Friday, August 31, 2012


After President Reagan effectively tripled our national debt - from $950 billion to $2.7 trillion - the now infamous debt clock was erected in 1989. Because it was not designed to run backwards, and with budget surpluses in 2000, the clock was unplugged.

By 2001 Congressional Budget Office projections told us that the national debt would be paid off within 10 years. 

Unfortunately, with President Bush pushing one unfunded initiative after another, the debt clock was turned back on in July of 2002. The debt clock ran out of digits in 2008 when our national debt hit $10 trillion. 

I provide this brief history of our debt clock because it really brings life to this GOP convention floor picture ... 

To help us understand how the GOP "built it," the Washington Monthly's Steve Brenen takes us on a debt stroll down memory lane (hat tip to Linda for finding this) ...

1980: Ronald Reagan runs for president, promising a balanced budget
1981 - 1989: With support from congressional Republicans, Reagan runs enormous deficits, adds $2 trillion to the debt.
1993: Bill Clinton passes economic plan that lowers deficit, gets zero votes from congressional Republicans.
1998: U.S. deficit disappears for the first time in three decades. Debt clock is unplugged.
2000: George W. Bush runs for president, promising to maintain a balanced budget.
2001: CBO shows the United States is on track to pay off the entirety of its national debt within a decade.
2001 - 2009: With support from congressional Republicans, Bush runs enormous deficits, adds nearly $5 trillion to the debt.
2002: Dick Cheney declares, “Deficits don’t matter.” Congressional Republicans agree, approving tax cuts, two wars, and Medicare expansion without even trying to pay for them.
2009: Barack Obama inherits $1.3 trillion deficit from Bush; Republicans immediately condemn Obama’s fiscal irresponsibility.
2009: Congressional Democrats unveil several domestic policy initiatives — including health care reform, cap and trade, DREAM Act — which would lower the deficit. GOP opposes all of them, while continuing to push for deficit reduction.
September 2010: In Obama’s first fiscal year, the deficit shrinks by $122 billion. Republicans again condemn Obama’s fiscal irresponsibility.
October 2010: S&P endorses the nation’s AAA rating with a stable outlook, saying the United States looks to be in solid fiscal shape for the foreseeable future.
November 2010: Republicans win a U.S. House majority, citing the need for fiscal responsibility.
December 2010: Congressional Republicans demand extension of Bush tax cuts, relying entirely on deficit financing. GOP continues to accuse Obama of fiscal irresponsibility.
March 2011: Congressional Republicans declare intention to hold full faith and credit of the United States hostage — a move without precedent in American history — until massive debt-reduction plan is approved.
July 2011: Obama offers Republicans a $4 trillion debt-reduction deal. GOP refuses, pushes debt-ceiling standoff until the last possible day, rattling international markets.
August 2011: S&P downgrades U.S. debt, citing GOP refusal to consider new revenues. Republicans rejoice and blame Obama for fiscal irresponsibility.

So, yeah, when it comes to the debt clock and the conditions for our bloated national debt, the GOP really did kind of build that. 

- Mark

UPDATE: This Jon Stewart clip - "A Human Being Who Built That" - nails it. Too funny ...

Thursday, August 30, 2012


Are you a Republican enamored with Paul Ryan's convention speech? Don't be. Ryan ignored facts and, to be blunt, flat out lied. Check it out ...

* PLANT CLOSING: Ryan blasted President Obama for not doing more to keep the GM plant in his hometown open. The plant closed while Bush was still president

* DEBT COMMISSION REJECTED: How can Ryan criticize President Obama for "rejecting" recommendations from a debt commission that Ryan sat on but also voted against?

* OBAMACARE DISTORTIONS: Ryan claim that Obamacare cuts Medicare spending but ignores that Ryan himself asked for the same cuts. Worse, he conveniently ignored that President Obama's "cuts" don't affect patients directly but, rather, reduce payments to service providers, hospitals, and insurance providers. 

* MEDICARE DISTORTION: Ryan also failed to mention that his voucher program would destroy Medicare and expose America's elderly to more out of pocket costs. 

* FLAT OUT LIE DEPARTMENT: Ryan claimed that President Obama insists on giving all the credit for private sector success to government. President Obama never said this. It's what the GOP wants to believe he said. 

* CREDIT RATING DISTORTION: Ryan blamed President Obama for ruining America's AAA credit rating. The reality is S&P was in a panic and reacted to the Republicans threat to default on the debt (by not increasing our borrowing authority) unless President Obama cut trillions from domestic programs. 

Then we have Ryan ignoring how government spending under President Obama is growing at it's slowest pace in over 60 years ... that tax levels are at their lowest in 60 years ... that historically GOP tax hikes far outpace taxes associated with Obamacare .... that Ryan has either supported or written budget proposals that have no numbers and depend on mythical trillions showing up out of nowhere ... well, you get the point (even Fox's Sally Kohn found Ryan's lies ... )

Paul Ryan lives in a world that only exist in his mind, and in the minds of his colleagues. And it's not realistic ...

Remember when Mitt Romney's pollster Neil Newhouse boldly stated - while defending campaign ads that falsely claimed President Obama removed work requirements from welfare - that "We're not going to let our campaign be dictated by fact-checkers"? 

Paul Ryan's convention speech makes it clear that the "no fact check" express is off and running. 

- Mark 

Wednesday, August 29, 2012


A short clip explaining the logic behind trickle down economics ...

Kudos to Roland for locating this.

- Mark

Tuesday, August 28, 2012


The Pew Center just came out with a report on America's "Lost Decade."  The set of graphs below pretty much sums up what's happened to the incomes and wealth of America since 2008. It's not pretty.

Among other findings include most Americans seeing this growing divide as bad for America and - get this - with the majority of Americans believing that the wealthy are paying too little in taxes. Even those who describe themselves as upper middle class (52%) don't believe the rich pay enough in taxes.

The upper tier of America's wage earners are the only group who believe they are more financially secure than they were 10 years ago. And why not? They are the one group who has actually been improving on their income status over the past 40 years.

There's more information than I can synopsize here. But one thing is clear. This trend has been going on for some time ...

... and it's not the result of the upper tier of America being harder workers or more deserving than you and me. The wealth transfer policy was deliberate and well thought out. 

It was carried out by a government captured by the interests of the financial elite, and approved by a party of market sycophants who don't understand how modern markets really work.

The Pew survey simply reports the results.

- Mark

Monday, August 27, 2012


Have you ever had a roommate that eats all your food and leaves the utilities on? To be sure, they pay a significantly larger share of the rent because they have the room with a balcony and their own bathroom. But then they eat your food, ask you to drive to them places (since "you're going anyways"), bring home "guests" on a regular basis, borrow money they forget to pay back, and then remind you of the one time they brought home beer when it's time to pay the utilities.

When you bring up what you've spent on gas driving them around, what you've spent on food they've eaten, and what utilities cost since they moved in and started turning up the air/heat they simply say that they pay more in rent. Then they add that you need to start watching your budget because they only eat snacks and take shorter showers than you.

Unless you're a complete fool these roommate situations don't last very long.

I bring this up because the rich and their congressional Ooompa Loompas in Congress have been complaining for years about the rich paying more in taxes and how our budget is in shambles because America spends more money than it takes in every year. They ignore that just 12 short years ago we were running budget surpluses that could have effectively paid off our national debt (then $5.7 trillion) by 2011.

Then America's rich decided to eat our groceries and bring home guests (as it were).

Like the roommate described above, conservatives like to point out that the rich pay "more of the rent" but then ignore how our nation's finances went down the crapper once they decided to mooch and go cheap when it comes to paying the daily bills. To solve the imbalance conservative members of Congress demand cuts in federal spending programs, but only if they are  programs that support America's working class.

Rarely, if ever, do conservatives say we need to go after federal spending programs (tax exemptions, write-offs, and other subsidies) that primarily benefit the rich. In fact, if you add up all the subsidies and taxes that benefit primarily the rich (again, tax exemptions, write-offs, and other subsidies) it's clear that budget expenditures for tax cuts and subsidies transfer more than $1 trillion of our nation's wealth to help subsidize the lifestyles of America's rich and famous each year.

More specifically, if you add it all up, tax avoidance for America's richest class cost our nation about $1.4 trillion dollars. Indeed, if we did something about tax avoidance schemes (exclusions, credits, capital gains, loopholes, tax subsidies from special deductions, etc.) that allow corporations like GE to make more than $44 billion between 2008 and 2010 but receive almost $5 billion in tax refunds we would have no annual budget deficits.

It would also go a long way in reversing the great tax shift - from corporations to individuals - that has been going on for decades.

But let's not lose sight of the real story here. Taxes avoided by America's richest class through assorted subsidies and tax avoidance schemes would effectively pay our annual budget deficits and stabilize our nation's finances.

It's time to get us back on the budget surplus path by going after the spending programs (tax avoidance schemes) that took us away from it.

- Mark 

Thursday, August 23, 2012


OK, I'm back from my week long vacation. I probably should have posted a note for my regular readers but I got busy during the last day ... Once I got inspired upon my return I went looking for information on subsidies (to follow up on my "You Didn't Build That on Your Own" post) and found the piece I'm posting below stashed in my "draft" stack. It was supposed to have been posted almost a year ago. For some reason I clicked the "save" button when I meant to click "publish" after I found typos. Such is life. Anyways, I'm posting it now.

About this time last year a friend of mine got into a text exchange with an elected official here in Bakersfield over the topic of subsidies. He wanted me to explain subsidies to him so that he could have a stronger argument with the local official (who I also know). Below is a cleaned up text exchange between my friend and the local politician (after I sent my explanation of subsidies).

At the request of my friend I’m paraphrasing, but the exchange begins with the politician telling my friend to do some anatomically impossible acts, followed by this:

“ … Do you even know what a depreciation allowance is? It’s something businesses get to write-off on their taxes over time because running a business is expensive. DO YOU  %&*$? UNDERSTAND? Some expenses are even written off in the year they occur. This is a God given right, granted by God to every business through human history. Business people are entitled to tax off-sets because running a business is hard, and God wants it that way.”

I know, kind of fun, huh? The original response was funner, but I promised my friend I wouldn’t post it.

Still, the key here is that Mr. Prominent Politician doesn’t understand what a subsidy is in our modern market system (which also explains much about modern conservatism). Nor does he understand how subsidies have morphed into corporate welfare, on many levels.

I’ll elaborate (with more quotes) below. But first we need to understand the subsidy concept ...

One of the stories I like tell in class is about a acquaintance-friend I had at Chico State who liked to brag how he was making it on his own. It was the mid-80s, and the height of the Reagan era. He let everyone know that he got good grades, worked hard, and that he was on his way to a killer job in the financial sector after graduation. He was a rugged individualist making it in the world, on his own.

I always thought, “Good for him.”

Later I learned from others that while my friend got good grades, that he only had to work during the summer because his parents picked up all of his bills during the school year. Rent, tuition, books … the works. He was also fortunate enough to have parents who worked in the financial sector who not only paid for his interview suits and prepped him but set up his job interviews. Nice.

The point is that my friend’s life was subsidized in many ways that he neither understood nor acknowledged.  In his mind he was a tough self-made man making his way in a dog-eat-dog Darwinian market world.

I bring this story up because, in real simple terms, it helps us understand how clueless our local conservative politician here in Bakersfield is when it comes to subsidies. In fact, after Mr. Prominent Politico was presented with several subsidy examples (that I had sent to my friend) our conservative politician explained that there’s no such thing as an oil subsidy. He was adamant about it.

Here’s what Mr. Prominent Politico had to say about oil subsidies (again, I’m paraphrasing):
You use the term “oil subsidy” just like your less than intelligent hero, President Obama … as if there is such a thing … SUBSIDIES DON’T EXIST IN THE OIL INDUSTRY YOU DUMB BUNNY … why don’t you understand this stuff? Too many carrots?

Of course our subsidy denying friend didn’t use the words “less than intelligent” or  “dumb bunny.”

According to Mr. Prominent Politico the oil industry (which is big here in Kern County) doesn’t benefit from legislation, tax favors, or other factors that help their bottom line. The oil industry is full of Darwinian supermen who - like my Chico State friend - make it on their own without any type of supports.

They are Capitalist Supermen, the epitome of human evolution …

The point is, just like my college friend who seemed to think that he was raised in the jungle by Tarzan-like parents, our subsidy denying conservative politician is convinced that tax breaks and other supports that help the oil industry make money aren’t subsidies. They’re part of Adam Smith’s natural capitalist order of things. Oil industry profits are in no way enhanced or subsidized by write-offs, write-downs, depreciation allowances, or any other legislative gifts from Congress.

Homo Economicus reins supreme. End of story.

Or is it?

If our subsidy-denying friend understood how modern markets actually work he would know that, at the most basic level, subsidies are state-sponsored supports. They can include financial and legal assistance to an individual, a company, or an industry. This assistance can be used to help keep costs down, purchase goods, boost profits, or hire more workers (among other goals).

In technical terms, most of these objectives are encouraged by end of the year tax credits and write-offs. These credits are often associated with something that we call fiscal policy. They reduce the tax bill of firms and individuals and can be used across many years. They amounted to $1.1 trillion last year (yes, we could put a pretty big dent in our annual budget deficits if we eliminated all of our tax credits and write-offs, but that's another story).

Subsidies can be as small as allowing businesses to write-off the lunch hour or as big as treaties and military actions, which support specific industries and market players across the globe. These kind of subsidies were most often associated with the mercantilist (some say imperialistic) actions of empires of the past, but are often viewed as part of a larger democratizing pattern in the 20th and 21st centuries (though many see this as neo-imperialism (another story for another day).

The thing to understand is that subsidies can be a good thing when it helps in the production and consumption of goods that help our nation’s economy, or even the the public good (e.g. tax credits for college expenses, charitable contributions, home loans, health care, certain business expenses, etc.). Even Adam Smith, the patron saint of capitalism, acknowledged the role of the government in steering the economy by a mercantile state.

In America’s case, for example, we’ve determined that helping the oil and gas sector prosper is a good thing, so we provide market subsidies for the industry. A good read on this is Daniel Yergin’s classic, The Prize (1992). The very conservative Heritage Foundation also has papers on specific oil subsidies in America for my subsidy-challenged politician.

Subsidies can take many forms, and cut across all sectors of the economy. The multi-trillion dollar Mother of All Bailouts following the events of 2008 is an example of an industry-wide subsidy. Unfortunately, it also turned Wall Street and the financial sector into wards of the state (though they cluelessly still believe they're rugged individualists). 

Subsidies can also come in either direct forms (like cash payouts) and/or indirect forms (like protective legislation and tariffs). Subsidies are actually more complicated than this, but you get the point. 

To emphasize, subsidies are such a big part of the American economy that they cost the American taxpayer about $1.1 trillion per year.

Unfortunately, battle lines are drawn in the subsidy debate. Individuals, firms, and entire industries like to play make-believe and tell everyone that they’re self-sufficient market warriors who operate in a jungle-like environment. It boosts the ego.

Acknowledging subsidies undermines the Tarzan-like image most market warriors have of themselves. It forces them to admit that they need help, in ways they don't want to acknowledge ... 

So market players like to pretend that tax credits and other write-off supports are God-given entitlements when, in fact, they are market gifts from the American taxpayer state.  

At the end of the day, subsidies undermine the belief system and the image market players have of themselves. This is why they like to pretend subsidies have little to any role in their success. This helps explain why local conservative politicians here in Bakersfield - like my Chico State friend - either live in denial or are simply clueless about the help they get along the way. 

Acknowledging the role of subsidies in our economy would be akin to the emperor learning that he has no clothes.

THE END (finally) …
At the end of the day, if you’re hiring, boosting profits, getting supported, or making purchases because of financial incentives or supports provided by the state (or others), it’s a subsidy.

Simply put, by manipulating the U.S. tax code so that it backstops profits and boosts specific industries market players have been able to draw on taxpayer support for years. Yet, they've gotten the American taxpayer to believe that market players have done it all on their own when, in fact, subsidies - now in the form of Wall Street bailouts - are a big part of America's economic game. 

- Mark

Monday, August 13, 2012


I've posted this before, but since it was in the closing ceremonies of the Olympics, and it's Monday, I think it's a good idea to re-post this ...

- Mark

Sunday, August 12, 2012


Mitt Romney is in trouble and he knows it. In an attempt to shore up his base Romney has gone to the extreme right and picked Rep. Paul Ryan to be his vice presidential candidate.

Think about it. Paul Ryan does nothing for Romney in the major swing states (Wisconsin will still go to Obama), with women, or with people of color. But worse than this is his long history of playing with numbers and trying to screw over the middle class.

Here's a short list of what Paul Ryan wants to do:

Ryan wants to let tax cuts for America's middle class expire but calls it class warfare when President Obama asks Congress to let tax cuts expire on those making over $1 million per year.  
Ryan pushes the lie that Social Security is going bankrupt (it's not), and then wants to send the money to Wall Street in order to fix it.  
Ryan wants to dismantle Medicare and make it insurance industry friendly with vouchers. In a few words instead of having Medicare pay your medical bills you get a voucher each year. If your voucher doesn't cover the costs you pay the rest.  
Ryan has a long, longlong history of creating magic make believe numbers with the budget. Hell, he even backed the GOP's budget with no numbers plan.

There's more, but you get the point. Ryan is a desperation pick by a desperate man in a desperation campaign.

- Mark 

Saturday, August 11, 2012


America's middle class didn't just happen. With great effort - before and after the American Revolution - the feudal mentalities and hereditary privilege that we saw in Europe gave way to the democratic impulse and equality of opportunity. This happened for a reason.

Simply put, we learned long ago that concentrated power and inherited wealth was corrosive to society and personal liberty. The Founding Fathers understood that for personal liberty to prosper the state had to both create and guard the conditions under which wealth could be created.

I bring this up because the "I built this on my own" crowd seem to have no idea what modern government does. Apart from moving us from a condition where hereditary rights and narrow privilege dominate society, today modern governments (i.e. Western style democracies) try to get rights "right" so that all of us enjoy the same freedoms and opportunities to pursue our life goals.

In fact, someone wrote about the need for government to do this a long time ago ...
... We hold these Truths to be self-evident, that all Men are created equal, that they are endowed, by their CREATOR, with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness. That to secure these Rights, Governments are instituted among Men ... 
Access to, and the protection of, personal property are the result of the modern state.

Unfortunately, there are many Americans today who believe that virtually everything the government does is akin to socialism. The simplicity of thinking here is, simply put, mind-numbing. I won't dwell on the point except to say that the level of thinking behind this mind-set reminds me of this ...

The American experience, and the human condition today, are much more complex than self absorbed positions about homo economicus and ignorant caricatures of the state.

And, no, you didn't build that on your own.

- Mark 

Tuesday, August 7, 2012


How far has modern sports advanced? Pretty far, which you will see once you check out this NY Times interactive. It provides some perspective.

- Mark 

Monday, August 6, 2012


Wow. It's getting ugly in Europe. Everyone remembers the Nazis and their claim to a Third Reich. As you can imagine it's a bit of a touchy subject in Europe. Well, here were the headlines in Italy's il Giornale this past Friday ...

The "Fourth Reich"? Putting Germany's Chancellor, Angela Merkel, on the front page with her right hand up under the "Fourth Reich" headline is no accident. And with Standard & Poor's downgrading 15 Italian banks today it seems like it's déjà vu in Europe, again (see here and here).

So, what's the big stink over? Pretty simple. Italy - like other European states - is upset with Germany and Angela Merkel for taking a hard line on saving the Euro and bailing out Europe. Specifically, the Italian article says that Merkel and the Germans have brought Europe its knees, paying special attention to point out that "Italy is no longer in Europe but in the Fourth Reich."

The ugliness goes on, with the article claiming:
In the First Reich, Germany also wanted the title Emperor of Rome and in the next two they used their own means again against the states of Europe, two world wars and millions dead, obviously this wasn't enough to quieten Germany egomania.
Continuing, the inflammatory piece notes that rather than coming with cannons this time the "new Kaiser" (Angela Merkel) and the Germans are using the Euro as its weapon of domination.

In many way, what we're looking at are the first steps towards economic warfare, as I've discussed many times (hereherehere, and here).

As ugly as all of this is, one thing that helps to temper the piece is knowing that il Giornale is also going after current Italian Prime Minister Mario Monti pretty hard for not doing enough to stand up to Germany.

Yellow journalism or not, I think everyone recognizes that this topic is a sleeping dog that is better left alone.

- Mark 

Wednesday, August 1, 2012


Four years ago then Senator Barack Obama visited the Middle East and then went to Berlin. Here's the reception he got ...

The UK's had this to say about then Senator Obama and how he was received in Germany:
If the intended message was to show American voters that he could restore the tarnished image of the US abroad, then the rally - the only such event in his overseas tour - succeeded.

You can watch the entire speech that Sen. Obama gave in Berlin by clicking here.

Fast forward four years later. Two days after arriving in London British officials were saying that Romney's visit was "a 'total car crash'" and that "he was 'worse than Sarah Palin'." 

Another official who met with Romney bluntly said he was "apparently devoid of charm, warmth, humour or sincerity." If you're wondering how this gets into the papers here's a short list of Romney's London gaffes ...

After insulting the British Romney then went out of his way to kiss the Israeli's rear ends, but succeeded in insulting the Palestinians along the way (and, it appears, the Mexicans too; 19:21 BST). 

Well, at least Romney didn't screw up in front of big crowds in Poland when he laid a wreath at the Tomb of the Unknown Soldier (kind of hard to when no one is there to watch) ... 

However, Romney continued to refuse to answer questions from the U.S. press pool. In Poland one Romney aide - annoyed over press questions about Romney's reluctance to speak with them - even told the press to "shove it" (though he did call back to apologize). None of this, apparently, sits well with Fox News' Greta van Susteran. She referred to being ignored, and then being stuck on the press bus, as akin to being in a "modified petting zoo" because of the tourists stirring around the bus. 

Nice. You know things are bad if even your cheerleaders aren't happy.

One thing is certain. If Mitt Romney wanted to replicate what then Senator Obama did on his trip to Berlin, he has a long way to go ...

- Mark