Relevant and even prescient commentary on news, politics and the economy.

The rest of the dinner table deficit/debt discussion: Equity

I promise, there are numbers here, but lets have some fun first and write a screen play to set up the point. It is long, but…

 
“Dear, I’m getting nervous. We seem to keep adding to how much money we owe and our income hasn’t changed for the better. What can we do?”
 
At this point of the conversation, the conservative ideology (Republican and Democratic Parties) suggests and encourages you to believe that the answer is something like: “Well Honey, as I look over the horizon I see no possibility for improving our current position. The only thing we can do is cut back on our spending. We have to stop spending on anything we don’t need to live. If we are willing to sacrifice then eventually we’ll have savings that we can then use to invest such that we have more income.”
 
Now, for most Americans at this moment in the euphemistically labeled “business cycle” Honey’s response would be: “But I don’t know where else we can cut!” Of course to the conservative there is always something that money is being spent on that is in actuality an indulgence for which one should repent and thus cut from their spending if said spending is greater than one’s income. This is true because no righteous individual would ever let the devil of consumption tempt them from the path to wealth heaven. Redeem one’s self through the power of restraint of consumption urges.

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Rep Marsha Blackburn’s snow job. Explains how Social Security money flows

I was watching C span Washington Journal this morning.  Rep Marsha Blackburn was the guest.  I got to listen to her explanation of how the Social Security funds flow and just had to post the clip.   Copied from the transcript of the clip:

THEIRS MONEY THAT GOES TO MEDICARE AND SOCIAL SECURITY AND I THINK IT IS JUST IS SO INAPPROPRIATE THAT THE FEDERAL GOVERNMENT DOES NOT USE THAT AS A TRUST FUND BUT THEY MOVE IMMEDIATELY TO THE GENERAL FUND AND STACK UP IOU’S THAT ARE SITTING IN A CABINET IN WEST VIRGINIA.

What she says should not be allowed to stand and if C-span were half of what it used to be, she would not have had the following go uncorrected.  Thus I leave it to the Angry Bears to correct her here and thus document her ignorance of the subject. 

I have not watched this lady before.  I could not help but think she is just a more polished version of Sarah Palin. She is totally capable of pulling off what we used to call a “snow job” when writing their essay.

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Economic writing after my own heart

I have just learned of a new book that I believe every AB reader could relate to.

DON’T BUY IT: The Trouble with Talking Nonsense about the Economy

by: ANAT SHENKER-OSORIO

An excerpt from the book summary:

This concise, entertaining book shows us how wrong-headed metaphors and deceptive language have muddled our economic thinking, and how better word choice alone can win the debate.
 
Today the term “dismal science” seems almost too kind: too many of today’s economic arguments deserve the mantle of mysticism.
 
Below are a few quotes from a an excerpt of the preface of the book.
 
 
Mainline thinking about the U.S. economy is starting to resemble Scientology: beyond a coterie of high-profile, high-income believers, the more those of us outside the fold learn about the teachings, the wackier the whole enterprise sounds.
 
Members who attempt to leave either orthodoxy—in one case a church and in the other a market-worship orientation—are shunned and ostracized.
 
In a nutshell, the overriding message is twofold: it’s your fault that the Economy sucks, but there’s not much you can do to improve it. This storyline must sound achingly familiar to Christians. The blame for damnation to hell lies with you and you alone. Yet though prayer and piety are good ideas, only God determines who merits redemption. Economic salvation is out of your hands, but that’s no excuse to quit your night job or start spending on luxury items like college.
 
 
I find this next statement most inline with my thinking when for years here at AB I have asked: What do we have an economy for?
 
In most domains, policies must be advertised as serving our national interests, but when GDP talk rolls around, this is no longer the case. We’re here to please the economy, not the other way around.
 
I’ll send this one to my daughter to add to my “gift list”. It’s a list of books she can consider when she wants to give me a gift.

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Did Romney speak blasphemously?

Of all the things being deconstructed regarding the debate last night, this is the one that stood out for me:
QUESTION: The outsourcing of American jobs overseas has taken a toll on our economy. What plans do you have to put back and keep jobs here in the United States?
Romney:…which will allow me as president to be able to put in place, if necessary, tariffs where I believe that they are taking unfair advantage of our manufacturers.
So, who is it on Romney’s team that has decided this is a viable tool regarding the position labor is in? Is this what would be expected of a Republican presidential candidate? It just floored me to hear Romney speak the word “tariff” when presenting his solution to the question.  What would Uncle Milton think of his school’s chosen one?

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Explaining Class Warfare

 
Last month one hundred and fourteen thousand unemployed moochers…suddenly yank the government teat out of their mouths, get off the couch for forty hours a week? Why?
 
 
I say follow the money; cause I found out, that right around the time those people got those jobs…they started getting paid!
 
And just where does that money come from? Right out of the pockets of the job creators. How’s that for your socialist redistribution of wealth? Folks, it’s called class warfare.
 
 
Mr Colbert has created a new party that will issue a certificate to sooth the hurt of the job creators. The Certificate of Richness issued by:
Protecting Industry Titans and Yachtsman party. The P.I.T.Y. party.
 
And right on cue:
 
 
If President Obama is re-elected and raises taxes, Westgate Resort’s David Siegel says he will have to lay off workers and downsize his company — or even shut it down.
 
 

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Ok class, let’s review before the exam (election)

I’m sure you are all feeling kind of blah. You have this final exam for this session and I can tell by your performances on the quizzes that you are still confused. The problem solving portions of the quizzes have been very telling. So lets review.
 
You’re taxes are not too high. It’s your income that is too low! Remember this and you will be able to solve enough of the problems to obtain a passing grade and graduate. And class, no one running today for president gets this. It is why President Obama looked like such a dufus in the debate. Romney took a step to his left… right into Obama’s policy space. Where does one go to gain more space when they have walled up the door to the left of them as President Obama has?
 
Let’s get something real clear from the beginning. Unless you are acquiring the majority of your money from money YOU ARE NOT A CAPITALIST 
 
 
Second: A MARKET IS NOT AN ECONOMY.

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An opinion on Thumtack.com/GW University Small Business Political Survey

I was forwarded an early look at a survey that was produced by George Washington University’s School of Political Management in conjunction with Thumbtack.com. As some readers know, I am an honest to goodness small business owner. Two business actually and they are as different as say a private practice physician and a florist. So…………I guess this is what has lead to a request of me to opine on this survey’s results.
 
 
I googled Thumbtack.com. I had never heard of them. There is some controversy out their regarding their business model. Yet, Thumbtack.com claims 250K users. The survey was of 6000 plus of their members. They have taken some steps to assure their sampling represents the distribution of small business throughout the nation. I’m going to trust that GW’s school knows how to do and produce a scientifically valid survey. Thumbtack.com had teamed up with Ewing Marion Kauffman Foundation early this year. This work attempted to come up with a ranking of business friendliness based on the experiences of small business within a given state.
 
The headline, take away finding is presented as follows:
 
40% of all small business owners nationwide rate the economy and jobs as the most important factor in choosing a president. Ethics, honesty, and corruption in government is the second-most important factor for small businesses.
Considering ethics, honesty and corruption came in at 15% and the next item to be ranked the top issue was so ranked by 6% with the percentages becoming smaller to 2% for the issue of foreign policy I would say 40%ranking the economy and jobs the number one issue is kind of an intuitively expected finding because every other issue considered in the survey fell so far behind.  After all, we are talking business owners.
 

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Screw the Clinton tax rates. Lets party like it’s 1936!

 
Update: *Additional numbers added

Digby wrote a few days ago about the“grown-up” people coming to town to save America from the deficit. She listed a few of those people and their annual income.

 
Also, a few days ago the Senate had a vote on the tax cuts. Letting the Bush cuts go (I’m all for it and we can stop the payroll tax cut too as it is all stupid policy when the problem is declining wages/income going to labor) will return us to the Clinton years rates. People have noted just how little such a rise means to those at the top.
 
Well, in keeping with my define rich series and my series looking at the purpose of taxation, I thought wouldn’t it be interesting to see just what these 1%’ers might be paying if we went back to the beginning of the last great period of mass prosperity: 1936.
 
Yes indeedy, I say go for the brass ring. Let’s show our maturity and actually implement the lesson learned from our history, that period from around 1906 to 1932 and then 1936 to 1979.
 
While we’re at it, let us stop pretending that global trade is something new with an unknowable to man exotic force that we just have to accept as part of the expression of our DNA. There is RNA also (look it up).

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Wages driven down, now relative to market you’re over paid!

Update: spelling corrected in title.

I heard and then went to look see that Caterpillar is working hard to control it’s costs.

“Despite earning a record $4.9 billion profit last year and projecting even better results for 2012, the company is insisting on a six-year wage freeze and a pension freeze for most of the 780 production workers at its factory here. Caterpillar says it needs to keep its labor costs down to ensure its future competitiveness.” 

It has purchased 17 other business since 2008, 9 were non US companies. Two companies were purchased in 2011. Here’s the thing, a 6 year freeze? I guess there will be no inflation? I mean like zero. Though economist are saying inflation is needed as part of the solution to our slow economy. Of course, Obama having frozen government wages, I guess Caterpillar is just being patriotic. Nothing like We the People blazing the trail for how we want the private sector to treat We the People.

Caterpillar made $4.9 billion profit. If they raised these people’s pay $10,000 each, your only talking $7.8 million. It is 0.159% (0.00159)of Caterpillar’s profit. Inflation has averaged since 2008 about 2.075%.  Giving the worker $10,000 more per year does not equal the inflation rate as a share of the profit. If the worker were getting their due based on inflation they would get a piece of $101,675,000. This would be $130,352.56 each for the 780 workers. Caterpillar would still have $4,798,325,000.00 profit. Imagine what that $130,352.56 would do for the economy in Joliet! I’ll bet Caterpillar equipment sales would rise do to demand for construction.

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