Month: November 2012

Maybe they shouldn’t have nominated the vulture capitalist

by David Atkins

As Republicans face up to the reality that they have little leverage going into the “fiscal cliff,” they’re doing their best to shore up support for keeping taxes on the wealthy as low as possible on a variety of fronts. One of those fronts is capital gains income: namely, money made by sitting on one’s behind and watching stock returns come in. Money that is taxed at an abysmally low 15% rate, as opposed to the much higher rate paid by people who actually work for a living.

Raising that rate a little won’t cause a drop in investment: after all, unless the ROI is very low, a good investment is a still a good investment, whether the returns are taxed at 15% or 30%. There may be a few investment decisions on the margins of profitability that might be affected, but if we’re going to be in the business of cutting deficits, the negative impact of those decisions wouldn’t come close to the negative impact of taking money out of the hands of poor and middle-class consumers who spend their money directly back into the economy.

But these arguments are a distraction, anyway. Republicans aren’t concerned about the health of the economy so much as about the offshore bank accounts of their wealthy donors. Those wealthy donors have been skating by politically on the fact that Americans vastly underestimate income inequality and don’t understand the degree to which all the wealth has been concentrated at the very top. Most Americans don’t know that capital gains investments are taxed at much lower rates than labor. If they knew and internalized that information, it would cause a political earthquake.

So maybe Republicans shouldn’t have nominated a vulture capitalist who would ensure that the capital gains rate became a big campaign issue:

Clint Stretch, a former staffer at the Joint Committee on Taxation, said capital gains and dividends could play a role in a fiscal-cliff compromise, given that Republicans are saying they are open to revenue but not individual rate increases.

“Clearly, folks are motoring around, trying to find a way to raise taxes on high-income individuals without raising the top individual rate,” Stretch, most recently at Deloitte Tax, told The Hill. “There seems to be some softness on the treatment of capital gains.”

During the presidential campaign, Romney’s low tax rate received front-page coverage. The GOP nominee paid tax rates of roughly 14 percent on millions of dollars in income in recent years, in large part because of the preferential rate on capital gains.

“Mitt Romney’s personal situation didn’t do capital gains any favors,” Stretch said.

“The message that came across during the campaign became one of, ‘It’s not fair for somebody to make that much money and only pay that much tax,’ ” McCrery said.

The wealthy elite in America aren’t really all that smart. They live in a social bubble that is largely disconnected from the real world. Most of them got fantastically lucky through social connections, having one bright idea once and the social capital to leverage it, or just being in the right place at the right time. And like everyone, they want desperately to be loved. More so, actually, since their wealth tends to give them an insecurity complex. Most of them know deep down that they don’t really deserve to lead lives of palatial privilege compared to the rest of America. For many, that leads to a sense of noblesse oblige that understands the necessity to give back to the society that enabled their success. But for many others, a psychological retreat to Objectivism begins to self-justify and protect themselves from guilt.

Part of that process involved the attempt to send one of their own to the White House, a vulture capitalist who would receive an affirmative majority of the vote, proving that the American people would gladly accept the superiority of their social class.

They were wrong. The American people took a look at Mitt Romney, his preferential tax rates and his condescending attitude and said, “no thanks.” And now those preferential tax rates may be in trouble.

Such is life, and such is the peril of hubris.

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Peggy’s fugue state

by digby

La Noonan is just so weary of the fight. And she knows who to blame:

You watch and wonder: Why does it always have to be cliffs with this president? Why is it always a high-stakes battle? Why doesn’t he shrewdly re-enact Ronald Reagan, meeting, arguing and negotiating in good faith with Speaker Tip O’Neill, who respected very little of what the president stood for and yet, at the end of the day and with the country in mind, could shake hands and get it done? Why is there never a sense with Mr. Obama that he understands the other guys’ real position?

Yes, that’s a good question. Especially considering this from the first term:

“Obama Tuesday night trekked to the Chevy Chase, Md., home of conservative columnist George F. Will to talk politics and get to know some of his fiercest intellectual adversaries: Charles Krauthammer, William Kristol, Larry Kudlow, David Brooks, Rich Lowry, Peggy Noonan, Michael Barone, and Paul Gigot.”

And this:

In the end, despite visiting Republicans in Congress Tuesday, stripping out two provisions the GOP objected to, and inviting several Republicans for drinks at the White House this evening, Obama did not get a single Republican to vote for the [stimulus] bill. Obama’s efforts did win him some compliments from Republicans who figure they can make deals with the Democratic president when the bill goes to the Senate next week. … “The president was clear that he was going to continue to reach out to us, continue to listen to our ideas and I think we have to remember we’re at the beginning of this process,” House Minority Leader John Boehner, R-Ohio, told “Good Morning America” today. Those comments marked a softer tone from Tuesday morning, when Boehner and other Republican leaders tried to head off Obama’s lobbying efforts by calling on Republicans to oppose the stimulus plan even before the president had met with them.

Or, perhaps this:

“Senators and Congressmen will come back in September afraid to vote against the American people,” DeMint predicted, adding that “this health care issue Is D-Day for freedom in America.”

“If we’re able to stop Obama on this it will be his Waterloo. It will break him,” he said.

I’m going to go out on a limb and say that the opposition party has been the one that isn’t arguing in good faith rather than the president. Nobody but a member of their own party could have reached out more. But then, according to Republican mythology, President Obama has been a socialist revolutionary bent on destroying all that is good and true about America, so in Noonan’s conservative bubble none of that ever happened.

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What Krugman Said

by tristero

Oh, yes. 

The important thing to understand now is that while the election is over, the class war isn’t. 

…the increase in life expectancy is concentrated among the affluent; why should janitors have to retire later because lawyers are living longer?

…there is, in fact, no way limits on deductions can raise as much revenue from the wealthy as you can get simply by letting the relevant parts of the Bush-era tax cuts expire. So any proposal to avoid a rate increase is, whatever its proponents may say, a proposal that we let the 1 percent off the hook and shift the burden, one way or another, to the middle class or the poor.

…you need to look very closely at any proposals coming from the usual suspects, even — or rather especially — if the proposal is being represented as a bipartisan, common-sense solution. 

Exactly.

Fiscal kabuki

by digby

I’ve gotten a number of questions about why I’m not more euphoric about the White House’s demands in the “fiscal cliff” negotiations, so I suppose I should explain more fully.

This is the opening bid in a negotiation and we still have no idea what the bottom line will be. The best news is that the White House didn’t capitulate prematurely, but then they have the tax cut expiration looming to force the issue, so they have strong leverage. On the other hand, the earlier negotiations still show just how far the administration has been willing to go under the debt ceiling pressure so the Republicans aren’t operating completely without leverage (or information about the bottom line) either.

It is not unreasonable for activists to be leery of this deal for myriad reasons, not the least of which is the fact that the fact that negotiating deficit reduction in this economic climate and around the debt ceiling and the Bush tax cuts expiring is bullshit to begin with and never should have happened. And, I’m sorry, but the Grand Bargain is Obama’s idea so he’s partially responsible for getting us to this place. But considering how far down that rabbit hole we already are, this is a much better starting point than we might have expected. (Of course, one never knows how much the pressure the hysterical activists, unions and others may have had in making the administration take a harder line. The squeaky wheel and all that jazz …)

In case you were wondering whether this really is negotiation kabuki, here’s an interesting article from Ryan Grim about the background of this offer. The offer has been out there for some time but the Republicans didn’t take it seriously. When Geithner presented it on the Hill it appears they decided it would be a good strategy to take it public.

Republicans in Congress reacted angrily to an Obama administration proposal delivered Thursday by Treasury Secretary Timothy Geithner that offered to avert the fiscal cliff by raising $1.6 trillion in new taxes, in exchange for some $400 billion in cuts to entitlement programs to be negotiated next year.

But the proposal wasn’t new. The offer that has Republicans furious was presented to them earlier this month by President Barack Obama at the White House, according to a well-placed Democratic source, and confirmed by two GOP sources involved in the talks.

What surprised Republicans wasn’t the newest offer, but who delivered it. The original offer, delivered by Obama, simply wasn’t taken seriously. Republicans assumed that Obama’s initial offer floated to congressional leaders would go like many others he’s made in the past, and quickly soften amid staff talks. That seemed to be happening, which left them taken by surprise by Geithner.

Acknowledging that Thursday’s offer was essentially the same as the one presented by the president, a GOP aide said that White House “staff has been back-channeling flexibility up until now. This was the first time their staff echoed his fantasyland numbers.” A second senior GOP aide called Thursday’s offer “a more detailed version” of Obama’s. “The day after the White House meeting, we gave them our framework. It took them 10 days for them to give us theirs and it didn’t reflect any of the conversations we have had since then,” he said.

A source involved in the talks provided HuffPost with a GOP summary of the White House offer as presented Thursday. A Democratic source involved in the talks confirmed that it accurately reflects the offer, adding that it’s “no different than what was discussed last Friday.”

It looks to me as if the Republicans are doing their usual whiny complaining about “unfairness” to me. And the White House doesn’t seem to be taking their bait. So far, so good. The question remains: are they willing to go over “the cliff”? It’s ok by me. Whether Washington is ok with it remains to be seen. Fasten your seatbelts.

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Socialism is GREAT for profits

by digby

That is if you believe Obama has thrust socialism upon the good old US ‘o A.

That is, by the way, an all time high for corporate profits according to a report from the Bureau of Economic Analysis.

To paraphrase Robert Reich, why is it they need all these tax cuts again?

Via Steve Benen, who quips:

It’s against this backdrop that the right still complains bitterly that the president is a radical socialist who says mean things about “job creators.” To ask slightly more of those enjoying record profits, Obama’s detractors argue, is an outrage. Indeed, many of the business leaders who’ve benefited under the status quo invested heavily to defeat the president — ostensibly because they’ve been so dissatisfied with the status quo.

Increasingly, their cries are literally unbelievable.

One might conclude that they’re incredibly thin-skinned, dumb or greedy. My personal suspicion is, as David concludes below, that they are surprisingly a bit of all three. But they are not entirely irrational — they have spent a lot of of their huge profits to buy both parties and they want something to show for it. They figured Mitt would be their best bet to make a killing but while they put on a show against the Democrats for appearances sake, they know that at the end of the day they own them too.

The good news is that the people intervened in the election (which I’m sure chaps the millionaires’ hides) and it’s just possible that President Obama has decided to spend his second term burnishing his legacy as a liberal instead of a centrist. At the very least he seems to have gotten the message that in order to make deals with lunatics he needs to stop pretending they aren’t lunatics. We still don’t know what he thinks the Democrats should be willing to “sacrifice” or how far he’ll go to appease them but it’s good news that they’re at least starting from a position of strength.

I think we can be fairly sure that the millionaires will be just fine no matter what happens.

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Yes, Romney really did think he would win

by David Atkins

There’s been a minor argument in the blogosphere over whether team Romney really was shocked by the results on election night, or whether the supposed shock is a pretense to cover for lying to their base.

It looks increasingly like they did truly believe they were going to win. The New Republic has an exclusive look at Romney’s internals. They were off–sometimes way off:

The first thing you notice is that New Hampshire and Colorado are pretty far off the mark. In New Hampshire, the final internal polling average has Romney up 3.5 points, whereas he lost by 5.6. In Colorado, the final internal polling average has Romney up 2.5 points; he lost by 5.4. “I’m not sure what the answer is,” Newhouse told me, explaining that his polls were a lot more accurate in most of the other swing states. “The only ones we had that really seemed to be off were Colorado—a state that even Obama’s people tweeted they thought it was going to be one of their closest states—and the New Hampshire numbers, which seemed to bounce a lot during the campaign.”

This is mostly true, but not entirely. Set aside Florida and Virginia, for which I don’t have internal poll numbers, but which the campaign apparently believed it was poised to win. Among those I do have, the Iowa number is also questionable, showing the race tied even though Romney ended up losing by almost 6 points. If Romney’s internal polling number in Iowa was roughly accurate, it would imply that Obama won every single undecided voter in the state, something that’s highly unlikely.

Wasn’t the rationale for the Romney campaign that Mitt was a great executive who was good with numbers and could manage and hire smart, effective people?

It’s increasingly obvious that at just about every level the wealthy elites in this country aren’t nearly as talented or clever as people give them credit for. They’re good at making deals. They know the right people. They have a good knack for social intelligence and little compunction about skimming a lot of money off the top of the labor of others.

But smart, talented and effective? Hardly.

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Jobs not austerity

by digby

Not that more than 300 economists could possibly have anything useful to say about our economy, but still, this is interesting:

The U.S. economy, once in free-fall toward a new depression, has begun to recover. But we are still mired in a prolonged slump marked by mass unemployment, rising poverty, and declining wages. And the fragile recovery is threatened by obsessive concern with cutting deficits that has infected both parties.

As even Federal Reserve Chairman Ben Bernanke recognizes, it is long term unemployment, not excessive deficits or debt, that is now inflicting the greatest human toll and economic damage. Polls show that voters agree joblessness and a bad economy are much higher priorities than deficits.

Yet too many in Washington are fixated on cutting public spending to balance the budget, not on how to put people back to work and get our economy going. There is no theory of economics that explains how we can deflate our way to recovery. Businesses are not basing investment decisions on how much Congress cuts the debt in 2023. As Great Britain, Ireland, Spain and Greece have shown, inflicting austerity on a weak economy leads to deeper recession, rising unemployment and increasing misery.

In a deep recession, deficit reduction is a moving target. If you cut spending and consumer purchasing power in an already depressed economy, unemployment rises and revenues fall — and the goal of a smaller deficit keeps receding like a mirage in a desert. When private purchasing power is depressed by the aftermath of a financial collapse, only public investment can make up the gap.

The budget hawks have the sequence backwards. Public outlay for jobs and recovery come first, growth is restored, and revenues follow. Budget cuts in a deep slump lead only to a deeper slump.

The government should invest in areas vital to our economy — to repair crumbling infrastructure, to build 21st-century smart-grid, public transportation and renewable energy systems, and to create public and private sector jobs. We should also help states prevent layoffs of teachers and other public servants, make early care and higher education more affordable, and create public service jobs throughout the nation. It can do so by borrowing at record low interest rates. We can also stimulate recovery without increasing deficits by increasing taxes on the wealthy and pumping the proceeds directly into the economy.

Both bipartisan and conservative deficit reduction plans — Simpson-Bowles, Rivlin-Domenici, and the Republican budget — magically assume a recovery to “normal” levels of employment. Yet, the economy is nowhere near normal growth, and budget cutting will only retard growth. At the end of the year, we face a congressionally-created “fiscal cliff,” with automatic “sequestration” spending cuts everyone agrees should be stopped to prevent a double-dip recession. That threat has led to backroom negotiations, backed by a multimillion dollar public relations campaign, toward a “grand bargain” that would maintain tax give-aways for the rich; cut Social Security, Medicare, and Medicaid; and impose new, job-killing spending cuts. This is no bargain, and it should be rejected.

President Obama should be commended for proposing a new jobs program. But unless the balance of power in Congress changes dramatically, there is a serious danger that after the election the austerity lobby will prevail.

We need jobs first. With recovery, deficit reduction will come of its own accord thanks to increased revenues in an improving economy. That was the case in the three decades after World War II — when the debt to GDP ratio declined from over 120 percent of GDP in 1945 to under 30 percent by 1978.

In 1945, our leaders placed a priority on putting people to work, not cutting spending. So government doubled down with public investments like the GI bill, housing, and highways — and widespread collective bargaining and equal opportunity laws made sure the rewards of growth were widely shared. Today, we need the same scale of public investments that made sure the greatest generation and their children enjoyed growth, opportunity, and shared prosperity.

In the face of today’s weak economy, the Federal Reserve has vowed to sustain extraordinary measures until unemployment comes down and the economy picks up. But as Chairman Ben Bernanke observed, very low interest rates alone cannot fix this economy. To make sure the American people are not crippled by another lost decade of joblessness, we need presidential leadership — and congressional action — to spur jobs and growth, not dangerous austerity.

Let’s not try to actually fix our problems. Let’s stage a full blown hysterical meltdown for no good reason instead.

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Opening bid

by digby

So apparently the Republicans went running to the press with President Obama’s opening offer for the fiscal cliff negotiations, and hare having themselves a good old fashioned cry about it:

House Republicans said on Thursday that Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, an immediate new round of stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.

The proposal, loaded with Democratic priorities and short on detailed spending cuts, was likely to meet strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced $400 billion in savings from Medicare and other entitlements, to be worked out next year, with no guarantees.

He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might well be outnumbered by upfront spending increases, including at least $50 billion in infrastructure spending, mortgage relief, an extension of unemployment insurance and a deferral of automatic cuts to physician reimbursements under Medicare.

“The Democrats have yet to get serious about real spending cuts,” Mr. Boehner said after the meeting. “No substantive progress has been made in the talks between the White House and the House over the last two weeks.”

Maybe someone should tell Boehner that the idea here is for him to make a counter offer. I would expect it to be the Ryan budget on steroids. And then we can get back to reality.

I am pleased that the administration didn’t open with their bottom line this time. Although his proposals all come from his budget and deficit reduction plans from earlier it will be very interesting to see how the Villagers react to the heresy of failing to propose massive cuts in vital programs. That is, above all, what’s expected of any “serious” proposal.

Let the games begin.

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One woman leaves the Fox News cult

by David Atkins

Witness Fox News cult deprogramming in action:

The movie in question is Chasing Ice, a documentary about receding glaciers due to climate change. I’m told it’s very good, though I haven’t seen it yet myself.

But regardless of the documentary’s merits, it’s instructive to note why this woman disbelieved so fervently in climate change. She just trusted Bill O’Reilly. She didn’t look into the evidence or consider alternate views. She just trusted Bill.

That’s how the Fox News cult works: repeat an endless stream of false drivel that conforms to certain people’s false and prejudicial expectations for how the world works and a lot of people will believe it because the authoritative man on the teevee said so.

There’s no “winning the argument” with these people, a few lifechanging experiences like this woman’s notwithstanding. If the Fox News watchers are to be reached at all, there has to be action taken to break the bond of codependent trust they’ve developed with their cultic abusers.

Update by digby: Dennis Hartley review the film Chasing Ice, here

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It’s not just the Tea Party anymore

by digby

This is good news. Apparently, liberals on the hill and outside the beltway were not pleased by that report in Politico this morning and have come out swinging:

Democratic Rep. Keith Ellison, the chairman of the 77-member Progressive Caucus, told Salon that his members would not support entitlement cuts. “Any agreement to meet our end-of-the-year deadlines will need a large portion of the House Democratic Caucus to pass. Progressives will not support any deal that cuts benefits for families and seniors who rely on Medicare, Medicaid and Social Security to put food on the table or cover their health costs,” he said.

Outside groups took an even tougher line.

“If this report in Politico is correct, then some ‘senior Democrats’ are sorely misguided about where their base stands. So let me be crystal clear. Any benefit cuts in Medicare, Medicaid, or Social Security, including raising the retirement or eligibility age, are absolutely unacceptable,” Ilya Sheyman, the campaign director at MoveOn.org told Salon. “More than 80 percent of MoveOn’s seven million members say they want us to fight a deal that cuts those benefits, even if it also ends all of the Bush tax cuts for the top 2 percent. And that’s a mainstream position everywhere except in the lobbyist-cash-infused DC cocktail circuit,” Sheyman continued.

There will be consequences, he warned, for Democrats who support a deal that cuts entitlements. “Bottom line: Any Democrat who votes to cut Medicare, Medicaid, or Social Security benefits does so at his or her own peril, and shouldn’t be in the least bit surprised to be held accountable by MoveOn members in the next primary election.”

Now, there are cuts to the programs that would not hurt beneficiaries, and that offers up some wriggle room. (Why democrats want to do that is unclear since the Republicans have shown they will run against them on the issue as they did in 2010, but everyone’s so hooked on the delusion of deficits that I suppose that’s a problem for another day.)

The details of the cuts in the Politico article were vague, and it’s unclear if they represents real cuts to benefits or not. “That’s a crucial distinction,” said Adam Green, the co-founder of the Progressive Change Campaign Committee. “What’s worried some about the Politico article is that it kind of tossed in reforms or efficiencies along with talk about raising the Medicare retirement age or adjusting the cost of living adjustment — those two things would essentially start a nuclear war on the left,” Green said. “Those are the two big things. Those are benefit cuts. Those actively hurt seniors.”

As I wrote earlier, this is not something about which liberals either in the House or outside should trust the administration. The White House already showed its hand a year ago and we would all be fools to think they won’t go there again if they can get away with it. Ellison’s words are very welcome.

Update: I should add: will they make a difference? Who knows …

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