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

Blast from the past…old funding dies hard

This article caught my attention mainly because I hadn’t heard much about the court battles on terminating funding for the A-12 because I thought it was done. But the inability of DOD to submit documentation that might justify that the A-12 was not viable due to classified and secret information and specs made an impression on me as a catch-22 of funding for non-viable projects…making it horribly difficult to ‘learn from mistakes’ so to speak.

Here is a response from ilsm to my sending him the link:


The A-12 a blast from the past!

I believe the Supreme Court last year decided the Navy/US Government would not be paid back “progress payments” paid prior to the termination of the A-12 sometime in the early 1990’s. Here is an article form Feb 1999 about the case as it stood then, it kept going until 2010!

I had read the linked article years ago and am surprised to find it. In the past 8 or so years I have only kept up with the A-12 headlines, when I saw them. The A-12 was a stealthy fighter concept, a carrier based version much different [of course] to the already retired F-117. Purportedly, the free world depends on things like the A-12.

The interesting issue to me is why then Sec Def Cheney terminated the contract for “convenience”, a termination used when the service decides it does not need the equipment. The Navy’s acquisition approach was to have Mc Donald Douglas (now owned by Boeing) build 12 of the A-12’s for test and evaluation. The technology was risky and the specifications challenging, for example they had to keep the weight under 80,000 pounds which was the limits of the elevators on aircraft carriers and likely a big deal to beef them up (maybe the decks cannot handle the load of the landings either).

I am neither an expert in stealth nor an expert in aircraft carriers, mostly Air Force. The contract type for this risky development was “fixed price”, which means Mc Donald Douglas signed up to deliver the 12 airplanes at a specification at a set time and contract price. In order words the contractors assumed al the risk.

As it happens today, and then Mc Donald Douglas promised to “name the song in 5 notes”, but needed about 20 special notes not on contract, they kept the Navy at bay, who would have done some insider contracting “magic” to raise the price until a contract auditor discovered the A-12 would not get any airplanes in the time and money Mc Donald Douglas had entered into the contract to deliver.

  George HW Bush was president and his advisors had some interest in cutting DoD spending [FY 91 spending had declined to 475B from 553B in 1989 a decline which was disrupted by the first Gulf war, but hit $400B in 2011 dollars in 1999] and finding new ways to do acquisition which was as much a mess as today.

So, through a fair amount of trading and evading it was decided to terminate for convenience. The better termination was for default, and I do not know why Cheney directed the type of termination, nor why a Navy contracting authority would not set him straight.

Cheney could have done three things, one being convenience. He could have terminated for “default”, which they were doing, or he could have called Mc Donald Douglas in and said: “a contract is a bond, do the job [which is impossible given the traditional ineptitude of defense contractors]. The point in Fensler’s article, which is valid today, is that the Navy needed Mc Donald Douglas and would have (without the publicity) kept shoveling good money after bad for  the A-12, (like the AF did F-22 and now F-35). The good thing is despite the fact the government does not get its progress payments back, the Navy has not been saddled for twenty years and likely $200B in costs to try and make the A-12 fly, a burden the USAF has successfully held up so their generals could have good jobs…

… Bottom line from the Supremes: the military industrial complex does not get real contracts, as in common law, they get paid whether they meet their promises or not.

Congressional Progressive Caucus People’s Budget beats Ryan’s corporatist budget by a long shot

by Linda Beale

Congressional Progressive Caucus People’s Budget beats Ryan’s corporatist budget by a long shot, but doesn’t get media coverage

FAIR has a good point on the way the media have covered the US budget debates.

Fact is, the radical right wing budget proposed by radical right Ryan gets lots of coverage. FAIR noted that he was on Meet the Press 4/10, Face the Nation 4/17, ABC’sThis Week 5/1, PBS News Hour (one on one) 5/1, ABC Good Morning America 4/13, and he’s been profiled personally, showing that he has learned the key to Reagan’s success–you can say the most absurd things that are ultimately extraordinarily dangerous for ordinary people, and get ordinary people to think you are great, just by smiling and coming across as “genuine” and acting like you believe the lies you are spreading. Be a good actor, that is, and you can move the corporatist agenda forward at huge cost to ordinary Americans, because they will (regrettably) trust in your (fake) genuineness that you will do right by them. The budget plan has been covered in nightly news shows many times–though not with the kind of piercing analysis that would expose its corporatist bones for what it is. Instead, in the segments I’ve watched, it is almost always treated as though it is what it claims to be, an attempt to put the US on sound fiscal footing. That’s simply bullshit. It’s an attempt to eliminate the New Deal and move the US back to the pre-New Deal period when regulators were weak-kneed and Business could pretty much do whatever it wanted, and the military would serve Big Business interests around the globe.

Fact is, a very reasonable budget proposed by the Congressional Progressive Caucus, “The People’s Budget”, that is based on sound economics, has gotten almost no coverage at all. What does it do? It increases tax on the wealthy (after a decade of their enjoying super-rich tax cuts), cuts military spending (after decades of enormous investments in the military, with the base budget for Defense doubling between 2000 and 2009 under George W. Bush), and imposes on a tax on Wall Street speculation (the kind of speculation that got us into a Great Recession that the rich have eased through and ordinary Americans are still suffering enormously from). The Budget proposes investments in public infrastructure that would spur economic growth, create jobs and ensure that the US does not continue to move towards third-world status in terms of its infrastructure. It includes a new public health insurance option as part of the national exchanges for health care plans, providing economies of scale and lower premiums. It also preserves Social Security benefits by raising the taxable amount of income.

Under the current system, income above a taxable maximum is not subject to any Social Security tax, meaning that high-income individuals pay less as a share of their income than everyone else. As income inequality has widened, a greater share of income has fallen outside of the taxable maximum, with the percent of earnings covered by the program slipping from 91% in 1983 to just 83% in 2009.

See the Economic Policy Institute for a technical analysis of the proposals, here.

Why is it that media covers the obscene Ryan plan and ignores the reasonable Progressive Caucus proposal? Probably because the radical right budget proposed by Ryan satisfies all the points of the corporatist agenda–cutting funds to support Social Security, Medicare and Medicaid, the social programs that blunt the edge of brute capitalism while keeping the gravy train going for the military-industrial-financial complex. Also, the Ryan budget is built on the same ideas of reagonomics that get touted as wonder workers even while they have wreaked economies from ours to Argentinas. Free marketarianism doesn’t work, never has, never will–it is brute capitalism that allows big business, and especially multinational corporations, to exploit little people at will while the few elite at the top (managers and owners) reap all the benefits.l That’s the Ryan budget in short. Instead of restoring the taxes on the wealthy to where they were before the George W. Bush regime in which economic idiocy reigned supreme along with neoliberal warmongering thinking that led us into two huge neverending wars that feed the military-industrial business machine, the Ryan budget would cut programs that make the difference between a decent life and a miserable one for aged and sick and poor Americans, while handing big business every gift it asks for.

And maybe because the corporate owners of corporate media are support the corporatist agenda to keep ordinary people from having real information about options that are in their interest, so that it will be easier to pass legislation (and issue court rulings) that favor multinational corporations over people.

crossposted with ataxingmatter

Taxes and the deficit

This morning in his Monday column Paul Krugman discussed the need to raise taxes to
deal with the long run structural federal deficit.

You can read the column at Economist’s view without worrying about the Times’ pay wall.

Every time any one proposes higher taxes Larry Kudlow and the right wing noise machine shouts to the rooftops that it is a tax the rich scam and that there are not enough wealthy people to raise the necessary revenues.

But as usual with these claims maybe we should actually look at the data before we accept this meme. Since 1980 the top 5% of family’s share of national income has increased from 15% to 21% — the percent is derived from the five year moving average centered on 1980 and 2007. The last year that this data is available is 2009

Source: Bureau of the Census/Haver Analytics

If we taxed away half of this increased share of national income it would generate a sum roughly equal to 3% of GDP, or about the CBO estimate of the long run structural deficit.

Moreover, it would still leave the top 5% of families with some 15% of national income, a larger share than was ever recorded before 1993.

Truth in Budget Numbers

by Linda Beale

Truth in Budget Numbers
crossposted with Ataxingmatter

Seems like everybody these days is into misrepresenting, distorting, or at least stretching the facts to suit the spin they want to give.

One issue that I raised in my snarky post on the 15th about the Budget commentary was the way most media has described the December 2010 Tax Relief ….and Job Creation Act.  As you will recall, that bill extended the Bush tax cuts for another two years, and most of the media talks about it as a “tax cut” bill.  But in fact that bill ended the “Making Work Pay” provision, a cornerstone of the Obama Administration’s attempt to make the stimulus package work for ordinary Americans.  The end of that provision resulted in a substantial tax increase for 51 million Americans in the lower income distribution.  See, e.g., Floyd Norris,  Some Taxes Went Up   (Feb. 4, 2011); Tax Policy Center, Table on the 2010 tax bill (Dec. 13, 2010).  When we talk about that bill, wouldn’t it be more accurate to discuss it as a tax bill that increased the burden on some of those in the most unfortunate circumstances, while giving substantial tax cuts to those at the top?, of course, spends its time looking for just those kinds of distorting statements and trying to set the record straight so that we are all talking about the same set of facts. 

They did an analysis of the “Budget Spin” that both sides put out surrounding the release of the President’s Budget.  Both sides get very bad grades.   Both sides misrepresent facts–neither Democrat nor Republican is immune.  And those misstated facts spread like wildfire over the net, as illustrated by Sarah Palin’s “mis-tweet” claiming that the White House is proposing a mere $775 million in cuts amounting to less than 1/10th of 1% of the deficit and linking to Glenn Beck’s right-wing website as proof. The truth is quite different–$33 billion in discretionary cuts for 2012, and the website link  from which she got her information was a mischaracterization of some examples offered by White House Budget Director Lew that was posted 5 days before the budget release. But Palin’s “mis-tweet” has been “re-tweeted” and that is the way misleading information is spread so easily on the net.

PS  if you enjoyed this you will also enjoy Floyd Norris on Life at the Dakota, noting the miracles (or at least, loopholes) achieved by someone with a mere $1.5 million in taxable income and outlays considerably greater just on housing…