Krugman Explains the Ryan Plan

Paul Krugman points out the hypocrisy and dishonesty in Paul Ryan pretending to be a deficit hawk. But he also points out the eager gullibility and laziness of the Washington opinion writers and policy thinkers who are supposed to study and analyze plans like Ryan's. They haven't done this. All they've done is seize Ryan as a plausible "conservative" (which he isn't; he's a radical) and a thoughtful policy person (he isn't; he only pretends to be) with a substantive plan to attack the deficit (it isn't and it doesn't; quite the reverse, it makes the deficit much worse at the expense of working people, while slashing taxes on rich people who own stocks for a living, Friends of Mitt who have already profited enormously from the economic crisis.)

Ryan promises to share key details, crucial mathematics that his plan doesn't explain, at some unspecified future date. I've not seen such empty promises since Nixon's secret plan to end the Vietnam War. Nixon had no plan, and the war did not end until we surrendered Vietnam after he left office in disgrace. What Nixon did do (and it's similar to what Romney and Ryan and the other Republican leaders have been doing for four years) was sabotage LBJ's peace talks, promising the South Vietnam government a better deal if they refused to participate. There was no better deal. In similar fashion the Republicans in this Congress have spent four years sabotaging every effort to repair and restore the economy and their motives are the same: if they can foul the economic gears and talk about secret plans they hope to regain power. There is a word for this kind of cynicism: criminal. Another word comes to mind: treasonous. Like Romney's business model which made him a billionaire: buy companies promising to help them, loot their pensions, gut their employee pay and benefits, borrow heavily against the worth of the company, take enormous management bonuses, then send the shell of the company either to Asia or the bottom of Boston harbor.

Google Chairman Favors Federal Stimulus Spending

Good interview via Mother Jones. A corporate leader who seems to understand how a consumer economy actually needs consumers.

Eric Schmidt, Executive Chairman, GOOGLE: "The economy is today stuck behind the power curve. It needs a lot of encouragement. It needs not just something like the jobs bill, but also significant government stimulation in terms of buying power and investment. Otherwise we're set up for years of extraordinarily low growth in the economy and no real solution to the jobless problem."

Christiane Amanpour: But you say significant stimulus. Obviously this is a political environment where the only real conversation is about cutting. Do you see any expectation or possibility of a climate for more stimulus?]

Schmidt: "Well that's a political question. But the current strategy is ludicrous. You have a situtation where the private sector sees essentially no growth in demand. The classic solution is to have the government step in, and with short-term initiatives help stimulate that demand. If they do it right, they'll invest in income and growth producing things, like highways and bridges and schools."

In other words, the radical budget cutting being forced by the Republicans is exactly the wrong thing. The Obama jobs bill is the right thing, if he can get it passed.

This corporate leader understands what most Americans don't: our economy won't recover without another strong jolt of stimulus. Corporations won't spend their money (in some cases OUR money, which they got in rescue packages) unless consumers show the confidence to spend, and consumers won't have that confidence if they don't have money in their pockets and if they're worried their employer is about to lay them off or cut their pay, which is what employers do when they're uncertain.

The consumer/employer/manufacturer cycle is a whirlpool right now, leading us down. Only federal stimulus will do the trick, like it did in 2009 when the entire world economy was on the brink. Then it did work. It will work again if Congress will let it work.

The problem we have is REPUBLICANS DON'T WANT A GOOD ECONOMY. They want Obama to fail, and in order for him to fail we as a nation must fail. Then Republicans can take over again. Do we remember what got us here? The dangerous finances of Bush and his Republican enablers.

Only Deficit Spending Will Save Us

Today's must-read comes from the chief economist at the Financial Times.

People have been bullied and misled about the so-called "ogre" of deficit spending. During a recessionary period, when businesses are not spending and tax revenues are down, the government becomes the key player. All other players are sitting on the sidelines, so government has to act. Government has to spend when no one else will. It may be the most crucial role government plays in our lives––unless you subscribe to the idea that government's only role is blowing up our enemies and fencing our borders.

The founders knew the importance of a national debt. Alexander Hamilton created a robust national economy by creating the national debt. Washington presided over this. Business wealth grew in America because we had a national debt. The great presidents knew this and used this tool to create infrastructure. Eisenhower didn't win WWII, rebuild Europe or build the interstate highway system with ready cash.

FDR got us through the Great Depression with deficit spending. Without it millions would have died of starvation and disease, not to mention millions more households that would have been broken up, homes and businesses lost. Instead, well built bridges and parks, roads and dams, electrical grid work in rural areas, hospitals, schools and public buildings were the result. We still see those projects in use today. We also see several generations who got higher education through the G.I. Bill, the last liberal "good deed" created by FDR. Millions would never have gone to college but for the New Deal.

FDR did make one key mistake, though. In 1936 he promised to balance the budget. His attempt to do so when the economy was still weak caused a second recession in 1937. It was only the massive deficit spending of WWII that finally ended the Great Depression.

In good times we pay our debt back... unless we have a Republican leadership that decides good times are a reason to loosen up, to throw no-strings tax breaks at corporations that are shifting jobs overseas.

Government needs to do the opposite of what businesses do. In bad times, government must spend. In good times, government spending is less important than government oversight to make sure the private sector doesn't create another financial collapse. Think if it as Id and SuperEgo. In good times the private sector needs a grown-up in the room, a conscience. In bad times, it needs someone to clean up its messes.

Blaming the Surgeon for the Cancer He's Removing

Today's Must-Read is from the Daily Beast, Tina Brown's hard-hitting digital newspaper. And nobody deserves to be hit harder than Standard & Poors.

As Noni Prins's article explains, S&P was "factory-stamping" AAA bond ratings on all the garbage Wall Street could manufacture in the run up to the financial meltdown of 2007-2008, and pocketing enormous fees.

The U.S. debt problem right now, which S & P is deploring, is largely made up of S & P's toxic garbage that we taxpayers (and our government) had to clean up.

A bit like blaming the surgeon for the cancer he's been asked to remove. The U.S. government removed the cancerous investments S&P and Moody's fed into the U.S. economy.

Instead of S & P downgrading U.S. Treasury Bonds, the U.S. Justice Department ought to be putting S & P on trial for its massive fraud. But major financial players appear to have total immunity.

This would be outrageous satire if it were satire, but it's not. It's all true, and we're paying for it.

The Tax Evasion Industry

Everybody hates the tax man, so people tend to laugh when tax evaders get away with it. Never mind that Jesus advised people to pay their taxes, and President George Washington personally led an army to go after tax evaders in western Pennsylvania.

Taxation is both Christian and patriotic. So how do flag wavers and bible thumpers get away with their evasions? Plain and simple? They cheat. They leave honest citizens to carry their burden. They sit at the table and order food, they eat and drink, and they leave before the check arrives. They may be good at business, but mostly they're good at avoiding their responsibilities as citizens and neighbors. They are lowlifes. We shouldn't admire them. We shouldn't allow what they do. Mostly we shouldn't be paying their debts for them.

Here's a very good article by Chuck Collins in Sojourners.

Tax evasion is a big business model, and the biggest tax evaders are corporations. Companies like Amazon.com outcompete the small independent bookstores by evading sales taxes. There's an excellent article about this in Mother Jones.

The "Double Irish" maneuver corporations use to avoid paying taxes. Clever them, poor us. Here's a useful diagram.

The U.S. may have a high rate of corporate tax, but corporations don't pay it. The Daily Beast has a list. It's worth sharing with your conservative friends.

The top corporate tax dodgers include GE, Eli Lilly, Google, Rupert Murdoch's NewsCorp (FoxNews and the Wall Street Journal), Boeing, Pfizer, Oracle, Altria (Philip Morris), IBM, Goodrich, TimeWarner, Morgan Stanley, the Hartford, Devon Engergy, Hewlett Packard and Microsoft.

The Premeditated Murder of the American Middle Class

This headline isn't from a lefty blogger, it's from Investors' Business Daily:

10-Year Real Wage Gains Worse Than During Depression.

Did you wonder how the American economy went bad? Look no further. The vast majority of Americans are nervous, underpaid, and either out of work or working harder than ever. This does not make for a robust consumer economy. When you starve the majority of incomes it has consequences.

The middle class isn't just done, it's been ruled irrelevant. So says Advertising Age. With flat incomes and rising necessary expenses on fuel, housing, education, healthcare and food, their disposable incomes have disappeared. Without money to spend you don't matter anymore.

The engine of the great American prosperity 1945-1975 was a prosperous working and middle class. The two were practically the same thing. Reaganomics ended that by flattening middle class incomes, killing unions and shifting the tax burden off the rich and onto the middle class taxpayer. Reagan accomplished this with the willing help of millions of American workers.

Today's GOP is outdoing Reagan, though, mounting an all-out assault on the American middle class, while protecting the very small, very rich upper class. A lot of Americans still vote Republican out of habit, out of team spirit, out of obedience to the dog whistle.

The middle class Republican has to swallow a lot of outright lies. Self deception is something you learn to do, and if you practice for a long time you get good at it. Being obedient helps. This GOP ability to lie and get away with it is remarkable enough it's written about in places like Forbes.

Who is really paying taxes? We (the working and middle classes) are. They (the rich) are not. Yet the sacredness of upper class tax cuts remains the keystone of Republican politics.

The reason for the current deficit? Reducing taxes on those who've taken all the income increases over the past generation and a half, while increasing taxes on those whose incomes have stalled–––on most Americans. The Republican policy is to protect and help the few who need no help or protection while leaving the less fortunate, most of us, unprotected and unhelped. Sometimes it's worthwhile to listen to a Nobel economist.

The debt, run up by Bush and compounded by the collapse Bush and his Republican policies precipitated, makes the current situation worse. It takes chutzpah to make debt an issue when your own party created it. If you like massive debt––Vote Republican.