Issues: May 4, 2011: bin Laden, Iran, Gas, GOP's budget, Cities w/Jobs, & Divorce

Most of the Western world continues to celebrate the death of bin Laden, many in Pakistan vow revenge. See this slideshow. The president's approval ratings went up 11%, but if you're an Obama supporter, don't get too excited. Not to be a Debbie Downer but these rally effect approval rating hikes tend toward the ephemeral.

Remember the hike the first Bush received after repelling Iraq from Kuwait? His approval ratings reached an all-time high, but he failed to win reelection when voters blamed him for a stagnant economy. This is why there is a sense of "foreboding" (NYT) in the polls despite personal satisfaction with Obama.

Joshua Tucker believes this might be "a bit of a game-changer."

I've heard lots of calls from liberals that now is the time to get out of Afghanistan because the wars cost too much. How much? Read here. I disagree. Now is the time to double-down on non-military foreign aid. It's important to remind the Middle East that we're than just about hunting down terrorists. We want economic and democratic opportunity everywhere for everyone. This chart show U.S. aid in the Middle East.

Violence, in the case of bin Laden's death, can actually be a good, however, in the case of Syria, violence, as it typically is, is quite bad. Follow that? One outcome is the Iranians have shut up. They know they are next in Spring Revolutions.

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In related news, George W. Bush's declination to Obama invitation to appear with him at Ground Zero should not go unnoticed. I appreciate the fact that the former president has stayed out of the limelight. It shows grace that he's not seeking to hog the limelight. Obama gave the order to get bin Laden after serious debate, but what president would want to be known as the one that let bin Laden escape.

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In unrelated news, this chart breaks down the cost of gas. No, most of it is not in taxes. The economy is what most Americans care most about and the GOP, if it loses big in 2012, according to Anson Kaye, will have to blame their proposed and enacted budget cuts. For those whom the economy is not so hot, you might want to consider relocating to these cities where the economy is hot. Whether or not you think the economy is hot or not largely depends on how much money you make.

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What do Mississippi, Alabama, Arkansas, Texas, Georgia, Louisiana, Kentucky, Oklahoma and Maine have in common? They are high divorce, low-education states.

The (Black) Congressional and Presidential Politics of the Bailout

Last Friday's re-vote in the House on the financial bailout (excuse me, rescue/recovery) succeeded because 33 Democrats and 25 Republicans switched their votes from no to yes (one Democrat from Washington state switched from yes to no).

Many members of the Congressional Black Caucus credit the personal intervention of Senator Obama as motivating their switch. Correct me if I am wrong, but even though Senator McCain briefly "suspended" his campaign to deal with the financial crisis, can he actually point to how his efforts facilitated passage of this legislation?

The NY Times has a graphic of all the vote switchers.


Analysis

This bill is painful by any measure. When deciding whom to be angry with regarding this crisis recognize that Congress is only partially responsible for this mess. Congress is somewhat culpable for the bailout - its' policies fed aggressive and irresponsible policies at Fannie Mac - and a Republican-fed ideological call for deregulation, deregulation, deregulation did not properly balance independence for the markets with concern for the public good. Yet, most of the blame for this crisis rests with the private sector.

Let us not forget our own greed in buying homes we could not afford. True, bankers snookered many homeowners with false promise of easy loan terms, but far too many Americans knew they were living beyond their means. The era of personal responsibility is over.

We can be mad at how Congress responds to the near collapse of our financial system, but we should not be mad that it must respond. To not respond would be to invite ruin on the national economy. Ruin because credit will become tighter and even more expensive. Credit is the grease in our national economy and without it, the American economy would ground to a halt. Ruin because rising unemployment will become the de rigueur economic news.

Some will say that we (the average taxpayer) should not have to bail out Wall St. for its' excesses. I agree, but I can think of no better alternative. However, the taxpayer should be recompensed with ownership in these new companies in the form of divided earnings until the $700 bn is repaid (really it is much more when you factor in Freddie, Fannie and AIG).

Finally, there is a reason President Bush fought so hard for this bailout. His reputation is already in the toilet because of the abject failures of Iraq and Hurricane Katrina. When faced with a crisis starting to mirror the Great Depression he did not want to go down in history as the next Herbert Hoover. President Hoover, if you remember, was the president who sat idly by the first three years of the Depression, insisting it was not the federal government's role to maintain order in the financial system.

Nonetheless, comparisons between Hoover and Bush are unfair to Hoover. At least Hoover did not start a war he could not finish.

Supply-side Economics Never made any Sense

As we see the collapse of Wall Street, AIG, Bear Stearns, Merrill Lynch, Washington Mutual and Lehman Brothers, we all must wonder what happened. We have been told that our economy was strong. Yet within the last seven to eight months we've seen 19 banks collapse and the kind of volatility in the stock market that makes us all queasy and seasick.

Within 20 years, we went from being the most prosperous nation on the earth to the nation carrying the most debt. Personally, I think we have to look back to the 1980s for the answers. This was the so-called Me Generation. It was all about nicer clothes, nicer cars and the biggest house in the gated community. It didn't matter if you obtained all of this through credit cards, six mortgages and a loan from Guido down the street. The bottom line was it was all about Me.

Some of this thinking came from supply-side economics. The theory behind supply-side economics: tax cuts for the wealthy and for businesses will free up capital; the wealthy would spend more money; business and the wealthy would hire more people. This prosperity would trickle down to everyone. On the surface, this makes a lot of sense but upon further reflection we see it is a magician's trick. Before we get the hard data, let's just think about this. If you're a wealthy businessman who makes $10 million a year, for argument's sake, you pay 40% of what you make in income tax. This comes to $4 million. With tax cuts, your tax rate is changed from 40% to 35%. You take home an extra $500,000. What are you going to do to spur the economy? You already have a new car, maybe two or three. You have a house, possibly two. You already have a maid and someone to cut your grass. Most likely, you will do what most multimillionaires would do, which is to invest that $500,000. The logic for business is about the same. Businesses don't hire people just because there's extra money lying around. Extra money from tax cuts can be paid out as bonuses (remember upper management is very fond of bonuses and stock options) or distributed as increased dividends to stockholders. Therefore, in this example, it appears that supply-side economics lines the pockets of the rich.

With President Bush, President Clinton and President Reagan, we are able to look at two eras of supply-side economics. Squeezed in the middle is a more traditional economic approach. Real investment growth was greater in the period of 1993-2001 at the rate of 10.2%. President Reagan had a growth of 2.8%. President Bush has had a growth of 2.7%. Gross Domestic Product, a measurement of economic growth, increased at an average annual rate of 3.9% during the era of President Clinton. Reagan and Bush had rates of growth of 3.9% and 2.5% respectively. For me, the most important indicator of how we are doing is real average annual median income. With the tax increases during Clinton's presidency, real average annual median income grew at a rate of 2.0%. Reagan's presidency spurred an increase 1.4% and under President Bush the increase was only 0.3% (data from Center from American Progress).

There are multiple excuses that true supply-side believers will give us as to why supply-side economics did not work. They will claim that any change in the economy takes years to make an effect. This plainly contradicts the father of supply-side economics, Art Laffer, who stated that we would see changes in our economy "before the ink is dry" on the legislation for tax cuts. They will argue that there weren't enough government spending cuts. There's further data to support a more traditional economic approach. This approach includes higher wages, higher employment growth and results in decreased federal deficits. Such was the case during Clinton's years in office, as compared with either supply-side era. In spite of all this data, though, some still advocate tax cuts for the rich. Why? Why indeed.

Supply-side economics simply does not work for America. Maybe, this Me first, everything else second mentality helped cause the craziness that we're seeing on Wall Street. I'm just askin'.

Obama Ad Locks McCain To George Bush

And they use McCain's Own Words to do it....

Bush Surpasses Nixon In Unpopularity

A new Gallup Poll indicates that George W. Bush has surpassed Richard Nixon in terms of unpopularity.

President talks about WW III

First of all, I appreciate the invitation to post on Mirror on America

There are times when the White House press corps simply gives me chest pain. When President Bush mentioned that “if Iran would get plans for nuclear technology”, someone should’ve asked the following question — “Mr. President, didn’t we give Iran nuclear blueprints?”

“Didn’t we give technical designs to a TBA 480 Russian reactor? ” “Wasn’t the operation to give ‘phony plans’ to the Iranians code-named, MERLIN?” “Wasn’t the whole operation delineated in James Risen’s book, State of War?”

I hate it when the press corp is stupid. I also hate it when the President thinks that we are stupid. I mean this is readily available knowledge. It is in a book about the CIA. The book sold well. Didn’t they read it or get the Cliff Notes?

To sum up, we, the United States, gave the “altered” plans for a nuclear reactor to the Iranians.

The thought was that if we gave them plans then we would know where they were in development of nuclear technology. It was a stupid plan but that’s what happened. This happened in late 2000 or 2001. I’m not blaming the President for the CIA’s thoughtlessness. I’m blaming the president for thinking that we are stupid. Developing plans is not that hard any more. We did it 60 years ago. With modern technology it has to be easier. Getting the materials is the problem.

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