Category Archives: Bush Administration

Fiscal Cliff or Stairway to Heaven?

As the Nevada Progressive points out, the looming “fiscal cliff” is a meaningful moment for the Republicans in the U.S. Congress.   The somewhat sordid history of this “cliff” which in actuality could be more like a slight slope is summarized as:

“The United States fiscal cliff refers to the effect of a series of recent laws which, if unchanged, will result in tax increases, spending cuts, and a corresponding reduction in the budget deficit beginning in 2013.  These laws include tax increases due to the expiration of the so-called Bush tax cuts and across-the-board spending cuts under the Budget Control Act of 2011.” [link]

At this point, even the well informed may need a reminder that the term ‘fiscal cliff’ was coined by Federal Reserve Chairman Ben Bernanke, who was concerned that the impact of the failure of the Super Committee to reach an agreement would depress the economy:

“For the record, although the explanation wasn’t reported or repeated as much as the catchphrase itself, Bernanke actually said the fiscal cliff was about the large spending cuts and tax increases already scheduled to occur being far too big for the current U.S. economy to handle at one time. “I hope that Congress will look at [the spending cuts and revenue increases] and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date,” he told the committee.

In other words, “fiscal cliff” means the big deficit reductions that have been both inadvertently and intentionally scheduled to go into effect at the turn of the year are the absolutely wrong fiscal policy at that time and that the economy will be damaged if they are not changed.” [OF.org]  (emphasis added)

For those likely to hit the panic button — some programs are exempted from the budget cuts: Social Security, federal pensions, and veteran’s benefits.  Social Security is properly called an entitlement program, because the beneficiaries have paid into it, and it is supported by payroll taxes and its own trust funds.  No one, repeat NO ONE, has “spent” money earmarked for the Social Security Trust Funds.  [SSA]

For those likely to run screaming into the sage brush about THE DEFICIT, we should note that reductions in military operations in Afghanistan will reduce that beast, and we should remember that the Affordable Care Act also has some deficit reduction benefits.  Cherry-picking selective think tank and editorial board musings notwithstanding, the  “CBO and JCT estimate that enacting both pieces of legislation—H.R. 3590 and the reconciliation proposal—would produce a net reduction in federal deficits of $143 billion over the 2010–2019 period as result of changes in direct spending and revenues.” [WH.gov]

The central question about the ‘fiscal cliff’ is whether or not  it becomes a stairway to heaven for the American middle class.  It’s a cliff if the Republican controlled Congress obstructs the negotiation process such that ALL tax breaks enacted during the Bush Administration expire — including those for those earning less than $250,000 annually.  It’s a stairway to heaven, if the Congress can agree to allow the tax breaks for millionaires and billionaires to expire, and retain the tax breaks for middle class families.

It’s a cliff if the Congress demands that automatic economic stabilizers like unemployment insurance support, nutrition programs, and other means by which we prevent highly volatile economic swings are cut in order to prevent the upper 1% of American income earners from having to pay any increased taxation.  It’s a stairway if the economic stabilizers can be themselves stabilized, perhaps even if in slightly reduced forms.

It’s a cliff if the tax breaks for 97% of American small businesses are lost in the interest of sparing the top 0.01% of American income earners any tax increases.  It’s a stairway if tax breaks for 97% of American small business owners are maintained, and the deficit is reduced by encouraging economic growth, and by taxing the top 1% more fairly.

The newly re-elected President had some words about this choice:

“President Obama said he refuses to accept any approach that isn’t balanced. “I’m not going to ask students and seniors and the middle class to pay down the entire deficit,” while higher earners get tax cuts, he said.

The President said he will ask Congress to pass a bill that will continue the tax cuts for the middle class, which he says will eliminate much of the uncertainty in the nation. After that point, he said, he and Congressional leaders can work on a compromise for the remaining tax cuts.” [CSPAN]

The President’s own words, on video (not yet embeddable) from CSPAN.

 

2 Comments

Filed under Bush Administration, Congress, Economy, Federal budget, House of Representatives, national debt, Obama, Politics

Who’s Sorry Now?

For the record, a list of Bush Administration apologies to foreign governments from 2001 to 2008.  Full post here.

The “WE” don’t apologize brand of Yosemite Sam foreign policy espoused recently by former Massachusetts Governor Romney stands in stark contrast to the measured responses of President George W. Bush who was willing to make amends to foreign governments when the diplomatic situation called for it.   While I’ve been, and remain, highly critical of the Bush Administration’s foreign policy in general —  giving credit where it is due —  President Bush did know when an apology was in order.

Current Republican candidate Romney seems not to have mastered the fundamentals of diplomacy necessary to understand when temper should be tamped down by temperance.

1 Comment

Filed under 2012 election, Bush, Bush Administration, Foreign Policy, Politics, Romney

Chart of the Day: National Debt Increases By Presidency

Clip and share with any Faux News lovin’ Fuzzy Uncle who is convinced Democrats are the party of “Out Of Control Spending.”

H/T to Think For Yourself, and Treasury Direct.

Comments Off on Chart of the Day: National Debt Increases By Presidency

Filed under 2012 election, Bush, Bush Administration, Clinton, national debt, Obama

Floss to Gold? Asking Better Economic Questions

While Nevada sits with an 11.6% statewide unemployment rate, an 11.8% rate in the Las Vegas Metropolitan Area, an 11.5% rate in the Reno-Sparks area, an 11.7% rate in Carson City and environs, (Elko County micro area is at 6.1%) [DETR] the national debate over jobs and economic policy gets waged in Sound Bites and Furious Advertising.  Everyone feels “our pain,” but there are two very different ideological positions for dealing with it.

The General Policies

The Romney Campaign summarizes the candidate’s Job Creation formula as follows: “His plan seeks to reduce taxes, spending, regulation, and government programs. It seeks to increase trade, energy production, human capital, and labor flexibility. It relinquishes power to the states instead of claiming to have the solution to every problem.”  [Romney]

The categories on the Obama website promote the President’s interest in  (1) Investing in American manufacturing and innovation, including doubling the tax deduction for domestic advanced technology manufacturing from 9% to 18%, and offering a 20% tax credit against expenses incurred in relocating jobs back to the United States;  (2) cutting taxes for small businesses and streamlining the patent process; and (3) restraining the excesses of the Financial Sector and curbing practices on Wall Street that leave American taxpayers holding the bag for financial sector errors in judgment.

Both campaigns are heavy on tax cuts, but diverge from that point.  Both campaigns place the jobs category in a wider economic framework.  The frames are very different.  Romney’s summation is a classic compilation of conservative notions all predicated on the assumption that government is the problem.   Obama’s summation is a centrist amalgam of tax policy and consumer protections.

Bush 2.0

The Romney proposals are little more than Bush Redux, the Trickle Down Theory of economic growth.  As noted previously:

“We should also bear in mind that what Governor Romney is calling a “job creation” proposal would more accurately be labeled a tax reduction plan which he hopes might could would should in some idealized ideological world of Trickle Down economics produce the job growth we want IF it works — we’re still waiting for the tax reductions on corporations and wealthy individuals to work from the last round. [DB 7/9/12]

Governor Romney also hits all the correct notes in the stump speeches about small businesses, but once again it’s with a philosophy which assumes that if the yachts are rising, with the tide or not, then everyone’s boat will float a bit higher.  [DB 7/10/12]

When the components of the Gross Domestic Product were discussed in terms of what kinds of economic growth would we need to convince firms to add more employees we found there volatility in private economic investment, negatives in government spending, and the overall GDP muddling along.  [DB 7/10/12]

Simplistic prescriptions like “cutting regulations,” and “increasing labor flexibility” from the Romney camp should be looked as as closely as the proposal to fast track the Trans-Pacific Partnership — or, NAFTA on steroids. [DB 7/9/12]

He Did It Too!

One of the weaker arguments made by the Romney campaign is that the Obama Administration has been derelict in its duty to protect American jobs.   The first charge was “he did it too.” From the former Massachusetts Governor campaigning in Colorado:

“It is interesting that when it comes to outsourcing that this president has been outsourcing a good deal of American jobs himself by putting money into energy companies — solar and wind energy companies that end up making their products outside the United States,” Romney said. “If there’s an outsourcer-in-chief, it’s the president of the United States, not the guy who’s running to replace him.”  [CNN]

First, there’s an interesting split here.  The former Massachusetts Governor is speaking only of the products used to transform solar and wind energy into electric power — not the power itself.   It would be nice if the Chinese didn’t manipulate their currency, and it would be well if there were more American manufacturers of solar and wind energy components.  It would be nicer still if the U.S. were not so dependent on fossil fuels to produce electrical power.

Secondly, the slap at solar and wind technologies implies that Governor Romney is firmly in the Fossil Fuel camp, and the attempt to equate renewable energy with off shoring jobs is a rhetorical trick, not necessarily the explication of any policy not already associated with the Bush Administration.

The second charge was a bit more nuanced, but not much:

“In addition to Priebus’ event, Romney’s campaign is also pointing to a new story in The Washington Post that details criticism of Obama for allowing domestic jobs to shift overseas. “American jobs have been shifting to low-wage countries for years, and the trend has continued during Obama’s presidency,” states the article, published online Monday night.”  [CNN]

Now, why would “jobs shift to low wage countries” for years?  Any reference to tariffs is asking for an immediate torrent of “Protectionism!”  And, an obvious question to ask at this juncture is whether trade agreements promote economic growth or “high productivity poverty?”

Any globalized corporation seeking to reduce its labor costs is going to locate plants in regions with a competent labor supply and a local infrastructure capable of supplying energy needs and providing adequate transportation and distribution for products.  “If only labor costs could be reduced, and union contract  requirements be eliminated — then we would have prosperity,” cry the manufacturers.  The numbers don’t seem to validate this contention.

If unionization and hourly compensation costs are the down fall  of economic growth, then why is Germany seven places above the United States?  However, as long as Chinese workers are comfortable with monthly compensation of $636, or workers in India will accept wages averaging $295/mo. or Pakistan’s labor force averages $255/mo. [BBC] then manufacturers who seek low hourly compensation costs will “shift jobs to …..” and there won’t be much any chief executive can do about it.

Asking Better Questions

A better question is how to replace manufacturing jobs for clothing or textiles — already long gone — with new manufacturing in new technologies.  We can ante-up to create new firms, or in the worst scenario, throw up both hands and allow the Germans and the Chinese to take the field.

We can get entangled in small arguments about whether Ralph Lauren, Inc. should have clad our Olympic team in Chinese manufactured clothing, or we can ask whether we want “Buy American” provisions in government procurement processes.   Conservatives, such as Governor Romney,  have generally been opposed to Buy American legislation.  [OF]

We can spew and sputter about backing start up loans to individual niche market solar panel manufacturers — or, we can ask how we might best coordinate the efforts of our manufacturing and higher education resources toward creating energy technology for the 22nd century.

We can bash unions, create more “right not to work” states, and restrict workers’ capacity to bargain for wages, hours, and working conditions; or we can focus more attention on retraining employees for modern jobs.  We can grouse about environmental regulations to abate air and water pollution, or we can put additional effort into devising and manufacturing the best quality filtration systems on the planet.

In short, we can cut taxes and regulations until every cow in the Intermountain West comes home — but until we broaden our focus from a narrow view of what is good for the financial markets to a wider perspective including what it will require to advance our manufacturing capabilities, we’re still going to be stumbling in the sagebrush trying to transform “high productivity poverty” floss into “high employment opportunity” gold.

Comments Off on Floss to Gold? Asking Better Economic Questions

Filed under 2012 election, Bush, Bush Administration, Nevada economy, Nevada politics, Obama, Romney

Jobs? The Romney Plan: NAFTA on Steroids

Governor Romney proposes a platform to create nearly 11 million jobs in four years, or at least that’s what he was saying as of September 6, 2011. [CSMonitor] Let’s take him at his word that he stands by what he said, whatever it was.

Trading It All Away

There are a couple of significant components in his “job creation” package.  The first we should look at very carefully is the promotion of the Trans-Pacific Partnership. [Romney] If you like NAFTA you’ll love this one.

The TPP, set in motion during the Bush Administration in 2008 and continued in fits and starts during the Obama Administration, would create a trade framework including Australia, Brunei, Chile, Malaysia, New Zealand, Singapore, Peru, Vietnam, Canada, Mexico, and Japan. [Brookings]   Russia and China are also included. [HuffPo] The Obama Administration’s negotiating position begins with the provisions of the Korea FTA as the model.

However, thanks to intense corporate pressure the proposed TPP doesn’t stop there:

“Think of the TPP as a stealthy delivery mechanism for policies that could not survive public scrutiny. Indeed, only two of the twenty-six chapters of this corporate Trojan horse cover traditional trade matters. The rest embody the most florid dreams of the 1 percent—grandiose new rights and privileges for corporations and permanent constraints on government regulation. They include new investor safeguards to ease job offshoring and assert control over natural resources, and severely limit the regulation of financial services, land use, food safety, natural resources, energy, tobacco, healthcare and more.”  [Wallach, CD] (emphasis added)

Why don’t we know more about this?  Because the negotiators agreed not to release any information about the talks until 4 years AFTER ratification.  [Wallach, CD] What’s the reason for all the secrecy? The proponents of the TPP say it is necessary because a leak brought down the Free Trade Area of the Americas, and therefore no public scrutiny should be allowed.  The USTR attempted to explain away the secrecy in classic agency-speak.  [USTR]   Maybe a little bit of light is in order?

US negotiators have proposed new rights for Big Pharma and pushed into the text aspects of the Stop Online Piracy Act, which would limit Internet freedom, despite the derailing of SOPA in Congress earlier this year thanks to public activism. In June a text of the TPP investment chapter was leaked, revealing that US negotiators are even pushing to expand NAFTA’s notorious corporate tribunals, which have been used to attack domestic public interest laws. [Nation]

The Trans Pacific Partnership would certainly cut “red tape,” if by “red tape” you mean environmental protection laws, worker safety regulations, and consumer protection acts, enacted by national legislative bodies, and there’s more:

“Countries would be obliged to conform all their domestic laws and regulations to the TPP’s rules—in effect, a corporate coup d’état. The proposed pact would limit even how governments can spend their tax dollars. Buy America and other Buy Local procurement preferences that invest in the US economy would be banned, and “sweat-free,” human rights or environmental conditions on government contracts could be challenged. If the TPP comes to fruition, its retrograde rules could be altered only if all countries agreed, regardless of domestic election outcomes or changes in public opinion. And unlike much domestic legislation, the TPP would have no expiration date.” [Nation] (emphasis added)

Little wonder Governor Romney, founder of Bain Capital, would like to put this agreement on the fast track!  Speaking of taking a knee before foreign laws — this agreement, as it stands, would have the U.S. genuflecting to the corporate TPP tribunals into time out of mind.  Australia and New Zealand have already announced they have no intention of submitting to a “parallel corporate court system.” Under the TPP proposals the “jurisdiction” issues are problematic:

In another concerning development, the “outline” indicates that the TPP is likely to include much of the same investment text as NAFTA—including the provisions that give foreign investors the extraordinary right to bypass U.S. courts and sue the U.S. government in an international arbitration panel if the investor feels it hasn’t been treated “fairly” or if a federal, state, or local law interferes with its expected profits. These same rules give U.S. firms an incentive to invest overseas (taking U.S. jobs with them), so they can bypass the judicial process in foreign countries and sue our trading partners (often developing countries) before international arbitration panels. We can’t let another trade agreement give U.S. companies more reasons to send jobs offshore! [AFL-CIO] (emphasis added)

In other words, if any corporation thought a local, state, or federal statute interfered with their profits, the TPP allows access to that parallel corporate court for a ‘decision.’

How easing job off-shoring is supposed to create “good well-paying American jobs” is something of a mystery.   Proponents argue the partnership will ease export facilities for small businesses.  Maybe, but the price tag is that major tobacco, pharmaceutical, food manufacturing, and international banking corporations will get free rein to ride rough shod over any national legislation they don’t like.

They don’t like labor protection laws.

“…with regard to labor rights, the “outline” reads “TPP countries are discussing elements for a labor chapter that include commitments on labor rights protection and mechanisms to ensure cooperation, coordination, and dialogue on labor issues of mutual concern,” but fails to mention ILO core labor standards or even whether the labor provisions will be enforceable.”  [AFL-CIO]

And, they don’t care for paying American level wages:

“According to the U.S. State Department, the per capita income in Vietnam was only $1,068 in 2010. This compares with a per capita income of $40,584 for the United States in the same year. This massive differential shows the skewed nature of the agreement. Of course companies are going to choose to manufacture items in a country where they can pay pennies on the dollar for labor. America as we know it would not exist if workers labored for those kind of wages, but if the TPP is passed companies will have a choice between hiring a worker in the United States, or hiring a much cheaper worker in Vietnam. America will lose this battle in all but the strangest of situations.”  [EIC]

Rather than actually promoting those well-paying American manufacturing jobs, the TPP offers corporations more incentives to off shore their production in the cheapest areas possible — hardly a recipe for encouraging the hiring of American workers.

The Trans Pacific Partnership is good for bankers, tobacco companies, Big Pharma, food manufacturers, and other multi-national corporations; whether it gets us any closer to better employment numbers is highly questionable.  Whether the TPP officially enters us into the lists for another Race to the Bottom really isn’t.

Comments Off on Jobs? The Romney Plan: NAFTA on Steroids

Filed under 2012 election, Bush Administration, Economy, labor, Romney

Supreme Court Rules In Favor Of ACA: Heller Kicks The Gator Ade Bucket

Senator Dean Heller (R-NV), or as the Fine Wordsmith The Gleaner calls him, “The Senator By Appointment Only,”  wants us all to know that he is not pleased by the Supreme Court’s ruling on the Affordable Care Act and Patients’ Bill of Rights.

“Nevada families and businesses are already struggling in this current economic environment, and the President’s job-killing healthcare law is making a difficult situation worse. Congress spent more than a year debating healthcare legislation while Nevadans were losing their jobs and their homes. Obamacare made sweeping changes to Medicare, impacting thousands of Nevada’s seniors, and cut the program by a half trillion dollars.

“This law has now been affirmed as a colossal tax increase on the middle class, and its excessive regulations are stripping businesses of the certainty they need to hire at a time when Nevadans and the rest of the country are desperate for jobs. The President should work with Congress to find real solutions to healthcare reform so the excessive mandates and taxes in this law do not further add to our national debt or continue to stifle economic growth. This onerous law needs to be repealed and replaced with market-based reforms that will provide greater access, affordability, and economic certainty to our nation,” said Senator Dean Heller.

Let us parse:

Heller:Nevada families and businesses are already struggling in this current economic environment, and the President’s job-killing healthcare law is making a difficult situation worse.”

Coupling “job-killing” and “healthcare” is a Republican construction which doesn’t do anything more than seek to associate a change in health care statutes with something (anything) negative.  If unemployment in Nevada were at 2%, and the nation’s major problem was smog, then it would be easy to imagine that the ACA and Patients Bill of Right would be “pollution producing.”  That’s speculative, so let’s drill down a bit further.

Let’s go to that bastion of liberal thinking, Forbes, to see if the ACA/PBR is actually “job killing?”  The answer: No.  In fact, when we go to the Urban Institute’s Study the Massachusetts health care reform enacted under Governor Romney’s administration did NOT produce “job killing” results:

The graphic reduction is difficult to read, so click on the image for the full sized version in the Urban Institute’s original study.  What happens when we take a look at the right hand side of the chart?

While the U.S. was experiencing a decline in full time jobs during the Recession of 3.6%, Massachusetts saw a 2.8% drop.  While the U.S. witnessed a 0.8% increase in part time employment, Massachusetts saw a 0.9% increase.  Whether Governor Romney wants to admit it or not, the Massachusetts plan is the closest statutory comparison to the Affordable Care Act we have, and the numbers about “job losses” in Massachusetts don’t make the Republican point.

Neither do the national numbers: “Since the Affordable Care Act was signed into law, the economy has created 3.5 million private sector jobs, including 488,000 jobs in the health care industry. The unemployment rate is 8.3%, lower than it was in March 2010.”  [Hoyer] And this: “360,000 small businesses have taken advantage of tax credits that are making health insurance more affordable for 2 million workers.  As many as four million small businesses are eligible for these credits.” [Hoyer] And, again, this: “…over 2,800 employers are participating in the Early Retiree Reinsurance Program, which is helping provide coverage to 13 million early retirees who are not yet eligible for Medicare.”  [Hoyer]   Whether we look at national numbers or state numbers, or both — the health care reforms enacted in Massachusetts and in the United States are NOT job killing.

Heller:Congress spent more than a year debating healthcare legislation while Nevadans were losing their jobs and their homes.”

Yes, many things happened while foreclosure rates in Nevada were leading the nation,  and during this time what was the GOP agenda on financial reform and mortgage relief?

On October 12, 2010 Representative Eric Cantor (R-VA) laid out the GOP position on the foreclosure crisis: “Republican leader Eric Cantor chose to break his silence on the foreclosure crisis, with other Republicans quickly picking up the talking points.  And his position should come as no surprise.  Rep. Cantor came to the defense of the housing industry and laid blame squarely on the feet of the American homeowner.” [C2C]

Then, there was the infamous comment from current GOP standard bearer Governor Romney on home foreclosures: “Don’t try to stop the foreclosure process. Let it run its course and hit the bottom,” Romney said when asked what he would do to jump-start the floundering housing market.” [WashMonthly Oct 2011]

Thus, while Congress was debating, the President was signing, and then the Department of Health and Human Services was implementing the provisions of the Affordable Care Act and Patients Bill of Rights, the Republicans were blaming homeowners for the foreclosure debacles and the leader among the GOP presidential candidates was asserting that Nevadans who were in the foreclosure process should close their eyes and Think of the Free Market.  In other words, the Congress could have been debating the desirability of regulating Sea Horse Races, and the GOP wouldn’t have been much interested in legislating solutions to the housing crisis.

Heller:Obamacare made sweeping changes to Medicare, impacting thousands of Nevada’s seniors, and cut the program by a half trillion dollars.”  We won’t go into the part in which the Ryan Budgets in their various incarnations cut massive amounts from Medicare AND sought to turn the program into a voucher/coupon program.  Let’s just deal with the blatantly misleading statement about cuts to Medicare, and see what the professional fact checkers had to say:

“Under the act, Congress voted to reduce $500 billion in projected Medicare spending over the next 10 years, not in one substantial chunk. The reductions are aimed at eliminating parts of the Medicare program seen as ineffective or wasteful. For example, the plan phases out payments to the Medicare Advantage program, an optional program set up under the George W. Bush administration, where seniors could opt to enroll in a private insurance program and the federal government would subsidize a portion of their premium.”  [PolitiFact.com, 5/10/11] (emphasis added)

Under the Affordable Care Act the savings were reinvested in the Medicare program itself, not simply cut from the budget and the program privatized.  And note — some cuts were made to the taxpayer subsidies to insurance companies offering highly profitable optional insurance.  The cuts were in areas considered wasteful, and were NOT related to basic Medicare services.

Heller:This law has now been affirmed as a colossal tax increase on the middle class, and its excessive regulations are stripping businesses of the certainty they need to hire at a time when Nevadans and the rest of the country are desperate for jobs.”   This statement is straight out of the GOP Talking Point Random Generator.

Interesting how Republicans like Senator Heller become really engaged in the problems of the Middle Class when taxes or fees might be increased, but rarely (if ever) when said Middle Class is getting pounded by corporate raiders, union busters, private equity Giant Squids, and stagnating wages.   Be that as it may, if the middle class wants a colossal tax increase — it’s more likely to come from the Republicans.

There is, for example, the tax proposal set forth by Governor Romney, about which the Christian Science Monitor reported:

“In any case, not extending the 2009 tax cuts still in effect in 2012 means that Romney’s plan would, on average, raise taxes for households in the bottom two quintiles, relative to what they’re paying this year.  Mitt Romney’s tax plan would cut taxes, by about $180 billion in 2015 alone, relative to current tax policy. And, despite all arguments to the contrary, a disproportionate share of the savings would go to households with the highest incomes.”  (emphasis added)

Ezra Klein, Washington Post columnist, added this analysis of Governor Romney’s plan:

“Note that the Tax Policy Center could only conduct a partial analysis of Romney’s tax plan. That’s because Romney’s proposal itself is incomplete. He’s said that he wants to scrap various deductions in the tax code, particularly for high earners, in order to broaden the tax base. But he hasn’t offered any details about which deductions he’d scrap or how, so there wasn’t anything for the Tax Policy Center to analyze.

Based on the details Romney has provided so far, his plan would lower tax rates for the top quintile by 5.4 percent, saving the wealthiest an average of $16,134. (The top 1 percent of earners, meanwhile, would save an average of $149,997.) The lowest fifth of earners, by contrast, would see a small tax increase of 1.3 percent under Romney’s plan, owing the federal government an additional $143 extra on average.

Obama’s tax proposal, meanwhile, would keep tax rates roughly the same except for married couples making over $250,000 per year (or single earners making more than $200,000 per year). On average, under Obama’s plan, the top 1 percent would be paying about $87,173 more per year.”

Klein offers the following illustration:

There are many “ifs” involved in the Romney tax proposal, incomplete as it is, but there are some deductions which if eliminated would have a definitely negative impact on middle income level Americans:

“Most middle-class families would get little help. About 18 million working families would actually pay higher taxes because Romney would end the American Opportunity Tax Credit for college and cut tax credits for taxpayers with children and earned income.”  [OCCD]

In fine, if one would like to see a tax structure which bestows the greatest advantages on those who already have great advantages — Governor Romney and the Republicans are your kind of people.

There’s nothing quite like tossing in a phrase like Excessive Regulations to stir the hearts of the financial and insurance sectors, both of whom dislike being told, for example, that using premium payments for CEO compensation and advertising aren’t the best use of consumer dollars.   And, the phrase tickles those who think the EPA is merely a professional thorn in the side of the energy sector — Deep Water Horizon notwithstanding.  It’s often notable that when expounding on the “excessive regulations” in the ACA, very few — if indeed any — examples are offered.

Ah, the now hoary and hirsute talking point “uncertainty and hiring” comes back for yet another encore.   The “uncertainty” allegation is a one size fits all gob-lob at any legislation or legislative proposal which might cause corporations to THINK about what they’re doing.

We’ve been told that implementing the provisions of the Dodd Frank Act on financial regulation reform creates “uncertainty.”  In this instance there’s something to be said for a bit of uncertainty — no bank should believe that it “certainly” has the latitude to use depositors funds to play around in proprietary trades, or has blanket permission to bet against the interests of its own clients, or has leave to arbitrarily play with interest rate reporting because it wants to make its own books look better.

And for the umpteenth time — small business hiring won’t increase until small businesses (not to be confused with Washington, DC lobby shops and hedge funds) see the demand for their goods and services increase such that their current staffing levels are insufficient to meet customer needs.   The only thing that is Certain is that middle class income and middle class jobs need to advance in order to improve aggregate demand.  This has precious little to do with the desires of the Wall Street Wizards to play cowboy with depositors dollars.

Heller:The President should work with Congress to find real solutions to healthcare reform so the excessive mandates and taxes in this law do not further add to our national debt or continue to stifle economic growth.”

Now what could be adding to the national debt?

So, if we are really serious about reducing the federal deficit — then we get rid of the Bush Tax Cuts! And, we do something to get more “growth” into the economy.  Hardly the austerity prescription being touted by Senator Heller and his Republican cohorts.

Heller:This onerous law needs to be repealed and replaced with market-based reforms that will provide greater access, affordability, and economic certainty to our nation,” said Senator Dean Heller.”

Yes, the House will make another symbolic move at “repealing” the Affordable Care Act during the week of July 9th.  Meanwhile, what are “market based reforms?”

Representative Paul Ryan has suggested some “market based” reforms which mean that Medicare recipients will get a “coupon” or voucher toward paying their private health insurance premiums.   This is essentially a government subsidy for health insurance corporations to give them an “incentive” to offer health insurance for the elderly.  Meanwhile back in the real world — the reason we have Medicare in the first place was that insurance corporations do not want to offer plans for elderly people — they get sick, and old, and old and sick.

This might be a good time to remind ourselves that it’s not a “free market” when some corporations are being subsidized by the taxpayers to offer services and products they don’t otherwise want to sell.  For those keeping score, “market based solutions” is GOP-Speak for privatization.

Not to belabor the point much further, but the GOP response to the ACA ruling as evidenced by Senator Heller is simply to offer no solutions to demonstrated problems, and demonstrations about issues of primary interest to the upper 1% of the American income earning public.  It is a tale bedecked with focus group tested buzz words and talking points, which can mean almost anything to their devoted listeners, and almost nothing to anyone seeking solutions to real American problems.

Comments Off on Supreme Court Rules In Favor Of ACA: Heller Kicks The Gator Ade Bucket

Filed under 2012 election, Bush Administration, conservatism, Economy, employment, family issues, Federal budget, financial regulation, Foreclosures, Health Care, health insurance, Heller, Insurance, Medicare, national debt, Nevada politics, Politics, privatization, Republicans, Taxation, unemployment

The Economy – Why Does It Still Hurt?

The economy is getting a bit better in Nevada, but it ‘still hurts.’  Let’s poke some of the sore spots.

Unemployment percentages have been dropping and now stand at an uncomfortable 11. 6% statewide.  However, employment levels are up in 14 out of 17 counties, and the following chart taken from DETR (pdf) shows an uneven employment situation in the Silver State:

Some of the YOY comparisons are highlighted because they suggest why the recovery has been uneven.  Carson City was mentioned previously because no sooner did the hiring come to a halt in state agencies and departments than local businesses found their taxable sales on the downward skids. Job growth in the Carson City MSA of -0.9% is part of the overall drag on the Nevada economy.   While no one wants over-stuffed bureaucracy, there is a point at which scaling down government operations not only means reduced protection and services, but it also begins to affect the economic growth of the region.

Those who respond, “But Gee We Have To Balance The State Budget,” are missing one critical factor.  Capital expenditures aren’t subject to the balancing act.  Investing in capital improvements may not have saved 259 jobs in the Carson City area, but putting some coin of the realm into deferred projects might have had a healthy impact on local construction companies.  Money spent on local contracts means money in the pockets of local construction companies.

This might be a good time to remember that a government entity going into debt (issuing bonds) isn’t necessarily an economic evil.  Government debt doesn’t crowd out private investment unless interest rates are high.  And that just isn’t the case right now — a point also made previously.

The recent layoffs of 1,419 teachers in Clark County doesn’t show up in the figures in the chart, but it will eventually.  The Las Vegas metropolitan area has a double whammy.  First, it has been caught in the great budget bind of 2008-2012 and public sector jobs have been eliminated or deferred.  Secondly, it’s ground zero for the housing market debacle brought to us by our friends in very high places and trading desks on Wall Street.  The following chart from DETR illustrates the problem as of 2011 Q3:

No surprise, the economic sector taking the biggest hit was construction, down 11.4%.  Public administration (-4.2%) and educational services (-3%) were the next highest in the job loss categories.  Many little pixels have given their all toward explaining what happened in the Housing Bubble and its Spectacular Splatter.  However, because we have a candidate for the presidency who is advocating the repeal of the Dodd-Frank Act, and a senatorial candidate who has co-signed a bill to that purpose, a few more pixels should go in a good cause.  *Feel free to skip this next part if you haven’t bought into the Big Lie that the “poor billionaire bankers were the victims of icky government and dishonest home buyers.

(1) Private banking interests generated loans to homeowners (2) while reducing lending standards (3) to accumulate as many loans as possible in order to (4) package the mortgages into CDOs which (5) were sold to other banking firms and (6) bet on using credit default swaps.  When investment institutions like Bear Stearns, Lehman Brothers, etc. etc. couldn’t cover their bets they got sold off, bought out, or as in the case of Lehman Brothers just flat out collapsed in a heap of bankruptcy.

Unsophisticated homebuyers didn’t help, the conflicted ratings agencies which slapped AAA ratings on Junque didn’t cover themselves with glory, having the mortgage twins reduce their lending standards and start playing in the shark pool didn’t help either.   The bottom line is that very few investment institutions knew what their bottoms looked like — they knew the price of everything and the value of nothing, especially the increasingly toxic assets on their own books.

OK the review is over, and it’s time to return to the more tangible world of statewide economic problems.

Declining Household Wealth.

Here’s where Clark and Washoe Counties took the Big Double Whammy.  As of September 12, 2008 Nevada achieved the dubious distinct of having the nation’s highest foreclosure rate.  One out of every ninety-one households had received some kind of foreclosure notice.  [LVSun]  The collapse wasn’t pretty:

“Americans lost nearly two decades of accumulated wealth from 2007 to 2010, according to a survey by the Federal Reserve. The median American family’s net worth dropped to $77,300 in 2010, from $126,400 in 2007.”  [Bankrate]

The collapse is even more unpleasant when we go to the source of that report.  The June 2012 Federal Reserve Bulletin (pdf) observes:

The decreases in family income over the 2007−10 period were substantially smaller than the declines in both median and mean net worth; overall, median net worth fell 38.8 percent, and the mean fell 14.7 percent. Median net worth fell for most groups between 2007 and 2010, and the decline in the median was almost always larger than the decline in the mean. The exceptions to this pattern in the medians and means are seen in the highest 10 percent of the distributions of income and net worth, where changes in the median were relatively muted. Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices.

The changes for those in the top ten percent of net worth were “muted” because more of their assets are in the financial markets, which have recovered rather nicely.  Middle class Americans tend to have more of their net worth tied up in the family manse.  Again, from the Federal Reserve Bulletin:

“Housing was of greater importance than financial assets for the wealth position of most families. The national purchase-only Loan Performance Home Price Index produced by First American CoreLogic fell 22.4 percent between September 2007 and September 2010, by which point house prices were fully 27.5 percent below the peak achieved in April 2006. The decline in house prices was most rapid in the states where the boom had been greatest. For example, California, Nevada, Arizona, and Florida saw declines of 40 to 50 percent, while Iowa saw a decline of only about 1 percent.” (emphasis added)

As property values dropped in Clark and Washoe counties so did the net worth of most of the residents.  What do people do when faced with foreclosures, underwater properties, or a devaluation of their total net worth?

Deleveraging.   The Federal Reserve Bulletin tells us that debt “ownership” generally fell as families “deleveraged” their obligations.  Home secured indebtedness declined. No surprise there.   By 2010 there was a 0.6% decrease in installment loans (education, vehicles) and the number of credit card holders declined.  Meanwhile back at the bank, the credit lines diminished as well, generally dropping from $18,900 to $15,000.   One practical result of this reduction is that individuals found their credit scores going down as their credit line declined.  Recessions are, as Angry Bear explained, a good way to keep the little guys down.

Unemployment + declining household wealth + deleveraging = A Really Big Hole.

Watching 19.3% trillion in household wealth evaporate between 2007 Q2 and 2009 Q1 is a tsunami-like shock to any economy, but one that’s fueled by consumer spending will really take a serious punch.

All is not lost.  Nevada demonstrated job growth in all but seven categories. (see above) Employment increased, at least minimally, in all but three Nevada counties.   And, last but not least, after holding on to the Top Spot in Home Foreclosures for 62 months, Nevada dropped to Number Two in March 2012. Now the rate is about 1 in every 313 households — a definite improvement from 1 in every 91. [RealtyTrac]

What we cannot expect is that the housing sector will lead Nevada’s economic recovery, as housing was wont to do in times past. [LVSun] If we can stanch the flow from public sector employment declines, continue to see increases in most categories of wages and salaries, and see further growth in health care, tourism, professional & technical, and manufacturing employment we’ll begin to climb out of this pit.

What Nevada needs now are fiscal and financial policies at the state and national level that promote stability over volatility — we’ve had enough of the latter to last for the next decade.  The state would also benefit from housing policies that help homeowners hang on such that further reductions in household wealth can be mitigated.  And, while we’re about it, it wouldn’t hurt to have regulatory structures in place to restrict the kind of Irrational Exuberance on Wall Street that helped get us into this mess in the first place.

1 Comment

Filed under 2012 election, banking, Bush Administration, conservatism, Economy, financial regulation, Heller, Nevada economy, public employees, Romney