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March 31, 2009

The Senate is Broken

The Senate "hold" and filibuster todays allows a Senator in Wyoming (less than 2% of the country) to hold veto power over almost every legislation.  These are not protecting minority rights in Wyoming, merely allowing a single Senator to hold the rest of the country hostage for ideological reasons.

The Senate is Broken:

Any time I revisit the Founders, their writing and their thinking, I'm always struck by the streak of Burkean conservatism that ran through many of them. Their fear of the mob (and, well, democracy) and their desire to keep power broadly distributed, but also out of the hands of the riff raff. In many respects the arc of American political history is more and more democracy, wider circles of enfranchisment, preserving the founder's belief in checks and balances, while jettisoning their distrust of the ability of people to effectively self-govern.

The massive exception to this [democratization] is the United States senate, which has only grown more undemocratic and more minoritarian over the years. Since population distributions have grown more unequal (California has 68 times the people of Wyoming), the imbalance of representation has also grown [(California has the same number of Senators as Wyoming)]. Filibusters have gone from being a relatively rarely invoked tactical gambit, to a de facto super majority requirement for all legislation. And the evolution of the "hold" means that each individual senator can more or less bring the body to a halt.

All this by way of recommending this excellent piece by Norm Ornstein on the subject. He argues persuasively that the senate is "broken." I'm increasingly of the opinion that if we want the kind of change we need in this country, the Senate has to change first.

George Soros Says Credit Default Swaps Need Much Stricter Regulation - WSJ.com

George Soros Says Credit Default Swaps Need Much Stricter Regulation - WSJ.com:

In all the uproar over AIG, the most important lesson has been ignored. AIG failed because it sold large amounts of credit default swaps (CDS) without properly offsetting or covering their positions. What we must take away from this is that CDS are toxic instruments whose use ought to be strictly regulated....

CDS came into existence as a way of providing insurance on bonds against default. Since they are tradable instruments, they became bear-market warrants for speculating on deteriorating conditions in a company or country. What makes them toxic is that such speculation can be self-validating.
... the mispricing of financial instruments can affect the fundamentals that market prices are supposed to reflect. Nowhere is this phenomenon more pronounced than in the case of financial institutions, whose ability to do business is so dependent on trust. A decline in their share and bond prices can increase their financing costs. That means that bear raids on financial institutions can be self-validating.
Many argue now that CDS ought to be traded on regulated exchanges. I believe that they are toxic and should only be allowed to be used by those who own the bonds, not by others who want to speculate against countries or companies. Under this rule -- which would require international agreement and federal legislation -- the buying pressure on CDS would greatly diminish, and all outstanding CDS would drop in price. As a collateral benefit, the U.S. Treasury would save a great deal of money on its exposure to AIG.

March 15, 2009

Robert Reich's Blog: The Real Scandal of AIG

Robert Reich's Blog: The Real Scandal of AIG:

This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. To whom should they be accountable? As long as taxpayers effectively own a large portion of them, they should be accountable to the government.

But if our very own Secretary of the Treasury cannot make stick his decision that AIG's bonuses should not be paid, AIG is not even accountable to the government. That means AIG's executives -- using $170 billion of our money, so far -- are accountable to no one.

March 13, 2009

House and Senate Republicans Differ on Need to Offer Budget Alternative - NYTimes.com

So, House Republicans are dithering while Rome burns and the Senate Republicans are re-arranging the deck chairs on the Titanic?  Or is it the other way around?  Hm.  Trying to sort that out seems likely to be as successful as trying to count the number of angels on a pin. 

Lead, follow, or get out of the way.

House and Senate Republicans Differ on Need to Offer Budget Alternative - News Analysis - NYTimes.com:

Congressional Republicans are engaged in a highly coordinated political assault on President Obama’s budget, but they are not so united when it comes to offering an alternative to the spending plan they have been shredding as irresponsible.

Breaking with the House, Senate Republicans say they do not intend to offer a full counterproposal to Mr. Obama’s sweeping $3.6 trillion spending blueprint, a decision that will spare them from outlining potentially painful decisions required to bring federal books more in line with their call to hold down spending, cut taxes and reduce the deficit.

March 12, 2009

Robert Reich's Blog: Is Obamanomics Conservative or Revolutionary?

Robert Reich's Blog: Is Obamanomics Conservative or Revolutionary?:

The basic idea of Reaganomics was that the economy grows from the top down. Lower taxes on the wealthy make them work harder and invest more, and the benefits trickle down to everyone else. Rarely in economic history has a theory been more tested in the real world and proven so wrong. In point of fact, nothing trickled down. After the Reagan tax cuts, increases in the median wage slowed, adjusted for inflation. After George W. Bush's tax cuts for the wealthy, the median wage actually dropped. Meanwhile, most of the income went to the top. In 1980, just before the Reagan revolution, the richest 1 percent took home 9 percent of total national income. But by 2007, the richest 1 percent was taking home 22 percent.

Obamanomics, by contrast, holds that an economy grows best from the bottom up. Obama's program increases taxes on the top, and uses the proceeds to raise the living standards of average Americans by giving them lower taxes, better schools, and more affordable health insurance. That may not seem very radical, but compared to the last quarter century it's revolutionary.

Reaganomics didn't believe in public investment, except perhaps when it came to the military. Everything else was considered government spending, which was assumed to be wasteful. Hence, the cuts (adjusted for inflation) during Reagan, Bush I and Bush II in education, job training, infrastructure, and basic research and development.

But Obamanomics is a commited to these forms of public investment. And there's good reason: In a global economy, capital moves to wherever it can get the best deal around the globe. That means capital and jobs go to nations that can promise high returns either because labor is cheap and taxes and regulations low, or because labor is highly productive -- well educated, healthy, and supported by modern infrastructure.

Which do we want? For the better part of the last quarter century our implicit economic strategy has tended toward the first. But that's a recipe for lower wages and lower living standards for most Americans, along with widening inequality. The only resource that's uniquely rooted in a national economy is its people -- their skills, insights, capacities to collaborate, and the transportation and communication systems that link them together. Everything else -- including capital, technology, designs, even plant and equipment -- can move around the globe with increasing ease.
Reaganomics' third principle was that deregulated markets function better. They do, in many respects, but not always. And when they don't, all hell can break loose. Energy markets were deregulated and we wound up with Enron. Carbon emissions weren't controlled, and now we face global warming. Financial markets were deregulated and we have a global meltdown. Obamanomics, by contrast, accepts that government has an important role in setting the rules of the capitalist game: Setting an overall cap on carbon emissions, ensuring that products and foods are safe, maintaining the solvency and security of financial companies.
Under Reaganomics, government was the problem. It can still be a problem. But Obamanomics recognizes there are even bigger problems out there that can't be solved without government. By building the economy from the bottom up, recognizing the central importance of public investment, and understanding that markets cannot function without regulation, Obamanomics finally reverses and repudiates the economic philosophy that has dominated America since 1981.

March 08, 2009

Orszag Calls Out GOP On Budget, Channels Inner Ronald Reagan

Orszag Calls Out GOP On Budget, Channels Inner Ronald Reagan:

Let's look at what the Republicans are putting on the table. The senior Republican on the House Budget Committee has put forward a plan that includes $3 trillion in tax cuts for the wealthy and corporations, a Medicare program -- when you turn 65, you'd be handed a check for 80 percent of the cost of health care and then you're on your own -- and a Social Security plan in which your Social Security funds would be invested in the stock market. I'm not making this stuff up. That is their alternative plan. I think they should come on this show, offer a detailed alternative to what we're talking about and I'll let the American people evaluate the two ways forward."

March 06, 2009

Novick looks forward to joys of another campaign

Steve Novick discusses possible run for Oregon governor in 2010.

Novick looks forward to joys of another campaign:

"Government doesn't create new business," he added. "What it can do is get the fundamentals right and that produces a good business climate."

In Novick's view, getting the fundamentals right means having a well-funded government. For years, he has argued that taxpayers tend not to realize that the vast majority of taxes they pay go to services they value.

Novick is also once again talking about the need for higher taxes, just as he did during his Senate campaign.

"We're going to need to raise more revenue," he said, "and the most obvious place to go is that businesses in Oregon pay 24 percent lower taxes across the board than the average state in the union."

Novick also said he would support a temporary increase in income taxes for upper-income taxpayers to help fund services during the recession - and he wants to divert most of the "kicker" income tax rebates into a rainy-day fund.

[Jeff Mapes on Politics - OregonLive.com:]

March 05, 2009

Anticipating Testimony, Rove Begins The Spin

Rove's "defense" is an attempt to completely muddle things.  The comparisons he makes are to people whose jobs are actually to do those things -- his was not.  The Justice Department building is named after former Attorney General Robert F. Kennedy because of his work as Attorney General, not because he was a political hack like Rove.  Same thing with the Obama White House counsel: the job is to do lawyering for the White House.

That is completely different than Karl Rove's job which was never as Attorney General or Counsel to anything.

Anticipating Testimony, Rove Begins The Spin:

Rove used a curious argument to defend his role in the firings, saying: "If White House contact with the Justice Department is inappropriate, then what are we doing by allowing anybody who has anything remotely to do with the political campaign -- like the general counsel of the Obama White House -- to have any contact with the Justice Department?. I mean, we named the Justice Department building after the campaign manager of the 1960 presidential campaign - Robert F. Kennedy."

White House Rethinks Tax Hikes

Three things:

  1. These are not new taxes, they are reducing (not even eliminating) subsidies to rich people.
  2. I think the charitable deduction is reasonable to leave, as there is a reasonable public good associated to it.
  3. The mortgage deduction should be phased out in high income brackets (remember the $250,000 and up is the top 2% of all income earners!) -- we, the taxpapers, do not need to subsidize fancy houses for the rich.

The rich can afford to pay their way, that is what it means to be rich!

White House Rethinks Tax Hikes - WSJ.com:

Mr. Obama in his budget blueprint last week proposed a cap on itemized deductions for mortgage interest and charitable donations to help pay for his health-care overhaul. The plan would cost wealthier taxpayers about $318 billion in new taxes over 10 years, according to government estimates.
The Obama plan would cap the value of deductions for families making $250,000 and up. Under current law, a $1,000 deduction is worth up to $350 for such taxpayers, because they can avoid tax rates of up to 35% on that income. The Obama cap on deductions would make the $1,000 deduction worth a maximum of $280.

If Private Health Insurance Is So Awesome, Why Would It Lose a Competition With Gov't Health Care?

If Private Health Insurance Is So Awesome, Why Would It Lose a Competition With Gov't Health Care? | OurFuture.org:

“Forcing free market plans to compete with these government-run programs would create an unlevel playing field and inevitably doom true competition,” the letter [from Senate Minority Leader Mitch McConnell (R-Ky.)] stated.

If the "free market" is as marvelously awesome as conservatives claim, shouldn't it have absolutely no problem winning a health-care competition with "government-run programs?" Or does this little-talked-about hypocrisy in the Republicans' argument expose a brazen corruption? Does it show that conservatives are totally bought off by the private health insurance industry that Americans despise?

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