Romney's plan to dig a deeper hole...

John Cassidy at The New Yorker:

In today’s Wall Street Journal, the Columbia economist Glenn Hubbard, who is one of Mitt Romney’s top economic advisers, has an op-ed piece entitled “The Romney Plan for Economic Recovery.” When I saw the headline, I felt a rush of anticipation: at last, I thought, here is the big new jobs initiative that the G.O.P. campaign is relying on to turn things in its favor.

I was mistaken. The first two thirds of Hubbard’s piece is taken up with an attack on the Obama Administration’s economic record: ineffective stimulus, too much regulation, failure to tackle the housing market—all very familiar stuff. When Hubbard eventually gets to laying out Romney’s alternative, there is nothing new either, just a reiteration of the existing policy plaform: a vague promise to cut federal spending and reduce the budget deficit, an even vaguer plan to cut taxes but in a “revenue-neutral fashion,” and a commitment to repeal Obamacare and Dodd-Frank. Judging by this piece, and by recent statements from Romney himself, the G.O.P. campaign still doesn’t have a recovery program worth the name. Indeed, if we are to believe the evidence of our eyes and ears, he remains committed to immediate spending cuts that could well bring on another recession.

Mitt Romney wants to raise your taxes and cut his

 David Firestone at NYTs:

The Romney campaign’s increasingly desperate attempts to dismiss a new study of its tax plan are a pretty good sign that the study is devastating. That isn’t to say the campaign is trying to counter it with actual specifics.

The big red one at the far right is tax cuts to the top 1%

Performed by the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute, the study shows that Mitt Romney’s proposal would lead to significantly lower taxes for the rich, and a higher tax burden on middle- and lower-income taxpayers.

It’s been well known for a while that Mr. Romney’s tax plan was a mathematical impossibility. He promised to reduce marginal tax rates by 20 percent, eliminate the estate tax and the alternative minimum tax, and end the capital gains tax for middle-income taxpayers – all while not lowering the amount of revenue coming into the treasury. Mr. Romney said he would offset those losses by ending a series of loopholes, but has yet to cite a single loophole he would delete.

What sane Conservatism looks like...

I'm not particularly a fan of the prolific gay, Tory, Catholic blogger Andrew Sullivan's, but I'll give credit where it's due to his articulating what a responsible conservatism might sound like. Sullivan on "the crux of our current debate:"

It is not what the GOP wants it to be about: some kind of ideological, abstract debate about government and freedom. It's a practical question about whether the US needs a correction from thirty years of center-right (yes, I include Clinton in that consensus) and then hard-right governance. That practical question requires engagement with the specifics of America's needs at this present moment. It is not un-American to favor private enterprise and small government, as Romney presents his own views. Far from it. Equally, it is emphatically not un-American to stress the parallel importance of collective infrastructure, institutions and public goods which are essential to free enterprise's flourishing. If you don't believe me, go read Adam Smith. Small government doesn't mean no government…

When people ask me how I can remain proud of supporting Ronald Reagan in 1980 and also proud of supporting Barack Obama in 2012, I can simply say: there is no contradiction. Reagan was right for his time; Obama is right for his. Both conservatism and liberalism have a role to play in guiding America toward balance and success. They exists as traditions that help correct each other's excesses. And that is why the Republicans' current insistence that liberalism is inherently un-American is so un-conservative. It is without the context Reagan provided; it has no time and place to measure itself by; it is pretty close to theology, rather than politics.

And it seems to me that the problem of 2012 is not excessive government (although there are plenty of ways in which government could and should be leaner and more efficient, a project Obama has been engaged on). The problem is weak government when it came to regulating the financial sector; insolvent government because of a refusal to raise taxes even as spending has soared and revenues have collapsed; and hubristic government that tried to being freedom to every person on the planet through military occupation. And the answer is not doubling down on theology, but restoring limited but effective government in areas where only government can work.

Here's why we need it, in this present crisis, to coin a phrase:

America is worse off than it was 30 years ago — in infrastructure, education and research. The country spends much less on infrastructure as a percentage of gross domestic product (GDP). By 2009, federal funding for research and development was half the share of GDP that it was in 1960. Even spending on education and training is lower as a percentage of the federal budget than it was during the 1980s ... In 2001, the World Economic Forum ranked U.S. infrastructure second in the world. In its latest report we were 24th. The United States spends only 2.4 percent of GDP on infrastructure, the Congressional Budget Office noted in 2010. Europe spends 5 percent; China, 9 percent.

As for economic freedom, America remains the fifth most competitive country in the world and the most competitive of major countries.

"The One-Sided Deficit Debate"

James Kwak at Baseline Scenario:

The fact that Simpson-Bowles—which uses its mandate of deficit reduction to call for . . . lower tax rates?—has become widely perceived as a centrist starting-point for discussion is clear evidence of how far to the right the inside-the-Beltway discourse has shifted, both over time and relative to the preferences of the population as a whole.

What’s more, the “consensus” of the self-styled “centrists” is what now makes the Bush tax cuts of 2001 and 2003 seem positively reasonable. With Simpson-Bowles and Domenici-Rivlin both calling for tax rates below those established in 2001, George W. Bush now looks like a moderate; even many Democrats now endorse the Bush tax cuts for families making up to $250,000 per year, which is still a lot of money (for most people, at least)...

Americans are currently getting a menu of proposals with Simpson-Bowles in the right, Paul Ryan and Mitt Romney on the far right, and Fox News on the extreme right. There is no explanation of how to deal with our long-term debt problem in a way that preserves government services and social insurance programs and protects the poor and the middle class...

 As long as those people have the floor to themselves, nothing is going to change.

Willard M. Romney praises socialized health insurance

In Israel, according to the New York Times, Willard M. Romney praised the cost effectiveness of their socialized health insurance system:

“Do you realize what health care spending is as a percentage of the G.D.P. in Israel? Eight percent,” he said. “You spend eight percent of G.D.P. on health care. You’re a pretty healthy nation. We spend 18 percent of our G.D.P. on health care, 10 percentage points more. That gap, that 10 percent cost, compare that with the size of our military — our military which is 4 percent, 4 percent. Our gap with Israel is 10 points of G.D.P. We have to find ways — not just to provide health care to more people, but to find ways to fund and manage our health care costs.”

For more on the virtues of Israel's health care system compared to ours, here's a link to an excellent article from The Jewish Daily Forward.

Awesome Diplomacy

From Empty Wheel:

Bad News for Growth: Since 2009 Government has been shrinking

 Catherine Rampell at NYTs:

While Washington debates whether big government is holding back the economy, it’s worth keeping a couple of facts in mind: Government has been shrinking steadily for two years, and compared to the size of the overall economy, government is actually slightly smaller today than it has been on average in the postwar era.

Here’s a chart showing the annualized percentage change in gross domestic product (blue) and the percentage change in total government spending and investment (red):

 

Bureau of Economic Analysis, via Haver Analytics

 

The overall economy has been growing for 12 quarters. Total government spending (federal, state and local), on the other hand, has been falling for eight quarters. That decline has been driven primarily by state and local spending, which has been falling for 11 quarters. Federal spending has fallen for six of the last seven quarters.

In other words, without the drag of shrinking government, the growth rate of the overall economy (which is measured as consumer spending + investment + government spending + net exports) would be faster. That is even before you consider how public layoffs ripple through the private sector as unemployed workers curb their spending.

Indeed, the shrinking government labor force is another factor worth noting when thinking about the role of government in the economy. While President Obama has been pegged as a big-government politician, the total number of government jobs has actually fallen under his presidency. Federal payrolls have risen a little bit, but not enough to fully plug the steady leak of layoffs at the state and local level.

Government spending aids economic growth

From, yes, The Wall Street Journal:

Even Rupert Murdoch's WSJ...

According to the government’s latest number-crunching exercise — they revised old economic data while taking their first crack at how the economy performed in the second quarter — the Great Recession of 2007-2009 wasn’t as Great as we thought. Sure, it was the worst economic calamity since World War II, but the abyss we sank into three years ago wasn’t as deep as we thought. The reason? Government spending provided a cushion.

Real gross domestic product shrank 4.7% between late 2007 and the middle of 2009 — not the 5.1% initially estimated, the Commerce Department says. In 2009, America’s economy contracted 3.1%, much less than the earlier estimate of 3.5%. (The government’s “positive” revisions to the first and second quarters of 2009 were the biggest ones they made.)

So, what happened? It wasn’t consumer spending or business investments; those estimates were pretty much left alone. Net exports of goods and services abroad were a little stronger than initially thought, but that also doesn’t account for the change. That leaves “government consumption expenditures and gross investment,” which jumped far more in 2009 than initially estimated.

Bush III - Rinse, repeat...

Jon Chait @ NY mag:

Last night, Brian Williams asked Romney to distinguish his approach to economic growth from Bush’s. The answer was a mere recapitulation of his plans (“Well, let me describe — actually, there are five things that I believe are necessary to get this economy going … ”). I won’t reprint the entire answer, but Romney did not make the slightest attempt to distinguish his approach from Bush’s. Of course that is because it’s the same thing! Every single idea Romney listed — low taxes, free trade, less regulation, developing energy, etc. — was part of Bush’s program.

Now, the usual Republican answer here, on how their approach will succeed where Bush’s failed, is to shout, spending! Romney promises to cut it. Bush also promised to cut it, but didn’t. I don’t think this really answers the main objection — lower spending may help the long-term budget picture, but the policies Republicans most directly associate with economic growth are taxes, regulation, and energy. And here Romney really is proposing the exact same policies as Bush.

Mitt's Mendacity

Dave Weigel:

At this point, getting video clips of President Obama from Republican campaigns is like getting an article pitch from Jayson Blair. It might tell a good story, but you need to run down the source and triple-check. Jim Geraghty points to our latest example, a rapid-response video from the RNC that clips Obama's speech from Oakland.

Just like we’ve tried their plan, we tried our plan—and it worked. That’s the difference. That’s the choice in this election.  That’s why I’m running for a second term.

Pretty stupid! As Geraghty points out, with a smorgasboard of links, the economy is still horrible three-and-a-half years after Obama took office. But what was the rest of the quote?

I'll cut out government spending that’s not working, that we can’t afford, but I’m also going to ask anybody making over $250,000 a year to go back to the tax rates they were paying under Bill Clinton, back when our economy created 23 million new jobs, the biggest budget surplus in history and everybody did well. Just like we’ve tried their plan, we tried our plan -- and it worked. That’s the difference. That’s the choice in this election. That’s why I’m running for a second term.

What are the chances? Another radical Obama quote that's just a clipped version of something all Democrats believe. Obama wasn't talking, at this moment, about his own economic record. He was arguing that the economy had grown and the deficit had shrunk when marginal tax rates were higher. (Of course he doesn't want to raise all those rates, which undercuts his point about the deficit.) This is a bog-standard part of the 2012 message. "The President also believes that the top 2% should return to Clinton-era income tax rates," said David Plouffe this month, "when the United States created 23 million jobs and ran the biggest budget surplus in history." Obama has tried a bunch of things, but Clinton-era tax rates on income over $250,000 is not among them.

So the truncated version of the Obama quote is insanely misleading. At best, it'll only appear in $10.4 million or so of TV ads.

Inflation? Bring it on!

Michael Hiltzik @ LA Times explains why inflation, in current context, should be embraced as one piece of the solution to the lingering legacy of global financial crisis:

Wars and other crises have a way of remaking your oldest enemies into your best friends (and vice versa — just look at the history of U.S.-Soviet relations from 1939 to 1945). 

Given the depth and persistence of the financial crisis here and in Europe, isn't it time to embrace one of our oldest economic foes, inflation?

The way most people think about inflation is reminiscent of the old National Lampoon cover line about pornography: "Threat or Menace?" But the idea that inflation might be our friend is gaining traction, and not only among progressive economists such as Paul Krugman. The notion has been spotted recently on the Wall Street Journal editorial page, and its clearest expression yet has appeared in the most recent issue of the Milken Institute Review — neither venue being known as a breeding ground of the virus known as economic liberalism.

The discussion focuses on how inflation reduces the debt burden. Debt is a head wind against recovery right now. But if you're a debtor paying a fixed rate of interest, like many homeowners, inflation is good for you — as prices, and hopefully your wages, rise, your mortgage burden falls relative to your income. On the other side of the coin, though, your lender is getting paid back with dollars lower in value than the ones he lent you.

That's the point of the Milken Review paper by economists Menzie Chinn of the University of Wisconsin and Jeffry Frieden of Harvard. The idea, as they put it, is that debt is almost always denominated at fixed interest rates, so as prices and wages rise, the relative debt load falls.

To set up world economies for more growth, Chinn told me, "The important thing is to shrink the size of debt contracts." Up to now, European countries have been trying to do that through austerity — cutting government spending and services, forcing down employment and wages.

"You see people trying to grind their way to balanced budgets and hence stabilize debt levels," Chinn says, "and it's excruciatingly hard. Because of the political difficulties in taking austerity measures over the long term, you have to ask yourself if it's feasible."

Free Lunch Money

Paul Krugman explains why it's insane for the US not to prioritize infrastructure investments right now:

Take a look at the latest Treasury real yield curve data — the interest rate the U.S. government pays on bonds that are indexed to inflation:

That’s right: for every maturity of bonds under 20 years, investors are paying the feds to take their money — and in the case of maturities of 10 years and under, paying a lot.

What’s going on? Investor pessimism about prospects for the real economy, which makes the perceived safe haven of US debt attractive even at very low yields. And pretty obviously investors do consider US debt safe — there is no hint here of worries about the level of debt and deficits.

Now, you might think that there would be a consensus that, even leaving Keynesian things aside, this is a really good time for the government to invest in infrastructure and stuff: money is free, the workers would otherwise be unemployed.

But no: the Very Serious People have decided that the big problem is that Washington is borrowing too much, and that addressing this problem is the key to … something.

The Inspector General's Tale

 Gretchen Morgenson @ NYT:

Nearly four years after Washington began its huge rescues of banks with taxpayer dollars, an important player in this, one of the great financial dramas of all time, is offering a damning account of how the Bush and Obama administrations handled the whole episode. 

He is Neil Barofsky. Remember him — the man whose job it was to police the $700 billion Troubled Asset Relief Program? And his new account, a book titled “Bailout” (Free Press), to be published on Tuesday, is a must-read. 

His story is illuminating, if deeply depressing. We tag along with Mr. Barofsky, a former federal prosecutor, as he walks into a political buzz saw as the special inspector general for TARP. 

Government officials, he says, eagerly served Wall Street interests at the public’s expense, and regulators were captured by the very industry they were supposed to be regulating. He says he was warned about being too aggressive in his work, lest he jeopardize his future career. 

Romney's remarkable distance from the values of normal Americans

Professor Krugman on Willard's attitude toward the little people and his fraudulent, crackpot characterizations of President Obama:

It’s no secret that, at this point, many of America’s richest men — including some former Obama supporters — hate, just hate, President Obama. Why? Well, according to them, it’s because he “demonizes” business — or as Mitt Romney put it earlier this week, he “attacks success.” Listening to them, you’d think that the president was the second coming of Huey Long, preaching class hatred and the need to soak the rich. 

Needless to say, this is crazy. In fact, Mr. Obama always bends over backward to declare his support for free enterprise and his belief that getting rich is perfectly fine. All that he has done is to suggest that sometimes businesses behave badly, and that this is one reason we need things like financial regulation. No matter: even this hint that sometimes the rich aren’t completely praiseworthy has been enough to drive plutocrats wild. For two years or more, Wall Street in particular has been crying: “Ma! He’s looking at me funny!” 

Wait, there’s more. Not only do many of the superrich feel deeply aggrieved at the notion that anyone in their class might face criticism, they also insist that their perception that Mr. Obama doesn’t like them is at the root of our economic problems. Businesses aren’t investing, they say, because business leaders don’t feel valued. Mr. Romney repeated this line, too, arguing that because the president attacks success “we have less success.” 

This, too, is crazy (and it’s disturbing that Mr. Romney appears to share this delusional view about what ails our economy). There’s no mystery about the reasons the economic recovery has been so weak. Housing is still depressed in the aftermath of a huge bubble, and consumer demand is being held back by the high levels of household debt that are the legacy of that bubble. Business investment has actually held up fairly well given this weakness in demand. Why should businesses invest more when they don’t have enough customers to make full use of the capacity they already have? 

Seeing through the "Simpson-Bowles consensus"

The much vaunted Bowles-Simpson anti-deficit commission came to no agreement on a plan - but that hasn't stopped the chairmen, corporate Democrat Erskine Bowles and testy former-congressman Alan "Grandpa" Simpson, from using their names to promote a package under the "Simpson-Bowles Commission" brand. It's not a good plan, primarily because it attempts to cap government revenues arbitrarily, cuts Social Security and raises the retirement age.  

While it's not nearly as crackpot or cruel as the "Ryan Plan" pushed by the boyish Ayn Rand acolyte who is a hero of the Tea Party Right, "Simpson-Bowles" is just the kind of "deficit reduction" one would expect from a Democrat from the investment banker wing of the party, allied with a mean-spirited, financially-cushioned-by-a-government-pension old coot who considers the AARP a threat to America and  wants to raise the retirement age for folks who actually have to work hard for a living to 70.

In polite circles where Paul Ryan's Tea Party patent medicine is viewed as a bit too toxic, "Simpson-Bowles" has  become shorthand for some imaginary cross-partisan "consensus" (even though it's rejected emphatically among GOP pols captured by dogmatic anti-tax ideology spread by a spectrum of interests from the Chamber of Commerce to far-right cranks like the "No Tax Increase" Pledge-Master Grover Norquist.)  Typically "deep-thinker" mediocrities like Tom Friedman and David Brooks will both refer to "Simpson Bowles" as the Gold Standard for fiscal strategies moving forward. Even Democratic Minority leader Nancy Pelosi has suggested she "could live with Simpson-Bowles."  This mainstreaming of "Simpson-Bowles" cutting Social Security and arbitrarily limiting government spending in a period when the economy calls for more and our infrastructure is in shambles is a trend that needs to be pushed back.  The proposal being pushed by these two commission appointees is not acceptable.


Ethan Pollack at Economic Policy Institute, who served as a Bowles-Simpson Commission staffer, explains the flaws of the anti-deficit strategy being pushed by the chairmen and embraced by many in the pundit class:

Yesterday, a selection of past members of the Bowles-Simpson commission, anti-deficit groups like the Peterson Foundation and the Committee for a Responsible Federal Budget, and a handful of retired politicians launched the Fix the Debt Campaign in order to push a deficit reduction package in line with the original Bowles-Simpson framework (full disclosure: I served on the Bowles-Simpson commission staff in fall 2010). The event was characterized by high-minded rhetoric about coming together and solving problems and little in the way of specific policies, a reflection of the fact that in the year-and-a-half since its initial release, the Bowles-Simpson proposal has become more a symbol of seriousness and bipartisanship than an actual set of discrete recommendations that can be analyzed.

This is unfortunate because the proposal itself is pretty detailed, and although it has some good components, it also has some major flaws that—without serious revision—should render it an inappropriate template for deficit reduction.

1) It would weaken the economy by cutting way too fast

The cost of electoral disaster in 2010 and the stakes in 2012

Economist Brad DeLong:

Suppose that Obama's voters had turned out in 2010 to vote for down ballot offices in as large numbers as they turned out in 2008. Where would the US economy be now?

There would have been no tea party Republican Governors' slashing of state employment, with attendance multiplier effect putting downward pressure on there and neighboring economies. There would have been no debt ceiling crisis to add substantially to economic uncertainty and increase the flight to quality. There would have been Larry Summers infrastructure bank, which would now be pumping out $200 billion a year in badly needed infrastructure investment.

Add all those up, and you get on economy with between $300 billion and $600 billion more of annual spending, depending on the multiplier. That is an economy with unemployment rate in the low 7s or the 6 percents. That's an economy growing at 3 to 4% per year instead of 1 to 2% per year. That some economy with a lower projected deficits and debt to GDP ratio then the economy we have today.

The failure of marginal Obama 2008 voters to turn out for down ballot candidates in 2010 was a disaster for America.

The election of Mitt Romney and a supporting congress this November would be a much bigger disaster for America. Think of the trainwreck that has been the Conservative government in Britain since 2010. And square it.

Mitt Romney & GOP 2012: Where The Money Comes From 2

Rachel Maddow looks at the Romney/GOP Deep-Pockets PacMan. Sheldon Adelson's foreign casino empire is a Chinese-government-sheltered enterprise steeped in corruption and bribery:

 

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Mitt Romney: Where the money comes from

It's useful, given the disingenuous (at best) pushback from the Romney campaign sewer against President Obama's reminder that the US government has, as a matter of American History 101, assisted our "job creators" in succeeding, from the railroads to the internet, to examine just how the Champion of "Private Equity" - Willard Mitt Romney - managed the Salt Lake City Olympics.  This episode is an activity of his that has come under little-to-zero scrutiny, other than as a "fine whine" to dodge any responsibility or benefit as CEO and 100% shareholder of Bain Capital from some job-killing investment decisions he doesn't want to account for or is embarrassed by that transpired after 1999. This by Donald Bartlett and James Steele from the Sports Illustrated archives (via Charles Pierce) :

The 996% Man

Federal spending for the Salt Lake City Games will average $625,000 for each of the 2,400 athletes who will compete. (Not a penny of it will go to the athletes.) That's a 996% increase from the $57,000 average for the 1996 Atlanta Olympics. It's a staggering 5,582% jump from the $11,000 average for the 1984 Summer Games in Los Angeles. Again, these are inflation-adjusted dollars. (If the minimum wage had gone up at the same pace since '84, the average McDonald's hamburger flipper today would earn $190 an hour.)

A 996% increase in Federal Spending...for Olympic games that Willard claims he "rescued!"  Gotta love those "free enterprise" Republicans like Willard.  The hypocrisy reeks! Can we afford to let him try to "rescue" our nation's economy with a record like that?

(Check out Charles Pierce entire piece at Esquire as well as the amazing archived article from SI.)
 

Mitt Romney: "Where the Money Lives"

Vanity Fair: "For all Mitt Romney’s touting of his business record, when it comes to his own money the Republican nominee is remarkably shy about disclosing numbers and investments. Nicholas Shaxson delves into the murky world of offshore finance, revealing loopholes that allow the very wealthy to skirt tax laws, and investigating just how much of Romney’s fortune (with $30 million in Bain Capital funds in the Cayman Islands alone?) looks pretty strange for a presidential candidate."  Read the entire investigative piece on Romney's shadowy finances HERE.

Let’s try to stick to the real world

Aaron Carrol at The Incidental Economist responds to a fact-challenged hit piece on Medicaid by Tyler Cowan in the NYTs:

I get a bit  annoyed when people claim that we can’t “afford” more government intervention or, god-forbid, single-payer. That kind of statement willfully ignores the fact that every country that has MORE government intervention spends LESS.

I get a bit annoyed by the claim that an expansion of government insurance leads to lines and waiting when lots of countries have universal access and less of a wait-time problem than we do. Moreover, almost no one makes this argument when we expand private insurance, only government.

I get a bit annoyed by blanket claims that doctors won’t accept Medicaid. Such statements often ignore the fact that the majority of Medicaid beneficiaries are children and pregnant women. We don’t need all types of doctors to accept Medicaid patients in equal numbers. They also ignore the fact that lots of doctors won’t accept new patients with Medicare or private insurance, either.

source: Washington Post-ABC News Poll, 4/14-17/11

I get a bit annoyed when people just claim government programs are “unpopular”. Like Medicare? I don’t think so. Is there any evidence that Medicaid is unpopular? I’d like to see it. Personally, I think that the fact that (a) all 50 states have bought in over time and (b) the Supreme Court just rules that threatening to take it away is “coercive” speaks to the opposite. Additionally, polling shows the opposite ...

I get a bit annoyed at the blanket acceptance of the awesomeness of the free market in health care, when there is no phenomenal evidence of its success. And again, those countries with less free market are cheaper, universal, and often just as good. So why are we always trying to run away from them?

Look, I get that people may not like the political implications of those systems. They may not like the governments that produce them. They may not like the lack of choice inherent in such systems. They may not like the potential  limitations within them for making money, and therefore for innovation. But we need to stop making stuff up about them.

"Romney’s Bain Yielded Private Gains, Socialized Losses"

 Anthony Luzzatto Gardner @ Bloomberg:

Mitt Romney touts his business acumen and job-creation record as a key qualification for being the next U.S. president.

What’s clear from a review of the public record during his management of the private-equity firm Bain Capital from 1985 to 1999 is that Romney was fabulously successful in generating high returns for its investors. He did so, in large part, through heavy use of tax-deductible debt, usually to finance outsized dividends for the firm’s partners and investors. When some of the investments went bad, workers and creditors felt most of the pain. Romney privatized the gains and socialized the losses.

What’s less clear is how his skills are relevant to the job of overseeing the U.S. economy, strengthening competitiveness and looking out for the welfare of the general public, especially the middle class.

Thanks to leverage, 10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy. It’s worth examining some of them to understand Romney’s investment style at Bain Capital.

The Wall Street Culture of Corruption

From "Up w/Chris Hayes"

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"The greatest lie ever told..."

The Ed Show blog exposes the "big lie" - recyled daily by Mitt Romney, the GOP and the FOX News/wingnut blog nexus - that President Obama has brought the country higher taxes:

The greatest lie ever told, the ones Republicans most want you to believe, is that President Obama is a classic tax and spend liberal.

In truth, under Obama taxes have hit a 30-year low, in part because of tax cuts enacted by the president as part of the stimulus package.

Average federal tax rates are lower than they were under Ronald Reagan, George H.W. Bush, Bill Clinton and George W. Bush.

These are numbers from the Congressional Budget Office and it doesn't matter if you look at just income taxes or all federal taxes combined, under President Obama, taxes are at a 30 year low.

The CBO report only goes through 2009, but since then, President Obama has lowered taxes even more with the payroll tax cut...

The GOP's lies about taxes

 Robert Reich:

To hear the media report it, President Obama is proposing a tax increase on wealthy Americans. That’s misleading at best. He’s proposing that everyone receive a continuation of the Bush tax cuts on the first $250,000 of their incomes. Any dollars they earn in excess of $250,000 will be taxed at the old Clinton-era rates.

Get it? Everyone is treated exactly the same. Everyone gets a one-year extension of the Bush tax cut on the first $250,000 of income. No “class warfare.”

Yet regressive Republicans want Americans to believe differently. The editorial writers of the Wall Street Journal say the President wants to extend the Bush tax cuts only “for some taxpayers.” They urge House Republicans to extend the Bush tax cuts for “everyone” and thereby put Senate Democrats on the spot by “forcing them to choose between extending rates for everyone and accepting Mr. Obama’s tax increase.”

Pure demagoguery. 

Regressives also want Americans to think the President’s proposal would hurt “tens of thousands of job-creating businesses,” as the Journal puts it.

More baloney.

"The basic structure of the world’s financial system has once again been exposed as fundamentally broken..."

Matt Yglesias:

You may not be interested in the Libor—the London Interbank Offered Rate—but the Libor is interested in you. Even though the typical American is never going to seek an interbank loan in London, the number is used as a benchmark for a wide range of other financial instruments.

Credit instruments with variable interest rates—private student loans, auto loans, adjustable-rate mortgages, credit cards, etc.—need to be indexed to some underlying marker of the overall cost of funds within the financial system. Often that’s something called the “prime rate” set here in the United States, but it’s also frequently the Libor.

So growing evidence that Libor numbers have been deliberately manipulated by banks for years means that millions of people have been paying the wrong interest rate on all manner of financial products. Vast sums of money have been wrongly snatched from innocent people and created equally vast undeserved windfalls for others. The basic structure of the world’s financial system has once again been exposed as fundamentally broken...

Public sector austerity is killing economic recovery

Heidi Shierholz and Josh Bivens at Economic Policy Institute explain that cutbacks in the public sector are the key to understanding the current stagnant "recovery" that has turned deep recession into lingering depression.  The private sector - while still not robust enough, given the deep trough created by the 2008 financial meltdown - is recovering at a pace consistent with previous recessions.  But prior recessions weren't accompanied by cutbacks in state and local employment that we are currently seeing.  As Bivens and Sheirholz demonstrate, this strangling of the public sector is the single biggest difference from previous recessions that weighs upon current potential recovery:

(T)he most glaring weakness in the current recovery relative to previous ones is the unprecedented public-sector job loss seen over the last three years. The figure belowshows that private sector job growth in the current recovery is close to that of the recovery following the early 1990s recession and is substantially stronger than the recovery following the early 2000s recession.



Yet, as the figure below shows, the public sector has seen massive job loss in the current recovery—largely due to budget cuts at the state and local level — which represents a serious drag that was not weighing on earlier recoveries.



How many more jobs would we have if the public sector hadn’t been shedding jobs for the last three years?  The simplest answer is that the public sector has shed 627,000 jobs since June 2009.  However, this raw job-loss figure understates the drag of public-sector employment relative to how the economy functions normally.

LIBOR Ruckus

More on LIBOR - an entertaining (believe it or not)
LIBOR scandal segment on UP w/ Chris Hayes:

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LIBOR - More dirty banksters' laundry

Joe Nocera at NYTs:

Here in the early stages of the Libor scandal — and, yes, this thing is far from over — there are two big surprises.

The first is that the bankers, traders, executives and others involved would so openly and, in some cases, gleefully collude to manipulate this key interest rate for their own benefit. With all the seedy bank behavior that has been exposed since the financial crisis, it’s stunning that there’s still dirty laundry left to be aired. We’ve had predatory subprime lending, fraudulent ratings, excessive risk-taking and even clients being taken advantage of in order to unload toxic mortgages. 

Yet even with these precedents, the Libor scandal still manages to shock. Libor — that’s the London interbank offered rate — represents a series of interest rates at which banks make unsecured loans to each other. More important, it is a benchmark that many financial instruments are pegged to. The Commodity Futures Trading Commission, which doggedly pursued the wrongdoing and brought the scandal to light, estimates that some $350 trillion worth of derivatives and $10 trillion worth of loans are based on Libor. 

With so much depending on this one critical interest rate, there shouldn’t ever be a question about its reliability. Yet beginning in 2005, according to the C.F.T.C. and the Justice Department, derivative traders at Barclays, the too-big-to-fail British bank, with the active involvement of traders at other yet-unnamed banks, persuaded their fellow bank employees to submit Libor numbers that were shaded in ways that would help ensure their trades were profitable. Even Robert Diamond Jr., the former Barclays chief executive who lost his job over the scandal, said that reading the traders’ e-mails made him “physically ill.” 

Where's the ACA tax?

James Kwak at Baseline Scenario explains the "tax" impact of ACA:

So the new Republican argument (which Mitt Romney was against before he was in favor of it) is that the individual mandate is an oppressive tax on the middle class. Cute, isn’t it, adopting John Roberts’s argument?

First of all, there’s the little matter that the word “tax” in legal doctrine means something different from the word “tax” in ordinary English. And there’s nothing wrong with that. Plenty of words have precise legal meanings that would be foreign to ordinary English speakers, like “negligent,” “reckless,” “material,” and so on, and billions of dollars turn on those precise legal meanings. But that’s not going to sway many people, so let’s go to the numbers.

The ACA "tax" and the insanity of contemporary "conservatism"

The professional Right truly don't have a clue, will say anything no matter how absurd, "can't handle the truth" and are totally in the grip of their unhinged resentments and hate-mongering:

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ACA & SCOTUS

Jeffrey Toobin at The New Yorker has a good, cautionary post-mortem on the "controversial" decision by Justice Roberts to split his decision and uphold health care reform as constitutional under the taxing powers of Congress:

When Chief Justice John Roberts emerged from behind the red curtain and took his seat at the center of the Supreme Court bench last Thursday, he did not look like his usual self. The brisk confidence of the Midwestern burgher was absent, replaced by a more sombre mien. His eyes were red-rimmed and downcast, his voice nearly a mumble. The announcement of the Court’s decision in National Federation of Independent Business v. Sebelius was clearly an unhappy duty for him. It’s easy to see why. By affirming the constitutionality of the Affordable Care Act—the legislative cornerstone of Barack Obama’s Presidency—Roberts was disappointing those closest to him. Roberts was a professional Republican: a staffer in the Reagan and Bush I Administrations, a judge and a Justice thanks to Bush II. And here, alone and exposed, Roberts joined with the Court’s four liberals to dash the Republican Party’s most fervent wishes. It was a singular act of courage.

One hopes, then, that it is not too churlish to point out that this should have been an easy case. The core dispute before the Court involved the portion of the A.C.A. which requires all Americans, eventually, to have health insurance. Failure to comply with the so-called individual mandate subjects scofflaws to a modest fee, to be paid when they file their tax returns. The basic idea for the mandate had bounced around policy circles for years, usually with Republican sponsors. As governor of Massachusetts, Mitt Romney implemented an individual-mandate system; as President, Obama based his proposal, more or less, on Romney’s. For two decades—from the mandate’s début in a policy proposal released by the right-wing Heritage Foundation to shortly before Congress voted on the A.C.A.—no one suggested that there was any constitutional problem with the idea. This is because there isn’t one.

The utterly nonsensical "We're on the road to becoming Greece" hype

If a politician - or, worse, an economist - claims that the US is in danger of becoming "Greece", it's a signal that the person is either a shameless ideologue stooping to dishonest rhetoric or...an idiot who doesn't have a clue. Mitt Romney's intellectually frivolous and politically hysterical claim that President Obama is taking us "forward on the way to Greece" probably qualifies him as some combination of the two.  

Matthew O'Brien at The Atlantic deals this nonsensical "Road to Greece!" rhetoric a death blow:

Greece is almost certainly Greece. That goes without saying.

Got it? 

But there's one country that definitely isn't Greece. That's the United States.

Let's step back. What makes a country "Greece"? It's become shorthand for wild government overspending -- especially on entitlements. Paul Ryan says we don't have long to avoid the same fate... that absent drastic reform -- read: cuts -- to the social safety net, we'll end up in penury like the Greeks.

It's a scary story. But it's just a scare story. Yes, we have a long-term healthcare spending problem. But that doesn't make us Greece. Heck, Greece isn't even Greece. At least not the "Greece" that's become such a political football. The evidence -- or lack thereof -- is in the chart below. It compares each country's average social spending since 1999, via the OECD, against its current borrowing costs. See the pattern?

There is none. Europe's biggest social spenders don't have any problems. And Europe's biggest problem countries don't spend that much on social programs. The death knell of the welfare state this is not. 

Here's the dirty little secret of the euro debt crisis. There is no euro debt crisis. There is a euro crisis. The debt is a symptom of the crisis of the common currency.* Europe's bailed out countries all saw piles of capital pour in during the boom, only to pour out during the bust. They were left with inflated, uncompetitive wages -- and that's sent them into deep slumps. That's been despite lower social spending than their northern euro neighbors...

The ACA SCOTUS Decision - some very bad people held in check

Professor Krugman reminds us of the dishonesty and cruelty of the opposition to ACA:

(T)he law that the Supreme Court upheld is an act of human decency that is also fiscally responsible. It’s not perfect, by a long shot — it is, after all, originally a Republican plan, devised long ago as a way to forestall the obvious alternative of extending Medicare to cover everyone. As a result, it’s an awkward hybrid of public and private insurance that isn’t the way anyone would have designed a system from scratch. And there will be a long struggle to make it better, just as there was for Social Security. (Bring back the public option!) But it’s still a big step toward a better — and by that I mean morally better — society.

Which brings us to the nature of the people who tried to kill health reform — and who will, of course, continue their efforts despite this unexpected defeat. 

At one level, the most striking thing about the campaign against reform was its dishonesty. 

Remember “death panels”? Remember how reform’s opponents would, in the same breath, accuse Mr. Obama of promoting big government and denounce him for cutting Medicare? Politics ain’t beanbag, but, even in these partisan times, the unscrupulous nature of the campaign against reform was exceptional. And, rest assured, all the old lies and probably a bunch of new ones will be rolled out again in the wake of the Supreme Court’s decision. Let’s hope the Democrats are ready. 

But what was and is really striking about the anti-reformers is their cruelty. It would be one thing if, at any point, they had offered any hint of an alternative proposal to help Americans with pre-existing conditions, Americans who simply can’t afford expensive individual insurance, Americans who lose coverage along with their jobs. But it has long been obvious that the opposition’s goal is simply to kill reform, never mind the human consequences. We should all be thankful that, for the moment at least, that effort has failed. 

Let me add a final word on the Supreme Court. 

Before the arguments began, the overwhelming consensus among legal experts who aren’t hard-core conservatives — and even among some who are — was that Obamacare was clearly constitutional. And, in the end, thanks to Chief Justice John Roberts Jr., the court upheld that view. But four justices dissented, and did so in extreme terms, proclaiming not just the much-disputed individual mandate but the whole act unconstitutional. Given prevailing legal opinion, it’s hard to see that position as anything but naked partisanship.

Europe's Deficit Hawks

Paul Krugman explains how Europe's version of "deficit hawks" operate:

Spain has troubled banks that desperately need more capital, but the Spanish government...faces questions about its own solvency.

So what should European leaders — who have an overwhelming interest in containing the Spanish crisis — do? It seems obvious that European creditor nations need, one way or another, to assume some of the financial risks facing Spanish banks. No, Germany won’t like it — but with the very survival of the euro at stake, a bit of financial risk should be a small consideration. 

But no. Europe’s “solution” was to lend money to the Spanish government, and tell that government to bail out its own banks. It took financial markets no time at all to figure out that this solved nothing, that it just put Spain’s government more deeply in debt. And the European crisis is now deeper than ever.

Let's get this straight.  The leaders counseling austerity and cutting government spending sink Spain's crisis-ridden economy into deeper debt...to bail out the banks.  If ever there was evidence of the fraudulence and class warfare foundations of "austerity economics," this is it. 

Our Independent Judiciary

Ezra Klein at WaPo:

“Over the past two years, the Republican Party has slowly been building a permission structure for the five Republicans on the Supreme Court to feel comfortable doing something nobody thought they could do: Violate the existing understanding of the commerce clause and, in perhaps the most significant moment of judicial activism since the New Deal, overturn either all or part of the Affordable Care Act. The first step was perhaps the hardest: The Republican Party had to take an official and unanimous stand against the constitutionality of the individual mandate. Typically, it's not that difficult for the opposition party to oppose the least popular element in the majority party's signature initiative. But the individual mandate was a policy idea Republicans had thought of in the late 1980s and supported for two decades. They had to, in effect, persuade every Republican to say that the policy they had been supporting was an unconstitutional assault on liberty.”

Eliminating state income taxes doesn't help growth or revenues

Bloomberg:

Governors seeking to expand their economies by eliminating income taxes find little support for the idea in the record of U.S. states that lack such a levy.

The BGOV Barometer shows the nine states with the highest personal income taxes on residents outperformed or kept pace on average with the nine that don’t tax their residents’ incomes, according to a study of economic output, unemployment and household income by the nonpartisan Institute on Taxation and Economic Policy.

Mr. Laffer & his curve.

The findings show cutting state income taxes to stimulate growth relies on “flawed analysis” based on the theories of economist Arthur Laffer, said Carl Davis, a senior analyst at ITEP in Washington and author of the report. Laffer’s work was cited by Republican Governors Sam Brownback of Kansas and Mary Fallin of Oklahoma as a reason to cut income taxes as a way to stimulate job growth and attract business.

“Being low-tax doesn’t generate economic competitiveness or long-term economic viability,” said Ralph Martire, executive director at the nonpartisan Center for Tax and Budget Accountability in Chicago...

Median household income declined an average 0.7 percent among the nine “high-rate” states, compared with a 3.5 percent drop in the nine states without such a levy. The study found no difference in the average unemployment rate between the two groups of states. The time period of the report includes the 18- month recession that ended in June 2009.

“States that have higher overall taxes have better capacity to weather economic downturns,” Martire said. “Then they can maintain their spending on the salary of workers, who then go out and spend their paychecks on the local economy.” ...

“Those who don’t believe in Santa Claus or the Easter Bunny anymore, and actually look at facts and data, recognize that since supply-side economics has been implemented in America, the complete opposite of what supply siders had promised has occurred,” Martire said.

 HT: John Thompson