George Romney's Prodigal Son II

"Up w/ Chris Hayes" is the best "news-talk" show on television. Far and away. Check out this segment on the stark contrast, both as a businessman and a political figure, between Willard Mitt Romney and his father, former chairman of American Motors and Michigan governor George Romney.

Visit msnbc.com for breaking news, world news, and news about the economy

George Romney's Prodigal Son

An informative article at Motoramic by Justin Hyde on "What Mitt Romney Gets Wrong" re: the auto industry "bailout":

Young Willard with his father in better days.

Republican presidential hopeful Willard Mitt Romney renewed his opposition to the Obama administration's bailout of General Motors and Chrysler today in several Michigan newspapers, contending President Obama's rescue made the companies worse. I wish I could leave politics to the professionals, but Romney's take just doesn't square with the facts as I lived them...

 Let me explain, point by point (Romney's words excerpted in bold quotes):


"Three years ago, in the midst of an economic crisis, a newly elected President Barack Obama stepped in with a bailout for the auto industry."

In fact, the bailout began with President George W. Bush, who was forced to lend GM and Chrysler $17.4 billion in December 2008 after Senate Republicans blocked a rescue plan in Congress. Bush told reporters just last week that he was warned by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson that if he didn't act to shore up GM and Chrysler, up to 1 million jobs could vanish. Knowing what we know now, says Bush, "I'd do it again."

"The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better."


The crux of Romney's argument: If Obama had not acted, private companies would have stepped in and run a "managed bankruptcy." What this ignores is that in the fall of 2008, before Obama was even sworn in, no one on Wall Street or anywhere else was willing to lend GM and Chrysler a penny — let alone the $81 billion they and their financial arms eventually needed.

What's The Matter With Red States? The "Entitlement" Hustle

Paul Krugman at NYTimes describes the almost absurd predicament of much of "red state" America. They're hooked on so-called "entitlements" while the GOP's  "severe conservative" pols are angrily pointing their fingers at some imagined class of moochers who are bleeding the government dry, immersed in a "culture of dependency." 

(What Krugman doesn't mention is that there's often a racial sub-text to the opportunistic political rhetoric, which explains the willful blindness and hypocrisy that drives this version of anti-government white populism within the GOP.)  Krugman:

Rick Santorum declares that President Obama is getting America hooked on “the narcotic of dependency.” Mr. Romney warns that government programs “foster passivity and sloth.” Representative Paul Ryan ... requires that staffers read Ayn Rand’s “Atlas Shrugged,” in which heroic capitalists struggle against the “moochers” trying to steal their totally deserved wealth, a struggle the heroes win by withdrawing their productive effort and giving interminable speeches.

Many readers of The Times were, therefore, surprised to learn, from an excellent article published last weekend, that the regions of America most hooked on Mr. Santorum’s narcotic — the regions in which government programs account for the largest share of personal income — are precisely the regions electing those severe conservatives. Wasn’t Red America supposed to be the land of traditional values, where people don’t eat Thai food and don’t rely on handouts? ...

The GOP's Stampede Toward Lunacy

Garry Wills at NYRB:

By a revolting combination of con men and fanatics, the current primary race has become a demonstration that the Republican party does not deserve serious consideration for public office. Take the controversy over contraceptives. American bishops at first opposed having hospitals and schools connected with them pay employee health costs for contraceptives. But when the President backed off from that requirement, saying insurance companies can pay the costs, the bishops doubled down and said no one should have to pay for anything so evil as contraception. Some Republicans are using the bishops’ stupidity to hurt the supposed “moderate” candidate Mitt Romney, giving a temporary leg up to the faux naïf Rick Santorum; others are attacking Barack Obama as an “enemy of religion.”...


The Phony Religious Freedom Argument

The bishops’ opposition to contraception is not an argument for a “conscience exemption.” It is a way of imposing Catholic requirements on non-Catholics. This is religious dictatorship, not religious freedom.

Who's "entitled"?

Center on Budget and Policy Priorities:

Some conservative critics of federal social programs, including leading presidential candidates, are sounding an alarm that the United States is rapidly becoming an “entitlement society” in which social programs are undermining the work ethic and creating a large class of Americans who prefer to depend on government benefits rather than work.  A new CBPP analysis of budget and Census data, however, shows that more than 90 percent of the benefit dollars that entitlement and other mandatory programs[1] spend go to assist people who are elderly, seriously disabled, or members of working households — not to able-bodied, working-age Americans who choose not to work.  (See Figure 1.)  This figure has changed little in the past few years.

CBPP continues:

In a December 2011 op-ed, former Massachusetts Governor Mitt Romney warned ominously of the dangers that the nation faces from the encroachment of the “Entitlement Society,” predicting that in a few years, “we will have created a society that contains a sizable contingent of long-term jobless, dependent on government benefits for survival.”  “Government dependency,” he wrote, “can only foster passivity and sloth.”[2]  Similarly, former Senator Rick Santorum said that recent expansions in the “reach of government” and the spending behind them are “systematically destroying the work ethic.”[3]

Obama's "War on Religion": Stewart takes on The Crazy

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
The Vagina Ideologues - Sean Hannity's Holy Sausage Fest
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

The Difference...

More on Charles Murray's "Coming Apart: The State of White America, 1960-2010" from the New York Times review by Nicholas Confessore:

A Libation Gap?

One of its overriding themes is that economic insecurity doesn’t have much to do with eroding civic values, so we shouldn’t bother using government to tackle inequality. You will learn about working-class laziness, but you will find little discussion of the decline of trade unions or the rise of a service economy built on part-time work without benefits.

Murray dismisses research by scholars who have found that people in bankruptcy court usually end up there because they lost a job, got divorced or faced catastrophic medical bills, pointing to a contrary study of a single year’s worth of bankruptcy filings in Delaware, home to many of America’s credit card companies but very few of its citizens.

Though a self-described libertarian, Murray is not immune to the rage of the 99 percent. He lashes into bloated C.E.O. pay, but chiefly as a symptom of collapsing codes of behavior and propriety. And he is also skeptical that working-class whites are employed less because they can’t find decent jobs. How can the economy have anything to do with it, he asks, when the decades in question have included periods of rapid economic growth? 

Perhaps because not everyone has shared in that growth. While Murray’s new upper class was taking home an ever greater share of national wealth, incomes for almost everyone else were stagnating. During the decade preceding the 2008 bust, according to the Census Bureau, median family income in the United States dropped from $61,000 a year to $60,500. 

Indeed, in comparison with the early 1960s, American workers today are less likely to have pensions, less likely to be able to support a family on a single income and, until the much-reviled ObamaCare law kicks in, less likely to be able to afford health insurance if their employer doesn’t provide it. 

Working-class whites are different from the cognitive elite in at least one way: They have less money.

Quote of the Day

Paul Krugman, at the New York Times, on the state of contemporary conservatism: "tinfoil hats have become a common, if not mandatory, G.O.P. fashion accessory."  Read the rest HERE.

Income Inequality & The Education Gap

Sabrina Tavernise at The New York Times:

Education was historically considered a great equalizer in American society, capable of lifting less advantaged children and improving their chances for success as adults. But a body of recently published scholarship suggests that the achievement gap between rich and poor children is widening, a development that threatens to dilute education’s leveling effects.

It is a well-known fact that children from affluent families tend to do better in school. Yet the income divide has received far less attention from policy makers and government officials than gaps in student accomplishment by race. 

Now, in analyses of long-term data published in recent months, researchers are finding that while the achievement gap between white and black students has narrowed significantly over the past few decades, the gap between rich and poor students has grown substantially during the same period. 

“We have moved from a society in the 1950s and 1960s, in which race was more consequential than family income, to one today in which family income appears more determinative of educational success than race,” said Sean F. Reardon, a Stanford University sociologist. Professor Reardon is the author of a study that found that the gap in standardized test scores between affluent and low-income students had grown by about 40 percent since the 1960s, and is now double the testing gap between blacks and whites. 

In another study, by researchers from the University of Michigan, the imbalance between rich and poor children in college completion — the single most important predictor of success in the work force — has grown by about 50 percent since the late 1980s. 

White America Coming Apart?

Murray, center, is worried about "White America"

Charles Murray, the right-wing think-tanker most notorious for the "Bell Curve" thesis asserting racial differences in intelligence, has come out with a new book focused on the apparent decline of white people in the US: “Coming Apart: The State of White America, 1960-2010."

Murray - true to form - blames liberal "elites" for what he interprets as moral disarray among the white working class. Most of this concern relates to declining labor force participation and declining rates of marriage among lower income white people.

Paul Krugman, reviewing Murray's case, suggests the real causes of increasing stress on working class individuals and families:

Most of the numbers you see about income trends in America focus on households rather than individuals, which makes sense for some purposes. But when you see a modest rise in incomes for the lower tiers of the income distribution, you have to realize that all — yes, all — of this rise comes from the women, both because more women are in the paid labor force and because women’s wages aren’t as much below male wages as they used to be.

"Those were the days..."

For lower-education working men, however, it has been all negative. Adjusted for inflation, entry-level wages of male high school graduates have fallen 23 percent since 1973. Meanwhile, employment benefits have collapsed. In 1980, 65 percent of recent high-school graduates working in the private sector had health benefits, but, by 2009, that was down to 29 percent.

So we have become a society in which less-educated men have great difficulty finding jobs with decent wages and good benefits. Yet somehow we’re supposed to be surprised that such men have become less likely to participate in the work force or get married, and conclude that there must have been some mysterious moral collapse caused by snooty liberals...

The Catholic Contraception "Controversy"

98% of Catholics use birth control proscribed by the hierarchy

The current heat over requirements that employers such as universities and hospitals that are affiliated with churches provide full health insurance coverage, including access to contraception is based on some misinformation regarding who supports the Affordable Care Act regulations and who is raising a ruckus claiming the Obama administration is engaged in a "war on religion" as some sort of secularist plot. While the Catholic hierarchy set off this controversy, the shock troops against the administration are mostly coming from elsewhere.

The graph below shows current polling on public support, broken down into denominational factions ("white evangelicals" is an unfortunate-but-necessary separate race-based category, because the right-wing white populism that has infected many self-defined evangelicals among the GOP's largely lily-white base is a more defining characteristic than their asserted Christian values - values which are interpreted quite differently among very traditionalist or fundamentalist Christians who are also informed by the real-world experiences of African-Americans.)

Note that support for the contraception coverage is even higher among Catholics than the general population, while "white evangelicals" - i.e. demographic terrain for a major "usual suspects" segment of the hard-core GOP base among resentment-driven white cultural populists - are the predictable locus of dissent  :

 Via Wonkblog.

The fallout of this episode - wherein the President is supported not only by most citizens but by most Catholics - is that in service of the GOP's desperate last-ditch partisan wars of cultural and racial resentment, we get nutty stuff like this coming from the mouth of Rick Santorum:   "This is a very hostile president to people of faith. He’s a hostile president, not just to people of faith, but to all freedoms." 

Santorum, true to form, is some combination of irresponsible and perverse in his mendacious mudslinging.  In fact, Santorum himself is hostile to freedom in that he has expressed opposition not just to a woman's right to choose as regards abortion, but to all forms of birth control. He is on the extreme wing of the anti-gay equality crusades. Santorum is shouting from the gutter. That he cloaks his hate and lies in high-volume religiosity makes them just that much more disgusting.

"How Romney would tax us"

Tax expert, David Cay Johnston, has it:

President George W. Bush cut taxes for almost everyone who paid income taxes. Romney would make the Bush tax cuts permanent. But that’s only a first step.

He would also raise taxes on poor families with children at home and those going to college. Romney does this by reducing benefits from the child tax credit and the earned income tax credit and by ending the American Opportunity tax credit for college education.

Without these tax breaks, the poorest fifth of taxpayers would pay $157 more in taxes in 2015 than under current policy, the Tax Policy Center says in its analysis of Romney’s plan. The second poorest group would pay $82 more, according to the center, whose past work has been praised by Republicans and Democrats alike.


TAX CUTS
While Romney would make these two groups — the poorest 125 million Americans — pay higher taxes, the top 60 percent all would get tax cuts. The top tenth of one percent would save, on average, $464,000 a year, the Tax Policy Center’s analysis says.

His plan gives one third of his tax cuts to the top tenth of one percent of taxpayers. By comparison, Bush gave this group only one eighth of his cuts.

Romney would also eliminate estate and gift taxes, a policy that I believe would damage the spirit of striving that has served us so well until now, replacing it with a new era of dynastic wealth.
Romney’s campaign did not answer specific questions about his tax proposals, referring me instead to the plan itself.

Tax Fairness - eliminate lower rates for capital gains

Mark Schmitt at "New Deal 2.0":

The special rate for capital gains and dividend income is the first problem to fix in tax reform, and not just for millionaires or those over $250,000. It creates enormous distortions in economic activity — all the complicated-sounding loopholes you hear about, like the “carried-interest loophole” or the “founders’ stock loophole,” are really just scams to redefine ordinary income as capital gains to get the preferred tax rate. Eliminate the special rate and the loopholes disappear.

Nor do lower rates for capital gains, in the long-term, promote growth or encourage investment that wouldn’t otherwise occur. Economist Alan Blinder pointed out in 2007 that after the Tax Reform Act of 1986 eliminated the special rate for capital gains, the economy continued to boom. The better “Buffett Rule” should be simply, “All income should be taxed in the same way, regardless of whether it comes from work or investment.”

Note: It's useful to remind ourselves of who was President when the Tax Reform Act of 1986 was passed, eliminating special lower rates for capital gains income.  Ronald Reagan championed this reform, which raised taxes on capital gains by thirty percent with no apparent impact on investment or GDP growth. The rates were eventually lowered under both Bushes.

Who benefits from this tax loophole?  According to Forbes editor Robert Lenzer (via Eric Alterman), "The top 0.1 percent—about 315,000 individuals out of 315 million—are making about half of all capital gains on the sale of shares or property after one year; and these capital gains make up 60 percent of the income made by the Forbes 400."

SuperBowl Surprise: Clint Eastwood endorses Obama... I mean, uh... the US auto industry

The hard Right will hate Clint for becoming a spokesman on behalf of Detroit's revival driven by President Obama's reaching out to an industry in distress, but I'm certain that he could care less. He's Clint Eastwood...and they're not.

A tale of two Romneys

Michael Tomasky at the New York Review of Books:

Gov. signing collective bargaining bill for public employees

George Wilcken Romney, the former automobile executive who became the centrist Republican governor of Michigan in 1963, was considered a presidential possibility leading up to the 1964 election. Moderate Republicans around the country were getting awfully nervous about this Goldwater fellow and seeking out plausible alternatives. But Romney, a tall and square-jawed man with impressive hair, had made a commitment to the voters of his state that he would serve four years, and Romney was a man who meant what he said, so a 1964 run was out of the question.

The task of opposing Barry Goldwater fell to other moderates—Nelson Rockefeller and Pennsylvania’s William Scranton. Romney did, however, leave his mark on the campaign: having deemed Goldwater an enemy of civil rights, which he backed ardently, he walked out of the party’s convention at San Francisco’s Cow Palace. He had his seventeen-year-old youngest son, Mitt, in tow, and thus Mitt, too, occasionally gets credit...for stalking away from his party on a matter of the highest principle.

Today, as the younger Romney struggles to secure the GOP nomination that seemed his for the taking until his crushing loss to Newt Gingrich in South Carolina, to think about that anecdote and his father’s towering influence on him...and to watch Willard Mitt Romney run a campaign in which he has charged as hard and fast to the right as he could on almost every issue you can think of lead inevitably to comparisons between the two Romneys, comparisons in which the younger Romney comes up dramatically short.

What the heck is the PBGC? Believe it or not, a very important reason to vote for President Obama instead of that Bain Capital guy!

Visit msnbc.com for breaking news, world news, and news about the economy

A Reagan Conservative debunks the current GOP's economic proposals

Picture credit: mariopiperni.com

Given the iconic status of Ronald Reagan and "Reaganomics" that is serially invoked among the current crop of GOP candidates - particularly at the level of presidential aspirants - it's useful to listen to one guy who actually did help formulate Reagan's economic strategy three decades ago and who isn't impressed with the rubber-stamped "Reagan(!)" pretenders.

Bruce Bartlett - one of the few sane voices left in contemporary conservatism (or, perhaps more accurately, left in the wake of extremist right-wing radicalism that pays lip service to conservatism) - was a domestic policy advisor in the Reagan administration and adheres to conservative fiscal policy, which he doesn't interpret as simply "more tax cuts all of the time."

Here's Bartlett's explanation of why the current GOP agenda - tied to simplistic invocations of Ronald Reagan - doesn't make sense in 2012:

In their debates, ads and speeches, the candidates for the Republican presidential nomination are vying for the label of most Reagan-esque.

On taxes, “I take the Reagan approach,” former senator Rick Santorum said at a recent Florida debate.

On the economy, “under Ronald Reagan, we had . . . the right laws, the right regulators, the right leadership,” former House speaker Newt Gingrich said in a debate before his South Carolina primary victory.

Judging from the candidates’ tax proposals, they seem to believe that the most Reagan-like candidate is the one with the biggest tax cut. But as the person who drafted the 1981 Reagan tax cut, I think Republicans misunderstand the premises upon which Reagan’s economic policies were based and why those policies can’t — and shouldn’t — be replicated today...

Willard M. Romney breaks with Reagan regarding the "very poor", the working poor and extensions of the "safety net"

Mark Schmitt at The New Republic:

Let’s give Mitt Romney the benefit of the doubt: He didn’t really mean it when he said, “I’m not concerned about the very poor.” Or, let’s just say he cares about them no less than he cares about the rest of us. Only 41 percent of respondents in a recent poll said that Romney “cares about people like me,” so if the wisdom of crowds is any guide, the very poor are hardly unique as objects of his indifference.

"Battling for America's soul..."

Let’s look instead at Romney’s follow-up: That there’s a “safety net” for the very poor, and “if there are holes in it, I’ll fix them.” This isn’t just a walk-back of the “not concerned” comment. It represents a very real element of an emerging conservative argument, one that deserves to be taken seriously. In this antiquated vision of the economy, everything is fine for most people, but there is a slice of the “very poor” who might need some help. Poverty, in this vision, is the exception; prosperity and opportunity without government aid is the norm...

"Unto whom much is given, much is required..."

President Obama speaking at the National Prayer Breakfast:

At a time when it's easy to lose ourselves in the rush and clamor of our own lives, or get caught up in the noise and rancor that too often passes as politics today, these moments of prayer slow us down. They humble us. They remind us that no matter how much responsibility we have, how fancy our titles, how much power we think we hold, we are imperfect vessels.

We can all benefit from turning to our Creator, listening to Him. Avoiding phony religiosity, listening to Him. This is especially important right now, when we're facing some big challenges as a nation.

Our economy is making progress as we recover from the worst crisis in three generations, but far too many families are still struggling to find work or make the mortgage, pay for college, or, in some cases, even buy food.

Our men and women in uniform have made us safer and more secure, and we were eternally grateful to them, but war and suffering and hardship still remain in too many corners of the globe. And a lot of those men and women who we celebrate on Veterans Day and Memorial Day come back and find that, when it comes to finding a job or getting the kind of care that they need, we're not always there the way we need to be.

It's absolutely true that meeting these challenges requires sound decision-making, requires smart policies. We know that part of living in a pluralistic society means that our personal religious beliefs alone can't dictate our response to every challenge we face.

But in my moments of prayer, I'm reminded that faith and values play an enormous role in motivating us to solve some of our most urgent problems, in keeping us going when we suffer setbacks, and opening our minds and our hearts to the needs of others.

We can't leave our values at the door. If we leave our values at the door, we abandon much of the moral glue that has held our nation together for centuries, and allowed us to become somewhat more perfect a union.

Frederick Douglass, Abraham Lincoln, Jane Addams, Martin Luther King, Jr., Dorothy Day, Abraham Heschel -- the majority of great reformers in American history did their work not just because it was sound policy, or they had done good analysis, or understood how to exercise good politics, but because their faith and their values dictated it, and called for bold action -- sometimes in the face of indifference, sometimes in the face of resistance.

Let the games continue... UPDATED!

I'm sorry but I can't help myself. This is great news:

LAS VEGAS -- An advisor to Donald Trump says he will make a major announcement in Las Vegas tomorrow. Sources tell the 8 News NOW I-Team Trump will endorse Newt Gingrich.

According to Trump advisor Michael Cohen, "Donald J. Trump will be making a major announcement tomorrow at 12:30 p.m. at Trump International Hotel & Tower, Las Vegas, Nevada... The announcement will pertain to the Presidential race."


Gingrich enters the Nevada Caucus after getting beat by Mitt Romney in Florida. He has spent the day campaigning in Reno.

Last year, Trump decided not to run for the GOP nomination after attacking President Barack Obama over the validity of his birth certificate.

Update: "I don't know of anybody who does a better job of getting attention by announcing that he will presently announce something," Gingrich told the AP.

Update 2: Epic fail. The Titanic - against all odds - has sunk. We misunder-reported. The Ultra-Donaldest Maxi-Trumpalicious Uber-PsuedoMogul-Entity endorsed Mitt Romney. This, of course, is great news for Barack Obama! 

Omigod! David Brooks reads another book...but doesn't really want us to know what it's actually about.

Brad DeLong catches David Brooks in another embarrassment - like not forthrightly telling his readers what the true subject of the book he's frothing over happens to be:

"David Brooks sure reads a lot of books."

Charles Murray's new book is called: Coming Apart: The State of White America, 1960-2010.

Now David Brooks:

"The Great Divorce: I’ll be shocked if there’s another book this year as important as Charles Murray’s “Coming Apart.” I’ll be shocked if there’s another book that so compellingly describes the most important trends in American society…"

How can a book that explicitly leaves out Asian-Americans, Hispanic-Americans, Amerindians, African-Americans, people of mixed race, and Arab-Americans possibly describe "the most important trends in American society"?

"Liberals play a central role in unfairness."

How can the New York Times editors publish a piece without asking David Brooks why he does not dare mention the subtitle of the book he is puffing?

Charles Murray, of course, is the right-wing "think-tanker" currently writing for the American Enterprise Institute and, notoriously,  co-author of "The Bell Curve" tome which argued that differences in intelligence were embedded in race.

About half-way into Brooks' latest adulatory column he notes that  Murray "is at his best" analyzing "behavioral differences" between the well-educated and the poorly educated and that "he’s mostly using data on white Americans, so the effects of race and other complicating factors don’t come into play." 

That Murray's entire study of "the most important social trends" is premised as a meditation on the circumstances of white Americans exclusively is rather conspicuously evaded by our deep-thinking gadfly, Mr. Brooks.

Update: A commenter at Brooks' NYTimes column site, Aaron Hamburger, offers this cogent observation:

Brooks writes "he’s mostly using data on white Americans, so the effects of race and other complicating factors don’t come into play." Why is "white" not a race? What are the other "complicating factors" that don't come into play?

And why do I get the feeling that this whole column reeks of nostalgia for a time when people who had "complicating factors" were kept at society's margins, not needing to be accounted for.

Three key regulators saw the warning signs of a serious financial crisis. All three were ignored. All were women.

Keith Chrostowski of The Kansas City Star:

Summers: "Issues of women's intrinsic aptitude?"

More people in positions of power — government regulators, especially — should have foreseen the subprime financial crisis coming.

They could have saved us from this mess.

But wait …

Three regulators did indeed ring warning bells — at the right time, in the right places, and loud enough for other banking and financial system overseers.

Brooksley Born

 All three were women: Brooksley Born, Sheila Bair and Susan Bies.

All three were ignored.

You may have heard before about the warnings issued by Born, the head of the Commodity Futures Trading Commission in the 1990s, and Bair, the chairwoman of the Federal Deposit Insurance Corp. from 2006 to 2011.

Bies’ concerns, however, came to light recently when the Federal Reserve released transcripts of its policy meetings from 2006, a full two years before the crisis exploded.

Susan Bies

Bies was a central bank board member from 2001 to 2007. Several times in the transcripts she said she was worried about the housing bubble.

Bies warned fellow board members that exotic mortgages — for instance, negative amortization loans in which balances become bigger and not smaller over time — were too dangerous for consumers.

Sheila Bair

She warned about the Wall Street-created securities backed by risky mortgages.

“I just wonder about the consumer’s ability to absorb shocks,” she said at Fed meeting in May 2006.

“The growing ingenuity in the mortgage sector is making me more nervous as we go forward in this cycle, rather than comforted that we have learned a lesson. Some of the models the banks are using clearly were built in times of falling interest rates and rising housing prices. It is not clear what may happen when either of those trends turns around.”

The Death of Glass-Steagall: a former top banking exec's "Mea Culpa" and a former Senator's "I told you so!"

Bill Moyers interviews John Reed, the former head of Citigroup - who was personally involved in the extinction of the Glass-Steagall Act, which for 70 years separated traditional banks from speculative investment banking, and now regrets it - and former Senator Byron Dorgan - who was one of the few in Congress to forcefully oppose the change and warn of great risks, predicting with almost eery prescience in 1999 that "within ten years" the country would come to regret this landmark deregulation.

Moyers & Company Show 103: How power and influence helped big banks rewrite the rules of our economy. from BillMoyers.com on Vimeo.

Thought for the day...on the GOP's Newtron Bomb

From John Heileman, who's been following Newt Gingrich on the campaign trail for New York magazine:

(S)o much has he come to despise Romney and the Republican Establishment that has brought down on him a twenty-ton shithammer in Florida, and so convinced is he of his own Churchillian greatness and world-historical destiny (that t)he same antic, manic, lunatic bloody-mindedness that has made him such a rotten candidate in the Sunshine State may be enough to keep him the race a good long time.

 You go, guy!

State and Local Budget Cuts Are Stalling Recovery

Jared Bernstein:

Sources: BEA, BLS

Last year, state and local squeeze shaved about 0.3% off of GDP and cost 266,000 jobs.  A simple regression of state/local job losses on the GDP contribution finds that for every point of growth that the states and locals take off of GDP, employment in the sectors falls around 700,000.

We generally recognize that GDP losses map onto job losses but the fit is not usually this tight—there are lags in the generalized relationship between growth and jobs and lots of other moving parts.  But that’s less the case in state and local governments.  Here, the chain of events is pretty obvious and pretty clear.  You squeeze their budgets, it shows up quickly and directly in growth and jobs.

Conversely, and here’s the policy part, were we to use federal stimulus to help relieve their budgets, we could get this relationship running in a better direction.

Update: The always righteous Larry Mishel (president of the Economic Policy Institute) points out that the job losses I’m citing above are only part of the story.  States and cities buy private services and contract with private firms.  Ethan Pollack writes: “For each dollar of budget cuts, over half of the jobs and economic activity lost are likely to be in the private sector.”

We need more federal assistance (aka "stimulus") to state and local governments. Of course, given the current Congress it's not going to happen.

Bill Maher wants to know: Who the F*** Is Saul Alinsky?

Newt Gingrich, trying to keep incoherent fear alive on the GOP campaign trail:  “The centerpiece of this campaign, I believe, is American exceptionalism versus the radicalism of Saul Alinsky,”

Once more: Fannie and Freddie did NOT cause the housing bubble!

"Fannie & Freddie's fault" fabulists.

Worth repeating, because the false narrative keeps getting recycled cynically - most recently by Mitt Romney in his desperate desire to become President at any cost to whatever integrity he might have had - another  debunking of the "Fannie and Freddie caused the housing bubble" Big Lie.  This one comes from, interestingly, Mark Zandi who is chief economist for the credit ratings agency, Moody's, which was itself a key player in marking up junk sub-prime mortgage securities so that unwitting investors would buy them. From the horses mouth, Zandi comments at the Washington Post:

There is plenty of blame to go around for the U.S. housing bubble, but not much of it belongs to Fannie Mae and Freddie Mac. The two giant housing-finance institutions made many mistakes over the decades, some of them real whoppers, but causing house prices to soar and then crater during the past decade weren’t among them.

GOP Pols, Right-Wing Billionaires, Chinese "Communists" and the art of having it every which way in the citadels of Money & Power.

According to a 2008 New Yorker article on Sheldon Adelson - Newt Gingrich's financial angel in the GOP primaries and current poster boy for post-"Citizens United" unrestricted campaign spending - the cagy casino mogul knows well how the game of money and politics is played, and with much bigger stakes than the career of a disgraced former House Speaker.

In 2001 Adelson - well known for his right-wing views and close ties to GOP politicians - met with the mayor of Beijing in the course of promoting his Las Vegas Sands Inc. casino business to the Chinese ruling group. Adelson saw his entrprise as a perfect fit for the island of Macao, a former Portugese colony which is controlled as a "special administrative region" by China and which had been exempted from the Communist Party's bans on gambling.

Global gambling mogul Adelson

But the Beijing mayor brought up an apparently unrelated concern - legislation pending in Congress criticizing China's human rights record, that was targeted in opposition to Beijing hosting the 2008 Summer Olympic Games.  The official asked if the politically-connected Adelson could do anything to block this US legislation as a favor to the Communist Party-controlled government he was lobbying to open China's doors to his casino business?

According to The New Yorker (citing testimony in court documents filed in an eventual lawsuit when one of Adelson's presumed business partners alleged he had been ripped off by the casino mogul):

Adelson said in court he immediately made calls on his cell phone to Republican friends in Congress—including Tom DeLay, then the majority whip—who had received generous support from Adelson. DeLay told him that there was indeed a resolution pending about China and the Olympics.

Representative Tom Lantos, then the highest-ranking Democrat on the House International Relations Committee, had introduced a resolution opposing China’s Olympic bid, saying, “China’s abominable human rights record violates the spirit of the games and should disqualify Beijing from consideration.”

The Buffet Rule

Greg Sargent at Plum Line:

Picture this scenario. The Senate holds a high-profile vote on a proposal focused directly on implementing the Buffett Rule, one that would bring the current tax rate for millionaires paying lower rates on investments up to 30 percent. This, at at exactly the moment when the GOP is picking a nominee who is worth $250 million and is personally benefitting to an enormous degree from the current rate — one that’s lower than many middle class taxpayers pay.

It could happen...Senator Sheldon Whitehouse is set to announce a proposal to do just this...

The Politifiction of "Politifact"

Who checks the bogus "fact checkers" downgrading the President's State of the Union speech? 

 
Jared Bernstein does a pretty good job:

OMG…this is beyond preposterous.

Politifact—the self-anointed fact checkers—grade this statement from the President speech tonight as “half-true:”

“In the last 22 months, businesses have created more than three million jobs. Last year, they created the most jobs since 2005.”

This is not half true or two-thirds true.  It is just true.

So why, I ask you, why do they go where they go?  Because of this:

In his remarks, Obama described the damage to the economy, including losing millions of jobs “before our policies were in full effect.” Then he describe [sic!] the subsequent job increases, essentially taking credit for the job growth. But labor economists tell us that no mayor or governor or president deserves all the claim or all the credit for changes in employment.

Really?  That’s it?  That makes the fact not a fact?  I’ve seen some very useful work by these folks, but between this and this, Politifact just can’t be trusted. Full stop.

Citizens United!

Las Vegas Sands casino mogul Sheldon Adelson, who has bankrolled the Gingrich campaign to the tune of $10 Million.

The Bains of Capitalism

James Suroweicki, at The New Yorker, on the implications of presidential aspirant Willard Romney's particular business experience:

Willard Mitt Romney Front and Center at Bain

The real reason that we should be concerned about private equity’s expanding power lies in the way these firms have become increasingly adept at using financial gimmicks to line their pockets, deriving enormous wealth not from management or investing skills but, rather, from the way the U.S. tax system works. Indeed, for an industry that’s often held up as an exemplar of free-market capitalism, private equity is surprisingly dependent on government subsidies for its profits.

Financial engineering has always been central to leveraged buyouts. In a typical deal, a private-equity firm buys a company, using some of its own money and some borrowed money. It then tries to improve the performance of the acquired company, with an eye toward cashing out by selling it or taking it public. The key to this strategy is debt: the model encourages firms to borrow as much as possible, since, just as with a mortgage, the less money you put down, the bigger your potential return on investment. The rewards can be extraordinary: when Romney was at Bain, it supposedly earned eighty-eight per cent a year for its investors. But piles of debt also increase the risk that companies will go bust.

It's the demand, stupid...

Former Treasury Secretary Larry Summers at Financial Times:

Government has no higher responsibility than insuring economies have an adequate level of demand. Without growing demand, there is no prospect of sustained growth, let alone a significant fall in joblessness. And without either of these there is no chance of reducing debt-to-income ratios...

The best chance for economic recovery involves governments working directly to increase demand and to augment business confidence.

Eye of the Newt

"Eye of newt, and toe of frog, Wool of bat, and tongue of dog...
For a charm of powerful trouble, Like a hell-broth boil and bubble."
                                        Macbeth (IV, i, 14-15)

Newt Gingrich is a chameleon-like charlatan who appears to constantly reinvent himself for his audience du jour, in variations on his persistent grandiosity, pretensions to power and ambition to accumulate wealth. His conduct in the GOP debates has been a study in resentment honed into startlingly effective demagogy. But there's really  nothing new here. Lest we forget one of his more shameless recent-but-pre-GOP-primary moments of shabby moral dissolution - having nothing to do with ex-wives - Charles Blow, at The New York Times, reminds us:

In September 2010, he told the National Review Online that President Obama followed a “Kenyan, anti-colonial” worldview. Gingrich continued, “I think he worked very hard at being a person who is normal, reasonable, moderate, bipartisan, transparent, accommodating — none of which was true.”

Gingrich was commenting on a Forbes article by Dinesh D’Souza, the president of the King’s College in New York City. In the article, D’Souza said of President Obama:

“Our president is trapped in his father’s time machine. Incredibly, the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s. This philandering, inebriated African socialist, who raged against the world for denying him the realization of his anti-colonial ambitions, is now setting the nation’s agenda through the reincarnation of his dreams in his son.”

Gingrich called the article the “most profound insight I have read in the last six years about Barack Obama.”

Ironically, what Newt was offering us was a profound insight into his own lack of intellectual integrity or moral boundaries, which would come to full fruition in his more recent conduct as a presidential aspirant.

"The crisis raises legitimate questions about the system itself"

Mohamed El-Arian - the chief executive of a major global investment firm, PIMCO - asks some serious questions about the  capitalist system itself, HERE @ Financial Times: "four years into the crisis, little has been done to repair the damage coherently and comprehensively and to safeguard the real victims, let alone counter the risk of further costly dislocations."

Economists at Sea...

Economist Robert Johnson suggests some ways to salvage the reputation and relevance of his profession in the wake of multiple economic crises and an increasing sense that the "experts" have been either bought off or are clueless:

As the Oscar-winning documentary Inside Job illustrated, there is a very lucrative market for false visions of financial-market behavior that legitimate the desires of participants to be unshackled and make more money. But good policy prescriptions are public goods that represent the social good and not just the concentrated financial interests. Unfortunately, as economists beginning with the work of Adam Smith have repeatedly shown, public goods are under­provided in the marketplace. In addition, the reputation of the economics profession is itself a collective good, and those who have tarnished it are not adequately penalized for the damage they do to their fellow professionals when they accept large sums of money in return for marketing a perspective that benefits vested interests.

These are problems that some within economics have been aware of for a long time, but the discipline as a whole has been unable to address them. The onus is on the profession to face these challenges and help lead society off the rocks.

How to Save Economics

"For God So Loved The 1%"

Historian Kevin Kruse at the NYTimes:

IN recent weeks Mitt Romney has become the poster child for unchecked capitalism, a role he seems to embrace with relish. Concerns about economic equality, he told Matt Lauer of NBC, were really about class warfare.

“When you have a president encouraging the idea of dividing America based on the 99 percent versus 1 percent,” he said, “you have opened up a whole new wave of approach in this country which is entirely inconsistent with the concept of one nation under God.”

Mr. Romney was on to something, though perhaps not what he intended.

"Supply Side Jesus" courtesy of Al Franken

The concept of “one nation under God” has a noble lineage, originating in Abraham Lincoln’s hope at Gettysburg that “this nation, under God, shall not perish from the earth.” After Lincoln, however, the phrase disappeared from political discourse for decades. But it re-emerged in the mid-20th century, under a much different guise: corporate leaders and conservative clergymen deployed it to discredit Franklin D. Roosevelt’s New Deal.

During the Great Depression, the prestige of big business sank along with stock prices. Corporate leaders worked frantically to restore their public image and simultaneously roll back the “creeping socialism” of the welfare state. Notably, the American Liberty League, financed by corporations like DuPont and General Motors, made an aggressive case for capitalism. Most, however, dismissed its efforts as self-interested propaganda. (A Democratic Party official joked that the organization should have been called “the American Cellophane League” because “first, it’s a DuPont product and, second, you can see right through it.”)

Realizing that they needed to rely on others, these businessmen took a new tack: using generous financing to enlist sympathetic clergymen as their champions. After all, according to one tycoon, polls showed that, “of all the groups in America, ministers had more to do with molding public opinion” than any other.

Obama and his critics

"I never said change would be easy."

"Self-described conservative" commentator Andrew Sullivan responds forcefully to the unhinged attacks on President Obama from the GOP, distorting him as some sort of socialist who doesn't believe in capitalism, as an appeaser and - in the crackpot cartoon painted by Mitt Romney and others - a mortal threat to "the soul" of America:

None of this is even faintly connected to reality—and the record proves it. On the economy, the facts are these. When Obama took office, the United States was losing around 750,000 jobs a month. The last quarter of 2008 saw an annualized drop in growth approaching 9 percent. This was the most serious downturn since the 1930s, there was a real chance of a systemic collapse of the entire global financial system, and unemployment and debt—lagging indicators—were about to soar even further. No fair person can blame Obama for the wreckage of the next 12 months, as the financial crisis cut a swath through employment. Economies take time to shift course.

But Obama did several things at once: he continued the bank bailout begun by George W. Bush, he initiated a bailout of the auto industry, and he worked to pass a huge stimulus package of $787 billion.

All these decisions deserve scrutiny. And in retrospect, they were far more successful than anyone has yet fully given Obama the credit for. The job collapse bottomed out at the beginning of 2010, as the stimulus took effect. Since then, the U.S. has added 2.4 million jobs. That’s not enough, but it’s far better than what Romney would have you believe, and more than the net jobs created under the entire Bush administration. In 2011 alone, 1.9 million private-sector jobs were created, while a net 280,000 government jobs were lost. Overall government employment has declined 2.6 percent over the past 3 years. (That compares with a drop of 2.2 percent during the early years of the Reagan administration.)

To listen to current Republican rhetoric about Obama’s big-government socialist ways, you would imagine that the reverse was true. It isn’t.

The basis of growing income inequality

The math, via Jared Bernstein:

Willard Romney: "Let's talk about this in quiet rooms..."

"In the decade of the 2000s, productivity  (economic output - i.e. aggregated national income - divided by hours worked) grew 28% while real median household income fell 7%.  Since 1979, productivity is up 84% and real median compensation, including fringe benefits, rose 12%."

Simply put, the pie keeps getting bigger as economic productivity increases dramatically, but the slices going to the typical worker - from the middle class to the working poor - keep getting smaller relative to the size of the whole pie.