Posts Tagged With: economy

OVER THE FISCAL CLIFF WE GO

By now you should have all heard about the “fiscal cliff” and how we are about to plunge over it, if Congress does not act by around Christmastime. Lots of luck with that. The fiscal cliff came into being in August 2011. The voters, in their infinite wisdom during the November 2010 elections, elected  a Democratic majority in the Senate, but a Republican majority in the House of Representatives. Most of the newly elected House members were Tea Party stalwarts, with a supposed mandate to sharply reduce Government spending by cutting the budget. Then, in July of 2011, a piece of legislative idiocy known as the debt-ceiling had to be raised in order for the Government to go on functioning. The debt-ceiling, which is not stipulated anywhere in the Constitution, mandates that the Government cannot borrow anymore money above an amount previously designated by Congress, unless Congress passes a new law designating an increased amount of debt. I know that this is utter nonsense that attempts to appeal to voters who otherwise are not paying attention to the machinations of the way things get done in Washington, but this nonsense is codified in statute.

So, if any of you haven’t fallen asleep yet, I’ll plow on with more explanation of how Congress functions on the taxpayers dime. Thus, back in July 2011, if the debt-ceiling wasn’t going to be raised on Government spending, where 40 cents out of every dollar spent had to be borrowed, it would have meant that major components of the Government would have to be shut down, and Federal employes sent home with no paycheck. It would have meant missed social security or medicare payments, as well as failure to pay Defense and other Government contractors. It would have meant that if you had payed for a trip to any of our national parks, such as Yellowstone or Yosemite, (over 300 million people visit our national parks every year) you were out-of-luck since park personnel would have been sent home, and the parks closed. You get the picture. But catastrophic or not, House Republicans vowed they would not go along with raising the debt-ceiling unless the Obama administration agreed to drastic cuts in Federal spending to begin January 2013, as well as renewal of the Bush tax cuts through the end of 2012. Otherwise the Government would be shuttered, starting August 2, 2011. Just before midnight on August 1, Obama caved, and agreed to all the Republican demands, and the Government was allowed to stay in business through the end of 2012.

By now, those of you that haven’t fallen asleep are probably propping open your eyelids with toothpicks, but, hey, I didn’t make the rules whereby the Government functions in all its splendor. So now we are in December 2012 and the “fiscal cliff” which sounds a lot better than “congressional stupidity” is about to befall us in just a few weeks. If the Administration and Congress can’t come to an agreement, the Bush tax cuts expire, and taxes go up for nearly everyone. This will be noticed immediately in reduced paychecks due to increased tax withholding. Automatic budget cuts will take effect, including a $50 billion annual cut in Defense spending. This has a lot of  Republicans all upset, since spending on military hardware and troops is the holy grail for conservatives. As if the Defense budget was funded by the money tree that grows in the Pentagon courtyard. Small Defense contractors, heavily concentrated in the Washington DC suburbs of Northern Virginia and Maryland, are claiming that they will have to close their businesses should these Defense cuts be allowed to take place. Other non-Defense contractors are also claiming they will have to reduce payrolls or shutter their companies, causing more unemployment and further weakening an already tepid economy. And so it goes, on and on.

President Obama is willing to reinstate the Bush tax cuts for all Americans, except the wealthiest 2% of the population. For them, (couples earning over $250,000) the marginal tax rates would go up 4.6% on earnings after $250,000. Which is where they were during the Clinton years. Yet Republicans are absolutely not willing to accept 98% of the loaf. They are insisting that it has to be either the entire 100% of the loaf, or no bread at all. After all, doesn’t everyone know that a small marginal tax increase on the richest 2% of Americans will cause an irreparable breach in the very space-time fabric of the universe. A breach that can never be healed and will eventually cause the universe to crumble into a heap of ashes. That, in effect is the Republican position on income taxes, and they’re not budging from it.

The Republicans also want to overhaul social security and medicare to lower their costs, both of which are unquestionably breaking the budget. In this instance, it’s the Republicans that are facing up to reality, and the Democrats that are being irrationally stubborn in refusing to come forward with reform plans that are clearly necessary for those 2 giant entitlement programs. Raising the eligibility age for both programs to 67, and eventually to 70, would make them solvent overnight. And such action would be completely justified because the life span of Americans has significantly increased since these programs were enacted. So there you have it- the GOP won’t budge on on a tax increase for the rich, and the Democrats are just as stubborn on reforming social security and medicare. If both parties hold to their positions we go over the fiscal cliff come January.

Awhile back I wrote a piece on the failures and dysfunctions of democracy, and democratic forms of government in general. I pointed out that Winston Churchill had said that democracy was the worst form of government, (except for all the others that have ever been tried.) And now with this extreme polarization among the ruling parties in this country, dysfunction has never been more clearly highlighted. I believe that members of both parties become highly agitated just at the thought of having to compromise with the other side. Thus, we appear to be stalemated. My feeling is, that at the last minute, some sort of agreement will be reached preventing our plunge over the fiscal cliff. Or not.

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BRAND NAMES

One of the more curious events of the recent Republican convention that was totally under reported by the media, was the fact that neither of the last 2 Republican Presidents, George H.W. Bush and George W. Bush were not only not invited, but were never mentioned during the convention process. On the other hand, Bill Clinton, the last Democratic President before Obama, was hailed at the Democratic convention as the second coming, and one could almost see a halo ringing the top of his head when he gave his convention speech. This despite the whole Monica Lewinski scandal thingy. Yet both Bush the Elder and Bush the Younger were both persona-non-grata at the GOP production. Although I disagreed with some of his policies I always considered the elder Bush to be a man of integrity and decency. At least, for a politician. But, I guess, that since he’s a pretty old man now, and he did lose his reelection bid, were factors leading to his aura of invisibility at the Republican festivities. The younger Bush, who also possesses a high level of decency, was made a non-person as far as Republicans were concerned, for several reasons. One, of course, was the economic crash we endured during the last 2 years of his presidency, which got us into the mess that we’re still trying to emerge from today. But the other reason was that W. showed too much moderation for today’s GOP, which has swung totally over to the dark side of political fanaticism. After all, it was under Bush’s reign that the Medicare drug benefit was enacted and federal aid to education, as well as other social programs, was significantly increased.  Can’t have that, as far as today’s Republicans are concerned.

Regarding the economy, however, the economic disaster in 2008 was not Bush’s fault,  nor is it ever the President’s fault. Although Democrats in general, and Obama in particular, have made lifetime careers out of blaming Bush for the bad economy, the reality is that the fault lies in the inherent nature of our capitalist system, and the speculators that try to game the system. In the 1920s, the economy was on a roll and the stock market was booming. It was known as the roaring ’20s. There were big profits to be made in the stock market, and investors were making money hand-over-fist. It really didn’t matter what stock a person bought, the stock market could only go one way, and that was up. Or so the speculators and other capitalistic gamers would have you believe. Until one day in October 1929, someone took a second look at what was supporting highly inflated stock prices, and found there was really nothing there. Word got around, and sooner rather than later, panic began setting in. People started selling their stocks in a mass frenzy, and the entire market collapsed. We all know about the great Depression that ensued, and the misery that America went through for about a dozen years, until WWII pulled us out the hard times.

Similarly, in the 2000s, capitalistic speculators zeroed in on the real estate market where values could only go one way, and again, that was up. Whereas, in previous decades, people bought houses primarily for living quarters, in the early 2000s, speculators were grabbing houses to to make big, quick and easy bucks. Indeed, we bought our house here in Las Vegas in the year 2000, and saw the property nearly triple in value before the roller-coaster ride came to an end sometime between 2006-2007. Almost on a weekly basis, I would tell my wife that our builder had increased the prices of new homes by somewhere between 25,000 to 50,000 dollars, and she would shake her head and utter words of disbelief. We saw speculators buying up scores of houses in our development, in one get-rich-quick scheme after another. Until, as in 1929, someone took a second look, and asked how real estate prices could possibly be so astronomical, given what was being offered for those prices. As previously, panic selling started to set in, and speculators were dumping their properties on the market for whatever price they could get. Today, my house is back down to roughly what we paid for it almost 13 years ago, which is okay since we bought it to live in, not for speculation. Plus, I have the satisfaction of knowing that many speculators and gammers were financially ruined when the housing bubble burst.

Of course, the greatest economic downturn since the great Depression resulted from the bursting of that bubble, and the economy continues to limp along weakly since 2008. Once again the flaws of our capitalistic system raised their ugly heads. But Mitt Romney and the Republicans see the poor economy as their pathway to the presidency and perhaps full control of Congress. Just blame the high unemployment rate and huge deficit spending on Obama and the Democrats, and winning in November should be in the bag. So why isn’t it. When it became a sure thing that Romney would be the Republican nominee back in April or May, and given the lousy state of economic conditions, I expected His Mittness to open up at least a 10%-15% lead in the polling numbers. Yet here we are, a little over a month from balloting time, and the latest polls show the race to be a dead heat with Obama actually having a small lead. What happened?

Could it be that the Republican brand of politics just isn’t selling too well? That the GOP way of fixing the economy by giving tax cuts to the rich while sharply cutting Government spending for the poor, sick and elderly, is not the way many people view reality. You know, that pesky 47% of us always looking for a Government handout. Including veterans from Mid-East wars with brain damage, blindness, missing limbs, or PTSD that insist on asking the Veterans Administration for benefits. Or perhaps those obnoxious seniors always carrying-on about their Medicare or Social Security benefits being tampered with. Or perhaps those receiving food stamps, where the GOP wants to make substantial cuts. After all, if you have no money to feed yourself, is it really the Government’s responsibility to keep you from starving to death.

Or perhaps people are objecting to the Republican brand when it comes to social issues. Like the Republican platform that would not allow any abortions, even in cases of rape, incest, or where the mothers life is at peril. Or the GOP guy from Missouri running for the U.S. Senate, claiming that a woman’s body would take care of her in cases of “legitimate” rape. (I would hate to see what illegitimate rape looks like.) Or the Republican continuing war against gay rights and gay marriage. Thus, in a year when a bad economy should enable the GOP to sweep into power, Republicans, as I said previously, have gone so far over to the dark side of right-wing whackoism, that the race for both President and Congress remains exceedingly close. I still think that Romney will likely win, because he has more billionaires willing to spend whatever it takes to get him elected. But by this point in time it shouldn’t even be close, except for the Republican brand of extremism. And as I’ve said many times, Mitt Romney remains the best candidate the billionaires could buy.

 

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A RATIONAL PLANET

One of the great disappointments I will have endured, is that in my lifetime we will not have made contact with beings from another planet. Space is so vast that the development of technology to enable us to travel to another inhabited planet probably won’t occur for at least a thousand years. But it would have been so cool to be able to examine life on an alien planet and see whether they were able to get it right, or whether they fucked it all up the way we have on planet Earth. Even some basic stuff would be fascinating. Do they have sex with the same organs used to remove bodily waste? What kind of foods do they eat if any? Do they require sleep like we do? But the most fascinating thing of all is whether they were able to develop a civilization that lived in peace and harmony, or did they have a history of constant war, strife and bloodshed as we have had. In other words, did they live lives of rational common sense, or in constant fear, paranoia, and irrationality as we have done.

So it got me thinking that if we ditched our usual fears and the delusional thinking that goes with those fears, how much better life on this planet would become. For example, when Barack Obama was elected in 2008, there was virtually an unprecedented rush to buy guns and ammo that occurred almost over night. Gun stores couldn’t up with the demand, especially for bullets, as the surge to buy weaponry cleaned off their shelves within days after the election. Apparently, a good segment of the population went into a full fledged state of paranoia, believing that the election of a liberal Democrat would result in the Government stripping every citizen of  his or her weapons, and hauling protesters off to concentration camps. This, despite the fact that the subject of gun ownership was rarely, if ever, discussed during the campaign. Today we have millions of citizens armed to the hilt with multiple guns and storage sheds filled with nothing but bullets, still waiting for Government tanks to come rolling down their streets and haul them off.

Anyway here are some of the things we can do to achieve a more rational planet.Lets start with drugs. Every year we spend tens or hundreds of billions of dollars to outlaw marijuana, heroin and cocaine, while allowing drugs that kill far more people like tobacco and alcohol to remain legal. Every year we incarcerate tens of thousands of drug dealers and users at enormous expense, while tens of thousands of  of suppliers in this country and throughout Latin America are murdered, usually by drug cartels that make billions off the illegal drug trade. First of all, is it the government’s role to tell someone they’re prohibited from engaging in self-destructive behavior if such is their desire. If that is the government’s role, then the government should prohibit tobacco which kills about 400,000 Americans a year, alcohol which is highly detrimental to over users, as well as cheeseburgers, fries and pepperoni pizza which do nothing but clog people’s arteries leading to heart disease and other ills. Sound ridiculous? No more so than the so-called war on drugs which has been a monumental and extremely costly failure. Legalizing at least marijuana would reduce prison populations, reduce a major source of revenue from the drug cartels, and lead to an increased flow of government revenues as it could be taxed the way tobacco is.

Another rational move would be for all the world’s governments to eliminate tariffs on imported goods. Tariff is just a $10 word for taxes. When the government puts a “tariff” on say a pair of imported shoes made in China, you, the consumer are paying a higher price than you need to for those shoes. Tariffs are put in place ostensibly to allow domestic producers to compete with countries where it’s cheaper to make similar  products, but all it does is result in consumers having to pay higher prices than they should. Tariffs result in protectionism, which is highly destructive to most economies,and is blamed as one of the main causes of the 1930s Depression. It has been estimated by some of the world’s leading economists that if tariffs were totally eliminated, all world economies would significantly improve almost overnight, especially the economies in the poorest third-word countries in Africa, Asia and Latin America. Interestingly, both Mitt Romney and Donald Trump before him (they make a good pair) have been bashing China and threatening them with higher tariffs, if China doesn’t raise the prices on the stuff we import from them. I know that will gladden the hearts of all consumers.

Another exercise in sanity would have the government be the employer of last resort for the unemployed. In 1933, when Franklin Roosevelt took office at the height of the Depression, and the unemployment rate was triple what it is today, he quickly established what came to be known as the Civilian Conservation Corps. Hundreds of thousands of unemployed men were hired by the Corps to go into every community in the country and plant trees and shrubs and undertake other environmentally-friendly actions. By 1936 the unemployment rate was cut in half, and Roosevelt swept to a landslide re-election. Today, instead of just shoveling out unemployment checks to those that can’t find work, the government could use that money to also hire hundreds of thousands of people to do a myriad of badly needed infrastructure projects. They could repair our decaying water and sewer pipelines, repave roads and restore crumbling bridges, work on outdated aspects of the nations’s electrical grid, and also perform environmental projects. The unemployment rate would be dramatically lowered and as spending increased the economy as a whole would gather steam.

In any event these are just a few of the steps we could take on the road to rationality. I could go on and list hundreds more but you get the picture. I deliberately left unsaid some of the more contentious political irrationalities that ideologues like to indulge in,  like trying to ban a woman they don’t know from terminating an unwanted pregnancy. Ideologue, by the way, is just another 10 dollar word for fanatic. Will this planet start to come around and begin exhibiting more common sense and rational behavior? I’m not holding my breath. In the meantime I’ll have to console myself with old Star-Trek reruns.

 

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