Category Archives: economy

Democrats Losing the Message Battle—As Usual

14 Tuesday Sep 2010

Posted by in Congress, Democrats, economy, Politics, Republicans, Taxes

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This is why Democrats consistently lose the message battle—theirs is not cohesive and it’s too convoluted and complex for non-political junkies to understand. One “senior House leadership aide” tells Talking Points Memo that there won’t be a vote on extension of the Bush tax cuts, another says there may be a vote after all. Make up your mind.

After John Boehner’s alleged “misstep” on Sunday when he said he would vote for an extension that didn’t include those making over $250,000 a year “if that were the only option” it would appear that Democrats have an opportunity to make Boehner put his money where his mouth is, so to speak.

Not so simple when one of those “senior House leadership aides” says Democrats don’t want to “force his hand” by scheduling a vote on the extension, they just want to use it as a campaign issue. Dumb de dumb dumb.

“You don’t need a vote in the House to say the party is blocking tax relief for the middle class – you can just point and say, ‘Look! Senate Republicans blocked it,'” the aide said. “If Republicans killed a tax cut, that could be potentially game changing for Democrats in both chambers.”

Wrong. Here’s where Democrats get too cute by half and get too far into the political weeds with their message. The average voter who doesn’t follow this stuff every day doesn’t know and doesn’t care about how the Bush tax cuts were written by Republicans with an expiration date, and that if they are allowed to expire it will actually be Republicans who have raised taxes.

The average voter doesn’t get, and doesn’t care about, all the intricacies of who did what and why. They don’t know and don’t care about parliamentary procedures and filibusters. They know this—Democrats are in charge of both Houses. If nothing gets passed, taxes go up on everybody. Therefore, Democrats raised their taxes. Nobody wants taxes raised, so throw the bums out, which is the simple to understand Republican message.

If Democrats would use their head, and if they really wanted to take advantage of the apparent “rift” between Boehner and McConnell on this issue (I say apparent because it’s not really a rift, it’s a kabuki dance designed to set a trap which Democrats are stepping into) they would introduce a simple piece of legislation in both Houses. The Bush rates remain in effect for people making under $250,000 and go up for those making over that amount. Make Republicans go on the record as being in favor of tax cuts for rich people, a simple message that everyone can grasp.

KISS. And for once, get everybody on the same page. Please.

Beware Wannabe Speakers Bearing Gifts

13 Monday Sep 2010

Posted by in budget, Congress, Conservatives, Democrats, economy, Obama, Obama administration, Politics, Republicans

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Speaker-in-waiting (he hopes) John Boehner says a few reasonable sounding words on Face the Nation and the headlines are about a ‘shift in policy,’ a ‘crack in Republican solidarity,’ a ‘victory for the Obama administration,’ and ‘Republicans caving on the tax cut battle.’ Three words of advice:

Don’t buy it.

First, why would anyone believe a word Boehner says? Then look at the entirety of his comments. Yes, he said,  “If the only option I have is to vote for some of those tax reductions, I’ll vote for it.” He also added, “But I’m going to do everything I can to fight to make sure that we extend the current tax rates for all Americans.” One hand giveth, the other taketh away.

Here’s what the Orangeman is doing as I see it. One, he’s taking a campaign issue away from the Democrats. He’s not going to let them beat the GOP over the head with ‘defenders of the rich’ for the next seven weeks, so he appears to show willingness to compromise.

Two, Boehner uses the qualifier “if the only option I have is…” because he knows that’s not the only option he’s going to have. He knows that, like everything else, the battle over extending the tax cuts is going to be in the Senate, not in the House. He knows that there are already 4 Democratic Senators—Bayh, Conrad, Nelson, and Webb—plus Joe Lieberman, who have come out in support of extending all the tax cuts for at least some period of time.

That’s why he also said this during the interview: “I don’t control the agenda on Capitol Hill. Nancy Pelosi and Harry Reid do…”

Here he’s painting the Democrats into somewhat of a corner. He and the Republicans can say, ‘See, it’s not us, it’s them. We’re not the obstructionists here. We’re willing to compromise but the president can’t get members of his own party to go along with him.’

Boehner hasn’t turned reasonable, it’s all a political calculation. Caveat emptor—let the buyer beware.

Making Sense of the Tax Cut Extension Contradictions

11 Saturday Sep 2010

Posted by in Congress, Democrats, economy, lobbyists, Obama, Politics, Republicans, special interests

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A couple of things don’t make sense in this debate over letting the tax cuts for the top 2% expire. Don’t make sense on the surface, that is. Dig a little deeper and it becomes perfectly clear.

Why is there such angst in Congress about raising taxes on the wealthy? Members of both the House and the Senate in both parties say they are so concerned with the deficit, but yet extending the cuts will add about $700 billion to the deficit. Many say raising taxes will kill job creation, but those same cuts led to little or no job creation during the 9 years they have been in effect. So what’s the big deal about raising taxes on millionaires?

Because they would be voting to raise taxes on themselves. One percent of Americans are millionaires, but 44% of the members of Congress are millionaires—237 out of 535. They would be voting not only to raise taxes on themselves, but their friends, their associates, and most importantly to them, the people who write the large campaign contribution checks.

Here’s the other thing that doesn’t appear to make sense. Naturally, most Republicans are against letting the cuts expire, for no other reason than that President Obama is in favor of it. But why are an increasing number of Democrats coming out in favor of an extension? Besides the fact that many if them are included in that number of millionaires, that is.

I know some probably get tired of me beating the drum for the importance of organized labor, but unions were once the largest constituency group and voting bloc who stood up and spoke out for working and middle-class people. Into the “vacuum” left by decreasing union membership and its influence on politicians and policy has stepped corporate interests and their money. From Winner-Take-All Politics via Kevin Drum at Mother Jones:

“Unions…are the particular focus of business animus. As they decline, they leave a vacuum. There’s no other nationwide organization dedicated to persistently fighting for middle class economic issues and no other nationwide organization that’s able to routinely mobilize working class voters to support or oppose specific federal policies.

With unions in decline and political campaigns becoming ever more expensive, Democrats eventually decide they need to become more business friendly as well. This is a vicious circle: the more unions decline, the more that Democrats turn to corporate funding to survive. There is, in the end, simply no one left who’s fighting for middle class economic issues in a sustained and organized way. Conversely, there are lots of extremely well-funded and determined organizations fighting for the interests of corporations and the rich.”

In my opinion, this also explains why some who vote Republican and support Republican policies, other than those who are simply anti-anything Obama related, are against raising taxes on the wealthy even though very few would be affected by an increase on those making over $250,000 a year. They’ve bought into the corporate-interest saturated media theme that unions are evil and that the wealthy special interests are looking out for them.

It’s 1938 All Over Again

07 Tuesday Sep 2010

Posted by in Congress, economy, Obama administration, Politics

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Any of this sound familiar?

“The U.S. economy has been crippled by a financial crisis. The president’s policies have limited the damage, but they were too cautious, and unemployment remains disastrously high. More action is clearly needed. Yet the public has soured on government activism, and seems poised to deal Democrats a severe defeat in the midterm elections.

[…]

Gallup polling… [a]sked whether government spending should be increased to fight the slump, 63 percent of those polled said no. Asked whether it would be better to increase spending or to cut business taxes, only 15 percent favored spending; 63 percent favored tax cuts.”

The result?

“And the…election was a disaster for the Democrats, who lost 70 seats in the House and seven in the Senate.”

The year was 1938. The president was Franklin Delano Roosevelt. Now here we are again:

“More stimulus is desperately needed, but in the public’s eyes the failure of the initial program to deliver a convincing recovery has discredited government action to create jobs.”

So what is the Obama administration proposing as a solution for a stagnant economy and insufficient job creation? Tax cuts, tax cuts, and more tax cuts:

“With just two months until the November elections, the White House is seriously weighing a package of business tax breaks – potentially worth hundreds of billions of dollars – to spur hiring and combat Republican charges that Democratic tax policies hurt small businesses, according to people with knowledge of the deliberations.”

Good, sound political strategery—let the opposition define the terms of engagement and play into their theme that tax cuts are the prescription for whatever ails the economy. And speaking of political strategery, how the hell is anybody still unclear on this subject?

“If administration officials can agree on a policy path, it is not clear that it would be approved in the current environment on Capitol Hill.”

Aaaaarrrggghhhh!!

Krugman concludes:

“But always remember: this slump can be cured. All it will take is a little bit of intellectual clarity, and a lot of political will. Here’s hoping we find those virtues in the not too distant future.”

That’ll be the day.

A $3.8 Trillion Republican Tax Hike

29 Thursday Jul 2010

Posted by in budget, Congress, Conservatives, economy, Politics, Republicans

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Before House Republicans left Washington for their August recess yesterday, Rep. Mike Pence handed out his 22-page plan for how Republicans can disseminate their propaganda get their message out to voters over the break.

“The recess document…lays out key topics to address in the dog days of August and early September: “Week One: Jobs. Week Two: Government Reform. Week Three: Spending. Week Four: National Security. Week Five: Healthcare. Week Six: JOBS.”

[…]

Under the heading “Job Creation,” Republicans call the expiring tax cuts, set to lapse at the end of this year, a Democratic plan “on increasing taxes by $3.8 trillion.”

Job creation? If I were a Democratic strategerist, I would have every candidate carry a copy of this chart, and every time a Republican parroted how tax cuts create jobs, throw it in their face and say, ‘Really? What happened here?’.


About the alleged Democratic plan to increase taxes–wrong again. If President Obama and the Democrats did nothing, if they extended none of the tax cuts (which isn’t going to happen, but for the sake of argument say it did) the tax increase would be a Republican tax hike, not a Democratic one. Republicans wrote the tax cut legislation, and a Republican president signed it into law—with an expiration date. Why? Because they had to pass the cuts through budget reconciliation and that required a little sleight of hand trickeration. Ezra Klein explains:

“In order to maximize the size of the cuts, Republicans had to minimize the influence of minority Democrats on the package. So they chose to run the bill through the reconciliation process.

But that posed some challenges. Budget reconciliation had never been used to increase the deficit. In fact, it specifically existed to decrease the deficit. That’s why one of its rules was that you couldn’t use it to increase the deficit outside the budget window. Republicans realized they could take that very literally: The budget window was 10 years. So if the tax cuts expired after 10 years, they wouldn’t increase the deficit outside the budget window. They’d also have the added benefit of appearing less costly in the Congressional Budget Office’s estimates, as the CBO duly scored them as expiring after 10 years, which kept the long-range budget picture from exploding.

But the plan was never to have the tax cuts expire. Instead, the idea was that people would get used to the new tax rates, and no future Congress would want to allow a big tax increase, so when the time came, either Republicans in office would extend the cuts or Republicans in the minority would hammer Democrats until they extended them.”

Which is exactly what they’re doing now.

And when Republicans get to their faux concern about the national debt, present them with this. Two economic scenarios–one with the cuts expired and one with the cuts extended:


Oh, but I forgot. Tax cuts don’t count against the debt, just unemployment benefits. Never mind.

Is 9% Unemployment the New Norm?

28 Wednesday Jul 2010

Posted by in economy, Obama, Obama administration, Politics, Unemployment

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Considering this:

“Nearly half of the unemployed—45.9%—have been out of work longer than six months, more than at any time since the Labor Department began keeping track in 1948…Overall, seven million Americans have been looking for work for 27 weeks or more, and most of them—4.7 million—have been out of work for a year or more.”

And this:


How do you get to this?:

“Treasury Secretary Timothy Geithner said the economy has now recovered sufficiently for government to begin to make way for private business investment.

Mr. Geithner’s comments on Sunday, which echo previous sentiments expressed by President Barack Obama, reflect a turning point in the government response to the worst economic downturn since the Great Depression, a period marked by deep federal intervention in the financial, housing, auto and other industries.

“We need to make that transition now to a recovery led by private investment,” Mr. Geithner said Sunday on NBC’s “Meet the Press.”

Led by private investment? Corporations are sitting on nearly $2 trillion of profits now and unemployment is still hovering around 10%. Just when is this private investment going to kick in and start hiring?

“A survey last month of more than 1,000 chief financial officers by Duke University and CFO magazine showed that nearly 60 percent of those executives don’t expect to bring their employment back to pre-recession levels until 2012 or later — even though they’re projecting a 12 percent rise in earnings and a 9 percent boost in capital spending over the next year.”

“2012 or later” huh? Something else significant is scheduled for 2012, isn’t it? Conspicuously convenient timing for the unemployment picture to start improving if you ask me.

Why aren’t corporations hiring now? The Chamber of Commerce claims it’s because of the “onerous regulations” being placed on them by the Obama administration. Now if one had a conspiratorial mind one might think that big business wants to keep the unemployment numbers high through 2012 so that they get a Republican Congress this year to be followed by a Republican president in 2012 who would cancel all those “onerous regulations.” One might think that, and one would be right, in my opinion.

Sadly, the administration seems to be willing to accept 9% or higher as the new norm:

“The White House said Friday it expects that unemployment will stay at or above 9% until 2012, but at the same time forecast that the economy will grow by at least 4% in 2011 and 2012.”

To whom it may concern at the White House:

If you seriously think that the economy has “recovered sufficiently” so that the government can get out of the way and let private investment take over on job creation; if you’re willing to accept unemployment at 9% or above through 2012; schedule the moving vans for the morning of January 20, 2013.

Why Tim Geithner Opposes Elizabeth Warren as Head of the CFPB

20 Tuesday Jul 2010

Posted by in bailout, economy, financial reform, financial regulation, Obama administration, Politics, too big to fail, Wall Street

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Elizabeth Warren should be a no-brainer as President Obama’s choice to head the newly-created Consumer Financial Protection Bureau (CFPB). She is a long-time advocate for the rights of consumers, the person most responsible for the Bureau’s inclusion in the recently-passed financial reform legislation, and its most notable and vocal supporter. She has this crazy notion that a consumer protection agency should actually…you know…protect consumers against the abusive practices of the big banks.

As chair of the TARP oversight committee Warren regularly clashed with what those banks consider to be in their best interests, as well as those in the administration who make a habit of carrying the banker’s water, namely Treasury Secretary Timothy Geithner. Which is why it wasn’t surprising when Huffington Post reported last week that Geithner opposed Warren’s nomination.

Then came this, a piece by John Talbott (also in the Huffington Post) on Sunday. The reason for the treasury secretary’s opposition:

“The [financial reform] bill has been written to put a great deal of power as to how strongly it is implemented in the hands of its regulators, some of which remain to be chosen. The bank lobby will work incredibly hard to see that Warren, the person most responsible for initiating and fighting for the idea of a consumer financial protection group, is denied the opportunity to head it.

But this is not the only reason that Geithner is opposed to Warren’s nomination. I believe Geithner sees the appointment of Elizabeth Warren as a threat to the very scheme he has utilized to date to hide bank losses, thus keeping the banks solvent and out of bankruptcy court and their existing management teams employed and well-paid.”

The “scheme” to which Talbott refers began with Geithner’s predecessor as Treasury Secretary, Hank Paulson, and is being continued by Geithner and his partner in crime in the Obama administration, Larry Summers. In short it goes like this:

The $700 billion in TARP money was originally supposed to go to get bad loans, the so-called toxic assets, of the bank’s books. Immediately after TARP was passed, Paulson did a 180 and decided to use it as a direct cash infusion into the big banks rather than buying bad loans. (Nothing to do with him being a former Goldman CEO, I’m sure).

That left the banks with trillions of dollars of toxic assets still on the books, where they remain today. Geithner’s plan is for the banks to:

“…earn their way out of their solvency problems over time so the banks are continuing to slowly write off their problem loans but at a rate that will take years, if not decades, to clean up the problem.

And this is where defeat of the nomination of Elizabeth Warren becomes critical for Geithner. For Geithner’s strategy to work, the banks have to find increasing sources of profitability in their business segments to balance out their annual loan loss recognition from their existing bad loans in an environment in which they continue to recognize new losses in prime residential mortgages, commercial real estate lending, sovereign debt investments, bridge loans to private equity groups, leverage buyout lending and credit card defaults.

The banks have made no secret as to where they will find this increase in cash flow. They intend to soak their small retail customers, their consumer and small business borrowers, their credit card holders and their small depositors with increased costs and fees and are continuing many of the bad mortgage practices that led to the crisis

[…]

It is exactly these types of unwarranted fees on small consumers and poorly designed products that Elizabeth Warren will fight against as head of the new consumer finance protection group. And it is why Geithner sees her as so threatening. Unless the banks are allowed to raise fees and charges on their smaller consumer customers, Geithner’s and Summers’ scheme for dealing with the banking crisis by hiding problem loans permanently on the banks’ balance sheets will be exposed for what it is, an attempt at preserving the jobs of current bank executives at the cost of dragging out this recovery needlessly for years in the future.”

After much thought and careful consideration (which took about 1.5 seconds) I have a suggestion for how President Obama can resolve this conflict. Warren’s in, Geithner’s out. Problem solved.

GOP Agenda: Meaningless Generalities and “Going Back”

19 Monday Jul 2010

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It appears that Republicans are following the advice of Rep. Peter King (R-NY) about laying out their agenda for what they would do should they regain control of the House in the November mid-term elections. On Bill Bennett’s radio program last Thursday, Rep. King said this:

“I don’t think we have to lay out a complete agenda, from top to bottom, because then we would have the national mainstream media jumping on every point trying to make that a campaign issue.”

Yesterday on Meet the Press Rep. Pete Sessions and Sen. John Cornyn, both of  Texas (sigh) continued with that theme. When David Gregory asked Sessions to explain what the GOP would do to cut the deficit, Sessions replied with meaningless generalities like these:

“We need to live within our own means.”

“We need to make that sure we read the bills.”

“We are going to balance the budget.”

“We need to make sure that…we look at all that we are spending in Washington D.C.”

Sessions added something which stood out to me when Gregory pressed him for specifics. “He [Rep. Chris Van Hollen D-MD who remarked earlier about removing tax incentives for employers who ship jobs overseas] wants to diminish employers’ ability to be able to be competitive across the world…We need to go back to the exact same agenda that is empowering the free enterprise system rather than diminishing it.”

“Employers’ ability to be competitive across the world.” For instance Hanes:

“As recently as 2006 when Hanes was spun off from its parent Sara Lee Corporation, the company had 19 plants in the US and Puerto Rico. It currently has seven with one (Forsyth, NC) more scheduled to close by year-end 2010. Hanes now manufactures its wares across 17 plants and production facilities scattered across the Caribbean and Central America (Haiti, El Salvador and Honduras) to South East Asia (Bangladesh, Thailand, Vietnam), Micronesia (Saipan, Marshall Islands), a China manufacturing hub and one plant in Mount Airy, North Carolina.

…two thirds of the growth in earnings for Hanes came as a result of moving its production offshore and from financing activities.

Who benefits? Well management certainly does as do the shareholders. Its stock closed today at $25.97 up 78.3 percent year-over-year. Its CEO, Richard Noll, was paid $5.7 million in 2009. Not bad for a manufacturer of underwear and hosiery. Meanwhile, the company’s average wage in Bangladesh is $0.33 cents an hour. Of its 50,000 employees worldwide, less than ten percent work in the US.”

This is the “free enterprise system” that Sessions and his fellow Republicans want to “empower rather than diminish.” Great for creating jobs in Bangladesh, not so much in America. Not to mention the “go back” remark. There’s the GOP agenda in a nutshell.

Cornyn’s answer to the question was much the same, adding that he wants to wait and see what the debt commission has to say. Way to face up to those tough choices, Sen. Cornyn. Watch:

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It’s True Harry, and You Have Only Yourself to Blame

15 Thursday Jul 2010

Posted by in Congress, Democrats, economy, financial reform, Politics, Unemployment, Wall Street

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Welcome to the party, Harry. You’re a little late, but glad you finally got here:

“Republicans hope unemployment rates jump higher to give them a better shot at retaking Congress, Majority Leader Harry Reid said Wednesday.

At a press conference announcing a package of proposals to help small business, the Nevada Democrat said Republicans were obstructing legislation to help the economy for political reasons.

“They think the worse the economy is come November, the better they’re going to do election-wise,” Reid said.

Reid cited an extension of unemployment benefits as an example of legislation that would help the economy but was being blocked by Republicans.”

They don’t care about extending unemployment benefits. That money goes mostly to the vanishing middle-class that Republicans have been trying to kill off since 1980 anyway. This will just accelerate the process in the direction of their goal of a two-class society—the very rich and the poor. The fat cats on Wall Street are hiring and doling out the big bonuses again, and that’s all that matters to the GOP.

BTW, Harry. If you’re looking for someone to blame, find a mirror. If you and the other Dems would have had the balls to change that stupid-ass 60 vote rule in the Senate 18 months ago, none of this would have been possible. We could have had a REAL stimulus package, REAL health care reform, and REAL financial reform.

Democrats didn’t want to change it because they were anticipating some time in the future when they were in the minority and could use the filibuster to their advantage.

That time will be here a lot sooner than they thought.