The Deliberate Mischaracterization of the National Debt

Republicans and even a few Democrats are fond of characterizing the National Debt as if it were akin to your household debt and claiming that the size of that debt is a big, big problem.

And I respond with: how do you know when a politician is lying about the National Debt? Answer: when his lips are moving.

Most of the “debt” incurred by the federal government is in the form of Treasury bonds. If one thinks of this as a piece of paper (rather than the electrons they are made of now) printed by the government, it is in effect a promise to pay. If the nominal value of the Treasury bond is $1000, the promise to pay is that $1000 and a smaller amount more. Easy peasy. This is, in effect, the government printing money. What would be the difference between this procedure and the government printing that $1000+ in the form of currency? Answer: there is no difference.

But, but the government has to pay off that debt, doesn’t it? Sure, it issues a new series of bonds and pays off the old bonds with the sale proceeds from the new ones.

But, but … that’s something we cannot do as individuals. Yep, that is why what we have is called a sovereign currency. As a sovereign country we can make as much or little of it as we want.

Consider this, in 1964, the year I graduated high school, the national debt was $312 billion, which constituted 46% of GDP. What do you think people would have said then that in 2018 it would be $21.5 trillion and 108% of GDP? I am sure some would have set their hair on fire and run about, claiming this was disastrous, that the American economy would be in a “failing third world country” state with rapid inflation and that we would be in a severe decline economically. Have you noticed any of this? No? (There are a great many things I do not like about our current economy; that is not my point, my point is that we are not now a banana republic because of our yuge national debt.)

Oh, by way of creating a little perspective, the National Debt in 1946, my birth year, just 18 years earlier, the debt was $216 billion, which was a whopping 119% of GDP.

As another point to ponder, realize that the U.S. Federal Reserve, aka “the Fed,” created $2 trillion out of thin air to fund its purchases of stock and creation of bank “reserves” and whatnot to “save the economy” during the recent Great Recession. Did you notice all of the inflation created by the injection of that much “new money” into the economy? No? Neither did I. Inflation was virtually nonexistent. In fact, many were worried about deflation. So much for the claim that printing money causes inflation. Printing money can cause inflation, but it doesn’t have to.

The country’s budget is not like a household budget, not even close. The country’s debt is not like a household’s debt, not even close. If the National Debt really bothers you, the government could print $21 trillion in currency (now done with electrons, not paper) and pay it off entirely. This is not desirable for many reasons; I won’t go into them now. (Whew, I had you worried, didn’t I? But just a teaser … would you make war on someone who owed you a lot of money?)

In an era of “fake news” the claim of there being a “big, big problem with the national debt” is among the fakiest of bits of news. Of course, there is no such thing as fake news, we have had lies in the news since the beginning of the country; those lies are still news. Think of the news as a court transcript; people lie in court all of the time and the transcripts can be used to convict them of that; they are not automatically true, just a record of who said what, just like “the news.” This is why lawyers tell their clients to shut up and not talk about their cases, something President Trump would be wise to do.

This claim of a “big, big problem with the National Debt” is pure propaganda, playing on the general public’s ignorance of national economics to push political agendas that have no good basis otherwise. For example, if you look back in history, if you had a large problem with debt, the last thing you would do is … cut taxes. Think of a corporation which is struggling with a large amount of debt, the last thing they would want is a reduction in income such as you would get if you cut prices. Cutting taxes creates a large reduction in income for the government. If spending stays near the same, a larger amount of debt is created. Have you known of any administration, Republican or Democrat, which has reduced spending? No? Neither have I. This is why Republicans can cut taxes dramatically and not worry. No matter what happens, it will not affect what they want to do. Reagan, Bush 1 and Bush 2, and Trump spent/spend more money than they took/take in, which was fine by them as long as their wealthy sponsors got wealthier, their prime objective. After all, these are the people that claim that they want to “get the government off of the people’s backs” and then create legislation pushing the government into our private lives ever deeper. Pay no attention to what they say, watch what they do.

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The Problem with Bases

No this is not about baseball. It is about our two main political parties and their “bases.”

The Republicans have sold their souls to the Religious Right, neoliberals, and reactionaries of the fringe of the right wing of American politics to get and stay elected, no matter the damage done. They haven’t dumped the rich as a core base element for who else would they serve? The Democrats have dumped their historic base of labor (working class people), minorities, and the less wealthy for the professional class, only to find out there aren’t enough of those to win them elections.

When I was young (I first showed an interest in politics when Eisenhower was president.) Republicans were stabilizers. They supported the institutions that kept out society stable (in their HO, of course). They supported the schools, the police, the military, the government (Right or Wrong!), the church, law and the courts, and so on. The complained when political or judicial opinions went the other way, but they didn’t threaten to take their ball and go home.

When I was young, the Democrats stood for fairness, helping the poor, balanced taxation, labor unions, and they were far from anti-war (both Kennedy and Johnson expanded the Vietnam War tremendously on specious grounds at best).

Neither party was worth a damn when it came to international relations. There was a small fringe who complained loudly about foreign aid, which has always been a spit in the bucket financially. (Somewhere along the line instead of giving technical aid and money to other countries, we now give them discounts on buy the weapons of war. Apparently as far as the U.S. goes peace and freedom don’t go together.)

Politically there was as much corruption then as is the standard now, but the stakes were smaller as were the amounts grafted by our politicians. But each party had some principled actors who kept the others in line. Often the “line” was racist or sexist, but there were lines and you could, as ordinary citizens, see them and attack them or try to move them.

Now, what I see is cowardice and incompetence (to he left of me, to the right of me, …) in our political bodies. Leadership? Not to be found? Intelligence? So little that the political class cannot evaluate whether their intelligence experts are to be trusted. Political astuteness? I can’t even find a politician who can define it. Deft policy drafters? Give me a break.

If we were to have a parliamentary system as has been suggested, these two parties would dwindle away to nothing and newer, more robust, more coherent parties would take their places. But as I have posted before, our political system is rigged. As much as the Founders feared political parties, they created a system that allowed two of those parties to hijack the system. (Our winner take all elections doom us to having just two dominant parties.) And, it is clear that the Founders feared true democracy, so they structured the Constitution against that.

I am absolutely gob smacked that the “press” still posts articles addressing the public will. They tell us, for example, that the Roe v. Wade SCOTUS decision has never been so popular. So? Since when has public opinion been a determining factor in anything governmental? Large majorities of citizens want background checks for all firearms sales; does that matter? A large majority of people want corporations to pay more in taxes; does that matter? If you are poor or middle class you have zero chance of affecting legislation. If you are rich and a campaign donor, then you have some chance. If you are a rich corporate lobbyist and have donated large sums, then you have not only a chance to affect the outcome, you may be invited in to help write (or write completely) the text of the bill.

If the Republican Party of my youth or the Democratic Party of my youth were still in existence, I could vote for the kinds of candidates either party proffered. As they are now, I cannot vote for either party as they both are embarrassments and anti-democratic and need to go.

The Monty Pythonesque Administration

Comments have been flying fast and furious regarding the meeting between President Donald Trump and Russian President Vladimir Putin.

Comments ranges from:

“One of the most disgraceful performances by an American president in memory,” Sen. John McCain’s description of the news conference.

to:

“(What) the American people saw is that President Donald Trump will always put the prosperity and security of America first.” (VP Mike Pence)

That the two polarities, including the ones evinced here, are coming from Republicans; well at least this is new.

I am reminded of a Monty Python sketch, “Argument Clinic” from Monty Python’s Flying Circus, written by John Cleese and Graham Chapman. Graham Chapman enters the office of the Argument Clinic looking for a good argument. John Cleese complies but no matter what is said to him, his response is “No, it is not.” or “No, you didn’t. (I am working from memory here, so if I am off on the details, no problem, it is the gist of the sketch I am getting at.)

Finally the paying customer complains that they were not having a proper argument as Cleese was just gainsaying everything sent his way. Cleese’s response was “No, I’m not.” No resolution occurs because they run out of their allotted time.

This, apparently, is the Republican strategy to run the Oval Office. No matter what anyone says, the answer is “No. it is not.” or “You are wrong.” If someone quotes sources, the response is “Fake news!” No matter what happens, the first things out of their mouths are outrageous lies.

Backing all of this up is Fox (sic) News propaganda machine and the various Internet “news” sites who back Trump’s version of reality. As a consequence, we have a significant portion of the American polity who believe Mr. Trump’s version of reality. Hell, quite a few of them even believe Mr. Trump is a Christian, all evidence to the contrary. (Jesus said it is okay to grab women by the pussy, if you are famous. Two Corinthians 6:66)

Then the talking heads lump it all together as us being a “Divided Nation,” as if we were the cause and not the lying, mealy mouthed politicians.

Mr. Trump is transforming American politics … and you are not going to like what you get. Whoever is in power just has to tell “the people” things that back up their performance (e.g. “The GDP has doubled on my watch.” DJT … when it has gone up 6% at most.) and then their propaganda machine goes into action to back it up or muddy the waters to make it seem that opinion is divided on the truth of that statement. (“After all, they will say anything to “prove” their point.” (stated by both sides).)

So, okay, conservatives. You have seen the way the Republicans have acted when they got back into power (and even before, refusing to address the nomination of a Supreme Court justice, for over a year). What will the country be like when the liberals get into power (the pendulum always swings back) … if they follow the same play book? Are you going to like it? Are you?

Or would you rather have the old, dull, grind it out politics that served us fairly well for quite some time. You know, the one in which if someone were caught in a massive lie they were expected to resign. (Compare Richard Nixon (then) and the still Senator David Vitter (now). You know Senator Vitter, the family values Republican who was a frequent client of the D.C. Madam’s whorehouse.)

We Can Trust Corporations … Right?

I often heard the trope from the Republihooligans that “we can trust the corporations, that they wouldn’t do anything illegal or immoral as that would affect their reputation which would ultimately hurt profits.”

I haven’t heard that line repeated much lately, especially since there has been a conga-line of disclosures of corporate wrong doing and illegality that has been unending before, during, and after that line was fed to us.

The latest example of corporate abuse involves a court case lost by Johnson & Johnson over one of their flagship products: baby powder. Surely J & J would never include a chemical in any of their products that would knowingly harm its customers (baby customers!), why that might damage their reputation. So would a $4.7 billion dollar award against them.

“Thursday’s massive verdict was handed down in the Circuit Court of the City of St. Louis. It was comprised of $550 million in compensatory damages and $4.14 billion in punitive damages.

“The women and their families said decades-long use of baby powder and other cosmetic talc products caused their diseases. They allege the company knew its talc was contaminated with asbestos since at least the 1970s but failed to warn consumers about the risks.”

OMG, do you think corporations could do such things?

Asbestos. Gosh, we all have know that asbestos is a health hazard for decades now. We have watched TV shows where house remodelers have to call in hazardous waste disposal teams to remove asbestos products before they can remodel their homes. Our public buildings have had to have “asbestos abatement” services in to make expensive extractions of the stuff.

Gosh, could J & J have not known? The judge who issued the $4,700,000,000 award thought not.

And what about the “we can trust the corporations” bullshit purveyors? I say, identify them and get them out of office and out of power, if for no other reason than gross stupidity but more likely because of political and moral corruption.

If You were Unsure that the Effing Rich Were in Charge

Here are some basic facts regarding the Class War.

The rich were acceleratingly richer as the last century ended:

• Between 1973 and 2000, the nation’s most prosperous 1 percent tripled their incomes, after taking inflation into account. The top tenth of that 1 percent did quite a bit better. Their incomes more than quintupled between 1973 and 2000, rising 414.6 percent.
• The other 90 percent of American’s incomes rose 2.6 percent. Something went horribly wrong over the last quarter of the 20th century.

The Founding Fathers were horrified by actual democracy; they felt that freedom stemmed from property. According to James Madison (James Madison!) in Federalist No. 10, who argued that democracies were “spectacles of turbulence … incompatible with … the rights of property.” Democratic governments gave rise, Madison felt, to “factious leaders” who could “kindle a flame” among dangerous masses for “wicked projects” like “abolition of debts” and “an equal division of property. … Extend the [geographic] sphere [of the U.S. republic],” and it becomes “more difficult for all who feel it to discover their own strength and act in union with each other.”

There is much, much more in this vein from all of the FFs. Basically if you owned property (aka were very well off to rich) then you were free, otherwise you were lazy and shiftless and deserving of your lot in life. The purpose of the government they created was to preserve freedom (= property).

So, instead of the rapacious masses confiscating the wealth of the rich (Oh, the horror!) we have the rich confiscating the wealth of the masses. How? Well so far in this new century, our decision makers in Washington have done their best to make things even worse with a temporary minuscule tax cut for the masses and a permanent massive tax cut for the rich and corporations. (Because they wanted it, not needed it!)

All told, only 3 percent of this century’s tax cut savings have gone to America’s poorest 20 percent. Taxpayers at the other end of America’s income spectrum, those fortunate souls in the top 20 percent, have grabbed 65 percent of those savings, nearly two-thirds of the total.

Remember “We have met the enemy and he is us (Pogo)?” We are not talking about a foreign enemy. If the American rich had been satisfied with their wealth level of the 1960’s and 1970’s (check it out they were doing very, very well, Mitt Romney got $2 million from his father to “get started in the late 70’s/early 80’s—I made the same amount over almost 40 years as a college professor) none of us would be complaining now. But too much is not enough for this class and they had to go to extremes (they always do; it is predictable; it has happened several times in our history alone).

We can no longer just “level the playing field” to right the wrongs having been done. This would be like finding a bicycle racer had cheated by using a motorized bicycle, requiring him to switch to an unmotorized bike, but allowing him to keep his lead in the race. We are going to have to confiscate the wealth so foully collected and then level the playing field.

Step 1 Throw the plutocrat’s minions out of office and replace them with progressive politicians.
Step 2 Raise taxes upon wealth accumulated and transfers of wealth.
Step 3 Establish a maximum wage.

The alternatives to these corrections is real class war, no longer with pencils and electrons, but with violence.

Randi Weingarten: The Right-Wing Assault on Unions Won’t Win: It Just Makes Us Angrier

We are in a race for the soul of our country. But if we really double down, if we fight not only for what’s right but for what the vast majority of Americans believe, working people—not Janus’ wealthy funders—will emerge as the real winners. Randi Weingarten

Lovely comment by Randi (Randi is the President of the American Federation of Teachers, my old union), but apparently she hasn’t been watching. The union movement has been taking it on the chin for the last 40 years and it has only gotten worse. If the recent offenses are what it takes to get the union movement to wake up, well, “better late than never” comes to mind.

I am fearful that the response will be too little, too late. It is already significantly too late. This feeling of mine seems to be partly due to the current composition of U.S. labor unions. So, who are these union members, now? They are teachers, nurses, “service workers,” and so on. In the hey day of labor unions, the people in unions were iron workers, construction workers, garment workers, auto workers, many, many men and women who worked with their hands. They needed those hands to support their unions because their oppressors brought clubs, knives, even guns to union rallies. There was literally blood in the streets.

The gains made by unions were made by sheer insistence, yes with a threat of violence, but typically in response to violence. A lot of luck was involved. World War 2 happened with Franklin Roosevelt in office was the biggest stroke of luck. (Roosevelt was called “a traitor to his class” for his pro union efforts and high taxes. His “class,” of course, was the “wealthy.”)

From my youth I remember picket lines, strike funds, strike kitchens and food sharing, shoving matches, dirty tricks, and this was well after the major battles had been fought (which were pre-1960). I had colleagues I was trying to recruit into our teacher’s union who told me they could not because they remembered their father coming home from Detroit union meetings bloodied as if from war. There was indeed some memory of what had been fought over and for.

I was anti-union myself until I experienced a work-related problem I couldn’t solve alone and I received unsolicited help from a union member, who was a colleague, not a “union thug.” I decided that something was wrong there, so I read several books on union history and I was stunned at what the union movement was about. The rapacious greed of the “industrialist” class. The disdain they had for working people. The tactics employed by the people in power (got a strike, have your friends in government mobilize the National Guard to protect your company and brutalize the strikers, or if you didn’t have friends in government hire “strikebreakers” who did just what their name implies).

I also found out that every time a state’s unions urged that labor history be taught in high school, an immense backlash from the rich and powerful occurs. They know that if people knew the real story, unions would be perceived very sympathetically. Instead there has been an unrelenting anti-union propaganda campaign resulting in ordinary American workers being quite anti-union. And we in the union movement have allowed this to happen.

It will be a long slog to get anywhere near back to where we were. And I wonder if people who don’t get dirty from their work are up to the task.

 

 

It Figures

When the Trump tax cuts were imposed (you remember don’t you: the small temporary tax cuts for us and the large permanent tax cuts for corporations and the wealthy) it was claimed by the Repubs that the money saved by the corporations would end up spurring growth, even result in raises for workers. (Right, those results were to be delivered via unicorn, I believe.)

It was pointed out that the last time such a tax cut was implemented, corporations spent the bulk of the savings in buying back shares of their own companies. Well, surprise, surprise, the same thing happened this time. (Who’d have known it could be this complicated?) In a post on the Naked Capitalism web site (Michael Olenick: Update Confirms That Share Buybacks Are Still Corporate Suicide) extensive studies on the effects of such buybacks show that “not only do buybacks not lead to growth in a company’s market value, they are strongly correlated to a declining market value.”

In other words, the effect of their behaviors is not to “grow” the companies but actually to “shrink” them! To quote from the piece:

“Corporate executives and directors are apparently bereft of ideas and the confidence to make long-term investments. Rather than using record profits, and record amounts of borrowed money, to invest in new plants and equipment, develop new products, improve service, lower prices or raise the wages and skills of their employees, they are “returning” that money to shareholders. Corporate America, in effect, has transformed itself into one giant leveraged buyout….”

And since “everyone” is doing it …

“The most significant and troubling aspect of this buyback boom, however, is that despite record corporate profits and cash flow, at least a third of the shares are being repurchased with borrowed money, bringing the corporate debt to an all-time high, not only in an absolute sense but also in relation to profits, assets and the overall size of the economy.”

This not only burdens those corporations, but also drags down the entire economy.

So, if these buybacks are not what anyone might call the best use of those tax savings, why are they being done?

Okay, boys and girls, whenever anything political happens what are we supposed to do? (Follow the money!) That’s right! So, who benefits from these buybacks the most? It turns out that … wait for it … it is the corporation executives who actually benefit the most. You see the buybacks inflate the prices for the corporation’s stock. CEO’s and their ilk are now being remunerated largely via stock options. And, corporation executives constitute the largest segment of the 0.1% of “earners.” And that class of “earners” is the one making the bulk of political contributions currently. Does the picture now come together for you?

Think of the corporation executives as sort of modern pirates. (Can you see the eye patches and hear the “aaaarghs”?) These executives started out as treasure ship captains but, well the temptation was too great, and they stole their own ships. Well what is the government’s politicians to do? When they sailed into action to recapture the ill gotten gains, they received handsome “gifts” from the pirates to the extent that they have become dependent upon those “gifts” and now seek to facilitate the pirate’s behaviors. The government stopped pursuing the pirates for taxes and actually invited them to submit their ideas on how the government could be run better.

And all of the rich assholes lived happily ever after.

When are we going to wake up? Stock buybacks should be illegal or strictly regulated (as they used to be). They are tools to manipulate the stock market by insiders, for Pete’s sake! But when we ask our politicians what the intend to do all we get is “Arrgh!” and a wink from under an uplifted eye patch.

How Stupid Are We?

Are teachers taking “penny wise, pound foolish” to a new extreme? Not long ago we were treated to a display of anti-worker politics in the state of Wisconsin by its newly elected Republican governor and its republican dominated state houses. According to OurFuture.org, there were consequences for state workers “One Wisconsin labor organization representing teachers lost 60 percent of its members. Overall in Wisconsin, the percentage of union members in the workforce declined from 14.1 percent in 2011 to 9 percent in 2016. Simultaneously, pay and benefits declined. For teachers, salaries sank 2.6 percent and benefits dropped 18.6 percent.”

Now, consider that union dues are somewhere around $100 per month, working ten months per year so the total cost is about $1000. By “saving” that money by dropping their union membership or refusing to pay “fair share fees” (which BTW by law cannot include charges for political representation, which makes the SCOTUS ruling based upon free speech a farce), this is what the total cost was: apparently those unions lost $3000 per year in fringe benefits right away (https://money.cnn.com/2017/11/17/news/economy/wisconsin-act-10-teachers/index.html) and then they lost even more in salary reductions and missed salary increases. Save $1000 to lose $6000-$10,000 or possibly your job! What a bargain! Sign me up … not!

Boy, all of you teachers fleeing your unions or refusing to pay fair share fees are really showing them!

Politically teachers need to wake up. The people behind these political moves are anti-union, pro-business plutocrats. They are not your friends. You do not have access to them. Your union, on the other hand, is made up of your colleagues, who you do have access to, and if you do not like the direction your union is going, you can run for office and change it from within!

I learned this lesson the hard way also … but I did learn it.

Support your local union or start counting your food stamps because that is where you are going.

 

 

 

Lies, Damned Lies, and Economics

Apologies to Mark Twain for stealing his phrase and twisting it to make my title. (His line was that their were “lies, damned lies, and statistics.”

Here are a couple of paragraphs from a recent post over at Naked Capitalism:

“A standard recommendation given to late-industrializing economies by the economic advisors of the World Bank and the International Monetary Fund has been to refrain from imposing regulations on the labor market, or if such regulations are already in place, to abolish them.”

“In this view, labor rights and labor protection are more likely to create additional unemployment and informal-sector under-employment, particularly of unskilled workers or labor force entrants, than lead to higher wages and better working conditions. Right? So, esteemed policymaker, what you should do is simple: reduce already existing employment protection, resist those siren’s calls to higher minimum wages, and curb regulation. Later, once your economy has developed, you can bring back some of those “European-style” luxuries. After all, they are good for social peace.”

“Well, this story is as wrong as it is ubiquitous.”

If you want to learn more see Who Says Labor Laws Are “Luxuries”?

If you want to know who economists serve today, I urge you to follow the political dictum: Follow the Money. As to who the World Bank and the IMF serve, well that has been apparent from the get-go. They are like the charter schools who are saying they are serving minority children when all they are really doing is lining their pockets.

Oh, and while the WB and IMF are prattling their twaddle about the dispensability of labor protections, you might want to take notice that that is the program being executed here in the U.S. for the past 50 years. The abolishing of labor protections is not just for “late-industrializing economies,” it is good for all! Follow the money. The money going into the pockets of economists is coming primarily from one source: those who already have a great deal of money and for whom that is not enough and are willing to step on the necks of anyone in their way to even greater wealth.

 

 

Another “Truth” of the Recent Tax Cuts Bites the Dust

Another “truth” (aka lie) that was used to sell the Republican tax cuts has been laid to rest. That “argument” was that corporations will take their tax savings (the really large ones as compared to the pittance you got) and use it in part to increase the wages of their workers. Wages have either been stagnant or gone down for working class people for decades. I quote one of the post’s quotes: “….The moderator asked the panel whether there would be broad-based wage gains again. ‘It’s just not going to happen,’ [Troy] Taylor, [CEO of the Coke franchise for Florida,] said. The gains would go mostly to technically-skilled employees, he said. As for a general raise? ‘Absolutely not in my business,’ he said.”

The gains from the tax cuts went to executives and to shareholders in stock buybacks (which raise the value of the shares still being held) and the bulk of all stocks are help by the wealthy.

Read all about it: More Evidence of Increasing Deflationary Pressure on Wages