The New Bailout

[xoxoxoBruce]

Interesting article on the Fiscal Responsibility summit.

1. Conservatives are "fiscally responsible." Progressives just want to spend, spend, spend.
~snip~
Under the conservative definition of "fiscal responsibility, " we'd have never set up the GI Bill and the FHA, which between them launched the post-war middle class (and made possible the consumer culture that generated so much private profit for so many). We wouldn't have 150 years of investment in public education, which for most of the 20th century gave American business access to the smartest workers in the world; or the interstate highway system, which broadened trade and tourism; or research investment via NASA and DARPA, the defense research agency that gave us the microchip and the Internet and made a whole new world of commerce possible. There wouldn't be the consumer protection infrastructure that allowed us to accept new products with easy confidence; or building and food inspectors who guarantee that you're not taking your life in your hands when you flip on a light or sit down to dinner.

2. It's not gonna work. Everybody knows the Democrats spent us into this mess in the first place.

The only remaining "everybodys" who "know" this are the ones who are simply impervious to facts.

Ronald Reagan came into office with a national debt of less than $1 trillion. Mostly by cutting taxes on the rich, he grew that debt to $2.6 trillion. George H.W. Bush broke his "no new taxes" pledge, but it wasn't enough to keep the debt from ballooning another 50 percent, to $4.2 trillion.

Bill Clinton''s aggressive budget balancing slowed the growth rate a bit: eight years later, he left office with a debt of $5.7 trillion—and a tight budget in place that, if followed, would have paid whole thing off by 2006. Unfortunately, George W. Bush had no intention of following through with Clinton's plan: on his watch, the debt nearly doubled, from $5.7 to $10.6 trillion. So, nearly 80 percent of the current debt—about which conservatives now complain—was acquired on the watch of the three most recent conservative Presidents.

3. $10.6 trillion? But I got this e-mail that says we're looking at a national debt of $56 trillion...

Wow. That's a big, scary number, all right. It's also a perfect example of one of the classic ways people lie with statistics.

This particular mathematical confection was whipped up by Wall Street billionaire and former Nixon Commerce Secretary Pete Peterson, whose Peterson Foundation is the driving force behind the effort to defund Social Security. According to this group, “As of September 30, 2008, the federal government was in a $56 trillion-plus fiscal hole based on the official financial consolidated statements of the U.S. government. This amount is equal to $483,000 per household and $184,000 per American.”

This "fact" is only true if you're willing to do a reckless amount of time traveling. The $56 trillion number is what you get if you project the entire U.S. debt a full 75 years into the future, which is how far out you have to go before you can get into numbers that big. In other words: we're not in that hole now—but we might be in 2084, if we keep going the way we're going now.

4. Whatever. It's still irresponsible to take on that much debt.
Even John McCain's economic adviser thinks this one's wrong. Here's what Mark Zandi said about the U.S. national debt on the February 1 edition of Meet The Press:

"It's 40 percent of GDP now. If the projections are right, we get to 60, maybe 70 percent of GDP, which is high, but it's manageable in our historic—in our history we've been higher, as you pointed out. And moreover, it's very consistent with other countries and their debt loads. And more—just as important, investors understand this. They know this and they're still buying our debt and interest rates are still very, very low. So we need to take this opportunity and be very aggressive and use the resources that we have at our disposal."

5. But Social Security is headed for disaster. It's out of control!
~snip~

The Congressional Budget Office projects that the Social Security trust fund will continue to run a surplus until 2019. (More conservative fund trustees put the date at 2017.) The fund’s total assets should hold out until 2046. And that's assuming that nothing changes at all.

6. Ending Social Security would be well worth it, because putting those deductions back in people's pockets would provide a big enough stimulus to get us out of this mess.

As Digby put it: "Boomers are still sitting on a vast pile of wealth that's badly needed to be put to work investing in this country. But it's shrinking dramatically and it's making people very nervous."

As [Dean] Baker writes, "if one of the purposes of the stimulus is to restore some confidence in the future, then talk of fiddling with social security and medicare is extremely counterproductive. If they want to see the baby boomers put their remaining money in the mattress or bury in the back yard instead of prudently investing it, they'd better stop talking about "entitlement reform." This is a politically savvy generation and they know what that means.

If they perceive that social security is now on the menu, after losing vast amounts in real estate and stocks, you can bet those who still have a nestegg are going to start hoarding their savings and refusing to put it back into the economy. They'd be stupid not to."

7. OK, forget I even mentioned Social Security. Besides, the real problem is Medicare.

Finally, we come down to the truth. There's no question that exponentially rising health care costs—both Medicare and private insurance—are unaffordable in the long term; and that getting ourselves back on track financially means getting serious about addressing that.

8. Next, you're going to tell me that some kind of government-sponsored health care is the answer.

Yes, we are. The Congressional Budget Office notes that health care costs were only 7 percent of the GDP in 1970—and are over double that, at 14.8 percent, now.

Much of that increase came about because in 1970, most health care providers ran on a not-for-profit basis. Hospitals were run by governments, universities, or religious-based groups; in some states, private for-profit care was actually illegal. Even insurance companies, like Blue Cross, were non-profit corporations. AdminIstrators and doctors were still paid handsomely; but there were no shareholders in the picture trying to pull profits out of other people's misfortune

9. But this Peterson guy's a billionaire Wall Streeter. Obviously, he knows something about finance...

Let's punt this one to William Greider:
Peterson, who made his fortune on Wall Street, never raised a word about the dangers of hyper leveraged finance houses gambling other people's money. He never expressed qualms about the leveraged buyout artists who were using debt finance to rip apart companies. He didn't fund an all out effort to stop Bush from raiding the Social Security surplus to pay for tax cuts for the rich.

But now he wants folks headed into retirement who have already prepaid a surplus of $2.5 trillion to cover their Social Security retirements to take a cut and to work a few years longer to cover the money squandered on bailing out banks, wars of choice abroad, and tax cuts for the few.

Basically, we're only having this conversation in the first place because a conservative ideologue was willing to pony up $1 billion of his own money to fund a "foundation" devoted to killing Social Security. Given that most politicians—both Democrat and Republican—are extremely unwilling to touch the notorious "third rail of politics," it's pretty clear that next Monday's "fiscal responsibility summit" wouldn't even be happening if Peterson wasn't bankrolling the Beltway buzz on this terrible idea.

10. OK—if killing Social Security isn't the answer, just how do you propose to get us out of this?

The idea of a White House summit on fiscal responsibility is a good one—but only if it focuses on real solutions to our real problems.

Cutting health care costs by getting all Americans into a rationally-managed system that puts delivering excellent care above delivering shareholder profits has to be a central part of any long-term economic health strategy. We're also about 15 years overdue for a complete overhaul of our military budget, too much of which is still focused on fighting the Soviet Union instead of responding to the actual challenges we're currently facing. Finally, it's time to ask the wealthy—who've profited more than anyone from the past 15 years, and yet haven't paid anywhere near their fair share—to step in a pay up for the system that enabled them to build that pile in the first place.

[sugarpop]

Originally Posted by TheMercenary

Robinson: The inequality of equality
GEVERYL ROBINSON | Sunday, December 14, 2008 at 12:30 am

Contextual linking provided by Topix Egalitarianism: 1. A belief in human equality especially with respect to social, political, and economic rights and privileges 2. A social philosophy advocating the removal of inequalities among people.


During the presidential election, I kept hearing people bemoan the fact that electing Barack Obama would mean the end of our democracy because Obama and all his Obamacans were socialists who believed in the redistribution of wealth.

I have news for you. We've been dabbling in socialism for quite some time. Democrats, Republicans and all of us are to blame.

I can give you a long drawn out definition of socialism, but in a nutshell, socialists advocate the creation of an egalitarian society in which wealth and power are distributed more evenly. Know some of you are wondering what's wrong with that, and I'll tell you.

It's not the government's responsibility to make sure wealth and power are distributed more evenly. Egalitarianism is a myth. No matter how you slice it, there will always be inequalities among people, and the government's and our delusion about this fact is the primary reason our country is in its current state.

So we should allow MORE inequality to exist, because we can't get rid of all of it? And ftr, it isn't the government's responsibility to make sure wealth is distributed at the top either, but that's exactly what's been happening, FOR YEARS (please read some of David Cay Johnston's books). This country has been using socialism for the gain of corporations FOR YEARS, class warfare has been going on in favor of the richest individuals FOR YEARS, and now that some of that wealth might actually leak back down to the middle and lower classes, people who have been brainwashed into thinking we actually live in a capitalist society cry foul. How nice.

For example, everyone is shocked by the high foreclosure rates and the millions who have lost their homes due to the "evil lenders." I agree that some of the lenders were predatory. However, there were many who were under extreme pressure from the government to give loans to any and everyone just to make things "fair."

If Mr. CEO with a steady job history, great credit and large income could get a home, then in the spirit of fairness, in the spirit of egalitarianism, Mr. No Job, no money, no credit, 12 kids by 12 different women, and dentures on layaway could get a home, too.

And his home should be just as nice as Mr. CEO's because after all, giving Mr. No Job a home with lesser value wouldn't be fair.

No one told those lenders to lend to people without jobs, or to give them bigger loans than they could afford, or to not check credit. There may have been pressure to make more loans to lower income people, but they did all that crap all on their own, because they KNEW they would package the loans up and sell them, and they wouldn't be the ones losing money when they failed. They KNEW they would fail, but they didn't care, because they were greedy.

Contrary to what a lot of people believe, Fannie May actually worked very well for decades, and lower income people have successfully been getting and paying for loans for a very long time

See the problem?

True, there have been practices by lending institutions and companies that were discriminatory. Laws have been put in place to alleviate these practices. But discrimination is defined as "making a difference in treatment or favor on a basis other than individual merit." If that's the case, then isn't giving people homes, credit cards, cars, jobs or anything else because they are poor, and not because they earned these things due to their own merit, discriminatory against those who earned the things they've acquired?

And what about the millions of people who knowingly accepted the "free" credit cards they received in the mail and then used the cards to their limit, all the while knowing they would never be able to make their monthly payments?

My God, when the federal government exists pretty much on credit alone, and banks are bombarding people with credit card applications, many of whom should never have gotten them, and advertising is coercing people into thinking they need things they don't, and our system is actually set up to get people to spend, spend, spend, can you blame people getting out of control? (Didn't you post that link to how stuff works on SMN Merc? Don't you remember how the government actually conspired after WWII to create an economy based on needless stuff?) Remember the 80s? Gordon Gecko in the movie Wall Street? Greed is Good! All politicians talk about is GROWING the economy. How about creating a sustainable one? Good grief.

I've heard some elderly people say, "Pigs get fat; hogs get slaughtered," and our greed has led us straight to the slaughterhouse.

Instead of suffering from optical rectumitis (the crossing of the anal nerve with the optic nerve causing one to have a crappy outlook on life), we need to take responsibility for our actions, for our part in this mess we find ourselves in as a country.

We all played a part in our economic downfall. So instead of redistributing wealth, let's try redistributing responsibility and then collectively find solutions to reverse our downward spiral and restore our economy.

http://www.savannahnow.com/node/635671

yes, we ALL did. But let's not blame individuals who have been brainwashed by Wall Street for decades MORE than the people who actually created the problem in the first place.

[sugarpop]

Originally Posted by xoxoxoBruce

Interesting article on the Fiscal Responsibility summit.

Great post Bruce! Thanks!

Someone should have invited the guys in charge of Iraq reconstruction to a fiscal responsibility summit.

In what could turn out to be the greatest fraud in US history, American authorities have started to investigate the alleged role of senior military officers in the misuse of $125bn (£88bn) in a US -directed effort to reconstruct Iraq after the fall of Saddam Hussein. The exact sum missing may never be clear, but a report by the US Special Inspector General for Iraq Reconstruction (SIGIR) suggests it may exceed $50bn, making it an even bigger theft than Bernard Madoff's notorious Ponzi scheme.

http://www.independent.co.uk/news/wo...f-1622987.html

[sugarpop]

Originally Posted by Redux

Someone should have invited the guys in charge of Iraq reconstruction to a fiscal responsibility summit.

Hell, we should have let Iraqi contractors be in charge. They could have done for a fraction of the cost.

Originally Posted by sugarpop

Hell, we should have let Iraqi contractors be in charge. They could have done for a fraction of the cost.

But then how would Cheney have benefited with a 3,000% increase in the value of his Halliburton stock options?

[tw]

Originally Posted by sugarpop

Hell, we should have let Iraqi contractors be in charge.

We did. And then enrich Halliburtion for it. We even murdered American soldiers - electrocuted in showers - by paying Halliburton to let Iraqi contractors be in charge.

[TheMercenary]

Originally Posted by sugarpop

And I'm quite sure, if this is true, that republicans wrote that part of the fucking bill. They ARE the ones who wanted all the fucking tax cuts. Obama put a lot of porky ones for rich people in there in order to appease them and get some votes. But they voted against it anyway. And he will have to take the heat for it. A very stupid move IMO.

I think, after the House dug their heals in and decided to completely vote against it, he should have just taken out everything he didn't want, and put the stuff back in he DID want that they took out for republican support. Fuck them. He will not get any support from them. That is pretty obvious.

Politics as usual, none of that surprises me. Obama and the Dems will still hold the bag if this fails.

[sugarpop]

Originally Posted by tw

We did. And then enrich Halliburtion for it. We even murdered American soldiers - electrocuted in showers - by paying Halliburton to let Iraqi contractors be in charge.

From what I've heard in the news, it wasn't Iraqi contractors who did the sloppy work. It was an American contractor. An American contractor who has changed their name and now has another contract to do work in Afghanistan. So how is it you are blaming the Iraqis?

[classicman]

[tw]

Originally Posted by sugarpop

From what I've heard in the news, it wasn't Iraqi contractors who did the sloppy work. It was an American contractor.

Iraqi contractors (or American hired Iraqis) are not being blamed and were not a solution. 85% of all problems are directly traceable to top management. Murder of American soldiers in showers is directly traceable to top management - even if the work is done by Iraqi contractors (paid by the job) or Iraqi employees (paid by the hour).

First task was call it an accident. Therefore blame does not go to the source.

And so the joke - let Iraqi contractors do the work. Iraqis could not have done it any worse. In essense, Americans got paid to let their Iraqi employees do it without training and oversight. And then we blame the Iraqis. Or call it an accident - same thing.

There has been corruption up and down the chain of command in the Iraq reconstruction program funded with US $$$. (Remember how the Iraqis would pay for their own reconstruction with oil revenue?)

The latest report from the Special Inspector General for Iraq Reconstruction (SGIR) has a list of 20 arrests, 19 indictments, 14 convictions, and more than $17 million in fines, forfeitures, recoveries, and restitutions to date.

Convictions (pdf)

Jan 09 Full Report

Just the tip of the iceberg...with more than $50 billion of US taxpayer dollars unaccounted for.

Fortunately, the Democrats were able to keep the SIGIR in place when they took control of Congress in '07.

The Republicans had voted to shut it down.

[TheMercenary]

Yea, and we are still paying for it. Throw the bums into Gitmo.

[classicman]

A Pick to Oversee Stimulus Spending

WASHINGTON (AP) — President Obama is expected to appoint a former Secret Service agent who helped expose lobbyists’ corruption at the Interior Department to oversee spending in the $787 billion economic stimulus plan, an administration official said Sunday.

Mr. Obama is set to announce his selection of the former agent, Earl Devaney, on Monday at a meeting with governors at the White House. Mr. Devaney will serve as the chairman of the new Recovery Act Transparency and Accountability Board and, along with Vice President Joseph R. Biden Jr., will coordinate oversight of stimulus spending.

Mr. Devaney, the inspector general of the Interior Department, helped turn up dealings at the department involving the disgraced lobbyist Jack Abramoff.

Mr. Devaney was a senior official with the Secret Service before retiring in 1991. He then worked as the chief of criminal enforcement at the Environmental Protection Agency.

Mr. Obama has said the recovery board will be an at-large body that will oversee the spending of billions of dollars allocated to help the economy. With dozens of agencies and departments involved, the president wanted an independent central group to monitor where the money was going.

I'm loving this.

Originally Posted by classicman

A Pick to Oversee Stimulus Spending

I'm loving this.

transparency and accountability provided by a qualified appointee, rather than a political hack.

How refreshing from previous IG type picks