Millions of Hostages Win Release After Ransom is Paid

American hostages have finally won release from Republican hostage takers... in the boldest and biggest hostage standoff in history. The ringleaders, Eric Cantor & John Boehner, got just about everything they demanded. They would not guarantee that this wouldn't happen again. In fact, the hostage takers have now been emboldened to use their extreme measures in the future.

And while America continues to drown in her own vomit... I still can't find a decent job.

Most Americans found themselves this past week asking... what in the world is going on... what just happened here?

Obama & Co. were taken to the cleaners once again. I have grown to accept the fact that Obama has few (if any) smart, competent advisers. Because someone should have told him to rally the troops much earlier... not 7 days before a deadline to default. The original debt ceiling proposal (a routine vote over much of the last century) was voted down back in May. Even before that, the Republicans telegraphed their plans to everyone...making it clear what their intentions were. They had been planning this stunt for a year. The debt limit itself was actually reached in June. The U.S. Treasury has managed this long by creating liquidity and finding extra funds. The point is... this was no surprise to anyone who has been paying attention. A surprise to the average American? Yes.. because they are fixated on Reality TV and American Idol. But for those who read the paper daily...and keep up with government... this was no surprise. So why in the world was the White House behaving as if they were caught flat footed.... yet again? I have mentioned the poor strategy & PR within the White House before... and it seems to keep rearing its head again and again. And as long as this problem persists... we will get the same results. Whispers from the White House suggest that Obama just didn't believe that the Republicans would be this evil... that they would hold the Country hostage to protect private jet owners. Yes Mr. President.. they are really that evil. Time and time again Obama & Co. seems to demonstrate a lack of imagination regarding just how tacky and low the Republican Tea Party could be. Was Obama being naive again?

President Obama should have taken his case to the people much earlier... 5, 6, 7 weeks before... telling the public exactly what the Republicans were planning to do. That would have forced the Republicans to confirm or deny and would have put them on the defensive. He should have told Americans the truth about what could happen to their benefits, and to the economy as a whole. Once people would have been informed about the potential hardships...and that we have never been held hostage quite like this before... that would have put tremendous pressure on Republicans. Obama could have effectively isolated the Republicans and forced them into a corner by preempting their plans. Obama (had he acted earlier) could have made it much harder for Republicans to go through with their plan.

But like so many other times before... the Obama Administration was not proactive. Instead... they reacted to whatever the Republicans wanted to lull them into. The White House actually believed that the Republicans planned to negotiate in good faith... when in reality..the Republicans were just dragging the President along... trying to get as close to the deadline as possible. They had no intention of coming up with a deal before the last 3 days or so. They were following their plan.

I don't know what it is about Obama & Co. and Democratic strategists... but something has to change. They always seem to react...(and even then...often too late). They are rarely proactive when it comes to their strategy for dealing with Republicans... even when they know the Republican playbook...and even when the Republicans announce their plans.

Will Obama be prepared for the next fight? The next fight will likely be the Affordable Care Act...(Healthcare Reform). Republicans plan to defund certain pieces of the legislation as a way of killing it.

We will go from one problem to another with this Congress. In fact... the reprieve will be short. There will be another budget fight in September...and a government shut down (while not likely) is possible. It isn't likely because the Republicans are actually afraid to go through with it. They remember what happened after their effort to shut down the government in 1995. They came away as the bad guys. But this Republican caucus is much more extreme. So these fights are not over... they are only getting started.

Meanwhile the world is watching...amazed at the level of dysfunction within the U.S. system. Global bond holders & investors may now have second thoughts about U.S. Treasuries... so damage has been done. The world is questioning the U.S. dollar as the global reserve currency (have been for a while... but especially now). Not only that... but now the credit rating for the Country could be under review. The economy...already weak, has been wounded yet again. The Dow Jones has fallen over 500 points (or about 4%) over the past week. All because the Republicans resorted to draconian measures... blaming Obama for the debt... most of which was racked up under the previous 4 Presidents (but they were white). More from the New York Times. Now the Republican Tea Party wants the debt problem solved instantly...which will cause more problems. Cutting spending too drastically will be a drag on an already slow economy. As if that wasn't enough... the political uncertainty & instability (caused by Tea Party nuts) will cause consumers and business owners to sit on their money. These Tea Party extremists didn't say a word when Bush put the Country into two wars...paying for them with emergency supplemental appropriations (outside of the standard budget process...adding to the deficit but hiding the cost).

It will be frustrating to watch Obama & Co. stumble from one debacle to another.... (including manufactured crisis) appearing unprepared..and surprised.  They will be reactive instead of proactive... allowing the Republicans to get the biggest deal that they can get. But unfortunately, this has been the m/o for Obama & Co. since 2009. The latest ploy was simply the most public example of a strategy deficit that has been a drag on the Obama Administration for quite some time.

Democrats Show Ineptness Once Again - Run Scared on Tax Cuts

I told you they had serious PR problems. Putting this issue up for a vote, forcing Republicans to defend tax cuts for the rich and daring them to vote against cuts for the middle class would have been a winner for the Dems. Harry Reid is incompetent, and I have been saying it for at least a year...not long after he became Senate Majority leader.

And one reason they are running scared (besides the Blue Dog weaklings worried about holding their seats) is because they may be preparing to cave altogether on the Tax issue, as I suggested weeks ago. After the election... watch them cave and renew all of the Bush Tax cuts...including the tax cuts for the rich, which will cost us $700 billion on top of the debt that all the other tax cuts and the other deficit spending will cost (which is in the trillions). Democrats are so scared of the Republican media machine that they are running with their tails tucked between their legs... with just the mere threat that they may be hurt by attack ads or specifically targeted to be unseated in the midterm elections. This is a perfect example of how powerful the right wing media is...and it is also an example of why there should be a Progressive alternative... a Progressive media infrastructure which could act as a counterbalance.

Can we resurrect Tip O'Neal or bring back George Mitchell? How about Adam Clayton Powell? Seems to be a lack of people with courage in Congress. The U.S. will end up in one crisis after another...instead of preventing the next crisis ahead of time with corrective policies, because everyone is more concerned with the next election.

America is screwed, especially if it can't get spending under control within a few years.

Related

The "Taxes Are Too High" argument is a Republican media illusion

Obama Administration Under Pressure to Extend Bush Tax Cuts

The Obama Administration is under serious pressure to extend the Bush tax cuts for the rich. Insiders have been suggesting over the past week, that Obama & Co. is flirting with the idea of caving. Extending these tax cuts would dig the nation into an even bigger debt hole. Once again Republicans - who claim to be concerned about annual deficits & the national debt - are saying one thing and doing another, as is normal for them.

The Republican media has carefully framed the expiration of the tax cut as a tax increase by Obama. The way that they manipulate the public through the media is just uncanny. They are making the Bush tax policy appear as if it was a permanent law and the evil Democrats are going to radically change tax policy. Of course this is all BS. The tax policy was never permanent...which is why the legislation is sun shining to be reconsidered by Congress. The cuts were temporary. This misconception (that Republicans purposely created) has allowed them to frame the scheduled expiration as an increase. This has been another textbook example of the power & influence of Conservative right wing media.

Commentary on why the Bush tax cuts should be allowed to expire.

Tea Parties and Make-Believe

When I think of Tea Parties the image that comes to mind is my little sister playing dress-up-- using her mothers clothes for a costume and having a make-believe moment. It's all about children pretending and using their imaginations to keep themselves entertained.

This same kind of make-believe is what the Republican "Tea Parties" were all about this week. The so-called "Tea Parties" were basically PR creations, crafted by Republican Strategists, sponsored by Right Wing front groups like FreedomWorks, and promoted by Right Wing Republican media. These people are masters at creating their own reality when the real world doesn't suit them. The events are designed to whip the Republican faithful into a frenzy. You even had Texas Governor Rick Perry (one of the Confederate Governors opposing Obama and rejecting stimulus funding) attend one of these events saying that Texas could secede from the United States... that whole Confederate thing again (if not in geographical terms...it's definitely alive in terms of ideology). What is it with Republican Governors and seceding from the Union? Sarah Palin and her husband have actually been connected with secessionists in Alaska.

One of the big ironies in all this is the fact that most of these "protesters" actually received a tax cut, which went into effect this month. I really don't believe these people understood exactly what they were protesting. All they knew is that this effort was part of the Right Wings anti-Obama campaign...and at the end of the day...that's all they really needed to know.

But are most Americans falling for this mostly manufactured outrage? Are Americans buying what Republicans are selling? Apparently not... at least not at the moment (although the power of Republican media has a way of changing that rather quickly). According to a new Gallup Survey, the tax issue is much ado about nothing, especially when put in historical context.



The Following Is Courtesy Of Gallup:

Views of Income Taxes Among Most Positive Since 1956

PRINCETON, NJ -- A new Gallup Poll finds 48% of Americans saying the amount of federal income taxes they pay is "about right," with 46% saying "too high" -- one of the most positive assessments Gallup has measured since 1956. Typically, a majority of Americans say their taxes are too high, and relatively few say their taxes are too low.

These results are based on the Gallup Economy and Personal Finance poll, conducted each April, including April 6-9 of this year.

Since 1956, there has been only one other time when a higher percentage of Americans said their taxes were about right -- in 2003, when 50% did so after two rounds of tax cuts under the Bush administration.

The slightly more positive view this year may reflect a public response to President Barack Obama's economic stimulus and budget plans. He has promised not to raise taxes on Americans making less than $250,000, while cutting taxes for lower- and middle-income Americans. The latter has already begun, as the government has reduced the withholding amount for federal income taxes from middle- and lower-income American workers' paychecks.

In this year's poll, slim majorities of both lower- and middle-income Americans say they pay about the right amount of taxes, while upper-income Americans tend to think they pay too much. The views of upper-income Americans have not changed in the past year, while both middle- and lower-income Americans are more likely to say they pay the right amount of tax. Read more of the Gallup report here.

The Republicans, especially those in the Republican media, are trying to convince the American public that this is an issue with legs and that there is genuine anger towards taxes across the social and political spectrum...when in reality, most of the noise about taxes and fiscal responsibility is coming from a small fringe within their Party... almost a fringe within a fringe...because the Republican Party is down to its base at this point. Where were these people when George W. Bush and the last Republican majority were running up huge deficits, trying to hide spending by keeping it off the books, not monitoring Wall Street, allowing the Oil Companies to rape ordinary working Americans, and allowing Special Interest Groups (Government contractors) to literally rob taxpayers blind in Iraq with thefts of historic proportions. They weren't trying to stage these grand protests then. In fact, it was the Republicans lack of fiscal responsibility that largely contributed to the current mess that the Country finds itself in.

This is clearly an effort by Republicans and their media apparatus to whip up anger towards Obama. Many of the people at these "Tea Party" rallies did not show up to complain about taxes at all. Instead, they were complaining about a list of other perceived grievances with Obama... with signs suggesting that he's Muslim, friendly to terrorists, is a communist, a Nazi, ...you name it. To me, the events appeared to have the feel of last years General Election campaign where folks were calling for violence against Obama, carrying racists signs, vandalizing campaign offices, and using stuffed Monkeys to represent him. It almost harkens back to the Southern tradition of lynching picnics, where lynchings were social events. I know that's an extreme comparison....but race is surely playing some role in these events. How many Blacks did you see in these crowds? Let's be honest...these are generally White Americans who are simply looking for any excuse to protest Barack Obama.

This is really an example of Right Wing media using fear & propaganda to take advantage of the ignorant and the uninformed. They prey on folks who are driven more by ideology (religion, race, xenophobia, fears, prejudices, and culture war issues for example) than by facts. It sends the message that Right Wing media is still strong and can make themselves as relevant as they want to be... regardless of whether they are dealing with the real world or not.

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'.

Tax Cuts should be the answer to every problem

President Bush who has been the "tax-cutter-in-chief" for last 7 years now faces a sagging economy. What to do? Housing sector which has pulled this economy along for the past 2 or 3 years is now in the toilet. The Military sector has gotten billions of dollars in government contracts so their are flush. So, it is time to revert back to the old standby tax cuts. Bush hasn't seen a tax cut that he didn't like. I don't believe that Bush's tax cut plan will work but I need to read the fine print.

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From Economic Policy Institute:

There is always debate over what an effective stimulus package should look like. Many different policies are purported to stimulate the economy, but it is important to distinguish between those that will have their effect in the very near-term to offset rising unemployment this year and those policies that have longer-term effects. Any useful stimulus package should strengthen the recovery immediately and create more jobs in 2008. Some obvious examples of policies that fail this criterion are the ones just suggested by the Bush administration, including eliminating the estate tax and extending the high-end income, capital gains, and dividend tax cuts beyond 2010. These policies have nothing to do with the job creation we will need in 2008.

An effective, appropriate stimulus package should meet the following five criteria (I have added emphasis):

1. A stimulus package should generate growth and jobs to offset rising unemployment. The point of stimulus is to increase economic growth and thereby generate more jobs. The reason that employment growth is slowing and unemployment is rising (and will continue to do so) is that there is a shortage of demand for goods and services: we will have the capacity to produce much more than we will be consuming, and what is missing are customers able and confident enough to make expenditures.

The two feasible ways to boost demand are to increase consumer spending (for example through tax or monetary policy) or to increase government spending (at the federal, state, or local level). Any stimulus aimed at spurring more business investment will not be effective at this point, because business investment will remain sluggish until consumer and government demand picks up. For example, a recent study estimated that business investment write-offs and the dividend-capital gain tax reductions included in Bush's tax packages had a small "bang-for-the-buck." Without a rise in consumer demand, corporate tax relief and other business investment incentives will not be effective in stimulating growth.

Government spending is more effective than tax cuts in stimulating domestic demand for two reasons: a portion of the tax cut will be saved rather than spent immediately, and consumers are more likely than the government to spend on imports (rather than domestically produced goods). Approximately 10 cents per dollar of consumer expenditures will be spent abroad, while virtually every penny of investments in public infrastructure will be spent domestically. Especially problematic would be more tax cuts directed at the wealthy, which would not be as effective as tax cuts directed at the low- and middle-income households who would spend (rather than save) a larger share of any extra income.

Read more »

Warren wants to pay more taxes

Warren Buffett, the second richest man in the world, has been an outspoken critic of the Bush tax cuts since back in 2001 or 2002. He is one of the few billionaires who are honest enough to admit that they aren’t paying as much in taxes (proportionately) as you or I. This is the problem in America. We have been sold a bill of goods and the goods are terrible.

Let’s start with the Death Tax. This is dumbest argument but the Republicans sold it to the American people. The story goes like this - So poor family farmer would lose his farm if we continued the Estate Tax. The second part of the argument was that folks that make a lot of money should be able to keep their money. If we tax it again, it will be double taxed and that’s not fair. (I’m getting nauseated while I type this. I think that I’ll need some Pepto Bismol.) We get “double taxed” all of the time. When we buy gas with our money that has been taxed, we pay gasoline tax. When we pay sales tax on a shirt, it is double taxed. The purpose of the estate tax was to prevent the formation of entitlement or royal class. The thought was that everyone should have to work for a living. The R’s have turned that idea on it ear and they pushed to repeal the Death Tax. Let’s go back to that poor family farmer. No one has been able to show one incident where a family farmer has lost his farm secondary to the Estate Tax. All of the Republicans arguments were bogus.

Tax cuts have never worked to boost an economy. They have worked to pad the pockets of rich Americans but they have never put money in the pockets of the average Joe and Joan. Here’s what Lee Price from the Economic Policy Institute has said about the tax cuts back in 2005.

“Since 2001 President Bush and congressional leaders have promised that enacting each of a series of tax cuts would strengthen the economy by bringing faster growth, more jobs, and greater investment. With Congress again debating whether to extend past tax cuts and enact new ones, it’s time to review how much the last four years of tax cuts have affected the U.S. economy and budget outlook. Unfortunately for most Americans, the tax cuts since 2001 have not made today’s economy stronger. Over the last five fiscal years, the tax cuts have had a direct cost of $860 billion and (with interest costs) a total effect on the deficit of $929 billion. By creating excessive permanent deficits, they have lowered our future standard of living.”

So, that brings us back to Warren Buffett. Maybe he understands that the average Joe or Joan needs a break. They are the ones that need tax relief. How about a tax but for the everyone who makes between $30,000 - $100,000? How about that? And then to offset this we need to increase taxes on the top 1% of households. This isn’t a call for class warfare as some Republicans have stated. Instead, it is equality.

Update: A.L. has written about a Wall Street Journal op-ed which sang the praises of Bush’s tax cut. A.L. took a different route but came to the same conclusion as I did above, tax cuts do not pay for themselves. They never have and never will.

Video here.