Friday, April 29, 2011

A Liquidity Trap is a Liquidity Trap

Mark Thoma post Paul Krugman’s column today in the NYT castigating the Fed for not doing more to help the unemployed.

Now Krugman is unquestionably the best and brightest.  However, with respect to monetary policy he has two themes.  One is that the U. S. is in the classic liquidity trap and the second is that the Bernanke and the Fed need to do more to stimulate the economy.

These two positions are self-contradictory.  A monetary trap means that monetary policy cannot be effective, that increasing the money supply and bank reserves just increases liquidity and holdings.  Krugman’s conclusion is that the Fed is hesitant to act because of the anti-Fed position of Rep. Ron Paul (R, Tx) who is now in a position of authority.  This is incorrect, the Fed simply can do no more.

Thursday, April 28, 2011

And In Other News . . .

With Democrats like these who needs Republicans . . .?

Do I hear $50 billion in cuts to social programs, $100 billion, $150 billion, going, going gone, social programs that help the poor, the elderly and the sick in a neighborhood near you.

GE is doing very nicely now that they have realized they make money by making things, not by being in the Finance business (Full Disclosure:  The Dismal Political Economist has GE stock and bonds.  The Dismal Political Economist is not stupid).

Greece is barreling towards restructuring their debt.  That’s “restructuring” as in defaulting.  The likely solution will be to extend maturities, which will technically be a default but still leave Greeks on the hook for the interest and principal.  European banks will still be able to record their investments in Greek debt at face value.

The growth in the U. S. economy slowed to 1.8% in the first quarter, but a lot of so-called experts are not worried, and say the results were from winter related activity.  We guess they do not understand the concept of seasonally adjusted economic growth.

CBS Reporter Lara Logan is apparently going to discuss her assault by a mob in Egypt on 60 Minutes.  Afterwards expect Sarah Palin to make a comment about the lame stream media.

A failed development project in New Jersey has gotten a new life,

reports the NY Times, thanks in part to state financial support from Gov. Christie.  Yes, that Gov. Christie, the one  who is the hero of the right wing group that wants to cut  government spending on education and frivolous things like that.  Seems the Governor has plenty of money to give to a private investor.

Unbelieveable, here is the report from the Times

Although the Christie administration once described Xanadu as a “failed business model,” the governor asked a close adviser, Jon F. Hanson, to try to resuscitate the project. The administration is offering a financing package of $180 million to $200 million, with the developer able to use most of the sales taxes they collect to repay the loan, rather than contributing the money to the state budget.

Wednesday, April 27, 2011

The War on the Poor, the Elderly and the Sick . . .

An opening salvo in the war against the poor, the elderly and the sick has been fired in conservative Florida.  The legislature is poised to change Medicaid from a “for fee” system into a system of managed care.

The idea is to stop the excessive growth in Medicaid costs, but in Florida the real objective is to increase profits of private health care companies (the current Governor was once head of a large for profit health care company) and to deny basic care to the poor, the sick and the elderly who benefit from Medicaid.

An interesting point is that in theory the movement to managed care can be a good idea.  Paying organizations to provide comprehensive medical care for Medicaid recipients on a fixed payment basis, and allowing Medicaid recipients the choice in provider organizations (and having an independent review board to prevent abuse) could be successful.  In Florida, however, the idea is to turn over Medicaid patients and a great deal of money to unregulated medical providers. 

It will be a like a gold mine, the companies get the gold and the patients get the shaft.

Today in Weird . . .

Economic growth in the U. K. was just released, and gosh, it does not look good.  Of course, this was to be expected since the U. K. is pursuing policy to reduce growth.  The only people surprised are those who think that cutting government spending and raising taxes stimulates an economy.  In the U. K. these are known as the Conservative Party.

The WSJ has a commentary by Seth Lipsky that even by WSJ standards is incomprehensible.

And in another column Betsey McCaughey writes about the virtues of the Ryan Plan for Medicare, or we should say for the demise of Medicare.  She notes

The Ryan proposal also includes a $7,800 annual medical savings account to help low-income seniors with out-of-pocket costs. Amazingly, the CBO analysts exclude this $7,800 benefit from their calculations. Their warning about low-income seniors suffering is baseless

Yes, low income seniors are sure to have $7,800 just sitting around to go into a MSA. 

Ford is doing very well, thank you and its CEO Alan Mulally is set to get about $200 million in bonus compensation. (WSJ, April 27, 2011)   Normally this level of compensation is never justified, but this may be the case where it is. 

The Headline in the WSJ is that Afghan President Karzai is being told to dump the U. S. an ally with Pakistan and China.  Please Mr. Karzai, listen to this.

The sale of the New York Stock Exchange is still not settled.  Really, who knew you culd buy a stock exchange?

Tuesday, April 26, 2011

In Today's WSJ

In the editorial section Roger Goodell, Commissioner of the NFL makes his case for the owner’s position in the collective bargaining dispute with the players.  According to Goodell, everything the owner’s want is for the good of the game and the players, and if the players win everything will be destroyed.

Now thanks to the publicity on this issue we all know what the Owner’s want.  More money.  And since this is a zero sum game, the owner’s can only get more money if the players get less.  Really, it’s that simple.  And Mr. Goodell would get a whole lot more respect if  he would just say as much.

Now such an admission might reveal the fact that some of the owner’s are just greedy billionaires, living off of publicly funded facilities, but then we really already know that.

The front page headline is that hedge fund managers are moving away from Obama and giving money to Republicans.  Gee, in the last two years they have made zillions of dollars and the stock market has done very well.  I guess they just do not remember that Crash that took place during the last Republican administration. 

A full page ad in the Journal by something called Defeat the Debt cites John Galt.  John Galt is a fictional character.

Another headline says the Fed is sweating about a news conference.  If you had their record you’d be drenched.

According to another story, the Tea Party is actively working against funding education.  You wonder if there is any program that benefits society that they are willing to support.  Oh yes, tax cuts for the wealthy.  Wait a minute, that benefits only the wealthy. 

Monday, April 25, 2011

Republicans 2012

Conventional Wisdom is Wrong

At the beginning of the year there were six potentially viable candidates for the Republican Presidential Nomination.  They were Mitt Romney, Tim Pawlenty, Sarah Palin, Mike Huckabee, Mitch Daniels and Haley Barbour.  A lesser group with little chance included Newt, Rick Santorum, Jon Huntsman, Ron Paul and about everyone else who works for Fox News.

Conventional Wisdom is that the race for the nomination is completely open.  Conventional Wisdom is wrong.

Barbour has just dropped out, citing honestly the fact that he just does not that fire in his belly.  Daniels doesn’t either, but enjoys the publicity.  Huckabee seems happy in his private life, and does not look like a candidate for public office ever again.  Palin’s priorities are (1) making money, (2) publicity, (3) adoration and (4) giving a prime time speech at the Republican Convention.  She has not started any serious effort to campaign, and though her startup process would be very short, it doesn’t look like it is going to happen.

So we are left with essentially a two person race, Romney and Pawlenty.  Romney must clearly be the favorite, and Pawlenty is doing him an enormous favor by tacking to his right, making Romney look far more moderate than he is, which will better position him for the general election.  The leading VP candidate is Senator Rubio of Florda, although Jeb Bush would do nicely in his place except for his last name.

Romney and Rubio, campaigning on a slogan of “America Needs a Little R and R”.  Their chances, better than you think, better than 50-50. 

OMG A Conservative is Right!

Paul Clement, a conservative lawyer in the Bush administration has just left the law firm that was defending the DOMA because the firm will not longer defend the indefensible. 

Clement is joining a conservative based law firm, and stated that his resignation was due to the fact that lawyers must defend unpopular laws, that is what they do. 

You know, he’s right.

Conservatives Think We Are Stupid

The Heritage Foundation Attacks . . .

One of the most bizarre aspects of the Ryan Proposal was the analysis performed by the Heritage Foundation, a conservative think tank funded, we suppose by conservatives, who found that the Plan cured every economic ill.  It immediately reduced the unemployment rate, brought federal spending under control, providing huge tax relief, primarily for high income individuals and large corporations, and it even found a way for the Chicago Cubs to win the World Series (ok, we are making that last one up).

As near as we can tell no serious independent economic analysis supported the conclusions, and some like Paul Krugman provided a strong, principled and logical attack on the results of the Heritage Foundation analysis.  As a result, the Heritage Foundation has now attacked Mr. Krugman in a very personal way.

Now Mr. Krugman is very capable of defending himself, if indeed he even feels the need to do so.  It should be pointed out, however, that one key element of the Heritage analysis was an eventual unemployment rate that is almost impossible for the U. S. economy to attain.  When this was pointed out, the Heritage study immediately replaced the rate with a higher rate, and stated nothing else changed.

Now this is impossible.  Macroeconomic structure is such that if one key variable changes, all others change.  If the unemployment rate goes up, income goes down, investment goes down, tax revenues go down, unemployment insurance spending goes up etc.  To asset otherwise, as the Heritage Foundation has done, is to invite the very ridicule that they are railing against.

Low Interest Rates Don't Work

Don’t Listen to Monetary Policy Experts

The NYT among others is reporting that economists are disappointed that expansionary monetary policy did not have much effect on expanding the economy.

Outside of the mainstream economics profession, this was to be expected.  Low interest rates have limited value in stimulating an economy, Aggregate Demand, the total demand for goods and services is the key factor.  Without sufficient demand, no matter how low interest rates go they will not cause investment which is the key to economic growth.

Keynes wrote about this decades ago, it is called the liquidity trap.  Low interest rates and increased bank reserves just build up, and do not enter the economy.  Hence the need for fiscal policy, primarily in the form of government spending which creates demand for goods and services, increases consumer incomes and gets the economy going.

As usual, we know the cures for the problems of the U. S. economy, there is just not the political will do invoke them.

Just Thinking . . .

Random Thoughts April 25, 2011

The WP has an article about comedy acts whose subject is Conservatives and the Tea Party.

The amazing thing is that there is something about funny about them.

Ross Douthat has a column in the NYT on the existence of Hell, or lack thereof.

Really, he does.  And the NYT wants people to pay for access to this stuff?  Astounding.

Mitch Daniels is having trouble making up his mind on whether or not to run for the Republican nomination for President.  Maybe if he consulted the polls he would get a clue.

Mayor Mike Bloomberg of NY City does not want any more taxes on the wealthy.  This is a rare wrong recommendation from someone who otherwise is a pretty appealing politician.  No serious commentator suggest the budget can be balanced by solely increasing taxes on the rich, but given the huge shift in income to the wealthy shouldn’t they kick in a little bit more?

Bloomberg also wants the President to be nicer to Republicans.  Gosh, I guess so, they have been so nice to him.

Sunday, April 24, 2011

Believe it or Don't

More This Week in Stupid

In California there is a huge budget crisis, and the newly elected Governor campaigned on the idea that the deficit would be closed by equal cuts in spending and tax increases.  He also said that he would take the issue to the people, that is, have a vote on whether or not to raises taxes or to balance the budget solely by spending cuts.

The Governor appears to have convinced a large majority of his citizens that his plan for a vote is a good one, and his plan to raise taxes as part of the solution is a good one.

So what do Radical Conservatives want to do.  Well they want to block an election, and can do so because they have enough votes in the legislature where a super majority is required to schedule the vote.  Seems like they just do not get this Democracy thing.

Believe It or Don't

This Week in Stupid


comes this from Sen. Tom Coburn (R)

the Oklahoma Republican asked on “Meet the Press.” “We’re not talking about raising tax rates at all.

about the Gang of Six bi-partisan plan.  So this is the great bi-partisan compromise the Democratic members are negotiating.  Of course “reforming entitlements” is on the table, which means cutting Medicare, Medicaid and Social Security.

How stupid to they think we are?

A Lesson From Europe for the Democrats, But Will They Learn?

One should pay attention to politics outside the U. S. occasionally, for there are some lessons to be learned.

Third parties in Germany and England have recently come into coalition governments.  In Germany the Free Democratic party, a center right group that could be considered a version of the low tax, low spending wing of the Republican party in the U. S.  has been in a coalition ruling government.  In England the Liberal Democrats, a center left party has joined the Conservatives in forming a government.

Each of the parties were significant, but small parts of the overall political structure, and each believed that by joining a coalition government they would get their place in the sun and become a major party.  Each was wrong.  In Germany the Free Democrats have had electoral disasters in state elections, and in Britain the Liberal Democrats have sunk in the polls like a Division I team losing to a Division II team.  The question is why?

The answer is that each party gave up its independence and many of its core values  to accept a role in the government, and voters have a limit as to how much hypocrisy they will accept.  In England the situation is particularly perverse.  The Lib Dems extracted as a price for joining the government a referendum on changing the electoral process from winner take all to a second choice system where if your first choice is not in the running your second choice becomes the vote.  Their partners in the Government, agreed to referendum, but did not agree to support the change, and so now you have the spectacle of the two coalition partners on opposite sides of a very major issue. 

Needless to say, it does not look like it will end well for the Lib Dems.  The lesson for Democrats.  Stick to your values, voters may disagree but you will get their respect.  Change your values to get votes, you lose the respect and you don’t get the votes.

Today's in Weird . . .

Random Thoughts April 24, 2011

The economic scene is now shifting to the debt ceiling issue.  For reasons no one understands the U. S. has a law limiting how much debt can be outstanding.  One must assume that the powers that be thought that if you limited debt by law, that would limit the amount of debt.  Of course, all it means is that every now and then the debt limit must be raised to accommodate the increased borrowings of a government running a deficit.

Politico has a story about what kind of deal Obama can make to get the debt ceiling passed.

The story itself is indicative of the problem.  There should be no deal.  By continuing to allow Conservatives to extort concessions on spending on social programs Obama just encourages more demands for more concessions.  The simple solution is for Obama to say plainly that Congress should raise the debt ceiling, period.  Faced with resolve, Conservative’s would cave.  Of course, such a position would conflict with the President’s belief in bi-partisanship, a belief so lacking in empirical support that it is only held up by faith based politics.

In international finance the focus is now shifting to re-structuring the Greek debt.  For those not schooled in the nuance of finance, this means how can Greece default on its sovereign debt without disturbing too many people and banks who own the debt.

In Singapore they have a unique way of having both a democracy and one party rule.

It seems a district is created with multiple representatives, and whichever party wins the district gets a win for all the representatives in that district.  It like, if Republicans win a majority of votes in Ohio, all House and Senate members in Ohio are the Republicans.  Before you get too smug about this system, check out what happens if there is a tie in the Electoral College.

And Donald Trump continues to attract international attention.

Where’s Sarah Palin when you need her.

Boston is sending tax bills to tax exempt organizations asking them to help out with paying for the public services they get. 

Well the Harvard endowment is down to $20 billion or so, so good luck with that (yeah, we know, Harvard is in Cambridge, but they make a great example anyway)

Jeff Jacoby has a great column in the Boston Globe about how the requirements for being a good candidate for President are different from the requirements of being a good President. 

The current and past holders of the office prove the point.

Saturday, April 23, 2011

In Today's Musings . . .

Random Thoughts April 23, 2011

Several news organizations are reporting that GM will soon regain its spot as the number one car manufacturer in the U. S.  Let’s see, the Obama policy of rescuing  Gm resulted in saving the company, savings hundreds of thousands of jobs, keeping the auto industry more competitive and it all cost less than bailing out AIG.  Exactly why do Radical Conservatives have a problem with this?

The resignation of Nevada Sen. John Ensign (R) was apparently motivated by the desire not to have his ethics issues made public.  Just another example of how the party that espouses family values doesn’t seem to have any.

The WSJ has a report that Americans spend about $1.2 trillion in things they don’t need (actually a non-scientific Commerce Department report).  Gosh, and the Federal Deficit is $1.2 trillion (more or less).

The U. S. dollar continues to weaken and this is actually a good thing despite the name.  A weaker dollar stimulates U. S. exports and makes imports more expensive, thus increasing Aggregate Demand, which is the engine that drives the economy.  In the long run a weaker dollar can lead to inflation and higher interest rates, but in the short term the U. S. economy needs the weak dollar.  We’ll deal with the long term effects later.

Besides, any economic policy that results in criticism from Europe, Asia and South America must be right.

The Financial Times reports that Obama is being blamed by the public for the bad economy.

 Let’s see, Obama is forced by Radical Conservatives to implement policy he did not support, and then is blamed when that policy does not result in as strong an economy as expected.  Of course, had Obama stood firm for his principles he would have a stronger economy and stronger approval.  Let’s see if he learned this in the coming debate on the debt ceiling.

Friday, April 22, 2011

No Mr. Ryan, We Do Not Need to Destroy Medicare to Save It

We Know How to Fix the Health Care System . . .

Costs can only be reduced by changing health care delivery in the U. S.  One must first start by recognizing that costs are one side of an equation, the other side being income to health care institutions and health care providers.  An increase in costs to a health care patient (consumer) is an increase in income to the health care system.  Obviously under a “Pay for Procedure” system the incentives for the health care system is to increase costs (income) and given that patients pay primarily on a fixed costs basis, there is no corresponding incentive to decrease costs.  Third party insurers (private health care plans, Medicare, etc) are caught in the middle of an unsustainable system.

The only solution is to restructure the system so that health care providers and health care institutions receive fix payments for providing health care.  Since increased income to providers and institutions could only come from reducing costs, under this system incentives would shift 180 degrees, from trying to increase costs to trying to decrease costs.  Here’s an example, which government could implement immediately for its Medicare and Medicaid clients.

Medicare and Medicaid recipients would have the choice each year to enroll with one of many health care alliances that would be formed to provide care for Medicare and Medicaid  recipients.  The alliance might be a large physician group allied with a hospital, a hospital allied with several physician groups, a hospital with employee/physicians, an insurance company that formed an alliance and so forth.  For each Medicare recipient who selected a specific alliance, that alliance would get $X per year (say $15,000) to provide all the health care needs for the recipient.  This payment would be the same for all patients, regardless of their health or age and an alliance could not discriminate.   A small deductible and co-pays would be necessary to prevent abuse by patients, the same as we have now. 

Once the alliance had this payment its incentive would be to reduce costs to increase profits and keep as much of the $15,000 per enrollee as possible.  Even more important, it would have a wellness incentive, an incentive to keep its enrollees in good health.  The government would get out of the business of deciding on treatments or setting reimbursement rates.  The alliance would be a driving force for efficiency and productivity and innovation in health care.  Once established, alliances would seek to enroll private employer groups, thus gaining even more economies of scale.

In order to prevent patient abuse and lack of care, enrollees would have the choice each year of switching to a different alliance, thus requiring alliances to compete on service for enrollees.  Additional safeguards such as an appeals group could be set up to decide a care dispute between an enrollee and an alliance if an enrollee felt he or she was being denied adequate treatment.

This requires physicians in particular to stop becoming entrepreneurs and become employee/doctors, which is what they should be.  They could still make huge amounts of money, it’s just that they would be doing so by keeping cost increases low and keeping patients well.  If they wanted to be entrepreneurs, there is nothing to stop them from organizing an alliance.

Today in History . . .

Random Thoughts April 22, 2011

Lindsay Lohan is still in the news.  Why?

With John Ensign resigning from the Senate the Democrats lose one more chance to take over a Republican seat.  Ensign was not running for re-election but his presence would have been a negative factor for the Republican nominee.  Now with an incumbent Republican running in 2012 the seat is probably safe.  The only other Democratic pickup was in Mass., but the question there, like in Texas is not whether or not the Democrat will win, but whether or not they even will field a credible candidate.

John McCain is in Libya.  We’re sorry, we thought he lost the election.

Toyota says normal production of autos in Japan is months away.  You see, when you do not have effective regulation you can cause a lot of problems for a business.

We read the WSJ editorial pages so you don’t have to.  Karl Rove says that Republicans can win in the debt ceiling vote if they stick together and enforce their demands.  He’s wrong.  The Republicans can win only if Obama caves, again. 

Pawlenty and Gingrich are the latest Republicans to run away from Paul Ryan’s Medicare Plan.  Mitt Romney says he can go either way on the issue, and expects that during the campaign he will be both for and against the Plan.

Paul Caron has the best tax blog on the Net.  See it here

Wednesday, April 20, 2011

Who's Against Child Nutrition?

Looking the Gift Horse in the Mouth, And Taking the Food Out of It.

Let’s say you are a large urban school district.  Let’s say a world renown chef want to come into your district, inspect you school lunch program and offer suggestions and ideas on how to make the lunches healthier.  What do you do?

Well a normal person would say “great”, and join enthusiastically with the chef.  Of course, normal does not apply to school officials, who often want to hide everything from the public.  So in the Los Angeles School District when Jamie Oliver came calling that’s what they tried at first.  Now it looks like he might at least get a look.

You wouldn’t think increasing child nutrition would be a difficult choice to make would you?

Today . . .

Random Thoughts April 20, 2011

The demand for pecans by the Chinese is driving the price of the nuts up substantially above prices just paid a year ago.  Now this is hardly newsworthy, except that it stands for what is happening with inflation at a global level.  Many macro economists are forecasting very low inflation for the U. S. because of weak aggregate demand for the domestic economy.  However world wide demand is becoming more and more of a factor in domestic inflation, just ask the person eating that pecan pie next to you.

We may well face the worst of both worlds, a high unemployment rate and rising inflation.  The weaker dollar will certainly be a factor.  In this case monetary policy will move towards raising interest rates, which of course will have little impact since it is not attacking the cause of the inflation.  It will, however, reduce employment.  Like many policy prescriptions by the “experts”, it will only make things worse.

A Gang of Six Senators is quietly working on a solution to the debt crisis.  We say quietly, because they know and we know that as soon as they actually propose something the ideas will be dismissed by powerful political forces.  Another name for the Gang of Six is “Useful Idiots”.  Useful, because they give the impression of being serious about the deficit, idiots, because they may actually feel they can get a bi-partisan deal that includes raising taxes.

Greece is saving they do not have to restructure their debt.  Now it is important that everyone know that the term restructuring is a code word for default.  You restructure your debt after you default on the payments due.  Why use the euphemism?  Well using the real term just scares the crap out everyone.

California has passed a law that requires one third of its energy to come from renewable sources by 2020.    Right.  Once again the citizens of that state will have to learn that just passing a law to require something don’t mean it will happen.  What if it doesn’t?  Well according to the Supreme Court corporations are people so I guess we will just have to jail em.

Tuesday, April 19, 2011

Today . . .

Random Thoughts April 19, 2011

The Race to the Bottom continues.  The LA Times reports on bi-partisan support for cutting the corporate tax rate.

It seems corporations want to be people, as in the Supreme Court ruling declaring them just so, but don’t want to pay the taxes people pay.

How to pay for a corporate tax reduction, hmm, how about cutting Medicare!

A Gun Carried by a 6 Year Old  to school went off and apparently hurt someone.  The NRA said this is just another reason why elementary school students should have guns to protect themselves at school.

Monday, April 18, 2011

Today . . .

Random Thoughts April 18, 2011

The candidacy or potential candidacy of Donald Trump is providing a benefit to the Republicans.  It is deflecting examination of more serious candidates.  Mitt Romney knows that the less the media looks at him, the better it is.  Of course, one of these days they will look at him.  It will not e pretty.

Goodluck Jonathan was re-elected President of Nigeria.  Good luck Jonathan.

Alan Greenspan  wants to know why we have a debt ceiling law.  Maybe its to try to control people like him who supported tax cuts which put the U. S. in a huge deficit position. 

The WSJ  is reporting that the government is in a hurry to sell it stake in GM.  Wait a minute, that’s not the socialism we are told that Obama is pursuing.  Of course, given the rise in the stock market since Obama became President, maybe some of those capitalists are re-thinking their position on socialism.

The Pulitzer Prizes were just announced.  We didn’t win again.   Here is comes again.

Mitt Romney has still not produced his birth certificate.

Sunday, April 17, 2011

In Today's News . . .

Random Thoughts April 17, 2011

Finland of all places is like to be a problem for continuation of the bailout process by Germany and other strong European economies of the weaker ones.  Finlanders, it seems, don’t want to bail them out.  Elections in that country may well result in an anti-bailout policy by the government, and it only takes one to stop the policy cold in its tracks.

Tim Geithner is confident that there will be no default crisis from the failure of the Republican House to pass a debt ceiling bill.  Kinda fills you with confidence doesn’t it, when it comes from the man who was the architect of the U. S. bailout and probably the first Sec of Treasury who could not do his taxes correctly.

According to the WSJ businesses in the U. K are not stepping up to the plate to replace public spending with private investment.  Unlike politicians, business understands that when fiscal policy contracts an economy, there is less consumption and hence less need for investment.  Don’t you wish this was taught in basic economics classes?  Wait, it is.

Nicholas Cage was arrested.  Why exactly is that news?

Friday, April 15, 2011

In the News . . .

Random Thoughts April 15, 2011

The Republicans handed the President a major victory today, voting to adopt the Ryan Proposal for the 2012 FY.  This means that the Republican candidates will either have to embrace the dissolution of Medicare, or face conflict with the Republican base. 

Now just because the opposition has fumbled inside their own 20 does mean a score for your team.  You still have to get the ball in the end zone, and Obama can still fumble things back.  In fact, based on the track record that may well happen.

Grover Norquist has a Q and A in the WP today.  Among other highlights.

  1. When asked about trickle down economics and job creation since 2000, he responded about job creation in the 1980’s.  I guess when you cannot answer a question, you don’t answer a question.

  1. His qualifications.  He’s a citizen, and he has an MBA from Harvard.  And we thought the only thing they taught there was arrogance.

  1. His Pledge allows revenue neutral tax changes.  This seems to be a change of heart, maybe he is reading the political tea leaves.

  1. FDR turned a recession into a depression.  Well I guess they don’t teach history either at Harvard.

  1. The David Bacon Laws (I think he means Davis) are racist.  Really!

Well you get the drift.

Conservatives want to offer school vouchers to middle income and affluent families.  Now we know where the money from cutting health care to the poor is going.

In California the Governor has this novel idea that citizens should vote on whether or not to raise taxes (or keep current tax rates in place) or cut spending.  Republicans are opposed, not only to raising taxes but to having the vote itself.  Seems they are still having trouble with this democracy thing.

Remember Inflation?   Here it comes again.

Mitt Romney has still not produced his birth certificate.

This Week in Stupid

Believe it or Not!

For reasons not entirely clear or coherent, the U. S. has embarked on a policy to turn corn into gasoline.  Corn ethanol, which is alcohol distilled from corn is used as a gasoline substitute.  The program was enacted not to help with U. S. energy costs, but to boost the price of corn for Midwest farmers.

Now given the rise in commodity prices even this excuse is no longer valid.  So it would seem that even free market Republicans would support a program to end a government subsidy that is no longer needed.  But wait!  According to the man who decides all Republican tax policy, Grover Norquist, ending the program would be a tax increase.  So Republicans cannot vote to stop a wasteful, useless subsidy.

Thursday, April 14, 2011

In Today's News . . .

Random Thoughts April 14, 2011

The headlines today said “Obama to cut $4 Trillion from Budget”.  Over at the WSJ Karl Rove said Obama was still not serious about cutting spending.  How is it that this man is not able to hold a job better than ditch digger?  Of course, only the WSJ and Fox News would employ him.

The President made a brave statement today, said he was wrong to vote against raising the debt ceiling when he was a Senator.  Said he did it for political reasons.  Wow, honesty in a politician, what will they think of next?

Jim Demint says he will block a vote on the debt ceiling, says he doesn’t care if it takes the Republican Party down.  We can only hope.

Charles Krauthammer joins the chorus of those who say the top marginal tax rate must be cut.  Gosh, raising it during the Clinton years must have been economically disastrous. Yes, if you define a disaster as low unemployment, high economic growth and a balanced budget.  He also says the Ryan Plan is does not have smoke and mirrors.  Guess he didn’t read the Plan.

What does it say about a political party that ragards Donald Trump as a serious presidential candidate?

Mitt Romney has not produced his birth certificate.

Greece and Ireland are experiencing a higher degree of a depressed economy than was expected by many so-called experts.  Just what part of austerity did they not understand?

Wednesday, April 13, 2011

The 1970's Redux

Fiction (the Ryan Proposal) and Non-Fiction (Obama)

Paul Krugman writes to refute claims that he is not as critical of the Obama plan as he is of the Ryan plan. 

His argument is simple, the Obama plan is a realistic, reasonable and credible plan.  The Ryan plan is, well  . . .

All this is a reminder of what Mort Sahl supposedly said in the 1970’s about Kissinger and Nixon.  If you were drowning 20 feet away from a boat, Nixon would through you a lifeline of 10 feet and Kissinger would complain that you were unwilling to meet the President halfway.

Already Saw This Movie

There you go again

This time the President says he is against renewing the Bush tax cuts for those making more than $250,000.  Right.

Obama campaigned on that platform in 2008.  In 2009 and 2010, when he had the votes in Congress to implement such a policy, he did nothing.  In late 2010 he agreed to a compromise that extended all of the Bush tax cuts for two more years.  Now he expects us to believe that he will not accept any more extensions of the Bush tax cuts for the wealthy.  Right.

If Obama is re-elected he will face a House that is even more Republican and more radical than the House today.  That body will not pass a law that extends the Bush tax cuts for anyone unless it extends them for all.  Obama’s choice will be to veto all the extensions, or to allow what is likely to be permanent extension for all the cuts.  Gosh, anyone know which way he will go?

Tuesday, April 12, 2011

In the News . . .

Random Thoughts April 12, 2011

The Economist reports this week that Greece is suffering from higher then expected unemployment and contraction of the economy.

Well, higher then expected by those who believed that cutting government spending and raising taxes was contractionary for an economy.  For the rest of us, it is just what we expected.

The President is going to announce his plan to cut the deficit.  Gee, isn’t that what the 2012 Budget was all about?

The Washington Post reports that one half of the recently negotiated cuts will hit education, labor and health programs.

  Does anyone still wonder who is winning the budget battle in D. C.?

Monday, April 11, 2011

In the News . . .

Random Thoughts April 11, 2011

If you combine the latest “deal” that the President negotiated with the Republicans with the “Compromise” last December that extended tax cuts for the wealthy for two years, you can see that a policy of cutting taxes for the highest income groups and paying for it by cutting spending for the poor, the sick and the elderly is now the policy in Washington.

The Buffalo News reported yesterday that the local Tea Party leaders have failed to pay taxes.  Now we know where their anti-tax sentiments came from.

According to the NYT Student loan debt will reach a combined level of $1 trillion.  And you thought the days of indentured servitude were long past.

Newspapers also reports Mitt Romney is running in 2012.  Since he started campaigning the day after the 2008 election, hard to see how this is news.

The 9th Circuit Court of Appeals has upheld the ruling that stopped the Arizona Immigration Laws  that allow police to stop suspicious looking people and demand to see their papers.  The East Germanization of the U. S. will have to wait for the Supreme Court to allow the law to go forward.  The Supreme Court revels in overruling the 9th Circuit.

Larry Summers is back on the Harvard Campus.  Remember, this was a man whose arrogance was too great even for Harvard.

Zonker is going to the royal wedding.

Sunday, April 10, 2011

Obama to Out-Ryan Ryan?

This Will Not Turn Out Well

The President is going to lay out a deficit reduction plan.  The forecast is that it will focus on Medicare and Medicaid, and we don’t think he is going to propose increases.  In short, the President is going to start negotiating with himself to cut spending for the elderly and the very, very poor. (Take a look at the qualifications for Medicaid, you basically check a box that says “abject poverty”).  So when he starts negotiating with the Radical Conservatives, the cuts will be even greater.

Of course, Obama will apparently call for an end to the Bush tax cuts for the wealthy.  Hard to take this seriously when he signed a bill extending them for two more years just a couple of month ago.

Saturday, April 9, 2011

Ryan's Rediculous Recipe for Disaster

Tax Cuts, What Tax Cuts?

You would think that $6 trillion in budget cuts over a 10 year period would produce $6 trillion in deficit reduction.  No in the Ryan Plan.  You see, a huge portion of that decrease in federal spending is used to decrease taxes.  So, Ryan will cut benefits for the most vulnerable Americans in order to fund tax cuts for the wealthiest Americans.  In Republican circles this is called bravery.  For the rest of us, the term highway robbery is more appropriate.

What a Deal!

Obama Loses Again

Would you pay $5 billion for $385 million?  No, well the President and the Democrats would.  In the budget deal the Democrats traded a reduction in federal spending of $5 billion in order to preserve $385 million in funding for Planned Parenthood.  There they go again.

Thursday, April 7, 2011

Guess Who's Paying for Health Care?

Paul Krugman Finds the Man Behind the Curtain

On his blog today Paul Krugman

notes that federal spending on healthcare a percent of GDP goes down under the Ryan proposal.  Krugman correctly notes the absurdity of this in an environment where the elderly population is rapidly growing.  The math is simple.  If health care spending as a percent of GDP is growing, as it must in the next decade and the share of government spending on health care as a percent of GDP is falling, then it can only mean that the share of health care spending by individuals is rapidly growing.

The Ryan plan does not save money, it merely shifts the burden to the old, the weak and the sick. 

Wednesday, April 6, 2011

Pay No Attention to What We Said

Ryan Never Said What He Said

Paul Krugman has nicely pointed out that one of the most outlandish statements of the Ryan Proposal (and there is a huge pool of outlandish statements to choose from) was that unemployment under his plan would go down to 2.8%.

Today, guess what.  The unemployment numbers are gone from the Report!

Yes, in the 1984 World of Paul Ryan, you simply erase what you said earlier, and its like you never said it.

And this is praised for serious thought.