Posts Tagged ‘Ron Paul’

The Party of More Debt? The GOP.

Saturday, February 25th, 2012

The following information comes from a report by the Committee for a Responsible Federal Budget  (CRFB).   The CRFB is hardly a liberal organization and is mostly considered a ‘centrist’ one that warns of impending doom if America doesn’t get it’s fiscal house in order–more along the Simpson Bowles channel in other words.  We disagree entirely, of course, because the ‘centrist’ theme takes aim at all the social programs installed beginning with social security during the Great Depression 80 years ago.  Our real problem is the crony capitalism we’ve developed the past 40 years where the wealthy are given all the tax breaks because of their money influence on Congress.  The result has been increasing deficits and debt due to lack of government funding.  It’s not a coincidence that the only administration to produce surpluses was a Democrat one, that of President Bill Clinton.

Gingrich’s tax and spending policies would add $7 trillion to the debt over the intermediate term.  Romney’s policies would add $250 billion.  Santorum’s policies would add $4.5 trillion.  Only Ron Paul, who would essentially entirely do away with Social Security, Medicare and Medicaid, the Environmental Protection Agency, the Food and Drug Administration–in short all discretionary spending other than that for defense, which he would also cut drastically by simply installing a non-involvement policy with the rest of the globe–actually cuts the debt by $2.2 trillion.

There are some interesting figures in the article.  One is that eliminating the health care reform law adds $80 billion to the debt.   Like most policy organizations, CRFB realizes health care needs structural reform in that the system needs to move away from a fee based business model to a health outcomes model.   All the GOP candidates ignore this truth and just shift the cost to families while doing nothing to control cost inflation created by the fee based model.

The big negatives for reducing debt in all the proposals comes from giving more tax cuts to businesses and the wealthy.

The take away?  The GOP is not now nor has it ever been interested in reducing deficits or debt.  The current crop (except for Ron Paul who’s policies would never be enacted for good reason) are all dissimulators, manipulators of data who know the mass media will never get around to actually studying the proposals so the public will be kept ignorant of the truth, if not completely mis-informed.

Beezer here.  From crony capitalism to journalistic malfeasance the country’s economic health is being systematically dismembered.  It’s a sad sight to witness.  Our only hope is that somehow the public will see through the circus and demand fairness in the tax system, and a restoration of social welfare as one of the nation’s top priorities.  Once again hat tip to economist’s view which linked to a Baseline Scenario article, which in turn linked to the CFRB research.

 

 

Is There A Gold Bubble?

Saturday, July 23rd, 2011

Hard to say but it certainly looks like one.  There’s been a surge in demand and gold production can’t keep up.  There’s also that old ‘irrational exuberance’ thing going on as well, facilitated by a huge marketing (sales) push.  So there’s definitaly a whiff of bubble factory here.

That said, irrational exuberance can last a lot longer than one can stay solvent. 

There’s also a big negative inherent in gold.  Outside of  a marginal industrial use, gold doesn’t really produce any wealth–the jewelry industry aside.  At some point most people will want to liquidate their gold because gold isn’t money, no matter what Ron Paul says. 

So what will be the needle that pricks this balloon?  Probably a dose of fiscal sanity in the US and Europe that creates jobs which will create a ‘risk on’ environment strong enough to stall or even drop gold prices.  Once gold prices break some trendlines, it will be ‘Katie Bar The Door.’

Robert Reich Points Out Republican Talking Point Of ‘Job Killing Regulations’ Is ‘Dumb.’

Thursday, February 10th, 2011

Former Secretary of Labor under Clinton, economics professor Robert Reich, explains that the latest Republican marketing slogan is just that–a slogan.  Taken literally, ‘job killing regulations’ is just ‘dumb,’ Reich explains.

Wednesday, February 9, 2011

  • Why the Republican Attack on “Job-Killing Regulations” is Dumb

     

    Republicans aim to end all “job-killing regulations” — especially those that, according to House Speaker John Boehner, are “strangling” business with detailed requirements over health, safety, the environment, corporate governance and finance.

    Here’s another instance of where the White House’s attempt to preempt Republican rhetoric (the President said last week his administration would root out all nonsensical and inefficient regulation) ends up legitimizing it — and reframing the public debate around an issue that’s hardly central to what ails America.

    The reason we have continued sky-high unemployment has nothing to do with excessive regulation. There was no sudden outpouring of federal regulation in 2007 before the economy tanked and millions lost their jobs.

    If anything, the economy unraveled because of too little regulation. Wall Street went on a binge, remember? The Street could get almost free money from the Fed (which had reduced interest rates to near zero) and do just about whatever it wanted with it. Thirty years of deregulation, culminating with the dismantling of Glass-Steagall and the abject failure of regulators at the Fed and the SEC to use the authority they still had, enabled the Street to make bundles of money and expose the rest of the economy to unprecedented levels of risk.

    The Fed had slashed interest rates in the early 2000s, by the way, because the corporate looting scandals at Enron, Worldcom, Sunbeam, and other major corporations had sapped investor confidence. Those scandals themselves wouldn’t have happened had securities regulations been stronger and better enforced.

    No one wants unnecessary regulation. And rules ought to be clear and simple. But let’s be real. Most of the complexity and verbiage that finds its way into the Code of Federal Regulations is the result of industry lawyers and lobbyists who exploit every potential ambiguity to avoid doing what lawmakers intend — thereby necessitating ever-more detailed and picayune rules to close the loopholes. It’s an endless cat-and-mouse game that runs from regulatory agencies through the courts and then back again. And it’s occurring right now, as regulations are being drawn up to put the healthcare and financial laws into effect.

    There’s no necessary tradeoff between regulations and jobs. Regulations that are designed well — that tell industry what to achieve by a certain date but don’t dictate exactly how (such as fuel economy standards) — can generate innovation as companies compete to find the most efficient solutions. And innovations can lead to more jobs as they spawn new products and industries.

    Even where there is a tradeoff — where regulations are costly and those costs result in fewer jobs — it still makes sense to opt for regulation when the public benefits exceed the costs to industry. We could have millions more jobs tomorrow if we eviscerated all health and safety regulations and allowed our air to turn yellow and our rivers and lakes to become fetid stinkholes. But that would be dumb.

    “Job-killing regulations” is a silly phrase that substitutes for real thought. And it’s a distraction from the hard work of creating more jobs in America.”

  • Beezer here.  The public has been fed a steady diet of this shallowness.  Instead of serious debate informed by experts and rational thought, we instead get essentially meaningless slogans.  We are a country full of marketing experts after all.  The ‘winners’ in politics are almost always the ones who can capture public discontent and focus it on political opponents.  Ron Paul, for example, uses the current public discontent over a deep recession, to push that same public far to the right and much more libertarian.  The public, of course, doesn’t have any background about libertarianism.  And there’s literally no historical example of libertarianism being applied anywhere.  At least we have examples of Communism and the obvious failures of that economic approach.  Not so with libertarianism, a utopian world view that every previous generation had the good sense to avoid.

    Maybe Churchill was right.  ‘Americans always do the right thing.  After they’ve tried all the wrong things first.’

    Once again, thanks to Mark Thoma’s economist’s view for highlighting the Reich article.

    Liberal US Senator Nails What Taxpayers Underwrote In Recession Fight.

    Thursday, December 2nd, 2010

    Bernie Sanders (I-Vt) is a liberal member of the US Senate.  In the recent financial reform legislation Sanders was able to tack on an amendment that mandated the Federal Reserve disclose what it had done to support banks and other corporations.  Fed Chair Ben Bernanke strenuously opposed this amendment, which also mandated the Government Accounting Office (GAO) conduct an audit of the Fed books.

    The GAO audit is still underway, but the Fed has now disclosed what it did fighting the recession and saving insolvent banks and other corporations.  From the press release from Sanders’ office.

    “WASHINGTON, Dec. 1 – Calling the revelations “jaw dropping,” Sen. Bernie Sanders (I-Vt.) said today’s disclosure by the Federal Reserve that it gave banks and other institutions an estimated $3.3 trillion in emergency loans and other assistance during the financial crisis “begins to lift the veil of secrecy at the Fed.”

    The estimated $3.3 trillion in liquidity and more than $9 trillion in short-term loans and other financial arrangements dwarf the $700 billion Treasury Department bank bailout out signed into law under President George W. Bush…..

    “Almost two years ago I asked Chairman Bernanke to tell the American people which financial institutions and corporations received trillions of dollars as part of the Wall Street bailout.  He refused.  Today, as a result of an audit-the-Fed provision I put into the financial reform bill, we finally learn the truth – and it is astounding,” Sanders said. (Read his full statement here.)

    “We now know that Fed loaned trillions of dollars at zero or near-zero interest rates not only to the largest financial institutions in this country, but also to many of our largest corporations – including GE, McDonalds and Verizon.  Most surprising, the Fed also lent huge sums of money to foreign private banks and corporations” he added.

    Among the corporate beneficiaries were Citigroup, which received over $1.8 trillion; Morgan Stanley, which received nearly $2 trillion; Goldman Sachs, which received nearly $600 billion; and Bear Stearns, which received more than $960 billion in short-term loans with an interest rate as low as 0.5 percent.  

    The Fed’s multi-trillion bailout was not limited to Wall Street and big banks, Some of the largest corporations in this country also received a multi-trillion bailout.  Among those are General Electric, to which the Fed made over $16 trillion in financing under a commercial paper funding facility alone; McDonald’s; Verizon; and Toyota.

    While the Fed loans were intended to stabilize the financial system and the entire economy, Sanders said today’s disclosure underscores that “the Fed failed to require loan recipients to invest in rebuilding our economy and protect the needs of ordinary Americans.”

    For example, at a time when big banks have nearly $1 trillion in excess reserves parked at the Fed, the Fed did not require those institutions to increase lending to small and medium-size businesses as a condition of the bailout?  At a time when large corporations are more profitable than ever, why didn’t the Fed demand that corporations that received backdoor bailouts create jobs and expand the economy once they returned to profitability? At a time when the Fed lent money to investors holding credit card debt, it did not require any interest rate caps for consumers, leading many of them to pay credit card interest rates of 28 percent or higher.

    Sanders said the disclosure also raises questions about the degree to which secret Fed loans turned out to be direct corporate welfare to big banks.  He called for an investigation to determine whether banks took loans at near-zero interest and then loaned that same money money back to the federal government at a considerable higher interest rate.  “Instead of using this money to reinvest in the productive economy, I suspect a large portion of these near-zero interest loans were used to buy Treasury securities at a higher interest rate providing free money to some of the largest financial institutions in this country on the backs of American taxpayers,” Sanders said.

    The disclosure of the Fed’s loan portfolio, Sanders said, raised another troubling issue: “How many big banks repaid Treasury Department bailouts in order to avoid limits on executive compensation received no-strings attached loans from the Federal Reserve?”  Overall, Sanders noted, Wall Street executives are making more money today than before the financial crisis.

    The four largest banks in this country – Bank of America, JP Morgan Chase, Wells Fargo, and Citigroup – issue half of all mortgages in this country.  Today’s disclosure reveals that these banks received hundreds of billions from the Fed.  “How many Americans could have remained in their homes, if the Fed required these bailed-out banks to reduce mortgage payments as a condition of receiving these secret loans?” Sanders asked.”

    Beezer here.  Sanders is a liberal, but no doubt this amendment was supported by libertarians in Congress like Ron Paul (R-Tx) in the House.  The far right meets the far left when it comes to the Fed.  Interesting.

    And of course these types of statistics have been all over the liberal internet blogs since the Fed went into action fighting the recession.  Now they are admitted to by the Fed.  And the audit isn’t done yet, either.  Beezer looked for news on this in the mass media, but except for a few references on CNBC that was it.  Wonder why?  Because it puts Republicans who continue to fight against financial reform (that would be the majority of Republicans, Paul excepted) in a bad light.

     

    Reagan Advisor Bruce Bartlett Rips ‘Starve The Beast’ Republican Ideology.

    Friday, November 26th, 2010

    Bruce Bartlett, domestic advisor to President Ronald Reagan, Treasury official under the first President Bush and Ron Paul (R-Texas) staffer on the House Banking Committee, is not a liberal.

    But he’s becoming increasingly critical of his party’s ideology.  In a Fiscal Times article entitled ‘Starve the Beast: Just Bull, not good Economics,’ Bartlett does a good job dismantling and exposing this slogan’s emptiness. 

    “It ought to be obvious from the experience of the George W. Bush administration that cutting taxes has no effect whatsoever even on restraining spending, let alone actually bringing it down. Just to remind people, Bush inherited a budget surplus of 1.3 percent of the gross domestic product from Bill Clinton in fiscal year 2001. The previous year, revenues had been 20.6 percent of GDP, spending had been 18.2 percent, and there had been a budget surplus of 2.4 percent.

    When Bush took office in January 2001, we were already well into fiscal year 2001, which began on Oct. 1, 2000. He immediately pushed for a huge tax cut, which Congress enacted. In 2002 and 2003, Bush demanded still more tax cuts, even as the economy showed no signs of having been stimulated by his previous tax cuts. The tax cuts and the slow economy caused revenues to evaporate. By 2004, they were down to 16.1 percent of GDP. The postwar average is about 18.5 percent of GDP.

    Spending did not fall in response to the STB (starve the beast) decimation of federal revenues; in fact, spending rose from 18.2 percent of GDP in 2001 to 19.6 percent in 2004, and would continue to rise to 20.7 percent of GDP in 2008. Insofar as the Bush administration was a test of STB, the evidence clearly shows not only that the theory doesn’t work at all, but is in fact perverse….”

    Beezer here.  Bartlett also addresses a corollary argument this group uses.

    The Moore-Vedder article argues strenuously that tax increases must never be considered no matter how big the deficit is. The reason, based on research Vedder has been updating since the 1980s, is that tax increases always feed the beast, leading to spending increases larger than the tax increase. Originally, he said that spending would rise $1.58 for every dollar of tax increase, leading to an increase in the deficit rather than a reduction. Vedder now says that spending only rises $1.17 for every dollar of tax increase.

    By this logic, the tax increase enacted in 1993, which raised the top federal income tax rate to 39.6 percent from 31 percent, should have caused a massive increase in the federal budget deficit. In fact, it did not. Spending was 22.1 percent of GDP in 1992 and it fell every year of the Clinton administration, to 21.4 percent of GDP in 1993, 21 percent in 1994, 20.6 percent in 1995, 20.2 percent in 1996, 19.5 percent in 1997, 19.1 percent in 1998, 18.5 percent in 1999, and 18.2 percent in 2000.

    And contrary to another commonly-held Republican idea — that all tax increases reduce revenue via the Laffer Curve — revenues rose from 17.5 percent of GDP in 1992 to 20.6 percent in 2000.

    According to Republican mythology, repeated by Moore and Vedder, the budget was balanced only because Republicans got control of Congress in the 1994 elections. But the deficit had already shrunk from 4.7 percent of GDP in 1992 to 2.9 percent in 1994. Budget experts who don’t shill for the Republican Party generally agree that the budget reforms and tax increases of 1990 and 1993 — which were both enacted against strenuous opposition from almost every Republican in Congress — deserve the bulk of the credit for bringing down spending and the deficit with tough budget enforcement rules and higher taxes…….

    Starve the beast is a crackpot theory, and its flip side that higher taxes invariably feed the beast is no better. They are just self-serving rationalizations for Republican budgetary irresponsibility.”

    Note: A few years ago, I went into great detail explaining the origin and development of STB in an academic journal. My article is available online for those with an interest in the gory details. In July, I posted a bibliography of more recent academic research in The Fiscal Times Ñ all of which shows no evidence whatsoever that tax cuts reduce spending. More recently, the International Monetary Fund has confirmed this conclusion in a September working paper .

    Beezer again.  This bullheaded reluctance to alter one’s beliefs in the face of overwhelming evidence is a common feature of human nature.   The tragedy is that if an entire political party falls victim to this herd-like behaviour then the nation suffers.  Bartlett is an insider and was present when many of these ideas germinated and came to fruition, including the Reagan years when Reagan advisor Jude Wanniski came up with the ‘Two Santas’ political strategy of winning elections by promising tax cuts AND lower deficits in the same breath.

    Unlike the current Republican leadership, however, Bartlett altered his viewpoint when the facts forced  themselves to the forefront.  Which is what Beezer had to do, as well.

    Reasonably progressive tax tables help pay the bills.  What drives robust economies isn’t taxes, it’s other dynamics that are far more important.  Leave the tax tables alone and instead spend time considering these dynamics–dynamics such as maintaining industrial ecologies, full employment policies, trade balances, strong infrastructures and diverse research and development activities that expose the nation to innovation breakthroughs. 

    Something the Left and the Right Might Agree Upon.

    Wednesday, October 14th, 2009

    Writing in the Guardian, a United Kingdom newspaper, Dean Baker thinks that reining in the banks and the Federal Reserve may be the flashpoint that will coalesce public opinion for real financial reform.

    In the article Baker points out that two polar opposities in Congress have joined forces taking aim at the Federal Reserve.

    “A bill that would require the Fed to disclose what it did with more than $2tn in loans to banks and other financial institutions was originally co-sponsored by Ron Paul and Alan Grayson, one of the most conservative and one of the most progressive members of Congress. Due to public pressure, it now has more than 270 co-sponsors.”

    A macroeconomist and co-founder of the powerful Center for Economic and Policy Research, Baker believes public opinion is so strong that reform is inevitable, even though it will be fought tooth and nail by monied bank and other financial industry forces.  Real change, he maintains, occurs only when public opinion is strong enough to overcome powerful, monied lobbies.  Such a moment in time may be now, he says.  Following is the entire article. 

    “The elites hate to acknowledge it, but when large numbers of ordinary people are moved to action, it changes the narrow political world where the elites call the shots. Inside accounts reveal the extent to which Lyndon Johnson and Richard Nixon’s conduct of the Vietnam war was constrained by the huge anti-war movement. It was the civil rights movement, not compelling arguments, that convinced members of the US Congress to end legal racial discrimination. More recently, the town hall meetings dominated by people opposed to healthcare reform have been a serious roadblock for those pushing reform.

    Those disgusted by the bank bailouts, and the bankers who brought us this recession, will have a chance to make their views known when the American Bankers Association has its annual meeting in Chicago this month. A large coalition of labour, community and consumer organisations are organising a protest at this “Showdown in Chicago“.

    A big turnout at this event can make a real difference. Just to review the scorecard, most of the country is still suffering the fallout from the bankers’ irrational exuberance of the housing bubble era. The Congressional Budget Office (CBO) and other forecasters expect the suffering to endure for years to come.

    The US unemployment rate is about to cross 10%, with an additional 9 million workers only able to find part-time work. CBO projects that unemployment will not return to normal levels until 2014. Almost 200,000 people are losing their homes every month through foreclosure. Tens of millions of people who had expected a comfortable retirement just saw most of their wealth disappear with the collapse of the housing bubble. State and local governments are being forced to lay off school teachers and fire fighters under the pressure of enormous budget deficits.

    But not everyone is suffering. Thanks to the bailout programmes put in place last fall, most of the country’s major banks are back on their feet. In fact, in the most recent quarter, bank profits hit a new record high as a share of all corporate profits.

    And the banks are sharing their wealth. Many of their top executives and high performers will be getting bonuses this year worth millions of dollars. In some cases the bonuses will be in the tens of millions.

    In the meantime, in elite Washington circles people are busy making plans for a national sales tax so that the government can limit the fiscal damage caused by the bankers’ recession. A sales tax is of course very regressive, since low- and moderate-income people typically spend the vast majority of their income, while our banker friends will more likely to be able to save some of their income or spend it in other countries where they will not be paying this new sales tax.

    To summarise: the bankers wrecked the economy with their greed, ran off with taxpayer dollars in a massive bailout and now plan to raise taxes for the rest of us. If that picture doesn’t sound quite right, then go to Chicago.

    This is a case where the divisions are not left-right, but of the elite against everyone else. When Congress was debating the Tarp bank bailout last fall, members of Congress were hearing calls from people across the political spectrum who were outraged that their tax dollars were going to the banks that had wrecked the economy. A higher percentage of Republicans than Democrats ended up voting against this bankers’ piñata.

    The policies that will rein in the banks: reform of the Federal Reserve Board to make it democratically accountable, a tax on financial speculation to pay for the bankers’ mess and restrictions on the bank abuses of consumers that caused the carnage have support from people on both the left and right.

    A bill that would require the Fed to disclose what it did with more than $2tn in loans to banks and other financial institutions was originally co-sponsored by Ron Paul and Alan Grayson, one of the most conservative and one of the most progressive members of Congress. Due to public pressure, it now has more than 270 co-sponsors.

    This is exactly the sort of alliance that gets the elite worried. Reining in the power of the financial industry will be a long, hard-fought war, but it is one that must be fought. President and Nobel peace prize winner Barack Obama may not have been able to bring the Olympics to Chicago, but everyone who wants to retake our country from the banks can bring their backside there on 25 October.”

    Beezer here.  Once again, thanks to Economist’s View for the link on Baker’s article.




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