October 2011 Archives

Dear America,

In Washington, the Republican conservative complex (Rcc) tells us that reducing what employers pay into Social Security-- putatively their share of the payroll tax-- stimulates the economy. But their share is really only a part of our share, because when they calculate how much it will cost to employ us, the money they have to contribute to the Social Security Trust Fund is part of that cost, just like the salary we get in our checks. In other words, the consumer pays it, and then we pay for it again as a reduction in business's share of the payroll tax because it is part of the compensation we receive for working, which is part of the cost passed on to the consumer in the first place. The employer gets a windfall-- a reduction in costs that he has already factored into the price of his products or services-- and we lose that portion of our compensation that would have been contributed to the Social Security Trust Fund by our employers in our names. They get a bonus, and we get a cut in pay, and if the recent past is an indicator, no new jobs will be created because business already has plenty of money on hand, so they would hire with the money they already have if there were demand for what they're selling.

My point is actually more graphically made by the oil industry. Exxon-Mobil announced its earnings last week, and while they spent almost $27 billion on exploration and drilling over the past nine months, the company made over $10 billion in profits in just the third quarter of this fiscal year, and that despite the fact that consumption in this country was down almost 3%. And all the while, gasoline prices were at elevated levels that they justified with claimed shortages and claims that there was uncertainty of supply, the usual excuse for spikes in price: shortages that never materialize. Put concisely, all these economic theories about stimulating the supply side never bear fruit for the rest of us. They say they need more resources before they will hire, but when they get more, they don't hire, and in fact they don't even reduce prices to stimulate consumption. Too much is never enough for the Rcc.

And now, the Republicans in The House-- with the overwhelming support of the Democrats I might add-- have passed a bill that repeals the requirement that the federal, state and local governments withhold for taxes 3% of certain payments to government contractors. The law requiring the withholding was passed because of non-payment of those taxes historically. In fact, the Congressional Budget Office scores the bill at a negative $11 billion of federal revenue over the next ten years, but Republicans claim repeal is worth it because it will stimulate business and job creation even though it exacerbates the debt and deficit problems that they pule about whenever they want more money for their friends in business. It's not as if contractors will get to reduce their tax obligations, which wouldn't produce any jobs anyway...at least it hasn't so far. They will still owe the taxes, but apparently they will be less likely to pay them to the tune of billions of dollars, and the Republicans are all for that. So, while businesses are awash in cash, the Republicans not only want to reduce taxes for them, they want to make it possible for them not to pay even what they owe. At the same time, they have passed a bill taking Medicaid away from some retired people because they aren't poor enough to benefit from the program in the opinion of the Rcc.

On Friday, I heard Paul Ryan, the Republican budget hawk, fulminating about tax reform as a way to stimulate job creation. When the interviewer raised the issue of revenue increases from new taxes, sighting the refusal at a recent televised debate of all ten of the Republican candidates for President to agree to a budget balancing measure that included even one dollar of enhanced revenue to every ten dollars in budget cuts, Ryan complained that the question was a "gotcha" type question, I assume because the answers given by his Republican colleagues were indefensible, even to him. And that theme persisted as he refused to answer the question himself claiming that reforming the tax code would stimulate business and that would increase revenue...you know, cause it to trickle down through a federal government that, if he has his way, will give less and less of its revenue back to the people of this country because of program cuts and more and more to business. The cuts in programs that fill our needs will be necessitated by giving money to those who need nothing at all, and give nothing at all.

The Occupy movements are a response to that kind of sophistry. They are saying that we aren't fooled. You can contrive all the rationale you want, and spout it as often as you like in television ads paid for by your cronies in business, but history has drawn back the curtain. We see you, Mr. Ryan. We know what you're doing Exxon-Mobil. And we've had enough. Now, all that remains to be seen is how many of us there are, and we should get a pretty good count next November. On election day, the majority gets what it deserves. Let's hope it's what we all deserve.

Your friend,

Mike

Dear America,

Years ago, the popular magician David Copperfield made a passenger jet disappear on television. Obviously he didn't really make it dematerialize, but he created the illusion-- and that's what people in his field of endeavor call them...illusions-- that the plane had vanished. It was stunning, but it was also certainly the case that whoever he borrowed the jet from got it back right after the show. It was an interesting diversion, but it didn't change the world in any way, and these days, that is much the way politics operates.

There is a Texas congressman named Jeb Hensarling on the "super committee" in The Congress, and he makes the national news occasionally on that basis. With a name like a Beverly Hillbilly, it is hard to be taken seriously, but the debt and deficit wars have given him more exposure than he has ever gotten before in his nine years in Congress. A couple of days ago, the super committee was one of the most popular stories in the network news cycle, and Hensarling got to be a sound bite. It was nothing unusual as Hensarling is a conservative Republican, and as might have been expected, he reiterated the oft pronounced claim that the only way to balance the budget was to cut Medicare, Medicaid and Social Security. That's what makes me think of David Copperfield; at the end of the show he had to give back the jet and pay for the use of it. That's what Jeb Hensarling wants to do.

As you all know, Social Security is funded with "payroll taxes," which used to be referred to as FICA deductions-- a more accurate name, but one less negatively charged-- and those funds are held in a trust fund by the federal government. The Secretary of the Treasury is the primary trustee. By law, those funds have to be lent to the federal government's general fund and the Social Security Trust Fund gets U.S. Treasury bonds in return. Those bonds pay interest, and the principal plus interest, along with current contributions from all of our payroll checks, is what Social Security benefits are paid out of. That trust fund still has over $2 trillion in it, albeit in the form of U.S. Treasury bonds, not cash. So, each month, the fund cashes some of its bonds to pay a small portion of the benefits due: that amount over and above current revenues from Americans' payroll checks. And so, if benefits were reduced by an amount equal to the amount of the bonds that the fund has to cash, the fund wouldn't need to cash the bonds. In other words, reducing Social Security benefits would be like getting a deferment on your student loan. It would help you pay your rent, but as soon as the deferment ended, you would have to begin paying what you owe again, plus the interest you hadn't been paying, which then would have been added to the principal of your debt. Your monthly deficit would have been reduced, but your debt would have been increased. (By the way, Medicare is funded the same way, though there is only about five years worth of funding left for that program...still, a lot of money in the bank to tempt a scam artist like a politician intent on eliminating the social safety net and balancing the budget with the proceeds.)

Wimpy, a character in the old Popeye cartoons, loved hamburgers, and he would go to the hamburger stand and say, "I will gladly pay you Tuesday for a Hamburger today." Of course, Wimpy never appeared in the cartoons on Tuesday. So I guess Hensarling is more like Wimpy than like David Copperfiled: he will gladly pay the trust fund in the future what he takes from Social Security beneficiaries today, because reducing the monthly payout of benefits will only defer payment of the $2 trillion the federal government owes us. And if Hensarling and his cohorts succeed, they can defer payment of that money forever by continually reducing benefits...a genuine Ponzi scheme, but on a scale never before dreamed of, not even by Bernie Madoff. So, if the Republicans in Congress succeed with Social Security, which is funded through 2037 or longer without changing Social Security at all, Rick Perry will be right in his characterization of Social Security as such. The federal government will have stolen $2 trillion from us, making it disappear in plain sight, and we will never see that money again, nor will there be anything we can do about it. They will have effectively abolished the Social Security Trust Fund, which FDR created in order to prevent just that from happening. And while our annual deficit might be reduced, the national debt wouldn't go down one thin dime; an excuse to reduce with impunity other programs that the Republican conservative complex doesn't like.

Social Security was supposed to be an annuity that we Americans would be compelled to buy for our own good, paid out of the very money we put into the program as premiums. That is what your "payroll taxes" really are: insurance premiums, and for that reason the change in political nomenclature from FICA withholding to payroll tax is insidious. FICA stands for Federal Insurance Contributions Act: the name says it all. But as it turns out, the phrase payroll tax is just a euphemism for fraud. But we have one last chance to prevent the theft. Your money or your vote, America. Think it over. You've got one...year.

Your friend,

Mike

Dear America,

The Republican hopefuls continue to skip from one high density issue to another in their respective attempts to gain public attention. The latest issue on which they are competing for the American political ear is "the activist courts," or more aptly put, a federal judiciary that doesn't always agree with them, though more and more Supreme Court decisions comport with conservative sentiments. They want to rectify this purported activism by making federal judges stand for election and imposing term limits on Supreme Court justices, which would require amending The Constitution, demonstrating that they are "strict constructionists" who wish to live by what they construe to be the original meaning of The Constitution in the collective mind of its authors, but only when it suits them. When it's inconvenient, they want to change The Constitution, not their minds. And they want to abolish the ninth circuit Court of Appeals because it is too liberal for them, which they construe as judicial activism, while they applaud The Supreme Court when it deems corporations to be people eligible for protection of their freedom of speech in the political arena. The most unfortunate aspect of their position is the fact that, while conservatives claim to be impelled to protest judicial activism by their desire to keep government out of their personal affairs, their complaints all seem directed toward making the courts interfere in the affairs of others. For example, the new conservative crusade is inspired by the desire of the Republican conservative complex (Rcc) to prevent the marriage of certain other people and to prevent other women from having abortions. One man's judicial restraint is another man's, or woman's, government intrusion I guess. What I wonder about all this is why they care so much about these things that really don't affect them at all.

The issue of gay marriage is particularly perplexing. Increasingly, the position of courts in the United States is that it is discriminatory to deprive same-sex couples of the rights and privileges-- marriage in particular-- that the rest of us enjoy, and that opinion is held by the majority of Americans. But no court has said that anyone must be a homosexual, or even that homosexuals have to get married if you want to look at it from the inverse perspective, and it seems to me that our traditions require that attitude. The Declaration of Independence declares all men to be created equal, and their rights to be unalienable. Thus it is contrary to those axioms of political freedom, our national creed, for states to impose constraints on people in their personal and private conduct when such constraints are not universal. Note that the conservative plaint is not just that same sex couples might be eligible for benefits that up to now only married couples enjoy. They want to prevent same-sex marriage entirely through judicial action. But why do they care? And why don't they see that it would be judicial activism for courts to approve such government prohibitions against minority individuals forming relationships that are sanctioned by government for the majority, as most state supreme courts have said. It has occurred to me that all these people who are fixated on other people's sexuality maybe have some sexual issues themselves, but I seriously doubt that conservatives en masse are actually in an enormous closet together. It's possible, but I doubt it. I mean, look at Newt Gingrich, who seems to be going for the land record for abandoning one woman-in-need to marry another. Of course, marrying someone of the opposite sex doesn't really prove a politician to be straight as a recent governor of New Jersey demonstrated very publicly, even writing a book about it. But still, all the evidence suggests that Newt Gingrich is heterosexual, so why does he care about homosexuals getting married. Michelle Bachman I can understand. She thinks creationism is real and evolution is only a theory. It seems de rigueur for those who believe in the afflatus of the authors of The Bible, like Bachman, to preach to others about what they should do and believe. Rick Santorum also falls into that category when it comes to both righteousness and self-righteousness. And of course Mitt Romney seems to be bi-ideological on this subject, but no doubt he will join the call for judicial reform too, which means he will have to choose his position against same-sex marriage in order to make his conservative bones, political ambition seeming to be his religion. But Newt Gingrich?

But beyond the ideological dogma on the subject of judicial activism is the more fundamental purpose of the federal courts and the ways in which they have changed our society for the better through what conservatives bemoan as activism. For example, there is Plessy vs. Ferguson, which was ultimately overruled in Brown vs. Board of Education of Topeka Kansas. If it weren't for that particular case of judicial activism, and I concede that reversing its own precedent is activism, African-Americans would still be riding at the back of the bus, and as was the case in Plessy, in separate cars on the train. We wouldn't be able to use contraceptives in Connecticut, or perhaps anywhere else, if it weren't for the activism of The Supreme Court in Griswold vs. Connecticut. And of course, women would still be dieing in back alleys if it weren't for Roe v. Wade. And none of that activism would have occurred if the federal judiciary-- the training ground for most Supreme Court justices-- were filled with electees of the same population that applauded segregation, and disapproved of birth control and a woman's right to choose.

So, on the issue of judicial activism, as on more immediate issues like President Obama's jobs bill and regressive taxation that reallocates wealth to the wealthy and takes it from everyone else when the wealthy already have more than enough, conservatives are not advocating for the great mass of Americans to preserve their freedom. They are advocating for those who believe as they do-- a distinct minority-- to dictate personal decisions to the rest of us even though we are the vast majority, and we have no intention of dictating their personal decisions to them. It's a question of whose ox is being gored, as the old adage goes. And frankly, I like my ox...and yours too.

Your friend,

Mike

Dear America,

On Sundays after major events, the Sunday morning current events programs generally illuminate the fundamental characters of the politicians in leadership roles. This Sunday, the week after a debate between Republican hopefuls for the party's presidential nomination, the President announced a firm date for final American withdrawal from Iraq and the "elimination" (as Hillary Clinton put it) of Muammar Qaddafi was brutally accomplished by Libyan rebels cum government forces, as to which the purportedly loyal opposition in this country showed its stripes. Senator John McCain of Arizona, the erstwhile Republican candidate who opposed President Obama in 2008, appeared on This Week, ABC's news program, and second guessed President Obama on both of those internationally significant events, and he left no doubt as to his motivations, which were obviously party-political. As to Libya and the death of Qaddafi, he criticized The President for leading from behind, as McCain put it, claiming that the strife and its resolution would have come months earlier if the United States had applied all of its might toward the goal of overthrowing yet another government we didn't like, thus solidifying our image as arrogant imperialists. While the rest of the nation's non-partisan observers have steadily come to realize that the way in which we got involved in Libya-- as one member of an extensive alliance of legitimate military powers, including the most powerful alliance in the world, NATO-- was the best way to avoid vilification while accomplishing an internationally desired goal within another nation's sovereign borders, McCain still seems to believe that it is the role of the United States to dictate to other nations how they should be run. The fact that even though we are completing our ill-conceived commitment in Iraq we are still involved in a war in Afghanistan that serves no American purpose, and maybe not even an Afghani one, doesn't seem to have taught him anything. And as to withdrawal from Iraq, President Bush agreed to withdrawal no later than the end of 2011, and President Obama is doing no more than implementing that agreement. Yet, McCain calls it a mistake that Mr. Obama made even though his only alternative would be to confirm the arguments of Islamic radicals to the effect that the United States is not really fighting beside the Afghans, it is occupying the country. Admittedly, McCain has been against deadlines for withdrawal all along, but he is almost alone in his insistence that he was right, or more importantly that the American people are willing to permit that war to continue. And I look for other Republicans, like McBoehnell (McConnell and Boehner) to jump on that bandwagon, thus demonstrating that President Obama can't win for winning as far as the Republicans are concerned.

But the bloviation didn't end with McCain. On Meet the Press, the world class bombast, Jack Welch, former CEO of General Electric, which as you may recall paid no taxes last year despite billions in profits, claimed as the Republican conservative complex (Rcc) is wont to do, that the reason we don't have jobs in this country is regulation and taxes. And he singled out the petroleum industry and exploration in particular for his criticism of government regulation, which is especially telling since we need jobs now and even when the drilling permit application process is expedited, it takes years to go from submission through approval, and then years more to go from approval to hole in the ground and workers to drill it. Put aside the fact that business leaders today are conceding that tax cuts would not motivate them to hire without demand to justify it, and that lack of regulation is how we got into this economic mess, when assessing Welch's credibility and concentrate on his retirement from power at GE. His parting gift to the company was a $100 million attempt to acquire Honeywell, which failed, in return for which GE gave him a million dollar penthouse in New York City, which he no doubt inveigled from the board of directors and had to give back when shareholders were heard to howl about it. This is a man who doesn't know to come in out of the rain, not like a man who doesn't mind but like one of those apocryphal turkeys who drown when it rains because they look up to the sky with their mouths open to see what's happening. Apparently Peggy Noonan was sick this week or, as usual, she would have been this week's buffoon.

But the rest of the panel members on both programs were quite rational in both their criticisms of the members of both parties and their assessments of their respective prospects. Even Frank Luntz, the Republican operative and provocateur, was critical of the Republicans' insistence on undermining President Obama on these issues when the rest of the country sees them as goals accomplished. And if Luntz can see that, dogmatic and reactionary conservative that he is, there is no explanation for the failure of the Republican leadership to do so, especially since Luntz has guided the Republican program for re-ascension to political hegemony, most publicly with a leaked memo he sent to party leadership before the 2010 elections. As we all remember, his guidance unfortunately led to considerable success at the polls. No doubt another memo will be going out soon, if one hasn't gone out already, but the question is, will the Republicans read it. If you throw into the mix the fact that the entire This Week panel, including Republican leading lights George Will and Matthew Dowd, saw it all the same way, it seems like the Republicans have un-holstered their foot shooting pistol again. All I can say is, go team, go.

Your friend,

Mike

Dear America,

Occupy Wall Street has become Occupy the World, and I find that fact encouraging. It demonstrates a universality of general attitude that unites many thousands, if not millions, and thus emboldens and strengthens the resolve of those who participate. It is reminiscent of the univocality of youth on the subject of the Vietnam War despite the disparateness of the movements that mobilized against it. That the United States does not still have a presence in Vietnam is probably a function of that widely shared and expressed sentiment. Yet, even in light of the prevalence of dissatisfaction all over the world that the Occupy movements reflect, those who are the preponderant inspiration for the discontent of the "99%"-- that is the "1%"-- seem to be in denial about the potential of this agglomerate movement to precipitate change, largely at their expense. It is difficult to determine whether their disdain for the movement is whistling in the dark or a function of the arrogance that leads them to believe that they have earned what they have gained through manipulation of a financial system that has become an end in itself rather than the means by which others can accomplish their ends that it was intended to be. But either way, I don't think that they fully appreciate the portent or the moment of the Occupy movements, nor do they recognize the potential for disaster that ignoring or dismissing the movements out of hand could wreak upon them. It has not been unheard of in history for the great mass of a population to eat the rich among them, and the delusion that it cannot happen here disserves those who harbor it and the rest of us as well. However, even if the worst comes of it all, I find it hard to feel sympathy for the 1%. As the Proverb (16:18) goes, "Pride goeth before destruction, and an haughty spirit before a fall." Even the proud and the haughty should know that, though in this case they don't seem to.

In the New York Times last week, it was reported that a hedge fund manager named Rajararatnam had been sentenced to eleven years in prison for insider trading on the same page as the paper listed the stiff sentences handed down for various financial crimes in ten other cases, including those of Bernie Madoff, who will never be free again if his full sentence is carried out, and Jeffrey Skilling of Enron fame. Yet the very next day, The Times interviewed several people on Wall Street who seem not to realize that they and their colleagues are not blessed with impunity, not just from protest movements, but from the legal establishment either. According to The Times, a hedge fund manager-- and they seem to be imbued with a kind of arrogance that is singularly ugly-- said that Occupy Wall Street was a ragtag group looking for sex, drugs and rock 'n' roll, apparently so out of touch that he doesn't realize that those things are readily available these days without going to the trouble of sleeping in the park. And a bank executive opined that the movement was a bunch of fringe groups who have the time to protest, not middle class citizens-- presumably like him-- as if to say that only those who are bankers can have anything significant to say. Who do you think pays the taxes, one money manager asked, apparently oblivious to the fact that people without jobs on account of the economic mess that money managers created would gladly pay taxes if they could find work, which they can't. He went on to claim that the financial industry is one of the last American economic bastions, and that it is the source of most of the campaign contributions that his senators enjoy, equating the ability to buy a politician with rectitude, and the number of dollars owned with the power with which his constituency should be endowed.

Of course, it all smacks of the (Rcc) Republican conservative complex refrain that criticizing the 1% is class warfare as if we all concur that class warfare is always unjustified...a bad thing in its essence. They seem to have forgotten the Russian Revolution in which the serfs rebelled against their blue-blooded masters, the French Revolution in which Marie Antoinette and her effete husband were beheaded because as they dined in splendor they would deny their impoverished countrymen a crust of bread, and our own American Revolution in which a country of expatriated pioneers rebelled against a culture defined by its patrician rulers, all of which seem justified to me. And then there are the Tunisians, the Egyptians and the Libyans who started just the same way that Occupy Wall Street has. The smugness of the critics of Occupy Wall Street and all the cognate conclaves forming all around the world does not bode well. Though the likelihood of a course of events here like that which occurred across the Arab world is very low, the Occupy participants are almost all young, and they will vote, at least in this country, over and over again for the next fifty years or more. If they are like us old sixties radicals, their voting patterns are being set this very minute in Zuccotti Park and in tens of other places where they meet. They will not forget what they believe, nebulous as the plutocrats want to believe that is. So the bankers and money managers might want to rethink their reckless joviality. It's not the laugh they are getting now that will matter ultimately. It will be the last laugh that counts, even if it comes decades from now.

Your friend,

Mike

Dear America,

It is remarkable how little things change, even those for which there is no explanation or excuse. Herman Cain has proposed his 9-9-9 tax plan as a panacea to address not only the lack of jobs, but inequities in the current income tax code. But the plan he proposes would effect the poorest of us the most...and the worst. The 9% sales tax would result in a tax burden for those who currently pay no or little income tax that exceeds, sometimes vastly, what they pay now. Families barely managing to provide themselves with food and shelter-- those often referred to as the working poor-- would see their tax burdens increase while the wealthy, and Herman Cain is among them, would see their tax burdens reduced as would corporations and the vast majority of the middle class as it is currently defined in our political debate. But what is overlooked in the criticisms of Cain's plan is that the nearly fourteen percent of our earnings now paid into the Social Security Trust Fund by our employers and us would no longer be payable, which sounds good at first blush. But it also means that the Trust Fund would disappear and Social Security benefits would be paid out of the general fund. That is just the first step toward saying that we can't afford Social Security as a nation, and though little is made of the value of the program now, it benefits both the recipients of benefits and the rest of us as well, because virtually all of the benefits paid get spent, generating not just well being, but through that consumption jobs, profits for business, growth, prosperity and a modicum of common weal that we can all count on in our later years. That was not there in the 1930's, and the misery the lack of a social safety net caused for the old and infirm was what motivated FDR to create the programs. Unfortunately, the Republican conservative complex (Rcc) doesn't concern itself with such things. This is my letter to you of January 28, 2011, in which I reiterated a fear I first mentioned in the earliest of the letters I wrote to you. Unfortunately, it appears from the significant interest being shown in Herman Cain's tax plan, that it was no idle concern.

The Republican conservative complex (Rcc) persists in making insinuations about Social Security's role in creating the national debt. But the reality is that the budget cannot be balanced and the national debt cannot be reduced by changing Social Security in any way unless the program is absorbed into the general fund budget and the payroll tax, which is the sole source of Social Security funding and cannot be used for anything else by law, is eliminated-- not just the seven percent we taxpayers pay but the seven percent that our employers pay as well. In other words, if the Rcc wants to address our debt through Social Security benefit reductions, they will have to reduce tax revenues by at least the amount of the reductions: a wash that would serve no purpose but the one they have been trying to achieve since the New Deal. That's right. Reducing Social Security benefits is just the first step toward eliminating the program all together because in reality, reducing Social Security benefits cannot reduce either the national debt or the deficit.

I know how some of you are reacting: it's just another conspiracy theory, or Eric Canter and McBoehnell (Mitch McConnell and especially John Boehner) aren't smart enough to figure out such a scam. But whether they have devised the plan or just intuit that they can get rid of Social Security by attrition and reduce the debt simultaneously, that is what they are intent on doing. Because if they merge both the revenue from Social Security's payroll tax and the benefit payments to Social Security recipients into the general fund, they eliminate a distinct tax-- and you know how the Rcc obsesses about taxes-- and at the same time they eliminate the safe repository of the funds to pay the benefits that they don't want to pay anyway so that they can keep the funds that are already in it, which they have already spent anyway. As an ancillary benefit for the Rcc, by eliminating the Social Security Trust Fund they eliminate the need to repay to the fund the trillions of dollars the federal government has already borrowed from it and hence owes the fund: trillions of dollars of debt disintegrated with nothing but a few strokes of the pen. Then, if the Republicans are in power at the time, they can say that their fiscal responsibility eliminated a massive portion of the debt problem. They think that no one will notice that it is really just a shell game that they are playing and that we, America, are the ones being conned.

What disturbs me most is how few people seem to be onto the Rcc. For example, on several occasions, I have heard David Gregory of Meet the Press talk about reducing entitlements like Social Security to balance the budget. Last Sunday, he tried to get Eric Cantor to admit that he needed to advocate reductions in Social Security if he wanted to balance the budget. And while Cantor was very coy about it then, refusing to give a real comment on the subject, in the end he will reluctantly-- gleefully underneath it all-- acquiesce in what seems to be becoming the mantra even the progressives among us are chanting...cut entitlements, cut entitlements, Om. And Gregory asked the same question of Harry Reid last week, though Reid's response was that reducing Social Security was not necessary: half of the right answer. So, the danger is that those of us who believe that the social awareness and compassion that have spawned what we refer to colloquially as "the social safety net" will unwittingly ask the Rcc to take it away from not just us but our grandparents and our grandchildren as well little by little. We are being duped into being their enablers-- accomplices in building the petard that will hoist us all. I can recall only one commentator who has expressed the reality about Social Security on television and he was one of Rachel Maddow's frequent guests. Almost everyone is ignoring the fact that even the President's debt reduction commission's preliminary report said that strengthening Social Security by changing benefit structure or revenue would not reduce the debt or balance the budget. In bullet number five on page 43 of their report, they recommended that we, "Reform Social Security for its own sake, not for debt reduction." That is an exact quote and the report is on the internet, so you can look it up for yourself, as can the Rcc. I hope you do, but they won't.

So, consider this fair warning. Social Security is in jeopardy, which I for one could accept if it were for good reason, but it isn't. The only reason that it gets mentioned by the Rcc is that they don't like it. Ramesh Ponnuru of the conservative journal National Review in his January 14, 2011 Op-Ed piece for the New York Times wrote that if President Obama does not offer a "good faith proposal for Social Security" in his State of the Union address, "reformers [substitute Republicans here] should blame Mr. Obama for the lack of progress and work to make entitlements a litmus-test in the Republican presidential primaries." The strategy Ponnuru is advocating is the first step in just what I have been describing, and you can count on seeing it unless the fallacy behind the Rcc's intention is exposed on a large scale. So, as usual, it is up to us, America, to help ourselves. Because if we wait for our politicians to figure this all out, we are in for some awfully hard times. The recession of 2008-2011 will look like a day at the beach.

Your friend,

Mike

MichaelWolf@Letters2America.com

Dear America,

The problem we face in our electoral decision making process is that when it comes to economics, there is no empirical way to separate certain truths from the contrary fictions being promoted by the other side in the debate. Of course, the Republican conservative complex (Rcc) believes that the truths in the debate are that tax cuts always stimulate the economy by promoting job creation and expansion of physical plant and that regulation of any kind is a damper on free enterprise whereas liberals believe that business already has too much money and the best way to stimulate job growth and hence the economy is to spend money on infrastructure improvement and civil services like teaching and public safety. It seems that the facts that business is already sitting on a pile of cash and that it spends twelve dollars for new robots for every one dollar it spends on new employees are not cogent contraindications for the Rcc position, though I have no idea why. With regard to tax cuts, the original stimulus plan passed in 2009 included $320 billion worth-- 40% of the entire program. So if that stimulus didn't work, it demonstrated not just that infrastructure spending is unproductive, but that tax cuts are too, but again, no one seems to feel that to be a cogent argument worth pursuing, and also again, I have no idea why. But the fact that we cannot separate the owls from the chickens with empirical data doesn't mean that we can't separate them at all. We just have to ask the right questions.

For example, when a Republican like Mitch McConnell claims that raising taxes on million dollar earners destroys jobs, we can ask him where he got that idea. "How does that work," we can ask him, and he'll give us a pat answer. He'll say that many of those million dollar earners are small business owners, and the extent to which we take their money in taxes is the extent to which they don't have that money to reinvest in their businesses and the creation of new jobs. That is the moment at which we can point out that almost all businesses of the size necessary to earn their proprietors a million dollars a year are corporations, so the money those millionaire proprietors pay taxes on is money paid to them by their corporations after the corporations pay corporate expenses. In other words, money they spend in the course of business-- on new employees, new equipment or environmental regulation compliance for example-- avoids taxation for those million dollar earners whereas the income they take out of the corporation is taxed as such: personal income of theirs, not the company's. In other words, taxes on their personal incomes don't effect the corporate balance sheet until after all of the business's needs have been satisfied, and thus those taxes have no effect on corporate operations, which in all those cases generated a million dollars or more of excess profit for the boss to take home. So, we can thus ask Mr. McConnell, "if taxes on those incomes are not taxes on the businesses that generated them, how do those taxes effect the businesses other than by causing their CEO's to have to live with smaller boats? And isn't that a price worth paying so that some old guy can get his Lipitor every month?" But even if we can engage McConnell in such a dialectic, it may be futile.

I was surprised to read in David Brooks' column last Friday that he sees liberals' desire to include raising tax revenue by increasing the rates at which the rich pay taxes as "a way to punish the greedy and redress the iniquities of capitalism," which he apparently considers the analog to what he describes as the conservative belief that tax increases on the rich are "an assault on the enterprising class perpetrated by arrogant central planners." He knows more about what conservatives believe than I do, so his characterization of their ideas may be apt, even though the umbrage he attributes to them seems contrived to me. But as to the retributive motivation behind tax increases for the richest of us that he ascribes to the progressive movement, he is far off the mark. Progressives don't like tax increases...on anyone...any better than conservatives do. And while progressives think those who perpetrate enormous frauds deserve punishment, they do not reserve that kind of retribution for conservatives. Punishment has nothing to do with the liberal position on taxes on the rich. It is not iniquity that motivates liberals in this dialectic. It is inequities...with an "e". Setting aside how the rich got rich, liberal thinking is that those few whose lives will be little effected by a 4% increase in their taxes should accept that additional tax burden to help the many who are suffering and need the assistance of their society in the form of government programs, reduction of which will imperil their health and render their lives even more devoid of creature comfort than they already are. It is not envy that motivates us. It is perceived need.

In the final analysis then, it appears that the conservative paranoia about progressive government policy may not be contrived to disguise cupidity, but rather it may be a genuine fear born of dubious reasoning. McBoehnell aside, David Brooks' failure to understand the motives of the progressive movement-- his belief that the movement is vengeful rather than compassionate-- demonstrates that even the best and brightest of conservatives live in a world they perceive as fraught with dangers emanating from their left political flank that are aimed at them personally rather than at problems common to all of us in America in that they afflict many of our fellow Americans. Perhaps we should feel compassion for conservatives and try to help them see the truth, and I'm willing to try by asking those questions I mentioned. But frankly, all of our efforts so far have fallen on deaf ears.

Your friend,

Mike

Dear America,

The inter-party debate seems to be distilling down to the essentials with The President articulating the position of one end of the political spectrum and the Republican aspirants to the presidency articulating the other. And they are giving us a full range of options from which to choose. The President's liberal creed is that those who have amassed and continue to amass great wealth have also amassed great responsibility. Without making moral judgments on the means by which they accrue their wealth, he advocates that they make sacrifices, none of which should dramatically affect their lives, so that those who have suffered stagnant wages, declines in their home equity-- the largest asset in the estates of most of us-- loss of employment opportunity and a debt and deficit burden born of the avarice and amorality of a plutocratic financial industry can recover from the losses they have suffered by virtue of what has probably been the largest transfer of wealth from one class to another in history. The Republican candidates for the presidency take an opposing view, but the differences in the ways in which they do so are of immense importance. They demonstrate the full range of conservative thinking with regard to compassion and generosity of spirit...that is to say the varying degrees in which conservatism lacks them.

Start with Herman Cain, who has now proposed his 9-9-9 plan for taxation: a 9% corporate tax rate, a 9% personal income tax rate and a 9% federal sales tax. Critics of his plan have pointed out how regressive such a tax scheme would be in that those who are amassing wealth would pay sales taxes only on what they consume rather than on what they take out of the economy for their own retention, and they would pay less income tax on that amount as well. In such a system, a family living on the poverty line would pay 9% on most every penny earned because it all gets spent just to survive whereas a hedge fund manager who makes a billion dollars would pay the 9% sales tax on only what he buys, which would exempt the rest of what he brought in-- probably 90% of it or more-- from taxation under the sales tax at all, thus reducing his overall tax burden at the expense of the family with barely enough to eat. But Cain's ill-advised and inequitable plan for federal taxation is just one manifestation of the callousness of his conservatism. He recently volunteered that the jobless should blame themselves for their unemployment, not our economy and our political system, as if the four or five million jobs available at any given time should be adequate to sustain the fourteen million or so who want and need them. Just as with his tax proposal, the arithmetic doesn't enter into his thinking. Only preservation of wealth is on his agenda.

And then there's Mitt Romney. He believes in supply side economics as if they had been codified on the Rosetta Stone. It is an article of faith to him, a businessman, that business will save us all if we pump more money into it in the form of tax relief and regulatory exemptions that will pollute our environment and endanger the common weal in all kinds of ways. He seems to have missed the past thirty years in which the concentration of wealth has continued to flow into the hands of fewer and fewer people who demonstrate less and less of a sense of responsibility to the society that makes their wealth possible, and all toward the end of allowing the select few to accrete more wealth than they can ever spend. Romney's view of the world is devoid of meaning in that wealth in his system is just a means of controlling others and keeping score. His nine figure fortune means nothing to anyone as it sits in one repository or another, getting bigger all the time, but serving no purpose as it grows. Capital for use by business is abundant these days, but it sits in corporate coffers where it does no one any good, and in bank accounts where it never sees the light of this terrible day for so many. So adding more to the pile would obviously be futile, if not destructive, but Romney's philosophy cares not.

And of course there is Rick Perry, who appears to have the intellect of a child and the reasoning capacity of the stereotypical conservative true-believer. His ideas are as stagnant as our economy, and the acceptability of those ideas to so many is the reason for the stagnation. In the media and in scholarly work over the past six months or so, the notion that uncertainty and regulations have caused our economic woes has been not just statistically repudiated, but rejected by members of the business community themselves as well, and I have even named a few in these letters. But Perry continues to trot out the old dogma that lays blame for our depression at the feet of regulatory agencies and the temporary nature of the Bush tax cuts, and he does so as if no one has said any different. And then there are the minor candidates like Newt Gingrich, who claims that Ronald Reagan doubled federal revenue by lowering taxes-- mostly on the rich-- when in fact if you adjust federal revenue dollars for the rampant inflation that prevailed over the first half of Reagan's tenure, federal revenues rose a mere 20%, which has been the norm for healthy economies under other presidents. And he touts the 16 million jobs created during the Reagan years as the product of reduced taxes even though 21 million were created in the Clinton years when taxes went back up by at least the amounts by which Reagan lowered them. But Cain's callousness, Perry's dogmatism and Gingrich's casuistry are really only flags that we should all note, but that do not represent the real problem.

A couple of weeks ago, David Brooks wrote a piece on empathy. It was his usual display of erudition, and frankly, I marvel at the volume of what he reads. But the essence of his thoughts was in the final paragraph. He opined that the way to make the world a better place is to improve the moral codes by which we live-- perhaps as varied and numerous as we are-- so as to create not just empathy but compassionate action as well. It is one's moral code that creates an empathic response to the needs of other, Brooks observes, whereas empathy alone does not necessarily precipitate compassionate action. And that is the point of my observations about Cain and the rest. The deficiency in their characters is not that they feel no empathy; it goes much deeper. They lack moral codes that would require that they do the compassionate thing, and thus even if they have empathy, they are incapable of the kind of action that it requires. They are hollow men...and they would be hollow presidents as well.

Your friend,

Mike

Dear America,

It infuriates me to hear people like Eric Cantor and Paul Ryan use phrases like "class warfare" to describe what is in reality nothing more than criticism of our entire system by the class of people that made the rich wealthy: working people and those who want to be but can't find jobs. These two politicians speak as if it is immoral for a worker who hasn't gotten a raise in thirty years to complain if his boss, who spends most of his work days on the golf course, gives himself an eight figure bonus every year: an unpalatable idea at best. Yet that is how they, and others in the Republican conservative complex (Rcc), have decided to discredit their critics occupying Wall Street in a dozen or so cities across the nation. I have to ask myself if Ryan, Cantor, et al. are really that obtuse, or are they rather that amoral. When Ryan's solution to our federal budget imbalance is to propose cutting benefits for those least able to afford the loss while decrying tax increases for those best able to afford them all the while, what does he expect the response to be. When Cantor refuses to consider tax increases-- or for that matter even tax reform that has the effect of raising taxes, especially on the rich-- as part of the budget balancing equation, what does he expect from those who have not enriched themselves by dint of accidents of birth, good fortune or suspension of moral constraint, not a description of all of the top 1%, but apt for a great many of them. The days when silence would be the response to attempts to legislate avarice into our social and economic structure are behind us, and deriding the protestation of such efforts with tendentious, self-serving characterizations will no longer suffice to turn the tide.

The unfortunate sobriquet chosen for themselves by the Occupy Wall Street protesters-- "we are the 99%"-- has been seized upon as the sole qualifier of everything the participants are trying to say, and the opponents of the movement seem to think that they can rely on derision of the movement for its name alone to carry the day. But they do not understand, or at least fail to acknowledge, that social injustice born of economic abuse is the root of much of Americans' dissatisfaction as reflected in national polls about our politics and the direction in which our nation is headed, but it is not the definition of the national mood of dissatisfaction. So rhetorical tricks, like ad hominem attacks as a substitute for rational debate, will no longer suffice, and the majority of the American people have made that point plain. In a recent Pew Research poll, 67% of Americans favored higher taxes on the most affluent among us, and that percentage was reduced by the Republicans' surveyed, yet even 47% of them favor taxing the rich more heavily. Thus, the ploy of castigating "the 99ers" for engaging in class warfare will no longer sway any significant portion of the populace for two reasons. First, the vast majority of Americans see that they have been the refugees of a class war prosecuted by the American plutocracy for decades, and they see themselves only as fighting back, not as instigators. And second, even if they believe in some quarters that the lower and middle classes are waging war on the upper class, they don't care about being labeled as class warriors because they see it as justified. But while we all know people like Ryan and Cantor to be shallow and transparent demagogues, there are serious, thinking people in the Rcc, like David Brooks, and their lack of objective analysis of the movement disappoints me. He, like many conservative critics, seems determined not to listen to either the analysts of the empirical data or the economic theorists who have concluded that the conservative mantra of lowering taxes and decreasing regulation in deference to business is a failed and futile policy choice for a nation in the condition in which we find ourselves today.

In his New York Times op-ed piece yesterday, Brooks criticized Occupy Wall Street by isolating the "we are the 99%" slogan as myopic for its failure to contemplate other causes of our economic and social distress as if the slogan defines the movement. But the slogan is just a rallying cry, and Brooks' choice to ignore that fact gives short shrift to a movement with a masthead focused on the financial industry, but an agenda of far greater breadth. While the protesters in the park do look up for the source of the acid rain falling on us all, they also bemoan the manifestations of the ethos that allows the rich to prey on the rest of us. Financial rapacity is only the visible pinnacle of the injustice they see. The system that promotes that rapacity however is the real grievance of the movement. The social stratification caused by our economic Darwinism is the real cynosure of the protesters' plaints, and that implicates Americans on all strata of our economy. So, while Brooks argues for the USA Tax program of tax cuts for business, increases in energy taxes that deplete the solvency of average Americans but leave gas guzzler and McMansion owners un-phased, and use of market forces to bring medical costs down even though our free market health care system has completely failed to do so over the past hundred years, he manages only to give form to the inchoate message of the protesters across the country: that kind of promotion of economic Darwinism does not benefit us all. That those of us whose labor produces the wealth that the few enjoy deserve a larger share of it, is only one link in a philosophical sorites of much greater breadth. At the same time however, he demonstrates that no conservative, even the most thoughtful of them, can reconcile his philosophy with the will of the American people as to the shape and form of the society they want.

Americans want social and economic justice for everyone, even if it is punitive for those among the middle class who speculate and lose on borrowed money, and the movement is consistent in that it seeks redistribution not only of wealth, but of duty as well. The protesters' point is not limited to the notion that the wealthiest 1% of us are greedy. Rather, they believe that the onus to provide a modicum of weal for everyone reposes on everyone's shoulders, including those of the rich and of the middle class. And the duty to take only what is within the classic American ethos-- the one that busted up monopolies and pursued the robber barons of the late nineteenth century as well as the industrialists who put our children to work for wages guarantying servitude handed down from generation to generation-- is incumbent on us all. It is at the heart of matter. The 1% are not the issue behind Occupy Wall Street, even though the movement's motto points to them. The movement is really about the responsibility of all of American society for its members and how that responsibility should be divided up. It is about the call to action that our American creed should dictate, which Brooks himself alluded to in an editorial he wrote about two weeks ago, the subject of this Friday's letter2America. As that piece demonstrates, "Compassionate conservatives" like David Brooks know what is right and moral...they just can't seem to put that imperative together with their philosophy, which is all Occupy Wall Street want the Rcc to do.

Your friend,

Mike

Dear America,

The people who host those Sunday morning talk shows about current events are no dummies, but you wouldn't know it to watch them at work. Yesterday, David Gregory of Meet the Press interviewed Congressman Paul Ryan of Congressional Budget Committee fame. As everyone knows by now, when the latest extension of the Bush tax cuts expires, the rate paid by the top two percent of income producers will go from 35% to 39%. That will occur at the end of 2012, after the next election, but at just the right time to be the central topic of discussion during the campaigns that precede it. But Ryan insists that at that time, the tax rate for the richest 2% of us will go up to 50%, and he insisted on that point again when defending his party, the Republican Party, as Gregory confronted him with the assertion of Vice President Biden made in an interview with Gregory just a few days earlier that the Congress had committed itself to doing absolutely nothing. And Ryan added that the Congress, which is now controlled by the Republicans, had passed over a hundred bills and sent them to The Senate where they were stalled and awaiting action. Of course, no one, including David Gregory, ever asks Ryan how he gets to 50% when the marginal income tax rate is going only as high as 39%. And Gregory didn't ask Ryan what those hundred bills were about either, some or all of which could be either trivial or nothing more than political stunts meant to embarrass someone. Ryan claims that the new health care act will add a significant burden to businesses, and he gets most of the way to 50% on that frivolous claim...frivolous in that he says he wants to reduce the budget deficit and the debt by making health care cost more for Medicare and Medicaid recipients in that if his budget were passed, it would add to the middle class tax burden in a comparable way. And as to those bills, the Republican minority has blocked many of them, as Senate rules permit, among those placing blocks on bills being the Tea Party's own Rand Paul. And the rest...well, in this Senate there is no way to get through a Republican filibuster, which Senator Mitch McConnell threatens without compunction every chance he gets. No salvation for the Republicans' reputation there I'm afraid, Mr. Ryan.

But then later in the day I heard Eric Cantor opining on the Occupy Wall Street movement. He claimed to be indignant because some were lauding that demonstration of sincere opprobrium for the money culture that now rules the United States, characterizing them as prosecutors of a class war, one American against another. He never says such things about the Tea Party of course, nor would he condemn anyone who agrees with him in his political causes, but he has no shame when it comes to the ad hominem tactic of castigating people for their beliefs not based on the content of those beliefs but on the basis of assertions about their motives and the effects of their arguments on his own friends. There is an arrogant shamelessness about these people that is going to get them in trouble one day, and that day may be tomorrow, or the next day, but certainly one day between now and November 6, 2012. Their assumption that a majority of the American people cannot see through their demagoguery because their supporters can't has led them to overreach, and what they don't realize is that Occupy Wall Street is a warning shot across their bow. It is the raising of the voice of the vast majority of Americans who generally sit quietly at home and watch the news while they hold their noses and shake their fists at the television screen.

Of course, the Republicans are not the only politicians who need to contemplate the error of their ways. It is true that the Democrats have not propounded a budget for the nation in years, even when they controlled both houses. And it is true that they failed to change Senate rules when this term began in January 2011 as they had the right to do by eliminating the filibuster through a simple-majority-cloture rule. And Harry Reid prefers to keep bills from reaching the floor of the Senate if he thinks the Republicans can defeat them, probably because he Republicans prevent every bill they cannot win from being voted on by filibustering it. But the reality is that the American people want votes to be taken, win or lose. So the Democrats are on the wrong side of the definition of democracy just as are the Republicans. But when the American people have to cast their votes, they will have to decide on some basis, and all that remains is fundamental principles. Do we care what happens to one another? Should taxation be used to reallocate some wealth from those who have not just a lot, but too much, to those who have too little, sometimes too little to eat? Do we really believe in the right of the individual to control his own life, or do we believe in it only so long as the individual believes as the sanctimonious majority does? Do we believe that people should stand on principle, or that they should manipulate the system with procedure wile? Do we subscribe to the notion that whatever promotes business is good for us, or have we recognized that business will sacrifice the common weal in order to put money in the hands of the few who believe in plutocracy, not democracy? Do we believe that people who protest the voracious cupidity of our financial industry and its beneficiaries are waging class warfare, or do we believe that their movement is a reaction to class warfare in which the wealthy have sacked our economy and many of our lives?

Who are we, America? My hope is that, while Eric Cantor and Mitch McConnell, John Boehner and Paul Ryan will try to tell us in such a way that it favors them, we will take the opportunity to tell them a year from now at the polls. Illegitimi non carborundum, America, as we used to say when I was in school. Illegitimi non carborundum.

Your friend,

Mike

Dear America,

Our President held a news conference yesterday, and I am pleased to report that the reports of his political demise have been greatly exaggerated. For a long time, he has seemed to cleave to the ostensible (I say ostensible because it is largely a myth in the first place) Reagan model of a presidency in fashioning his own. He took the conservative supply side economic principles on which "Reaganomics" was fashioned and tried to incorporate them into "Obamanomics," but they were largely a failure as they were in reality under Ronald Reagan despite conservative fulminations to the contrary. Federal revenue did not double after deep tax cuts, but rather, after the first full year of the Reagan presidency, during which his supposedly historic tax cuts were passed, federal revenue dipped in terms of inflation adjusted dollars by over $80 billion in two years, only then increasing over the rest of the course of his two terms-- during which he increased taxes many times by the way-- to a level 20%, not 100%, over what he started with...about the usual range of growth for any eight year period. And as far as growth in commerce and jobs were concerned, business failures reached record highs and unemployment continued to climb to 9.6% by the end of Reagan's second year in office, while his job creation record over eight years was the worst since the Johnson years. And as to Reagan's "there you go again" strategy, his popularity by the time he left office was at a record low. Thus, the Reagan presidency was not a model that any president should follow, which appears to be the conclusion that President Obama has reached...finally. By the way, all these statistics are available from the IRS and other government agencies.

So Reagan seems to be out as a paradigm for President Obama, but he still seems to be emulating a predecessor. This time, however, it is Bill Clinton, who admittedly had his shortcomings, but he knew how to hold feet to fires, and that is what we need now. President Obama was asked in the second question of the news conference whether he was really just campaigning by going out into the country to bring the question of his stimulus package to the American people, and as if to demonstrate that the question was ulterior in its motivation, whether he intended to compromise. It was as if Mitch McConnell had written the question for the CBS reporter; it was more of a comment than a question. But President Obama was blunt with his answer, effectively pointing out that diplomacy was out of the question anymore. He pointed out that attempts to compromise had left him with nothing but political scars inflicted by the intransigent opposition, and that his efforts to accomplish it were a thing of the past. And then he struck the coup de grâ ce that he has administered and will continue to administer over and over again between now and November 2012. He said that he had a plan and they could pass it, or they could present their own idea, but either way, they had to face the American people with their choice. If the old Barrack Obama really is back, he will give that answer over and over again until he either wins or loses in the end, but he will not abandon the principles that got him to the White House. That's what Bill Clinton did with Newt Gingrich, and in the end, Gingrich blinked and the Republican decline of the 1990's ensued. We'll see if history repeats itself.

But if the President is well advised, he will add one more thing to his confrontational repertoire. There are amassing in various cities groups of mostly young people gathering in support of the occupation of Wall Street that is living and growing in New York City as we speak. They are thousands, and likely they will be millions before the movement dissipates, who will cast votes next year, and the likelihood that there will be a single Republican voter among them is so remote as to be unworthy of consideration. This should be the beginning of the Democratic campaign, and President Obama should announce that such is the case. The Democratic National Committee should have a table at the demonstration in every city to which the new movement spreads at which all those people can register to vote. The result will be one of two things. One possibility is that the Republicans will see that their strategy of recalcitrant inertia has failed and they will actually cooperate in doing something good for the American people, though prudence doesn't seem to be in their repertoire anymore and no amount of discretion can outweigh the audacity that has become their cardinal trait. Which leaves the other choice: that the Democrats will register the voters they need to go to the polls and vindicate the American political system by rejecting Republican partisanship and return the Democrats to the majority in The House while increasing their majority in The Senate. I can live with either one.

Your friend,

Mike

Dear America,

I had shoulder surgery on September 27 and I will be unable to write to you for a few weeks, but I want to stay in touch. So, I will be republishing some of my previous letters to you...letters that I think have continuing or renewed relevance. Here is the second one, my letter of March 18, 2010. It is relevant today because we are once again talking about a stimulus plan, and the elements of this new plan will be of benefit overall, but they are flawed in the same way as the first one was...by the assumption that taxes can play a roll in our recovery from a disaster served up by business and our failure to demand its regulation.

This week, the president and the congress reached accord on a new "jobs" bill. The cost is insignificant in terms of recent infusions of government money into our economy, but at this point, it seems foolish not to examine the strategy behind the bill because it is more of the same things that have gotten us nowhere so far.

Our economy is in its current condition because of unemployment and lack of credit. But it occurs to me that perhaps those two things are not two at all. Perhaps they are one and the same if you view the financial crisis from the top down. You may remember that a year and a half or so ago, when it came to light that the big banks in this country and around the world had found a new Ponzi scheme that our government and the rest of them had declined to regulate and control, the "TARP" was shoved down our throats.

The big banks were given money to use so as to restore the flow of credit and thus stimulate business and the real estate market. But the banks didn't use that money to lend. They used it to buy other banks, to pay bonuses and the like. And the fact that our national treasurer and the leaders of the Federal Reserve didn't see that coming seems as preposterous to me as the notion that if you give a business man a tax break, he will hire someone even though there is no demand for what he is producing. No, as I have been saying since my first letter to America on February 7, 2009, our problem cannot be solved from the top down. It has to be solved from the bottom up.

The American people have noticed over the past twenty five years or so that tax cuts do not trickle down; they don't trickle anywhere. Tax cuts just make those who get them, but don't need them, less needy. Even worse, in the case of this most recent jobs bill, it will allow employers to forego payment of their 6.2% of the Social Security tax that funds all of our Social Security retirement benefits, in other words, the president and congress are giving business our retirement money, though the bill requires the government to pay us back. But our government has been pushed into a corner, looking for any way to spend government money based on the presumption that the act of government spending is in itself priming the economic pump.

The problem is the lemming principle. "Supply Side Economics" is the dogma that replaced "Keynesian Economics," so we now subscribe to that dogma in the belief that we no longer have to think beyond employing it. Last year, the topic of conversation was how the Japanese use of Keynesian dogma failed and whether Roosevelt's reliance on it was really successful. The claim that both failed was deemed to affirm supply side dogma, and for those on whom we rely to get us out of this mess, that was enough. But docilely invoking that dogma, any dogma, will avail us of nothing. The reason that the Japanese and Roosevelt were not completely successful, if indeed that is the case, is not that government spending on infrastructure (the new Washington jargoneers' version of what used to be called public works), that is Keynesian economics, is wrong any more than it is proof that supply side doctrine is right. It is much simpler than that, and we have had the proof we need within the past two years.

When the Bush administration's stimulus tax checks went out, they went right into the people's savings accounts at the bank. Well, that is partly true. Those of us who have bank accounts with savings in them put them in the bank. Others of us who had too much debt sent the money to our creditors, those very same banks that recently came back to us to borrow seven hundred billion dollars. But the money did not have the desired effect, not even for the banks. Again, that is partly true. Some of the money, a very small proportion, probably did just what it was supposed to do-- stimulate credit. But if it did, it was not even enough to be counted.

The only people who will spend tax refunds, rebates and reductions are the people who have very little money, so little that they don't have debt either because no one will lend them money. That's right. Give money to people who need food and it gets spent on food. Unemployment? That's right, the unemployed have no money either; most of them will spend the stimulus money they get on food, or rent, or clothes. So if we want to stimulate the economy immediately by getting money to people, we have to get it to the people who need it most. Building infrastructure doesn't do that. Neither do tax cuts for business men.

Still, if we want to spend money on infrastructure, that's fine. We can do that to good effect in the long run so long as it is necessary, for then and only then will it pay double: once when we hire people to build it and once when commerce uses it. But we have to spend and keep on spending, probably for at least a decade. Why? Because all those people who have the skills to build the infrastructure have had jobs lately. They have run up debt, because that is how we have been living for twenty years or so. And until they have paid down their debt to the point at which they feel secure, they won't spend freely either, and without demand, you can give business all the money it wants, but we'll get nothing for our trouble. That's how the credit problem is linked to the employment problem. That's why I estimate that we need a decade. Ask yourself how long it took you to get your financial house in order the last time you got into trouble. Until we do so, private business can't help us. Only government can do it. So just sit back and try to work out a plan for weathering the storm. It's going to rage for a while.

As to the credit problem, once government does prime the pump that stimulates demand, the ability to borrow money so as to stimulate business will in turn become an issue, because it is the other half of the same problem, that is the flow of money. I have an idea on that score as well, but for now, I've got to go. I've got to look for a new job. I'll tell you what I think about the credit thing next time, America.

Your friend,

Mike

Dear America,

I had the privilege of hearing Newt Gingrich give his new "Contract with America" presentation. Before I give you my impressions, let me tell you an old joke. A man walks into a drug store and asks the clerk where he can find the talcum powder. The clerk says, "Walk this way, sir." And as the clerk starts off with the man in tow, he hears the man utter, "If I could walk that way, I wouldn't need the talcum powder." Here's another one. Newt Gingrich is campaigning for the Republican presidential nomination, and he says to his loyal constituents, "Which way to the presidency?" And his constituents say...don't tell me, you've heard this one before. Me too.

According to the Office of Management and Budget, federal revenue increased by about twenty percent over the eight years of the Reagan administration, which was less than the rate of inflation back then, and that occurred only after decreases in federal revenue over the first two years of Reagan's tenure, during which he lowered taxes, especially on the rich. But then he raised taxes in more than ten increments over the next six years to get the twenty percent increase in federal revenues the conservatives brag about, though they usually indulge in the even greater hyperbole of claiming that he doubled federal revenue. And while Newt points out that 1.1 million jobs were created in September 1983-- a historical coincidence that he's probably been waiting months to trot out-- he fails to mention that the unemployment rate was 9.6 percent and the rate at which businesses were failing was among the highest it has ever been during the Reagan years. But even that single month job creation figure is tainted by the fact that jobs grew more in the seventies than they did in the eighties when the coming of age of the baby boomers added consumer spending to the economy in record amounts. In fact, while the Reagan years saw an increase in the number of available jobs in excess of 16 million, that figure was about 21 million in the Clinton years when taxes were higher, and it was around two million for George W. Bush's eight years, despite the largest tax cuts in history. As I said about Newt's claims before, I've heard that one too.

But he didn't stop there. He also says that he can fix Social Security by making it voluntary, but still offering it to those who want it. Apparently he doesn't know the fable about the grass hopper and the ant, nor does he understand why Roosevelt created Social Security in the first place: because people didn't create their own retirement savings...at least not in sufficient amounts to feed them when The Depression came. And then there's the fact that in some opt out of Social Security, the rest of us will have to take care of them when their stock market investments tank, as they do periodically with predictability that apparently escapes conservative like Gingrich. He does however have a few good ideas, setting aside his fixation on regulation as the reason that jobs are not being created now. He wants to increase research in what he calls "brain science" to reduce the impacts of conditions like Alzheimer's disease and autism. He wants to preserve Medicare and Medicaid. And he also wants to preserve Social Security for those who want it, slyly suggesting that he can assure us that there are enough resources in the federal budget to ensure payments for twenty five years. Apparently he is taking credit for the Trustee's report that said that the fund is sufficient until 2042 with no change in eligibility or benefits structure.

My point is that Newt Gingrich thinks that he is a "futurist" because he can dress up old ideas and sell them as new. That is the basis on which he claims to be qualified to be the next President of the United States. But that ability is not a qualification for the presidency. The job of snake oil salesman is open however, and in American business and industry as the Republican conservative complex sees it, there is always a calling for them.

Your friend,

Mike