This alert came via James Pethokoukis of Reuters:
Congressional Republicans appear to be quietly but methodically executing a plan that would a) avoid a federal bailout of spendthrift states and b) cripple public employee unions by pushing cash-strapped states such as California and Illinois to declare bankruptcy. This may be the biggest political battle in Washington, my Capitol Hill sources tell me, of 2011.
That’s why the most intriguing aspect of President Barack Obama’s tax deal with Republicans is what the compromise fails to include — a provision to continue the Build America Bonds program. BABs now account for more than 20 percent of new debt sold by states and local governments thanks to a federal rebate equal to 35 percent of interest costs on the bonds. The subsidy program ends on Dec. 31. And my Reuters colleagues report that a GOP congressional aide said Republicans “have a very firm line on BABS — we are not going to allow them to be included.”
In short, the lack of a BAB program would make it harder for states to borrow to cover a $140 billion budgetary shortfall next year, as estimated by the Center for Budget and Policy Priorities. The long-term numbers are even scarier. Estimates of states’ unfunded liabilities to pay for retiree benefits range from $750 billion to more than $3 trillion.
This report has serious, and apparently unrecognized implications:
1. The cheery observations that state tax receipts and spending are set to increase in 2011 by 5% will be more than undercut by budget brinksmanship in key states
2. This GOP strategy sounds troublingly similar to the famed scene in Blazing Saddles where the new black sheriff, getting a less than welcome reception from townspeople, threatens to shoot himself. The GOP is willing to shoot the economy to precipitate a crisis with the hopes of forcing the most favorable resolution possible to a long-standing desire of theirs. But the collateral damage will be considerable. Uncertainty over the muni bond market will likely extend well beyond particular states (many people invest in munis via funds rather than specific bonds, and if they exit that market, it will damage all sorts of blameless government entities who have the vast misfortune to need to access the market in 2011). And it is also not inconceivable that unions might actually get the balls to strike, shutting down critical services. If a drama of civil unrest takes place, this will damage the markets (and hence the wealthy GOP investor base) and the economy generally.
3. It isn’t hard to recognize this move as part of an effort to push America further into banana republic land, with a small and wealthy elite controlling the government and a greatly disproportionate share of the wealth. As we’ve indicated, those sorts of societies are unhealthy, even for those at the very top, but that does not seem to deter anyone behind this campaign. Notice that the objective here is not to do the responsible thing, which is to figure out the fairest and least destructive way out of the states’ budget woes; it’s instead to push this festering problem to a crisis to achieve another goal, namely, break unions, with the objective of transferring even more to the rentier class. Now that we’ve had stagnant average worker wages for over thirty years, government worker pay, which used to lag considerably, now looks not too bad (although various studies have pointed out that government pay is not out of line when you look at job skill requirements; you have more white collar jobs in government than in the private sector. Cherry picking examples of arguably overpaid government sector workers is no different than trying to base private sector tax policy on examples of ostentatiously overpaid private sector workers, like John Thain’s driver, who made $230,000 in 2008).
And note that those stagnant average worker wages resulted not from some widespread failing of US workers, as some critics like to allege, but because the benefits of productivity gains, which used to be shared between workers and the companies, now accrue entirely to companies.
Update 3:00 AM: Bruce Krasting, who is not at all left leaning, sees the elimination of the Buy America Bonds Program as a disaster, a black swan in the making:
It wasn’t the political muscle that lead me to believe that BABs would be extended. I saw it as a critical component in municipal finance. If it was eliminated I thought we could quickly evolve into a crisis with certain states debt. I was by no means alone in that observation. This comment from the rag for the muni market, The Bond Buyer:
If the Build America Bond program expires at the end of this year, long-term tax-exempt bonds could lose their latest pillar of support.
Parts of me want to be proved right about the significance of this development. I am one of those who thinks there is too much debt creation at the governmental level. Well, it just got more difficult for munis to borrow. By itself, that will curb debt creation.
There is another part of me that is saying “gulp”. By definition, you do not see a black swan in advance. I did not see this at all. I don’t count, but the market does. If you follow markets you now have to have a screen for muni pricing. As this sorts out over the next 60 to 90 days the muni market might drive the global markets.
I’m thinking to myself, “How could they have blundered on this?” They extend the Bush cuts for everyone. They tack on another 120b of deficit spending with a cut in SS taxes. And they throw in another year of unemployment checks. They threw the sink at the economy at the sake of the deficit. But they failed to pass BABs? Knuckle heads. If there is a hiccup that takes a big state out of the market for a spell it will trump the economic benefits of all the new deficit spending. It might do it a few times over.
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… but because the benefits of productivity gains, which used to be shared between workers and the companies, now accrue entirely to companies. Yves
Bingo! And those productivity gains were financed via borrowing from the government backed counterfeiting cartel?
I notice that corporations issue new common stock only as a last resort. Why isn’t it their first resort? Why should it be when they have first access to new credit at low interest rates?
Smash the government backed counterfeiting cartel and genuine capitalism might well emerge in the US. This banker fascism is getting old and is dangerous too.
And what, exactly, is wrong with putting the squeeze on spendthrift states?
Try to think beyond the primal temptation to see this as a morality play.
There wouldn’t be anything wrong with it…if the GOP wasn’t so freaking mono-maniacally hell bent in conflating spendthrift with the existence of unions.
But noooooo! Instead of showing a cool head and hard ass approach to the problem, GOPers all start dripping wet at the prospect of smashing what they perceive as their political nemesis numero uno…the evil unions.
Sorry, but that is not an approach that should inspire ANY confidence whatsoever.
”
hell bent in conflating spendthrift with the existence of unions.
”
There are many subtle forces with insidious power to derail efficiency that would otherwise spread distribution of supply to everyone.
Pragmatic considerations would point to more efficiency from a Feudal system of the Federal Government taxation. Should Federales tax only states? Should a state then tax its major entities, for example, the unions, the large corporations, and its own counties. Counties would then levy sin-taxes, property taxes on landlords, and taxes on its own cities. Landlords would then levy higher rents on plebes. Did Tip O’Neal once say, “all taxes are local”? No! But he did give us a hint.
Would such a feudal system provide a competitive edge for states that crush unions? A competitive edge for states subsidizing unions? Is the climate and mineral resource more adaptable to unions for some states but more adaptable to *right to work support* within other states? Is the experimental approach a powerful tool of discovery? Could feudalistic taxation easily morph into efficiency? Should we have open minds until the experimental results are extant?
And what, exactly, is wrong with putting the squeeze on spendthrift states? bob goodwin
And what is wrong with our brand of capitalism that so much social spending is required to compensate for it? Could it be that a banking and money system that is based on systematic, government backed theft of purchasing power from all dollar holders INCLUDING the poor DEMANDS recompense?
Fix the fascism in our system and the need for socialism should “wither away”.
Agreed. Discussing fixing the system as it is designed currently is useless. We must have a different monetary system first.
That being said, I have no sympathy for the BAB program. It was one more ill-designed ‘temporary’ stimulus program designed to ‘kick-start’ the economy. Two-years (or so) into it, all it has done is kicked the can further down the road with more federal and state borrowing. Among other issues, the Feds were supposed to get the interest subsidy back from buyers of the bonds in tax payments, but from what I have read the bonds have gone to tax-exempts and foreign holders.
I could argue that the BAB program actually decreased the state’s sovereignty, as the Fed’s tightened their noose over national power. When the foreign holders of BAB’s ask to get bailed out, a la FRE and FNM, will the Feds take over the collateral and put it into receivership?
The BAB’s program was supposed to be temporary. Of course the Bond Buyer likes it – huge fees for their advertisers (the investment banks love selling BAB’s). Let it die. Let it all reset. Bring back a debt-free, interest-free currency. The idea that governments have to borrow their own money is ridiculous…
Bring back a debt-free, interest-free currency. The idea that governments have to borrow their own money is ridiculous… traderjoe
Agreed. However, government money should only be legal tender for government debts(taxes and fees), not private ones. Conversely, private monies should never be accepted for government debts. That should satisfy everyone.
I suppose the States should be allowed to issue their own money too and even cities. In that case, government money should only be legal tender for the government that issued it.
Too complicated? Modern communications and computers should make it doable.
Mr. Beard,
I agree that Fascism is the evil that both Liberals and Libertarians agree is evolving from our current capitalist/democratic system.
Even Jerry Brown has seen unions as having played a destructive role in California’s version of corporatism.
So, again, what is wrong with putting the squeeze on?
So, again, what is wrong with putting the squeeze on? bob goodwin
Well, if we weren’t in debt deflation then no squeeze would be necessary. But if you wish to squeeze the public service unions then how about squeezing down the mortgage principle they owe? The boom ratcheted up their wages and their debt. If one is forced down then so should the other.
Or better yet, bailout the entire population including savers and ban fictional reserve banking to end this nonsense (the boom-bust cycle).
“Well, if we weren’t in debt deflation then no squeeze would be necessary. But if you wish to squeeze the public service unions then how about squeezing down the mortgage principle they owe? The boom ratcheted up their wages and their debt. If one is forced down then so should the other.”
So you are an advocate for the public service employees, and not other segments on the population as well?
Of course debt deflation has this impact across all segments, and of course debts cannot be paid. I agree that those holding the paper should take a haircut. I am not sure what this has too do about reigning in spendthrift states, or ending fascism (including the kind represented by public service uninions)?
F. Beard:
LOL Great way to describe the problem!
Is “F Beard” any relation to “Charles A Beard”?
F Beard is the drummer for ZZTop.
“F. Beard” is a nome de plum. Hint: I am a South Park fan.
Bob Goodwin is my real name, I am a fan of ZZ Top, and I don’t eat plums.
I live in California, one of your “spendrift states.” I will tell you what is wrong: 20% of my Federal Taxes go to fund other states, and most of the “money saving” states are actually systematically overfunded by the Federal Government. So, if you really want capitalism, let’s make sure that all the Fed taxes are invested in the state of origin. If you did that, California would have a $25B surplus instead of a $25B deficit. Something similar happens with NY state, by the way.
You can find the specific data here:
http://www.taxfoundation.org/UserFiles/Image/Blog/ftsbs-large.jpg
Then, by extension, money should not leave Beverly Hills either? Should we bail out Beverly Hills if they spent too much?
Hahaha, quite right! Talk about redistribution of wealth. Red states are unwitting socialists.
Shh, don’t tell them which states funding for military bases and defense contractors comes from — it’ll blow their minds!
I, for one, support our profligate fly-over brethren.
Thank you, CFS. The great irony is the the most ardent anti-taxation, anti-socialist states are the ones that receive the MOST tax money.
Being in CA myself, I’m all for us keeping our own money. Isn’t that what the GOP is proposing?
“I live in California, one of your “spendrift states.” I will tell you what is wrong: 20% of my Federal Taxes go to fund other states, and most of the “money saving” states are actually systematically overfunded by the Federal Government.”
Same for me, I live in NY.
But the reason is politics 101. People in the states that wanted (or whose political class wanted) social programs, needed to get the votes of people in states that didn’t want(or whose political class didn’t want) such programs. The solution, bribe them with beneficial terms. The latest examples came with Obamacare, one being the Cornhusker Kickback, in which the price of Nebr. Sen. Ben Nelson’s support was a permanent exemption from the cost of new Medicaid recipients in his state.
So, the extra you (we) pay is a measure of how desperate you (in this case, not me) were to get federal programs passed.
Richard
Bob, we just happen to live in the UNITED STATE(S). yOU SCRW OVER 1 STATE, THEN 2, THEN IT’S ALL THE BLUE ONES OR THE RED ONES? Everyone want’s to nail spenthrifts! I just want to nail the 5-10,000 Wealthiest Old White Male 1%-ERS who’ve been LOOTING the US Treasury, ROBBING Taxpayers and
PILLAGING Oil,Gas & Mineral Rich Muslim & African nations since the Eisenhower years using 1/2 MILL US youths!
They’re the thieves, liars, thugs and cheats! Anybody who goes after the poor, the weak, th unarmd or the non-white (because THEY have all the Oil, Gas & Minerals) is a BUM!
High unemployment puts corporations in a stronger bargaining position than workers, allowing the corps to pay less and claim a larger share of productivity gains.
A weaker economy may result in lower demand for products, lowering revenue, but many in the corp world would take the trade of lower labor costs and less contentious workers. They may actually end up with more profits.
They did have record profits last quarter. And Obie is still called a commie. And Big Business has long since, put their money on the the Repubs.
The present political duopoly is under a generational spell of an ideology as dangerous as communism.
The generational part are the boomers – as Victor Hugo said “adversity makes men&prosperity makes monsters – well our little monsters, our little locust plagues are the boomers, those that oppose war when their behind was in danger, made everyone else cannon fodder when there were safely away from draft age, as well as many of today’s social ills.
The ideology is a dark cloud that has been around humanity for millenniums and when it takes hold, an economic, personal liberty and knowledge dark age usually follows. Its presently fashionable to call it neo-feudalism and includes its neo-liberal economic arm and its neo-conservative foreign policy arm.
In the West – the neo-feudalism has taken the wrapping of a Corporate State with its hope of selected Global Corporation supplanting the former roles of
higher nobility and the State taking the role of the lower nobility with its direct control of serfs. In the East – the wrapping are those of a State Corporation. Both abhors transparencies and nourish cronyism and are likely to battle it out eventually for total control.
All of the above helps explains the present republican’s goal & democratic party with Obama’s total failure from the first month of its presidency when he decline to hold
Wall Street accountable, a moment when he should have been channeling his inner Robert DeNiro doing Al Capone giving his team dinner speech accompanied by his Louisville Slugger in “The Untouchables”, making it clear that at its heart he was what a “country club republican” was in the 60’s. This is why, many of Obama’s supporters turned on him, if they wanted a country club republican the
would have voted for a Clinton.
The American citizen can not fathom the treasonable ideas and action that have taken place against them by people that drank the laced kool-aid and are true believers in their psychedelic view of the nebulous dark cloud.
Just ask yourself what would a J.J. Angleton who was the CIA’s counterintelligence chief during most of the cold war have thought and done if he received a report that by 2010 most of the manufacturing ability and know how of the country had been transferred to other countries and primarily a communist one-party state while running high debts to the same. Angleton would have thought either we
fell under the biggest espionage trap ever devised or we became the biggest dunces in the world by ignoring critical thinking and drinking someones ideological laced kool-aid.
So yes, the average American is angry and is realizing that the country is no longer what they though it was and are searching and want someone to blame. Our future is grim if we don’t stop drinking the ideologically laced kool-aid. Just look south for its results and I don’t mean south of the Mexican border only, I mean the Dixieland border
– just look at the results of anything to do with Mississippi.
The solution is quite simple, but farther away because of the Supreme Court’s recent decision, and that is public funding of campaigns as the kool-aid drinking political duopoly racketering machines depends on its corporate masters for funding.
I don’t foresee any changes but I foresee a lot of reactions. Citizens reacting at best the equivalent of tarring and feathering at worst political assassinations. Government reacting to its true masters and becoming more jack booted. Further civil disorder reaction
from citizens ensuring a stronger police state reaction.
Going down this slippery road to an eventual dystopia. I hope I’m wrong, but the future looks more like the movies – something like 40%”Brazil” 40%Idiocracy” with a touch of “Soylent Green” and “Logan’s Run” especially in the matters of handling the boomer generation problems.
By the way – the goal might be breaking the unions, but more importantly is to allow privatization and donations from those pay-to-play contract winners. Something like Jeb Bush did in Florida. County & State social services were privatize. Some contract went to reliable entities with history of social services, but a lot more went to newly created non-profit agencies that had for profit management structures. This for profits were the real winners as well as donations to the GOP racketeering machine. Ask any social worker in Florida or look up any major paper for results.
“Just ask yourself what would a J.J. Angleton who was the CIA’s counterintelligence chief during most of the cold war have thought and done…”
Angleton drank a half-dozen martinis at lunch every day, was duped continually by the Soviets, and refused to computerize his records so they could be shared within the agency. When Colby took over the CIA and fired Angleton, he said it looked like Angleton never caught a single spy. (For more info, read the excellent book Cold Warrior, by Tom Mangold.)
Must say, he’s a perfect touchstone for these fraud-laden days of wolves dressed in sheep’s clothing.
Jersey Machievelli says: “The generational part are the boomers – as Victor Hugo said “adversity makes men & prosperity makes monsters – well our little monsters, our little locust plagues are the boomers, those that oppose war when their behind was in danger, made everyone else cannon fodder when there were safely away from draft age, as well as many of today’s social ills.”
I was born in 1946 and served 4 years in the US Army Security Agency. (1963-1967) I had a Top Secret/Crypto clearance and the Army was concerned about the potential for blackmail. So one of my training classes taught us how to recognize and avoid marijuana and other drugs. As a result I never experimented with any drug, except alcohol. I went to school after I left the Army. After that, I got a decent job, married, raised children, and paid my taxes. My brothers and cousins served in the military in the 1960s. The large majority of the boomer generation is just like us.
Literally speaking, I am a boomer but I never identified myself with the draft dodging druggies in my generation and I make no excuses for them now. But I wish we could agree on some way of modifying the ‘boomer’ title. I suggest “boomer elite” because that is much more accurate. They went to college and acquired Bachelor, Master, and PhD degrees while dodging the draft. If they flunked out or graduated too early, then they ran to Canada. I have often wondered what percentage of college professors were draft dodgers and were thus in a position to poison later generations.
Jersey Machievelli says: “Just ask yourself what would a J.J. Angleton who was the CIA’s counterintelligence chief during most of the cold war have thought and done if he received a report that by 2010 most of the manufacturing ability and know how of the country had been transferred to other countries and primarily a communist one-party state while running high debts to the same. Angleton would have thought either we fell under the biggest espionage trap ever devised or we became the biggest dunces in the world by ignoring critical thinking and drinking someones ideological laced kool-aid.”
Angleton seems to have been paranoid, but of course it can be argued that a counterintelligence chief is paid to be paranoid. But you are right about his probable assessment of our situation. And in my humble opinion he would be correct.
This deal on tax cuts is rotten to the core. It would have been better to let all the tax cuts expire. WE HAVE TO PAY TAXES IN GOOD TIMES OR BAD OR STOP GOVERNMENT SPENDING DURING BAD TIMES. That includes the richest amongst us. This is not rocket science. But the politicians insist on digging the hole deeper, rewarding the top 1% income earners, and attacking Social Security. These dimwits didn’t recognize what the logical conclusion of their policies of the last 25 years would be. And they don’t recognize the danger of a placid population that once aroused will be in the streets screaming for blood.
“These dimwits didn’t recognize what the logical conclusion of their policies of the last 25 years would be. And they don’t recognize the danger of a placid population that once aroused will be in the streets screaming for blood.”
Dimwittedness, maybe, but it’s hard to dismiss cunning and malice aforethought—especially when you consider how practiced they are with blood in the streets and counterinsurgency. Neocon elites are violent at heart and in imagination; it is very thinly-disguised in their political hate speech. I think they would welcome a physical manifestation of their darkest fantasies.
I might add McCormack’s “The Road” to Jersey’s movie list of future scenarios.
I agree with all your premises except that “it’s the boomer’s”. a lot of crooks have contributed to this state of affairs. I always wonder when some particular group/generation is targeted.
Might as well say it was GenX for dropping out of the whole ballgame.
You do not understand the Boomer generation whatsoever. Boomers were drafted to serve in the armed forces during the Vietnam engagement, before they were able to vote. They did not choose this conflict and many died on account of it. They also marched for civil rights with the Blacks. If you want inspiration about facing tough civic challenges, read up on the 1960’s and learn about the generation.
The economic brinksmanship appears to be a GOP addiction, and ‘their appetite grows with eating’.
And now, they do this with all the backing of any rogue dictator, autocrat, or CEO who wishes to funnel money into the political services sector, given that Citizens United has dispensed with accountability and transparency.
‘It isn’t hard to recognize this move as part of an effort to push America further into banana republic land, with a small and wealthy elite controlling the government and a greatly disproportionate share of the wealth.’
This claim is so over the top it’s silly. The Build America Bonds program didn’t even begin until Feb. 2009. It was primarily intended to subsidize capital expenditures, as the title of the program illustrates.
So now the expiration of this 21-month special program translates into a right-wing conspiracy to bankrupt the states and cripple public employee unions? Ha ha ha ha!
Never has the ‘ratchet effect’ been better illustrated — in which a generous gift mutates into an entitlement, and the donor becomes an abusive monster for failing to continue her largesse.
Pethokoukis … what a blowhard ideologue.
Either way Jim, welcome to the REP HQ of the American East Indies Company INC/LLC/IB/CB/IMF/BIS…
Skippy…Corporate motto…if your not a slave…your a preferred customer…
The right-wing conspiracy is real, if you can’t see it you may be happy in your naivity but it will it you just the same.
“Pethokoukis … what a blowhard ideologue.”
Replace “Pethokoukis” with your name…see if it resonate somewhere in some recess of your conscience.
Only an ultra-liberal can use the words “union” and “critical services” in the same sentence and mean it. NC, you are such a tool.
Amen. The public employee unions and their political whores have the main instrument of budgetary and educational destruction in the US. We are at all time highs for numbers and compensation of public workers, and lows for productivity and educational achievement. Blow up the unions, please.
Disregard the public employees unions for a minute, and look back on the history of labor unions generally over the last 40 years.
Unions, with a few exceptions like public services, HAVE BEEN BLOWN UP. And the demise started approximately in 1980. Now look at the historical relationship between productivity growth and wage growth. They both rise in unison until approximately 1980, at which point there’s a disconnect (productivity continues rising, while wages stagnate). Think that’s a coincidence??? It ain’t.
Think blowing up public employee unions is in the interest of any wage-earner in any sector???? It ain’t.
I can have my take-home reduced by corporate swine applying the law of supply and demand, or I can have my take-home reduced by public unions applying the strong arm of the law.
Either way, it doesn’t change the fact that the executive and legislative branches have put themselves up for sale.
yes, of course the republicans want to blow them up, the unions were the only thing standing in the way of total corporate control.
You are clueless.
Actually the number of government employees (all levels) as a percentage of the population (7.16%)is at its lowest level since August 1988. The average since 2000 is 7.37%
I knew there was something to like about the Repugnant Party tax plan. If it succeeds in breaking apart the Union it will have been worth it. The Republic of Cascadia will make a great country— large enough to be economically viable, yet too small to support an imperial army. With the dynamic city of Vancouver BC as its capital, and the progressive regions of Oregon and Washington incorporated from the old USA, it will truly be a country one could be proud to live in.
To the south, California is already the seventh largest economy in the world, and adding the culturally compatable territories of Arizona and Nevada will make it a complete nation.
Alberta, Wyoming, and Montana all historically have the same attitude of rape and pillage toward their mineral resources. They deserve each other, and will have a very prosperous marriage until they exhaust their treasure of fossil fuels. When that happens they will make great buffalo range.
Texas has always believed it is an independent country– let’s formalize it now. Strict anti-immigration laws could then prevent anyone named Bush from ever leaving.
As for you MPA’s who live east of the Mississippi, you can fight the Civil War again if you can’t figure how to divide yourselves up.
I doubt if the dis-united states of ex-america will have much appetite for maintaining imperial outposts all over the world or using shock and awe to terrify other countries whose oil they covet. Bring it on!
Thanks Yves for forgetting to add an “s” to Union so I could have some fun. Seriously, I do believe that the breakup of the USA and any other nation states large enough to become imperial powers is a net positive development. And I would rather live in Cascadia than the US.
Imperial powers, being populated and ruled by mere humans, always create myths of moral superiority. “Make the word Safe for Democracy” “Bring the benefits of Her Majesty’s civilization to the sub -human races” Rid the world of the Communist Menace, Exterminate the Jews to make room for the superior Arian race, Exterminate the buffalo to force the starving Indians onto reservations— there is no end to it.
Humans, being less civilized than animal species that have developed ritual display and combat, will always find ways to have wars. Better it be among relative weak states than world powers.
Visionary. A Modest Proposal inverted.
Wow, finally a single policy from either the Republican or the Democrat party that I can fully endorse – break up the USA. It would do the rest of the world a massive favor and eventually something good will probably come out of it on the North American soil too.
Seriously, it’s wishful thinking on my behalf. Something that good could can’t happen just like that.
I don’t think Yves or the Republicans meant break up the US. I think Yves meant that the plan was to break down the unions.
As for the Build America Bonds being only a year old — so what? They help states build infrastructure. Deficit spending in a depression is crucial. The New Deal was hampered by people who that it was over around 1937 and raised taxes, cut recovery programs, and tried to pay down the US debt. Then the whole thing collapsed again until the end of WWII.
I agree that deficit spending in good times is a bad idea. Just because we had nearly 8 years of deficit spending under the previous administration isn’t a good reason to stop now, when it’s actually necessary. We can pay down the debt when unemployment goes down.
Interesting conjecture. My socialist mom always said that after WWII if the elites had had their way the government would have reneged on their promises (GI bill, etc. You don’t want the peasants to be educated, right?) to the service men and women as it did after WWI. Only the sheer number of them prevented it she thought. I never believed her, but I wonder now. So this has been going on in history with only a few breaks maybe. I still don’t really understand why some people wish to have power over others. This should be taught in school apparently with real examples. “Hi, I’m John, I enjoy crushing people under my boot and would enslave all of you if given the chance. Ask me anything.”
The idea of stagnant worker income is a myth perpetuated by bad measurements. See http://www.progressivefix.com/inequality-living-standards-and-the-middle-class-part-2
Basically, when one accounts for the value of benefits (how much more is health-care coverage worth now, in terms of the cost of purchasing it? 401(k) matches/pensions?), cost-of-living and smaller households (in a household-income comparison), income has risen – and at a good pace w/r/t productivity. In any event, our average income still measures well against European countries (even Sweden).
If real wages have gone up, why do we need college degrees, credit card debt, and two-income households just to live a life almost as good as our parents?
Education costs more in part because the government subsidizes its cost. You need more of it also in part because the government subsidizes its costs (the relative value of a college diploma – particularly as a signal to employers – is greatly diminished when more people have them). I don’t know why you need credit card debt. As far as two incomes, I suppose it depends on how much it costs you to replace or forego for the work one spouse can do at home, but the utility is up to you. We provide a whole lot more to our families these days that we consider “basics” than our parents did.
W/r/t 401(k) and pension, I was comparing the value of a 401(k) MATCH to the value of a pension.
Hi Gimlet,
“Education costs more in part because the government subsidizes its cost.”
I don’t follow your point. Government subsidies should make education cheaper. They idea is that the government “invests” in your eduction through grants and subsidized student loans, and gets return on investment through higher income tax receipts and greater technology, efficiency, better quality service, etc. All of which is priceless.
“You need more of it also in part because the government subsidizes its costs (the relative value of a college diploma – particularly as a signal to employers – is greatly diminished when more people have them).”
It depends on where the demand is. There are fewer labor-intensive jobs in the post-industrial world, so more education may be necessary to do anything productive, not because of education inflation.
Even if Ph.D.s of Philosophy are rare in Shenzen, they aren’t necessarily valuable.
But this is getting off-topic. Your contention is that we are wealthier now than we were in the 50’s and 60’s. I’d say that the disappearance of middle-class manufacturing jobs and the lack of education opportunities for the middle class is not an improvement.
“I don’t know why you need credit card debt.”
I personally don’t carry a balance because I live like a hermit, but most people have had to. The current theory is that the recent drop in credit card debt is only due to write-offs.
People in the 50’s and 60’s were buying expensive (for the time) appliances, moving to suburbs, buying one and then two cars, all before the credit card. And it didn’t start out as no-down 30-year ARM loans for the houses either.
They had huge discretionary spending power then and people today have almost no more spending power than their line of credit.
“As far as two incomes, I suppose it depends on how much it costs you to replace or forego for the work one spouse can do at home, but the utility is up to you.
My response to that is that less is getting done around the house, and that wage pressure forced homemakers into the workforce.
Wives don’t have the option of staying home and cooking dinner, packing lunches, cleaning house, etc. That’s all replaced with fast food and dusty shelves.
I completely support workplace equality, but the feminism movement mostly succeeded because the second income became crucial, not because hiring managers got feminist religion.
“We provide a whole lot more to our families these days that we consider “basics” than our parents did.”
Can you give me an example of something “basic” now that was a luxury back during the boom? I can think of video games and computers. I will concede that we spoil our children, but that doesn’t account for the necessity of a second income.
“W/r/t 401(k) and pension, I was comparing the value of a 401(k) MATCH to the value of a pension.”
I would say that a pension is a better deal for employees. It’s guaranteed, whereas a company can yank 401(k) matching any time, and do. If you can show me when companies put more into 401(k) matching than they could with pensions in the long run, I’d be interested in it.
Scott,
I doubted Gimlet would even try to answer your question (they almost never do), and he didn’t disappoint.
But you want to know what their “real” answer is, the rare times they try to give it? It boils down to: Today’s TVs really are that much better than the TVs from the 50s, and that makes it all worthwhile. “Hedonics”, they call it.
Also, 401(k)s are not benefit compared to a pension.
“A primary reason for the explosion of 401(k) plans is that such plans are cheaper for employers to maintain than a defined benefit pension for every retired worker. With a 401(k) plan, instead of required pension contributions, the employer only has to pay plan administration and support costs if they elect not to match employee contributions or make profit sharing contributions. In addition, some or all of the plan administration costs can be passed on to plan participants. In years with strong profits employers can make matching or profit-sharing contributions, and reduce or eliminate them in poor years. Thus 401(k) plans create a predictable cost for employers, while the cost of defined benefit plans can vary unpredictably from year to year.”
https://secure.wikimedia.org/wikipedia/en/wiki/401(k)
Gimlet,if you look at real measures of well being instead of “income” the picture looks somewhat different.
The broadest measure of health is longevity. The US ranks 38rd, just behind Cuba at # 37, and behind every country in the EU including the PIGGS. (from the CIA World Handbook)
The World Heath Organization ranks our heath care system 37th, behind such “second world” countries as Chile and Columbia.
Our Canadian neighbors to the north don’t have imperial military outposts in every corner of the globe and a national policy of continual warfare. Instead they spend their tax dollars providing universal (and excellent as I can testify) health care for their citizens.
Of course we don’t have any working class in the US because we are all members of the middle class. But in Europe where there is a self conscious working class, workers receive 30-40 days of paid vacation each year. We American middle class workers average only 7 days– that is if we are lucky enough to have a full time job at all.
Our “free” press (which now is almost entirely television) is in fact an owned press controlled by a very small group of upper class individuals. It succeeds in convincing everybody that we are all members of the middle class, while in fact the US has the most class stratified income pattern of any developed nation, with the upper 2% receiving the lions share of the national wealth. By any measure of wealth and ability to determine political outcomes, we are now an oligarchy or kleptocracy rather than a middle class democracy.
Health coverage costing more does not mean it is worth more.
The studies on average worker wages are pretty incontrovertible. You can always find someone who can cut the data to make it look different, but people have been discussing the stagnation of worker wages for 15 years, this is well accepted and only fringe types try to dispute it.
It’s going to be interesting to see what happens next. I never knew insolvency would be so entertaining …
Gallo’s humor, huh? Are you having Night Train or Thunderbird?
(-;
Oh for heaven’s sake, Yves, this just shows what an intellectual light weight and ideological hack you are.
The GOP is not engaged in a conspiracy to “bankrupt the states” What nonsense! What lunacy! What pure loopy Left-Wing agi-prop. (The hard core Marxists in the Democrat Party, however, are conspiriing to backrupt the nation.)
You unwittingly engage in projection.
The GOP is certainly standing up for the rest of the nation who rightly think that they should under no circonstances be forced to bail out the proffilgate, Dem run states whose governments have aqunadered their residents’ wealth on thier vile Marxist redistibutionist “programs” and are now facing bankrptcy.
You stand reality on its head: The GOP is acting responsibly and you characterize them as engaged on some “evil conspiracy:. This is the response of a just clinical narcissist. It is also the response of a spoiled brat.
(And Reuters as a source? Really now.)
When will you liberals learn that people are responsible for their actions? The rest of us are not obliged to support you or bail you out of the messes you make. We are not your parents.
This is at the same level of you bizarre delusion of this vast conspiracy in the mortgage markets.
Personally, I think you have Daddy issues.
Oh, and it is the Democrats that engage in “brinkmanship”. They did it to ram through their “stimulus”. They did it to radically expand TARP. They did it to steal GM and hand had it over to their supported in the Unions. They have been doing this since FDR.
His legacy and all of the accretions of it pushed by the Left these last 70 years is at the root of the crisis that we now face.
Liberalism is a disaster. It is time we faced it.
Democrats need to finally face just where their agenda leads.
I have no doubt that if we through the left out of all our leading institution, the nation will bounce back within a decade. The problem is the Left, not “capitalism”, and certainty not the GOP.
This is precisely how Pethokoukis presents it, out of the mouth of GOP operatives. I am just repeating what they say their objectives are. If you don’t like how it looks, I suggest you talk to the lobbyists behind the strategy, and not shoot the messengers.
If there are any projection or psychological issues, they lie on your end, with your need to attribute a clear and hardly surprising statement of GOP objectives to some sort of evil plot by Democrats. I’m no fan of the Democrats, but your need to blame them rather than the policy instigators is comical.
You present not a single cogent argument in opposition, your entire comment is ad hominem attack. And you are reduced to denigrating Reuters as a source, particularly when Pethokoukis’ commentary has skewed center right?
With all due respect, Yves, he does make a good point about the GM and union deal. Quite a good point I might add.
RH
Oh and btw, those bondholders left holding that brinkmanshipped bag would most certainly agree.
I suggest we leave the two parties out of any cogent analysis as in reality it is but just a two-headed single party system to begin with.
No, this isn’t about which party is doing what to whom. Both have already done plenty to everyone that hasn’t paid them off thank you very much.
RH
You and he have it completely backwards on GM. “Hand it over”? What fact free universe do you hail from? GM was put into BK to break union contracts, among other things.
Barry Ritholtz, who is a Republican and an authority on bailouts, considers GM to be a singularly good example, because EVERYONE took pain, bondholders, stockholders, dealers, unions, and most important, management.
http://feedproxy.google.com/~r/TheBigPicture/~3/_AX3b65BXtA/
“GM was put into BK to break union contracts, among other things.”
Really, Yves? I thought they were put into BK because they didn’t have enough money.
Unions were given better treatment than the BK law should have provided because of government intervention.
There’s just no defending the indefensible. The argument speaks for itself, as well as the charges of its master.
The revelations of this conspiracy theory may not peak the interest of Jesse Ventura any time soon, but the response to it may well solicit cheers from the greater majority of those who have ever had to deal with, or be forced into the membership of, a union. The very “suggestion” of unrest is another “real” argument winner when it comes to a discussion of our organized comrades.
Can anyone explain the exact function, purpose, or necessity of our current public employees unions, or for that matter of a pre-packaged vs. a normal bailout…I mean bankruptcy?
“Can anyone explain the exact function, purpose, or necessity of our current public employees unions, or for that matter of a pre-packaged vs. a normal bailout…I mean bankruptcy?”
It’s pretty simple really…unions exist to represent the collective interest of workers, be they public or private. The striking think about the US isn’t the “power of public unions,” it’s the complete lack of power among private unions. The auto unions are some of the last vestiges of what was once a strong middle class-creating workers movement.
People like TeeHee and Damocles rejoice in the continued destruction of the middle classes. We don’t need to destroy public employees unions…we need to rebuild the private employee unions, impose harsh tariffs on countries that treat their workers like slaves, and levy much higher taxes on the upper classes. Not that I’m holding my breath.
There has been an ceaseless propaganda campaign to demonize unions and government in the US. Nevermind that most developed countries have stronger union movements and bigger govt social safety nets.
That’s not what the post says. The post is mostly conclusory. And “operatives” said it because he said so? If the GOP is taking the opportunity to destroy public unions then good for them. They have taken over CA, IL, NY, and they have entrenched themselves to such a degree that they run all levels of government.
The entire concept of a public union, collective bargaining on the one side, and no management on the other to counter, is idiotic. The fact that someone would raise the argument that destroying them is bad for anyone other than the people who run those unions and the most senior employees suggests that said someone is utterly clueless.
The Federal Gov’t needs a Ch. 9 for States. If States then choose to go BK to overcome ridiculous bargaining positions from unions then so be it. No public employee should be able to unionize — it should be just as criminal as GM, Chrysler, and Ford agreeing to fix wages.
Private unions are largely irrelevant outside of a few capital intensive industries (ports, airlines, auto to a lesser and dying degree etc) or janitors. Companies that have sissified management that give into union demands and run the company into BK should not be bailed out (i.e., GM). They should sell their assets to well run companies.
Yes, the wealthy elite has gotten richer. That has everything to do with bailing out the TARP banks. Neither group deserves a penny. The world would not end if Citigroup went down, nor would it if the CA prison guards had to take a 25% pay cut.
The original story is pure idiocy. And the defense is even worse. Good lord.
‘Certainly not the GOP?’ How memories fade! I’m thinking of the fiscally incontinent G. W. Bush, who pissed away federal money at a rate that would have shamed his Texan predecessor Lyndon Brownnose Johnson.
How about that prescription drug benefit, which added several trillion to the US negative net worth in one fell swoop? How about those ‘Saddam’s WMDs’ we seized, at the cost of trillions? Yeah, them GOP green-eyeshade guys wield some sharp pencils, let me tell you!
Don’t confuse a political duopoly with an actual choice. The RePukeLickin’ party, like the DemonRat party, is a braindead anachronism, fit for the scrapheap.
One little issue you have missed is that citizens in these supposedly profligate states routinely see much of their federal taxes paid transfered to the Republican states (landlocked farm states, the Southeast, etc.). If Republicans states weren’t able to feed at the trough of the most productive states, there wouldn’t be so severe a crisis in places like NY and CA and the budgets in Mississippi, Alaska or Idaho would look much worse.
I’d warn you on calling anyone lightweight or a hack. I’ve know senior Republicans for decades and the current bunch is by far the most intellectually empty and provincial. Even the corrupt class of 1994 had a few thoughtful leaders from earlier ages to chaperone them. The current group on the Hill isn’t able to consider that they might be causing their party serious long-term damage by being so simultaneously self-impressed and naive.
“When will you liberals learn that people are responsible for their actions?”
My, my, has it occurred to you that in your purist Neocon fantasy world, GWB and Cheney would be in The Hague; Libby would be in prison for treason; deregulated banks would be public utilities; Paulson would be in a homeless shelter; and Blankfein and most of your crony-capitalist heroes would be showering with Bernie Madoff?
BTW, what’s with the “Daddy issues” psychobabble? That’s weird. You do realize the obvious indicator of a scoundrel and “ideological hack” is one who resorts to “vile” personal attacks in a lame attempt to compensate for the lack of any substantive argument … or perhaps for some other personal inadequacy. I wonder who here is projecting Mommy-Daddy issues?
New York Medical College attempted to bust a Union in 2006.
They, illegally, fired all the Union members, then asked them to stay a bit longer to train the replacements, then fired the Union workers again. At the last minute, they canceled the whole scheme, just leaving one or two people twisting in the wind. The Union did nothing for those twisting in the wind.
Management, and the Union Management are scum, but balance each other nicely. Yin and Yang. Their actions are not forgotten. Sorry to be a bit off topic.
The rancor of the discussion in the following thread suggests that pleasing vistas of Crazy Horse should be the starting point for discussions of the state and municipal debt. ( http://www.nakedcapitalism.com/2010/12/trojan-horse-in-tax-compromise-gop-plan-to-bankrupt-states-break-union.html#comment-250886 ). Crazy Horse is to be commended in recognizing the the breakup of the Union would precipitate the break up of the Canadian federation. I would only suggest that Cascadia is likely to include much of northwestern California and extend up to Anchorage. Los Angeles and the Bay Area will in the end be separate independent Metro States somewhat like Singapore.
Why would Obama do this? He is from Cook County. He knows the score. The only thing I can figure is that this is an opening of an inter-generational (generation gap) material contradiction within the Dems. Obama intends to consolidate of the youth vote before it slides over into the secessionist camp. In the end though it is going to be so deeply unpleasant that people will find the secessionism to be far more entertaining and politically viable.
Good night David.
Re: “proffilgate, Dem run states”
Oh, and we should learn from responsibly run GOP controlled states like Arizona?????
Why, yes, Genghis. Watch and learn from the Phoenicians. It’s all about sound family values and education you see. Families tend to value food more when you levy taxes on groceries to balance budgets; ditto for healthcare and organ transplants.
So your “family values” include denying organ transplants in order to provide tax cuts for millionaires???
I guess protesting government “death panels” (aka Arizona legislature) isn’t so much fun when its real…
It is really funny. The top 1% in this country own 1/3 of it. The top 10% own 2/3 of it. They did not produce their way into this wealth. They bought the politicians and wrote the laws to make it so. This is never called redistributionist. It is causing the country to fall apart under its weight. We see it in high unemployment, the bubbles, the lack of good healthcare and education, the loss of retirement accounts. You want to know why no one has any money, why there is so much debt, why wages have been flat for 30 years, it’s because the rich have stolen it all. But suggest that some of that wealth should be given back to those who actually created it? Marxist redistribution!!! Class warfare!!!
Like I said, funny, in a sick sort of way. But this kind of claptrap is fast losing its potency. The anger and dispair in the country is real and growing, and trite phrases like these just aren’t going to be enough to fool the rubes or keep them at each other’s throats, and not yours.
Having spent a large part of my time these last 15+ years providing services to local governments, all I can can say regarding the “Build America Bonds” program is the sooner it dies a quick and hard death, the better.
First off, local governments and state governments are using the program to fill budgetary gaps. Or they are building edifices through the program. Why look for operational efficiencies and/or better ways to do things when the pressure is off? That is what happens, and I see it every day.
I can give example after example of inefficiencies and/or terribly poor decision making where each and every example is at least $50k to $100k per in savings, but the local government “powers that be” don’t care – these are issues that you get to sweat over down in the trenches, and there’s no accrual of glory or power in doing that type of work.
As a real example, there’s a relatively small Northern IL county government, outer collar county near Chicago, IL. Looks really wealthy and their paper looks good. But when you drill down, and really understand, there’s issues.
First off, they were affected big time by the real estate boom, and now bust (went from “go go” to “gone gone” in a blink). Their property tax base went big time, and now it’s starting to shrink (say 7% this year, more in the future) – and it’s going to continue for the next 3-4-5 years, but their actual taxes are going to stay steady, if not increase. That right there is a real danger sign (Sign #1) to me.
They are running in deficit spending this year, and they also have built a high cost structure. Back in the “go go” days, they started up a very sophisticated government campus (Edifice complex) substantially relying on bonded indebtedness. They put all sorts of very expensive and highly sophisticated technology into place that is quite expensive to keep up and running. The “Edifice Complex” is Sign #2. They have a lot of long term bonded indebtedness in place now, and the need for all this high powered environment that they built for has just shriveled up & gone away.
They haven’t recognized the trends. This is Sign #3. They made some potentially very bad fiscal decisions 5-6 years ago, resulting in potentially large (as in cash dollars) ‘claw backs’ on property taxes ALREADY COLLECTED AND SPENT (as in their share alone being considerably over a million dollars cash). But that may be the lesser issue, because during the “go go” real estate years, they entered into a number of fiscal deals to encourage real estate development (alternate revenue bonds, etc.), and that has consequences that are coming due.
And the leadership still has not recognized the potential consequences. Any budgetary cutbacks (new FY budgets went into effect 12.01.2010) are basically cosmetic in nature.
Btw, this is happening in a Republican controlled county. But the Democratic controlled counties here in Northern IL are in even worse shape. It’s not a political issue.
Too many people out there playing fast and loose with tax exempt bonding. IMO, need to put a stop to it now. Because it can get worse.
Hi Small Business Guy,
I don’t know if I follow your point.
We’re in a depression. States will definitely have budget shortfalls until unemployment goes down. States are losing all of that income tax (U6 around 17%).
When unemployment goes down, tax revenues go up.
Unemployment goes down when people demand goods and services.
People demand goods and services when they feel secure enough in their finances to spend.
Ok, here’s one of the issues that people don’t see unless you look really closely:
When you issue tax exempts, there’s always part of the bond offering which looks at the overall level of bonded indebtedness (both property tax reliant and separately, special (alternate) revenue bonds) for the entire county.
So, one is supposed to be able to obtain a relatively complete picture of all bonded indebtedness for a county government, all the different school district, community colleges, municipalities, park districts, fire protection districts, etc.
Get too much bonded indebtedness in aggregate (between all the tax districts), and that’s supposed to be an enormous red flag. And then you throw in bonds issued as a result of ‘special’ developments (such as bonds issued for Tax Increment Financing and Special Service Areas, among others) and things get way out of control.
There’s various ratios of bonded indebtedness to property taxes collected, and they apparently vary. One of the problems is the rapid (past) growth of special revenue bonds based upon development fees. All is good as long as the fees come in – when they don’t, it’s really bad news.
Imagine a situation (which certainly exists today) where 10% of the entire property tax collections for a specific county is going for bonded indebtedness payments. Then factor in a 25% decrease in property assessment values (also not unrealistic). Those bond payment obligations don’t change – the tax rates have to increase, and this means that in most cases, people’s property taxes are increasing at the same time the values of their property are decreasing.
That’s a nightmare – and having the ability to wildly issue more federally subsidized bonded indebtedness just makes the problem worse. The financial community loves it, because that’s money in the bank (and in their bonus checks) for them, but for homeowners/taxpayers, it’s a ticket for long term real estate stagnation.
And local governments aren’t anywhere near ready to come to grips with this scenario. Most of the individuals sitting on boards don’t have a clue about this type of issue – their eyes glaze over almost immediately.
Hi Small Business Guy,
Thanks for trying to explain it to me. There must be something I still don’t understand, as I agree with all your facts but disagree with the conclusion.
Property values are declining — agreed.
Lower property values leads to lower property tax income for counties and states — agreed.
States may increase property taxes to make up for shortfall in property tax income — very plausible.
A high amount of leverage and debt service is bad — I agree in ordinary times, but we live in extraordinary times.
Businesses are hoarding cash not because the economy is bad, but because the economy is unpredictable. If Federal, state, and local governments spend consistently, businesses can make forecasts and business cases for capital outlays, hiring, etc.
For the government to spend consistently, they need to print money, issue bonds, etc. I would find the idea distasteful if we weren’t in a deep depression. But the last great depression showed us that Federal deficit spending is the only way out.
Scott:
Just so you know, I don’t look at this through partisan eyes. Work with way too many local and state government folks of both political persuasions.
Where I have an issue is that a large percentage (and growing) of the BAB’s are not being used wisely. And there’s a whole lot of that going on, and from my viewpoint, it’s going to end up being catastrophic to local government economics.
Here’s why:
The uncontrolled BAB issuance is using up the available bonding for a whole lot of “feel good” projects. That’s going to put a far higher burden on local taxpayers down the road, and the only “hope” is that at that point, the Fed’s will roll in & bail us out of our poorly planned and wild misuse of bonded indebtedness (Remember, “Hope Is Not A Plan”).
Ex.1: A school district getting ready to issue $13+ mil in BAB bonds to build a “Development Center” for less than 600 students in total enrollment (only about 40%-50% of students will be using it). That’s one that’s on the burner, not a done deal yet.
Ex.2: A county run Forest Preserve District getting ready to issue MORE BAB’s to preserve prime agricultural farmland as “Open Space”. Sounds really great, doesn’t it?
Here’s the rest of the story. They passed a local referendum back in 2004 during the RE glory years, and the bonds were a 5 year term. Paid off this year. But they don’t want that bonded indebtedness authority to end, so it’s guess what, let’s issue MORE BONDS to preserve even more prime agricultural farmland as “Open Space”.
Great, except for two factors. First off, they sucker punched all of us as taxpayers, because they never made it clear that they were planning on rolling over the authority into a new set of bonds. In fact, at the time, they told all of us sheeple out here that was “unlikely” to happen.
Secondly, where’s the development pressure? There’s NONE out there right now, and it’s pretty unlikely it’s coming back anytime soon. If anything, we’re more concerned about increasing foreclosures, half finished, boarded up homes, about a 14++ year supply of platted developer subdivision lots and minimal demand – So why are we using scarce bonding power to protect print farmland from a threat that simply does not exist?
Because they can…
I’m just not seeing BAB’s as being treated as a scarce resource that they should be – I’m seeing considerably more of the “..And The Band Played On” attitude.
Hi Small Business Guy,
“Just so you know, I don’t look at this through partisan eyes. Work with way too many local and state government folks of both political persuasions.”
Haha, identity politics gets you nowhere at Naked Capitalism.
“Ex.1: A school district getting ready to issue $13+ mil in BAB bonds to build a “Development Center” for less than 600 students in total enrollment (only about 40%-50% of students will be using it). That’s one that’s on the burner, not a done deal yet.”
Hmmm… I don’t know much about what a Development Center would do or what they would normally cost.
“Ex.2: A county run Forest Preserve District getting ready to issue MORE BAB’s to preserve prime agricultural farmland as “Open Space”. Sounds really great, doesn’t it?”
How much will it cost to preserve the land? Is it previously developed, now just lying unused?
It’s possible that there are some unquantifiable benefits to having natural space, especially near farmland (pollinating insects come to mind). But I’m reaching, since I don’t know the details.
“Great, except for two factors. First off, they sucker punched all of us as taxpayers, because they never made it clear that they were planning on rolling over the authority into a new set of bonds. In fact, at the time, they told all of us sheeple out here that was “unlikely” to happen.”
Haha, well the FED chairman didn’t see the financial crisis coming, so I doubt some city planners saw it either.
“Secondly, where’s the development pressure? There’s NONE out there right now, and it’s pretty unlikely it’s coming back anytime soon. If anything, we’re more concerned about increasing foreclosures, half finished, boarded up homes, about a 14++ year supply of platted developer subdivision lots and minimal demand – So why are we using scarce bonding power to protect print farmland from a threat that simply does not exist?”
Now I think we’re on to something. I absolutely agree that something should be done with half-completed construction projects. But I don’t have any numbers on what would be useful. Completing them would drive down the price of real estate further and encourage small businesses to open up.
“I’m just not seeing BAB’s as being treated as a scarce resource that they should be – I’m seeing considerably more of the “..And The Band Played On” attitude.””
I think it’s great that you’re looking into this. The crisis did blindside everyone and it’s entirely possible that BABs aren’t being utilized effectively. The mantra was “shovel-ready” projects, which boils down to maintenance projects and boondoggles. If we recognize we’re in a long-run depression, then we can forget “shovel-ready” and start long-term, well-thought-out projects. Hoover Dam comes to mind.
Agreed, SBG.
On Chicago’s North Shore there are certainly many infrastructure projects that could make good use of BABs. Instead, the only attempts to use them that I see are on the part of bloated school districts (New Trier and Highland Park, to name names) who want state of the art facilities without having to pay for them (yet). Both proposed high school projects include fancy field houses at a cost of $10-20 million a pop. Sure, we can’t compete with the rest of the world in academics, but that doesn’t mean we shouldn’t borrow billions so Johnny and Jenny don’t have to run outside in the cold.
Given the chance, states like Illinois will continue to pile on the debt (and yes, unions are a big part of the problem) until the feds have no choice but to bail them out.
Give me an alternative to the Republicans’ “tough love,” Yves, cause I don’t see it myself.
Tough love toward gang-banksters and merchants of death would be an exceptional start. For their non-productive, lion’s share of the national economy they are the low-hanging fruit. Time for an eye exam?
As a New Trier resident, I can assure you that the infrastructure project you refer to as a “state of the art” fieldhouse is a wild mischaracterization. It is in fact about replacing a 100 year old facility that can’t support current academic requirements.
Andrew, breaking up the USA would not be “doing the world a favor”, it would push it into a dark age.
We are the last best hope, the last bastion of freedom, contrary to left-wing, Anti-American cant that you reflexively regurgitate.
You would know that if you actually understood how the rest of the world ACTUALLY works.
I would wager that you are under 35, have no property, few real prospects and no children. When you finally get a little older and actually face reality, i hope that you then see and acknowledge the great good that America has done in this world and in history; I hope that you remember how shameful your “beliefs” where when you were young.
Wow, if being a conservative republican makes me as happy as you, Hattip, sign me up!
And I would wager that you, hattip, are white, over 55, and have never worked a day of physical labor in your life. Oh, and probably “got” a deferment during Vietnam.
Which is not to say that I think that the turmoil the collapse of the USA would entail would be good for anyone at the time. But I’d be happy to stop sending my Federal tax dollars to Alaska…
How much do you really know about how the rest of the world works? I’ve had meaningful work experience on six continents, including quite a few emerging economies. Your American exceptionalism is the hallmark of someone who either has little/no foreign experience, or has had that experience only in the bubble of a more or less US setting overseas (foreign operation of a US company).
I have worked overseas extensively. America is different, and it is better. But we are going through some dark times with government expansion.
Bob you know from the past that we share certain shared accounting reality’s, although I diverge with your American exceptionalism.
Skippy…for better or worse…its a mid-western tornado…indiscriminate in its creative destruction…does your people weep….for their sins.
Don’t get too sensitive. Living on the coasts is better too, except the people. You can criticize exceptionalism all you want, but you really can’t critize opinion, even when the opinion is about exceptionalism.
Naw were good, just saying in retrospect having moved to Australia, to start my family 15 odd years ago is proving to be the right decision…for me. It took a few years to go native, as can be expected, and enjoy the attitude down under vs. the constant win at all costs etc etc I left behind.
That said I feel it would be imposable for reasons too numerous to put here…Australia’s template and smash it down over America.
Skippy…the NUMERO UNO mental status MSM psyops projection is a over weight anchor dragging down[ing a large part of the population. Which if given other metrics to focus on would benefit not only their personal lives_but_the world it self. Death / diminishment by self inflicted aggrandizement…it really breaks my heart to watch it Bob…
Take care…
Bob – I’ve worked and lived in the UK for almost 9 years. I’ve only worked in places where the employees are for the most part (say 95%) are non-American. I can say without a doubt that living and working here is much better than the US. When you “go native” like I have (and I believe Yves did as well), it’s a very different experience. And a rich one. Assumptions on ways to live begin to melt away – the American way is not the only nor best way to live.
And before you get started on how I am a hippy, I am a manager in an asset management company and am a CFA charterholder.
I have worked around the globe for moderate time periods. Circa 1960, America was decidely better. The period from 1960 to 1970, the rest of the world that I knew began to get better at rate that exceeded the rate of financial imorovement in the US. Effectively the rate of decline in the US middle class was accelerating from 1965 forward to the present.
The principal cause of the decline in the financial status of the middle class relates to the purchasing power of the the global reserve currency, the US Dollar.
Now the GOP Tax Compromize is indeed a trojan horse. It’s a tactic that is intended to create the oportunity for the draconian actions of an idealogy that has no understanding as to what the disease is as opposed to what the symptoms are.
thank you for the joke of the day, i needed a laugh-out-loud. Last bastion indeed
The rich, the ruling class and their elite agents have long been at war with the people of this country. Of course, the tide of history has been one long push to disestablish the white male protestant oligarchy. It is difficult for me to have to listen to educated people actually ask the president of the US, the galactically stupid questions that he was presented with today. My favorite was from AP Ben Feller, the school boy wonder in the front row who asks how can the American people believe in you, when you say you want to not give the wealthy a tax break, and then boo fucking hoo, you flip flop Mr President! How can you pass legislation when the politics of the moment demands that you do what you promised not to?
I normally do not believe in arguing by name calling, like the anonymous republican eunuch, tee hee, his name says it all, a joke disguised as a trenchant appearance here on NC. But really, the politics of the situation demands, just what Ben? Here is politics, 60 votes in the Senate, 218 in Lower House, then, and only then will you get what you want.
There is a disturbing dumbing down of understanding what power is in this country. President Obama’s arrival into DC, along with majorities in both houses of Congress was not a personal achievement. 67 million people voted him into office. They did it so he would fill an office where he would not be taking minute by minute orders for legislative action by the citizenry. He may choose to run, but we vote him in. If he lost, would he have failed to fight hard enough? It was not up to him to decide. It was us to us. He is not failing to fight it out, not failing to use his smarts and his political capital along with those whiz kids he has with him. He was only elected into the office. Once there, he is battling day in and day out to operate the Federal bureaucratic organizational structure. He is not shopping for options in the mall of life. He has people who want to destroy him in every way possible, to prevent him from doing anything at all. Anything at all. It has been like this in Washington, almost exactly, for over 100 years.
The middle class overachievers, who have grown up accomplishing so much, success in careers, in money made, in status, acclaim, legends in their own mind, now, see a president who is like them, polished, smart, an achiever, but he can not get what he wants. Like Tony Soprano crying out for help from his therapist, How do I make people do what I want them to do? He sees the problems of life as obstacles to his accomplishments, black marks of failures, instead of achievement, humiliation. Why can’t Obama be more like FDR, now he was such an ICON! Poor Feller and all of the whiners and who can’t believe that Obama is not as great a democrat as Buba. That Democrat did the best imitation of a republican I’ve ever seen. Tip O Neil went to his grave having stopped NAFTA, WELFARE REFORM, BANKING DEREGULATION, Bill Clinton accomplished more than Reagan and Bush together with those ACCOMPLISHMENTS.
But Obama, he can’t do what I want him to do, and it would be so easy, but for the people with the necessary and sufficient votes in Congress who absolutely will not vote for what I want Obama to do. How can Obama get those people to do what he wants, when he wants it? Poor poor yuppies, poor poor outraged frustrated voters for Obama. Boo Hoo, it’s not the republicans who have been fighting every quanta of government movement outside of military spending since the beginning of the 20th century, it is the unwillingness of Obama to win fights and thereby being a flip flopper.
Yves, you are uncovering tactical moves to strangle the baby in the bath water. It won’t be the first or 21st such attack. Just continue in your work to expose these tactics and to blunt them. Fighting tooth and nail. Obama is not the great man we need, we need to be the great people, organized to turn back wave after wave of attacks that will surely come, again and again. Your financial analysis is critical in this undertaking, I am more than hopeful that full blown banana republic status is not our fate.
Oh please. No states will go bankrupt. You can’t break the state employees’ unions without breaking the states. This is a silly worry and an empty threat by the Republicans. They may hate organized labor, but they certainly want collar county and downstate Illinois votes and Orange County money.
And labor productivity gains in capitalism should be expected to benefit the owners of capital, not the workers. I think I read that somewhere (and you should have). Unskilled laborers get paid enough to keep themselves alive, nothing more; surplus goes to the owners of capital. You must know this. The only reason workers ever benefited from productivity gains was because we used to have a labor movement in this country. It’s largely dead now. The same people who bitch about the death of the “middle class” also frequently bitch about labor unions without seeing how the two are related. If you own no capital and want more money, you have to take it from the people who own capital. How is that so hard to understand?
Oh how I love the petty bourgeoisie! So entertaining. They try so hard not to get shot in the foot, but they vote for people who shoot them in the face.
The record is to the contrary prior 1980, when the US experienced much better growth than now, and even through 2000, when the overwhelming majority of GDP growth went to labor, not capital. And Germany and the Scandanavian countries have far stronger unions than the US, with much better growth rates and more success as exporters too. So the economic side of your argument is simply counterfactual. It’s just rentier ideology.
And the Pethokoukis post explains how the strategy works in more detail. You might also get familiar with the basics before going off half cocked.
Uh Yves technically he isn’t wrong…I think you were reading into his comments more than you should have, he’s actually on our side but being a fuddy duddy with his comments
but you’re not wrong either for pointing out that labor taking a higher % of total income doesn’t mean lower GDP growth(though I don’t believe the guy you were responding to was saying o/w), and I would argue mainly for Minsky’s instability hypothesis reasons(in addition to that all important empirical analysis, but a reason for why is always good).
The only reason workers ever benefited from productivity gains was because we used to have a labor movement in this country. It’s largely dead now. T Jake
Ah, a labor cartel (with government privilege, I presume) to counter capital built with borrowing from a government backed counterfeiting cartel?
Rather than oppose an unjust cartel, labor decided to form one itself?
A strategic error. The way to fight injustice is not to engage in it oneself.
This is starting to sound like Krugman’s blog:
Fact-picking, obfuscating the real problems, no or only ridiculous alternatives offered, and most important everything the Reps do or plan is evil, everything the Dems do or plan is great.
Hey, the states can sell as many bonds they want, they will never pay them back anyway – so what difference does it make if the pay 35% less of the interest?
Why not postulate outright that you want unlimited backdoor bailouts for the states?
You appear to have reading comprehension issues. What in the post advocates an unlimited bailout of the states? This is pure straw man.
This is what I said:
Notice that the objective here is not to do the responsible thing, which is to figure out the fairest and least destructive way out of the states’ budget woes; it’s instead to push this festering problem to a crisis to achieve another goal, namely, break unions, with the objective of transferring even more to the rentier class.
Deal with what I wrote, not your projections.
Yves, thanks for the posting. It sure is bringing out some serious ignorance from commenters about reality versus the narrative they are fed by the MSM. All this misdirection of anger towards the boomers, the GOP, the Dems, Obama is just what the ultra rich want to keep the focus anywhere but on them.
We can hope that all readers of your web site will read your book ECONNED and tell their political representatives they want rule of law enforced on the FIRE industries in our country.
“everything the Reps do or plan is evil, everything the Dems do or plan is great.”
Got any evidence to the contrary?
Jest kiddin’…
The idea that Krugman, for one, lauds everything the Democrats do is laughable.
Furthermore, the Republicans _are_ evil. Certainly, the Democrats are a corrupt, plutocratic party. But the Republicans make them look good.
“Furthermore, the Republicans _are_ evil. Certainly, the Democrats are a corrupt, plutocratic party. But the Republicans make them look good.”
Put this comment in gold stars!
Here’s the end game:
$500,000 ‘success fee’ revealed in proposed sale of [California] state buildings the end game.
Its all about privatizing the commons.
Only $500,000? C’mon, that’s small-time.
How about Larry Agran, Mr Irvine Great Park?
From: http://www.ocweekly.com/2010-08-19/news/larry-agran-great-park-irvine/2/
“Great Park administrative costs (2008-2011): $56 million.
Great Park construction costs (2000-2010): $0.”
$56 mil, and no park. No idea how much of those consultant fees get kicked back to Larry, but there you are.
Finally some real discussion on this blog without the usual domination of left-wing rants and without even a single cdemand for for jubilee! I feel like the blog discussion is starting to mature.
without even a single cdemand for for jubilee! eagerly beaverly
We need a Jubilee or better a bailout of the entire population, borrowers and savers alike.
I feel like the blog discussion is starting to mature. eagerly beaverly
Do you associate callousness with maturity?
Posts like this one show why another crash is inevitable. We have very bad economic fundamentals, overlain with a series of bubbles, and a political class that is criminally goofy. The states are time bombs, but then there are so many others both here and abroad. It is increasingly looking like the house of cards before the meltdown when those of us who were watching wondered which one was going to be the one to bring it all crashing down.
That’s the potential silver lining — hastening the inevitable crisis of parasitic capitalism. As Yves notes, “the [GOP] objective here is not to do the responsible thing … it’s instead to push this festering problem to a crisis to achieve another goal…”
In fact where GOP strategy appears diabolically shrewd in its cohesion and relentlessness, it seems more akin to the self-destructive compulsion of a drug addict pursuing its never-sufficient fix of profit and power. Other apt metaphors might include cancer or a bacterial colony pursuing mindless growth to the terminal limits of its ecosystem, or a parasite that kills its host community en masse—an evolutionary dead end. I hope we can get to that dead end sooner and limit the ultimate collateral damage.
Politics aside, isn’t the critical flaw with Pethokoukis’s thesis that states cannot declare bankruptcy under federal law?
Sure, they can default on their bonds, but the term “declare bankruptcy” has a specific meaning under the federal bankruptcy codes. Where is the mechanism for states to “declare bankruptcy”?
Yves,
Please don’t get discouraged by the Friedman acolytes that have sprung up since you mentioned the word “union”.
Your post was undoubtedly meant to uncover what the mainstream media does not want to talk about, the other “compromises” that Obama/Biden have given to the Republicans in exchange for a 13 month extension of unemployment insurance.
Unfortunately for most of the Chicago School, they don’t have the capital and won’t when the austerity hits them, because they are expendable as well.
I do find it surprising that progressives and even centrist democrats are surprised by Obama’s actions.
If the tax cuts were not extended, the markets would have less money to speculate with. This is NOT about social justice or deficits. Trillions have gone to the top, to keep the music going.
If unemployment insurance was not extended, there would be alot of unhappy Republicans and Democrats looking for a third party candidate or a pitchfork whichever was easier to find ( probably the fork).
The decision, as most of Obama’s decisions, has been to keep the current system on life support.
This amounts to giving a guaranteed income to the top 10-15%, to keep spending and speculating.
Externalities are the worry though, they keep Bernanke up at night. Because he can keep printing money and giving it to the upper brackets, of course in a Pareto-esque manner, only until the producers of the world rebel and won’t accept the paper.
Nothing a little gunboat diplomacy can’t solve, right?
That’s the Black Swan.
The first carrier to be sunk, will end it all mighty quick.
NIS says: “……The first carrier to be sunk, will end it all mighty quick.”
Not likely. At that point America starts using nukes to install some real fear in the restless areas. After all, one just HAS to keep American exceptionalism going, with or without Sarah Palin or some other theocratic fascist puppet for the ultra rich.
(/snark), if necessary.
Tis scary….
Thanks for spreading this important story, Yves. Unbelievable…
Yves – happy to be your driver for 220k.
Banana Republic Land? Our masters show no such restraint. They want it all. They can’t help themselves. But by taking it all, they destroy the tax base that funds the government that legitimizes their claims on property. They certainly won’t tax themselves sufficiently to support it, and even if they would, they couldn’t, because taxation ultimately rests on the flow of resources through an economy, and the master-subsistence-slave economy envisioned by the powerful minimizes that flow. The effective bankruptcy of the states is just one step.
Total debt of all kinds in the US is over $50 Trillion. That is money that is owed to someone, by everybody else. The financial industry has forced this debt on the rest of us. Here is the mechanism: Most money is created out of debt. Government issues about 5% of the money that is in circulation. The rest of it is created by banks, when they make a loan.
When a bank makes a loan, it creates the money to loan out of nothing, just adding numbers on the computer. So the total money supply is the principal of the loan, P, plus the amount issued by the government, G. This does not include money the government borrows, which, after all, is still just created by the banks.
The banks then charge interest on the loan, on money which they have created out of nothing.
Because of interest, the total money needed to pay off all loans will be greater than all the money loaned, ie greater than the money supply in ratio (P + G + I – E)/(P + G), where I is all the interest, (not the interest rate,) and E is all the expenditures of the financial industry, if I > E. (If I < E, the opposite will be true.) This implies (I – E)/(P + G + I – E) share of borrowers will always be unable to pay off their loans. Only when I = E is the system stable, and all borrowers able to pay off their loans. Where E is less than I, this leads to an exponential growth of both the money supply and debt. This is how the world has gotten to where it is: The many deeply in debt to a few.
Only with an exponential growth in real consumption, which necessarily implies an exponential growth in real production, can this be maintained. Since this is ultimately impossible, this spiral has no (nice) ending.
See:
http://www.youtube.com/watch?v=vVkFb26u9g8&feature=related
for the movie “Money as Debt.”
See my blog for a further discussion.
um…no
some of your basic facts are right but your conclusion that it will all come crashing down is wrong. Debt by itself is not a bad thing, it depends on what it is financing that determines the good or bad in it. Lumping all individual debts into a 50 trillion number is just stupid.
Debt by itself is not a bad thing, it depends on what it is financing that determines the good or bad in it Deus-DJ
Is debt to a counterfeiter good? Do not fractional reserve banks create money (credit) as they lend it? And where does the purchasing power for that new money come from?
Not to gang up on ya here but, mark to myth valuations, maturity time travel and very questionable trusts…cough…rmbs et al just to name a few.
Hell is it government debt[?] or private…hard to tell these days….international counterpartys[?], all based on higgs boson like discovery.
Skippy…valuations_has become_a philosophers debate methinks.
States cannot declare bankruptcy. They are sovereign under the 11th Ammendment, and so there is no superior agency to administer bankruptcy.
They can, however, default on their obligations. Bondholders only recourse is under State laws and constitutions. States have done so at least 17 times in the past, and probably will do so again in the future.
Thank you for that tidbit. It will be interesting to see what Federalism machinations are attempted as the train wreck we are watching proceeds. Any bets on a state and when?
Is someone going to ask along this path if states are to TBTF as well? Which state will be let go under like Lehman as an example?
How much speculative fun can one have is this sick sort of way?
really?
Hi Yves,
Here it is:
The new sheriff scene from blazing saddles
http://www.youtube.com/watch?v=upvZdVK913I
This is all wishful thinking. Neither party has the balls to deal with out of control government growth and spending. We will continue to increase the size of government, increase government pensions, benefits, salaries, and services until we can no longer borrow and we have a total economic collapse. Give it another 20 years.
and services until we can no longer borrow and we have a total economic collapse. Give it another 20 years. Bill G
The government should NEVER borrow in the first place. It is a favor to the usury class that should have been abolished long ago.
Furthermore, the size of government is a result of the unstable (and dishonest) nature of the banking and money system. Fix that and the need for government should “wither away”.
And in related news-
Year-End Muni Bond Flood Creates Buying Opportunity
http://noir.bloomberg.com/apps/news?pid=20603037&sid=aRV8MBkfTgfQ
Well, Yves, after reading down through most of the responses regarding unions in general, and public sector unions in particular, I thought I may have clicked on my shortcut to the WSJ. The antipathy and virulence toward unions found on NC resembles that found on the latter.
We’re a long way from ALLSTON and graduate school, heh? What a difference 30 years makes…
Perhaps a piece on how and why “unions” have become the poster child tied to the “whipping post” for the ongoing assault on the living standards of working people is in order as this antiunion vitriol appears to span the social spectrum from the top to the bottom.
Let us face it; Obama is a supply side Reaganite. He is not a democrat. Supply side economics have destroyed the fiscal health of the nation and destroyed the industrial base of the country. Surely Obama can see this. He is not stupid; he is just sided with the corporatist over the individual and the ubers over the rest of us.
The deficit commission had one purpose and one purpose only to destroy SS and Medicare. SS has a $2T surplus that is invested in government bonds and those bonds that will need to be cashed to fund the boomers SS. This Plan was the result of the Greenspan commission which raised FICA in the ’80’s. The boomers it was said was an abnormally large demographic and would thus pay for the current recipients of SS and set aside a large amount of savings to fund a large part of their own SS. But of course Reagan and Greenspan did not see fit to establish a real program of savings and instead used the surplus to fund the Reagan tax cuts. Successive administrations did the same and spent the boomers surplus FICA.
Now in order to fund the boomers SS, the SSA will need to cash the bonds and distribute the current contributions to the SS beneficiaries. In order to cash the bonds and spend the current contributions more money will need to flow into the treasury. The R’s are deliberately defunding the treasury with tax cuts and their deficit/debt spending under Bush. They know this will implode SS and eventually Medicare.
Add this to their plans for the states and you find that their purpose is to turn the USA into a third world country with 2 classes, the ubers and the poor. Middle class not wanted. No need to move to China when we are willing to work for peanuts a day and live several families to a tenement flat. Welcome to the new American 19th century. Welcome to total major corporate control.
The R’s care not for reducing the debt or deficit, it is all a sham. They want to drive the fiscal health of the country into the ditch. Then they can ride to the rescue with austerity for us, but not them or the ubers. Why no one can see through their plans is amazing. The deficit commission never mentioned eliminating the Bush tax cuts as a first step toward fiscal health.
The easiest way to eliminate the Bush tax cuts is a planned phase out. A percent or two per year in increases taxes flowing into the treasury adding to the federal revenue. And SS, remove 5-10% a year from the general fund into a true saving until all of SS has been removed from the general fund.
Pipe dreams, I know. But dreams will soon be all we have.
I agree with everything you say except “Obama is a supply side Reaganite”. Obama seems to want to bring back some compromise in forming policy, which would be a good thing if the opposition was of the same mind. Unfortunately they are not. The Republicans’ approach to public policy is that of high priests’ and one can not compromise on religion. Obama is somewhat like the pacifist who believes that if he refuses to fight, there can be no fight, in spite of the fact that he is regularly getting mauled.
The federal budget was running a surplus when Bush was sworn in as President. We would be in much better condition if the Republicans had demanded that the surplus be used to pay off the debt and raised taxes to pay for Bush’s two wars and his domestic programs. Instead they fought for lower taxes and spent, spent, spent. This was intentional, no one is allowed to be this stupid.
Jim the Skeptic said: “Obama is somewhat like the pacifist who believes that if he refuses to fight, there can be no fight, in spite of the fact that he is regularly getting mauled.”
I’m not sure I’d lump Obama together with Tolstoy. But whether Obama is a Tolstoyan or a wolf in sheep’s clothing, the outcome is the same:
The experiments [of Ernst Fehr and colleagues] also point to the key of the moralists. Kindly saints (Tolstoyans) are completely ineffectual in preventing cooperation from unraveling. In the absence of effective sanctions against free-riders, opportunistic knaves waste any contributions by the saints to the common good. Self-righteous moralists are not necessarily nice people, and their motivation for the “moralistic punishment” is not necessarily prosocial in intent. They might not be trying to get everybody to cooperate. Instead, they get mad at people who violate social norms. They retaliate against the norm breakers and feel a kind of grim satisfaction from depriving them of their ill-gotten gains. It’s emotional, and it’s not pretty, but it ensures group cooperation.
–Peter Turchin, War and Peace and War
Aside from the rhetoric, there is no difference between Democrats and Republicans. “Compromise” is just an excuse for Democrats to take up the same corporatist policies they would have taken up even if the Republicans didn’t exist. Unions? Republicans hate them. But can you name one significant pro-union position, you know like EFCA, the Democrats actually carried through on? Instead we get another job killing free trade deal, this one with South Korea. You blame Bush for the wars, but whose wars are they now? All that has happened is that Obama has shifted troops from Iraq to Afghanistan.
You say Obama is not a Reaganite supply sider. Where have you been? Aside from military Keynesianism and a stimulus that was too small and too weighted toward supply side tax cuts, we have had nothing on the demand side. That’s why we have 15 million unemployed and 32 million disemployed. Against this, we have the trillions that have gone to the banks.
I know changing paradigms is difficult, but at this juncture it is crucial. Both the Democrats and the Republicans are sending us over the cliff. This is not about a bad decision we can live with. It is about a long fall and a hard landing. Do you really think any of us should care whether it was a Democrat or Republican who was driving the bus at the time?
Hugh said “Instead we get another job killing free trade deal, this one with South Korea. You blame Bush for the wars, but whose wars are they now? All that has happened is that Obama has shifted troops from Iraq to Afghanistan.”
I agree that signing any trade treaty now is absolute stupidity. Our trade treaties over the last 25 years have helped corporations move well paid production jobs overseas. THAT IS THE CAUSE OF OUR CURRENT ECONOMIC NIGHTMARE NOT THE MISCONDUCT OF THE FINANCIAL SYSTEM. I also think that we are in for “a long fall and a hard landing“. Obama gets the blame for that trade treaty but this is not Obama’s failed economy.
These are Bush’s wars, he sent the troops into Iraq and Afghanistan. There was no way for Obama to take those troops out immediately without causing worse problems. Obama was trapped by history, he has made mistakes, but these are not his wars.
Hugh said “You say Obama is not a Reaganite supply sider. Where have you been? Aside from military Keynesianism and a stimulus that was too small and too weighted toward supply side tax cuts, we have had nothing on the demand side. That’s why we have 15 million unemployed and 32 million disemployed. Against this, we have the trillions that have gone to the banks.”
The difference between Obama and a Reaganite supply sider is that the Republican supply sider believes in supply side economics, compaigns for it, won’t settle for any compromise to it, it is their STRATEGY. Obama got himself trapped into it as a TACTIC, to push stimulus into the economy. He got lousy advice from economic advisers and he has a propensity to compromise. We have 15 million unemployed because of 25 years of failed trade policies.
I have not seen one single economics guru who is prepared to accept that the banks all should have been allowed to fail but I believe that was necessary. Banks haven’t been lending because there was no great demand by qualified borrowers, so their failure would not have changed anything! Or an economics guru who accepts without reservation that our economic nightmare was caused by 25 years of Global Free Trade, but I believe that is true too. They all start with the assumption that you must bail out the financial industry. So where was Obama to get his economic advice?
Anyone who is not angry about this situation must be brain dead but I can still detect a difference between Democrats and Republicans. I am a registered Independent, give me a good Independent candidate and I will vote for him. I have in the past.
So secret plans and 11-dimensional chess are no longer operative? The new explanation for the disaster that is Obama is that he is “trapped by history.” My reply is the same as Truman’s if he can’t stand the heat he should stay out of the kitchen.
Our trade policies have certainly contributed to our problems but that’s quite a stretch to overlook the housing bubble and the securitization driven and fraud induced meltdown.
“You say Obama is not a Reaganite supply sider. Where have you been?” I said “Obama is a supply side Reaganite” I did not say that I had just discovered this.
On trade; I agree, this notion of free trade is ruinous to our economy. We need to immediately begin reciprocity with all of our trading partners which includes tariffs, price supports and import restrictions, to begin seriously prosecuting anti-dumping laws, and if possible renegotiate harmful trade agreements. Next we need to change our tax laws so that value added in the US is taxed at a lower rate then when value is added off shore. This should induce manufacturing on shore. Additionally, we need to change our Corp tax system to eliminate the booking of profits made in the US off shore to avoid taxes and institute a tax on financial transactions (except in retirement accounts).
Hugh said “The new explanation for the disaster that is Obama is that he is “trapped by history.” My reply is the same as Truman’s if he can’t stand the heat he should stay out of the kitchen.”
The point is how should we assess blame? If we are indiscriminate in laying blame then the exercise is meaningless.
Blaming the Iraq war on Obama, lets Bush off the hook for starting something where there was no good finish. He invaded Iraq with an Army big enough to destroy the Iraqi Army but far to small to occupy the country. When the government fell, there was no entity to step in and maintain order. Bush followed that up with a disastrous policy of eliminating all Baathists from the new government or it’s institutions. Iraq is still trying to recover from the after effects of those mistakes.
Blaming the Afghanistan war on Obama lets Bush off the hook for his mistakes there. He sent CIA agents to work with the northern alliance to remove the Taliban government. Next he sent minimal US military forces into the country. These forces were too small to surround Tora Bora, so they depended on the local militias to block al-Qaeda’s retreat. The people of Afghanistan survive by never making blood enemies, and when push came to shove, the local militias allowed al-Qaeda to escape into Pakistan. For 6 years Bush allowed al-Qaeda and the Taliban to operate in their sanctuaries in Pakistan, it became the status quo. By 2008 the only possibility was to fight them at a distance, leaving them free to wander in and out of Afghanistan at will and Pakistan was tired of our meddling in their affairs. We didn’t give a damn about Afghanistan, we wanted al-Qaeda, and Bush let them escape.
Obama is trapped by those histories and the failing economy which limits his options.
But hell if it makes you feel better, let’s blame him for the cold weather too. :^)
Giving one side almost everything they want for very little in return is not compromise. Eliminating all the Bush tax cuts, in set increments would began to repair the debt/deficit. No deal should be approved without the elimination of the tax cuts and a contemporaneous vote to raise the debt ceiling.
During the Bush years, we used to joke that they would blame Clinton for the cold weather. Apparently, this “blame one’s predecessor” is something every Administration does.
I have argued this point a million times. Obama was never trapped by Bush’s policies. He was specifically elected and given a mandate to reject them. Yet he embraced them, even expanded them. You and others can push the line that Obama never had the votes in Congress to enact a more liberal agenda. The salient point here is that Obama never fought for a liberal agenda. This should come as a surprise to no one. Peter Daou recently related how Obama describes himself in private conversations as a Blue Dog. What seems hard for so many Obamabots to accept is that what we see is Obama’s agenda. It just happens to be a Blue Dog agenda in which he believes and which he fights for.
But even if we were to accept that Obama is trapped by an unresponsive Congress, there are a whole range of issues where he does not need Congress to act. Investigating and prosecuting Bush Administration and Wall Street criminality, ending the wars, not re-appointing Bernanke, reducing the surveillance state, administratively ending DADT, closing Guantanamo, using the DOJ’s anti-trust division to take on the TBTF, conducting terrorism trials in Article III courts, including progressives in his Administration, the list goes on and on. But even where Obama had discretion to act independently he chose to embrace what Bush had done.
So no, I don’t buy this line that Obama was trapped. Nor do I accept how you frame the wars. It’s the Washington narrative which was put together by neocons. It ignores the actual political realities of those countries and makes it all about us. It never explains why we should remain in either country. That is there has never been a policy reason given why we should have troops in either country. As for removing them, we could have been out of Iraq completely within 9 months from Inauguration Day, in an orderly fashion not rushing the withdrawal at all. Similarly, we could have been out of Afghanistan by August of this year again orderly fashion no rush. The reason that we still have troops in both countries is because Obama is continuing the neocon agenda with regard to both. As in everything else, he’s there because he wants to be there.
Obama is not trapped by history; rather he is trapped by his own folly. There is a vast distinction between the creation of a problem and the solving of a problem. It is in the solving of a problem that Obama is failing. He campaigned on a certain set of solutions to numerous problems facing the nation. He has failed to fight and to implement the solutions he promised. Those solutions were the reason many supported him.
Shortly after his election, he replaced most of his progressive campaign economic advisers with the current economic advisers. Many of who were responsible for the economic problems we now face, including Giethner, Summers, and Bernanke.
It appears as though he has become bewitched by the big money and he has forgotten the importance of a thriving middle class to the economic and democratic well being of this country. These are the principles that have made this country great. Destruction of the middle class spells the demise of America.
Ella, I agree with you on these tax cuts. Obama is completely unforgivable wrong! Nothing done in the Bush administration requires him to continue those tax cuts, so there is no way for him to escape blame here.
We seem to disagree about whether there are limits on the President’s freedom to change policy for the country. There would have been a firestorm of protests if Obama had ordered the troops out of Afghanistan on day 2 of his term. Once elected, reality sets in!
Hugh, we just disagree. But I think we will both be voting for some other candidate during the next Presidential election!
Very perceptive, ella. Your (and Yves’) clarity is what brings out the regressive defenders of the indefensible, with increasingly shrill and illogical attacks.
“Face piles of trials with smiles. It riles them to believe that you perceive the web they weave. Keep on thinking free.” —Moody Blues
Ella,
When it comes to the courtroom of public opinion, those appealing to morality will always triumph over those appealing to material self-interest, and this is especially true in the United States. Thus the right-wing’s appeals are always to morality, even though they go to great lengths to perpetuate the myth of self-interest.
You posit the riddle: “Then they can ride to the rescue with austerity for us, but not them or the ubers. Why no one can see through their plans is amazing.”
An answer to the riddle I believe might be found in the ground-breaking research being done by Ernst Fehr and his colleagues at the University of Zurich. They explore a phenomenon called “ultrasociality,” and in the U.S. and Slovenia we find the greatest levels of ultrasociality of any nations in the world.
One component of ultrasociality is the impulse to self-sacrifice for a greater good. Most Americans, perhaps 65% to 85%, will voluntarily self-sacrifice to defend their nation from foreign threats. Most Americans (perhaps 50% to 60%) will also voluntarily self-sacrifice to defend the nation against internal threats—-that is they will self-sacrifice in order to punish free-riders.
A well honed educational and propaganda system can go a long way in defining who the “threats” are. The ubers want the threats to be 1) foreign and 2) if internal, anybody but themselves. Herculean efforts are thus expended by the ubers on the educational system and media outlets to define the free riders as, citing some examples from this thread, “unions,” “deadbeat borrowers,” “spendthrift states” or “the unemployed.”
But I’m not so sure your desires are “pipe dreams.” Another component of ultrasociality, besides the impulse to self-sacrifice which the ubers have so successfully manipulated, is a well developed appreciation of fairness. Humans have large brains and highly developed cognitive abilities. Evolutionary psychologists Leda Cosmides and John Tooby argue that there are specialized “cheater-detection circuits” that allow a potential cooperator to detect individuals who free-ride. Furthermore, there is a cultural component and, in nations like the U.S. where ultrasociality ranks high, the impulse to fairness is especially acute.
The question I believe is this: How quickly can the ubers destroy ultrasociality in the United States? I’m not convinced this can be achieved within a timeframe of four or five decades, even though I’m sure the ubers are quite confident they’re at the top of their game in duping the proles. But they may be overconfident. If cultural devolution cannot be achieved so quickly, the ubers might find themselves reaping a whirlwind. Instead of the unions, deadbeat borrowers, spendthrift states and unemployed being the targets of the moralistic punishers whom the ubers have whipped into such a frenzy, they could find themselves being the target.
As conditions worsen, our diets may increasingly consist of ubers…sorry, I mean tubers, tubers! you know —potatoes, yams, yucca casava, etc. Ubers cause mad cow disease.
On the similarities of Slovenia and the US, the last ranking of healthcare by the World Health Organization has the US beating Slovenia by a hair at number 37, versus Slovenia’s abysmal 38th place. Yea, we’re number 37!
http://www.photius.com/rankings/healthranks.html
Granted we have a way to go to catch up with Malta, Oman, Greece, Morocco, Saudi Arabia, the UAE, and thirty other countries, but still—Yea, we’re number 37!
Thanks. I am not familiar with this research. The public needs to be educated. Hopefully, fairness will win and not the ubers. Otherwise…
JMO but the Build America Bonds program was a system designed to get municipalities away from offering TAX FREE muni bonds and return to offering only taxable bonds. If you look at recent new-issues, it’s very difficult to find tax free muni bonds because every municipality took advantage of the government payouts.
By the constitution (remember that document) and specifically the 10th ammendment, the federal government isn’t responsible for the debts of the states and isn’t supposed to be bailing them out. Once states begin taking bailout funds (some would argue they already are), they lose sovereignty to govern within their boundaries. Any bailout should / would immediately force the reorganization of the government and it’s promises (like happened to GM). Renegotiate all debt, all benefits are renegotiated and every contract is renegotiated. Why give California $20 billion if they are just going to promise more benefits or generate another spending program?
Regardless, this is a direct replay of what’s happening in the Euro Zone. Fiscally responsible states should not be required to fund the fiscal irresponsibility of other states. If you want to break up this country, start having 45 states fund the programs of Illinois, New York, New Jersey, California and Ohio.
As for this:
> Fiscally responsible states should not be required to fund the
> fiscal irresponsibility of other states. If you want to break up
> this country, start having 45 states fund the programs of
> Illinois, New York, New Jersey, California and Ohio.
If all California paid Federal tax dollars returned to the
state instead of supporting other states, I think we’d discover who’s self-sufficient and who isn’t. So if you are so certain
California is a deadbeat, we’ll take you up on your offer
to withhold “help from the other states” in exchange for
keeping what we make. Tit-for-tat might not work out according to your superficial analysis, so you might want to think a bit more before you accept the offer.
Back here on earth, the states as sovereigns was resolved back in 1865.
Similarly, it might be useful for you to go back and read the 10th Amendment:
“The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”
This along with the 9th Amendment affirms that the Constitution is not a closed system, that just because a right is not “enumerated” in the Constitution does not mean it doesn’t exist. The word “sovereign” by the way does not occur either in the Constitution or the amendments. Note too the language of the amendment. The Constitution does prohibit powers to the states. So if you want to make a sovereignty argument, it would be that it is the Constitution that is sovereign.
It makes good economic sense to help the states. The country may be headed toward depression but if you want to get it there faster than by all means crash the finances of the big states.
Finally, KnotRP is right. Most of the states that are net recipients of federal dollars are Red States in the South and West. It is precisely the deadbeat states of the West Coast, Midwest, and Northeast that are carrying them and have always carried them. This is the libertarian fallacy. They want the government to do only those things they want it to do, not realizing that this is the position of every other political group in the country.
Red State versus Blue State taxes versus benefit is a misunderstood but often quoted statistic. They include corporate taxes paid which highly skews the figures. For example compare Nebraska and Kansas. Very similar states but Nebraska pays far more in taxes to the federal government and it comes in the form of corporate taxes (ConAgra, Mutual of Omaha, Union Pacific and many of the Berkshire Hathaway companies). Should we really call that a tax on Nebraska? Not really since it is paid by the customers of those corporations all over the country.
New York, New Jersey, California, Delaware are all major centers for corporate headquarters where the federal taxes are paid.
This has been explained repeatedly but for an obvious reason many ignore the reason and just keep repeating the statistic.
> New York, New Jersey, California, Delaware are all
> major centers for corporate headquarters where the
> federal taxes are paid.
Right, so despite the fact that your posting travelled
across numerous products designed and built in California, you
wish to present the argument that California is
an “empty corporate shell” state?
1. I thought that was Delaware, but whatever.
2. If you aren’t going to use logic, I cannot argue with that.
Red State versus Blue State taxes versus benefit is a misunderstood but often quoted statistic. They include corporate taxes paid which highly skews the figures. For example compare Nebraska and Kansas. Very similar states but Nebraska pays far more in taxes to the federal government and it comes in the form of corporate taxes (ConAgra, Mutual of Omaha, Union Pacific and many of the Berkshire Hathaway companies).
So Nebraska companies (and their employees) pay federal taxes that get distributed as subsidies to corn farmers in Kansas. Got it.
Should we really call that a tax on Nebraska?
Yes.
Not really since it is paid by the customers of those corporations all over the country.
Uhh… what? So companies in one state have customers in other states that… pay local sales tax? Or you mean the fees charged for products and services from Nebraska, paid by Kansasians, are a kind of tax?
I don’t follow you at all.
And as for corporate income taxes “skewing” anything — huh? That’s blue state money that will go directly to red states.
I don’t wish to fan partisan flames. I love my red state brothers. But think a little bit. Defense bases don’t pop out of the ground by magic. Do they take in any revenue? Do they pay any taxes? They redistribute wealth from one area to another.
Thanks Yves for calling it what it is; another push to move us to banana republic status.
Tank public sector investments.
Undermine Social Security by decreasing payroll taxes.
Eliminate campaign disclosure.
Eliminate class action suits.
The Republican plan is to so damage the public sector that Americans
are left to the tender mercies of corporations. Then, when the corporations
fail, the public is forced to bail them out. Talk about a Road to Serfdom!
Am I the only one who sees this as system that needs to be cleansed by letting the debtors fail or fly based upon their own merits? Why are we looking at Federal funding States funding Munis funding Boards debts?
When the hell did TBTF get to the point of covering a new portable building for the grass-cutter at the park?
If there is a hiccup that takes a big state out of the market for a spell it will trump the economic benefits of all the new deficit spending. It might do it a few times over. Bruce Krasting via Update
Perhaps I R a knucklehead myself but I would like to see this expanded on. A deflationary spiral in a big state as the state cuts back on spending?
Never mind, this makes it clear to me:
http://www.washingtonsblog.com/2010/12/reuters-republicans-are-trying-to.html
All very interesting comments here.
One thing. Yves says I am not at all left leaning. Not true. In many ways I am a commie. In others I look like a John Bircher. I go both ways.
Same way with BABs. I hate it. But without it we may fall into a hole. What’s better?
We fall into the hole either way, it’s just a matter of who else gets dragged in with us. Just like the multi-trillions in losses still to be recognized, and still to come; it’s only a question of who pays for the Banks losses.
Why do claw-backs seem to be off the table?
The first sentence of this article is either sloppily written or the writer doesn’t understand the facts (or, I suppose, has an angle). This fundamental misunderstanding of the issue really negates the entire article, namely, states cannot declare bankruptcy. There is no such court that can force the restrucuring of debt and obligations. Municipalities cannot declare BK without the approval of the state. To credit this opening statement to “my sources on Capitol Hill” either means the author is lying and has no sources (i.e. made it up) or his sources are crap.
Since there’s no such thing as BK for states, they have choices – they can cut spending, or restructure the debt on their own (which has very negative implications should they decide to go to market again any time soon), or raise taxes. Simply declaring insolvency doesn’t solve anything. Pension obligations don’t go away if you declare insolvency, but they’ll have to be restructured. Taxes have to go up and services have to be cut. There will be pain, for sure, but the unions aren’t going anywhere (though they may be marginalized somewhat. However, public perception of unions is pretty negative right now anyway, so I would argue they’ve been marginalized already. I don’t see how this is the GOPs fault). Still, even the most ardent anti-union activist doesn’t think that all of the benefits that have accrued to unions should be eliminated and cut to zero. I have yet to hear that argument anywhere. The argument made is that union benefits and wages should be more in line with the private sector, or perhaps a bit lower given the greater job security. This is not an indefensible case.
The lack of a BAB program makes it harder for states to refinance, but not impossible. Debt service is actually a fairly small portion of state budgets (California has about $83 billion in expenditures projected for the next budget, debt service is about $5 billion). The market shrinks because long term tax-exempt money will no longer by the BABs, but the program amounts to a subsidy to profligate states and it distorts the markets. I am in favor forcing states to actually control their spending once in a while.
Sorry to poke a hole in this “bash the GOP” post, but I see no evidence how any of these actions will “break unions” in states. There is plenty to criticize both parties about, but this is a horribly constructed and poorly thought out argument.
QUOTE: “It isn’t hard to recognize this move as part of an effort to push America further into banana republic land, with a small and wealthy elite controlling the government and a greatly disproportionate share of the wealth.”
Isn’t that exactly where the US is, and has been, for a long time???????????????
Every now and then when I need a laugh, I read this blog and the comments section of the NY Times. Liberals falling all over themselves in a tizzy about something (usually a ‘vast right wing conspiracy’).
It’s going to be quite enjoyable to watch over the next several years as California, New York and Illinois follow New Jersey in waking up to reality and electing someone with common sense enough to read a balance sheet and income statement. California (where I live) in particular needs a serious wake up call as the liberal union-friendly spending since 1980 has just about bankrupted the state. [n.b. Google “I opt out of CA” to read an excellent piece on the sorry state of this state).
Message to Democrats and liberals: apparently the worst election results since the 1930’s are still not enough for all of you to wake up to the reality that the United State of America do not like you, or your economic policies. This once great nation was founded by people who got things done, and produced things, which led to wealth creation. Note the term “wealth creation”, not “wealth redistribution” which is apparently all liberals and Democrats can grasp.
Anyway, thanks for the good laugh this morning. Always enjoyable to read how liberals think, although it is sad to recognize just how close their anointed one (Community Organizer In Chief) came to destroying this country.
“Always enjoyable to read how liberals think”
Yes, but we do think. That’s the difference between us.
Is this the wealth redistribution where my federal tax dollars fund defense boondoggles in red states? Or the one where rich bankers get fat bonuses?
I know, I know. Don’t feed the trolls.
William, the real laffer on all you Americans is that y’all have the answer to everything in this world (count the military invasions in the last 100 years, for a starter) and will end up with a mafia-run corporate Mussolini state. How can y’all be concerned about the state of the union with over 1000 military bases around the world? You are safe ! Wake up !
The rich are going to make you happy and content.
Anyone who knows anything about the reality of how states and local governments are run and for whose benefit, realizes that there is a pressing need for financial discipline. The more local the government, the easier to succumb to graft and corruption. That is my personal experience. What may slow them down is strict financial accountability and severe scarcity of funds.
If there is a lot of available money (or the perception thereof) and if this money can be borrowed or taken from nonlocal (this distinction from local is important!) sources, then there is no limit to their corruption and mismanagement. These cesspools of payola can only end up in bankruptcy inflicting damage on a lot of bystanders.
The primary tool in class warfare is to direct attention away from the perpetrators of it. So there are always deadbeats, welfare queens, the undeserving poor, and, of course, corrupt government. The goal is to keep us fighting each other, for liberals to hate conservatives, for conservatives to hate liberals, and for us all to be angry at the government. But the people that we should really be angry about are the rich who monopolize the country’s resources and buy its politicians. By all means, let us get rid of corruption in government, but let us also get rid of its source, the rich.
No. The issue is that those who corrupt the system find accomplices among those who should know better — sadly people who work in the public sector. Why do you think there are so many public employees who get fantastic retirement deals? The unions love corrupt politicians who steal aplenty from all while giving chicken feed to some groups.
Let us forget ideologies and face reality. Wait to see how many local governments will face bankruptcy in the next few years. Then, the unions of public employees will see that they made a deal with the devil and, not surprisingly, lost. Gesundheit!
Wait to see how many local governments will face bankruptcy in the next few years. Then, the unions of public employees will see that they made a deal with the devil and, not surprisingly, lost. Tortoise
A bailout of the entire population would fix the banks and state and local governments too. But we must never bailout the victims so it seems. Why? T’would admit guilt is my guess and would establish a “bad” precedent (justice).
This is an example of what I was talking about. Set private sector employees against public sector ones. Those government guys are freeloaders and deserve whatever bad is coming to them, etc., etc. And who really benefits from this fabricated conflict? The rich. Government employees earn less than their private sector counterparts. Why do they have retirement plans? Because *gasp* many of them belong to unions. Unions are demonized in this country, again a function of class warfare, because when they used to be strong they could shift some of the profits to wages, they could negotiate healthcare and retirement plans for their members. Evil, evil, evil, I know, how could we ever have tolerated them in our country. Much better to break them and strip them of their power. The benefits of doing them in are for all to see. 30 years of no wage growth, pensions done away with, healthcare available to fewer and fewer. Truly, the millennium has arrived and paradise is at hand. The smartest thing the rich ever convinced their workers to do was to get rid of those awful, terrible unions.
If you aren’t rich, you’ve been had. If you are rich, that explains your attitude.
The most powerful “union” in the country is the government backed counterfeiting cartel otherwise known as the banking system.
This once great nation was founded by people who got things done, and produced things, which led to wealth creation. Note the term “wealth creation”, not “wealth redistribution” which is apparently all liberals and Democrats can grasp. William
Yes, wealth was created, with stolen purchasing power, via the government backed counterfeiting cartel (the FR banking system).
So one can easily argue that redistribution (return of stolen property) is called for.
Is redistribution ideal? No, not at all, but it is a form of rough justice, better than none.
How about we eliminate the need for redistribution via fundamental money and banking reform?
“because the benefits of productivity gains, which used to be shared between workers and the companies, now accrue entirely to companies.”
…and around/down the circle/drain they start/go again.
Yesterday’s investment, the consumption economy, resulted in today’s disposable consumption economy; hmmmm ….
what is this guy churping in my ear about now?
Ha. Ha. You have got to love those Republicans especially Sen. Boner and the gay caballero Sen. Grammcraker. If Debt is Prosperity, then we are the richest county in the world! Ha. Ha. All in just 10 years!
At least they are upfront about their intentions of following the Bush/Obama administration agenda of bankrupting America into submission to the World Banksters and the new economic world order!
God, how they hate Independence and government for and by the people and they especially hate any social services for the people including: Employment Benefits, Social Security, Unions, Social Services and public ownership of Lands and Natural Resources and public owned Infrastructure including buildings, highways and bridges.
Republicans pray for the day that Austerity kicks in for Americans and the States are bankrupt and in receivership by the Bank of International Settlements and the International Monetary Fund which is backed by the United Nations and enforced by NATO’s 3 million troops.
The ultimate goal of the World Banksters fiat money debt scheme is International monetary control of each nation by international Totalitarian corporate rule.
So you are an advocate for the public service employees, and not other segments on the population as well? bob goodwin
I advocate a bailout of the ENTIRE US population, borrowers and savers alike. Or lacking that, mortgage principle cram down for every underwater mortgage.
Of course debt deflation has this impact across all segments, and of course debts cannot be paid. I agree that those holding the paper should take a haircut. bob goodwin
Or a sufficiently large (and equal) bailout check to every US adult would allow the debt to be paid. No haircuts would be needed. To prevent an inflationary spiral, leverage restrictions (ideally a 100% reserve requirement) should be placed on the banks at the same time.
Can I have a free house too?
No, of course not.
But if you’re rich enough, the law doesn’t apply to you, and you can just take the house!
By now, every American family should own their home free and clear. So sure, why not?
Well, at least extended unemployment monies returns back into the market place with food and bill paying versus bank bailouts that end up in overseas markets. I’m sure we will get more of both unfortunately.
Interest free, fee based monetary system conducted by the US Treasury sounds good to me while the old Federal Reserve remains as the bad bank until dissolved when done handling all the bad paper (decades).
Also like partial gold backed reserve currency to satisfy transactions between governments and countries. Partial silver backed currency for the little people, in as much leads to limited growth or controlled growth which the existing bank system wants no part of besides market investors.
BAB or debt financing curtailed is scary when you are forced to live within your means. I’m in California, probably a list of at least a 100 State agencies that we could do without. Unionized government employees at all levels (city, county, State) we can live without including but not limited to teachers’ unions. Free markets (not capitalism) have a way of balancing themselves out.
….contact me, in care of fantasy land.