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As the Dow falls 500 points in a day we find gridlock has consequences after all. That would be news to the obstructionist Republicans, who have used political paralysis as an end in itself and as their primary strategy of governance. Few will admit it. It takes impolitic diehards like Bill Bonner at Daily Reckoning to intone:
Political paralysis is a good thing. If homo politico liberalis can’t come to terms with homo politico conservatoris, well at least they couldn’t get up to any mischief together. The rest of us could go on our way…creating and disposing of wealth…without too much interference.
Well, disposing of wealth anyway, the way the stock market disposed of 4.6 percent of its value today. To say there is no connection between the floundering economy and the strategy of intentional gridlock is to entirely miss the point of the effects that government inattention to the economy and government worker layoffs at all levels are having on the economy as a whole. Not to mention consumer confidence, which hit the skids à la 2008 during the debt ceiling scare and is now likely stuck there.
If you believe that government is evil, that all government action is counterproductive, as does Mr. Bonner, then you should, if you are honest, get ready to throw that baby out with the bathwater. If government solutions are no good, then ipso facto, Social Security is no good, unemployment insurance is no good and food stamps are no good. That should come as a shock to the 45 million people on food stamps, or SNAP (No crackle, No pop), as federal nomenclature would have it.
One Republican strategy to starve the beast is to keep the beast occupied by sky-is-falling tactics for every level one reauthorization that comes up for a vote. Just as soon as the so-called debt ceiling crisis is “solved” we have a FAA reauthorization crisis. Such crises are as artificial as the model laws that ALEC (American Legislative Exchange Council) comes up with. Never mind that the federal government is losing $30 million dollars a day, $460,000 million dollars to date, in airfare revenues, (and the air carriers don’t even have the grace to pass the savings on to consumers), or that 74,000 American workers are idled while air infrastructure projects remain in limbo--at least until today. What counts is that government is enjoined from governance, from spending to stimulate the economy by improving infrastructure, or from attempting to embark on an agenda to address our panoply of intractable problems.
That latter point should come in handy when the presidential election cycle gets into full swing with the economy in the toilet. In a way, that’s the goal—sabotage the Democratic administration, blame it, and kick its ass for trying. Political paralysis is both the end and means in this dogfight.
The dynamic in play here is that the Republicans have zero intention of addressing any economic problems. They are channeling, they surfing, they are, in effect, manufacturing a tidal wave of voter anger, and frankly, why bother to do anything else? This just works. Sure, we could get started on the fact that Democrats wield power like octogenarians surf the web. Everyone likes their ideas, but they can’t govern worth a damn, at least not now. We know that about them. Social Security was the most important political idea of the Twentieth Century. Equal access to health care should have been that for the Twenty First—and instead we have this jumbled mess coming at us down the pike like the world’s biggest blob of Jell-O.
Still, no think tank of the center-left has come up with a strategy to counter deliberate, no-holds barred gridlock. The grassroots, populist populace on the left near and far knows the answer. It’s the Republican answer. It is, pardon the metaphor: stick to your guns. Stick to your guns and lose a few. Stick to your guns and take a beating in the short-term. Stick to your guns ‘til it hurts. That’s how you deal with bullies.
Some have written of late about the Democratic impetus to compromise as a mark of maturity—even if the other guy is putting out cigarettes on your forearm. Compromise is good to a point, and that point is somewhere around the 50-yard line. When that compromise point is in your own end zone, you know your strategy and your tactics stink. In Minnesota, our government went out of business for a while. In Wisconsin it’s trench warfare in the recall election cycle. This is okay. This is just how politics go when one side wants to have a McCarthy party on your face.
In the end, the voters will sort it out, as they always do. And they always do by running from one side of the boat to the other. Now, which side are they standing on at the moment, cowering, looking for the lifeboats? This legislative session will be the lost opportunity of a generation. But let’s not forget that the same mayhem led to the mini-Depression of 1937, after even Roosevelt backed away from his own stimulus program until he got mega-stimulus in the form of World War II.
This is a demand recession, a recession based on the lack thereof. And the economy is a bit like an injured limb that, once unused, starts to atrophy. That’s were our recovery jobs are, in a state of economic atrophy. The more you sit, the more you lose. And believe me, a good number of our lost or decimated sectors will never be back in their previous incarnations.
If Americans insist upon learning Keynesian economics the hard way, so be it. We’re in for a rotten ride. But bowing to sheer, outright attacks on the very principle of democratic compromise from a group of thugs who are directing a mountain of populist anger in the least productive direction possible at this moment in our decline? You can have it. I say no more Mr. Nice Guy.
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Ken Honeywell
AndreaF.
Brian Carter
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Dr. Matthew Lynch
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americans could demand citizen initiative, and use it to bend america into a better place. but they want to be saved, by a kind master. where can he be, i wonder...
i suspect people who think like slaves will have to wait for a long time.
Substantially true. . . . All of these programs corrupt the human spirit and government. Pay a man when he is unemployed; and government removes from him, in part, the motivation to find work. Promise him that you will support the legislation to pay him if he loses his job in order to get elected; and you have used government power, in part, for personal gain.
Provide a "safety net" and you remove, in part, the fear of entering the abyss of destitution because the welfare state will treat you as a beneficiary. Provide a "safety net" and you remove, in part, the shame of leaving the state of being destitute because the welfare state treats you as a beneficiary.
Expand the welfare state to the point where many taxpayers understand that most of what they remit underwrites an annual $2.3 trillion wealth transfer system that has proven to be ineffective, counterproductive, and economically disasterous; and you get . . . . . the Tea Party.
http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563
"The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy."
The ship is taking on water and some people are saying that if the captain doesn't do what they want, they are not going to bail. What? You do realize don't you that you're in the same boat. If you stop bailing and the boat sinks, everybody goes down. Yes, everybody including yourself.
I had the misfortune of attending the 2008 Libertarian National Convention in Atlanta. I was in the same hotel on other business - running a blood drive as a matter of fact - but I spent a lot of time in the convention....and it was a blood chilling experience.
What I heard there was a great deal of fundamentalist doctrine, mixed with bizarre political beliefs from far right wing groups when, as someone who thought of himself as a libertarian, I was expecting to hear about the defense of personal liberties.
That was my awakening, the day I realized that libertarians are actually anarchists. They don't want any rule at all. They want to undo the modern industrial state from top to bottom, not realizing that we cannot return to the agrarian democracy of the early 19th century....but that's where their hearts were.
Today, the same people - and I mean the very same people - are the leaders and the rank and file members of the tea party movement, but their agenda is unchanged.
These people really want to bring this civilization down, lock, stock and barrel. They are no more loyal to the American Ideal than Communist China is. They want a theocratic state, pure and simple, where everyone keeps what they have and no one gets anything from anyone else.
The couch their objections to quite reasonable sounding concerns about the debt and the deficit, but those concerns are delinquent of any economic education, and are not based on a sound understanding of international economics.
Debt is a form of capital, nothing more or less. Debt is actually the means by which a civilization stores the excess capital it has generated through increasingly efficient manufacturing operations. If all the world's debts were suddenly liquidated, turned into actual cash, the economies of the world would collapse because there is no economy that is capable of absorbing even its own debt, much less all of it. That amount of liquidity would generate an inflationary spiral that would collapse the world economy in a matter of months.
The belief that you can operate in a debt-free society is part of Ayn Rand's Objectivist philosophy, written large, adopted by Milton Friedman during his youth, and spread through the arcane University of Chicago School of Economics to the point where it has a strangehold on the practice of political economics in this country and throughout much of the capitalist world, largely through the efforts of Alan Greenspan, who has written about his dedication to Ayn Rand and her ideals.
It is complete bullshit. The idea that an economy can continue to expand indefinitely defies the basic physical fact that all system seek balance, a steady state. The ceaseless expansion of industrial society is reaching a breaking point where we cannot afford the goods we're creating. The concept of continuously increasing profits are undermining the natural inclination of the economic system to achieve stasis, which the U of C trained economists term stagnation. It is completely nonsensical, but everyone has drunk the kool aid and no one wants to raise such simple issues as, "It just ain't true," but it does provide fodder for the fundamentalists.
This is what we are dealing with. The large numbers of evangelicals who have flocked to the tea party's banners believe the end times are at hand and, therefore, it doesn't matter what they do to the economy or the nation because it is over. The rapture is coming.
That's the mind set we're dealing with....and any attempts to reason with people who are basing their decisions on this mind set is an exercise in futility.
Maybe it is time to speak in plain English rather than in metaphors. I just completed a study that documents a plain fact: tax cuts have only resulted in job growth in seven out of the past 88 years. That's seven out of 16 occasions when the maximum nominal tax rate was cut. On the other hand, over the same 88 year period, tax HIKES resulted in eight occasions of job growth. That's eight out of 12 occasions.
Since Republicans like to throw statistics around, let's make this more blunt.
Tax cuts have resulted in job growth only 33% of the time, but tax HIKES have result in job growth 66% of the time.
But tax cuts often carry across calendar years. On nine occasions there was a decrease in unemployment in the year following a tax cut, but there was an increase in unemployment on five occasions. Therefore, on nine out of 14 occasions, there was a decrease in unemployment in the following year, a 64% success rate. Tax hikes accounted for seven years where unemployment fell in the following year, against five occasions when unemployment rose, a 58% success rate.
The delta between those two success rates, 6%, indicates that you have just a 6% probability that a tax cut will be more effective at generating jobs than a tax hike.
But wait! There's more:
If you consider the effects of tax cuts and tax hikes over the two years period beginning with each change, you find that tax cuts have a 51.9% chance of generating jobs, while tax hikes have a 62.5% chance of generating jobs.
In other words, tax HIKES are 13.4% more likely to generate jobs than tax cuts are.
These are hard, cold facts. Not metaphors. The historical evidence shows that tax hikes do not generate jobs....but they do generate wealth.
Given the closeness between these ratios, the inevitable conclusion is that tax policy has no demonstrable, replicable effect upon job growth....in either direction.
The difference is this: tax hikes put more money into the hands of the government, which then distributes that money to a great number of people who, inevitably, spend it....stimulating the economy. On the other hand, tax cuts merely generate an increase in the in the private liquidity of the nation's businesses, and the evidence is that this money goes into buying back stock, into dividends on outstanding stock, and into the acquisition of other businesses.
In other words, tax cuts result in corporate consolidation while tax hikes result in increased consumer spending.
Alan, don't get me started about Libertarianism--or fundamentalism for that matter. I have written about both in some detail here and hope that, as a whole, the body of it all gets to address the issues.
I disagree that Libertarians are anarchists. They desire--ardently--to be governed--by the market. What they want seems to be the equivalent of a medieval jousting match. Winners. Losers. Cut and dried. Blood sport. It's a ridiculous fantasy and highly narcissist to boot. I yam what I yam, Popeye, self-made men and all that tripe. As if capitalists sprung, pristine, from Botticelli's shell. No one past the age of 14 should read Ayn Rand and at 14 she is highly damaging. I prefer bloody video games for adolescents.
Of course their economic platform is nonsense. It is to quantitative economics as fantasy football is to the NFL.
There. Another metaphor. Or simile.
I think the studies you are reporting here bear out much in the way of historical outcomes we know well on a macro level. But then we knew trickle down was a urinary problem along time ago.
I appreciate the empirical data on tax cuts and hope to read more of your analysis of same. Tax cuts aren't even a one-trick pony. And no, I don't mind in-depth comments at all. Thanks!
For months and months I have commented here on the notion of governance and its total absence in the political landscape in America. It's scary and getting scarier. The next 12 months leading to the nominating conventions may tell a horrendous story of how polarized we have become. And it may ultimatley lead to a "taking to the streets" of more than just the teabaggers.
This is an analytical presentation and there's nothing wrong with facts. What I end up with after reading your comments is a "feeling".
The Progressive Problem is that a "belief" needs to be generated in the popular culture.
They create the conditions and the "perceptions" which in wall street are far more dangerous then facts or reality. As the sheeple run and stampede at the mere "reports of pending or imagined" fears.
The radicalization of the folks who have the ear and the heart of wall street in their hands know either way they win, they bet against this nations future and make billions on the speculation, they bet with the future and they will gain also. (stacked deck for themselves)
The problem is they created the "Monster" which like Frankenstein, happy at the prospect of creating a new life, but then the beast rises and gets it's own identity and comes back to destroy its creator.
Just like our past government folks have furnished the "freedom fighters" with guns and money to fight the "perceived enemy" our lobbyists and wealthy few have chosen to arm the Tea Party with hate and funding to keep the anti-minority agenda fully active.
This might be more about Destroying Obama, in the first glance, but it is a message to all minorities. It says, you are allowed to participate in all aspects of this nations governing, as long as you are not seeking to lead this nation, nor think freely of the dogma created by the long standing white power base.
The hardest hit in this crisis (created for greed and power)
were the minorities, they lost 50-66% of their wealth, which in Tea Party rhetoric equates to "no political power from those folks" those "others".
This is the last ditch efforts by those who see their racial dominance being lost and their dogma and fanaticism being rejected by the vast majority of this nations people.
They NEED the working class and the minorities to feel slighted by Obama. He has let Americans feel the GOP policy and it SUCKS!!
(that's why so many say he is a Republican)
he could never have articulated this as well as Americans living it.
now you can see just how bad they are in the GOP.
It's economic coup, sedition and subversion, but under the guise of freedom of speech and the potential implantation of the corporate mentality of profiteering and human capital as the new currency.
The stalling is the goal and the frustration and the breaking of the working class spirit and most Americans is the end game.
Take away the right to defend your family and lively hood, kill unions, kill the EPA, kill the FAA, turn it all "outside contractiors" and you control the future of this nations education and wages.
Americans are not the profit schemes and the human capital for the folks who claim to be righteous, yet lack the moral conviction to live up to thre freedoms our costitution spells out.
The Tea Party has surrendered our lives to their own dogma and the whims of the greedy and the self-righteous.
Can Americans find it in their own hearts to hold fast to their beliefs and their desire to remain free and not be bound by false morality and created and fake situations which are only designed to use the media as its tool to control the lives of all Americans, by economic terrorism?
One rating agency, which didn't downgrade our national debt, whose biggest stock holder is claimed to be a Democrat; another rating agency, which did downgrade our national debt, owned by a presumed Republican -- Both agencies are apparently conspiring for their own political agenda and goals. No doubt one is being governed by Martians and the other by Venutians.
No question that partisanship lead to Congressional gridlock. No question that the current set of Representatives and Senators should largely be voted out of office. No question that S&P has rendered a relatively objective opinion on Congressional ability and competence.
On the other hand, America has arrived at a point long-predicted, long in development, whose solutions would have been comparatively mild 20 or 3o years ago. Today the real solutions, which have not even been approached in the discussions to date, must be draconian, without exception, to avoid an eventual default.
Most know this; and this may be why passions are so high and convictions so deep. Nevertheless, the can is being kicked down the road as we write.
However, the clear distinctions in the camps seems to be those who now whine about "manufactured crises" while trying to insist on entitlement spending nearly as usual and higher taxes. . . versus. . . . those who insist on spending cuts and argue that now is not the time to raise taxes. The middle ground does not seem currently available.
V e n u s i a n s . . . .
The problem we should have addressed 20-30 years ago is the long tsunami of libertarian-as-conservative economic destruction. We should slit its debt-exploding, job-deleting throat in a draconian manner before it finishes killing off the economy. It is a rabid animal with a voracious appetite and no ability for higher reasoning, and shouldn't be allowed anywhere near Washington DC or Main Street. Screw the Tea Party -- even the communists couldn't screw up an economy as badly as our own brand of mindless ideologues have.
If Obama can convince them it's not him, and in fact he has bent over backwards to satisfy the conservatives and not been able that is a start. Then, he has to somehow convince perfidios liberals who may well be the greater problem than out and out right wingers and the racist element that is at their core.
Don't discount it. On a cultural level, which is far deeper than the political, that is also what is at stake. Otherwise, the showdown will be transferred to yet another generation.
I've been saying for months on my blog and elsewhere it's going to boil down to whether so called "liberals" vote for political reasons rather than ideological.
That's the battle of the blogs too. If it makes a difference. The conservatives are loyal and obedient for the most part when it's time to vote. They are, after all, authoritarians. Liberals can't be trusted to make the logical choice. It's actually a very old story.