"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:

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

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:

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

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

" Corporate Profits Just Hit An All-Time High, Wages Just Hit An All-Time Low"

 Henry Blodgett @ Business Insider:

In case you need more confirmation that the US economy is out of balance, here are three charts for you.

1) Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't).

Business Insider, St. Louis Fed

2) Fewer Americans are working than at any time in the past three decades. One reason corporations are so profitable is that they don't employ as many Americans as they used to.

Business Insider, St. Louis Fed

3) Wages as a percent of the economy are at an all-time low. This is both cause and effect. One reason companies are so profitable is that they're paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" are other companies' revenue.

Business Insider, St. Louis Fed

In short, our current system and philosophy is creating a country of a few million overlords and 300+ million serfs.

That's not what has made America a great country. It's also not what most people think America is supposed to be about.

So we might want to rethink that.

Meanwhile, if you want to know more about what's wrong with the economy, flip through these charts:

Okay, Folks, Let's Put Aside Politics And Look At The Facts...

The "Job Creator"

 Washington Post:

Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India.

During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components, according to filings with the Securities and Exchange Commission.

America in decline

David Cay Johnston @ Reuters:

A broad swath of official economic data shows that America and its people are in much worse shape than when we paid higher taxes, higher interest rates and made more of the manufactured goods we use.

The numbers since the turn of the millennium point to even worse times ahead if we stay the course. Let’s look at the official numbers in today’s dollars and then what can be done to change course.

First, incomes and jobs since 2000 measured per American:

Internal Revenue Service data show that average adjusted gross income fell $2,699 through 2010 or 9 percent, compared to 2000. That’s the equivalent of making it through Thanksgiving weekend and then having no income for the rest of the year.

Had average incomes just stayed at the level in 2000, Americans through 2009 would have earned $3.5 trillion more income, the equivalent of $26,000 per taxpayer over a decade. Preliminary 2010 data show a partial rebound, reducing the shortfall by a fifth to $2.8 trillion or $21,000 per taxpayer.

Wages per capita in 2010 were 4.3 percent less than in 2000, effectively reducing to 50 weeks the pay for 52 weeks of work. The median wage in 2010 fell back to the level of 1999, with half of workers grossing less than $507 a week, half more, Social Security tax data show. The bottom third, 50 million workers, averaged just $116 a week in 2010.

Social Security and Census data show that the number of people with any work increased just 1.5 percent from 2000 to 2010 while population grew 6.4 times faster. That’s why millions of people cannot find work no matter how hard they try.

In May, nearly 23 million workers, 14.8 percent, were jobless or underemployed, the Bureau of Labor Statistics reported...

PRESSURE ON WAGES

"Twilight of the Elites"

Rachel Maddow talks with Chris Hayes about inequality
and our increasingly out-of-touch, dysfunctional elites:

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

"What Bernanke Can Do..."

 Dean Baker:

The Federal Reserve Board's open market committee meeting this week likely presents the FOMC with its last opportunity to boost the economy before the end of the year. While the FOMC meets every six weeks, as a practical matter, the FOMC has historically been very reluctant to take major moves close to an election...

The fact that the economy can use an additional boost should not be in dispute. The rate of job creation in the last two months understates the underlying growth path, since it is essentially a payback from the stronger growth due to an unusually mild winter.

Even the 165,000-a-month average rate of job creation for the last five months is far too slow. With the economy needing roughly 100,000 new jobs a month just to keep pace with labor force growth, it would take us more than 12 years to make up our 10 million jobs deficit at this point.

If there is a clear need for more rapid growth, the data also show there is no downside risk of excessive inflation. The consumer price index fell 0.3% in May. It has risen by just 1.7% over the last year. (The core index rose 0.2% last month and is up 2.3% over the last year.)

Of course, many of us have argued that higher than normal inflation would be desirable, in any case. It would reduce real interest rates in a world where the Fed has already pushed the nominal federal funds rate as low as it possibly can. That would provide businesses with more incentive to invest. Higher inflation should also help to lift house prices, helping homeowners to rebuild equity.

However, even if the Fed is unwilling to accept the idea that it should promote higher inflation, as Chairman Ben Bernanke used to recommend back in his days as economics professor, it should at least be confident that the data show no reason to be concerned about inflation exceeding its target... There are two routes the Fed can go.

Common Sense Conservatism