A "pricelss" clip I was emailed...

I was e-mailed the following clip.

It was sent with the message:

"Isn't it interesting that the question out of Donahue's mouth some thirty
one years ago, is one of the primary issues Obama ran on and pushes
almost daily?"

(The clip blow is from youtube, but he email actually linked here. Same clip)
 


The blog, includes the following commentary:

Pretty interesting clip…even though it is 30 years old, the content is “timeless” If you don't think we have been going aroud on the same argument for years this will put it into perspective. Leave it to an economist to clear things up. Wow! Talk about a clear cut look at the way the world operates. This is Phil Donahue interviewing Milton Friedman thirty years ago. The audience is notably silent.

Now I'm going to say a couple of things that will probably shock my Conservative readers, and possibly some of my liberal ones. I like to burninsh my centrist cred from time to time, and this post is going to be one of those times.

First of All: Milton Friedman was right.

And no, I'm certainly no fan of Friedman, nor am I a supply-sider. I'm a Keynsian, and unlike 99% of people of commenter who start out admitting they know nothing about economics, I have a graduate degree in Business, and three Graduate Level classes from the University of Michigan, which I solidly aced on my to graduating with honors. So i DO know a little bit about economics.  And it's very simple: Keynes was right, Krugman is right, and their detractors range between liars, thieves and morons.

But... Every thing Friedman said in this clip? It's 100% correct.

And Phil Donahue is an idiot.

No, not in general. Generally I have no problem with Donahue.  But here's the thing: ANYONE who is talking about "socialism" in this day and age is a FUCKING MORON.  Hear me out...

If you are a Liberal, Progressive, Democrat, etc... talking about it? I'll clue you in: IT DOESN'T FUCKING WORK!  OK?  As a designed system it looks great, on paper anyway. But you're trusting humans to run things, and humans are, at best, short-sighted and fallible. At worst they're greedy, money-grubbing, evil and corrupt.  And even if you could get past THAT part of human nature, the laws of supply and demand were not invented by Partisan Republicans. They're based on observations of COLLECTIVE HUMAN BEHAVIOR and you simply cannot fight them for very long. They're like gravity: You can go against them for a while (climb a ladder, fly a plane) but eventually you are going to pulled back to market equilibrium (the ground.) It's inevitable.

Now... To be honest, I'll be somewhat disappointed if I really have to argue that point with that many Liberals. I really said all that so that there's some chance that Conservative readers will drop their idiotic assumption that anyone not actively  pining for the glory days of George W. Bush (with a McCain/Palin or Romney/Ryan sticker on their bumper) must be some kind of wild-eyed Socialist. I'm guessing there really aren't that many people out there who REALLY believe Socialism is the way to go, especially if they actually understand history and/or economics.

Which brings me to the reason that anyone who is Conservative, Libertarian, Republicans, Tea-Bagger, etc... and is talking about Socialism is also a fucking moron:

NOBODY ON THE LEFT (OR ANYWHERE ELSE) IN THIS COUNTRY IS PROPOSING ANYTHING SOCIALIST OR TALKING ABOUT SOCIALISM!!!

Show me the Socialism! Show where Obama, or Pelosi, or ANY Democrat has proposed that the State take control of, and run, private companies! SHOW ME! It's not fucking happening!  And far from the e-mails claims that Obama "ran on" this [socialism? redistribution?] and "pushes [it] almost daily;" back in the real world, the only legislation Obama has ever signed regarding taxes LOWERED THEM (for everyone) and that remains unchanged going forward. (More on that in a moment.) And his big health care system? "Obamacare"? Hardly a Socialized, government takeover: It owes it origin to the Right-Wing Heritage Foundation, it was pushed by Republicans during the Clinton years, and implemented by Governor Romney, the Republican candidate for President last year! And as much as I've heard the Rigth talk about Obama's plans for "redistribution," you know who I NEVER heard speak of it? Even ONCE?

Barack Obama.
See... What the idiot Right in this country doesn't understand (and/or doesn't want the voting public to understand) is the argument is not one of Capitalism vs. Socialism. It isn't. And if you think it is, you're an idiot. The Republican are no more the great defenders of Capitalism, anymore than the Democrats are it's Detractors.  The argument is simply on of laissez-faire Capitalism versus regulated Capitalism.

Obama has done NOTHING to stop or curtail "free enterprise,"  "capitalism," "entrepreneurialism" or anything else. Nothing. Zip. Nada.  And as for Keynes? How could Keynes possibly be a socialist? Aside from the fact that he was himself an avowed critic of Socialism, his economic models are based ENTIRELY on a Capitalist Free-Market economy!  Being a "Keynesian" MEANS you're a Capitalist!  Only, you one that wants the Government to do what it can to help out, and you're one that realizes that both the supply side AND the demand side are needed for a society to grow economically!  See, while you're two choices here (being Democrat or Republican) are in fact "Keynesianism" or "Supply-Side," Keynesianism is NOT the opposite of Supply-side.  Supply-side simply looks at only ONE-HALF of the Keynes model.

Kind of like building a baseball team on Pitching alone, only to have to face another team that ha equally good pitching, AND phenomenal hitting as well. And reasonably intelligent person knows you need BOTH.  Consider the 1940's-1960's, those "good old days" of the "greatest generation" and the "baby boom."  You had FDR-D, Truman-D, Eisenhower-Rino, JFK-D, LBJ-D and 1 Year of Nixon-r. You had strong labor unions, a top tier tax rate ranging from 70%-90%, and each President had, among his greatest accomplishments, things that are considered Liberal by today's standards!
Now ironically, that video was shot in 1979, one year before the Election of Ronald W. Regan. And what has happened in the 34 years since then?  Unions have been broken, tariffs have been lifted, Top-tier tax rates has fallen, deficits has skyrocketed, and middle class wages have stagnated, at best, and for the majority of Americans, haven't even kept up with the cost of living! And while the country, in total, has done "better" almost all of that benefit has accumulated at the top!

And that's exactly what you'd expect from supply-side economics.

(Historically, it's also what generally becomes of Socialist States as well - our old "Corporate Masters" merely move into their new Government Roles, now having official, codified, legal power, insteadof just the power that comes unofficially with great wealth.)

Again: It's not about Capitalism versus Socialism. It's about common-sense regulations, based on sound science, and taxation and spending based on sound economical principles, matched the needs of the country, or letting the old, fat, rich, white, men (think Roger Ailes) take and keep all the money!

And if you think that's an exaggeration, I defy you to show me that it's anywhere close to the ones calling Obama, Krugman or Keynes, "Socialists."

------------------

*** Obama has lowered taxes. I said I'd get to that.  Remember that in 2001, President Bush signed the Economic Growth and Tax Relief Reconciliation Act. Part of this Bill became known as the "Bush Tax Cuts."  They lowered taxes, for everyone, from where they were under Clinton, but were heavily favored towards the rich, exploded the deficit and did little to stimulate the economy, relative to their cost.  (All facts - you can look 'em up.)  One key part of this legislation however, was that they were only suppose to go for TEN YEARS. Then, according to that very law, voted for by a Republican Congress and signed by President George W. Bush, taxes would revert back to their previous levels - for EVERYONE - in 2011.

Then, one wrecked economy later, President Obama comes along. And he needs to get the economy going again, so as part of the Stimulus he does two things: (1) He extends the Bush Tax Cuts through 2012.  (NOTE: If he does nothing,PREEXISTING LAW has them at a higher rate. His actions therefore LOWERED them.) And (2) he temporarily lowers the payroll tax. Not that's not REALLY a "tax cut," since you'll still owe the same amount in the end, but it does put more money in your pocket in the meantime. In any case, President Obama only took action to LOWER taxes, relative to existing law.

And what about now?  What about the law he just signed RAISING taxes on the top 1%?!

Really?!

>Once again, let's go back to existing law: In 2013, without any action required from the President, tax rates would go back to what they were under President Clinton.  So what action did he take? He signed a law that LOWERED taxes.

For the bottom 99%? What about those at the top? Those poor, suffering 1%'ers?

Nope. For EVERYONE.

>EVERYONE is paying a lower tax rate than they would have been absent any action from the President, even those top 1%'ers who saw that top tier tax rate go up.

How's that, you ask?

It's called our progressive taxation system. (And it was first advocated by every Right Wingers second favorite economist, Adam Smith, I might add.)See... you know how all those "flat tax" advocates keep saying that we should all pay the same rate? Well, what they're hoping you don't know is that we ALREADY DO!

My first $8700 is taxed at 10%. So is Yankee Third Baseman Alex Rodriguez's.
My earned income between $8,700 and $35,350 is taxed at 15%. So is Donal Trump's.
My earned income between $35,350 to $85,650 is taxed at 25%. So is Roger Ailes and Rupert Murdoch's
(and so on...)
And so is all of yours.  EVERYONE'S is, in fact.

So, see... when you cut the bottom tier tax rate, EVERYONE benefits from it. When you cut the TOP rate, only the rich benefit.

Likewise, when you raise the bottom tier rate, you raise EVERYONE'S taxes. (Unless you do what Reagan did in 1987, having a top tier rate that was LOWER than the middle-tier, the great fellatiator!)  So even though that poor, suffering Billionaires will be paying a little more that they would have if Obama had extended ALL of the tax cuts, they are STILL paying less than they would have had no action been taken, on account of them keeping the same benefit we all got from those lower tier rates.

What do you know: Obama STILL hasn't raised income taxes!

Now, yes, we can talk about the taxes that are associated with "Obamacare" (again: a nae that Republicans gave to their own plan, once they realized how many even of their own people hated it) but that's a much more complicated discussion, as it involves an objective discussion of how broken our health care system was BEFORE.  And it remains to be seen, going forward, if the various taxes, benefits, regulations, restrictions and markets/exchanges will bring a net benefit or net harm.  And on a personal level, that depends largely on whether you currently have health insurance or not, if you can afford it, and if you can afford it down the road. A worthy discussion, to be fair, but not what we're talking about HERE.

One final note: I came out pretty big for Capitalism in this post, albeit the regulated Capitalism of 40's, 50's and 60's, not the laissez-faire Capitalism of the 20's (which didn't end well, you may recall) or the Reaganomics that continues pretty much to this day. (Until I see a top-tier rate over 50%, we haven't substantively left Reaganomics yet!) I'd still proudly describe myself as a "Free-Market Liberal" or "Progressive Capitalist" and see no contradiction in doing so, at all.

To SOME EXTENT, Gordon Gecko was right: Greed is (or can be) good. Greed WORKS. (or CAN.)

And I do believe that for many things, the free market and the profit motive, assuming there's good, fair, open competition and well-informed choice, will generally distribute goods, services and income in a fair and equitable way. (Or at least the best possible way over time.) And while there may be others, I really see only four areas in our society that should be kept completely isolated from the pursuit of profit. And while, sadly, so many seem to disagree with me on these, I really can't see how these are anything but universal:

1) Education. Education is neither a right, not a privilege: It's a OBLIGATION. Of both a society to educate, and the people within it to become educated. And it an obligation that should be fulfilled by passing on OBJECTIVE KNOWLEDGE, not just the clap-trap that Corporations want to teach you in order to make you better voters and consumers (for them.) And make no mistake: The Right, and their 1% Corporate Masters, FEAR an educated populace. (And so does any Government in general.) Let's keep it that way!

2)  Medicine. This one's easy. Just ask yourself, Do you want your Doctor making medical decision based on what's best for the Hospital's shareholders, or YOU, the patient. I think all sane people will say, "To hell with the Hospital's shareholders!" if the alternative is that they receive sub-standard or mediocre medical treatment.  WELL... if you want that for yourself, you have to willing to grant it to everyone else. Otherwise, you're just a selfish little ass-wipe!

3) Justice. This one SHOULD be easy, but we actually HAVE a for-profit prison system. Oh, it "works," meaning it saves us money, provided that the jails remain FULL. Well, one "three strike and you're out" law signed by that great "Liberal" Bill Clinton, and we're now incarcerating a greater percentage of our population than CHINA does!  (What, did you think that bill had something to do with CRIME?! OH, HELLS' NO!: It was entirely created by ALEC to make the for-profit prison system "work!" Look it up!)  In any case, I don't think even the idiotic Conservatives who thought that "3-strikes" had something to do with being "tough on crime" would want to have a Judge making a decision that affected them based on economics rather that the evidence presented before the court.

and...

4) The Military. Duh. Private contractors in Iraq and Afghanistan have been expensive, wasteful and (in some eyes) guilty of War Crimes. They cost more than our troops and do a worse job. Not to mention... All the top Republican brass all now admit that Iraq was all about OIL and MONEY in the first place!  What do you know? EISENHOWER WAS RIGHT. And the profit-motive makes for REALLY FUCKING TERRIBLE foreign policy decisions.

Aside from those four areas?

I'm 100% a Capitalist. Just like President Obama & company are.

-----------------------------

(One more thing... Something funny... every time I read about President Obama being described as a "Kenyan" I always read it, "Keynesian."  Which becomes REALLY wierd when he'd called a "SECRET Kenyan." Because I read it "Secret Keynesian" and think, "Shit, that's not a particularly well-kept secret, is it?!")

Meant to post this ealier...

Someone posted this infographic on MMFA lasty week, and I had meant to post it here and forgot about it until now. It comes from [IMHO HoF'er] Newscorpse and it serves as a pretty handy reference should you find yourself in a debate with any C-Students about taxes or economics. Please feel free to download it and pass it on.

Occupy Reality, part one

The Dow Jones Industrial Average "soared" 330 points today.  What does that mean?  Well... nothing, actually.  But there's an interesting story to the DJIA when take in context.  Here are the numbers over the past two months:

From July 21st to August 8th it lost 1914.26 points.  That's... a pretty substantial drop.  Now... Seeing as how it had been an almost consistently upward trend for over a year leading up to that point - up 6097.27 points since its low, about six weeks or so after Obama took office.  So... What was going on during that time period that might have given the economy some jitters?  Hmmm.... Let me think...

OH YEAH!

The whole stupid DEBT CEILING DEBATE!  Thank you, REPUBLICANS! I mean, GOD FORBID the recovery happen when there's a DEMOCRAT in the White House!  Keynes might make a comeback or something!  (Of course, by stiflingng the stimulus packages, and seeing the recovery falter, they basically PROVED Keynes was right, but don't expect that liberal media (*barf*) to tell you that!)  They couldn't bear to see that Obama (and Keynes) were RIGHT, so they invented an issue in order to shit-can the economy.  Way to go, Republicans!

And since then, check it out:

UP 429.82
DOWN 519.83
UP 423.37
UP 125.71
UP 213.88
DOWN 77.707
UP 5.017
DOWN 419.63
DOWN 172.93
UP 37
UP 322.11
UP 143.95
DOWN 170.89
UP 134.72
UP 254.71
UP 20.7
UP 53.58
DOWN 119.96
DOWN 369.31
UP 15.04
UP 275.56
DOWN 119.05
DOWN 303.68
UP 68.99
UP 44.73
UP 140.88
UP 186.45
UP 75.91
DOWN 108.08
UP 7.65
DOWN 283.82
DOWN 391.01
UP 37.65
UP 272.38
UP 146.83
DOWN 179.79
UP 143.08
DOWN 240.6
DOWN 258.08
UP 153.41
UP 131.24
UP 183.38
DOWN 20.21
UP 330.06

Now, the trend? On average? Since, August 8th? Is DOWNWARD.  OK, yeah, the index is actually UP 193.41 points since the start period, but the trend-line says that we'll lose about 4.65 points per trading day.  The thing is?  Do you notice how many days there are that the CHANGE (up or down) was in the triple digits?  Because I did. Don't bother counting, I'm going to tell you: 32 out of 44.  That 72% of the time that the Index changed by roughly 1% of it's overall value.  To put that in context - a 1% change in a single day - if it went UP every day by 1%, in a year you'd have roughly THIRTEEN TIMES the money you started with.  Now, obviously, that's never going to happen.  Down days will cancel out up days and vice-versa.  But more than EVER OTHER DAY? THREE OUT OF EVERY FOUR?!  That's extraordinary.

So... what does it mean?

Well... You have to understand that the DJIA is nothing but a handful of stocks (30) that the Dow Jones Company picks because they feel that they are a good indicator of the countries overall economic health.  (It's actually one of THREE indices for this purpose, but it the only one anyone every talks about, so it's what we're going to talk about.)   And you also have to understand what a stock's price actually means.  What it is, is the net present value (which assumes some arbitrary inflation rate) of all future dividends (profits) divided by the number of shares.  IOW, it's a predictive value of how a company will do.  And, obviously, as new information comes in (like quarterly reports?) both that projection, and the price, will change accordingly.

So... what does it mean that "the experts" keep changing their prediction by such a significant amount every day, up and down? 

Well, for a start, it may seem that they don't what the hell they're bloody doing! But ACTUALLY, it merely means that there's a lot of economic instability at the moment.  Now the Republcians will balme it on all kinds of things that eitehr haven't happened yet (like tax increases) or things that have no chance of happeneing. (Like tax increases.)

But I have an alternate theory, and it's fairly simple.

The economy is trying to recover.  It really wants to.  There is pent up demand and people are starting to spend money again. Sales of Halloween Candy/Decorations/Cosutems/etc..., for example, is WAY up from the last two years.  I can tell you that Automotive sales (and profits) are generally up as well. But then...

HERE COME THE REPUBLICANS...

Debt crisis = higher interest rates = harder to borrow = lousy economy
No More Stimulus = hampers demand = lousy economy

Raise taxes on THE POOR (a favorite of Fox News these days!) = hampers demand = lousy economy
Cut Social Security and Entitlements = hampers demand = lousy economy

Cut Government Salaries and jobs = hampers demand = lousy economy


You see the trend?

The ECONOMY? Would be doing just fine if the Republicans did what they always say the Government should do: STOP FUCKING WITH IT!

All of this instability is due to Washington's (read: REPUBLICANS) refusal to simply DO WHAT IS NECESSARY to make things better.

Now... You might hear the Right tell you that their thinking LONG TERM instead of SHORT TERM.

To which I'll answer, "Yeah..." and point out that, to a Republican, "Short term" means the next fourteen months, while "Long term" meand 2013 through 2016.

If I had my way, I'd execute every one of these scumbags for treason. As it is, they should be impeached and jailed for theft, fraud and corruption. But, at a minimum? THEY SHOULD ALL BE VOTED OUT OF OFFICE. EVERY LAST MOTHERFUCKING ONE OF THEM!

I've said it many times on MMFA, and probably once or twice here, and I'll say it again:

Anyone making less than $250,000 a year who votes Republican is either clinically psychotic or functionally retarded.  The rest? Are just greedy.

I Don't Believe in Miracles

Nobel Laureate and one of a very few people who “get it” (or tell the truth) anymore, Paul Krugman, wrote an excellent piece the other day in the NYT debunking the myth of the “Texas Miracle” that has supposedly happened under Governor Rick / General Robert E. Perry. It’s great piece and although it doesn’t go far enough (to use one of his own famous critiques) I recommend that everyone read it, just I as Recommend reading pretty much ANYTHNG this man writes. (Barry? Are you listening?)

And last night the Gym some ass-hat two machines down from me not only had Fox News On, but had it turned UP. (Usually the TV's are muted and just show subtitles.) So I got to listen to a marvelously fact-free response from the four members of the Fox Panel who HAVE NOT won Nobel Prizes in Economics. Devoid of rational response, or evidence to support their so called “miracle,” they report to calling [Krugman's analysis] the “Alien Invasion” theory suggesting either that Krugman credits illegal immigration ALONE for ALL of Texas’ growth, or that he was suggesting that little green men, perhaps from Mars, were somehow to thank. And of course, the average Fox viewer is more likely to hear that explanation and think, “Wow, that Krugman sure is a nut!” rather than, “Wow, these Fox peoples sure are stupid!” Because remember:

A LIBERAL WILL TELL YOU WHY YOUR ARGUMENT IS WRONG.


A CONSERVATIVE WILL TELL YOU WHY YOUR ARGUMENT IS LIBERAL.

(As an aside, between how pissed off I was getting listening to Fox and the Trainer playing the Greatest Hits of the Rocky movies with one his clients, I did have a really good workout!)

(Another aside - I couldn't find a transcript of the Fox segment, but while looking for one, I found almost the next best thing: This Idiot's Blog.  Check it out, although preferably not right after you've eaten! We got a future Hall of Shamer here, for sure. I'm curious to see if he has the balls to let my comments post(he did! good on him!), and the chops to respond to them. Or come here! If he does, who knows? It might get interesting.)

Well, anyway, I’m all for debunking “Miracles” as anyone who understands my Humanist and Skeptical Philosophy already knows. And I heard an EXCELLENT story on NPR this morning that started where Krugman left off and ran with it, showing even more reasons why the “Texas Miracle” is unlikely to apply to the broader economy. You can find a transcript and audio HERE, but here are some of the highlights:

1) Population Growth: Texas has had an influx of immigrants, both legal and illegal, yes, but also many people moving there from other States. And, as Mister Krugman pointed out, it’s not like EVERY STATE’S population can grow based on people moving there from OTHER STATES. So, either it IS (or will have to be) an actual “Alien Invasion,” as Fox sarcastically put it, or it won’t work. Nice work there, Fox.

2) Public Sector growth has been every bit as robust as Private Sector growth. Liberals would be neither surprised nor bothered by this, but remember: He’s promising small Government. Apparently what’s been good for Texas will NOT in fact be good for the rest of the Country – at least according to him and his Tea-Backers.

3) The overwhelming majority of the private sector jobs have paid minimum-wage or less. Governor Perry, please, despite what your Tea-Backer and Supply-Side buddies will tell you, we don’t just want jobs. We want GOOD PAYING JOBS. Filling the economy with part-time, minimum wage jobs (or worse) is NOT what we’re looking for!

4) Despite all that Public Sector Growth – that the Right isn’t even prescribing? Texas ranks 49th in per pupil public school spending, and 50th – tied with Mississ-fucking-ssippi (or as my father-in-law calls it: The states that keep West Virginia from being LAST in anything) in the percentage of adults that go without health insurance.

5) Texas residence still go without many of the services that residents of every other state enjoy. Remember folks, because this is his recipe for success: Sub-Minimum Wage Jobs, and no Public Services. THAT’s the Texas “Miracle.”

6) Perry's “Enterprise Fund,” which gives taxpayer money to companies to come to, or expand in, Texas. *ugh* OK, putting aside that this is little more than Rick Perry giving tax-payer money to the company’s that back his campaign (alone enough to warrant his removal from office) this might sound a bit familiar. In one of the rare instance in which I agree with the tea-baggers, another word for this is… duh-dah-daaaaaah: STIMULUS. (You know: That thing they want to GET RID OF so we can have MORE JOBS?) (Idiots.) And in one of those rare instances that I agree with Rick Perry, depending on how this is administered this can be a good thing. Of course, I’d prefer public works projects to strait corporate giveaways, but, in a rare instance where Paul Krugman and Rick Perry would agree, the economic effect is largely the same: IT CREATES JOBS. But, of course, this will likely be off the table when it comes to the rest of the country.  The Tea Party Republican Retards have no intention of spending any money to fix anything. (At least, not while Obama's in office.)

And finally, the one that PISSES ME OFF THE MOST…

7) What kind of companies thrive in Texas? What are the biggest employers there, the ones driving most of that jobs growth? Well… Enron, ExxonMobil, Halliburton, Marathon Oil, Shell Oil, Texaco… You see the pattern yet? Mostly Oil Companies and other Energy Companies. And those guys have been doing great while the rest of the country’s economy remains in the shitter. Why? BOWEL-BASHINGLY HIGH GAS PRICES, THAT’S HOW!!!! These companies have made it their business model to siphon off as much of the rest of country's growth as possible! Well… OK… I’ll say potential growth, because with these greedy little fuckwads operating the way they do, they rest of the country will basically NEVER GROW AGAIN. Does that sound alarmist? Think about it. Since ~2005 or thereabouts (I've noticed it pretty clearly since the days after Hurricane Katrina) the pattern has gone in lockstep perfection:

1: Gas prices go up =>the economy slows.

2: Slow economy => no jobs => less demand => gas prices drop.

3: Low gas prices mean people have more money, as they are no longer being strangled by the oil companies. (Thank you, Mister Keyenes!)

4: More money => more demand => economy starts to improve.

5: Economy improves, demand goes up => GAS PRICES GO UP.

6: GOTO 1

And it doesn’t make a difference whether the oil is foreign or not. (Shell is a Dutch company. They still employ a lot of Texan-Americans.) The problem is that oil and gas (energy) prices will ALWAYS act as drag on the economy. They will ALWAYS be a negatively correlated indicator. Until we break their stranglehold we will not be able to escape this pattern. It’s like a tax on the rest of the economy, but one who’s rate actually goes up to the point that it kills growth as soon as there IS any. And nowhere has this kick-in-the-balls been more evident than in my home state of Michigan. High gas prices killed the SUV. That’s great for the environment, don’t get me wrong. It needed to happen, and it was inevitable that big-Auto would need to transition off of them. But the gas prices have gone back down since then! They slowed the economy and were really what kicked off the mortgage crisis. (Not the kindling, of course, just the spark.) And the two brought the Big Three automakers to the brink of bankruptcy. And we haven’t had a robust recovery – because the Republicans and big oil won’t LTE US!

Nice going.

Oh yeah… and as for the whole Low-Tax, low Regulation business environment?

8) Texas job growth has not kept pace with its population growth: They have higher unemployment that the high-tax, highly regulated, robust public service providing states of New York and Massachusetts. (You remember Massachusetts, right? The state with near-universal health care coverage, compared to Texas’ rank of dead last?)

So THAT’S his recipe folks:

• Shitty, Low paying jobs

• No public services

• Little to no health insurance

• Underfunded schools

• High gas prices

You know what? If THAT shit works? I just might start believing in “miracles!”

Lies du Jour, Part One

There are two particularly annoying meme’s being pushed right now by the Right about Obama and the Democrats:

1. That Obama created the deficit
2. That Obama raised taxes.
3. There are both true and both bad and thus both are reasons to vote Republican.

First things last: neither is true. And we'll get to that in part two.

But let me put that aside for the moment, and first point out the absurdity of the idea that the deficit can be your #1 issue when you’re calling for TAX CUTS! Now… am I saying tax cuts are BAD? No. Not at all. They stimulate the economy. That’s right. You read that right. They DO. In fact the idea that cutting taxes can stimulate the economy if every bit as much part of the Keynsian economic model as the fact that increasing spending stimulates the economy is. And both work the same way: The multiplier. If you cut taxes, or increase spending you increase the income of America by [some multiplier, greater than 1] times the amount of the change. And like wise raising taxes and cutting spending will have the same negative effect: the income of America will change by [some negative multipler, greater than -1] times the amount fo the change. Conservatives are more than happy to accept the tax half of the Keynsian model, but for some reason they can never seem to swallow the spending side of it. And the real kicker is that the multiplier ofr spending are GREATER than the multipliers for taxes. The end results is that a balanced budget always has a multiplier of “1.” If you raise taxes AND raise spending by [X] collective income will INCREASE by [X]. If you cut taxes AND cut spending by [X] collective income will DECREASE by [X]. They never buy it, but if you take an economics course, regardless of the ideology of the professor, you will learn this. It’s a FACT.

BUT… that’s all about the effect on the ECONOMY. If you’re concerned about the ECONOMY? Fine, cut taxes. (Or increase spending, whatever.) But you can’t be expected to be taken seriously if you’re talking about cutting taxes to decrease the DEFICIT. (Well, OK, yeah you CAN, only because there are a lot of real idiots in this country. In any case you SHOULDN’T BE taken seriously by ANYONE.) Because that’s like saying, “My credit card debt is getting too high, so I better quit my job.” The deficit is SPENDING minus TAXES. So… if you lower taxes, you can ONLY increase the deficit!

Duh!

Now… some will argue that the multiplier effect I mentioned earlier can fix this. That if we cut taxes (for example) the resulting growth will result in more tax revenue. (Or at least as much as we had before.) That’s the idea behind the now widely discredited Laffer Curve. Personally I think Laffer had a legitimate point, but he his partisanship caused him err when trying to figure out where exactly on the curve we were, as well as what the exact shape (slope) of the curve is, and where the center of it is. In any case, let me demonstrate why tax cuts (or spending icreases, for that matter) will never “pay for themselves,” why they will ALWAYS contribute to the deficit, unless offset by spending cuts (or tax increases):

  

Let say you’ve got a company with $100 in taxable income (profit) and we’re taxing them at 30%. (That a bit higher than most US corporations pay, but it makes the math easier.) SO you get $30 in tax revenue from them.  How much growth would they need to see for a 5% reduction in taxation to “pay for itself.” (Meaning: for it to be deficit neutral.) Well… to get that same $30 at just a 25% rate of taxation, they’d need to make $120 in pre-tax profit. IOW: they’d have to see 20% growth! Note: Few companies EVER see 20% growth, and a 5% tax cut on it's opwn just ain’t going to do it! How do I know this? First of all, most companies require a Return on Investment of just 10%, 15%, 20%... something on that order. To turn that $5 of tax savings into $20 of income would require a 300% return! And if a company had a way to get a 300% return on their money? They’d do it. Period. Right now. They’d find a way to beg, borrow or steal that $5 they needed. But guess what? There are not a whole lot of projects out there with a 300% ROI. None really. At 20%, that company would made $101 in taxable income from that $5 investment and pay $25.25 in taxes. IWO – we added $4.75 to the deficit by doing this.

Even IF one considered the multiplier effect, the results are still nowhere near where they need to be. To turn a $5 tax cut into $20 of taxable income requires a multiplier of FOUR. And no legitimate economist goes throwing numbers like THAT around lightly. I'm not saying it's impossible, just that your going WAAAY out on a limb to assume it.  Here, for example, is a graph by Mark Zandi of Moody’s showing the benefit of each dollar spent on various parts of the stimulus package in 2008:

(And yes, I know that looks like crap bleeding over like that, but it look worse shrunk down. So just deal.)

Now, granted one could claim this is “just some liberal rubbish,” but do you notice how the highest multiplier is still under TWO? (~1.7) Even for the “liberal” stuff that he'd be trying to sell?! Nothing ANYWHERE NEAR the four that we'd need.

Now, that 300% return (multipler of 4) only applies to a 5% cut from a 30% base tax rate. Here’s a chart I worked up, showing how much growth you’d need (and the required multiplier) for a given tax cut to pay for itself. Feel free to go in there and monkey with the numbers if you want. The point still stands.  You can see that unless you’re talking about very small tax decreases, from very large rates, you’re talking about growth rates that are only ever talked about in classroom examples. They have no place in business projections (indeed any business would go broke VERY FAST if it relied on this kind of growth assumption) and should have no place in policy discussions.

"Part Two" will show why, in addition to being assinine when taken together, both a flat out FALSE individually as well.