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Monday, December 27, 2010

Happy Xmas, Mr. President!

What follows is an open letter to the President of the United States, extending my holiday greetings and providing a brief explanation of some perhaps ‘idiosyncratic’ gifts sent to Pennsylvania Avenue via U.P.S. this past week.
Okay, okay, I realize this may seem rather belated, but let’s be realistic:  there was no way you were going to get around to opening my Xmas gifts to you until now.  Indeed, they probably still remain unopened in some storage room, if they haven’t already been nicked by the staff you’ve assigned to opening packages.  Or the security detail hasn’t mistakenly drawn a sinister interpretation of their contents and ruined them by soaking them in some watery defusion contrivance.
Which would be a great shame.  Not because my personal feelings would be injured by the gifts’ destruction, but because recent events have shown me that you are sorely in need these items.  So much so that I regard it as equally necessary to append this open letter describing the thought process behind each of the gifts.  Knowing your reputation for savvy use of social media and keeping ‘in touch’ with the constituency that elected you, I felt sure that the best custodian of this letter was the web, the one place where even your most bumbling and overzealous staff could  not destroy or misplace it.
So whenever you get around to opening them, this letter is waiting for you.  Can’t miss ‘em.  They’re the ones wrapped in green bar paper with this URL slathered all over them.  Just promise me you won’t cheat and read ahead, ‘kay?  Here goes:
Item #1:  Neuticles. 

Given the precipitous manner in which you collapsed before Republican calls for taxpayer giveaways to millionaire and billionaire trust fund brats, it’s clear that you’re in need of a new pair of balls.  Looking back, you’ve probably been in need of them for a long, long time.  My first inkling that you had a testosterone deficiency was pre-midterm, during your lackluster appearance on Jon Stewart’s “The Daily Show”.  Far from using the opportunity to launch an offensive against a reactionary, plutocratic Republican opposition, you  somehow managed to turn what is generally assumed to be a progressive-friendly audience against you.
Item#2:  Calculator. 
Thought it might come in handy as a prop for the series of speaking tours I expect you to make in support of the backroom deal you made with the Right in order to get the billionaire tax cuts passed.  After all, you spent months telling us that you “just didn’t have the math” to make those cuts fiscally responsible.  And you invoked some pretty big guns, various CBO and Treasury reports describing how those cuts are expected to add $238 BILLION to the deficit in the next two years alone.  Those #'s work out pretty damned close to the $116 BILLION per annum I myself calculated hereAnd no doubt, to those who supported you then, or at least those who have more than a 15 second attention span, you’ve now got some ‘splainin’ to do.  This calculator should give you the rhetorical credibility you will need to overcome their objections.  Warning:  For God’s sake, whatever you do, don’t try to turn the thing on—there is absolutely no need to perform any actual calculations.  The point is to LOOK credible—not actually BE credible, right?

Item #3:  Official Registration Card for the Republican Party. 

Might as well own up to it, eh?  This is the season for personal reflection and planning for the New Year.  A new year, I hardly need add, that will be spent kowtowing to the revitalized Republican majority that you gutlessly allowed to “shallack” the party that you nominally led until the midterm elections.  Surely you no longer feel any need to pretend any longer, yes?  After all, it’s pretty fucking hard for anyone with an IQ greater than their shoe size to believe anything you said way back when, when you ran as a supposed Democrat.
Guantanamo is still up and ticking more than a year after your promised close date.  Ditto with the expansion of domestic ‘surveillance’ programs.  And you managed to extend billions of further dollars in aid to the sham kleptocratic terrorist state of Pakistan in support of the Republican program of never-ending war.   And lest we fail to give you credit for your programme of omissions as well as commissions, I call to your attention the lack of any significant prosecutions of banksters for their fraud and malfeasance which continues to hamstring the recovery of the real economy. 
I could go on and on, but why bother?  You pride yourself as a pretty clever individual, surely you get the point—one of your newest ‘best buds’ is Slick Willie Clinton, Rhoades scholar and the man who signed both NAFTA and the repeal of Glass Steagall.  In fact, you and Willie are beginning to look more and more alike theseadays—not only did you have the gall to set your Attorney General against repealing ‘Don’t Ask Don’t Tell’ after courting the gay vote in 2008, but you now are trying to take credit for its passage in spite of your opposition.  Classic Clinton play.
You’re no Democrat, you phony turncoat.

Monday, December 13, 2010

New Page: Policy Directions

Announcing a brand new page that I hope you'll visit here.  It's an ongoing summary of my thoughts vis-a-vis required financial, tax and economic policy directions and legislation.  It is in part also to counteract the continual parade of worthless rhetoric and bullshit being thrown at us by the ridiculuously hypocritical and incompetent Republican'ts.

Tuesday, December 7, 2010

The Economy of The Crow: Bird Brains Want to Throw Away $116 Billion A Year to Benefit The Richest 1.3% 'Small' Business Owners

There is an old folk saying that comes down from the Irish tradition:  “The economy of the crow”.  It’s uttered whenever some old wag wishes to describe, in a dryly pithy manner, a short-sighted and foolish resource management strategy.  It supposedly is derived from the habit of scavenger birds like crows who, upon noticing an unharvested bit of carrion ripe for the picking, tend to drop whatever goodies they may currently have in their clutches in order to go in pusuit.  Basically the saying is a ridicule, a chastisement of stupid waste.
Chart 1 (see underlying calculations  here)
While that kind of bird-brained buffoonery may be understandable in a creature with the cranial capacity of a thimble, it’s not the type of responsible management practice we expect from our elected representatives.  Certainly not from the members of the party that claim in one breath to be both the party of fiscal responsibility and the party of deep business savvy.  Nonetheless that’s exactly what Republican’t douchebags like Paul Ryan (R-WI) and McConnell (R-KY) continue to parrot unashamedly when they urge for yet another tax cut for the wealthiest 2% of Americans.  We’ve already estimated at Chart 2 of this post that tax cuts for elite income individuals as proposed by Ryan will likely add $116 BILLION* per year to the deficit.

And what, pray tell, do sirs Ryan and McConnell promise the American people will receive in return for the bankrupting of the national treasury?  Jobs.  Jobs they say will be created by pushing more capital into the economy.  They’re kinda vague about just how many jobs, though.  While the suspicious among us might be inclined to attribute this to fundamental dishonesty, the generous interpretation of their lack of clarity is because they don’t want to confuse what they regard as their constituency of simpletons with all sorts o’ complimicated numbers an’ stuff.  ‘Cause numbers are for egg heads and nerds—not cool ‘down home folks’ like you an’ me, right?
Bullshit.  I call fucking bullshit on Ryan and McConnell.  And here’s why:  LESS THAN 2% OF THE SMALL BUSINESSES THEY KEEP HARPING ON NET MORE THAN $200,000 A YEAR.  And here’s the fucking proof drawn directly from  the IRS’s most recent business survey.

Table 1 (See underlying calculations  here)
That’s right.  Even if these tax cuts could spur job creation (which clearly they won’t1), they are focused on less than 2% of small businesses, the sector that the Kaufmann Foundation says creates 2/3 of all net new job creation.  Now that’s what I call a horrendous goddamned waste of money.
That sound like a good deal to you?  Throw away $116 BILLION and increase the deficit by 7.5% every year for less than 2% of benefit?
The Technical Stuff
This is by far and away the simplest analysis conducted on the blog yet.  All I had to do was go to the IRS’s website, download the most recent available survey of business filings by receipts and net income, calculate the average net income in each net income bracket and the % of total businesses that fall within each bracket.  Incredibly straightforward.
Nothing technical there.  But for purposes of full disclosure, I’ll point out the following:
  1.  Businesses included for consideration here are only what the IRS calls ‘flow-through entities’—that is, those businesses organized under charters which require their owners to report business income directly on their individual tax forms rather than separately on a corporate income tax return.  I trust the reason for this is simple enough—the discussion at hand, like the bills currently before Congress, focuses on the taxation of individuals rather than corporations.  Just for your information though, these ‘flow-through’ entities included S Corporations, Partnerships and Sole Proprietorships.
  2. The most recently available survey, published here, is for 2003.  Meaning that for purposes of debating the current bills, I’ve had to inflate the historical net income $’s reported to the most recent Consumer Price Index, published for October 2010.
Check out the charts, tables and underlying data and source citations here at your leisure.
So there it is, the straight dope:  Ryan and McConnell want you to throw away $116 Billion each year, bankrupt the Treasury and destroy the United States all for the sake of some make believe hope (not anything remotely resembling a signed contract, mind you) of an unspecified number of jobs at some point in the undetermined future.  Never mind that the rhetorical bullshit that bargain is premised upon has been destroyed years ago and many multiple times over, not only on this blog2, but by the CBO as early as 2005 (linked here).  And never mind the fact that we’ve proven on this blog that a single dollar retained spent in federal programs typically has 4,700% more job creating potential than any dollar ever spent by Ryan’s corporate finance buddies3 over at AIG or JP Morgan Chase4.  And never mind the fact that Ryan’s credibility has been severely challenged time and time again over a shamefully inadequate fiscal plan that has been publicly branded a “sham” by prestigious economists.  Paul Ryan and McConnell seem to think that you are so fucking stupid that you will thank them for destroying both the economy and the United States.
So are you going to prove them right?  Are you going to just sit back and take it?  Or are you gonna stand up for common sense and your rights and say “BULLSHIT!  No more millionaire handouts!  We're not gonna let you bankrupt the nation for the sake of your country club pals!”
Call and your representatives and senators immediately on this issue.

* That is, $114 billion (2009 dollars) annual cost of extending Bush era tax cuts to all but the elite, inflated to the October 2010 Consumer Price index.  See calculation and citations for underlying data on the 'Analysis and Charts' tab  here.

1  Numbnuts like Ryan and McConnell need to understand that the principle is to shove capital into sectors with higher, rather than lower, fiscal multipliers.  Clearly the federal government's fiscal multiplier of 9.4 is larger than the 0.2 (ZERO POINT TWO) of the financial sector.  Or clear to you and me at least.  See the chart and supporting calculations here

And even if you were naively to assume that the wealthy individuals receiving these tax cut windfalls would go out and spend them on their businesses right away instead of hoarding them in their already bloated securities holdings, the federal  fiscal multiplier of 9.4 is almost THREE TIMES as large as the  fiscal multiplier of the non-corporate sector's of 3.6.  That sound like savvy financial strategy to you?  Throwing away $0.66 of every dollar?  If so, please leave a comment with your name and contact information; I have some lovely 'marshland' property in Florida you may be interested in purchasing.

2  See the following:
    "Fail Files", Volumes I and II.
3  Yeah, that's right.  Fiscal multiplier of 9.4 for the federal government is literally 4,700% of the fiscal multiplier for finance of 0.2.  See  this original blog for discussion of the calculation of those multipliers.
4.  During this last election cycle, Paulie boy was a big favorite of the banksters.  His clients included not only Goldman, but CITI, Bank of America, JP Morgan and a host of other F.I.R.E.  (i.e., "Finance, Insurance and Real Estate sector) companies and trade groups.  In fact, he got about $246,000 or 25% of his total PAC money from these guys.  See details here.  Who knows how much else he got INdirectly through Orwellian-ly named PACs or individual contributions?

Saturday, December 4, 2010

American Death Cult Part II*: Welcome To The House on Maiden Lane

I arrived at Siobhán’s new digs in late evening, after more than three hours of driving north through blustering gusts of cold air, along deserted Wisconsin state highways and country lanes, ringed with a seemingly endless succession of pale grey and weather-worn barns, silos and stubble fields of harvested corn, punctuated every 30-40 miles by the glistening plastic pillars of some shopping center, gas station or outlet mall.  And while the sterile fakeness of it all might seem utterly foreign on the surface, I was soon reminded just how integral a part of this place’s heritage Death worship is.   When I passed the familiar gloom of the Lac Butte des Morts^ fens, I recalled that this place used to be Winnebago country, supposedly the prehistoric stomping grounds♦ of Red Horn, the Ho-Chunk culture hero who freed the land from the tyranny of monsters hunting his people like vermin, and the native place of Huitzilopochtli and Tezcatlipoca, rival brother gods of the Aztec people who led their people from wintry Aztatlan in the north to their current patrimony in the Valley of Mexico.  The White Man displaced most of those first nations people from this part of Wisconsin long, long ago, but in some ways the deathgrip of the old gods and monsters is stronger than ever.

“Oh, hi, Liam!  C’mon in!”  Siobhán greeted me at the foyer door of the shabby-genteel Victorian pile on Maiden Lane.**

“Uh, wow, I didn’t see you as the ‘dog-in-a-handbag’ type of girl, Shivvers ,“  I was trying to be cute, witty, sardonic—anything to  suppress my shock at her drawn and wan appearance when she came to the door.

She shot back a weak, snarky smirk while wrestling with the little Chihuahua wriggling in her arms.  “Yeah, well, it’s a long story.  Take a load off.”

Oh, shit.  Éamó was right.  He’d tried to warn me but I never fuckin’ listened to him, and now I couldn’t do anything but play through.  The scene swam back to me as I followed sullenly in her shadow into the sitting room.

Flash back almost one week ago:  As soon as I’d hung up after Siobhán’s call my uncle Éamonn asked me with an unusual bluntness what I’d intended to do.

“Head up north.  What else?  She’s basically offered me a blank check to do renovations on some rich doctor’s summer house.”

“So just like that you said ‘yes’?”

“Well, what are my options?  Winter’s coming on hard and I’ve lost probably a good three weeks of work with the downturn.  Gotta make hay while the sun shines.”

“Think about it, boyo.  Didn’t her voice sound a little uptight to you?  A little clipped?  Like the vocal chords were stretched to snapping?  Don’t you think that merited a few questions?  Like: ‘How long do you figure it’d take?’, ‘Just what type of work does he need done?’, ‘Why the Hell aren’t you living it up on the Gold Coast or getting ready to vacation in Vail?’  Does it really make sense to you that a party girl like Shivvers is holed up in the middle of Bumfuck, Egypt?”

“What?  She didn’t sound that bad.  Could have been the connection, or maybe she’d caught a bit of a cold—the weather is changing.  Besides, she’s never done me a bad turn.”  My thoughts now turned to her holiday card last year—a pickkie of her in a Colorado ski lodge, clad in a bear-skin bikini, posing with biceps flexed triumphantly and sitting astride an enormous stuffed moose head.  THAT was the dominant image of her in my mind.  I was constitutionally unable to even imagine a scared, uptight Siobhán, much less register any micro-decibel of doubt in her voice over a shaky cell phone signal.  Still, Éamó did sound insistent . . .

“I’m not saying she has ever done you wrong.  Just saying you should stop, look and listen a bit. Ask a few questions before plunging in.  Wait for answers.”  This old bullshit artist was serious and it caught me like a deer in headlights.  Pulling an Obi Wan-style mind bender, he gave one final parting shot, “Yes, she’s a lovely girl, but you know a person’s judgment isn’t always what it could be when they’re stretched.”

And even now, while my consciousness flashed forward again to the present, with me taking a seat in a plush fashionable settee at Siobhán’s invitation, that last word echoed in my mind:  “stretched”.  That was a perfect description of her appearance now.  No artful application of make up could conceal the dark rings of fatigue swelling under her eyes or the pale, hollow cast of her cheeks.  Something WAS wrong and I’d committed myself to dealing with it for a matter of weeks at least—all without asking a single pertinent question.

But Siobhán’s mind was a million miles ahead of me on that curve.  Gently setting the beast down on its little canopied doggie bed she rushed into the kitchen and returned unbidden to hand me a glass brimming with red wine.

“Yeah, I admit I’ve been a little short on sleep lately.  I’m kinda keyed up to get settled in to the new situation, y’know?”

“Like the dog.”  I thought I was being clever and disarming by starting out slowly, but Siobhán shot a tense glance back at the animal.  Its eyes glared back at us with a weird green sheen from the flickering darkness of its throne just behind a covey near the fireplace.

“Uh, yeah, Pavlov# is a big part of it,” she said, launching into what seemed like a well-practiced recitation of a drama worthy of Dostoevsky.  She’d had a grand setup in a Gold Coast suburb of Chicago, working as ‘au pair’ to a handsome, older ophthalmologist and all was well—until the shrill old bitch of a wife got to ‘imagining’ some kind of shenanigans afoot in the household.  Siobhán kept her cool and made every effort to be above the board with the older woman, but she would simply not be placated.  The old man clearly wasn’t able to ‘keep up’ his end, and in the end the best deal he could strike with the wife was exile for Siobhán in return for getting rid of the dog, which he never got on with.  "Kept pissing in his shoes at night.” 

I would’ve sworn that even the dog reacted with a dry little laugh at that last part.

“Well, at least this gives you some breathing room, time to make a few calls and pick up the pieces before you blow out of Dodge altogether.  Soon as your pals in Vail or Saint Tropez can return your calls, right?  The only awkward aspect might be dropping off the dog.  But that’s hardly any big deal:  ‘Wham, bamm, thank you, ma’am’.”

“Er, yeah . . .   Say, would you like another glass of wine?” and without waiting for an answer she returned with another glass of the red stuff, filled to the brim.

She plopped down next to me on the settee.  “Listen, there’s more than enough work to be done around this place, but it’s late tonight.  And it’ll still be here tomorrow.  So what’s the hurry?  Let’s just relax some now and leave that kind of heavy talk for tomorrow, hmmm?”  Her tone had segued into a warm, throaty purr that coaxed a blush of warm blood to my face.  “I’ll turn on some tunes and you can tell me about your adventures since getting the boot by A-Visa or whatever her name was.”  Waving the plastic magic remote-control wand, she activated her iPod’s playlist of mellow-mood tunes from the likes of Mumford & Sons and Iron & Wine. 

She spent the rest of whatever I can still recall of that night seducing me, drink by drink, into unwariness, vanity and stupor.  She laughed at all my shitty jokes, told me that I didn’t need Aviva anyway, and massaged away any tension that became apparent in my shoulders whenever I started to evince any regret about the way things had ended.

“Awww, you can do better than that, Liam.  And you know what they say anyhow—“If it don’t fit, don’t force it.”  I let out a low chuckle and then she got really bold; she physically drew me over to her on the couch, and began to gently stroke the back of my ears.  That’s about the last thing I remembered before drifting out of consciousness—that and the weird fact that Pavolv seemed to take the gesture as a cue, and sprang out of his cubby and shuffled out of the room, his nails click-clacking on the kitchen tiles as he left.

It must’ve been shortly after noon when I woke up shivering—and alone—on the couch.  Glancing around to get my bearings I felt kind of lost at first—the place had a cold, pale hollowness when viewed in broad daylight that was fundamentally from the psychic geography of the rich warm, brown-ness it radiated by last night’s fire.  It seemed tidy and in good order, but cavernously empty as if nobody had really lived in the place for years.

Siobhán had exhibited enough class to throw a comforter over me and as I pulled it tighter, I began to mentally review the chronology of last night’s events; the wine, the music, the talk, the embrace—shit, did anything happen?  I checked my junk.  Nope all dry and packed as tight as if it’d never been brought out of storage.  Damnit, blew it!

Before I could start to pity myself too much I noticed a light scratching noise coming from the kitchen that turned out to be Pavlov’s nails pouncing against the pantry doors.  I pitied him; he looked just about starved, with the corrugated edges of his ribcage protruding though a hide pulled too tightly over him.  So I didn’t even bother to check and see if there was any dog food in the place and immediately dug into the fridge and shot him a couple of wet hot dogs on the floor that he gobbled up greedily.  Yeah, his mummykins back home in the Gold Coast would probably shit herself if she found out her baby was eating anything other than a precisely measured quarter cup of Doctor Parnassus’ Fat-Free Specialty Beluga Caviar Canine Mix, but fuck her and fuck her dog.  Siobhán and I were only here ‘til we caught the next train out of Maiden Lane, which wouldn’t be long at all.  Little did I know.

I spent the next hour or so doing my best to respect Siobhán’s space, and retreated to the sitting room to watch some low-volume television and waited for her to wake up and talk about a work plan.  I’d brought most of my tool kit and supplies, including a portable drill press, table and jig saw, so I doubted that I’d need much additional stuff other than the lumber that I could only assess adequately after getting a tour of the place.  But as one hour stretched into one-and-one-half and into two, my patience ran low and Pavlov’s eerie stare began to creep me out and I longed for some human companionship, so I started to roam the inhabited west wing looking for her room—which I found empty.

WTF? Did she pick up and leave camp altogether?  I stormed out to my truck and immediately noticed the vicious crumple of the rear driver’s side quarter panel that turned in on itself into a dagger threatening the tire with a nasty puncture if I even thought about turning the ignition key.  Stooping down to read a faded yellow Post-It™ note I saw her large, loopy writing:

Oops!  Sorry ‘bout the mix-up!  Text you at 2:00!

Love, Shivvers☺”

THAT FUCKIN’ BITCH!  Just then I heard the digital ‘plink’ of my phone announcing the arrival of a new text message.  Must have hit 2:00 that moment.

“LM, U THR?”



What the hell was THAT supposed mean?  “Talk to Pavlov yet?”  Had she gone completely mad in this Wisconsin wilderness?

“Y.  D’ U TLK 2 HM YT?”

I blew my top at this altogether and began shouting out loud to no one in particular.  “No I did NOT talk to Pavlov yet!  He’s a fucking DOG!!!”

From over my shoulder I heard the rejoinder:  “Who the fuck is Pavlov?  My name’s Paul.  Paul Ryan.”

*Remember this bit?  It’s allegory:  a fictional narrative presenting in symbolic form actual events or persons intended to make rhetorical rather than strictly factual or historical points.  Remember that when interpreting the events described here.

^ Actually Lake Butte des Morts—I changed it a bit to sound more exotically French.  It’s the name of a small town in Winnebago County.  Translates literally to “Lake of the Hill of the Dead”.  Apart from some fishing, there’s nothing much to see here for the casual traveler but the low-lying shallow lake fens that stretch below part of I-41.

This stuff has only a rough, historical basis to it.  It’s true that this is the native country of the Ho-Chunk (aka Winnebago) people, and that Red Horn was their mythology’s great culture hero—like Hercules to the Greeks or Cú Chullain to the Irish.  And while I’m unaware of any strict canonical interpretation of his tradition, what I present here is only my rough re-imagining and is in no way to be interpreted as either recapitulation or violation of the authentic Ho-Chunk legends about him.  Similarly with Huitzilopochtli and Tezcatlipoca.  Some proto-archaelogists like N.F. Hyer thought that the legendary prehistoric homeland of the Aztec people, Aztalan, was located in Wisconsin, but I am unaware of anyone taking that idea seriously today.  True there was definitely some kind of culture interchange between ancient Wisconsin and the Valley of Mexico—they both were centers of maize cultivation—but the extent and nature of that contact is far from clear to me.  Far more important for the purposes of my narrative will be re-interpreting in the context of modern American politics the status of these figures as mythical hero, founding father and Death God, respectively.

** I chose the name ‘Maiden Lane’ for this house’s location because it just happens to be the name of a series of special-purpose entities established by the Federal Reserve Bank in Q3 2008 to deal with the liquidity crisis precipitated by the failures in the mortgage and insurance business, particurarly of two of Paul Ryan’s biggest customers, AIG and JP Morgan Chase.  I’ll go into more detail about how socializing the cost of these failures has impaired the effectiveness of federal government later in the next installment of this series.  But for now you might want to peruse the Wikipedia page description of their activities.  I know it’s Wikipedia, but it is a fair high-level summary of the entities’ purpose, structure and timeline. There’s more technical stuff, like their financial statements, available here.

# Pavlov, the surname of the famous 19th century Russian scientist Ivan Pavlov, whose experiments with dogs established the notion of involuntary physical response to psychological stimuli.  Etymologically it happens to be cognate with the English or Scottish surname “Paulson”—son of Paul.

Thursday, December 2, 2010

What's The Difference Between The 'Greatest Generation' and The 'Generation of Swine'? About $684 Billion a Year.

The words of John F. Kennedy's inauguration speech still echo forth today for those Americans who are willing to listen:

" . . .  Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty. . . . "

Beautiful stuff without a doubt.  But is it still true?  The 'Greatest Generation', Kennedy's generation, the generation that suffered the deprivations of the Great Depression, fought on the front lines against fascism during WWII and pioneered the Civil Rights movement is approaching their century mark and has nearly, if not quite entirely, departed the national stage altogether.  How well have their Boomer and X'er heirs honored their legacy?

A Generation of Swine
Not too well at all it seems, if you've been monitoring the latest dust ups about the deficit reduction commission.  Though I wouldn't blame you at all if you haven't; by and large it's been more of the same from Republican'ts.  Just one long litany of proposed hatchet jobs, both to vital programs that support the working class and retirees and slash the tax load of the mega-rich.  They're currently using refusing to renew unemployment benefits and threatening to make regular Americans work an extra 5 years in order to pay for yet another handout to their wealthy patrons*.   Despite a roll call of high-profile economic experts and even business moguls warning against the damage that Republican policies will do to our national infrastructure, the middle class and the economy in general, the Right Wingers seem just about Hell-bent on the "Roadmap to America's Ruin".***

Wisconsin's own homegrown homunculus, Paul Ryan, will become House budget chief in January, which should be a profound shock to anyone with a working appreciation for morality or intelligence.  Having thoroughly shit all over himself by begging for an $800 + billion bailout for his patrons, the atavistic bankster failures AIG and JP Morgan Chase, he not only had the cojones to run interference to prevent attempts to check their excesses, but now he claims the mantles of down-home populism and economic savvy.  Oh yeah, and he's trying to repeal the law that allows parents to insure their college-age children and keeps insurance companies from denying coverage at will.  Just one more chapter in the life of an American 'patriot'.

Seriously, though, Paulie's list of failures must loom large in the annals of the history of those of us born in the late '60s through the early '80s.  Most social historians call these folks "Generation X".  But Hunter S. Thompson, perhaps my favorite American writer of all times had a much more descriptive and apropos name for us, the "Generation of Swine", reflecting the utter moral and intellectual pollution of a generation, raised to be Reaganauts with the crude lack of self-awareness that is pleased to call cutthroat robbery "magic of the free markets". 

We've already talked in this post about Ryan's shameless pandering to Big Money interests.  Economist Paul Krugman calls Ryan's centerpiece fiscal plan a "sham" that leaves a $4 TRILLION budget deficit over ten years while increasing the tax burden of 95% of Americans.   The chief economist at Moody's, Mark Zandi has warned of the major negative impact Ryan's proposed program cuts will have on GDP.  And this blog itself has unmasked on numerous occasions Ryan's lack of analytical rigour and the utter falsity of his consistent rhetorical themes.**

Just How Trashy Are We As A Generation?
At the risk of piling on, I thought it might be fun to once again quantify in actual dollars and cents the extent of the hypocrisy and stupidity of the Right Wing-friendly "Generation of Swine".  Voilà:  a high-level comparison of the likely annual impact of various tax policy alternatives being bandied about, plus three of my own Kennedy-inspired scenarios.  Included are:

1.  Let the Bush era tax cuts (often referred to by the legislative acronym 'EGTRRA') expire.
2.  Renew the Bush era tax cuts altogether, à la Ryan and the Republican'ts.
3.  Renew the tax cuts for all but the elite, as promoted by the Democrats.
4.  Return to the tax rate regime of 1965, after Kennedy's historic reforms.
5.  Return the elite to the '65 regime, let EGTRRA expire for everyone else.
6.  Return the elite to the '65 regime, but renew EGTRRA for everyone else.

You'll never guess which of these policies turns out to be both least fair (i.e., increases income inequalities) and least effective in combating the deficit.  I'm dying to tell you, and you can skip ahead to the conclusions section if you like, but you may want to cast an idea on the why's and wherefores, too.

The Technical Stuff
You may want a little background on the techniques I used to perform the calculations.  I'm more than happy to provide additional detail upon request, but I'll keep it brief here and confine myself to a broad conceptual overview of methodology and reference to the workbook with the detailed calc's.

Historical data comes from the IRS, the Bureau of Economic Analysis, and ^  Where projections and allocations were necessary due to limits on historical detail available, they have been made upon well-established statistical correlations of no less than 60%.  You'll find narrative comments, citations and hyperlinks to the relevant sources within the workbook.

You should know, however, that this calculation focuses on the tax liability before the Alternative Minimum Tax ("AMT") and tax credits.  I don't think this limitation impairs the usefulness of the analysis much, given that the IRS requires calculation of AMT and tax credits AFTER performance of the basic tax liability calc I've done here.  The intention of this analysis to focus on the broad, sweeping statutory RATE changes between the tax regimes--not petty discrete items like the myriad of arcane credits that pepper the tax code like specks of fly shit on the lamp shade of a crappy Motel Six room.

I also focused only on the three filing statuses that comprise over 98% of all federal income tax returns and tax--Married Filing Jointly, Single and Head of Household.

And you may find it interesting to know that the procedures I used to test this workbook included reconciliation to actual historical data.  For 2007, the most recent year for which I have the most comprehensive information, the workbook varies from historical fact by less than 6/10 of 1%.  Not too shabby. 

In order to maximize memory utilization for the workbook I did not include a lot of tables for historical AGI information--which seems in keeping with the forward-looking orientation of the estimates the workbook was created for anyhow.  You will be happy to know that the algorithms I've used to project the excluded data also seem to be pretty decent--I ended up within 4% of the total liability for 2000.  Kinda all right, especially when you consider that most high-quality statistical studies have margins of error of +/-5% (i.e., an error range of 10%).

The Shocking Truth:  The "Generation of Swine" Come Up $684 Billion Short

Table 1.
Wow.  Can it really be that self-proclaimed fiscal hawk and lottery arbitrage advocate** Paul Ryan has backed the wrong pony once again?**  That his plan not only fails to "pay any price, bear any burden, meet any hardship" in order to assure the survival and the success of the middle class or its economic liberty against the relentless market forces of plutocratic banksterism, but it also doesn't do shit to address the budget deficit.  Hmm.  How could that be?  Maybe Ryan's an idiot or maybe he just doesn't give a damn about the American nation.  It's all the more humiliating when you consider that unemployment was a lousy 4.5% in 1965 (see table #1 here).

Just for laughs, I've also included below a table splitting out the shortfall vs. the '65 tax regime attributable to the elites and one chart each graphically illustrating the billions of dollars and millions of jobs Ryan is throwing away and the ridiculously small income sacrifices expected from the uber-rich by even the most radical alternative.

Table 2.

Chart 1.

Chart 2.

Call and your representatives and senators immediately and often telling them that you know what a horrible idea Paul Ryan's budget plans are.  And let them know that you know what you’re talking about.  Send them a copies or links to the information available on this blog.  Send them a link to the Senate testimony of Mark Zandi, Chief Economist at Moody's, to the effect that tax increases for the rich are tantamount to robbery of the middle class and that continued support of government programs like Social Security and Medicare is vital.  Send them a link to the Congressional Budget Office's report that renewal of the Bush era tax cuts would add bring the national debt up to 100% of GDP by 2020.  Email this stuff to your friends, family and acquaintances.  Whatever you do, don't keep this information to yourself.

*During this last election cycle, Paulie boy was a big favorite of the banksters.  His clients included not only Goldman, but CITI, Bank of America, JP Morgan and a host of other F.I.R.E.  (i.e., "Finance, Insurance and Real Estate sector) companies and trade groups.  In fact, he got about $246,000 or 25% of his total PAC money from these guys.  See details here.  Who knows how much else he got INdirectly through Orwellian-ly named PACs or individual contributions?

**  Paulie's support, unwitting or otherwise, of banksters' counterfeiting operatins discussed here.
      His inability to identify the sector with the highest fiscal mutliplier here.
      His lottery-like fiscal program, costing trillions of dollars and millions of jobs discussed here.
      The wicked, lying Laffer Curve myth destroyed here and here.

***Ryan's good friend Grover Norquist just about announced his intention to destroy America over the public airwaves.

^ Yeah, these guys have a reputation as a conservative think-tank advocating tax cuts.  But what I was looking at here wasn't their analyses, but their re-publication of historical statutory rates, which were not available in any convenient form at .

Friday, November 26, 2010

Q: How Wisely Do ‘Wealth-Friendly’ Policies Employ Capital? A: Not So Wisely

To say that reaction to my latest post has been ‘mixed’ would be generous.  While grasping the way the Bush-era handouts to the richest 2% reinforce wealth redistribution, it seems that folks may not yet see just how they're like a ‘Death Cult’.  At least in the opaque allegorical form I set out in part one of the newly planned 3-part series.  For most readers, the point still seems a little abstract.   So here I lay down some more explicit exposition.  Today I will demonstrate the difference between ‘Wealth’ and ‘Productivity’.

The Right Wing may be many things, but subtle is not one of them.  Their financial platform is quite clear:  Profit is the ultimate yardstick of economic progress, tax cuts and deregulation of markets allow perpetual increases in the level of profit; ergo continual reductions in tax and regulation guarantee the wisest allocation of resources.  But is this true?

Answer:  Not Unless You Think The Lottery Is A Sound Investment
Far from it.  We’ve already disposed on multiple occasions with the Laffer Curve myth1.  We’ve already demonstrated the relationship between tax cuts for the richest 2% and deterioration of the income for the median tax filer2.  And we’ve even provided an analysis from uncontested data from the Bureau of Economic Analysis and the Federal Reserve showing that the federal government is typically 4,700% times more productive than the financial sector.3  But now take a gander at the chart above. 

Note the difference in the % of the total money supply our ‘wealth-friendly’ policies allocate to each sector and their relative productivity in terms of GDP.  We literally piss away over 34% of our money on a sector (i.e., Corporate Finance) that provides only 0.8% of our productive capacity3.  Not too shrewd now, is it?  That’s more or less like a man in 2008 making the average annual salary of $43,000 spending $14,710 of it on lottery tickets4.  Is that what voters of Wisconsin elected Paul Ryan to do?  Spend over 34% of our national productive capacity on Powerball tickets?

Wasted Money and Wasted Jobs
“But wait,” you say.  “Aren’t there other ways of measuring the inefficiency of this resource allocation?”

Indeed there are.  While it’s not possible within this short space to exhaust all the possibilities or perform  superfine, CBO-quality calculations, it’s still worth performing a rough, back-of-the-envelope calculation to determine the relative magnitude of the inefficiency.  Here are my guesses as to the maximum potential figures for Wasted Money and Wasted Jobs:

  • Wasted Money:  Holding all price levels equal to those of 2008, the last year for which fully comparable data was available for all variables, we typically throw away $1.9 TRILLION or $1 out of every $12 in circulation.  Smooth move, X-Lax. 
Now keep in mind that represents the net negative impact Gross Domestic Product or "GDP" of our current, un-optimized resource allocation.  Basically this means to say that by spending $X's in less productive areas of the economy instead of spending that same dollar in the more productive segments of the economy, we lose $1.9 trillion of GDP.
Of course the reality is more complex than this because there is the possibility that radical changes in the allocation of resources to a sector can alter its aggregate productivity (e.g., per unit step fixed costs may not vary directly with the scale of operations, and the introduction of too much liquidity in a given market all at once may result in a certain amount of inflation).  But it is still an interesting, thought-provoking exercise to estimate the maximum potential cost of inefficient allocation, even if the assumptions used are pretty basic.
If you care to see details of my calculation, look at cell V118 on the tab ‘Velocity of Money by Sector’ within the workbook here.  I can answer more detailed questions upon request.

  • Wasted Jobs:  68.7 million jobs sound like a big number to you?  Well, it should—that’s 47.5% of our total employment base of 144.5 million jobs per the October release by the Bureau of Labor Statistics.  “Fuckin’ ape-shit crazy!” you say.  “How the hell can that be right?”

Well, take a look for yourself.  See cell BB118 on the tab ‘Velocity of Money by Sector’ within the workbook here for more details.  That’s the best shorthand calculation available based on data from the Bureau of Labor Statistics and Bureau of Economic Analysis regarding wages and total compensation by sector and their typical percentages of GDP through 2008 and current employment base as of October 2010.

“But WTF could that possibly mean that we have a supply of capital that could fund employment at a level 136.1% of our actual workforce?”  Well, among other things it means that the current “magic-of-the-markets” system of allocating wages ain’t so fair.  But you already knew that based on our analysis of income inequalities from the Bush-era tax regime2, right?
“Goddamn, that’s disgusting!” you may be thinking to yourself.  And so it is.  There is no freakin’ way we should tolerate simpletons like congressman Paul Ryan (R-WI), senator elect Ron Johnson (R-WI) and Right Wing pundit David Frum5 to be pushing yet MORE tax cuts for the wealthiest 2% and stonewalling every effort to regulate the pitifully unproductive financial industry.  Get on the horn or send an email straight away to your  representatives and senators telling them:

  • “NO WAY” to renewal of the Bush-era handouts to the richest 2%.
  • “Get working NOW on further financial regulatory reform”
  • “Stop messin’ around with baloney cuts to high value-add programs like Medicare and Social Security—they actually provide economic benefit, instead of hamstringing the economy like tax cuts do.”6
As a nation we just can’t afford to go on like this.

1    See the inaugural blogpost here decisively discrediting the baloney notion that tax cuts invariably boost the economy.
2    See this blogpost detailing how the Bush-era tax cuts for the richest 2% ended up increasing the average income of the wealthiest Americans by at least 20% while DECREASING average income for Joe Average by 17%.
3    Read here how $1 dollar in the federal government sector typically increases GDP by 9.4 times whereas $1 in the financial sector DECREASES it by 80 cents.
4    Yeah, for real.  See data on average wages on cell F12 on tab ‘Profile of Typ. Ee-2009’ and the % of total money supply within the financial sector within cell AK115 on the ‘Velocity of Money by Sector’ tab all within this workbook.
5    That’s the former speech writer for Bush II.  I’m referring especially to a recent radio commentary on “Marketplace” where he again puked forth another plea to give away more tax cuts to the wealthiest 2%.  Contact them and let them know how much bullshit you think that is.

      But one further thing I’d like to call to your attention:  David Frum maintains dual citizenship with both the U.S. and Canada.  Now does it seem right to you that a guy who doesn’t see fit to commit 100% to a country should have a whole lot of influence on policy?  I’ve got nothing against Canadians—I have lots of friends in Montreal myself.  But they seem to know that if you’re gonna flood the airwaves asking a country to go to war, you’d better be fully committed to said country yourself; they’re all single-country citizens of Canada.
6    And don’t just take my word for it.  Mark Zandi, chief economist at Moody's testified before the Senate in September about the positive fiscal multiplier effects of these programs.  Forward this to  representatives and senators  if they just don’t seem to get it.

[Editorial Note December 2, 2010:  See item #1 regarding revision to calculation of M3 here.]