It’s Banned Book Week – So Go Read One!

September 27, 2010

Stand up and fight for your diminishing intellectual freedoms!
Librarians are the real heroes

You can also read one of my recent faves, which hasn’t been banned anywhere I know of, Charlie Pierce’s “Idiot America.” Funny, and depressing – A Must-Read

He gave us a taste of what was to come in Esquire five years ago, ironically, before anyone had heard of Sarah Palin, Tea Baggers, Chritine O’Donnell or some of the other crazies running around in our political system these days – Greetings From Idiot America



David Cay Johnston puts a hurt on the myth of tax cuts

September 27, 2010

Not that some people won’t listen, especially the MSM: No, they don\'t improve wages or the economy, except for a few rich people

Johnston is a man to be listened-to, carefully. He’s a former NYT investigative journalist, someone many in our Flaccid Fourth Estate would do well to emulate, if they wanted to bother looking up from their steno pads. He’s written several books, including two stunners, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With The Bill, which exposes hidden subsidies, rigged markets, and corporate socialism, and Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else, which lays bare the machinations in Washington to make our lives harder so a few can have extra fluffy pillows.

Read the whole post through; he lays the case out clearly – tax cuts don’t stimulate the economy, and they don’t help the great majority of Americans.

This comes on the heels of the Bernstein piece I posted the other day and Robert Reich’s new book, through which I’m making my way as you read this – Aftershock. Reich explains, as many of us have, that the real crisis in the American economy is falling wages for most people. He points out that, in the late 70s, the richest of the rich owned about 9 percent of the country’s wealth. Fast forward 30 years, and that number was more than 23 percent. Care to guess when a similar hoarding of wealth at the top took place in recent history? Bingo, the 1920s, right before the Great Depression.

There were several triggers to the current Depression – yes, it is – including the repeal of Glass-Steagle, the Bush tax cuts, and the refusal of both Democratic and Republican administrations to regulate derivatives. But the fundamental problem has been growing since Ronald Reagan took office. The great majority of Americans have lost ground, and, with Bush, their tax burdens actually increased relative to their richer fellow citizens. This is part of the reason why so many Americans were strung out on credit, not because they went on buying sprees at Best Buy, but because they were trying to make ends meet. And in the first decade of the 20th Century, when – let’s never forget – the Rs completely controlled the federal government, incomes actually dropped. Not just in terms of inflation or buying power, but actual number of dollars taken home.

Now, with the safety net weaker than ever – part of the design, btw – and programs like Social Security on the block, most of us face a dreary future indeed, unless Obama and the Dems start showing some conscience, and some cojones.


One way Dems SHOULD act more like Rs

September 21, 2010

Dems play softball with defectors – think Joe Lieberman – and hardball with their base – think progressives.

Republicans do it the opposite – Wonder what would happen if?


What was that about grass-roots, populist, etc?

September 21, 2010

Soooooo, Tea Partiers can’t seem to organize a conference – Three strikes, schmucks, but they can pour (wait for it) nearly $600 Grand into a primary race Enjoy the cruise?

Grassroots movement my ass.


“The stated goal of cutting taxes to spur US capital investment was not achieved”

September 21, 2010

The conclusion of a commentary piece in the Financial Times. I’m posting the text, since the link seems not to work consistently:

Non-US groups reaped fruits of Bush tax cuts
By Richard Bernstein

Continuation of the Bush tax cuts has been the subject of much discussion in US political and economic circles.

Those on the right object to most forms of increasing government revenue, while the left wants to narrow disparities of income and wealth.

The tax cuts’ two bills, in 2001 and 2003 – changed laws so that personal income tax rates were reduced, exemptions for the Alternative Minimum Tax increased, and dividend and capital gains taxes also cut.

Yet in the debate, it seems of no moment to either side whether the tax cuts were effective in achieving their goal of spurring business investment and making the US economy more competitive.

Our own examination of US non-residential investment indicates that the reduction in capital gains tax rates failed to spur US business investment and failed to improve US economic competitiveness.

The 2000s – that is, the period immediately following the Bush tax cuts – were the weakest decade in US postwar history for real non-residential capital investment.

Not only were the 2000s by far the weakest period, but the tax cuts did not even curtail the secular slowdown in the growth of business structures.

Rather, the slowdown accelerated into a full decline.

During each decade from the 1950s to the 1990s, growth in real gross non-residential investment averaged between 3.5 per cent and 7.4 per cent per decade. During the 2000s, it averaged a mere 1 per cent.

Similarly, the growth rate for investment in equipment and software ranged from 5.7 per cent to 9.9 per cent in these earlier decades. It averaged 1.9 per cent during the 2000s.

Average growth in non-residential structures ranged from 1.3 per cent to 5.7 per cent from the 1950s to the 1990s. During the 2000s, it declined by 0.8 per cent.

The stated goal of cutting taxes to spur US capital investment was not achieved.

Where did the benefit of the tax cuts go?

We have maintained that an increasing proportion of the benefits of US monetary and fiscal policy are leaking outside the US.

Washington sets policy as if the US were a closed economic system and rarely considers ramifications outside the country.

The consensus regarding the negative effects of rising tax rates on US stocks suggests that investors also might not adequately consider policy leakage when formulating strategies.

The Bush tax cuts may have encouraged capital flight from the US because the dollar was weak and capital – including incremental funds in taxpayers’ pockets – tends to flow to stronger currencies.

In a weak dollar environment, US policymakers must consider whether a tax cut’s positive effects on the US economy might be muted relative to its collaterally positive effects on stronger-currency economies.

Record flows to emerging market debt and equity funds, coupled with anaemic US investment spending, suggest that this might be an issue.

If we are correct about the growing extraterritorial leakage of US monetary and fiscal policies, then an increase in the capital gains tax rate might have a larger negative effect on non-US investments such as emerging market funds and exchange-traded funds than on US investments.

There probably are greater long-term capital gains to be made in non-US investments than in US investments simply because of the outperformance of non-US markets since the tax cuts were enacted.

From December 2003 to August 2010, the MSCI Emerging Market Index appreciated 120 per cent versus a decline of 6 per cent for the S&P 500.

Speculative assets that have appreciated, such as gold, might also suffer if the tax cuts were allowed to expire and investors rushed to cash in gains before the lower tax rate expires.

Business investment data demonstrate that the Bush tax cuts failed to achieve their goal of spurring productive US investment and that this failure has contributed to the poor performance of US stocks.

In a strong dollar environment, the cuts might have encouraged incremental taxpayer savings to flow into US companies, reducing their cost of capital, boosting their return on capital and driving their stock values higher.

Instead, in the weak dollar environment of the times, the cuts leaked abroad and boosted return on capital outside the US.

By so boosting non-US companies’ return on capital relative to that of US companies, the tax cuts made US companies that much less attractive and had the opposite of their intended effect.

It is possible that allowing the Bush tax cuts to expire might damage non-US investment prospects more than those of the US.

Richard Bernstein is chief executive of Richard Bernstein Advisors

Just a little reminder from Eric Alterman that, instead of kicking one’s base, one might want to pay attention to it

September 20, 2010

In The Daily Beast – Base-ic politics

You know, there’s much I don’t like about the Rs, but they don’t treat their base this way.


Same old, same old

September 19, 2010

Dangerous right-wing wackiness, that is, backed up by lots of money and lever-pulling old pros Hey, isn\'t that . . . . ?

Some of us of what used to be charmingly referred-to as “a certain age,” who have seen Goldwater/Nixon/Reagan (and at least remember McCarthy and anti-communism classes in junior high), have said this whole Tea Party thing isn’t really the breathlessly new phenomenon the MSM seem to believe it is. Glenn Greenwald at Slate has a good piece on how this is just the latest incarnation of an old model – Greenwald

The faces in front of the cameras change (even as Newt tries to act even nuttier in order to get an additional 15 minutes), but those behind the curtain are often the same, and the script remains largely untouched.