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

Rick Perry admits that deregulation of the financial services industry, and insufficient economic stimulus in the wake of economic collapse, were mistakes. Cool!

Republicans jumped on Clinton’s decision [in her speech today] to cite her ties to Obama and were trying to raise money off the speech almost as soon as it ended. In an email appeal asking for donations, former Texas Gov. Rick Perry wrote, “We want to look toward a brighter future, not backward at the failed policies of the Obama-Clinton years.”

— In 2016 kickoff, Clinton embraces potential to make history, Lisa Lerer, Associated Press, today

Yup. We must demand a return to the failed policies of George W. Bush and Ronald Reagan.  Y’know, if we want a brighter future.

Rick Perry Says Social Security and Medicare Were Given to Us by God. Seriously. [Addendum added.]

The things we have in this country were given to us by God, not by government.

Perry: Government isn’t your savior, Nick Gass, Politico, today

Social Security and Medicare were given to us by God?  Who knew?

The highway system, sewer and water systems, airports and air traffic control, operation of shipping ports, public school systems, and (going back a way) electrification of the Tennessee Valley?

The research that resulted in the polio vaccine?

Guess I’ve been under a misapprehension about their provenance.

ADDENDUM:  It just occurred to me that, presumably then, the things Canadians, Danes, Swedes, Norwegians, and Germans have in their countries were given to them by God, not by government.  And the French, too—especially their healthcare system, widely regarded as one of the best in the world and available free of charge to everyone.

Which makes me wonder why God favors Canadians, Danes, Swedes, Norwegians, Germans and the French over Americans.

That said, I do understand why God favors the residents of blue states here in this country over red states.  Just in the last year alone, God has saved many, many more lives and lessened pain and physical suffering for far more people in blue states than in red states simply by deciding to significantly expand Medicaid availability under Obamacare.  Why did He decide to be a savior for so many more people in California than in Texas and Kansas?  He’s obviously a Democrat.  But he’s supposed to be nonpolitical.

This is testing my faith.

Added 6/5 at 2:58 p.m.

Beale debates Cato’s Edwards on the right’s "flat tax"–New Hampshire Public Radio

by Linda Beale

Beale debates Cato’s Edwards on the right’s “flat tax”–New Hampshire Public Radio

Last Wednesday (Oct. 26, 2011), I debated the Cato Institute’s tax policy guru Chris Edwards about the right’s various “flat tax” (FairTax, 9-9-9, USA Tax, consumption tax) proposals, on New Hampshire’s public radio station’s hour long program “The Exchange”, hosted by Laura Knoy. You can catch the program on the NHPR site, at “The Flat Tax is Back” (Oct. 26, 2011). (The live format is an initial discussion in response to the host’s directed questions, followed by call-ins from the public.)

I argued, as you might expect from my previous postings on this matter, that the various proposals for some form of VAT/consumption/wage-based/flat tax do not make sense at a time of inordinate income and wealth inequality in the United States. Consumption taxes are regressive, and most proposals from the right–including Herman Cain’s three step progress, with 9-9-9 as the midpoint, towards a national retail sales tax, and Rick Perry’s proposal for an ‘option’ of a 20% national sales tax–simply will make the rich richer and the poor poorer. They are terrible ideas at any time as a substitute for both the somewhat progressive income tax and the somewhat equalizing estate tax. They are especially terrible ideas in a period when inequality has returned roughly to the same level as it was in the Gilded Age and when plutarchy threatens to devour our democracy.

Edwards made some rather inconsistent statements–including acknowledging that all of these proposals call for elimination of tax on all income from capital and from all estates, and then a later statement that the flat tax would be fair because it would tax people alike on their total income! He also relied on straw man arguments–another favorite of the Cato Institute representatives that I have seen before, used to divert attention from the fact that they cannot really answer the real question at issues. Chris relied on the laughable Laffer-curve based argument of which Cato is inordinately fond and which has been adopted and repeated ad nauseum by the right, that tax cuts result in greater revenues to the rich that result in enhanced job growth. I reminded him and listeners that our greatest growth was from WWII to 1981 when we had very high tax rates, demonstrating clearly that high tax rates do not cause weak growth. (Of course, 1981 is the critical time, because the Reagan cuts ushered in the right’s reaganomics dominance with tax cuts, deregulation, militarization and privatization that led us to the current Great Recession–aided in part by the weak-kneed Democrats who went along rather than standing up for worker rights.) Chris’s response to the empirical evidence that tax cuts do not lead to broad-based growth or job creation was “we can’t ever go back to the high rates of the 1970s again.” Of course, that was a straw man argument. Nobody is arguing for 90% rates. I am arguing, however, that the flat tax–with its zero percent rate on most of the income of the uberrich and its very low rates on the rest of their income–will hurt the poor because it is distributionally unfair, and hurt the economy generally because it will lead to revenue shortfalls that will force spending cuts to programs that matter to the wellbeing of society.

Anyway, listen to the program. Your thoughts welcome in comments to the blog. (And sorry for miffing my chance at the “last word” at the end of the program. It was an instance of getting tangled up in what I wanted to say and ultimately failing to make the point with any power at all. What I was aiming for was something along the lines of the following:

Reagan passed the 1981 tax cuts, and then Congress realized what a problem the resulting deficits would be so was energized to pass increases in taxes. Problem was, most of the cuts favored the rich (were cuts in income taxes and in depreciation expenses providing cuts in income taxes, etc. ) and most of the increases disfavored the poor (i.e., were regressive payroll taxes). IN 1986, however, there was a broad process of Congressional review, resulting in the 1986 tax reform act that eliminated (for a very short time, as it turned out) the category distinction between capital gains and labor income. That was a major, good innovation that grew out of a sustained, measured, thoughtful though imperfect process. There is no indication that election of more hard right candidates will lead to any such similar reform process today. If elected, the hard right candidates are likely to push for, and may get, tax changes that continue to enrich the rich, like the flat tax or 9-9-9 tax plans being put forward by Perry and Cain.

originally published at ataxingmatter

Rick Perry’s 20-20 Vision

Charles Pierce sums up the true issue:

It is on days like this that I don’t envy political economists. They’re the ones that are going to have to take this Message from Goobertown seriously. They’re going to have to score it. They’re going to have to do the math, such as it is, and try to find a coherent formation in this unwieldy parade of hackneyed talking points (Kill the Estate Tax and Save the Family Farm!) and tired applause lines (The Job Creators Are Uncertain!). They’re the ones who are going to have to find a way to square the utter abandonment of the progressive income tax, a balanced-budget amendment to the Constitution, a return to explosively inflationary health-care costs, an unchained and undoubtedly newly amok financial-services industry, and the partial privatization of Social Security, all of which Goodhair has managed to wedge into “Cap, Balance, and Grow (!).”

(By now, I figure the political economists are going to be hopelessly drunk and firing rubber bands at each other.)

They’re the ones who are going to have to tell the family of the sad-eyed young intern in the corner that their son, a Wharton grad with a brilliant future, studied this plan for a couple of hours and then screamed, “But it doesn’t make sense!” prior to trying to feed himself into the fax machine in a vain attempt to get as far as possible from any place where this nonsense is taken seriously.

Personally speaking, I’m not bothering. When you’ve already lost Pete Davis, you can pretty much give up on anyone believing your economics will work:

Governor Rick Perry (R-TX) proposed his tax reform plan today and wrote this Wall Street Journal op-ed. Unfortunately, it’s just a slapdash of slogans. If this plan were enacted as proposed, it would lose a lot of revenue, reward the rich, and complicate filing for most taxpayers.

Giving taxpayers the option would also mean that only those who pay less would opt in, guaranteeing significant revenue loss. [OPENING QUOTE ADDED, sans original links; go read the whole thing]

And Andrew Samwick piles on with the politics:

And now we have another version of the flat tax, as if the crushing irrelevance of Steve Forbes to the primaries in 1996 and 2000 were not an indication of how unproductive the discussion will ultimately be. What are the prospects that a Republican President would actually be able to implement such a change if elected? They are equal to the chance that Republicans will both retain control of the House and secure a filibuster-proof majority in the Senate in 2012. In other words, absolutely zero.

Personally speaking, I don’t think the odds on that election scenario are “absolutely zero” (but I count people like Ben Nelson, who fellated George W Bush from the beginning, referring to him in interviews as “the King,” as part of that “filibuster-proof majority”). But the rest of the analysis is spot-on.

Jobs as the Measure of Economic Success, and Rick Perry’s Texas

by Linda Beale

Jobs as the Measure of Economic Success, and Rick Perry’s Texas

We have had a warped sense of how to measure economic success in this country at least since George W. Bush started talking about the “ownership” society.  Of course, we should have guessed that moniker was problematic from the start, since it was ‘invented’ by a guy who bragged about representing the ‘have-mores’ while the economy was rapidly becoming a bi-polar, class-based society of have-mores and have-nots.

Most of the media looks at the gyrations of the Dow Jones Industrial, the S&P 500 and similar indexes of stock pricess and then says our economy is good (if they’re up) or bad (if they’re down).

Folks, that’s only true for those who own most of the financial assets–the rich folks at the top of the scale.  It’s not true for the companies. As Ali Velshi noted in the Daily Show clip on the earlier blog post, companies intrinsic values don’t change by dropping 5% overnight, gaining 3% overnight and then dropping 4% overnight.  The companies are still plodding along doing what they’re doing.  What changes is the attitudes of those secondary investors–more and more of them just quick traders out to arbitrage a temporary price difference who don’t give a damn about the company’s fundamentals.

Now, if you happen to own a few shares of a company that tanks, you clearly care about that stock price plunge.  And if your retirement account is large and heavily invested in stocks, then you care as well.  But fact is, the way we really should measure the economy is by how much and what kind of work it offers to ordinary Americans.  What’s the jobs count?  And what do those jobs pay?

And those numbers are important only relative to other numbers.  You don’t know whether you have a mice or an elephant in terms of job creation unless you know how much your population has grown alongside the growth of those jobs.  This is why the same record on job creation can be made to look good to the naive hearer  (“more than 5 million jobs in 8 years”) or terrible (“only 3 jobs per 1000 new citizens in 8 years”), depending on whether the hearer gets information on the number of new job seekers as well as the number of new jobs available for those seekers.

So Rick Perry brags about his Texas record.  I’ve already posted on the many problems in Texas, some of which Perry is responsible for and most of which he is responsible for not addressing.

What about jobs?  Yes, there is still an oil and gas ‘one-note’ economy that creates directly and indirectly new jobs as the oil and gas industry grows (for now).  Many of those jobs are minimum wage and lots of them are not very secure.   But our question is what about the new jobs to new job seekers ratio–are jobs growing, so that unemployment is going down?  or are jobs growing but not at the same rate that the population is growing?    The fact that the unemployment rate has increased to just below the national average at 8.2% suggests that jobs aren’t growing as fast as the population and maybe that jobs are even shrinking.

Here’s someone else’s take on this question.  The staff at ThinkProgress and the Center for American Progress Action Fund produced a report that delved a little deeper into the Texas jobs numbers and concluded: Texas Ranks Dead Last in Total Job Creation, [when] Accounting for Labor Force Growth, Aug. 17, 2011.

Here are a few facts from the report:

1) Between 2008 and 2010, jobs actually grew at a faster pace in Massachusetts than in Texas.

2) “Texas has done worse than the rest of the country since the peak of national unemployment in October 2009.”

3) The unemployment rate in Texas has been steadily increasing throughout the recession.

4) While over 126,000 net jobs were created in Texas over the last two and a half years, the labor force expanded by over 437,000, meaning that overall Texas has added unemployed workers at a rate much faster than it has created jobs.

5) if there is a real “miracle” here, it is North Dakota, which has seen over 27,000 new jobs and a labor force expansion of only 3,700, resulting in about 24,000 new jobs for workers who previously had none.

The resulting picture comparing Texas to other states in terms of job creation considering labor force increase or decline is the following (note that Michigan’s ‘top’ rating is due to some job creation but primarily to loss of labor force as people without jobs leave the state;  neither Michigan nor Texas has the ‘right stuff’)


Also posted at Ataxingmatter