Friday, December 9, 2011

The rich like socialism so much that they don't want to share

The EU is moving toward a Federal system with today’s vote in favor the Fiscal Discipline Treaty by all 17 Euro zone countries, and the likely acceptance by the rest of the EU nations except the UK. The British PM said the treaty wasn’t in the best interest of the London banks. It’s pretty obvious who David Cameron works for. This begs the question of whether this means the EU intends to rein in its banks, or are the banks reining in the EU? With Greece and Italy already being run by un-elected bankers instead of elected prime ministers, I guess we know.

More cynical observers are saying that German Chancellor Angela Merkel has accomplished with bankers what Chancellor Hitler could not do with Panzer tanks. Since the European Central Bank thinks this new stranglehold on the weaker EU countries is a grand idea, it would appear the cynical view would be the correct one. Now that the peripheral European countries are under the thumb of the German banks, and are being forced to accept grinding austerity, you can look for low wage manufacturing jobs to move to these countries from China.

Here at home the number of Initial Unemployment claims dropped sharply by 23,000 last week to 381,000. This is well below the magic 400,000 number indicating jobs are being created. BUT, this was a so-called “seasonally adjusted” number. The real number jumped by 150,000 to 525,000. Still this is 60,000 less than a comparable week this time last year. Since we are living in those proverbial “interesting times” it’s hard to know what to make of these numbers.

For the good news: Obamacare had one of its most important features kick in a week ago today. From now on insurance companies must spend 80% to 85% of premiums on healthcare instead of the common 60% with the rest going to profits, multi-million dollar salaries and corporate bureaucrats to kill you with neglect. The 85% rate applies to large group plans the 80% rate to individuals and small groups. They can no longer refuse adults for pre-existing conditions but individuals not in a group can be charged more until the “mandate” kicks in.

The Republicans have been screeching about the mandate as if it were a tax increase or your that rights are being taken away. It’s neither. You will simply get a tax deduction if you have insurance the same way you get a tax deduction for having a home mortgage. What the Republicans are actually upset about is something else entirely. Remember the whole idea of mandating insurance was originally a Republican idea (a gravy train for the insurance industry).

What they are really upset about (besides limiting profits) is how the Obama plan is to be paid for; by a 3.75% tax on income in excess of $250,000. That income level puts you in the top 2% of earners. But what really frosts them is there are no exceptions for how the money is “earned”. Wall Street pirates can’t get out of paying it, those billionaires that Obama spoke of who are only paying one percent will have their taxes quintupled. (oh the humanity!)

Now for the best part of all this: under the requirement to spend 80-85% on patient care, there is no longer any incentive to withhold treatment. Any leftover money must rebated to policy holders, so the more healthcare the companies provide the more dollars they get to keep. No more having a clerk in India poring over your records to find an excuse to dump you. Need an expensive procedure? The more the merrier.

There is of course the problem of bill padding and the practice of unnecessary medical procedures that this would create an incentive for. This is the reason for government regulations on the quality of care and determining the effectiveness of medical procedures, what the Republicans call death panels. They never mention that rich Republicans all go to the few hospitals like the Mayo Clinic that don’t do “fee for service” care.  These hospitals pay all of their Doctors the same salary with bonuses for successful outcomes.

It seems the rich don’t like having unnecessary, painful and ultimately life shortening procedures done to them. They’re just fine with that being done to you and making you pay through the nose for it. We peasants live and die under the capitalist system while they go to the “socialist” hospitals. Now we get some of that socialism, and the rich through their Republican shills will do anything possible to take it away.

Tuesday, December 6, 2011

Then it can happen, then it will happen

President Obama journeyed to Osawatomie, Kansas on Air Force One to essentially repeat a speech made by another President who traveled there by steam train. Actually, by 1910 Teddy Roosevelt had been voted out of office for being socialist. While many things have changed since then, the first powered flight happened during Roosevelt’s term and it covered less ground than the foot print of Presidential plane, we find ourselves in many ways worse off than the gilded age TRR railed against in his speech.

Roosevelt demanded the end of child labor, higher wages for men and even a minimum wage for women. He wanted laws to protect workers from injury and sickness. After a century we are on the verge of this all being reversed by a President Newt who now leads Romney 2 to 1 in Iowa. TRR wanted a living wage for every man, something the majority of Americans no longer have and soon this will be a luxury exclusively for the one percent.

You could say Obama is simply trying to define himself as a Progressive to win the votes of the middle class, and he mentioned them 25 times in his speech today. Contrast this with the advice of right wing propagandist Frank Luntz to Republicans to never mention the “middle class, call them hard working Americans instead“; never say “capitalism”; never talk about “taxing the rich”; Wall Street’s hundreds of billions in bonuses are now “pay for performance”. Calling it pirate booty would be more accurate.

If you want to make the argument that Obama is just another shill for Wall Street then why would he say such dangerous things out loud from the “bully pulpit” that TRR had a penchant for breaking up monopolies. No US President has spoken openly of such a thing in decades. It’s true that Obama didn’t actually call for this, but he did lay out the part of the Dodd - Frank Act that will break up any large bank or corporation that threatens the financial stability of the nation instead of bailing them out.

Obama talked about billionaires who only pay one percent income tax and this is something you never hear on the corporate news. About CEOs that make 110 times the pay of workers. Remember Frank Luntz calls this “pay for performance”, that wasn’t the tone of Obama’s speech but from the President tone matters.

To be sure, a speech is just words but when the POTUS says things like this it shapes the public discourse and can inspire voters to look for candidates that might make this happen. Republicans brought us the Cold War this way, and hot wars around the world as well. They brought us trickle down economics, free trade and the endless war on terror this way.

This President is talking the talk of the 99%. If he’s doing it only to get re-elected, so what? It only matters that the 99%, the real 99%, not just a handful of protesters at the Occupy sites start talking this way. Then it can happen, then it will happen.  [full text of the speech at]

THE PRESIDENT: Well, I want to start by thanking a few folks who’ve joined us today. We’ve got the mayor of Osawatomie, Phil Dudley is here. (Applause.) We have your superintendent Gary French in the house. (Applause.) And we have the principal of Osawatomie High, Doug Chisam. (Applause.) And I have brought your former governor, who is doing now an outstanding job as Secretary of Health and Human Services -- Kathleen Sebelius is in the house. (Applause.) We love Kathleen.

Well, it is great to be back in the state of Tex -- (laughter) -- state of Kansas. I was giving Bill Self a hard time, he was here a while back. As many of you know, I have roots here. (Applause.) I’m sure you’re all familiar with the Obamas of Osawatomie. (Laughter.) Actually, I like to say that I got my name from my father, but I got my accent -- and my values -- from my mother. (Applause.) She was born in Wichita. (Applause.) Her mother grew up in Augusta. Her father was from El Dorado. So my Kansas roots run deep.

My grandparents served during World War II. He was a soldier in Patton’s Army; she was a worker on a bomber assembly line. And together, they shared the optimism of a nation that triumphed over the Great Depression and over fascism. They believed in an America where hard work paid off, and responsibility was rewarded, and anyone could make it if they tried -- no matter who you were, no matter where you came from, no matter how you started out. (Applause.)

And these values gave rise to the largest middle class and the strongest economy that the world has ever known. It was here in America that the most productive workers, the most innovative companies turned out the best products on Earth. And you know what? Every American shared in that pride and in that success -- from those in the executive suites to those in middle management to those on the factory floor. (Applause.) So you could have some confidence that if you gave it your all, you’d take enough home to raise your family and send your kids to school and have your health care covered, put a little away for retirement.

Sunday, December 4, 2011

Ever wonder how the Republicans destroyed the economy? Some numbers

It seems a mystery as to why the economy is so sluggish (other than the Republicans like it that way) but there are actual numbers available now to show how they are doing it. First the history: we were really destined to drop into a really serious depression after Reagan's massive tax cuts and the huge downward pressure on wages that he created. The stock market crash and the collapse of commercial real estate after the S&L looting nearly did us in, but Reagan held it all at bay by spending trillions of borrowed dollars. Money borrowed from the very same rich people who were no longer paying taxes, it’s what conservatives like to call “wealth transfer” except when it’s going from the poor and middle class to the already wealthy, then it’s called “fiscal conservatism“.

The reason we didn't have the Republican Great Depression in the 90s was that Allan Greenspan set about creating a series of bubbles: dot com and such crap as that, Clinton raising taxes helped but that wasn’t really enough. Then Greenspan and GW Bush created the housing bubble, Greenspan made the cash available and Bush killed all regulations on lending.

This scheme also took advantage of  so-called investment “deregulation and modernization” done by the Republicans under Bill Clinton’s signature. This allowed them to securitize the debt that was created so that they could bilk investors on the debt itself, and sell derivatives that allowed the banks to bet against their own securities. This wasn't the only thing they were doing but is relevant to this point.

We really need about $18 trillion/year in GDP just to maintain our middle class based economy. Under Bush this was achieved with 14 trillion in actual GDP plus another 4 trillion a year in new consumer debt for an effective $18 trillion GDP. Currently this debt is being de-leveraged (either paid down or defaulted on) at about 2 trillion a year. So instead of an $18 trillion economy we now have a 14 trillion minus 2 trillion or a $12 trillion economy. This is what has created 14 million permanently unemployed people.

This economic strategy works just fine for everybody, except the 99.9% who are screwed. To get the debt down a point where the economy stabilizes at this rate will take about 10 years. This doesn’t take into account anything else the Republicans might do. The austerity they have been pushing at the state and local levels is just making it all worse of course. If they are able to do that at the Federal level things will go down hill fast.

Speaking of things going downhill, the number of students receiving subsidized lunches rose to 21 million last school year from 18 million in 2006-7, a 17 percent increase in the USDA meals program. Eleven states, including Florida, Nevada, New Jersey and Tennessee, had four-year increases of 25 percent or more. Over the previous 30 years as we saw the gradual decline of the middle class, the program had only incremental growth from year to year. These new numbers are only for the last school year ending in June, and don’t reflect the worsening situation this fall.

So even as some Americans go back to work their wages are being cut drastically, and this also cuts into the GDP as 70% of the economy is consumer spending. Traditionally when consumer spending lags, the government steps in to make up the difference. Even in ancient times if there were an excess of beggars outside the castle the king would launch some sort of building project to put coin of the realm into circulation, or just start a war if he was a conservative king.

We are currently in the midst of a war with a slight twist, I mean besides the ones overseas. The rich are making war on the rest of us to loot and pillage the wealth of 99.9%. We were supposed to be distracted by the endless war on Terror but people are starting to notice. The Republicans think it might work for them to start a war with Iran to keep us busy, “we’ve always been at war with South Asia”.