deficits – Hank Kalet

Supercommittee of the 1 percent

I’ve mentioned this before, but it bears repeating: Congressional focus on the deficit at a time of severe economic malaise is downright foolish and dangerous.

And, as Dean Baker points out, it also is just one more example of how deformed our politics has become. The existence of a supercommittee, first, demonstrates a distortion in priorities. We need a rebirth of the commons, a sense of common good and shared sacrifice that has disappeared.

That means wrestling the economy back from the legalized criminal enterprises that control our economic lives. Corporations control our economy and our political system and they have used their power to rig things — to create, in Dylan Ratigan‘s words, “a platinum citizenship” — and protect their own prerogatives.

The supercommittee’s focus on “entitlements” — it’s not should we cut Social Security, but how much should it be cut — even as both sides avoid going after the bog boys just shows where Congress’ loyalties lie.

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Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.

Forget deficit negotiations; where are the jobs?

Establishment liberals are mistaken when they call say that Democrats on the so-called super committee charged with shrinking the deficit incompetent negotiators. It has nothing to do with incompetence. Rather, it is part of a larger failure of establishment liberalism and the bankruptcy of the Democratic Party.

The fallacy here is that negotiations are warranted, that slashing the deficit must be a priority at a time when the nation is battling an economic collapse. Without a serious jobs plan, one that matches the scope of the New Deal, the national economy will continue to disintegrate, costing the nation tax revenues and offsetting any cuts or tax hikes we put on the table.

Progressives need to get behind Dennis Kucinich’s jobs plan, which will increase employment while rebuilding our infrastructure; and, if we’re looking to pay for the jobs plan, we can do so by drastically increasing taxes on the top 1 percent and slashing military spending — both the money spent on our unnecessary and costly military escapades and the cash we hand off to contractors.

The issues are the jobs and economic inequality.

Send me an e-mail.
Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.

Read their lips, no new taxes — on the rich; the rest of you, you’re on your own

The Republican plan for addressing the long-term deficit can be summed up this way: Leave the rich alone and pass along the costs to the rest of us.

As Ryan Grimm of the Huffington Post reports:

Rep. Paul Ryan (R-Wis.) said on Sunday that House Republicans would oppose President Barack Obama’s payroll tax cuts for both employers and employees, arguing that the policy had already failed to provide a sufficient boost to the economy. “It hasn’t worked,” Ryan said, suggesting the current temporary tax cut should be allowed to expire, which will amount to a 50 percent tax hike on workers making less than $106,000 per year.

He also said he opposes the president’s proposal to require millionaires to pay the same tax rate as the middle class, known as the Buffett plan. “Class warfare might make for good politics, but it makes for rotten economics,” Ryan said.

Again, to sum things up: Raise taxes on the middle class and oppose any hike in taxes for the rich. And gut so-called entitlement programs.

Send me an e-mail.
Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.

Do the math

Today’s math lesson comes to us, courtesty of Daniel Froomkin at Huffington Post. As he points out:

The Big Five oil companies this week announced they had made a whopping $36 billion in profits in the second quarter of 2011.

Here’s the second-quarter profit tally:

ExxonMobil, $10.7 billion
Shell, $8.7 billion
Chevron, $7.7 billion
BP, $5.6 billion
Conoco Philips, $3.4 billion

These are astonishing numbers when you consider that our economy is locked in a massive stall — and it should make the folks realize that budget reform is possible and that it can come without shredding the programs and services that the poor and middle class have come to rely on.

What do these obscene profits have to do with the deficit discussions currently paralyzing Washington? The oil industry gets “$4 billion to $8 billion a year in deficit-increasing tax subsidies” that remain in place, as Froomkin says, “the incentives those subsidies were designed to create ceased to make economic sense.”

The subsidies should end — and could, given their profits, without much pain to the oil industry.

But that would be bad form, right, given the amount the industry spends on the political process. I mean, if you pay to get a politician elected you have every right to expect him to do your bidding. Right?

Send me an e-mail.
Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.

A deficit of sound judgment

Can anyone tell me what is wrong with the lede paragraph in this allegedly unbiased news story in The New York Times?

I’ll give you a hint: The Times reporters apparently have made up their minds on the value of the Simpson-Bowles commission’s suggestions, positioning “fiscal health” as a long-term good, while casting critics of both tax hikes and/or spending cuts as fearful of their short-term political health.

Here is the lede:

The chairmen of President Obama’s debt-reduction commission have been unable to win support from any of the panel’s elected officials for their proposed spending cuts and tax increases, underscoring the reluctance of both parties to risk short-term political backlash in pursuit of the nation’s long-term fiscal health.

The problem, however, is not the politics so much as the lack of consensus on addressing long-term budget deficits — especially when the remedies being offered as skewed against the middle class and poor and favor those with the cash.

Mainstream Washington might be fixated on the deficit (at a time of high unemployment, a fact that boggles the mind), but there are economists willing to challenge the capital consensus. Dean Baker, at the Center for Economic and Policy Research, a populist liberal economist, questions the basic assumptions on which the battle to beat the deficit is built:

The fundamental premise of the commission is that the country suffers from serious deficit problems that Congress is unable to address through its normal processes. This view does not correspond with the facts as can be easily shown.

There has been no explosion of spending whatsoever. This is entirely an invention of those with their own agenda. The Congressional Budget Office shows that non-interest spending was 19.8 percent of GDP in 1980. Its analysis of President Obama’s 2011 budget projects that non-interest spending will be 21.1 percent of spending in 2020. This means that in 40 years, spending other than interest will have increased by just 1.3 percentage points of GDP.

Rather than being a cause for concern, the rise in the deficit in the downturn has been essential for sustaining demand in the economy. Annual demand in the private sector has fallen by more than $1.2 trillion as a result of the collapse of the bubbles in residential and non-residential real estate. This led to a plunge in construction and also consumption that was driven by housing bubble wealth. Remarkably, the co-chairs of the commission never seemed to have considered a tax on the financial sector as a source of revenue (a policy that is even recommended by the IMF), in spite of the fact that it was largely responsible for the current crisis.

The projections of longer-term budget problems are almost entirely due to a projected explosion in health care costs. The United States already pays more than twice as much per person for its health care as other wealthy countries with the same or longer life expectancies. This ratio is projected to rise to three and four to one in the decades ahead.

However, rather than honestly discuss the problems of the U.S. health care system, Simpson and Bowles have used the projections of exploding health care costs as an argument for gutting Medicare and Medicaid, leaving tens of millions at risk of not being able to afford health care.

And then there is Robert Reich, a former Clinton labor secretary, who included the anticipated release of the deficit commission report tomorrow in a post called “National Fiscal Hypocrisy Week“:

Finally, on Wednesday, the President’s deficit commission will issue a report on how to reduce the nation’s long-term deficit. The initial draft was regressive — cutting $3 of spending for every $1 of tax increase, and decimating the Earned Income Tax Credit, among other things.

The best outcome would be a unanimous report that focused on taming rising health-care costs (see first item above), rejected Republican calls to extend the Bush tax cuts for the wealthy (see second item above), and supported extending unemployment benefits for the long-term jobless and a new WPA (third item). Ideally, the report would also call for new investments in infrastructure and education that would grow the economy and thereby shrink the deficit as a share of GDP.

Likelihood, zero.

And that pretty much sums up the likelihood of this plan making a difference in the deficit.

Send me an e-mail.
Read poetry at The Subterranean.
Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
Suburban Pastoral, a chapbook by Hank Kalet, available here.