Selling Social Darwinism

Robert Reich has a blog that is well worth following. He is a knowledgeable person with the facts and the social empathy to present an honest account of the situation that the 99% find themselves in.

Here is his latest post:

The Republican Myth of Obama's "Entitlement Society"

One of the few things Mitt Romney and Newt Gingrich agree on is that President Obama is turning America into “European-style welfare culture.”

In his standard stump speech Romney charges Obama with creating a nation of dependents. “Over the past three years Barack Obama has been replacing our merit-based society with an entitlement society.”

Gingrich calls Obama “the best food-stamp president in American history.”

What’s their evidence? Both rely on federal budget data showing direct payments to individuals shot up by almost $600 billion, a 32 percent increase, since the start of 2009.

They also point to Census data showing that 49 percent of Americans now live in homes where at least one person is collecting a federal benefit – Social Security, food stamps, unemployment insurance, worker’s compensation, or subsidized housing. That’s up from 44 percent in 2008.

Finally, they trumpet Social Security Administration figures showing that the number of people on Social Security disability jumped 10 percent in Obama’s first two years in office.

They argue our economic problems stem from this sharp rise in “dependency.” Get rid of these benefits and people will work harder.

They have cause and effect backwards. The reason for the rise in food stamps, unemployment insurance, and other safety-net programs is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. They and their families have needed whatever helping hands they could get.

If anything, America’s safety nets have been too small and shot through with holes. That’s why the number and percentage of Americans in poverty has increased dramatically over the past three years, including over a third of families with young children.

One scandal, for example, is that only 40 percent of the unemployed qualify for unemployment benefits because they weren’t working full time or long enough on a single job before they were canned. The unemployment system doesn’t take account of the fact that a large portion of the workforce typically works part time on several jobs, and moves from job to job.

Republicans also object to Obama’s health care law, which covers 30 million more Americans than were covered before. But it still leaves over 20 million without health insurance. They’ll get emergency care when they’re in dire straights — hospitals won’t refuse them — but we all end up paying indirectly.

Regressive Republicans pretend they’re about opportunity. In reality they’re back at what they’ve been doing for years — promoting Social Darwinism.

Go read his blog.

The manipulation of statistics to sell their Social Darwinism is utterly cynical. The political right knows that it is lying. It isn't naive. But it trusts in the big lie technique. They know that if they repeat their right wing lies long enough and through enough media, most people will assume it is true because the message is so prevalent.

I remember being incredulous when I matured and discovered that my father believed that if something was printed it had to be true. In his mind, nobody would go to the expense of printing something unless it was true. I could never change his mind. He proved to me just how effective a propaganda campaign could be. He lived a life believing falsehoods simply because "they were printed" and I could never change his mind because my arguments were "just words" and he refused to look at the printed material I presented to him. Propaganda can be very, very effective.

Robert Reich Addresses Occupy LA

Here is a talk by former Clinton Secretary of Labor, Robert Reich, to spell out the ugly details of the current crisis:



The tragedy is that Reagan and the Republicans laid the foundations for this crisis 30 years ago. Bush took a federal surplus and turned it into a multi-trillion dollar deficit. And now Obama has been in office for 3 years and frittered those years away without providing a big enough stimulus or working hard to get the unemployed back into jobs. America has suffered 3 decades of abuse by the 1%.

Stopgaps and Half Measures

Here is a bit from an article in the NY Magazine on the rising inequality in the US and the failure of policy makers to either admit the problem exists or come up with any policy to effectively deal with the problem. The Republicans deny it exists and the Democrats are willing only to propose partial remedies:

Over the last few decades, income growth for most Americans has slowed to a crawl, while income for the very rich has exploded. That’s a reversal of the three decades following World War II, when all income groups got richer, with the poor and middle class rising at a faster rate than the rich. Crucially, the Congressional Budget Office’s new analysis shows that changes in government policy over this period have made inequality worse. (In CBO-speak: “The equalizing effect of transfers and taxes on household income was smaller in 2007 than it had been in 1979.”)

We’re not having a debate about how to reverse or even stop the growth of inequality. Nobody has a real plan to do that. The Democratic plan is to slightly arrest the growth of inequality by hiking taxes on the rich a few percentage points, so as to minimize the need to cut the social safety net. The Republican plan is to slash taxes for the rich and programs for the poor, thereby massively increasing inequality.

That is a hard position to defend in the context of exploding inequality, and conservatives would rather not defend it. Instead the right’s response has been to persistently deny or ignore the facts. Rick Perry, pressed by a reporter to explain why he was proposing a tax plan that would widen income inequality further, replied, "I don’t care about that." The Wall Street Journal editorial page today dismissed the Tax Policy Center, whose calculations persistently show the ways in which various Republican tax proposals would widen inequality, as “liberal.” It didn’t even pretend to dispute the substance of the calculations. Eric Cantor gave a speech about income inequality centering on stories about how his grandmother worked hard and pulled herself up by the bootstraps in the old days. It was a nice speech if you like stories about plucky grandmothers. It failed to grasp the central dilemma, which is that it was a lot easier for poor people to move up sixty years ago, when tax rates on the rich happened to be far higher, than it is today.

...

The way to understand Ryan is that he’s deeply influenced by the theories of Ayn Rand, who believed that the root of all evil lay in attempts to alter the wealth distribution created by the free marketplace. Rand may have been a deranged cult leader, but she did live at a time when the fear of the poor devouring the rich had an actual real-world basis. She escaped communist Russia for the United States, Franklin Roosevelt — while not a reprise of the communists, as she mistakenly believed — really did denounce the rich and impose confiscatory tax rates. The world of Rand’s imagination bore a slight resemblance to the world she inhabited, but it bears no resemblance to the contemporary United States.

Ryan cannot process the realities of this world because they are so at odds with the imagined world of his ideology. After his speech, he was asked about the CBO’s report on inequality, and he brushed it off, falling back on Rand-esque lingo the virtuous rich (“takers”) and parasitic poor (“makers”):

“Let’s not focus on redistribution, let’s focus on upward mobility,” he said. “If these studies are used as justification for erecting new and more barriers for making it harder for people to rise, all that will do is reduce our prosperity in this country.”

“We’re coming close to a tipping point in America where we might have a net majority of takers versus makers in society and that could become very dangerous if it sets in as a permanent condition.

Don’t confuse Paul Ryan with the facts. If studies run up against Ryan’s ideology, then the studies must give way.

Sadly, the politics in America a deeply dysfunctional. No major party is addressing the concerns of the 99% so clearly visible in the Occupy Wall Street movement.

A Simple Picture of America

Rather than show the faces of 312 million people, here is a statistical distillation that captures what I consider to be the most profound fact about America:

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So much money in so few hands... no wonder the economy is slowly grinding to a halt. The vast majority have so little. They are watching their wages stagnate, many are unemployed, many have lost their homes, many are in poverty and they just don't have money to consume so their part of the economy keeps shrinking. Meanwhile, the few have so much and it keeps growing larger and they can't spend it all. A person can only spend so much, so these people end up sitting on bigger and bigger piles of gold and goodies. But when they spend such a tiny fraction of what they have the economy shuts down. The US is strangling itself because the bottom 90% have so little to spend and the top 1% have so much but after you've bought your 4th "500 foot yacht", you just don't have the urge to buy a half dozen more yachts. You can only sail on one at a time.

Robert Reich with a Call for Action

Looks like the Arab Spring might come to the United States...

Here is a post by Robert Reich on his blog calling for Americans to get out into the streets on Labor Day and protest:

Labor Day is traditionally a time for picnics and parades. But this year is no picnic for American workers, and a protest march would be more appropriate than a parade.

Not only are 25 million unemployed or underemployed, but American companies continue to cut wages and benefits. The median wage is still dropping, adjusted for inflation. High unemployment has given employers extra bargaining leverage to wring out wage concessions.

All told, it’s been the worst decade for American workers in a century. According to Commerce Department data, private-sector wage gains over the last decade have even lagged behind wage gains during the decade of the Great Depression (4 percent over the last ten years, adjusted for inflation, versus 5 percent from 1929 to 1939).

Big American corporations are making more money, and creating more jobs, outside the United States than in it. If corporations are people, as the Supreme Court’s twisted logic now insists, most of the big ones headquartered here are rapidly losing their American identity.

CEO pay, meanwhile, has soared. The median value of salaries, bonuses and long-term incentive awards for CEOs at 350 big American companies surged 11 percent last year to $9.3 million (according to a study of proxy statements conducted for The Wall Street Journal by the management consultancy Hay Group.). Bonuses have surged 19.7 percent.

This doesn’t even include all those stock options rewarded to CEOs at rock-bottom prices in 2008 and 2009. Stock prices have ballooned since then, the current downdraft notwithstanding. In March, 2009, for example, Ford CEO Alan Mulally received a grant of options and restricted shares worth an estimated $16 million at the time. But Ford is now showing large profits – in part because the UAW agreed to allow Ford to give its new hires roughly half the wages of older Ford workers – and its share prices have responded. Mulally’s 2009 grant is now worth over $200 million.

The ratio of corporate profits to wages is now higher than at any time since just before the Great Depression.

Meanwhile, the American economy has all but stopped growing – in large part because consumers (whose spending is 70 percent of GDP) are also workers whose jobs and wages are under assault.

Perhaps there would still be something to celebrate on Labor Day if government was coming to the rescue. But Washington is paralyzed, the President seems unwilling or unable to take on labor-bashing Republicans, and several Republican governors are mounting direct assaults on organized labor (see Indiana, Ohio, Maine, and Wisconsin, for example).

So let’s bag the picnics and parades this Labor Day. American workers should march in protest. They’re getting the worst deal they’ve had since before Labor Day was invented – and the economy is suffering as a result.

Something needs to be done to get Obama off his duff and doing something to represent the bottom 90% of the population instead of the top 1%.

A Change in Religion in the US

Here is a news release from the American Sociological Association highlighting a new trend where the less educated are leaving religion faster than the better educated:

While religious service attendance has decreased for all white Americans since the early 1970s, the rate of decline has been more than twice as high for those without college degrees compared to those who graduated from college, according to new research to be presented at the 106th Annual Meeting of the American Sociological Association.

"Our study suggests that the less educated are dropping out of the American religious sector, similarly to the way in which they have dropped out of the American labor market," said lead researcher W. Bradford Wilcox, a professor of sociology at the University of Virginia.

The study focuses on whites because black and Latino religiosity is less divided by education and income. Most whites who report a religious affiliation are Catholics, evangelical Protestants, mainline Protestants, Mormons, or Jews.

Relying on nationally representative data from the General Social Survey and the National Survey of Family Growth, the study finds that moderately educated whites—those who have a high school degree but who did not graduate from a 4-year college—attended religious services in the 1970s at about the same rate as the most educated whites—those who at a minimum graduated from a 4-year college—but they attended at much lower frequencies in the 2000s.

The least educated white Americans—those who did not graduate from high school—attended religious services less frequently than both the moderately educated and most educated in the 1970s and that remained the case in the 2000s. "The least educated have been consistently less religiously engaged than even the moderately educated, meaning the gap between the least educated and most educated is even larger than the one between the moderately educated and most educated," Wilcox said.

This is contrary to the impression you get from the media where televangelists are still going strong.

If this trend holds, this should be positive for the society because it is the manipulation of the religious evangelicals by the Republican party which has enabled to get wave of greed, fraud, and crime that has brought the economy down.

I'm upbeat about this direction, but the researcher Wilcox is more negative:

Wilcox views this disengagement among the less educated as troubling because religious institutions typically provide their members with benefits—such as improved physical and psychological health, social networks, and civic skills—that may be particularly important for the less educated, who often lack the degree of access to social networks and civic skills that the college-educated have.

I can see the viewpoint, but I also believe that religion, especially frenzied popular religion like evangelicalism harbours a large number of predatory "preachers" who suck money out of their poor congregations. This withdrawal from religion may be a sign that people have caught on that they have been robbed by the religious leaders. This may be a sign that they are taking more responsibility for their own lives.

But I can see Wilcox's viewpoint:

Because less educated whites are now less likely to be stably employed, to earn a decent income, to be married with children, and to hold familistic views, it makes sense that they also do not as often attend services at religious institutions that continue to uphold conventional norms, Wilcox said.

Time will tell if this is a postive change or a negative one.

Who is Doing the Looting?

Sure low lifes are on the streets of the UK looting shops, but the bankers are in "the City" and doing their looting quietly via the big banks and their schemes to defraud the public and the government.

Here's the discussion in the Keiser Report on RT:



This is an excellent comparison how petty criminals are frog-marched and punished (jail!) while the fine-tailored banker criminals are patted on the head and excused (bailed out!).

The interview with William K. Black is well worth watching at 15:00 into the video.

Don't believe fraud at the top? Read this bit from the Washington's Blog:

SEC Attorney Reveals that Agency Has Shredded Documents for Decades to Cover Up Wall Street Fraud

What should we make of the new revelations by Securities and Exchange Commission attorney Darcy Flynn (background here, here and here) that the SEC has been shredding documents for decades?

As many commentators have noted, the SEC did this to cover up fraud on Wall Street.

The Entire Government Strategy Is To Cover Up Fraud

William K. Black - professor of economics and law, and the senior regulator during the S & L crisis - says that that the government's entire strategy now - as during the S&L crisis - is to cover up how bad things are:

The entire strategy is to keep people from getting the facts.

Understanding Why Some Poor People Oppose Assistance to the Poor

Here is a theory of behaviour that I had never considered. It is counter-intuitive but after reading it, I can see the truth in it. But without the imprimateur of a scientific study, I admit that I wouldn't believe it.

Here are some details of a study reported in an article in The Economist magazine:

Paradoxically, as the share of the population that receives benefits in a given area rises, support for welfare in the area falls. A new NBER paper finds evidence for an even more intriguing and provocative hypothesis. Its authors note that those near but not at the bottom of the income distribution are often deeply ambivalent about greater redistribution.

Economists have usually explained poor people’s counter-intuitive disdain for something that might make them better off by invoking income mobility. Joe the Plumber might not be making enough to be affected by proposed hikes in tax rates on those making more than $250,000 a year, they argue, but he hopes some day to be one of them. This theory explains some cross-country differences, but it would also predict increased support for redistribution as income inequality widens. Yet the opposite has happened in America, Britain and other rich countries where inequality has risen over the past 30 years.

Instead of opposing redistribution because people expect to make it to the top of the economic ladder, the authors of the new paper argue that people don’t like to be at the bottom. One paradoxical consequence of this “last-place aversion” is that some poor people may be vociferously opposed to the kinds of policies that would actually raise their own income a bit but that might also push those who are poorer than them into comparable or higher positions. The authors ran a series of experiments where students were randomly allotted sums of money, separated by $1, and informed about the “income distribution” that resulted. They were then given another $2, which they could give either to the person directly above or below them in the distribution.

In keeping with the notion of “last-place aversion”, the people who were a spot away from the bottom were the most likely to give the money to the person above them: rewarding the “rich” but ensuring that someone remained poorer than themselves. Those not at risk of becoming the poorest did not seem to mind falling a notch in the distribution of income nearly as much. This idea is backed up by survey data from America collected by Pew, a polling company: those who earned just a bit more than the minimum wage were the most resistant to increasing it.

Poverty may be miserable. But being able to feel a bit better-off than someone else makes it a bit more bearable.

This is an almost classic case of "cutting your nose off to spite your face" except here the poor opposing aid are getting a benefit. A meagre one. But something of value to them. They can be smug in the distance between their own poverty and that of those who they are pushing down further into poverty.

Understanding the UK Riots

This video is probably the best example of why there have been riots in the UK. The BBC tries to do an interview but it is completely at cross purposes because the upper middle class reporter and the poor guy she is interviewing live in completely separate realities. She demonstrates exactly how "official" Briton simply doesn't get it. He is trying to tell his pain but she stops him because of "legal formalities" and then she goes on to label him as a rioter and he is dumbfounded and upset that she could make this accusation out of thin air. He had just been trying to tell her how the police "suspect" all blacks as thieves and criminals and she just labeled him as a rioter.

If you want to understand the riots, this video is an excellent education. An incompetent BBC reporter "interviews" Darcus Howe, a broadcaster and columnist, who lives in Brixton, South London, England:



He shows intelligence by trying to connect the riots in the UK with the world wide rise in youth violence and tries to connect it with a struggle for freedom and dignity, and she just wants to "cover" a riot using the standard rules of "what did you see" and "how did you feel" without trying to understand anything or put anything in context. Worse, she showed the huge divide between the haves and have nots by her completely lack of understanding of him, his pain, and his life. She has the audacity to label him a "rioter", a serious allegation, and she does it freely on the media. But when he tried to talk about a young man having his face blown off she stops him because that is "before the courts" and "you can't make that kind of allegation in the press". Nuts! She can label him a rioter with no evidence. He can't accuse the police of killing because of "legal niceties". What an absurdity!

Here are some bits from a useful article in the UK's Guardian newspaper:

The police shot a black guy in suspicious circumstances. Feral kids with no jobs ran amok. To Tony’s mind, this was a riot waiting for an excuse. In the hangover of the violence that spread through London, the uprisings seemed both inevitable and unthinkable. Over a few days in which attacks became a contagion the capital city of an advanced nation has reverted to a Hobbesian dystopia of chaos and brutality.

...

This is the most arcane of uprisings and the most modern. Its participants, marshalled by Twitter, are protagonists in a sinister flipside to the Arab Spring. The Tottenham summer, featuring children as young as seven, is an assault not on a regime of tyranny but on the established order of a benign democracy. One question now hangs over London’s battle-torn high streets. How could this ever happen?

Among several obvious answers, one is a failure of policing. The evidence so far points to more ignominy for the rudderless Met, as doubts emerge over whether Mark Duggan, whose death inspired the initial riots, fired at police. The stonewalling of Mr Duggan’s family precipitated the crisis, and the absence of officers to intervene in an orgy of looting led to a breakdown of order suggestive of the lawless badlands of a failing state.

...

The real causes are more insidious. It is no coincidence that the worst violence London has seen in many decades takes place against the backdrop of a global economy poised for freefall. The causes of recession set out by J K Galbraith in his book, The Great Crash 1929, were as follows: bad income distribution, a business sector engaged in “corporate larceny”, a weak banking structure and an import/export imbalance.

All those factors are again in play. In the bubble of the 1920s, the top 5 per cent of earners creamed off one-third of personal income. Today, Britain is less equal, in wages, wealth and life chances, than at any time since then. Last year alone, the combined fortunes of the 1,000 richest people in Britain rose by 30 per cent to £333.5 billion.

...

Financial crashes and human catastrophes are cyclical. Each reoccurrence threatens to be graver than the last. As Galbraith wrote, “memory is far better than the law” in protecting against financial illusion and insanity. In an age of austerity, there are diverse luxuries that Britain can no longer afford. Amnesia stands high on that long list.

Go read the whole article. It usefully explores the issues surrounding the rioting.

Why US Democratic Admininstrations are Better than Republican

From an article in Slate magazine, a graph showing how Democratic administrations have "grown the economic pie" to let everybody have a better life:

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What the rich don't like about Democrats is that relatively speaking, the rich slip a bit. Sure the economy grows, but the rich don't quite keep up with the growth of income among the lower classes. They clearly prefer Republican administrations that ratchet back growth but make sure that the lion's share of income growth goes to the very top of the economic pyramid. This is what the really wealthy like. This clearly moves them ahead of the mass of unwashed, undeserving "little people".

For more details about US income distribution, click here for a huge graphic with details.

Mom, Apple Pie, and the Republican Way

I see this as an "intelligence test" for contemporary America. Can you see something wrong in this picture?...


Most Republicans would say "What idiot allowed those poor people to get into this shot and ruined the glorious message presented by that wonderful poster?"

Most Democrats would say "Please give us a half a dozen or more years before you start criticizing us about unemployement. We are working as hard as we can within the limits of the system to get back 'The American Way' we all know and love!"

Most Progressives would say "That picture was a lie then and it is still a lie today. Sure there were some at the top enjoying the 'world's highest standard of living' but there were way too many who were poor and who were suffering, and that very problem is getting worse today because of bad political decisions and even worse economic decisions. America has achieved a society less segregated by race, but more segregated by wealth."

Instead of opening Congress with a prayer, I suggest that they open by having everybody look at this picture and 'share' with everyone else just what it is that they see in this picture.

Mortgage Fraud in the US

This is the sad fact that US banks are going to get away with fraud on millions and millions of home owners...

 

Funny... the little people lose jobs, lose homes, have their taxes go up, but the ultra-rich continue to get tax cuts, get no jail time, get their politicians to destroy the unions, and get to keep their TARP money and their bonuses. Who says America is not a great place to live if you are rich?

Best Selling Novelists for a New America

I think Stephen King is trying to help kickstart a populist left movement in the US:



Notice that he is complaining that he is only paying 28% of his income as taxes. He asks "Why am I not paying 50% of my income as tax?"

Last fall the father of Bill Gates tried to push a referendum that would raise taxes on the rich. But the kind and gentle people of Washington State voted that down. They said to their government "Please don't tax the rich, we love the rich, tax us instead!" And guess what? They won. The generous people of Washington State are happily supporting their rich people.

Hopefully the rest of Americans will agree with Stephen King and not with the clueless Washington State voters.

Oh... and I have some bad news for Stephen King. The rabble might want to go back to the last tax rates when America was growing strongly, the 1950s/early 1960s when tax rates for the seriously rich were at 92%, not 50%. From Wikipedia...

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Here is the same point made by a guy who knows politics. Here is a post by Robert Reich, he was Bill Clinton's Secretary of Labor:

The Birth of the People's Party

Look at the outrage in Madison, Wisconsin. Look at the crowds in DesMoines, Iowa. Look at the demonstrations in Indiana and Ohio and elswhere around America.

Hear what they’re saying: Stop attacking unions. Stop making scapegoats out of public employees. Stop protecting the super-rich from paying their fair share of the taxes needed to keep our schools running.

Stop gutting the working middle class.

Are we finally seeing average Americans stand up and demand a fair shake in an economy now grotesquely tilted toward the wealthy and the privileged? Are Americans beginning to awake to the fact that our economy now delivers a larger share of total income to the very top than at any time in living memory? That big corporations are making more money and creating more jobs abroad than in the United States?

That this concentration of income and wealth has so corrupted politics that corporations can extort whatever they want from the government — tax breaks, loan guarantees, subsidies — while the super-rich can take most of their income as capital gains (taxed at 15 percent), and the rest at the lowest top rate in 25 years? And that because of this our kids are crowded into classrooms, our streets and highways and bridges are falling apart, and our healthcare bills are out of control?

The Tea Party grew out of indignation over the Wall Street bailout — an indignation shared by the vast majority of Americans. But the Tea Party ended up directing its ire at government rather than at big business and Wall Street. Was this because billionaires Charles and David Koch and their like funneled money to the Tea Party through front organizations like Dick Armey’s Freedom Works, and thereby co-opted it?

Now we may be seeing the birth of a genuine populist movement. Call it the People’s Party. Like the Tea Party, the People’s Party doesn’t have a clear organization or hierarchy or single address. It doesn’t have lobbyists in Washington. It’s not even yet recognized by the mainstream media.

But the People’s Party seems to be growing in numbers and in intensity. And it’s starting to push elected officials — first at the state level — to listen and respond.

Political Blather about "Burdening Our Children"

Here's a bit from an excellent NY Times op-ed where Paul Krugman lays open the Republican lies about worries over burdening the next generation:

Now, politicians — and especially, in my experience, conservative politicians — always claim to be deeply concerned about the nation’s children. Back during the 2000 campaign, then-candidate George W. Bush, touting the “Texas miracle” of dramatically lower dropout rates, declared that he wanted to be the “education president.” Today, advocates of big spending cuts often claim that their greatest concern is the burden of debt our children will face.

In practice, however, when advocates of lower spending get a chance to put their ideas into practice, the burden always seems to fall disproportionately on those very children they claim to hold so dear.

Consider, as a case in point, what’s happening in Texas, which more and more seems to be where America’s political future happens first.

Texas likes to portray itself as a model of small government, and indeed it is. Taxes are low, at least if you’re in the upper part of the income distribution (taxes on the bottom 40 percent of the population are actually above the national average). Government spending is also low. And to be fair, low taxes may be one reason for the state’s rapid population growth, although low housing prices are surely much more important.

But here’s the thing: While low spending may sound good in the abstract, what it amounts to in practice is low spending on children, who account directly or indirectly for a large part of government outlays at the state and local level.

And in low-tax, low-spending Texas, the kids are not all right. The high school graduation rate, at just 61.3 percent, puts Texas 43rd out of 50 in state rankings. Nationally, the state ranks fifth in child poverty; it leads in the percentage of children without health insurance. And only 78 percent of Texas children are in excellent or very good health, significantly below the national average.

But wait — how can graduation rates be so low when Texas had that education miracle back when former President Bush was governor? Well, a couple of years into his presidency the truth about that miracle came out: Texas school administrators achieved low reported dropout rates the old-fashioned way — they, ahem, got the numbers wrong.

It’s not a pretty picture; compassion aside, you have to wonder — and many business people in Texas do — how the state can prosper in the long run with a future work force blighted by childhood poverty, poor health and lack of education.

Krugman points out that Texas has a big budget deficit because the Republicans hid the problem until they won the elections and now the question arises "how to deal with the deficit?":

So how will that gap be closed? Given the already dire condition of Texas children, you might have expected the state’s leaders to focus the pain elsewhere. In particular, you might have expected high-income Texans, who pay much less in state and local taxes than the national average, to be asked to bear at least some of the burden.

But you’d be wrong. Tax increases have been ruled out of consideration; the gap will be closed solely through spending cuts. Medicaid, a program that is crucial to many of the state’s children, will take the biggest hit, with the Legislature proposing a funding cut of no less than 29 percent, including a reduction in the state’s already low payments to providers — raising fears that doctors will start refusing to see Medicaid patients. And education will also face steep cuts, with school administrators talking about as many as 100,000 layoffs.

You wouldn't want to burden the billionaires when you have a deficit. The US Congress just showed that this past December. And once they got Bush's tax cuts for the ultra-rich restored they suddenly discovered... can you believe it?... a budget deficit! So they want to cut, cut, cut.

Well, Texas will be doing the same right wing political two step. Now that they've discovered "deficits" in Texas, they will be cutting social programs. Not a peep about raising taxes on the rich. That would be too much of a burden. But producing more illiterates and school dropouts? Fine! That won't "burden our children", right? The hypocrisy of the political right is monumental.

Taxes in America

Funny how there are constant budget deficits and Republicans calling for more tax cuts, but then you have protestors like this:


or this:


Here's a post on ThinkProgress that asks the obvious questions:

Today, hundreds of thousands of people comprising a Main Street Movement — a coalition of students, the retired, union workers, public employees, and other middle class Americans — are in the streets, demonstrating against brutal cuts to public services and crackdowns on organized labor being pushed by conservative politicians. These lawmakers that are attacking collective bargaining and cutting necessary services like college tuition aid and health benefits for public workers claim that they have no choice but than to take these actions because both state and federal governments are in debt.

But it wasn’t teachers, fire fighters, policemen, and college students that caused the economic recession that has devastated government budgets — it was Wall Street. And as middle class workers are being asked to sacrifice, the rich continue to rig the system, dodging taxes and avoiding paying their fair share.

In an interview with In These Times, Carl Gibson, the founder of US Uncut, which is organizing some of today’s UK-inspired massive demonstrations against tax dodgers, explains that while ordinary Americans are being asked to sacrifice, major corporations continue to use the rigged tax code to avoid paying any federal taxes at all. As he says, if you have “one dollar” in your wallet, you’re paying more than the “combined income tax liability of GE, ExxonMobil, Citibank, and the Bank of America“:

[Gibson] explains, “I have one dollar in my wallet. That’s more than the combined income tax liability of GE, ExxonMobil, Citibank, and the Bank of America. That means somebody is gaming the system.”

Indeed, as politicians are asking ordinary Americans to sacrifice their education, their health, their labor rights, and their wellbeing to tackle budget deficits, some of the world’s richest multinational corporations are getting away with shirking their responsibility and paying nothing. ThinkProgress has assembled a short but far from comprehensive list of these tax dodgers — corporations which have rigged the tax system to their advantage so they can reap huge profits and avoid paying taxes:

- BANK OF AMERICA: In 2009, Bank of America didn’t pay a single penny in federal income taxes, exploiting the tax code so as to avoid paying its fair share. “Oh, yeah, this happens all the time,” said Robert Willens, a tax accounting expert interviewed by McClatchy. “If you go out and try to make money and you don’t do it, why should the government pay you for your losses?” asked Bob McIntyre of Citizens for Tax Justice. The same year, the mega-bank’s top executives received pay “ranging from $6 million to nearly $30 million.”

- BOEING: Despite receiving billions of dollars from the federal government every single year in taxpayer subsidies from the U.S. government, Boeing didn’t “pay a dime of U.S. federal corporate income taxes” between 2008 and 2010.

- CITIGROUP: Citigroup’s deferred income taxes for the third quarter of 2010 amounted to a grand total of $0.00. At the same time, Citigroup has continued to pay its staff lavishly. “John Havens, the head of Citigroup’s investment bank, is expected to be the bank’s highest paid executive for the second year in a row, with a compensation package worth $9.5 million.”

- EXXON-MOBIL: The oil giant uses offshore subsidiaries in the Caribbean to avoid paying taxes in the United States. Although Exxon-Mobil paid $15 billion in taxes in 2009, not a penny of those taxes went to the American Treasury. This was the same year that the company overtook Wal-Mart in the Fortune 500. Meanwhile the total compensation of Exxon-Mobil’s CEO the same year was over $29,000,000.

- GENERAL ELECTRIC: In 2009, General Electric — the world’s largest corporation — filed more than 7,000 tax returns and still paid nothing to U.S. government. They managed to do this by a tax code that essentially subsidizes companies for losing profits and allows them to set up tax havens overseas. That same year GE CEO Jeffery Immelt — who recently scored a spot on a White House economic advisory board — “earned total compensation of $9.89 million.” In 2002, Immelt displayed his lack of economic patriotism, saying, “When I am talking to GE managers, I talk China, China, China, China, China….I am a nut on China. Outsourcing from China is going to grow to 5 billion.”

- WELLS FARGO: Despite being the fourth largest bank in the country, Wells Fargo was able to escape paying federal taxes by writing all of its losses off after its acquisition of Wachovia. Yet in 2009 the chief executive of Wells Fargo also saw his compensation “more than double” as he earned “a salary of $5.6 million paid in cash and stock and stock awards of more than $13 million.”

In the coming months, politicians across the country are going to tell Americans that the only way to stave off huge deficit and balance the budgets is by gutting programs for the poor, eviscerating support for the middle class, eliminating labor rights, and decimating the government’s ability to serve the public interest. This is a lie. The United States is the richest country in the history of the world, and income inequality is higher now than it has been at any time since the 1920′s, with the top “top 1 percentile of households [taking] home 23.5 percent of income in 2007.”

It is simply unfair for Main Street Americans who’ve already been battered by one of the worst economic crises in our history to have to continue to sacrifice while the rich and well-connected continue to rip off taxpayers and avoid paying their fair share. That’s why a Main Street Movement consisting of Americans who are fed up with the status quo is rocking the nation, and one of its first targets should be tax dodgers like Bank of America and Boeing.

Go read the original post to get all the embedded links.

I'm sure hoping that governor Walker in Wisconsin has pushed the average American too far and the protests in Wisconsin will boil over across the whole US. There have been too many years of right wing "trickle down" economics that have larded the ultra-rich with tax cuts and given corporations handouts while cutting social spending and sneakily raising taxes on ordinary people by nickle-and-diming them on all kinds of "hidden" taxes.

Rich people in America can "buy" their rights. The bottom 90% have to stand in the cold like the demonstrators in Wisconsin to try and get the attention of their government so they have "have" their rights. I guess that is "the American way".

Scott Adams: How a Smart Guy Shows He is Stupid

I like Scott Adams' Dilbert cartoon, but I'm coming to loathe Scott Adams the human being. He is a reactionary "libertarian" who deliberately misunderstands the way the world works. Here's his latest blog posting:

What exactly is Social Security?

Some say Social Security is like a retirement plan, but that would require it to be self-funding, which it isn't.

I've called Social Security a Ponzi scheme because it's funded by the next generation of suckers. But Ponzi schemes are voluntary. So that analogy is flawed.

Some say Social Security is a social safety net. But old people wouldn't die on the streets if the program suddenly stopped sending out checks. You and I are compassionate. We would open our homes and take in the oldsters. The alternative would be feral gangs of senior citizens grazing on our rosebushes. That's not good for property values.

So it seems to me that the main purpose of Social Security is to prevent old people from sleeping on our couches. Keeping old people out of the house, and away from the rosebushes, is expensive, so we cleverly pass along part of the bill to people who haven't yet been born.

While each person in my generation is paying to prevent, on average, one old person from sleeping on his couch, the next generation will be paying to keep two or three old people out of the living room, and the thermostat below 85 degrees. It might seem like a bargain to them. I call that fair.

People in my age group don't have a cool name like the Greatest Generation. But I think we have a legitimate chance of someday being known as the Generation that Prevented the Greatest Generation from Sleeping on Its Couches.

He pretends to know know what Social Security is, but the answer is at his fingertips with Wikipedia. Just click the link I provided in the previous sentence.

He claims he doesn't know how it is funded. It has always been funded by the current generation paying for the current seniors' retirement. He wants to call that a Ponzi scheme. It isn't. It is the same principle that families are built on (parents care for children when they are young, the children take care of their senior parents). We don't talk about "family exploitation" and demand that children stop requiring parents to feed, clothe, and raise them. We don't talk about seniors "extorting" money from their adult children to help them. Why does Scott Adams want to see social programs as "exploitation"?

The reality is that back in the early 1980s Greenspan ran a group that changed the funding formula for Social Security. The worry was that the retirement of the Baby Boomers would bust the system. So the plan was to build up a huge surplus to tide the system over during the retirement of the Baby Boomers. So they started charging a lot more for FICA. And a big surplus was built up. And just last year did that process of setting aside hundreds of billions (trillions?) to fund the Baby Boomers finally came to an end because the number of retirees started growing, so the big surpluses have come to an end and the system will not start taking tiny amounts from that surplus to cover the extra costs over the next 30 years. Social Security is well funded. But the Scott Adams' of the world ignore this fact. Instead they focus on the fact that Social Security funds is just "IOUs" and are "meaningless". Well, if you are a thief, then ownership is "meaningless" and up for grabs. But for most normal people, the Social Security Trust Fund is well funded and isn't "going broke". Adams has to know this, but he willfully purveys the lie that it is some kind of "Ponzi scheme".

This is expecially funny because Scott Adams presents himself as a paragon of virtue would would willingly look after not just his own aged parents, but any aged person in need. He says "You and I are compassionate. We would open our homes and take in the oldsters.". If he is so compassionate, why is he complaining about a social program to help the aged? I don't know Mr. Adams but I suspect he is a hypocrite. I suspect he loves to play Scrooge McDuck and sit on his piles of gold and let the gold pieces trickle through his fingers and his real complaint is that the government would tax him to force him to exercise his so-called "charity" for others.

He claims that the US doesn't need Social Security because "Some say Social Security is a social safety net. But old people wouldn't die on the streets if the program suddenly stopped sending out checks.". But if Scott Adams read some history he would find that prior to government programs, a fair number of old people did "die in the streets". Those who were spinsters and never married, those who were childless couples, those who were socially isolated. But Scott Adams lives in an ideologues heaven where there are no storm clouds, where manna falls from heaven, and liberty reigns. He lives in a fantasy world. Prior to Social Security there was real privation among those too old to continue to work.

Ah... but the Scott Adams' of the world have a solution. They are pulling out the old playbook and calling for a "fix" to Social Security that would simply tell people to work into their late 60s, through their 70s, through their 80s, and if they are so luck as to live into their 90s, to keep plugging away at a job so that they don't become "social parasites" and require a rich man like Scott Adams to have to give up the possibility of a third vacation home, or taking his eighth getaway vacation, or hiring his fourth domestic servant. You know, times are tough for the rich, the world needs more WalMart greeters. That keeps the aged "productively employed" where they should be!

I gag when I think of Scott Adams. He is a hypocrite. He is too smart to not know the lies he spews. To point of social programs is to give everybody a social safety net. But Scott Adams wants to go back to the sharp divides of the Dickensian era when the rich could lord it over the underclass and the poor people knew that their life was a veil of tears, many years of hard work, and when their health failed, the only recourse was to crawl in a corner and slowly starve to death because the "charity" of the rich was certainly "on show" with lots of balls and galas where the rich showed off their "urge to help the poor" but in fact the poor were left to starve. All those "donations" really went to wine and dine the rich. It didn't end up as crusts of bread and a little milk for the poor.

World's Richest Country has 12% Hungry/Starving

It is incredible to believe that a country that feels it is "strong" and "rich" can have 35 million of its citizens -- a full 12% -- have to receive food stamps to prevent starvation. Incredible.

35 Million Americans on Food Stamps: 12 Percent of U.S. Population on Food Stamps Highest Since Records Kept in 1969.

There are a few statistics that you can look at to see actual human pain in the real economy. You can look at the recent stock market rally yet even a 50+ percent rally is unable to create jobs or stem the economic pain of those at the lower end of the economic spectrum. Looking at food stamp participation from the United States Department of Agriculture shows us a very disturbing picture. When we did a report on this in August of 2009 we had 34 million Americans on food stamps. In the span of one month, the number jumped by over a million.

The raw data shows us that a stunning 12 percent of our entire population is receiving some form of food stamp assistance. The program is now called Supplemental Nutrition Assistance Program but the theme is still the same. Let us look at some of the raw data:

There is more. Go read the whole article.
It is clear that Obama is just as dithering on the economy as he is on Egypt. The US needs leadership, but it gets a figurehead who can give a good speech, can posture, can call up wonderful images, but who just can't bring himself to act, to call on people do struggle, to strive for goals.

I remember Bush's response to 9/11. He called on Americans to "go shop". Well... Obama isn't do much better when it comes to giving leadership and direction in troubled times.

The Divergence in the US Economy

The rich are partying. The poor are in distress. That's the essence of Robert Reich's latest post on his blog. Here is the key bit:

Put your ear to the ground and you can almost hear the bulls stampeding. The Dow closed above 12,000 Tuesday for the first time since June 2008. The Dow is up 4 percent this year after increasing 11 percent in 2010. The Standard & Poor 500 is also up 4 percent this year, and the Nasdaq index, up 3.7 percent.

“The U.S. economy is back!” says a prominent Wall Streeter. Not quite.

Corporate earnings remain strong (better-than-expected reports from UPS and Pfizer fueled Tuesday’s rally). The Fed’s continuing slush pump of money into the financial system is also lifting the animal spirits of Wall Street. Traders like nothing more than speculating with almost-free money. And tumult in the Middle East is pushing more foreign money into the relatively safe and reliable American equities market.

It’s simply wonderful, especially if you’re among the richest 1 percent of Americans who own more than half of all the shares of stock traded on Wall Street. Hey, you might feel chipper even if you’re among the next richest 9 percent, who own 40 percent.

But most Americans own a tiny sliver of the stock market, even including stocks in their 401(k) plans.

What do most Americans own? To the extent they have any significant assets at all, it’s their homes.

And the really big story – in terms of the lives of most Americans, and the effects on the US economy — isn’t Wall Street’s bull market. It’s Main Street’s bear housing market.

According to the Wall Street Journal’s latest quarterly survey of housing-market conditions, home prices continue to drop. They’ve dropped in all of the 28 major metropolitan areas, compared to a year earlier. And remember how awful things were in the housing market a year ago! In fact, the size of the year-to-year price declines is larger than the previous quarter’s in all but three of the markets surveyed.

...

So don’t be fooled. The financial economy isn’t the real economy. The American economy isn’t back. While Wall Street’s bull market is making America’s rich even richer, most Americans continue to be mired in a housing crisis that’s worsening — and in which the Wall Street banks seem blissfully disinterested, and the Administration incapable of stemming.

If you want to understand why this divergence is such a tragedy for the US, you should read Robert Reich's Aftershock or, if you want a more lurid and graphic account that emphasizes criminality and not just economics, read Matt Taibbi's Griftopia.

Obama and Middle East Unrest

Here's an interesting article from Al Jazeera asking why there is such deafening silence from the West in the face of the populist uprising in North Africa and across the Arab world:

The democracy protests that swept Tunisian President Zine el Abedine Ben Ali from power are going viral, but sadly President Obama and other Western leaders seem immune.

Indeed, it is quite likely that the president and his colleagues in Europe are as frightened of the potential explosion of people power across the Middle East and North Africa as are the sclerotic autocratic leaders of the region against whom the protests are being directed.

The question is, why?

Why would Obama, who worked so hard to reach out to the Muslim world with his famous 2009 speech in Cairo, be standing back quietly while young people across the region finally take their fate into their own hands and push for real democracy?

Shouldn't the president of the United States be out in front, supporting non-violent democratic change across the world's most volatile region?

...

So the question really needs to be asked - whose interests is President Obama serving by remaining silently supportive of the status quo when he could, and by any measure, should, be lending vocal, public support for the peoples of the Arab world as they finally rise up against their leaders?

Is it companies like Lockheed Martin, the massive defence contractor whose tentacles reach deep into every part of the fabric of governance (as revealed by William Hartung's powerful new book, Prophets of War: Lockheed Martin and the Making of the Military Industrial Complex)?

Is it the superbanks who continue to rake in profits from an economy that is barely sputtering along, and who have joined with the military industrial complex's two principal axes-the arms and the oil industries-to form an impregnable triangle of corrupt economic and political power?

It's hard to think of any other candidates at the present time.

Tonight in his State of the Union address the world will learn whether President Obama has any of his once celebrated vision, courage and audacity left in him, or if he's been so thoroughly beaten down by the forces that actually run Washington that he can barely muster support for the young people around the Arab world who are increasingly saying "Kefaya", Enough!, To their governments, and the larger global system that has kept them in power for so long.

It's probably too much to ask the President to say "Kefaya" to the forces that have so circumscribed his once progressive vision.

But it would be nice if he could at least offer a few words of support to the people of Tunisia, and now Egypt and other countries across the region, who are actually following the example of the United States and fighting for their freedom.

For the generation of the 1930s a similar question was asked. Why didn't the democracies support Loyalist Spain? Why did they let Hitler and Mussolini use the military revolt by General Franco to test weapons and train troops for the coming world conflagation?

For the generation of the 1960s a similar question was asked about why the US didn't respect the Geneva accords calling for elections in North and South Vietnam. Why did the US back a repressive regime that led to Buddhists burning themselves in the streets? Why did the US help depose and kill Ngo Dihn Diem? Why did the US support a series of military dictators?

For the generation of the 1970s a similar question was asked about the US planning and supporting a military coup against a legally elected president of Chile, Salvador Allende. Why did they back a repressive military regime that herded people into stadiums and let death squads kill indiscriminately? Why in the 1970s did the US support the Dirty War in Argentina?

For the 1980s generation a similar question arose about Reagan, a US president, defying laws passed by Congress prohibiting aid to the Contras, death squads, roaming Nicaragua. This was especially poignant because the US administration sold rockets to Iran, a deadly enemy that had held American citizens hostage for a long, long time in order to get the dirty money to pay the Contras.

For the 1990s generation a similar yet somewhat different question arose. Why with the collapse of the "evil empire" didn't the US disarm? Why did the US military continue to grow until its budget was bigger than the budgets of the ten next biggest military budgets? Why was such overwhelming superiority needed? Especially when it was used so oddly. It was used to chase the Iraqis out of Kuwait so that the pampered princes could have their gold-plated bathrooms back. But when Bush called on the Iraqis to rise up and overthrow Saddam Hussein, the military was not used. Instead, it stood down and let Hussein fly his helicopters to massacre those who rose up against him. Why?

For the 2000 generation the question is similar but different again. Why these interminable wars in Afghanistan and Iraq that kill so many civilians but seem completely incompetent to rid these lands of a handful of Al Qaeda fanatics? Why would a US president issue a "we will get Osama bin Laden dead or alive" but when they had him trapped in the Tora Bora mountains of Afghanistan, did they use hired mercenaries to "trap" him despite the knowledge of how corrupt these local "fighters" were? Why declare a war in Iraq on false pretenses (weapons of mass destruction) that would cause so much grief and do so little good. In fact, this war handed Iraq over to Iran, the sworn enemy of the US. Why?

I would love to get some answers from Barack Obama tonight. But I don't expect any. I expect only the bland self promoting statements, the feel good statements, the call for a "better America" and the achievement of America's "promise". I don't expect any real truth. Any getting down to the ugly facts of history and how cruelly democracies have treated the poor and the disenfranchised. I expect no truth about power politics and corruption. I expect nothing to be said about a military-industrial complex on steroids that is a cancer destroying America by bleeding the economy dry to fight endless wars that have no purpose and no successful termination. (Think of the huge waste of life and treasure in Vietnam to defeat a supposed "mortal enemy" who is no a treasured economic partner with whom the US trades happlily in the new world order.)

It would be great to get some answers from Obama. But I don't expect anything. I fully expect the US to remain silent about the mideast turmoil. Or for the US president to call for "cool heads" to prevail or some other innocuous words while behind the scenes the US is probably shipping arms and "trainers" into the region to prop up the dictators.

Thanks to Thomas for pointing me at this article. Needless to say, the above views are mine and not those of Thomas.

A Tongue-in-Cheek Look at Obama's "Compromise"

Here is a post from Barry Ritholtz's Big Picture blog that jests at how liberals and conservatives can hold the same view and come to a "compromise" that results in something they both claim to hate. Yes, this celebrates the joys of "politics" and the razzle 'em, dazzle 'em politics that uses sleight of hand to "deliver the goods" to the only constituency that counts: big corporations:

President Obama has “compromised” on everything from financial regulation and healthcare to taxes.

Obama claims that all of his “compromising” shows that he’s getting things done. After all, politics was long ago defined as “the art of compromise”.

On it’s face, it makes sense that if both conservatives and liberals hate legislation, it must mean that there was give-and-take, and it ended up somewhere in the middle.

But that isn’t necessarily true.

Specifically, as I pointed out last month:

Conservatives tend to view big government with suspicion, and think that government should be held accountable and reined in.

Liberals tend to view big corporations with suspicion, and think that they should be held accountable and reined in.

Okay, stay with me here for a minute …

Conservatives hate big unfettered government and liberals hate big unchecked corporations, so both hate legislation which encourages the federal government to reward big corporations at the expense of small businesses.

As an example, both liberals and conservatives are angry that the feds are propping up the giant banks – while letting small banks fail by the hundreds – even though that is horrible for the economy and Main Street.

The Dodd-Frank financial legislation wasn’t a compromise where things landed somewhere in the middle between liberal and conservatives ideas. Instead, it enshrines big government propping up the big banks … more ore less permanently.

Many liberals and conservatives look at the government’s approach to the financial crisis as socialism for the rich and free market capitalism for the little guy. No wonder both liberals and conservatives hate it.

And it’s not just the big banks. Americans are angry that the federal government under both Bush and Obama have handed giant defense contractors like Blackwater and Halliburton no-bid contracts. They are mad that – instead of cracking down on BP – the government has acted like BP’s p.r. spokesman-in-chief and sugar daddy.

They are peeved that companies like Monsanto are able to sell genetically modified foods without any disclosure, and that small farmers are getting sued when Monsanto crops drift onto their fields.

They are mad that Obama promised “change” – i.e. standing up to Wall Street and the other powers-that-be – but is just delivering more of the same.

They are furious that there is no separation between government and a handful of favored giant corporations. In other words, Americans are angry that we’ve gone from capitalism to oligarchy.

So if both liberals and conservatives hate something, it doesn’t necessarily mean it’s a compromise. It may mean that they feel disenfranchised from a government that is of the powerful and for the powerful.

I like the comment posted by one reader of Ritholtz's blog:


You have to admit, that comment pretty well sums up the government under Republicans and Democrats.