WE HAVE A BUDGET: IT'S NOT MONOPOLY MONEY

President Obama came out with his budget for 2011. We're spending $3.8 trillion, and only have about $2.2 trillion coming in this year. Hence the $1.6 trillion shortfall. As I noted a few posts back, $1.3 trillion of this amount was already on President Obama's desk before he arrived in Washington. The remainder is a product of the recession and the parasitic sociopaths on Wall Street damaging the economy far more than we thought.

Still, check out this cool budget expenditures interactive from the NY Times. This budget forecasting interactive tells what most of us already know: Projecting beyond two years is largely a futile endeavor. As an example, President Clinton's economic team failed to predict the level of their budget surpluses, while President Bush's economic team made surplus projections for fiscal year 2012 that will not materialize.

What's clear from this budget is that President Obama understands Vice President Cheney's pronouncement that "deficits don't matter" is both off the mark and - as if this needs to be said - is no way to approach a family's budget, let alone a nation's. Indeed, here's President Obama, speaking about our need to stop treating our budget process like we're playing with Monopoly money (which I wrote about two weeks ago).

“We simply cannot continue to spend as if deficits don’t have consequences, as if waste doesn’t matter, as if the hard-earned tax money of the American people can be treated like Monopoly money ...”

Unfortunately, if Republican extended comments are any indication, the Party of No seems prepared to continue their smoke & mirror games, as if the Monopoly Standard policies they initiated 30 years ago (i.e. supply-side tax cuts) hasn't undermined our nation's fiscal health enough. Whether America buys into the notion that the Republicans should be "rewarded" because President Obama hasn't cleaned up their economic mess fast enough will be one of the key issues this November.

Stay tuned.

- Mark

RED STATE WELFARE QUEENS

I always find it amusing when I see this tax data. In a few words, it makes it clear that Republican, or Red, states in the country are the biggest recipients of federal tax dollars. On the other hand, the biggest tax contributors to our nation are Democratic states, like New York and California.

So, for example, while Sarah Palin likes to wax nostalgiac about the rugged individualists up in Alaska, for every dollar Alaskans pay into our nation's treasury box they take out $1.84. For every dollar California puts in we get 78 cents. Put another way, Alaska's hardened sense of "rugged individualism" is really built on a foundation of communal welfarism, direct from the American taxpayer in big Liberal states like New York and New Jersey.

This is what it looks like in graph form (click on graph to enlarge) ...

Here's a couple of other little tax nuggets you might find interesting. In the 2000 U.S. presidential election, George W. Bush won most of the states that are net beneficiaries of federal spending programs, while Al Gore won most of the states that are net contributors to federal spending.

Put another way, the Reagan loving Republican Red Staters are the real welfare queens of America. The Gipper would be proud ...

Last note. While their share of the income has increased, the tax burden on America's richest 400 tycoons has been going down for years.

- Mark

HONEST ACCOUNTING

I couldn't help but notice during President Obama's appearance at the Republican Retreat in Baltimore how many speakers prefaced their questions with right wing radio talking points, followed with outright lies about the origins of our budget deficits.

Here's the standard claim, and a contrived question, as posed by Jeb Hensarling (R-Texas):

As President Obama made clear in his response to Rep. Hensarling's comments, the reality between what Republicans claim about the budget and the truth is as vast as the Grand Canyon.

Simply put, Republicans are either lying about the reality of the budget or they're simply ignorant as to the facts (or both). Here's the math ...

If you don't like reading those CBO numbers, know this ...

President Obama came into office with projected deficits of $1.3 trillion dollars for 2009. As President Obama pointed out, this was a budget deficit that he had on his desk before he was sworn into office. Those projections have turned into a $1.6 trillion deficit for this year because the recession (and the needs of the parasitic sociopaths on Wall Street) were far worse than everyone imagined.

Let me repeat. This was not President Obama's doing. It was a gift from from President Bush and his pals on Wall Street. Simply stated, President Obama inherited an economic mess, and the Republican Party is lying to America about it's origins.

President Obama's response to the mess he was left has been both straighforward, and commendable. Here's why.

Under President Bush the majority of the costs associated with the wars in Afghanistan and Iraq were never on the books. President Bush regularly - and deliberately - kept them off budget and asked for emergency "supplemental" funding. What's supplemental funding? In a few words it's like the money you find yourself spending every year on birthdays, vacations, Christmas, etc. that you didn't plan for in your yearly budget. Instead, because you don't have the money, you borrow or put it on your credit card. Then you try to pretend that you didn't spend the money. We all know how those debts eventually catch up with us. President Bush did this to the tune of about $100-200 billion per year.

President Obama thinks that since we know we're in a war that that we shouldn't play "supplemental" accounting games with the American public. He's decided to put the cost of these wars in the budget. While this does inflate our budget deficits, it is also the way serious people deal with their budgets.

Want to see how Republicans deal with budgets post Bush? Check this out.

Seriously, a budget proposal with no numbers?

The impact of embracing the smoke & mirrors behind Republican borrow-and-spend policies is quite serious.

Then we have the expenses associated with cleaning up President Bush's economic mess. You can add hundreds of billions of dollars to our deficit pot. See where this is going? The point is, Republicans are playing political games to score political points.

You would think that Republicans would show some humility on the budget topic, especially given that President Reagan almost tripled our national debt, and President Bush more than doubled it. Instead, Republicans think they should be "rewarded" in November for pointing out how deficits have increased, when they know (or should know) that President Obama's policies didn't bring our current budget mess to our doors.

It's a wonder to me that the media takes anything the Republicans have to say about the budget seriously.

- Mark

OBAMA SMACKDOWN EXPOSES FOX (yet again)

It appears that I'm not the only one who thinks President Obama gave a major smackdown to 140 Republicans yesterday in Baltimore. It turns out that the beating was so obvious that Republican propaganda station, and conservative mouthpiece, FOX News pretty much turned the channel.



Critical here is that President Obama made himself available to the opposition party in a way that no president has done in recent memory. His appearance at the Republican House Retreat in Baltimore was, as many observers have noted, akin to the Prime Minister taking questions from Members of Parliament.

For Fox News to turn the channel, while the other networks had continuous coverage, says much about Fox News. First, they can see the truth, but willfuly choose to ignore it. Second, they are a propaganda arm of the Republican party.

So here's my question:

How stupid are the people who watch Fox News that they need Fox's general management to break away from LIVE coverage so that paid media goons can tell them what they THINK is happening?

Seriously, who would stay to watch a football game on TV if the network stopped showing the game and switched to hacks telling you that your team is doing great when you just saw them getting pounded?

At the end of the day Fox is to network news what World Wrestling Entertainment is to Greco-Wrestling and serious sport. A joke. They take a serious activity and turn it into fantasy entertainment. And all for what? So the intellectually challenged among us can indulge their fantasies about the world around them?

For the Fox viewers out there who might be reading my blog, let me make this simple for you. Here's what serious news looks like in wrestling form ...

 Here's what Fox News looks like in wrestling form ...

Any questions?

- Mark

PRESIDENT OBAMA AT THE REPUBLICAN RETREAT

President Obama delivered a speech, followed with Q&A, to the Republican Party House Retreat today. I guarantee you the Q&A will not end up on any Republican highlight reel. In fact, I doubt that the Republicans will invite President Obama back under the same circumstances.

Here's the speech.
 


Here's the Q&A ...



- Mark

SAMUEL ALITO & THAT DAMN TYPO

In Baker v. Carr (1962) the Warren Court ruled that the principle of One Person One Vote had to be respected, and was perhaps the most fundamental element of American democracy. At the heart of the case were states that had failed to redraw districts. This left some districts with significantly less, or more, voters. According to the Warren Court, this undermined the principle of equal, or proportional, representation and violated the idea that each citizen's vote should carry equal weight during every election cycle.

The Warren Court's decision was so significant that Earl Warren would call Baker v. Carr (again, which dealt with redistricting and proportional representation) the most important decision his court ever made. As he put it, legislators represent people, not rocks or trees.

The same can not be said about corporations.

POLITICAL VOICE & PROPORTIONAL REPRESENTATION
I bring up Baker v. Carr because it gets to the heart of what Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) was saying yesterday when he criticized the Supreme Court's 5-4 decision on Citizens United v. Federal Elections Commission. The Citizens United decision allows corporations to enhance their political voice by bankrolling political campaigns. This undermines the spirit of the Baker decision because it super charges the influence of corporations and the corporate lobbyists who represent their very narrow interests.

More specifically, instead of having disproportional political weight lie in the hands of a few people who live in sparsely populated areas - as was the case before the 1962 Baker decision - the Citizens United decision shifts political weight to a few corporations who have the resources to drown out the voice of the middle class. This caters to the interests of a select, pampered, few and violates the principle of proportional representation and One Person One Vote.

This, in part, explains why Sen. Leahy criticized Citizens United as the "most partisan decision since Bush v. Gore." He sees a political system tilting toward a condition (1) where we don't always need to count the votes (Bush v. Gore, 2000) and (2) where one group will have disproportional power over elections (Citizens United, 2010).

(As a reminder, in Bush v. Gore the Supreme Court ruled in a 5-4 decision that because Florida's vote counting standards differed from ballot to ballot, precinct to precinct, and county to county that the Florida Supreme Court's recount order was "unconstitutional." Left unsaid is that vote counting standards differ from state to state. Still, the Supreme Court stopped the Florida recount. According to Justices Rehnquist, Scalia and Thomas the recount order, which provided instructions, was unconstitutional because only state legislatures - who have created different standards across the nation - can make election law. Recognizing the Gordian Knot they had tied themselves into the Supreme Court limited it's divided opinion only to the Bush v. Gore case.)

With this background it's easier to understand why Sen. Patrick Leahy criticized Justice Samuel Alito yesterday. Simply put, he sees an increasingly politicized Supreme Court. No doubt prodded by Justice Alito's "that's not true" moment during President Obama's State of the Union address, Leahy took aim at Justice Alito's new "activist" position.

Here's the money quote from Sen. Leahy:

"In his confirmation hearing, Justice Alito — I might say under oath — testified that the role of the Supreme Court is a limited role. ... It has to be equally vigilant of not overstepping the bounds and invading the authority of Congress. That was then, when he was seeking confirmation. This is now."

Leahy's essentially saying Justice Alito's a scoundrel, and not a man of his word.  But this is a throwaway ...

CORPORATE PERSONHOOD, OR JUST A TYPO?
Ranking judiciary committee member Sen. Jeff Sessions (R-Ala.) didn't take kindly to Sen. Leahy's words about Justice Alito, and shot back at both Leahy and President Obama (for scolding the Supreme Court), saying, "I'm disappointed that the president and my colleagues are attempting to politicize a very, very serious First Amendment question."

What he's really saying is that corporations have (or should have) all the rights and privileges as voters because, after all, they're people too. Is this true? Let's review:

1. CORPORATIONS AREN'T PEOPLE: Free speech is designed to protect the actions of naturalized and/or U.S. citizens. Corporations are neither.

2. THAT TYPO: Corporations are viewed as "persons" protected under the 14th amendment only because of the functional equivalent of a typo, not a Supreme Court decision. Put another way, corporate "personhood" status was an accident which means their claim to equal free speech status is not etched in stone.

3. THE FIRE PRINCIPLE: If we can't yell fire in a crowded theater, corporations should not be able to yell fire (or set a fire) during a political campaign. They need limits like we do.

4. CORPORATE PRIVILEGES: Unlike individuals, corporations regularly get favorable legislation (think bailouts), subsidies (think agriculture), generous tax write-offs (too many to list here), legal exemptions that boost their bottom line (especially Big Pharma), etc. They also have a limited liability standard, which you and I don't have (think exploding Pintos and how decision-making Ford executives escaped responsibility), and can live on indefinitely.

5. FOREIGN/SUBSIDIARY SHELL GAMES: Foreign corporations have subsidiaries through which they can access teams of Madison Avenue executives who can distort and elevate their "voice" above Joe Six-Pack's. 

6. LEGAL SHELL GAMES: Corporations can find legal cover behind proprietary rights (trade secrets) when called into court. This means they can both distort their voice, and then hide it. Apart from pleading the 5th, Joe Six Pack can't do this.

And the list goes on ...

CONCLUDING COMMENTS
fateful typo that granted them corporate "personhood" status.

This has enabled corporations to secure favorable legislation that increasingly allows them to act on their own (with less government oversight), ignore the public interest (think subsidized and protected health care industry), and to make more money with government-escorted profits (think Wall Street). Granting corporations the ability to use unlimited money in political campaigns, as the Citizens United v. Federal Elections Commission decision does, accelerates this process.

If we want to maintain Abe Lincoln's "Government of the people, by the people, for the people" maxim - and the power of One Person One Vote - Congress needs to fix Citizens United. More importantly, we need more of our elected representatives like President Obama and Senator Leahy to speak out against it.

American democracy, proportional representation, and the principle of One Person One Vote should not be drowned out by a judicial bench that not only believes corporations are people too, but has already said that we don't need to count all the votes.

- Mark

JUSTICE ALITO'S STATE OF THE UNION MOMENT

I generally liked President Obama's State of the Union speech tonight, and especially enjoyed watching the Republicans sit while others applauded Obama's tax cut and helping the middle-class proposals. For me, though, the highlight was watching Associate Justice Samuel Alito mouth something to the effect of "that's not true" during the speech.

Justice Alito was responding to President Obama's comments that all but scolded the Supreme Court for their decision this past week, which gave corporations the Green Light to spend as much money as they want on political campaigns. The Supreme Court's 5-4 decision is based on the notion that spending money equals speech. As such, the court ruled that the state has no business restricting the "free speech" of corporations because they're accorded the same protections as people under the 14th amendment (equal protection clause).

Missing in the Justices opinion is how a simple court reporter, who reworded a Supreme Court decision over 120 years ago, provided them with the "precedent" they needed for their decision.

As I wrote a few posts back, this week the U.S. Supreme Court essentially granted corporations the legal right to use all the financial resources at their disposal to influence political campaigns (because we all know that you and I have $10 million lying around the house, so we can match them any time we want, right?). 

Consider this: During the last presidential election, all candidates for federal office spent around $3 billion on their political campaigns. Three billion dollars was Exxon's profits for one quarter.

So I'm glad President Obama - who taught constitutional law at the University of Chicago - took the opportunity to make the comment. Undoing over 100 years of legal precedent because you think corporations are people is not good for America.

Alito and his brethren needed the scolding.

- Mark

POSTSCRIPT: It appears I'm not the only one who took notice of Alito's State of the Union moment (now last night). Additional commentary on the Supreme Court case Citizens United v. Federal Elections Commission, and Justice Alito's moment, can be found here, here, and here.

RECONCILIATION 101

OK, one last post before the State of the Union. If you want to understand the reconciliation process you can read this, this, or this. 

Or, if you don't like all that reading, think about this. Reconciliation essentially restores democracy to America. It limits debate (or a filibuster) on budget related items that affect mandatory spending, or taxes. It allows the Senate a simple up-or-down vote on a budget related piece of legislation, and requires only 51 votes (or 50 votes, plus the Vice President to break the tie). It was considered so crucial to President Reagan's program that he used it to get his agenda done, as did George W. Bush.

The problem is that President Bush used reconciliation primarily in the name of tax cuts for the rich. Because President Bush's initiatives undermined the spirit of the reconciliation process - because his tax cuts added to our national debt - Congress passed a reconciliation bill in 2007. It said in plain language that reconciliation could only be used for budget matters that REDUCED budget deficits.

You would have thought that the "fiscal conservatives" during the Bush administration would have thought about this in 2001 and 2003, when they voted for tax cuts without finding ways to off-set their impact. They didn't. But I digress ...

The real  beauty of the reconciliation process is that it reinstates the principle of an up-or-down vote when you have a stubborn party, or a stalled process.

Read the Center on Budget and Policy Priorities piece, or Rep. Louise M. Slaughter's overview for some historical perspective. In all cases, it's clear that reconciliation is not the high drama route Republicans would have you believe. Perhaps more importantly, it also becomes clear that Republican presidents have been using it whenever they want to push their agenda.

Democrats need to use reconciliation, especially since the "health care bill before the Senate would cut costs and reform health-care delivery more than any piece of legislation in American history."


- Mark

IS RECONCILIATION ON THE HORIZON?

Reconciliation to get the health care bill passed? I must be dreaming. After learning about President Obama's decision to pander to the right wing on deficits (after he stood by and watched as Wall Street looted our treasury), I really like this for Main Street.

But I especially like this from Ed Schultz.



Seriously, Democrats need to start acting like they have a majority, instead of fretting over whether the Republicans are going to filibuster in the Senate and call them names. If you can't govern with 59-41 majority you really shouldn't be in the politics business.

Force the filibuster, use reconciliation, and let the Republicans explain their Party of No position.

- Mark

ET TU, OBAMA ... WHERE'S OUR TALF RELIEF?

A few posts back I suggested that President Obama needs to get on the side of Main Street and should enact an immediate payroll tax cut, spend hundreds of billions on infrastructure projects, and then go after Wall Street. I still think he needs to this. This Robert Reich post offers two other proposals that I like.

(1) Enact a second stimulus. It should mainly focus on bailing out state and local governments that are now cutting services and raising taxes, and squeezing the middle class. This would be the best way to reinvigorate the economy quickly.

(2) Help distressed homeowners by allowing them to include their mortgage debt in personal bankruptcy — which will give them far more bargaining leverage with morgage lenders. (Wall Street hates this.)

There's a reason why Wall Street hates the second proposal. It would force them to renegotiate with homeowners in a fashion that the big banks were able to negotiate with Washington when they had their economic meltdown. In many ways it would force the banks to consider negotiating TALF-like loans for homeowners, which would allow homeowners to get new loans by using their "legacy assets" as collateral.

More simply, it would allow homeowners to claim that, in their world, their house and their lives are too big to fail so they deserve help. Just like the big banks homeowners would be able to secure a new, lower value, loan on their home, as long as they stay in the home for a certain period. The loan would be made by the banks, and guaranteed by the federal government (like the TALF loans are). The argument, which was "all good" when Wall Street's financiers were going under, is not viewed as legitimate when it comes to Main Street. Nice.

Apparently, in the grand scheme of things, President Obama isn't going to put the effort into helping Main Street that he put into bailing out Wall Street. He's going to propose a three-year freeze on a large portion of discretionary spending, which will make it virtually impossible for him to stand up for Main Street's immediate needs, or it's interests. Economist (and frequent guest on my program) Mark Thoma calls it a "cheap political trick." I agree. This recession isn't your Great-Grandfather's depression. And, as Robert Reich points out, it's not the recessions Reagan or Clinton had to deal with either.

Of course Wall Street's happy as a bug in a rug because it signals that President Obama isn't going to put any teeth into taxing or reining in Wall Street's greed and stupidity. Main Street is the only sector that's going to take the hit on the recovery. This is all we need to know that President Obama's proposal stinks.

Like Julius Caesar, I get the strange feeling that our friends are stabbing us in the back, again. I'll have more to say on this later.

Sigh ...

- Mark