they dig themselves and their Party deeper and deeper into a revanchist trench. It is all driven by a sense of grievance or victimhood. That way leads to marginalization for both them and the ideas that they were elected to represent.

President Obama is, as I have written before (LDNews Jan 22, 2009), basically still a community organizer who is more interested in community and conciliation than being the decider. To Obama the process drives the content, not vice versa. He is not an ideologue or an idealist. There is room for dissent in his presidency and it can come from the right or the left.

The real task for Obama is to somehow convince all those rational conservatives out there that they can still have influence in the new world that is coming, that they can help rebuild this great nation. But they can't do that from a position of hatred and resentment.

Economic Well-being and Employment

2009-09-23T17:43:00.000-07:00

This Great Recession should re-teach us the importance of employment and jobs. Employment is where the divide between the people and the managers of our society, corporate and governmental, is greatest. That divide leaves the impacted citizen angry and feeling neglected and abused. Jobs could be the issue that we unite around.

For 50 years our economic machine was working well enough to provide secure, good paying jobs to our rising middle class. Two generations grew up and entered the workforce taking jobs for granted.

Our Great Recession showed us how far we are from that world. Our politicians don't seem to know that yet. They barely pay lip service to the unemployed. They prefer to bail out bankers and their bonuses

This is clearest in regard to our "jobless recovery." If you listen to Larry Summers, Chairman of the National Economic Council, and his cohorts, everything is going to be all right. The economy is bottoming out and we are already in the first stages of an economic recovery.

Unfortunately for workers, job creation is expected to lag the rest of the economy by several years. Working people are supposed to learn to live with a “jobless recovery” where the unemployment rate will hover around 8 to 10 percent.

Larry Summers has spoken and he is channeling Dick Cheney. He dismisses the human aspect of the economy. He allows policymakers to claim success because the bankers are making a profit again. He confuses the means (the economy) with the end (the well-being of the people).

Nevertheless, in my own hopefulness, I think I see some green shoots of humanity in the economics profession. It isn't newsworthy to our business-oriented press but in one instance the focus of economic policy shifted from aiding and abetting financial shenanigans to a concern for the well-being of people.

There is this first sign of hope that contradicts the Larry Summers-types. And it may in the end confound them.

The Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) is the group that determines the dates for the beginning and end of recessions. When these economists said that the recession began in December of 2007, they said they based their decision on payroll employment which peaked that month. Their criterion was the trend in job creation and loss.

This is an astonishing change. It put people first.

Previously the definition of the recession was two quarters of negative growth in the gross domestic product (GDP). Output or market activity was the measure of economic progress. The NBER specifically dismissed output as an unreliable and inappropriate indicator.

If Larry Summers wants to declare the recession over, he is going to have to contend with the NBER. A "jobless recovery" is now an oxymoron, a contradiction. The economy cannot be in recovery unless payroll employment is in recovery because payroll employment is the metric used to determine recovery.

This is more than a semantic word change. Payroll employment measures the money that workers are receiving. It is what they spend and what the economists measure as consumption. If there is no increase in payroll employment, there can be no increase in consumption and no GDP growth.

After the 2001 recession, it was still possible to have a "jobless recovery" because workers could borrow money on their credit cards or the equity in their homes to maintain consumption. Now credit cards are maxed out and housing wealth has dropped by $7 trillion. There is no basis for even a jobless recovery.

The bad news is that the economy lost 7 million payroll jobs since the recession began and we need 150,000 new jobs per month just to stay even. The economy could go great guns and produce 300,000 new jobs per month. It would still take us until the summer of 2013 to get the economy job-wise back to where it was in December of 2007.

The good news is that policymakers will not be able to call it a recovery unless it is a real job-based expansion. Bad job numbers mean politicians will be called to do something about it; they need a recovery/expansion for the next election.

Maybe, just maybe, this NBER recognition of the importance of jobs will spread. Then this Great Recession will turn policymakers back to a proper respect for job creation as central to the health of the economy. Such action might even be a small part of the revolution that is now brewing among the people.

The Arrogance of Fallen Gods

2009-09-02T19:35:00.000-07:00

It is high time we started insisting that Wall Street traders are human beings and not gods who deserve the first fruits of the earth. Wall Street had to be and was "reassured" by the reappointment of Ben Bernanke as Chairman of the Federal Reserve Board.

Reappointing Bernanke means approving of the $1 trillion in money supply offered to the banks and guaranteeing to Wall Street a continuation of the subsidies, payoffs and profits they have received or been promised over the past year -- and these are enormous.

Take Goldman Sachs, for instance. The firm paid $1.1 billion for the use of the TARP money that it recently paid back. But it got, in addition, an otherwise cost-free insurance on its $1 trillion balance sheet and on hundreds of billions worth of off-balance sheet liabilities that might otherwise have paid pennies on the dollar.

The deep guarantees that Bernanke gave to the entire financial sector mean that these firms can take enormous risks, "earn" above market returns and never worry about the downside. This is called "moral hazard:" your risk is covered by someone else so you take the risk and any gain and someone else pays any loss.

This means that Wall Street has an incentive to leverage, that is, borrow without limit, gamble wildly with other people's money, rake in the profits and otherwise repeat the scenario that brought on the crisis and recession we are now suffering through.

In the process, these masters of the universe screwed up everything they touched, except their own salaries and bonuses, as they brought the world to a near financial collapse and kicked off a recession of once-in-a-century proportions.

Along the way and in clear violation of our antitrust laws, Goldman Sachs, AIG, Citigroup, Bank of America and their brethren became "too big to fail." Actually, since their very existence threatens the stability of the system, they should really be too big to be allowed to exist. In the past 50 years, and with Fed approval, the 10 largest US financial institutions increased their share of financial assets from 10 percent to more than 50 percent.

That growth led to a real rip-off. In the last 40 years, the financial industry increased its share of GDP from 2 percent to 8 percent. Part of this might be just a naturally changing economy. Except that even after those gargantuan salaries are taken out, the industry still takes for itself 30 percent of total US profit. That 30 percent share of profit is basically theft because they do nothing that merits it.

The industry, of course, argues that its returns are commensurate with the contribution it makes to the economy. What nonsense! Fifty percent of the trades on the New York Stock Exchange are "programmed trading" which takes place without human intervention. And for that they received billions of dollars.

The largest salaries are paid for making “flash” trades at 1000th of a second faster than someone else. The traders receive salaries in the tens of millions while contributing no improvement whatsoever to the economic allocation of resources. All the money they receive is by definition misallocated and therefore undeserved.

These firms, with a little help from their government friends, are reporting record profits and obscene salaries and bonuses. They did not learn from the Long Term Capital Management crash nor the dot.com bubble nor the housing bubble and not even the near meltdown of a year ago.

In the meantime and in crisis, Bernanke broke every rule in the book and certainly at least stretched a lot of law to bail out the banks and the rich. He left the poor mortgage holder to lose his house.

Bernanke also set precedents in regard to contract and ownership law. He nationalized financial firms like Fannie and Freddie and AIG. He threatened to remove the management and board of directors of Bank of America if they tried to get out from under his protective wing. He was a partner in the seizure of the auto companies where contracts with workers and bondholders were voided without all the niceties of bankruptcy law.

You would think someone on Wall Street would hear the wake-up call. Instead, the Obama administration’s "re-regulation" of Wall Street was lobbied down to nothing.

Goldman Sachs, former and present, has a tight grip on government financial policy. They reappointed Ben Bernanke. They decide who gets bailed out. They decide what value will be put on assets. And they always look out for themselves first.

People who say they want their country back should be picketing Goldman Sachs, J.P. Morgan, Bank of America and that crowd, not the poor fumbling Congressmen and Senators who are, like us, trying to understand what comes next.

Healthcare Agonistes

2009-08-18T19:23:00.001-07:00

The Democrats are trying to do something about a faltering healthcare system. The Republicans have committed themselves to opposing anything the Democrats propose, the country be damned.

The healthcare issue deals with our most basic concerns, matters of life and death, ethics, and fairness. We need to have an honest discussion and debate. We are not getting it. All content and reason seemed to be irrelevant to the poisoned politics of the moment.

In the mainstream media, it all seems very clear. Citizens are portrayed as frightened over a feared intrusion of the government into their lives and they are showing up and shouting about it at town hall meetings. All that might be accepted as accurate were it not for the Republicans who are stonewalling everything in Congress and the conservative pundits who are stoking that fear with deliberate misrepresentation.

In normal times, those townhall disruptions would be democracy in action. But virtually all of the complaints are based on factually wrong information as the protesters are goaded to complain about things that are not true.

Manufactured idiocy is pervasive, from Sarah Palin’s “deaths panels” to accusations of socialism and comparisons to Hitler and fascism. Republican constituents seem primed to believe a dozen impossible things before breakfast. The fact that Republican politicians not only refuse to condemn but in fact repeat these absurdities exposes the politics behind the campaign.

Some of the errors and fabrications are tragically obvious. Thus, the “public option” that is so widely feared is nothing but a self-pay Medicare system. All of us over 65 are on Medicare. We love it and will fight to keep it. Until a month ago, polls showed 60 to 70 percent of the people want a public option like Medicare for all. But suddenly to extend it to others, even when they would have to pay for it, is dangerous, socialistic, fascist, and is going to take away their country.

The disinformation campaign is frighteningly effective. It used to be considered an urban legend but now it is on tape. The constituent demanded of his congressman, Bob Inglis (R.-SC), “Keep the government out of my Medicare!” Medicare Part A, the heart of the program, is a government-run, single-payer system. It is combined with Part B which is provided by private insurance companies. To Inglis’ credit, he tried to explain the facts but the indoctrination was too deep and the shouter would hear nothing of it.

Other mistakes are more subtle but also more tragic because the perpetrators know the damage they are doing. The accusation that the healthcare reforms would harm small business is a classic example because exactly the opposite is true.

We all know that most jobs are created by the small businesses that are the backbone of any modern economy. What most people don’t know is that we are falling behind internationally because our small businesses not only have to pay directly for healthcare but they have to pay twice as much as their foreign competitors pay in taxes.

In the U.S., startups, notoriously short on cash, can’t afford to pay healthcare premiums for their workers or even themselves. The bright, innovative and adventuresome entrepreneurs can’t afford to join, much less start, a small firm.

The U.S. is thus not getting the start-up small firms that it needs to compete in the modern world. As a result, the U.S. share of self-employed workers is second lowest among the wealthy countries. The US stands third from last in the share of manufacturing employment in small firms and in the share of workers in computer related services or research and development in small firms.

These kinds of distortions pervade our politics and our economy. Yet there is something more going on here. It isn’t just the misinformed “know-nothings.” It is also the conservative pundits and the Republican politicians who know better but are goading on the misinformed.

Nor should we let off the hook those blue-dog Democrats who are afraid to stand up and say it like it is. They also sin who only stand and wait.

Our politics have gone bitter. The Republicans are willing to kill healthcare reform or pay any price to undo the last election. And they are willing to abuse the disaffected to push their agenda.

The now famous Mr. Craig Miller who stood up demanding to be heard at Senator Specter’s Lebanon Pennsylvania town hall meeting, is a good example. He is probably an average working guy beset by the troubles and costs of our Great Recession. Because of the distortion machine, he blames the government and the Democrats for all the ills of the world. It got to be too much and he wanted to tell someone, to exercise his constitutional right to petition the government.

The Republican purpose is not legislation, prosperity or bipartisanship, it is to break Obama and make him a one-term president, whatever the costs to the country. The technique is to abuse people like Mr. Miller and anyone they can confuse or bamboozle.

Healthcare reform, an economic, social and medical necessity is long overdue. The delay until now just shows how rotten our political discourse has become.

It Is Not Over

2009-08-05T19:02:00.000-07:00

It Is Not Over

This “Great Recession,” crisis or whatever you want to call it, is not over. The financial industry and the press would like you to believe that the slow up in the fall of some statistics presages an upturn. That is wishful thinking or deliberate deceit.

It is probably not wrong for them to try to convince you the crisis is over because you’re thinking that it is has the potential to hasten the end. Just don’t bet your 401(k) on it.

The consensus view that the recession is ending ignores the two most salient facts in regard to this recession. First, this recession is being universally compared to previous postwar recessions when it is analytically an entirely different phenomenon. It tracks a different economic model through the jumble of GDP, CPI, unemployment rate, DJIA, M2 and all the other measures that purport to explain movements in our economy.

Second, this recession is accompanied by a first-class financial crisis which may be even more important to the future of our economy than the recession and it is something we are not doing anything about. The trillions of dollars poured in the economy are like blood transfusions when no one is closing the wound or otherwise caring for the patient.

Previous postwar recessions occurred because the Federal Reserve was slowing the economy to prevent inflation. Those recessions were part of the cyclical nature of an industrialized capitalist economy. When inflation threatens, the Fed raises interests rates and then waits for the economy to respond with a drop in the inflation rate and a rise in unemployment. They then reverse course, lower rates and in due time the recovery comes. Then of course, the process starts all over again.

This time the collapse in the economy came because the middle class, paycheck America, run out of money or places to borrow it. The economy had been sustained by a virtuous circle of borrowing against credit cards, mortgages and an ever greater inflation of assets. The good-times consumption from 1990 to 2007 was built on income borrowed from the Chinese and the illusion of wealth created by a financial sector endlessly relending money they did not have.

Working America did not have any real income increase because the financial sector was an illusion, the medical sector was taking an ever greater share of national income, manufacturing was outsourcing or moving offshore and unions were shorn of any real bargaining power.

Consumption makes up 60 to 70 percent of our GDP and as long as the consumer’s income is stagnant or dropping, GDP cannot rise and the recession cannot be over.

The financial crisis is a completely separate but interwoven analytical problem. Probably it should be compared to the financial crisis of 1907 rather than the banking crisis of 1932.

In 1907, the United States had no central bank or lender of last resort to maintain liquidity in the financial system. J.P. Morgan had been acting as a national bank for regional problems but even he could not handle the nationwide crisis that occurred in 1907.

The Federal Reserve Act of 1913, which established the Federal Reserve System as our national Bank, was a direct result of the financial sector recognition that someone had to control the money supply. The bankers wrote the law and took control.

It is not generally known that the Federal Reserve System is owned and run by the American banking system. In order to maintain that control, the private banks and the economics profession insist on the “independence” of the Fed from any kind of government involvement.

The Fed failed miserably in 1932 and again in the period 1987-07, the only two instances when they were called upon to do their job of protecting the structure of the system.

The New Deal did happen and its bold action to control the financial system through a series of watchdog agencies and division of power kept the system working..

The deregulation that began in 1980 was, in a sense, appropriate to a changing technology. It is just that the regulators mistook government for the problem and forgot the basic issues that brought on the 1907 and 1932 crises. The fundamental problem is that banks have no natural limit to the amount of money they are willing to create and use to pay themselves. Government has to control them.

This financial crisis will not be over until the people in the United States get spending money in their pockets and assume appropriate control over their own finances.
So far the stimulus package has been at most a palliative for an economy bleeding to death. The Fed is fighting any change, even a mere audit. A fundamental restructuring of the Fed and the whole financial structure is essential if our economy is to allocate resources with any kind of efficiency.
This crisis is nowhere near over.

A Time for Satire

2009-07-23T19:31:00.000-07:00

The only ones who get close to the truth are comedians. If you want the truth, go to Saturday Night Live, The Daily Show, The Colbert Report or any of the late-night TV comedian/talk shows. Their viewers are the best informed audience on television.

Politicians, whether it is Supreme Court Justice to-be Sotomayor or her Republican senatorial inquisitors, whether it is Governor “Soulmate” Sanford or Speaker Nancy Pelosi, none are willing to face, much less state for the record, simple facts that we all know are true. And the mainstream media aid and abet their avoidance of reality.

The agenda media from Rush Limbaugh and the American Enterprise Institute to Rachel Maddow and the DNC frame the facts so that they reinforce the existence of a preconceived world.

Then, the only honest outlet is satire. Satire at its best is the Daily Show putting on comparison video clips showing the shocked outrage of people during the Clinton impeachment and those same people later trying to excuse their own philandering. The mainstream media would have trouble being so accusatory.

That’s the way it is when our world is changing and the people controlling the media are becoming increasingly irrelevant. They deny reality to hold tight to the reins of power.

These power brokers, however, represent a dying system and are in a futile fight to maintain a world that the comedians are exposing as full of hypocrisy and sanctimony.

When the politics and economics of a country are in a state of fundamental flux, as is true now of much of Western civilization, the elites and the people they govern want to keep the world the way they think it ought to be.

This is a reoccurring theme in history and one that is fertile ground for satire.

In ancient Rome the classical satirists (Quintilian, Horace and Juvenal) appeared as the Republic collapsed and the Empire took over. In 17th and 18th century England, the satirists (Alexander Pope, Daniel Defoe and Jonathan Swift) ridiculed the disappearing but still powerful role of the king in a changing society. In France it was Francois Rabelais and Voltaire.

In America we had Benjamin Franklin, whose Poor Richard’s Almanac is now recognized as a brilliant work of satire. Later, in another period of upheaval, Mark Twain undermined the power structures with Huckleberry Finn. Satire hurts. That is why Huck Finn is still being banned.

Each of these flowerings of satire appeared in a time of change where satire was the only available means to confront power. When the powers-that-be are vigorously defending ridiculously out-of-date positions, comedians and satirists have no trouble provoking laughter exposing the self-righteous and sanctimonious denial of reality.

Now as ever, in a societal paradigm shift, we turn to the satirists and comedians to reflect what is really going on in our society. And satire is safe because it doesn’t push an agenda; it only intends to undermine the ridiculous. The best satirists are a-political.

So why is it that when you look around, you see that most of the comedians are Democrats? It is not that Republicans lack a sense of humor. Well maybe they do, but there is always Mike Huckabee to rescue their honor.

The lack of Republican satire arises from the fact that the base of the Republican Party, the very wealthy, the country-club businessmen and the religious right, are the vested interests who are working to maintain the system. They want to support, not satirize, the existing institutional structure.

Stephen Colbert and The Colbert Report, twinned up with Jon Stewart and the Daily Show, presents the classic example of what a satirist does. Colbert takes the statements of the politically and culturally powerful and parodies them to their logical extreme. He then mockingly supports this extreme and ridiculous position or demands that his interviewee do so. In the process Colbert exposes the hypocrisy and self-righteousness of the opinionated.

It is a time for satire. The pompous and pretentious are everywhere.

Morality: Sex and Business

2009-07-09T17:18:00.000-07:00

The parade of repentant politicians stepping up to confess their sins is like an old-time tent meeting: good theater, not much more.

Yet, like any good theater, it makes us think and exposes the foibles and contradictions of our lives. In this case, it exposes our self-righteous conflation of morality and sexuality and hopefully marks a tipping point toward a more adult approach to accountability and trust.

The hard core of the Republican Party is made up of old-line patrician wealth and corporate power aligned with the religious right. This partnering works for both so that the moral majority can burden the Republican Party with its agenda of family values but ignore business or public values.

America has always considered itself a righteous country, free from guilt or sin and living with a sense of justice and morality. Righteousness pervades the Declaration of Independence, the Constitution and the way that we think of who we are. America was, after all, founded on the basis of general principles that granted rights to all human beings and left behind in Europe the quarrels over religion, nobility and privilege.

Righteousness is, indeed, a virtue while self-righteousness, a narrow minded moralism and self-satisfaction, is a failing. Sometime, probably in the gaudy nationalism of the 1984 Olympics or the founding of Jerry Falwell’s Moral Majority, we moved easily from the former to the latter.

Along the road to self-righteousness, sexuality morphed into family values and family values morphed into morality. Core moral challenges became abortion, pornography, teen pregnancy, gay marriage and feminism to the exclusion of honesty, accountability and respecting your neighbor.

The major flaw in all of this is that errant sexuality is no big deal. Can anyone really take seriously a sanctimonious politician confessing that he found his “soul mate” on an Argentine dance floor or a notorious cheapskate who gets caught in his own web with $1000 a night hookers.

In the religious right scheme of things, all this sinning is forgivable and Governor Sanford is now likely to survive politically.

All this nicely distracts from the problem of American corporate morality where sex isn’t important but money is.

If the business of America is business, as Calvin Coolidge so aptly put it, then a moral country should have a moral business code and community. That is just what we do not have where money is concerned.

Business runs on trust. Trust demands accountability and honest dealings. Businessmen have to believe that their counterparties in any contract will perform as promised. The present financial and economic crisis finds its roots in the absence of trust and accountability.

From Enron to Bernie Madoff, we have seen a trail of deceit and double dealing. Investment bankers, hedge fund managers and, probably the biggest hypocrite of them all, Goldman Sachs were touting deals that they themselves were betting against and on which they made huge amounts of money.

Bernie Madoff was just another victim of the crash, albeit a crooked one. Those who caused the crash are not being held accountable. Contracts to pay golden parachutes to the bankers are sacred while contracts to provide pensions to workers are easily voided.
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Thousands of individuals have just achieved wealth that runs to hundreds of millions of dollars each All of that wealth was stolen from the 401(k)s, pension funds and mutual funds that invested in their fraudulent deals. There now exists a whole new culture of great fortunes behind each of which there is a great crime.

The honest and trustworthy small businessperson did not walk away with a great fortune. They and their workers are the ones who are the surest victims of this catastrophe. Their moral code of continued righteousness is what has cost them.

We are not about to have any parade of sinners confessing publicly how they did it and giving restitution. On the contrary, the crooks are still in charge calling the shots. They are even demanding bonuses to fix the problem that they created.

Morality is more than sex and family values. In the world we are going to create getting out of this crisis, we have to build a morality that respects trust and demands accountability. We have to go back and demand righteousness.

Iran and the Theology of Empire

2009-06-24T14:20:00.000-07:00

Deus vult -– God wills it -- was the battle cry of the Crusaders when they went against Islam in the 12th century. It is still the battle cry of all modern empires, including ours and that is the problem. President Obama has so far had the good sense to curb our imperial instincts and stay out of that bloody theological mess in Iran.

America is in the business of empire. The Jewish claim to be God’s chosen people is modest compared to American exceptionalism and its belief that we have a mission to remake the world in our economic and political image. This is the force pushing President Obama to tell the Iranians how to run their country.

Empires, by definition, impose their culture and value on others. Big power interference in the internal affairs of others is the modern face of imperialism. Thus it is imperialistic for the US to preach to Iran. We have a bad habit of doing more than just preach.

The US does not approach Iran with clean hands. With an unprecedented candor, President Obama admitted in his speech in Cairo that we had a hand in overthrowing the democratically elected government of Iran. We did it to protect American and British rights to Iranian oil. The unintended consequence of that CIA debacle was a whole new vocabulary of ayatollahs, sharia, burkas and the seeming acceptance of perpetual war. British Petroleum still lost the oil rights.

Besides, there are no good guys in the competition in Iran. The real power struggle is between two competing groups of clerics. The street demonstrators are mere theater even though people are dying. They are beside the point as long as the clerics continue to hold a monopoly on the use of force.

Even our own history demonstrates the futility of Empire. Originally, our empire was based rather openly on commercial interests. Like every Western empire since the Romans, when our commercial interests are at stake we first punish commercially. If that doesn’t work, we use our military to threaten to or actually invade. Often we use or abuse international organizations that we control.

Our offshore imperialism began in Latin America with what was called “gunboat diplomacy.” That version of empire began with Haiti, Nicaragua, Mexico, Honduras and especially Panama. It continues today with Cuba, Chile, Venezuela, Bolivia and Argentina.

After World War II, however, we tried to mask our commercial interests behind a sanctimonious civic theology of culture and values. This was our version of the British “white man’s burden.”

In the language of slogans, the values we advocated were democracy, which called for free elections, and liberty, which called for private property and markets. We were still very much protecting our sources of raw materials and our export markets. The imperialistic true believer or the naïve would say that it just happened that our commercial interests coincided with our political mission.

This transition from commercialism to political-military empire began with World War I and President Wilson’s Fourteen Points. That was when America first offered its vision of what a free world should look like. At the time, the U.S. Congress was still independent enough to reject that messianic vision.

Now the U.S. Congress is fully on board and continues to fund and vote for the imperial project even though, as in 2006, there is a clear electoral mandate to end it all.

America’s imperial project insists that America has not just the right but the obligation to make its democracy and liberty available to the rest of the world. As the exceptional country, we have a mission to bring freedom to the world. That others would want a theocracy, oligarchy or even, God forbid, socialism is not permitted under our mission statement.

There is nothing new in all of this because mission-driven imperialism is an old story. The sad fact is that every empire claims God is on their side as they subject nations and peoples to their faith systems. Fundamentalist Islam makes exactly the same claim as fundamentalist Americans: Deus vult.

The American project that insists that Iran and Iraq adapt our civic theology of liberty is no different than Islam posting outrageous fatwas or the British Empire picking up the white man’s burden.

Like every other empire, we insist that it is “the end of history” because, at last, we have discovered the self-evident truths that will now guide government for all times.

Thankfully, President Obama in his respect for the Iranian nation is making a change we can truly believe in. Now, if he would just show the same respect for Afghanistan and Iraq and a healthy disrespect for America’s imperial project …

6-9-09 The Rhetoric of the Cairo Speech

2009-06-11T10:23:00.000-07:00

President Obama has redeemed rhetoric as a tool of policy. He did it again with his speech in Cairo to the Muslim world. More importantly, that speech restarted America’s dialogue with the Arab-Islamic world and marginalized Al Qaeda.

Wikipedia says that rhetoric is the art of using language as a means to persuade. Yet, in our American practicality, an appealing style of speech is suspect. “Mere rhetoric” is a damning judgment, claiming that the statement, speech or argument is so much hot air and not worthy of reasoned response.

Despite this, we honor Presidents Lincoln, Roosevelt and Kennedy for their rhetoric. Obama has a gift that clearly puts him in their company. Each of his speeches, since his 2004 explosion on the political scene with the keynote address at the Democratic National Convention, has always been right on target with an inspiring, empathetic call to unity and progress.

Rhetoric is actually intended as such a tool of good. From ancient times to the 19th century, rhetoric was appreciated and even taught as a central part of a liberal education. Speeches of the past were memorized and studied. We know, for instance, that in preparing the Gettysburg Address Lincoln used Pericles’ funeral oration for the fallen Athenians.

I don’t know if anyone a generation from now will remember or study Obama’s speeches. If people do not remember, it is not because Obama has been vague and wandering.

Obama starts with the idea that words and convictions have power. Listeners start out captured by his sincerity. The trope that he uses most is his identification with some transcendent moment that all can share, which most often is a call for hope and change. He uses his personal story to bridge the gap between opposing groups whether they be black/white or Islamic/Christian. If the intrinsic meaning of what he says is not specific we all create in our own mind an acceptable idea of what he means.

Obama can pull all this off because he is a “boundary walker,” “The Brother from Another Planet.” He places himself as an outsider to both sides and that permits him to be genuine to both when he calls for unity.

Islam is particularly vulnerable to Obama’s use of rhetoric because it appreciates the written and spoken word. Islam understands the meaning and use of the concept of logos, or the word, as it appears in the beginning of the Gospel of John. With John, Islam identifies God with the Word.

The Bush administration gifted Obama with the situation almost tailored to his talents. The rhetoric of crusades and a war on terror (which sounded so much like “war on Islam”) is relatively easy to reverse. Obama’s candor (he admitted for the first time that we had instigated the 1953 coup against Mohammad Mossadegh in Iran) contrasts glaringly with the Bush/Cheney secrecy, denial of torture and language manipulation.

In the end it was Obama’s words of respect for Islam and for the aspirations of the Arabic population that created the possibility for connection.

Al Qaeda is probably the biggest loser.

Wars of choice, torture and imprisonment created such a successful recruiting program for Al Qaeda that they cost us years of warfare. This speech clearly undercut that effort through its appeal to the Arab street and its calling out of authoritarian and dictatorial regimes.

Dissident groups throughout West Asia and Africa heard a call to freedom from the United States. The Muslim Brotherhood, which now opposes everything American, must have been startled for it was originally set up to overthrow the Egyptian government.

The best part is what Obama has done to Osama bin Laden. Osama in his message at the time did not mention the Obama speech. Instead he condemned the American efforts to clear the Taliban and Al Qaeda out of Pakistan. Those efforts are clearly successful enough to disturb him. We are, finally, taking the battle to him.

President Barack Hussein Obama now has the opportunity to cut off not just the supply of suicide bombers but the whole stream of money and logistics going to Iraq, Afghanistan and Pakistan – if he can deliver enough of what Islam sees as necessary.

President Obama remains in a “conciliator” role that serves him well domestically, much to the dismay of his most ardent supporters on the left.

But if he wants to crush Al Qaeda completely, sometime in the not-too-distant future, he’s going to have to give up some of that and some of the convenient Bush doctrines that have us still imprisoning, torturing and killing far too many people in Islamic countries.

Kleptocracy

2009-05-27T17:39:00.000-07:00

Our governing elite failed us. They set up a kleptocracy: “a government that extends the personal wealth and political power of government officials and the ruling class at the expense of the population.” Klepto is the Greek word for theft.

The crisis was brought on by the kleptomania of the wealthy and the powerful but it did not diminish their arrogance or greed. The bankers who brought us this crisis are in proud control of the response. They are writing the rules that will determine who has to eat the $5 trillion in losses (taxpayers) and who will control the post-crisis financial system (them).

The bankers, investment houses, and insurance companies stole the most, caused the most damage and, of course, have the most power in a restructuring. They are already sending drafts of legislation to their congressional committees.

The bankers would abolish or limit the power of the institutions they were not able to buy: the Office of Thrift Supervision, The Comptroller of the Currency and the Securities and Exchange Commission. The bankers would place all power in a strengthened and even more “independent” Federal Reserve.

Most people don’t know that the Federal Reserve banks are owned and controlled by the banking industry. The Fed manages our money and watches over the banking system but it is completely free of any political oversight, influence or audit.

There is nothing public, political or democratic about the Federal Reserve banks, they answer only to the banking industry. The banking industry chooses the officers and members of the board. The boards of the regional Fed banks are supposed to have three members to represent the public. At the New York Fed, two of those slots are empty and the third is held by the CEO of GE! You wouldn’t dare make that up.

Or get this: the banks use life insurance, Wachovia $12 billion, on hundreds of thousands of their employees to fund bonuses and pensions for their executives.

But the banks, however larcenous, did not do this alone. This theft by power and privilege is shared with the Congress and the other partners that they finance: the military-industrial complex, the healthcare-insurance complex, the pharmaceutical industry and all the rest on these open conspiracies that rip off the public. A lot of people had to steal a lot of money for us to be bankrupt.

The Congress funds major defense procurement programs that even the Pentagon does not want. The privatization of the war in Iraq made billions for private firms and got renewed contracts for firms that consistently underperformed. Why we maintain military bases on a Cold War scale (737 bases in 130 countries) cannot be explained except as kleptocracy at work.

A single-payer universal healthcare system would show that the insurance companies spend $400 billion a year to deny coverage or limit benefits. Insurance companies now decide on what doctors will be paid and the type and length of your treatment. Already these superfluous insurance companies are fighting the inclusion of a public option in the Obama healthcare plan.

The pharmaceutical industry made sure they got a huge cut of the Medicare prescription plan which thereby costs us almost twice what it should.

The American agricultural industry is dominated by a very small number of firms that are, by definition, oligopolies that control their customers and their prices.

It took prideful arrogance and contrived incompetence on the part of all of these groups to bring us to the catastrophe we are suffering. But special blame must go to the Congress and the banks. The banks bought a willing Congress that schmoozed up to hundreds of millions in campaign donations and lobbying. Actually, most congressmen are kinda cheap to buy.

We are about to reset the system. In that process, we cannot allow the bankers their claim that only they understand the financial system. We cannot let defense contractors decide what they are going to be paid. We cannot allow the insurance companies to choose our doctors and our healthcare.

But mostly we cannot allow the Congress to continue to distribute the loot on the basis of who gives them the biggest campaign contribution. The wealthy and the powerful bought this crisis and with the Congress they are making the most of it.

If we let President Obama continue with Geithner’s surrender to Goldman Sachs and the Fed; if we are satisfied with a minimal patch-up job on healthcare; and if we excuse and accept the Bush policies in regard to the wars, we and he will have let them steal our future.

Recovery Now

2009-05-12T18:40:00.000-07:00

In mid-March on “60 Minutes” Ben Bernanke, Chairman of the Federal Reserve, stated that he detected “green shoots” suggesting a bottom to this recession in late 2009 and a recovery in early 2010. Convince people that the recession is over and you can deny them a chance for the change they can believe in.

This recession is about changing the system and reestablishing worker rights to the American dream. The pretense of a quick end to the recession is meant to deny them that.

Bernanke’s call for an end to the recession was supported by several additional “green shoots,” in particular, the slowing rate of job loss and reported profits in the banking industry. Despite the fact that these were phony statistics, a consensus quickly formed around a recovery in 2010.

What does that old warning say: “past performance is no guarantee of future results.” Well, the consensus, those who buy and pay for the news and the pundits, are projecting future results on the basis of past performance – and present hopes.

The average recession lasted 11 months and this one is already 18 months old. So it must be about to end! These are the same people who convinced your pension fund that it was safe to buy that mortgage because housing values have always gone up therefore they will always go up.

A 2010 recovery is a similar produced hallucination. Numbers by themselves mean nothing. They have to be part of an analytical model that explains why things happen. So why do recessions end? They end when people and businesses have the money to start spending and investing again. That is not happening.

In a structural recession, such as this one, consumption, investment and therefore employment go down because some groups don’t have the money to keep spending.

The recovery from a structural recession is generated not by monetary policy and action by the Fed but by an increase in spending on consumption or investment. Government usually primes the economy with a stimulus package of spending measures. We call this process Keynesianism.

America has a large economy and it is in a real, structural, Keynesian-type recession. A GDP of $14.5 trillion has slipped to $14 trillion. The civilian labor force of 154 million has 13.7 million now unemployed. Industrial production is now 69.3 percent of capacity, the lowest since 1967 when data were first kept. Personal consumption decreased 4.3 percent in the fourth quarter while non-residential investment decreased by 21.7 percent.

It took us 30 years of depressed wages and ever-growing debt to create this mess. We’re not going to get over it in 18 months. It just serves the purpose of the powerful to have us believe we will. The claim that “prosperity is just around the corner” is a deliberate do-nothing argument.

Our most basic economic problem is that the system is stacked against paycheck people. There will be no real recovery until we find a way to reestablish the income and wealth of the middle class. That will not happen so long as all the sources of money for consumers as well as businesses are drying up.

Wages have been stagnant since 1980 and now they are dropping. Real wages went down in April when the “increase” in average hourly earnings was less than the rate of inflation.

Increases in wealth could lead to increased consumer spending. Unfortunately household wealth dropped by $13 trillion since 2007, causing a drop in spending of $650 billion.

Investment spending could also help but is facing the same kind of pressure. Banks are deleveraging big-time and financing channels are still frozen.

Exports could also create American jobs and pull us out of this. The IMF projects the first global decrease in output since the Second World War and Europe and East Asia are in worse shape than the United States. We can expect no rescuing surge from export demand.

And it looks like American consumers are finally ending their debt binge. The recent increase of the savings rate from zero to 4 percent will decrease spending by an additional $284 billion each year.

There is simply no credible source of increased aggregate demand except the federal government and it has already taken its shot. The stimulus package of $780 billion, even with the multiplier of 1.2, is not enough to make up the gap.

The Bernanke-led consensus holds that the very busy Obama economic team got the stimulus right and that the Summers-Geithner team is stumbling toward a solution of the financial crisis. Then we won’t have to strengthen the workers with the Employee Free Choice Act nor will we have to re-regulate the financial sector.

At least that is what the recovery-now power brokers hope.

Shock

2009-05-12T18:39:00.000-07:00

One thing the neocons taught us: if you want fundamental change have a crisis. The “Shock Doctrine” as advocated by Milton Friedman & Co. says that economic oligarchs use the occurrence of economic shocks to create privilege for themselves and to limit the freedom of ordinary citizens.

Our current crisis did indeed threaten a meltdown of our economic and financial system. But out of that we got the opportunity to address the problems that were impoverishing us as a nation.

This Great Recession is first of all an economic problem and only incidentally a financial crisis. It is not like the recessions that we have seen in the past 60 years. It was brought on because the working people of America ran out of money or places to borrow. Something had to happen.

The most serious problem we face is, therefore, the lack of purchasing power on the part of the middle-class. That problem began in the 1980s with the deliberate crushing of the labor movement, enormous tax cuts for the rich, a sharp increase in Social Security taxes on working families and a general assault on the American paycheck.

It took us 30 years to pile up this mountain of debt and get ourselves into this hole. It is going to take more than a year or two to get out. Progress will depend on how we as a nation respond to this shock.

First, we have to re-establish the buying power of working Americans. The $400 billion spending bill, the $780 billion stimulus package and the $3.6 trillion budget are all crafted to feed money to working Americans and get the economy moving again.

All of this comes even before the economy has hit bottom. Wisely we are not waiting Hoover-like. All of this purchasing power will be in the hands of the people just as the economy hits bottom and when they need it most. Natural economic and bureaucratic time lags mean that will be late 2009 to mid-2010.

Best of all, this spending turns the economy to investment rather than consumption and it does so in areas that we have long neglected: energy, education, healthcare and infrastructure.

The Economic Recovery Act and the budget respect and honor our environment. It is a bold investment worthy of an entrepreneurial America – and it is green. The age of denial and pseudo-science is over.

Those who complain that the money is not being well spent misunderstand Keynesian economics. In a depression economy, John Maynard Keynes wanted government stimulus money spent on investment. But, because that might take too long, he also suggested that they could just as well bury money in milk bottles and let people dig them up or they could build pyramids in the South of England.

What the Obama administration is doing in regard to a stimulus package is right on target. In this regard, the first 100 days could not have been done better.

Then there is the other half of the problem. The cure for the financial crisis in our banking system faces entrenched opposition. The large, “too big to fail”, banks are determined to dictate terms that will maintain them in their power position in the economy. The bankers want to use this shock to maintain their enormous wealth, outrageous paychecks and bankrupt banks, despite what they did to the economy with their incompetence and corruption.

These banks have to be made susceptible to failure and the administration has not yet found a way to do this.

Last weekend, Rahm Emanuel, Obama’s Chief of Staff, said that the Administration is now ready to convert the loans made to these banks into equity. That would put the government in an ownership/control position.

The government would then be able to force the banks to furnish the necessary finance for the investment generated in the stimulus package. We the people, through our Executive Branch, would then again be in charge of the economy.

So things are looking up.

Rahm Emanuel has been criticized for saying: “a crisis is a terrible thing to waste.” Well, he’s right.

Famously, the Chinese character for crisis is also the character for opportunity. Honesty demands that we recognize that Obama would not have happened without this crisis coming when it did. The recognition of our needs in energy, education and infrastructure and the restructuring of our financial system to serve the people would not have had a chance in the absence of this severe crisis.

What Rahm Emanuel and the Chinese recognize is that the Shock Doctrine can work the other way as well. We the people can seize this crisis/opportunity to take back the control of our economy. So let’s push Obama and our Congress to do that.

The Great (Structural) Recession

2009-04-16T08:05:00.000-07:00

The New Deal attacked the causes of the Depression head-on. It rejected the unregulated market structures and ideology that created the economic inequality of the 1920s. The Obama administration has to do the same thing if we are to end this Great Recession.

The shift since 1980 back to unregulated market structures is the root cause of this recession. Deliberate action brought us the stagnation in wages, the loss of union bargaining power, the plague of home foreclosures and our tax system that is designed to protect the wealthy at the expense of payroll employment.

Virtually all other recessions since the Great Depression have been brought on deliberately by the Federal Reserve because of inflation or fear of inflation. A drop in GDP for two consecutive quarters defined a recession and signaled Fed success in slowing up the economy and dampening inflation. That is cyclical.

This recession is different: it is structural. The National Bureau of Economic Research (NBER), which sets the dates of a recession, did not use their usual rise and fall in GDP as a measure. Instead, they specifically cited a peak in “payroll employment” in December 2007 as the turning point in the economy.

Previously, employment had been considered a lagging indicator. In cyclical terms, employment is neither the determinant of recessions nor the deepest concern of policymakers. The NBER, in its statement setting the onset of this recession as December of 2007, did something unprecedented but appropriate. It said the problem is structural: we worry about employment now.

This change to payroll employment means that the NBER was referencing not a cyclical decline in output or financial activity but the structural drop in basic aggregate demand as reflected in the number of people on a payroll. Payroll employment measures how much workers can buy and therefore predicts subsequent consumption patterns. It is one of the fundamentals

The indicator of a recession changed because of the nature of this recession. This is not something the Fed did because too much aggregate demand was causing inflation. Just the opposite is happening, too little demand is going to cause deflation. We have not seen this type structural “recession” since the 1930s.

When unemployment is recognized as the problem, all the talk about “green shoots” and a slow up in the ball dropping off the table become so much nonsense. All of this happy talk is just confidence building. It ignores the fact that all of the employment numbers are bad, getting worse and have nothing to do with the cyclical patterns of the past 60 years.

The unemployment rate will continue to climb, and probably stall at above 10 percent, at least into the fall -- and no one can see further ahead than that.

Consumer spending, the engine of the economy, cannot recover until workers find a source of income. Unemployed workers can’t maintain spending unless they find a job.

The necessary payroll employment is unlikely to arise from new investment when investors (and paycheck families) are in the process of writing off $4 trillion in debt losses and $20 trillion in the stock market. And, in a worldwide recession, jobs will not come from increased exports. The government stimulus will definitely help but not until the fall and then who knows if it will be enough.

Until this structural problem is addressed, we are going to see workers continue to lose their jobs, their homes, their healthcare and their self-respect. This Great Recession will continue until we recognize that this is not a cyclical downturn that will cure itself.

Our economic team – Larry Summers, Tim Geithner and, mostly, President Obama – has to recognize the structural nature of the problems that an unregulated market imposed on our economy, especially the losses incurred by paycheck families as income was transferred to the wealthy.

In the mid-1970s the richest 1 percent got just 9 percent of the national income. By 2006 they were getting 20 percent. That looting took place at the expense of the bottom 40 percent.

This President should not have to be told that the only successful safety net is a good-paying job.

We have to restructure the job market, get money back in the hands of working families and bail out payroll employment, not rich bankers.

Economic and Social Revolution

2009-04-02T18:19:00.000-07:00

Revolutions are started by the arrival of new technologies. These gales of creative destruction force a society to react and, in effect, revolutionize the way things get done. When it is time, as now, there is no way to put it off and we don’t want to.
The present mess is probably going to be worse than it needed to be because our government and corporate elite delayed and de-regulated rather than re-regulated our markets. They postponed the changes in order to continue to game the system.
The present storm, however profound, is only the first in a series. More importantly, the subsequent financial and economic recovery, whether done well or badly, will determine our response to the other storms that necessarily follow this one.
There is a pattern and it will be repeated. Efficiency-creating but disruptive innovation blows like a hurricane in some sector of the economy. In the process, the old rules become obsolete because they are not applicable to a new set of facts. The elite are able to capture ever more of the rewards while all the costs are pushed off onto society as a whole. Finally, the costs become unbearable, the system freezes up and we have crisis.
In the case of finance, efficiency-creating but disruptive innovations led to new profit opportunities in derivatives, securitization and a shadow banking system. These innovations did not fit the legal safety net that enforced standards of prudence and accountability.
Wall Street bankers were able to slide out from under regulation and set up a new system where no rules applied to them. They collected the rewards of imprudent risk-taking while pushing the actual costs of that risk off onto unsuspecting stockholders and now bewildered taxpayer.
Finally, the economic system, despite soaring asset values, could no, longer generate the income necessary to pay the interest. Inevitably, this bubble burst and the house of debt came tumbling down -- on us as taxpayers and stock holders.
New technology is now similarly threatening a list of economic and social sectors where continuing lack of response promises wrenching revolution.
We have a carbon-energy driven economy that faces peak supply just as wind, solar, tidal and who knows what want to compete. Yet we follow the same self-destructive pattern. We bolster the old system as we allow the petroleum and coal industries to squeeze the public for profit and the government for subsidy.
It isn’t just finance and energy. Our social geography is structured around the automobile. Yet the auto industry executives seem to think a few more billions in bailout money is just the thing to make up for their decades of inefficiency and oligopoly profits. .
Infrastructure of every kind fits the model. That is why our crumbling interstate system is being privatized and the West is running out of water. The environment is just as bad, maybe worse. Our public utility infrastructure is at a tipping point to disaster.

Other public institutions with ripe new technologies, and with social costs coming due, include: medical care, education, food safety and adequacy, the military-industrial complex, and even the structure of the family. We are in the process of resetting the values in all of these areas.
Every revolution is a counterrevolution to the one that came before. Ronald Reagan gave us his free-market-deregulation-privatization revolution. This was essentially a counterrevolution against Lyndon Johnson’s war on poverty.
Now Barak Obama will have to harness the technology of the millennium with its transparency, accountability and community to his revolution. His administration seems to know this since his stimulus package promises money to all kinds of new science and technology.
Danger comes with revolution. First, the leaders of the previous revolution fight to keep their privileges and they still have the levers of power. Second, revolutions have an infinite number of possible outcomes and at this stage no one knows what package of values we will end up with.
The economic and social revolution we are now embarked upon is unavoidable but we will see the benefits only after we have paid the cost of resetting the values of our whole social structure.
We have to be proactive or the revolution could fail with all the horrible costs and no change. Embrace the revolution and 2020 could be an economic and political paradise.

An Efficient Healthcare Payment System

2009-04-02T18:17:00.000-07:00

President Obama apparently accepts the conventional wisdom about the failure of the Clinton health-care program: that the very powerful economic and political interests that roused the country’s fear of socialism to block Hillary-care will again be able to block a universal, single-payer system. So Obama isn’t even going to try.
Is he right to concede this point? That depends: first, is the public perception of a single payer system really that bad and is the cost of wiping out the private insurance companies really economically and politically intolerable?
We know that the Republican message machine is working very hard to label Obama with the dreaded socialist stigma. But the polls show that message is being seen for what it is, an admission that the right wing has no constructive ideas and is reduced to negative smear tactics at the Rush Limbaugh level.
The American public is aware how crazy that Republican claim is. Only a couple of months ago the Bush administration “nationalized” half the banking system without hesitating for a moment. That ploy is backfiring.
The Obama administration knows this and is making decisions based on that fact. In the student loan program, they are quite willing to cut out the private sector middleman to make that program more efficient despite the whining complaints. The government already guarantees all the loans and would save about $4 billion per year.
Yet we have to admit that the huge savings that could come from eliminating the insurers from the healthcare industry would come at the expense of a specific group of people.
That brings us to the fact that changes in government programs, instituted for the common good, often concentrate their impact on specific industries or localities. Sometimes the government compensates, pays off, the losers and sometimes it does not. Eminent domain constitutes such compensation.
In 1960, when trade liberalization was being considered, President Kennedy said: “[T]here is an obligation to render assistance to those who suffer as a result of national trade policy.” The Trade Adjustment Assistance Program was then instituted and has for years assisted workers, firms and communities that were adversely affected by increased imports. The president’s stimulus package, The American Recovery and Reinvestment Act on 2009, expanded the coverage and enhanced the benefits of this program.
Change the word “trade” to “healthcare” in President Kennedy’s statement and it is applicable to implementation of a single-payer healthcare system.
The medical insurance carriers will argue, that a single-payer system would wipe them out and the cost of the adjustment process would be enormous. They have a point: the direct health and medical insurance carriers employ 450,000 workers with an annual payroll of $22.7 billion.
No harm would come to the medical care of the American people by ending the role of the insurance companies. Most of that payroll cost, and other administrative costs, are employed largely in shuffling claims and determining how to deny benefits, tasks which would disappear under a single-payer system. Virtually everything that the medical insurance carriers do constitutes a make-work project.
The medical insurance carriers administer benefits of approximately $356 billion with those 450,000 people and their payroll of $22 billion. Compare that with the Social Security Administration which administers benefits of $700 billion with 80,000 people and total administrative costs of $10.5 billion.
The general question of compensating the economic losers is a legitimate economic and moral issue that is not settled. What do we owe people when their lives are impacted adversely by government policy? Conversely, we do not expect specific winners to pay the compensation.
The question reaches from simple eminent domain to reparations for wrongful conviction and imprisonment to assistance for trade or healthcare impacted firms and workers.
The question does get sticky. When western cattlemen demanded compensation for the loss of subsidized grazing rights, they were rebuffed because it meant that welfare recipients should likewise receive compensation for lost benefits.
The moral question of whether or not to buy off the medical insurance carriers and their employees is an unsolved political issue that we can only fight about. The economic question, on the other hand, can be settled rather simply by doing the arithmetic. The example of the rest of the world shows you can get far more medical care for far less money without insurance companies.
Single payer is still the most efficient way even if you buy off those 450,000 workers. And that would be the bold change that Obama promised us.

The first thing we do, let's kill all the economists

2009-03-05T06:21:00.000-08:00

The sorry truth is, economists are largely responsible for the crisis. They implemented the mainstream free-market model and it failed.

Over the last 30 years, mainstream economists, with their faux Nobel prizes, were not worried when others whined about unsustainable distortions. The mainstream economists assured the world that their working models could forecast and their monetary tools would ward off any serious instability. Recessions and minor business cycles are normal but there would be no serious economic downturns, financial crises or global panics.

Now we know better. All of the macro economic and financial models constructed with such mathematical elegance over the past three decades failed when applied to the real world. Forget the subprime borrowers, shady lenders and speculating hedge fund managers. The mainstream economists blew it.

To understand how this economic and financial mess happened and speculate when it might be over, you have to go back to the arrogance of a specific group of economists called the “Committee to Save the World.”

That is what Time magazine called then Secretary of Treasury Robert Rubin, Deputy Secretary Larry Summers and Fed Chairman Alan Greenspan, in the late 1990s, when they famously put out financial brush fires in Mexico, Russia, East Asia, Latin America and the United States.

Bailout packages for the lesser countries depended on their opening their markets to Western capital and methods and making themselves vulnerable to exactly the financial pandemic they are now being dragged into.

The Committee to Save the World was supposed to be the cop on the beat. Only now do we know how badly they failed us and the global economy.

The ruling model of how the financial system was supposed to work, what Alan Greenspan called an “ideology” or “conceptual framework,” taught that markets were automatic equilibrating mechanisms that maximize benefits to the community as a whole.

The problem is that even Alan Greenspan, the cock sure oracle of the Fed, now admits that the model is flawed: “The question is whether [a conceptual framework] is accurate or not. And what I'm saying to you is, yes, I found a flaw.”

The flaw that Greenspan admitted to was that self interested bankers will not self-regulate. The incentives when you are dealing with a common good are, as every second semester economics student knows, such that no individual gains from self-regulation while every individual can gain by cheating. That’s why people cheat.

The failure of this free-market ideology has been extremely costly for the US and the world. Mexico previews what is coming.

The Mexican bailout led to a 40 percent drop in real wages and a chaotic, failing state. In Mexico, kidnapping is the newest business model, government is based on graft and corruption and the only economic growth sector is narco-trafficking. All of Mexico’s social strife and “internal wars” are now spilling over into the United States.

The global economy is following Mexico downward, spiraling into a bubble bursting, credit crunching, self-inflicted depression.

This is not a place to tote up all the costs of this crisis. It is enough to quote Dennis C. Blair, the new Director of National Intelligence: the economic collapse is "the primary near-term security concern" for the country and has led to “increased questioning of U.S. stewardship of the global economy.”

When the crisis first hit, Secretary of Treasury Paulson, New York Fed President Timothy Geithner and Fed Chairman Ben Bernanke formed a new “save-the-world” committee. Unfortunately, they continued to implement the deregulation model which, in this case, meant funneling money to the rich expecting trickle-down.

This resurrected committee forced $350 billion on the banking industry and it all trickled up. Robert Rubin, who Marketwatch noted had been chosen as one of the 10 most unethical business people, resigned from Citibank with $116 million of that money.

President Obama has appointed his own reincarnated save-the-world committee. Weirdly, it is made up of, again, Larry Summers, again Timothy Geithner, and again Ben Bernanke. Does the president think these guys have had a change of heart?

Many economists never ascribed to Greenspan’s deregulation ideology, saw the crisis coming and now vigorously disagree with what Larry Summers is doing. These include, my favorites, Joseph Stiglitz, Paul Krugman, Robert Reich, and Robert Kuttner. Also Paul Volcker, who should be moved to the inner circle for he is to Summers and Geithner what a distinguished professor is to an undergraduate and a high schooler.

These economists saw this crisis coming and they now advocate that the Keynesian economics being applied to stimulate the economy also be applied to the repair of the financial system.

Economists should assume responsibility for this crisis which will be over when President Obama finally fires Larry Summers and appoints Paul Volcker as head of the National Economic Council.

Put the Banks Out of Our Misery

2009-02-19T13:12:00.000-08:00

Suddenly, everyone wants to nationalize the banks. Why, in the United States of private property, would the federal government even in this crisis want to seize, good heavens - socialize, the banks. Let us note that President Obama and Secretary of the Treasury Geithner are not yet on board. So why is everyone else, even Senator Lindsey Graham (R-SC), so ready to act?

Because the situation is dire and the solution is clear: the channels of finance or clogged with toxic assets and the FDIC is in the business of selling toxic assets and nationalizing failed banks.

All our major banks are bankrupt and the banking system itself is frozen because the banks do not have any money to lend. That is because they have on their books a vast store of subprime and other securitized toxic assets that no one knows the market value of. The system doesn’t begin to move till we get rid of that burden of bad debt.

Remember way back a couple of months ago when Secretary of the Treasury Hank Paulson threw the then unprecedented sum of $350 billion at the banks. It was supposed to recapitalize the banks by buying up those troubled or toxic asse ts. That money disappeared without a ripple.

The situation now is appreciably worse and trillions could disappear in the same manner if the government tried to just buy or guarantee those assets.

The money machine that is our banking system is an amazingly efficient operation. Banks act as intermediaries between savers and investors. Banks accept your savings or they borrow money short-term at low interest rates and then lend that money long-term at a higher interest rate. The banks make money on the spread between interest rates and people, usually, get the money they need.. The money machine is that simple.

That machine can get into trouble, first, if everyone wants their short-term money at the same time: see Jimmy Stewart in “It’s a Wonderful Life.” The New Deal made this problem obsolete with The Federal Deposit Insurance Corporation (FDIC). Your funds are now insured by the federal government.

Next, banks can also get themselves into trouble when they get greedy with this marvelous money machine. They have to make prudent loans to be able to pay back their depositors and the people who lend them money. When the bankers make a mistake, the FDIC doesn’t pay out money, it takes away their bank.

The particular, greedy mistake banks made this time around was to lend huge amounts long on subprime and other poor credit risks. When these loans went bad in the trillions, it wiped out the banks reserves and even their entire net worth. Those troubled or toxic assets are still on the books and no one knows the value because there is no market for them. The banks are continuing to list them at their original price and pretending their banks are still solvent.

Those high risks paid high interest rates and correspondingly high profits for which bankers were paid high bonuses. They have continued to take the bonuses even as the value of the assets plummeted and the firms they worked for went broke. They deserve to be lose their banks.

Even should the federal government give the banks trillions of dollars, the banks could not afford to lend that money. They would have to hoard those dollars to shore up their capital base hoping to avoid bankruptcy.

The federal government actually has in place already the means to take care of the problem. We just have to let the FDIC do what the FDIC does. It seizes banks that it finds insolvent, gets rid of the failed managers and their enabling boards, sells off the toxic assets for what they will bring, starts the lending machine going again and then the bank is resold to the private sector.

The FDIC calls it a “purchase and assumption agreement” but a forced federal purchase by any other name is still nationalization. Nationalization is what the federal regulators do to insolvent banks. So, let’s not be spooked by the word and just get on with it.

If seizure and sale is good enough for CenterState Bank, Magnet Bank and Suburban Federal Savings Bank, all in the past month, then it should be good enough for Citibank and Bank of America next month.

This situation is not unique. The semi-socialist Swedes were in our situation and they nationalized their banks, sold off the toxic assets, turned a profit for the people and then re-privatized the banks. The Japanese, on the other hand, tried through the 1990s what Secretary Timothy Geithner is trying to do now, that is, act as though the banks were not broke and can muddle through. Japan stagnated for a decade.

Also to the point, the American regulators nationalized the bankrupt savings-and-loans in the 1980s, sold off the toxic assets and got it right.

What’s wrong with doing that again, admittedly on a larger scale? Get with it Secretary Geithner and Mr. President, every one else, including now even Alan Greenspan, is ready to do what has to be done.

An Open Government

2009-02-06T08:46:00.000-08:00

The joy on the National Mall and across the world was justified. The wars will not end tomorrow and our economy will not right itself over night but something more important is happening: we, the people, get our government back.

Secrecy is designed to make self-government impossible and we have just lived through an age of secrecy.

That age is now over. Openness is at the center of President Obama’s style and the way he is governing. This is a stunning change.

The secrecy began eight years ago with Vice President Cheney’s energy task force and subsequent policies. We never knew who was writing the rules or what the rules were. We drifted from a government of, by and for the people to a Star Chamber-like government of secret kidnappings and secret imprisonments. That secrecy was instigated not to protect national security but to keep us from governing ourselves.

Obama, on the other hand, has set up a series of public task forces chaired by Cabinet officers: on Middle-Class Working Families, on Detainee Disposition and on Interrogation and Transfer Policies.

Obama’s openness, outreach, transparency or whatever you want to call his inclusiveness in action and purpose, extends from family and neighbors to friends and foe alike and even to the city of Washington and to the world.

Even before the inauguration, President Obama made it clear that he personally, and his government, will not be a captive in the White House. He goes out to where the people mingle.

Some of it is just Obama having fun as when he went with Michelle to Bobby Van’s steakhouse, when he showed up at Senator Dick Durbin’s party at the Equinox restaurant or when he went with the DC Mayor to Ben’s Chili Bowl for a half smoke sausage. Obama said he intended to be a friend to the city. The mayor and the local restaurant industry consider him such already.

Obama has thrown the White House open in an almost Jacksonian fashion; cocktail parties rather than tapping a barrel of whiskey. . He invited Republicans and Democrats to the White House for a Super Bowl watching party

He is having his extended family come to his home. He has that tight community of family and friends where Barak was at first, Michelle’s husband. They plan for regular monthly get-togethers in the White House to keep the Obama’s from being isolated. We as a nation are about to learn to appreciate the strength and power of the black family which is going to be on full view.

Obama is also reaching out to the world and those who might oppose him. His first interview as head of state was with Al Arabiya , an Arabic news agency. He reached out to the Arabs, the group with whom we have the most serious misunderstandings

Then he went to the group with the next most serious misunderstandings, the Congressional Republicans. It matters little that none of them thereafter voted for the current version of his stimulus package. The point was a civil discourse where he explained his line of reasoning and he listened to theirs.

His trip to the Republicans was more than symbol and he will continue to reach out as he and they get past the acrimony and partisanship we have all endured.

The substance is there to back up these symbols. Attorney General Ashcroft said: “When you carefully consider FOIA [Freedom of Information Act] requests and decide to withhold records, in whole or in part, you can be assured that the Department of Justice will defend your decisions.” Obama’s response is a bit more open: “The Freedom of Information Act should be administered with a clear presumption: In the face of doubt, openness prevails.”

Other fruits of this change in style are already apparent. His cabinet may not be a “team of rivals” but it will contain: the hold over Robert Gates at Defense, and Republicans Ray LaHood at Transportation and Senator Judd Gregg at Commerce.

This openness promises a more Lincolnesque government. But one that we can be part of because we know what it is doing and we can relate that to our own aspirations.