THE RICH GET RICHER AND THE POOR GET...

I usually wouldn't use charts this big on this page, but the dates under each segment are important. As the chart title says, this is the distribution of average income growth during periods of economic expansion. What makes these data interesting is not so much that between 2009 and 2012 the top 10% grew massively while the other 90% had negative income growth. No, what makes this interesting is when you look at the top individual income tax rate during the early time periods.

In 1949 the top tax rate was 82.1%. In 1951 the top rate grew to 91% and stayed at 91% until 1963. Notice anything different about income growth during those years compared to the 21st century? Ya, the lower 90% of earners had actual significant growth in their income during those periods of incredibly high tax rates. Why was this so? Because the economy between 1951 and 1981 grew at an average rate of 3.7%, but between 1981 and 2013 it has grown by an average of only 2.8%.

So lets review. Not only do super high tax rates not hurt the middle class, but they also seem to do no harm to the growth rate of the general economy. And what significant event began in 1981, the year the economy and middle class income growth both started down? The so-called Reagan Revolution and the Trickle Down theory of economic growth. Facts is facts. Just sayin'.

MORE MYTHS

As I noted in the last post, our friends on the conservative side of things seem to believe a lot of stuff that can't pass the smell test of logic. That is to say, if it doesn't walk, quack or fly like a duck... it's not a duck, no matter how much you believe it is one.

Our second myth, then, is simply the entire right wing economic plan and answer to the endlessly repeated question, "Where are the jobs?" But don't worry about it being a long, dry list of policies. Here's the whole thing from a USAToday piece by Cal Thomas.

"Cutting taxes, lowering government spending and reducing the size of the federal bureaucracy would improve the economy... "

Ya, that's all of it. The conservative answer to all that is wrong with the Greatest Nation to Ever Grace the Face of the Earth. That, by the way, is yet more right wing clap trap. Here's the logic problem. If the statement is true then how could there be so much wrong with the country? Just sayin'

So let's dig a little deeper into the Great Plan (GP) and see how it would work to solve all of our economic problems. Cutting taxes. I assume that the idea is that leaving more money in the hands of them that earned it will translate into more investment in private sector businesses which will then produce more hiring and greater economic activity. That's the theory, anyway. Let's look at those ever so bothersome facts.

American businesses are, and have been, sitting on over 2 Trillion Dollars of cash. Not capital, not infrastructure, not warehouses full of product. Cash! There is a glut of mergers going on at the highest levels. And notice how often the deal is presented in terms of cash not just stock and other equity. We also have many large companies doing stock buybacks as a way to offer stockholders short term gain and get rid of even more of that pesky cash. What we don't have is hiring of new employees or raises for existing staff. So please, if you can, explain how giving a business even more cash money in the form of a tax cut will induce, encourage or maybe trick those companies into spending that money by creating jobs?

Businesses do not hire people because they have excess cash laying around the boardroom. They hire to satisfy a need brought on by increased demand for whatever it is that they are selling. Look at the last 6 years. Businesses have lots of money but are not hiring. Or look even farther back to 2001 and 2003. The massive Bush tax cuts, directed mostly toward the top 10% of earners did not result in increased hiring as had been predicted... by conservatives. Here's a chart of the unemployment rate since 2000.

Notice how after the 2001 tax cuts the unemployment rate went up, not down. Also notice that after the 2003 tax cuts the rate did start down, but very slowly and barely reached the level of unemployment recorded on the day George W. Bush took office. Oh, and you might want to notice that the huge upward spike starting in 2007 and ending in the first quarter of 2009 was all on Bush's watch.

So, two huge tax cuts... no effect on hiring. Tell me how this works!

Well, surely lowering government spending will do something positive for the economy. Maybe not. As I alluded to in the first myth post, government spending puts money into the economy. The logical extension of that statement is that reducing government spending removes money from the economy. But the conservative theory says that that money will still me spent and invested by the private sector which knows much better than bad old government where to pour that cash. Okay, but there may be a few problems. For example, it may be unstated but the conservative assumption is that money not spent by government will be returned to the taxpayers in the form of tax cuts (see above). This, of course, ignores the other unmentioned part of the right wing GP, the debt and deficit. I would think that any savings of tax dollars brought on by spending cuts should first go to reduce the deficit (the amount of money we borrow and then spend) and then to reduce the debt (the amount of money that we owe to those entities which lent us the money to excessively spend). They, conservatives, wale and moan about the D and D almost as often as they mention Obama's War on Coal. Which is to say, all the time. So I only think it would be fair to use spending reductions for those purposes. Want to bet on that one?

More importantly for our busting of myths (see how I avoided problems with the copyright laws), how would cutting spending, regardless of were any savings is redirected, "... Improve the economy?" I don't think it would. And I'm in agreement with the majority of economists. I'll say it again, government spending puts money into the economy. And, by the way, it also increases the moneys coming in from taxes. No, this is not some perpetual motion machine that runs forever on its own output energy. It is the simple fact that the federal government taxes transactions.

We pretty much only think of the government taxing income, but income, and in the case of businesses, profit, can also be viewed as transactions. Your part of transaction is to put in your 40 hours of working for your employer and your employers part is to give you money for your work. The same, of course, holds true for businesses. Buy 100 widgets from Widget World and they send you widgets and you pay them money. So really, all of what we call economic activity is just one transaction after another. And they're all taxable.

Those who haven't been there might be surprised to learn that unemployment payments are... taxable. Yep, all of those lazy takers receiving unemployment benefits so that they can lay around and play video games all day on the taxpayers dime are, in fact, required to pay taxes on the money they receive. One member of the household working while the other is disabled or retired? Social Security payments are also taxable under certain circumstances.

Grants from the government are generally not taxable, every transaction from that point on, is. So a science grant of say $500,000 to study hens teeth may seem like a half million dollar waste, but just remember that the half million dollars is now buying lab equipment (taxable) lab coats (taxable) paper, pens, computers, cell phones, lab assistants, etc. (all taxable). And the people who are paid for their work or their products take that money and buy bread and milk and shoes and diapers and more lab coats and stuff to sell AND IT'S ALL TAXABLE.

This basic fact is why Europe, which chose spending cutting as their way to recover from the Great Recession, is suffering under double digit unemployment and why the USA, which, by way of the FED, chose stimulus rather than austerity, has an unemployment rate of 6.1%. Facts are facts.

Okay, that's enough for now. The part about reducing the size of the federal bureaucracy is really just reduce spending said in a different way and is, as we've seen, just as meaningless. This stuff sounds good, in a kitchen table, checkbook balancing, kind of way, but the federal budget is not your checking account. The general economy doesn't work like that and believing that it does is a very big part of the problem.

MYTHS

Every so often I read or hear something said by a politician or political pundits that just sets my teeth on edge. Why? because I know that what is being said is not true. And I'm not talking about Presidential birth certificates or other such bull crap that is passed off as true in certain circles. No, I'm talking about things that are false on their face by real evidence or logical deduction. For example:

In an op/ed piece from our local, very right wing, newspaper a Republican Congressman and committee chairman expressed the thought that he didn't think that the American people wanted any higher taxes since that just took more money out of the economy. And there it is. The myth of the black hole of government taxation.

First, the obvious question should be, "Where does the money go?" I can't for the life of me figure that one out. Is there a super computer out in the desert somewhere that adds up all of the tax dollars that, because they've been collected, now must disappear from view. Of course given the government's fine record of efficiency I figure that super computer is a couple of Apple II's and a dial up modem.

This little myth, which has and is repeated regularly on the right, flies directly in the face of the other side of the conservative mantra; out of control government spending! What do these folks think is being spent? Let's see, the government taxes people and corporations, who are really just people too, haven't you heard, takes that money and hides it somewhere so that it is no longer in and usable in the regular economy and then, I guess, borrows money from China to spend on all of the worthless programs that the government over spends on. Or something like that. See what I mean. This whole concept fails a simple test of logic.

No, the government does not remove money from the economy when it collects taxes. It might remove money from your economy or from your businesses economy and that could certainly piss you off, but if you step back and look at the bigger picture it's clear that redistribution of money by the government may stick in your craw, it's what governments at all levels do.

We can clearly see that the Congressman's statement is false. Is this a deliberate lie on his part? I have no way of knowing. More troubling is the thought that he actually believes this nonsense. That would be the result of decades of ideology being endlessly repeated and never challenged by our dog whipped main stream media. They, the media, are so afraid of charges of bias from the right that they'ed find someone to express an opposing position after a guest states that the earth is round. What scares me is that this guy writes laws that I have to then follow. He doesn't know how the economy works. That's not a good mix.

Okay, that's all for now. Think about this a little, please. Myth number two coming up.

HOW DARE THEY - INSURANCE MANDATE

How dare the Government mandate that we must have insurance. And mandate what the minimum coverage must be. And penalize us if we don't buy the insurance from a private company approved to sell that insurance. How dare they!

Of course, I'm not talking about the ACA or as it has come to be called, Obamacare. I'm talking about Auto Insurance. That's right, good old auto insurance. I can't for the life of me understand why the folks on the political right can get blue in the face over the ACA's individual mandate. You know, the government forcing us to buy a product and penalizing us if we don't, since that is exactly what happens with your auto insurance.

Let's compare, shall we. Government sets the minimum coverage required under both. Check. Government must approve which companies can sell both. Check. Government mandates that you buy both types of insurance. Check. Government penalizes those who don't buy both types of insurance in the form of a monetary fine under the ACA and by taking away ones vehicle registration under the auto insurance statutes. Check. The only difference that I can see is that the ACA is federal and auto insurance is regulated by the states. Oh ya, and that the ACA is a program passed by the Democrats under a Democrat President. (Using ideas first proposed by the very conservative Heritage Foundation, by the way.)

They're the SAME, people! No difference at all. The auto insurance mandates were put into place so as to product the public from uninsured, and unable to pay, drivers who cause accidents and damage to those who do take personal responsibility and buy insurance. It's a way to mandate that personal responsibility and the states feel that it's in the best interest of the public that all vehicles are covered by insurance. The ACA is a way to make the uninsured health care consuming public also take the same personal responsibility that those who have purchased health insurance have taken. That way the responsible people don't have to pay to make up for health care services used by the uninsured and then not paid for. Each form of insurance satisfies a compelling public interest. There is no difference.

So, please, someone tell me why one is okay the the other is not? Please. Anyone?

TAXES

I've been working on our taxes this week and if anything can send me into a rant, that's it. Now, I figure that everybody hates paying taxes, but if you listen to conservatives you'd think that the tax man ranks right up there with Hitler, Stalin and Jack the Ripper.

You've heard them, I'm sure. "The government wants to confiscate your hard earned money," or "That government just wants to steal my money." Of course this is usually followed by the words, "And give it to some poor folks," or words to that effect. This echos back to the 2012 Presidential race and the talk of Makers and Takers. But maybe we need to get a bit real.

When you try to define who falls into which camp, either the Makers or the Takers, you run into several, shall we say, problem areas. For example, the fact that the Federal Government pays out huge amounts to subsidize the oil industry. And Agribusiness gets in on their share, as does the renewable fuels industry, including solar, wind, hydro and geothermal. And let's not forget the auto industry, the airline industry and pretty much any other transportation industry you can think of other than the Amish buggy industry. And these and many more are so called Makers!

On the Taker side of the coin one is faced with the uncomfortable truth that both Social Security payments and unemployment benefits are taxable. That's right, every year I have to pay taxes on the Social Security Disability payments which I received during the year. So, does that make me a Taker... or a Maker? Let's see, I earned enough money as a business owner who created and helped to create a couple hundred jobs, and paid into the Social Security and Medicare systems the required taxes so that now, when I need it, I can get a check from Social Security for my disability and receive health insurance by way of Medicare. I guess I went from being a Maker to a Taker. But since I still pay taxes on what I receive I should still be a Maker, right?

And that right there is the part that makes my head explode. People are always changing their status in our mobile and ageing society. It's one of the things that makes this a great country. We just shouldn't label folks with names like Makers and Takers and then try to make those labels a justification for certain policies. It's not fair and it can come back and bite you later in life. Even conservatives get old you know.

LET'S TALK ABOUT BULLETS

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ON RAISING THE MINIMUM WAGE THE GOP IS JUST ...WRONG!

First, a little housekeeping. Yes, I'm back. Like a bad penny I have returned from an almost year long battle with a rather persistent, but not life threatening, infection. The main problem was that the combination of the infection, and the antibiotics to fight it, knocked me for an energy loop. As in, I didn't have the energy to sit at this computer and write. But I miss it, so I'm back. Now on to the topic.

As the President said in the State of the Union speech Tuesday night, we need to raise the Federal Minimum Wage to $10.10/hour and we need to do it soon. This, of course, produced the usual screams from Republicans that raising the minimum wage will cost jobs and do great harm to the economy and, I think, cause dandruff to break out across the land. As one law maker lectured a TV reporter this morning, it's just simple Econ 101: The Law of Supply and Demand. If you have a higher cost for something, in this case labor, you will use less of it by either not hiring new workers or by laying off workers that you have now.

I'm guessing from that position that, first, the Congressman never actually took Econ 101 and, second, that he never owned a small business with employees. Here's what the Congressman, and the Republicans, pretty much to a man, fail to understand about what actually happens when the minimum wage goes up. Businesses raise prices! It would seem, if you listen to the GOP that the idea of raising the price of a good or service in our economy is right up there with the Seven Deadly Sins. They don't like and they won't stand for such a thing. Oh, they don't actually hate prices increasing if it throws off more profit for the company and increases the wealth of the stockholders. But thou shall not cause prices to increase to pay for increased cost of labor. I'm sorry, that is just nuts.

Now, here's what actually happens when the minimum wage, either State or Federal is raised. I know these things from first hand experience. My darling wife and I owned and operated two locations of a certain fast food franchise. We employed 120 people between the two restaurants and we had to deal with a minimum wage increase during that time.

The first thing that blows up the logic of the Republican position is that labor follows need. No good small business person employs unneeded staff. But by the same token, your employees have value to the business because they make you money. Maybe not every day. Maybe not every hour. But over all, a business will operate at close to the correct number of employees for the amount of business expected. In fast food we had the ability to add staff for certain parts of the day (you know, meal times) and have fewer people on the clock during slow times. This is because there are many possible part time positions available in the fast food business. Students who work after (or before) school, workers with other full or part time jobs, and older folks who don't wish to work a full time schedule. But remember, labor follows need. When the minimum wage went up the very last thing we thought about doing was laying people off so that our labor costs didn't go up. If we were doing the job right, we had the number of people we needed for the business which we anticipated. If we were over staffed because business was slow we should have laid people off sooner. If we were understaffed because business was growing, we needed to add employees whether or not they would be paid more under an increased minimum wage. The way we dealt with the increased cost of labor was to raise prices a little. Not across the board and not by a huge percentage. What was the result?

Our business increased and we needed to add staff! And that's not an unexpected result. There are scores of studies and surveys which agree. Raising the minimum wage doesn't cost jobs, it helps in the creation of jobs. Why, you ask? Because that Econ 101 idea of supply and demand does work when dealing with actual products or services being sold. More money in the hands of your staff, and in the hands of every other minimum wage businesses' staff, means more demand which leads to more staff. This idea is not new. Henry Ford was soundly criticized by the business community of his day when he took the outrageous step of paying the workers building Model Ts on the assemble line the unheard of wage of $5.00/day. His reasoning was simple. If I pay them that high wage they will be better able to buy the cars that they are building. Which will mean I'll sell even more cars and, of course, make more money. It worked.

The second thing the GOP doesn't seem to get is what I mentioned above: everybody is in the same boat. We could raise prices because every other fast food restaurant also had to pay a higher wage and, thus, also needed to raise prices. If my competitors could gain no advantage, in the long term, they either raised their prices too, or ate the increased cost. In the fast food world, and in fact in most minimum wage businesses, you can only do that for a little while. The profit margins are too tight.

So, as you go about your business, when you hear Congressman so and so or pundit such and such go all Rambo on the very idea of raising the minimum wage, ask yourself if the Congressman or pundit is smarter than Henry Ford. I bet I know the answer.

ARE WE REACHING THE TIPPING POINT ON HEALTH CARE COSTS?

I just finished reading a very informative article in last weeks Time magazine about the health care costs that we, insurance companies and the government pay. One can certainly be outraged at being charged $1.50 for a single Tylonal  tablet that cost the hospital 1.5 cents. But maybe this is pointing to an even bigger outrage; that fact that middle class earnings have declined since the 1970s while the price of health care has only increased. At what point do we find that people just can't afford to get sick? And have we already reached that point?

I think that we're there and have been for a while. The single biggest driver of personal bankruptcy are medical bills. pretty much everybody can name a friend or relative (or themselves) who were charged huge sums for simple procedures and short hospital stays. The usual response from the political class is that greater competition and more transparency will make people better consumers of health care and thus drive costs down. It just never seems to happen. People aren't all that excited about asking the price of a needed health procedure. They're either insured in some way, so that they never actually deal with the price, or they are in no condition to haggle. "Gee, I'm going to have to check that other hospitals price to repair my broken leg." "I'll get back to you." We're not buying washing machines here.

That concept, that health care is not like other goods and services, is at the heart of the problem. When you need medical attention, you need it. In many cases, if you don't get that attention, you will die. Or suffer disabling after effects. Or disabling after effects until you die. None of these is a good outcome for the consumer. But, as the Time article lays out, this produces some very good outcomes for the medical industry. They make loads and loads of money.

Now, it's pretty clear that suggesting that maybe doctors and hospitals and drug companies charge less is seen by some to be... un-American. It brings into question the entire capitalist system that we have created and defend. But, I think that if we can look at it from a slightly different angle, or two, we might just see some light at the end of the tunnel that isn't a train.

As I asked at the start, has the health care industry reached the tipping point beyond which people just can't afford to pay any more? If your health insurance goes up 20% and your paycheck hasn't gone up in three or four years, you may have to do without the insurance. The same is true of increasing co-pays and deductibles. And for the uninsured medical bills can be just devastating. If things don't change, each year will see fewer and fewer consumers of health services. From a business standpoint that would be a very bad thing for the health care industry.

But we don't ever seem to get to that point because health care is a necessity of life. So maybe we need one of those different angles to solve this.

As a society we have determined that for certain things necessary for life we don't want to leave outcomes to the free market economy. The water that comes into your home, even if it's from a private, for profit, company, is heavily regulated. Joe's Water Service can't really compete on price or service because Joe has to meet the same quality level as the city water department. The same is true for sewage collection. We assume that these services will be provided by our city or town, or by a public service district. It wasn't always like that.

In the days before the urbanization brought about by the Industrial Revolution fresh, potable water was hard to come by. Rain barrels and hand pumped wells in the towns and, sometimes, water collected from creeks or streams out in the country. If you were lucky, or your ancestors were smart in selecting their homestead, you had a nice fresh spring bubbling out of the hillside behind the house. Whatever the source, your water needs were pretty much your own problem to solve. And, again, the same is true for sewage and other waste. In the country it was dig a hole and put a shed over it and in the cities, well you really don't want to know about the cities. After the age of throwing "slop" out of the window into the street came the age of cess pools in the back yard and a wagon with a tank, and a hand operated pump, used to empty the nasty pit that your grandpa told you to never play near. (Not a problem. The smell took care of protection just fine) These services were provided by private companies which started with two guys and a wagon and grew to rather large firms with dozens of trucks. Notice, though, you were still on your own. You had to contact the company so have them come and pump out the pit.

After the Industrial Revolution caused cities to explode in size and density, and the old model of taking care of your own needs fell under the weight of too many people need too much food and producing way too much waste. In order to protect the public, as a whole, from water borne and waste borne diseases the cities and towns took over these services. They became public utilities.

The same thing happened with natural gas and electricity. Even though we may be supplied by a private, for profit, company, they and their price structure are regulated by public utility commissions. We really don't want price competition on natural gas services. The safety of the population trumps capitalism in these cases. Electricity and natural gas are just too dangerous for price wars and such. Interestingly, heating oil, and propane have not followed this trend. The reason has to do more with infrastructure (pipelines and wire) than with any other economic or public safety issues. You just can't pump heating oil to individual homes by way of a network of pipes. Particularly in the winter. With respect to electricity the problem is economy of scale. It doesn't make economic sense to generate power all over the map when that power is going to be generated with the burning of coal. Or the damming of a river. Or nuclear power. Those are big business and government projects.

So, we see that certain necessities of life are better distributed to citizens by either their government or companies regulated by their government. And then there's health care.

In the case of health care we have turned the whole on its head. We have huge companies, making huge profits, providing the needs of the citizens with lots and lots of outlets for their "products," with some government regulation, but mostly with the attitude that any other system is socialized medicine and a very bad thing. I just don't get it.

We have a necessity of life, health care, that we purposely leave in the hands of private enterprise, and we wonder why the cost keeps going up. Please note that, even though Medicare and Medicaid are government programs, they're designed as a way to pay private health care providers. Not to provide health care. And that is the heart of the matter. We didn't dream up "sewage-aid" or "water-care" to help pay for those necessities of life. No, governments stepped up and took the burden on themselves. Your public utility provides the water or the sewage removal.

I'm afraid that only such a public utility model can cure the health care mess that we find ourselves in. I think we have to look at what the rest of the industrialized world has done and pick out the best practices and adopt Universal Public Health Care for all. Not some patched together Frankenstein monster like we have today, but a real national health care provider. The doctors would work for the government and nonprofit hospitals would actually not make huge profits. The government would fund drug research directly and the consumer would reap the benefit of cancer drugs that don't cost $15,000 a dose. We could, in fact, become civilized. Oh, who am I kidding. Civilized doesn't buy politicians. The health care industry sure does! 

ONE FINAL ARGUMENT

That chart that you see above is, I think, one of the main reasons that I'm voting for President Obama and why I think you should. It's really very simple.

For almost two years Mitt Romney has stated, over and over again, that the President inherited a bad economic situation and "He made it worse." Those four words that Mr. Romney evokes to explain away the after effects of the worst economic downturn in 80 years. "He made it worse."

Look at the chart again. Now, I don't know about you, or Mitt Romney for that matter, but I remember learning about charts and bar graphs in grade school. And one of the main things we learned is that charts are  very good for showing trends in data. Look at the chart. From February 2008 through January 2009 the trend on unemployment was getting worse. The bars are getting longer below the "0" line. That means getting worse. George W. Bush was in the White House. From February 2009 through February 2010 the trend (no, not every data point) was getting better. The bars are getting shorter below the "0" line. Let me repeat that. After Barack Obama took office on January 20, 2009, unemployment got better, not worse.

That's more than enough for me. If a candidate for the highest office in the land can take a simple bar graph and spin its meaning to be exactly opposite of what the actual graph says, that candidate does not deserve a chance to lead this great nation. Period.

GO OUT AND VOTE!

CAUSE AND EFFECT

We live in a cause and effect universe. Things don't just happen by themselves. For every effect, there is a cause and without that cause no effect will occur. This is a basic law of physics. Why is this blinding flash of the obvious important, you ask? Because  it seems to me that the Republican Party, and Mitt Romney want to repeal this physical law of the universe. Let me explain.

We have been told, time and again, that the only way out of our current post recession economic doldrums is to cut taxes on the well off and rich, the so called job creators, and eliminate strangling regulations from business. Do that, the GOP says, and the economy will perk right up. Why Mr. Romney has even said that such a course will create 12 million jobs in the next four years! It sounds good, doesn't it? But the same problem keeps nagging at me. How does it work? What is the cause that leads to the 12 million job effect?

For the life of me I can't find one. If the idea is that companies will have more money because they will be paying a lower tax rate and, thus, will use that money for hiring, I remain unconvinced. Look around. Businesses in the USA are posting record profits. And they're not spending much of it either. The last number I heard was $3 trillion. That is, businesses in this country are sitting on $3 trillion in cash money. So seriously now, how much more cash do they need from tax cuts before they start hiring? Will another trillion do it? How about $2 trillion more? See the problem. There doesn't seem to be any particular amount that will cause the effect of more hiring.

We do know that the other guys also have a plan for increasing hiring and creating jobs. They may call it investing in infrastructure, but we all know that means government spending. But guess what? There really is a cause and effect relationship between spending and job creation. One can yell from the top of the highest mountain that "government can't create jobs," but there's no question that government can create demand and that leads directly to...jobs! If government needs 20,000 new hammers you can best believe that some business person will try to sell those hammers to the government. They might be over priced. They might be horribly delayed. But somebody will make said hammers and will sell them to the government. And since hammers don't just grow on trees, somebody will need to be hired to do the making. Government creates a demand that is then filled by the creation of new jobs. Thus, one step removed, government created new jobs.

But the tax and regulation cutting method doesn't have that same connection. What makes Mr. Businessman add workers? Because if what the government does under a Romney Presidency can't cause the desired result, can't make the effect happen after the cause, then Mr. Romney and friends really don't have a plan at all. What they have is Magical Thinking. They believe that a causal link exists, in this case between lowering taxes and job creation, when in fact there is no such connection. But they sure do believe it to be so.

But has anyone actually thought about how this might work in the real world? Because it seems to me that what has to happen is as follows:

First, government cuts taxes on the job creators.
Then, the job creators, having more money than they had before the tax cuts, open wide the factory gates to the hoards of job seekers who will then have jobs, will pay taxes and the country will be back on the road to prosperity. You can almost see the CEOs standing at their penthouse office windows looking down on the masses as they line up to be hired. He, or she, may spread their arms wide in a gesture of welcome, even if the soon to be new workers can't see such a gesture from the ground. That looks to me like the entire Republican job creation plan, at least from the vantage point of the "Job Creators." Because remember, there's no actual cause for the desired effect.

But what does this look like from the people at the gate? It looks like they line up and beg the job creators to grant them a job, doesn't it? Should one approach on bended knee, perhaps? Should one be careful to not look the "Job Creator," in the eye, in case that might offend? Since nothing the government did in cutting taxes actually made a company start hiring, I think some variation on begging for a job may be the only solution.

And if that's the case, would someone please explain how begging rich folks for work offers more freedom than being dependent on government to send out a Social Security check or pay the doctor that you just had to see. Anyone? I didn't think so.

THE MYTH OF THE ZERO SUM ECONOMY

In a prior posting here I talked about the apparent lack of understanding between our political parties. It seems that each side is using different definitions of words and concepts. This becomes clear when one listens to the most basic ideas of how the American economy works. An example might help.

When discussing that most hated of all things government; taxes, politicians on the right will invariably trot out two arguments that they are sure will convince the simpleton asking the question of the, if you'll excuse the pun, rightness of their position.

First, they will tell us that, back home in their district, business people come up to them and tell them that if the incredible tax burden that they are under and the job killing regulations they face were just lifted, why then all would be well and jobs would flow forth as if from a fountain. Or something like that. Bottom line, business people want lower taxes and less regulation. Fair enough. But does it bother anyone else that this is like asking an eight year old if he wants more ice cream. You sort of know what the answer is going to be before you ask the question.

Second, and more to the point of this post, those on the political right will sometimes lecture an interviewer with a little lesson from Econ. 101. It goes like this. " We shouldn't raise taxes on the 'Job Creators'." "When we do that we just extract money from those 'Job Creators' and then redistribute it to poor people." "Since no new money is created in the transaction, the economy gains nothing." "In fact," they will say, "Those extracted dollars are no longer available to create jobs so taxing and redistribution are BAD for the economy." This is usually said with a bit of a smug smirk, as if the speaker is sorry that the interviewer is too stupid to understand such a simple concept.

Now, the problem that I have with this explanation is that it only seems to make sense in an Econ. 101 text book. Or maybe in a game of Monopoly. "Oh my, if you charge me for landing on your Boardwalk I'll be unable to buy a hotel for Illinois Ave. Think of all the hotel workers who won't have jobs." Ya, that makes sense. It's a zero sum game. There's only so much money to go around. If I give it to you, by way of the government taxing me, then I don't have the money to invest.

Back here in the real world things are a bit different. We have to deal with a global economy where rich people and corporations invest in businesses and securities from around the world. Where they park millions of dollars in off shore bank accounts. Where they spend billions on capital investments in other countries. Now just how does any of that square with the zero sum tax and redistribute game that they say explains our economy? Simple answer - it doesn't.

Those off shore or out sourced dollars offer no benefit to the general economy here in the USA. They only benefit the corporation, its investors and the country where the money now lives. So while extracting taxes from the rich for redistribution may look like it takes funds out of our economy, the rich aren't really playing a zero sum game at all. In fact it can be argued that their out of country investing is (one of) the actual reasons for our national unemployment problem. It's those dollars that have been removed from the economy, not the dollars extracted by taxes.

BEWARE THE FUB

Now that the Supreme Court has upheld Obamacare we will again be warned by Republicans about the horror of the FUB; the Faceless Unelected Bureaucrat. These frightening creatures will come between you and your doctor. They will prevent you from getting the care you need. Why, they might even be on the dreaded Death Panels! What utter BS.

First, let's be clear that the GOP is talking about only one species of FUB; the G-FUB or the Government Unelected Bureaucrat. That's the one we have to fear. Nothing is ever said about the P-FUB; the Private Unelected Bureaucrat. That's because, as the Republicans have been telling us, over and over, redundantly, again and again, government is always bad and private industry is always good.

So it came as a bit of a surprise when my lovely bride, the Queen of the Frontier, who has private, employer provided health insurance was informed that, no, she could not have the MRI that her doctor wanted for a back problem. She was informed that the insurance company wanted her to have physical therapy first, and then if (when) that failed to help her the MRI would be paid for.

Imagine, a P-FUB had come between her and what her doctor wanted. Can you believe it?

Of course, that's the real problem with the right wing's view of the American economy. They see harm from government action but ignore harm from the private sector or assume that "The Market" will magically fix any problems. It doesn't matter that the person having the problem won't or can't benefit from the invisible hand of the market as it makes its invisible corrections. Just believe in the free market and all will be well.

But here's the thing that really gets me boiling. The fear of the G-FUB seems to be mainly based on that unelected part. Now, I don't know about you, but I'm pretty sure that the Queen of the Frontier has very little recourse to change what that P-FUB decided. The FUBs that work for private firms have the interests of the company, and keeping their job, foremost in mind. In fact just about the only thing that she could do would be to follow Mitt Romney's advice and "Fire," her insurance company. Opps! Since hers is employer based health insurance she can't just send them packing. She, like millions of other Americans, is just stuck.

But it seems that we do have recourse when a G-FUB makes a decision that we don't like. It's called an election. Perhaps you've heard of that. In fact, it's funny that the folks on the right don't seem to allow for just that kind of corrective action as it relates to health care. They don't have that same problem when the issue is coal.

Those of you that don't live in coal country may be unaware that the Obama administration, by way of the EPA, is waging a "War On Coal." This war is, according to Republicans and their friendly news outlets, Obama's effort to kill the coal industry and raise everyone's electric bill so that wind and solar energy can compete. This would appear to be yet another load of good old bull manure, since, at least in West Virginia, coal production was only down 0.8% in 2010 (with the economy weak), and coal mining employment was at its highest since the '60s! Some war. But here's the thing. The answer to the War On Coal, according to the GOP, is to elect a different President. This, even though the means by which Obama is fighting the war is through, you guessed it, the Faceless Unelected Bureaucrats of the EPA. So, just vote out that guy and vote in their guy and problem solved.

Let's review. Obamacare is bad because Faceless Unelected Bureaucrats will come between you and your doctor, but private health insurance is good, even though we know that Faceless Unelected Bureaucrats already come between you and your doctor. To FUB or not to FUB. What a question.

THEY DON'T EVEN SPEAK THE SAME LANGUAGE

I had one of those Ah Ha moments the other day while trying to stay cool in front of the TV. Former RNC Chairman Michael Steele was talking to Chris Mathews on Mathews' program during which another guest suggested that President Obama would be politically wise to propose a large public works project before the election. While Mathews and the other guest tried to discuss the merits of such a plan, Mr. Steele kept interrupting with the comment, "With what?" Referring, no doubt,  to the fact that the Federal budget is, and has been, running rather large deficits.

"With what?" he'd say. Then louder, "with what?" The simple message being that in a time of deficit spending and increasing government debt we, as a nation, can't afford to repair our crumbling infrastructure. No way, no how! Ask pretty much anyone on the Republican side of the issue and they will give the same response. No way, no how! Well, they're wrong.

Here are a few uncomfortable facts for Mr. Steele and the GOP. We have been running deficits for quite a long time and the country has not gone under yet. The deficit spending of WWII was, as a percentage of GDP, far higher than the deficit today. And, maybe the most important, we can and are borrowing money about as cheaply as any country in history.

As any good business person will tell you, a business prospers when it uses OPM. That's "Other Peoples Money."  Whether from loans or investments, companies know that leveraging there own, often, limited  resources with the resources of banks or investors is often the only way to grow a business. This is particularly true in the area of capital improvements. Building a new factory or store takes far more resources than any sensible business can, or would, keep on hand. It's good business.

But when it's the countries investments? Not so much. The current GOP thinking is that we can only spend what we have and since we don't have any extra, we can't spend at all. This way of thinking, while seeming to make sense in the "around the kitchen table," type discussion, flies in the face of what governments at all levels actually do. Have the Republicans never heard of local bond issues? You know, for schools and new playgrounds and roads and the like. This is how governments, businesses and people finance today's spending with tomorrows dollars.

And I'll repeat the single most important factor. We, as a nation, can borrow from the investors of the world at incredibly low interest rates. And those same investors are clambering to buy our bonds. They're standing in line and throwing money at the Federal Reserve. Each bond offering gets double or triple the offers than there are bonds available.

So the next time you hear a voice on the right question "with what?" you might want to point out these uncomfortable facts. It won't change their mind, but it's fun to watch them stammer out some lame answer. Hey, it's summer. Without football we need to get our fun somewhere.

WHY GOVERNMENT SPENDING IS NOT LIKE A BLACK HOLE

I recently heard a conservative make a statement which seems to point out one of the right's biggest fallacies concerning the U.S. economy. After lamenting that it takes until some time in May for an American worker to earn enough to pay his taxes, this fellow says, "(that's) a whole lot of money for the government to be taking out of the economy." The problem with that point of view is that it is 180 degrees from the truth.

Government doesn't take money out of the economy. It redistributes money taken in taxes back into the economy. In fact, since we are borrowing $0.40 of every $1.00 of government spending, the government is putting way more money into the economy than it is taking out in taxes. Now, one can be against redistribution, call it socialism, and demand an end to it, but that's not the same as assuming that money taken in taxes just disappears into some black hole of the Treasury Department.

I think this actually gets to the heart of the American conservative idea of how the economy works and why I find the prospect of turning the keys to the whole thing over to them frightening. In their view, since being made to pay taxes takes money from them, that money is then gone and not available to be used by the "job creators." Since the free market no longer has use of those moneys they see this as a net loss that can only be resolved by cutting taxes. No credit is given to the government's use of the money. Government jobs don't count. Government workers have no worth to the economy and besides, we all know that government can't create jobs. Don't we?

As I said, conservative have it backwards. It's not government which takes money out of the economy, it's private sector investment in foreign companies, out sourcing and just sitting on over $2 trillion in cash which takes money out of circulation. Government, on the other hand spends the money taken in taxes by direct hiring, contracting, or in the form of grants to the states. The states, of course, then do the same. And here’s the real dirty little secret of government spending; they get some of the money back in more taxes.

Never forget, boys and girls, that the government taxes transactions. If you work for the government you pay taxes on your income. If a corporation enters into a government contract that corporation (hopefully) pays taxes on its profits. And that’s just the original transactions. That corporation pays wages which are also taxable. Buys products (taxable), services (again taxable), and perhaps invests some of the money (the profit from which is taxable as capital gains).

So, the next time you hear someone on the conservative side complain that taxes take money out of the economy, ask them if they’re kidding, or just confused. Then tell them why.

WE NEED TO TAKE A STEP BACK

There's a saying in business, politics and sports that applies to the general way that we Americans look at problems. That phrase is, "In the weeds." Pretty much everyone understands that when a project or team or political party is in the weeds that they're down in the rough going, beating through the underbrush, trying to find a clearing. Being in the weeds is, therefore, not where you would like to be.

That's where we are as a country right now. Everything is point counterpoint, detail this, data overload on that.   But then you look at a picture like this one and start to realize that we are pretty darn small specks on that vast world, and that world is only the fifth largest of the eight that make up our little solar system. A solar system that is one of maybe 100 billion solar systems in the Milky Way galaxy, which is one of 200 billion known galaxies in the visible universe. Think about that for a second.

Okay, times up. Time for more politics. There is, of course, a reason for my billions and billions rant. Our political system, joined at the hip as it is with the media, has put us all in the weeds when it comes to understanding the economy and its current troubles. We need to take a step back and take in the curvature of the economy, as if seeing it from space. And by the way. This ain't rocket science. Anybody can do it. Even the politicians.

The situation in Europe, in particular the French election of the Socialist Party candidate, points out that not only doesn't austerity work to pull an economy out of recession, austerity also pisses off the voters who, if angered enough, will throw the austerity pushers out of office. Here in the good old U.S.A. we have the austerity crowd as the out of office challengers. They believe that austerity works. They are wrong!

Now, just to be clear, what I mean by austerity is simply, reducing spending by the Federal government below current levels. Remember, we're taking the long view from space here. If we start to address which programs are good, or which are bad, or which are wasteful, or which we just don't like, then we descend back into the weeds. From way up here in space we can't see all those petty differences. A dollar of Federal spending is... a dollar of money spent into the economy. Period.

"But wait a minute," you say. "Some things that the government spends on are stupid and wasteful." At which point starts the list. The list of BAD GOVERNMENT PROGRAMS. Bridges to nowhere, counting spotted tree frogs in the swamp, volcano monitoring and space exploration are on that list. Or not, if it's somebody else who made the list. That's a big part of the problem. Every dollar of spending that I like, somebody else hates, and so on. But that just keeps us in the weeds.

Take a step back. That dollar of Federal spending, no matter what for, gets paid to someone or to some corporation which pays someone. Every dollar that stays in the country goes to somebody's pocket. So, here's the thing. If we a facing high unemployment, (we are) and are coming out of a recession, (yep) why would anyone even suggest that we cut government spending and thus, take dollars out of those pockets?

"$16 trillion in debt and getting worse," you scream. Well, okay, that is a problem over the long haul, but can we take that step back and look at it from a distance. Right now, even after one of the rating agencies downgraded our bonds, we are borrowing money in the world market for just slightly more than 0% interest. And we're not having to chase investors. They're coming to us and throwing heaping gobs of money at treasury bonds which will make then basically nothing over their investment. Why? because we're still the biggest, baddest, and safest economy on the planet. That being said, it means that even though we have to borrow $0.40 of every dollar the government spends, it's incredibly cheap money. It is so incredibly cheap that we should be spending even more of it on the infrastructure of the nation. We can justify the increased spending with another old saying from business. "You have to spend money to make money."

But that's for my next posting.

THERE ARE FOUR HEALTH CARE CHOICES

With all of the heat, and very little light, being produced in the debate over what we as a nation can do about health care for our citizens it would seem that there are dozens, if not hundreds, of different solutions being put forward. the problem is, when you boil it down there seem to be only four.

First, just leave things alone. The problem with this approach is that time is not on our side. If we do nothing about the ever increasing cost of health care itself, and the ever increasing number of people who cannot afford or qualify for health insurance, the whole endeavor is likely to just crash and burn. As noted in the last post, uninsured "Free Riders," put an unsustainable burden on the system. At the same time, drugs, treatments, tests and therapies are all increasing in cost at a rate far in excess of inflation. We will simply not be able to care for sick people if something isn't done. Then, add in the 10,000 Boomers reaching Medicare age each day and the ever increasing number of folks in need who must rely on Medicaid and this house of cards will come tumbling down.

Second, we could mandate that people buy insurance. Thus, the much hated on the right Individual Mandate. This idea, which anyone who has any sense of what's going on in the real world knows, as opposed to pretty much the entire GOP, was a conservative concept that would force individual responsibility (yes, that is an oxymoron) and thus end the era of Free Riders. With everyone in the insurance pool, including the young and healthy, everyone can be covered and the cost of insurance should go down. Of course, this idea by itself does nothing about the cost of care but with everyone insured market forces brought to bear by the insurance companies should hold down the cost of care. Maybe. Sort of. We hope.

Third, we could stop treating the uninsured. This is the "let them die," option. Simply put, if the mandate to care creates the Free Rider problem then doing away with that mandate should solve it. It's not pretty and there isn't an office seeker, except maybe for Ron Paul, who would ever advocate such a change, but it would solve the problem. And as I said in the last post, it sure would get people to buy health insurance.
I don't think that we as a nation want to go that route, but given the political rhetoric out there right now, who knows. I'm thinking that Ted Nugent might like this one.

Forth, we could adopt a "Single Payer," system. You know, the dreaded (by the right) Universal Healthcare model that exists in every other industrialized nation on Earth. Call it Medicare for all or call it socialized medicine, the end result is the same. Everyone has health insurance and can get treatment. Costs are contained in much the same way as under Medicare today or we adopt more of a UK model where the doctors, nurses and technicians work for the government itself. If this were a new idea that had never been tried before I could certainly understand being careful. But this system works and it works all over the world. It really isn't un-American to borrow ideas from abroad.

Finely, I should include a fifth. That would be whatever the hell the Republicans want to replace Obamacare with. We don't know what that is. Maybe there are just four.

THERE HAVE TO BE LOSERS

The Affordable Care Act, or Obamacare, is now before the U.S. Supreme Court and according to some of the cable news talking heads things are not looking good for the Individual Mandate. You know, the part of the law that says that starting in 2014 people have to buy health insurance or pay a fine on their tax return. There is lots of talk of how this or that result will effect the election in November, but really no discussion of the actual alternatives to the Mandate as written.

The reason given by any and all of the defenders of the act, and some non-defenders if you listen to Mitt Romney from 2008, is that without mandatory insurance coverage healthy young people will not get health insurance. Without these healthy people in the insurance pool the companies can't afford to cover people with preexisting conditions. This also causes the uninsured to use emergency rooms and similar services, the cost of which is then passed on to the insured by way of even higher premiums. The idea is to get the so called "free riders," into the insurance system.

No one on the GOP side seems to have any idea of what to do about this problem. They're all very quick to shout "Repeal and replace!" but never offer what the replacement may be. See, the problem they have is, the logical, conservative, Republican response is one that a lot of folks think is a little mean. It was seen at one of the early GOP debates when the crowd cheered for letting an uninsured accident victim die. The only reason that there is a problem is the Federal law that mandates that health care providers help everyone, regardless of their ability to pay. If the GOP is at all true to their conservative colors, they should jump on the repeal of the mandate to treat. Then, our health care system would better fit with the conservative of ideal of self sufficiency and personal responsibility.

I have no idea how many people would die each year from being turned away at the emergency room door, but I'm sure the number would begin to decline after a while as more and more "free riders," realized the error of their way and went ahead and purchased health insurance. The numbers would, of course, also decline as the sickest of the "free riders," died off. This would thus appear to be a win for society and the economy.

Notice, please, that in order to get that win for society someone, in this case those too poor, sick or dumb to get health insurance would, of course, lose. That's the dirty little secret behind any plans for so called free market solutions to complex societal problems. The free market requires that there be losers.

The Liberal and Progressives in American society tend to want to protect the aforesaid too poor, sick or dumb from being losers. They want the government to be a back stop against losing. Conservatives tend to prefer the freedom of the marketplace, without actually telling the too poor, sick or dumb that they will end up as the losers. But be not fooled. That is what will happen because the "markets" demand it.

See, for everyone who buys a share of stock say, at what they think is a good price, someone else sold that share of stock and half the time lost money in the transaction. For every winner in a free market, there's a loser. The real problem for society is as I said; conservatives don't want to mention the losers and liberals want to protect people from losing. Each distorts the markets themselves and both lead to the kind of financial mess that we are slowly working our way out of.

So, keep an eye on how the Obamacare fight comes out and if it gets tossed out, ask your Congressman what he or she wants to replace it with. Good luck!

DOES THE GOP REALLY WANT TO ARGUE RELIGIOUS LIBERTY?

Oh, the fun that comes out of Washington. Now we have one side wanting to make contraception use a statutory right, and the other side screaming that to do so will infringe on their First Amendment religious liberties. It was that claim, "Religious Liberties," that made me sit up and take notice.

Without going into the entire dust up (if you need more information use the damn internet for something other than tweeting) I keep wondering what would happen if the offended religion were one other than Catholic Christianity. You know, like Islam. Would the defenders of faith based scofflawism be just as outraged if the law in question was similar to the French law against wearing a Burka in public? Or what if the defendant in a murder case case claimed that "honor killings" are part of their religious beliefs? Would that be okay? Or even, as I heard from one talking head, that Quakers could object to their taxes being used to fight wars. How far do we what to push this?

As will be no surprise to anyone who has read this blog, I come down on the side of the common good of society being more important than the particular beliefs of any particular religion. That may seem extreme or even anti-religious, but when one considers that their are over 250 different Christian sects in the U.S.A., not to mention the non-Christian religions and of course the non-religious, it seems to me that any other position can only lead to arguments like we are having now.

This puts me in mind of a similar, although not nearly as important as contraception, place where the beliefs of the few are imposed on the many. I'm referring to the good old fashioned "Blue Laws."  You know, the reason that you can't go out to breakfast on a Sunday in, say, North Carolina and order a Bloody Mary before noon. Or run into the grocery store to pick up a six pack Sunday morning in West Virginia. Most of these have been declared unconstitutional or are at least not enforced (much) but the buying booze on Sunday ones seem to have a lot of staying power.

I have been directly impacted by the NC version, and not because I'm a drunk looking to start early on a Sunday. No, The Queen of the Frontier and I owned a restaurant in the beach resort town of Kitty Hawk, NC and we were faced with this every Sunday morning. In comes a car load of happy tourists from some far away land, like New York, looking for a nice beach brunch with a morning cocktail and wham, I have to explain that "I'm sorry but I can't sell you $40 worth of drinks to go with your table full of Eggs Benedict because it's only 11:00 am." Trust me, that does not win friends and repeat customers.

My take on this was always that, if the preachers wanted to make sure that their flock didn't come to church drunk that they, the preachers, should have a chat with their wayward lambs. Why burden me, my staff and most importantly, my customers, with the problem. We don't see Rabbis marching outside of pork BBQ joints claiming that they should close their doors do we? Of course, this was not an argument that was going to go very far in the American south, but it does illuminate the problem.

If you, or your religion, doesn't like the use of birth control fine. Enforce that belief system on your believers. But leave the rest of us alone, please. Because any law that favors one belief system over another, like the blue laws, violates my First Amendment rights. And the great thing about our great country is, my rights are just as important as yours. Let's all defend them equally, shall we. 

WE NEED A CHRISTMAS MIRACLE

As it turns out, this is my 100th blog post. Who'd have thunk it! Any how, after a break from blogging I'm ready to take on the second hundred, so let's go.

We, that is citizens of the U.S. of A., sometimes act like cats chasing a flashlight beam. We'll pay attention to a problem right up until the beam moves, then wham, our focus moves to something else. This seems to hold true in just about everything we do as a nation and the question of what to do about the lasting effects of the Great Recession is no different. And that could be a problem.

As the mortgage/housing bubble burst and banks stopped lending the issue that seemed to join Wall Street, Main  Street, government and the individual was the issue of debt. Everybody had too much of it. Of course, we saw right away that this wasn't that big a problem for Wall Street since the Bush Administration was eager to push forward TARP to ease the pain of that particular segment of our economy. Main Street and the individual debtors were not so lucky. I don't even want to get started on the government's debt situation except to remind you of how much fun raising the debt ceiling was. That gave me nightmares.

So, as the whole countries' attention was focused on debt, and in particular, our personal level of indebtedness, we were cautioned from every corner that we owed too damn much, saved too damn little and the whole thing was, at base, a moral failure of the American people. If only we could change our ways. And, as strange as it may seem, we did change. Saving went from -1% to +5%, on average. Consumer spending all but stopped for a while. Some of this was not just a reaction to the moral dilemma, it was the hard economic reality of losing jobs, worrying about losing jobs and not being able to find new jobs. So, why then has the economy not turned around? We're all being good, moral citizens. We're not using credit to buy stuff we don't need. We're saving more. What the heck is the problem?

The problem is our short attention span and "all or nothing" way of dealing with problems. If the problem is too much debt we just need less debt, right? Wasn't that the rallying cry of the GOP during the fight over stimulus spending. "The first thing you do when you find yourself in a hole is... stop digging!" That makes perfect bumper sticker sense, doesn't it? Well, yes and no. And in our economy no is the better answer.

The U.S. economy, before the crisis of 2008, was 70% consumer driven. That is, 70% of all economic activity was people buying stuff. And not just buying stuff, but buying stuff on credit. So clearly the answer had to be, stop digging. But what if the hole one finds oneself in is starting to cave in. In that case one needs to keep digging in order to keep breathing. Go back to that 70% number. When consumers stopped digging, that is buying stuff, layoffs got worse. More people lost their jobs. More companies went under. More pain ensued. Why?

Because a consumer driven economy can't change over night to a saving and investing economy. There is way too much economic inertia. Just open the yellow pages, assuming that you still get such a thing. You'll find page after page of businesses dedicated to selling stuff to you, the consumer. Remember, 70%. No matter how much moral indignation is raised against our borrowing and spending ways, that's what the economy is set up to do. And, unless and until the consumer can start doing some of that spending again the recovery will remain weak. So what can we do?

We need, rather than tight money and increased saving, looser lending and a return to some pre-recession levels of consumer spending. We're seeing some of the latter this holiday season and I think that the results may surprise some folks. I know this sounds like I'm encouraging a return to the bad old days, but I'm only saying that this economy can't change over night, and to expect it to is a recipe for a double dip recession. Yes, we should encourage saving, but when the same banks that want to (and do) charge double digit interest on personal loans and credit card accounts can only offer savers <1% interest on saving accounts I really can't see the value to society of removing any money from the market place. Later, when the crisis is behind us? Sure. Now? Not so much.

So, let's all have a joyful holiday season and get out there and spend. Your country is counting on you! 

THEY SAY THE STIMULUS FAILED...

Ah, autumn. Leaves changing, football on TV (Let's Go Mountaineers!) and the Republicans still telling the same tired lie about the President and the 2009 so called stimulus. What lie is that, you ask? Well, it's actually a compound lie. One which can indite the president and his policies in multiple ways. They go like this.


"Obama lied because..." Or, "The stimulus failed because..." Or the ever popular, "Obama is a failure because..." See the cleaver combining of the President himself with the failed program. So what is all this lie telling and failing about? It's about one little number... 8%.


Here's what happened. During the run up to passing the American Recovery and Reinvestment Act, the said "stimulus," one of the President's advisors, Christina Romer, then chair of The Council of Economic Advisers, made the prediction that the ARRA would bring unemployment down to the aforesaid 8%. Since that time, of course, the unemployment rate has not fallen to 8%, so that, in whatever Never Never Land the Republican Party resides, the entire program was a failure. Period. No discussion needed. Oh ya, and since Obama said it (by way of an adviser's words) he lied to the American people.


This is A number 1, super high quality BS, and to my mind anyone who holds and expresses that position not only shouldn't run for office, he or she should probably be treated for a mental disorder. Let's start with the "Obama lied," group.


No matter how you cut it, paste it, or fold and spindle it, Ms. Romer's statement was, is and always will be, a prediction. The American Heritage Dictionary of the English Language defines the term:
1. The act of predicting
2. Something foretold or predicted; a prophecy
Nothing in the definition of the word relates in any way to the truth of the statement. In fact, we are faced with predictions all the time which we know may not happen. We may say, when we go to work without an umbrella and it rains, that the weatherman lied, but everyone knows it's not a lie. It was a prediction. If that's not enough how about these gems of prediction: "The fighting won't last more than six months." "The war will be paid for by Iraqi oil." "They will greet us as liberators."  Or my favorite, "We know Saddam has WMD and we know where they are." Each of these came from Bush folks before we invaded Iraq. Each was wrong. Point this out to Republicans and see how many rise up on their hind legs and say that George W. Bush lied. So I think we should agree that predictions that prove false are not, on their face, lies.


But, you say, what about the obvious failure of the stimulus to meet the goal that was predicted. Again, one must start from the proposition that a failed prediction or prophecy as to the result expected from some program or action does not necessarily mean that the program or action was a failure. It just means that the particular program or action didn't match the prediction. I can predict that WVU will win tonight's game by 30 points. If they only win by 20 does that mean that the WVU football team is a failure? It may show that I'm a failure at predicting, but it really doesn't say anything about the success or failure of the team.


Likewise,  while Ms. Romer's prediction missed the mark, I think it's a stretch to then declare the entire program a failure because of it. What Ms. Romer is guilty of is a failure to follow Scotty's first law of engineering: When the Captain asks how long the very important repair to the warp engines will take, tell him three hours if you think it will only take an hour. That way being done in an hour, or even two, means you did better than your prediction and the good captain will keep you around. Had Ms. Romer only thought to predict that the ARRA would hold the unemployment rate below 12% we wouldn't be talking about this almost three years later. And let's not ignore a very important fact. The Great Recession was far worse than anyone predicted it would be. In fact the full extent of the downturn is not yet fully known, but just this year we discovered that it was far deeper and wider than was reported even just a year ago. Under those circumstances it looks to me like the ARRA was a success. But then I'm one of those strange fellows that think that any money pushed into the Main Street economy, so long as it stays in the U.S.A., will act as a stimulus.


Now, it may be that the Republicans aren't just mouthing the talking point of the week when they call the stimulus a failure. It just might be that they have a different view of what a prediction should be. Maybe they like that part of the definition that says a prediction is prophecy. Couple that with their often repeated swipes at the President's acting as if he's "The One," and it all makes sense. Of course, to make the logic work out Obama has to actually, you know, be "The One." I don't think their willing to accept that, so their arguments that the ARRA was a failure, or that the President lied, just make them look stupid. It's going to be such a fun election season. I may have to take up knitting!