The 14th Ammendment Argument Remedy

Paragraph 4 of the 14th Amendment to the U.S. Constitution states in full (emphasis added):

4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Any questions?

Update:  Bernie Sanders explains in detail for those who don't get it.  (H/T to the LW )



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On the Other Hand Though, Perhaps . . .

.  .  .  we're Not So EXCEPTIONAL, after all.

Some history lessons, via Paul Glastris at the Washington Monthly.

As it happens, the willingness of the rich to defend their wealth from taxation to the point of national ruin is nothing new in world history, as Francis Fukuyama recounts in his magisterial new book The Origins of Political Order. The Han dynasty in China fell in the third century AD after aristocratic families with government connections became increasingly able to shield their ever-larger land holdings from taxation, which helped precipitate the bloody Yellow Turban peasant revolt. Nearly a millennium and a half later, the great Ming dynasty went into protracted decline in part for similar reasons: unable or unwilling to raise taxes on the landed gentry, the government couldn’t pay its soldiers and was overrun by Manchu invaders.

In the fifteenth century, the Hungarian King Matthias Corvinus persuaded his reluctant nobles to accept higher taxes, with which he built a professional military that beat back the invading Ottomans. But after his death the resentful barons placed a weak foreign prince on the throne and got their taxes cut 70 to 80 percent. When their undisciplined army lost to Suleiman the Magnificent, Hungary lost its independence.

Similarly, the cash-strapped sixteenth-century Spanish monarchy sold municipal and state offices off to wealthy elites rather than raise their taxes—giving them the right to collect public revenues. The elites, in turn, raised taxes on commerce, immiserating peasants and artisans and putting Spain on a path of long-term economic decline. This same practice of exempting the wealthy from taxation and selling them government offices while transferring the tax burden onto the poor reached its apogee in ancien regime France and ended with the guillotine.

By contrast, in England during the same period, the nobility and gentry didn’t conspire with the crown to exempt themselves from taxation. Instead, thanks to a number of factors—greater social solidarity, a keener sense of foreign threats, reforms that made the government itself less corrupt, and the principle of taxation only with the consent of Parliament—the wealthy of England willingly accepted higher taxes on themselves. As a result, government spending in England rose from 11 percent of GDP in the late seventeenth century to 30 percent during some years in the eighteenth century. That’s higher than U.S. federal spending today. These higher taxes on the wealthy in England, Fukuyama notes, “did not, needless to say, stifle the capitalist revolution.”

Higher taxes on the rich won’t stifle America’s economy either. Nor, I think, would most wealthy Americans object to paying more if they truly understood that the fate of the country is on the line. Unfortunately, the GOP may now be too ideologically rigid to see the real interests of its own wealthy constituents. History shows that the rich sometimes make suicidal decisions. The challenge of American democracy right now is to somehow keep ours from doing so.

Makes ya wonder . . .
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More American Exceptionalism: Government Revenues

That was the title of Steve Roth's post yesterday.

Go read it.

The only thing I would add is that U.S. GDP growth started slowing around the early 80's, when the "ahem" countries started to overtake us.  So - it's only slow GDP growth that has kept us from falling even farther -  oooh, the hazards of ratio based analysis.

OTOH, the graph suggests a correlation that Steve hints at:  countries with higher sustained growth have also had generally higher revenues/GDP.

My take is that the free market is NOT necessarily more effective, efficient, nor better in any way than a market that is 1) sensibly regulated and 2) distorted by the dead-weight loss of taxation..

My take is supported by both U.S. history and cross-country comparisons.

Makes ya wonder . . .

Wake Up and Smell the Crazy

My first post on this blog that related to current political events - here reproduced in full - was short and to the point.  Clearly, I had not yet discovered my Blogger voice.

THE OBAMA RECESSION

With Home equity losses of over 6 trillion dollars from 2006 through 2008, Right-wingers are trying to blame the current recession on Obama.

The guy who took office in 2009.

Yeah, I get it. Not funny.

Some anon wingnut left a comment that prompted me to refer to Grover Norquist and Magical Thinking.

As Bill Maher puts it, while the Democrats have moved to the right, the Republicans have moved to the insane asylum.  But that's over decades.   Most recently, it has only gotten worse. Here's Krugman, from yesterday's op-ed piece.

A number of commentators seem shocked at how unreasonable Republicans are being. “Has the G.O.P. gone insane?” they ask. 

Why, yes, it has. But this isn’t something that just happened, it’s the culmination of a process that has been going on for decades. Anyone surprised by the extremism and irresponsibility now on display either hasn’t been paying attention, or has been deliberately turning a blind eye. 

And may I say to those suddenly agonizing over the mental health of one of our two major parties: People like you bear some responsibility for that party’s current state. 

.  .   .

First of all, the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency — any Democratic presidency. We saw that under Bill Clinton, and we saw it again as soon as Mr. Obama took office. 

As a result, Republicans are automatically against anything the president wants, even if they have supported similar proposals in the past. Mitt Romney’s health care plan became a tyrannical assault on American freedom when put in place by that man in the White House. And the same logic applies to the proposed debt deals. 

Put it this way: If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph. But when those concessions come attached to minor increases in revenue, and more important, when they come from a Democratic president, the proposals become unacceptable plans to tax the life out of the U.S. economy. 

Beyond that, voodoo economics has taken over the G.O.P. 

.   .   .

Recently, however, all restraint has vanished — indeed, it has been driven out of the party. Last year Mitch McConnell, the Senate minority leader, asserted that the Bush tax cuts actually increased revenue — a claim completely at odds with the evidence — and also declared that this was “the view of virtually every Republican on that subject.” And it’s true: even Mr. Romney, widely regarded as the most sensible of the contenders for the 2012 presidential nomination, has endorsed the view that tax cuts can actually reduce the deficit. 

.   .   .

So there has been no pressure on the G.O.P. to show any kind of responsibility, or even rationality — and sure enough, it has gone off the deep end. If you’re surprised, that means that you were part of the problem. 

 Have I ever mentioned that I love it when Krugman agrees with me?
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Quote of the Day: Speaking of "Rare Moments of Lucid Candor"

Re: That Debt Limit Thang, from perennial Ass-Hat Lindsay (Is this Watergate or Peyton Place?) Graham.

NYT Politics:

The stakes are high, for the economy, the financial markets and both parties. But the pressure was particularly intense on Republican leaders, who only weeks ago seemed to be on the offensive and in a strong position to extract major concessions from Mr. Obama and the Democrats. 

For months, the Republican leaders have emphatically pledged that there will be no increase in the federal debt ceiling absent huge cuts in government spending and fundamental changes in popular social programs, all without the whiff of a tax increase. 

Now, with negotiations stalled and a potential default by the United States government just over the horizon, they are being held to those promises by their own rank-and-file, leaving them in a bind that is defying easy resolution and putting them at risk of being blamed if things end badly.

Behind closed doors and by phone, they groped for a solution and struggled to assert some kind of control over the situation as rank-and-file Republican members, especially in the House, grew more confrontational. 

Panic had not yet set in, but the worry and tension were evident as seasoned lawmakers of both parties whose experience told them that Congress always finds a white-knuckle way to avert disaster wondered if this was going to be the time when it did not. 

“Our problem is, we made a big deal about this for three months,” said Senator Lindsey Graham, Republican of South Carolina. 

“How many Republicans have been on TV saying, ‘I am not going to raise the debt limit,’ ” said Mr. Graham, including himself in the mix of those who did so. “We have no one to blame but ourselves.”

The Rethugs have attempted to make this situation a zero-sum game.  However, they seem not to understand that they are playing with Napalm, and a huge negative-sum outcome is a very realistic possibility.

H/T to P6.
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Thinlips McChinless Rides Again

Mitch McConnell will save win the day.  Thus sayeth Robert Reich, who might actually know what the hell he's talking about (emphasis added.)

McConnell, like most other Republican leaders, has all along seen the battle over raising the debt ceiling as part of a master plan to unseat Obama. Remember, it was McConnell who openly admitted the GOP’s “top goal is to defeat President Obama in 2012” – a brazen and bizarre statement in the face of the worst economic crisis in seventy years.

H/T to Thoma.

The thing that's clear is that the lizard-people will stop at nothing to defeat Obama in 2012.  Whether this ploy will succeed or not is anybody's guess.   A check of possible outcomes does NOT favor the incumbent.  If we get a Rethug lizard in the White House in 2012, "We, the People" are literally finished.  The America that once was will dwindle to a faded memory, as the American people devolve into corporate serfdom.

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Speaking of Treason

Yes, I dare call it that!

While on Randi's Facebook page, I also found this.





Fortunately, genuinely stupid conservatards have these rare moments of lucid candor when a little slice of truth leaks out.

For many months now some Democrats have openly wondered* whether Republicans were purposefully sabotaging the economy in order to benefit themselves politically in 2012.  Senator Chuck Schumer (D-NY) pointed to the fact that the GOP was unwilling to accept tax decreases in the new debt limit deal as evidence that they may be committing economic sabotage.  Still, the “sabotage theory” was seen rather far-flung for most.  However, the claim may gain more credence after Rep. Michele Bachmann’s remarks on CNBC.

This blog probably has more viewers (50 or 60 on a good day) than CNN, so I'd better spread the word.

In isolation, Bachmann's off-hand comment could be shrugged off, I suppose.  But everyone on the right from druggie Rush Limppud to Thinlips McChinless has professed their determination to make Obama fail.  Of course, and contra the Drugster's football analogy, as the leadership goes, so goes the country.  But such piddling collateral damage as the (potential) downgrading of the Country's secured dept, and millions on the unemployment rolls are as nothing to the reptile-brained Rethugs that the population of this once great country have selected to determine their fate.

Put yourself under the control of lizards and you get eaten by lizards.   Thus we devolve from a great experiment in participative government to poverty, servitude and rule by a privileged elite.  This, my friends, whether you realize it or not, is feudalism.

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* Full disclosure:  I never had ANY doubt.

What Do You Call A Man Who Stands to Profit From His Country's Misfortune?

I call that person a traitor.

What do you call it when a person stands to profit when taking an action that is detrimental to the community and his sworn duty to that community?

I call it conflict of interest.

What do you call it when a person can control events in such a way that he profits directly from influencing the market value of assets he owns?

I call it insider trading.

What do you call a person who does all of this with a single policy stance?

I call him Eric Cantor.

When Eric Cantor shut down debt ceiling negotiations last week, it did more than just rekindle fears that the U.S. government might soon default on its debt obligations -- it also brought him closer to reaping a small financial windfall from his investment in a mutual fund whose performance is directly affected by debt ceiling brinkmanship.

Last year the Wall Street Journal reported that Cantor, the No. 2 Republican in the House, had between $1,000 and $15,000 invested in ProShares Trust Ultrashort 20+ Year Treasury EFT. The fund aggressively "shorts" long-term U.S. Treasury bonds, meaning that it performs well when U.S. debt is undesirable. (A short is when the trader hopes to profit from the decline in the value of an asset.)

According to his latest financial disclosure statement, which covers the year 2010 and has been publicly available since this spring, Cantor still has up to $15,000 in the same fund. Contacted by Salon this week, Cantor's office gave no indication that the Virginia Republican, who has played a leading role in the debt ceiling negotiations, has divested himself of these holdings since his last filing. Unless an agreement can be reached, the U.S. could begin defaulting on its debt payments on Aug. 2. If that happens and Cantor is still invested in the fund, the value of his holdings would skyrocket.

Sure, $15,000 is chump change to a multi-millionaire like Cantor.   But this is not a situation where size counts.  It is a situation where Cantor can control the events, to his advantage - financially as well as politically (he thinks), and to the disadvantage of the entire U.S. economy.

If I thought Cantor was stupid, like the majority of newly-elected tea-party-backed Rethug congresspersons who clearly have no clue what the hell they are doing, this could be shrugged off as insignificant.

But he's smart, cagy, powerful, ruthless, and greed-motivated.  I cut him no slack whatsoever.

We are well and truly screwed, and it's because we have selected lizard-people like Cantor for leadership positions.  The end of this road is the 12th century, and we are well on our way.

H/T to Randi Rhodes.
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The Book of Jobs

Friday's jobs report was dismal.  David Beckworth was not surprised.   The  missing jobs conundrum has been a recurring theme at Stagflationary Mark's place.  At Mark's link you'll find how we've strayed from the path of righteous exponential growth.  Well, exponential growth can't go on forever, but that doesn't mean we had to plunge face first into a ditch.  Alas, though, "Our failure to create jobs is a choice, not a necessity — a choice rationalized by an ever-shifting set of excuses."

Mark points to this FRED graph, throws on an exponential trend line, and notes: "The party ended in 2000."  I prefer to look at exponential growth on a log scale - it makes it easier for my aging, bifocal-laden eyes to see what's really happening.  See for yourself.   (Unfortunately, you have to click the green drop-down pointer next to "Graph " click the "log scale" box, and then scroll down and click "Redraw Graph."  Go ahead.  It's fun!)

It's tempting to throw a straight line from about 1945 to 2000 and simply agree with Mark.  However, while I don't disagree with Mark, there is more to the story, and I think it's worth telling.

I've drawn straight green lines peak to peak, and color coded Presidential Administrations red and blue.  Connecting the dots this way gives us not a straight line, but an "S" curve.  It's no illusion.  Here are the slopes of the line segments.

Time                               Slope (Y-axis units/Mo.)
11/1/43 -- 2/1/57              .00135
4/1/60  --  3/1/70              .00223
3/1/70  --  3/1/80              .00201
3/1/80  --  6/1/90              .00153
6/1/90  --  2/1/01              .00147
2/1/01  --  1/1/08              .00049

Most economic graphs show the Clinton administration bucking the slow, agonizing death-trend of the America we think we know and love.  Here, though, all Billy-Bob could do was come close to holding the line.  Shrub, on the other hand, was able to come even closer to totally killing job growth in America, from his very first day in office - what an awesome accomplishment!

B. Hoover Obama might be the first president since his early depression-era namesake to give us negative job growth.  What an accomplishment that would be, as well!  Alas, though, more awful than awesome.  Here is a close-up view of recent history, if you can stand to look at it.  Even getting back to the anemic Shrub-era trend line looks like a forlorn hope at this point.

Yes, the party ended in 2000.  But all the good wine was consumed 40 or 50 years ago, and we've been swilling dregs and Ripple for decades, all the while deluding ourselves that it was Château Gloria.

We've been hung over for at least three years now, and someday and we'll realize what chumps we've been - the whole party has been at our expense!  Sadly, waking up penniless and face-down in the gutter is not a good way to start a decade.

Update:  After I finished the post, I got to wondering if BHO might really be (potentially) the first Prez to accomplish negative job growth over his term - after all, Poppy was pretty horrible.  Turns out, he actually added almost 23,000 jobs.  Over the course of a full four years.  That's how Terrible, Horrible, No Good, Very Bad it was.  But at least it wasn't negative! 

Here's another way to look at it.  I calculated a 4-Yr rate of change by taking a running twelve month average, subtracting the value of  48 months previous, and dividing the difference by the previous value to get a percentage. 

 

(Update 2 {nuances and a link} in this paragraph) This is again color coded by Prez party, except I gave Poppy his own color (GOLD!) to differentiate from St. Ronnie of the (Lannister?) Crimson V.   Connecting tops and bottoms gives a very discouraging trend channel.  It should come as no surprise that the decline starts in 1980.  Also note that every Rethug regime (ex-Ike, who was an actual Republican, not a Rethug) starts with a big downturn, and every Demo admin (ex-BHO, the Republican in Demo clothing) starts with a big upturn. This is no coincidence.  I've stated before that Rethugs pretty much own recessions (even Ike had 3!) and recessions kill job growth, so this should not surprise anyone who has been paying attention.

I look at that trend channel and weep.  Things might get better someday, but between now and then, things are going to get a hell of a lot worse.
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Quote of the Day - Fourth of July Fireworks

The GOP seems to no longer be the "party of business", but a mad-dog populist gang that is running around chucking sticks of dynamite in all directions.   --   Noah Smith

OK - a dynamite stick isn't exactly the first thing you might think of when "fireworks" is mentioned.  But it does make a big flash and go "BOOM!"

Happy 4th of July, and remember Independence Day has somethin' or other to do with freedom, as we stumble blindly along - at the behest of mad-dog populists -towards corporate serfdom.

And there's more than a touch of irony here, since the independence of the Fed is just one more thing to be blown up.
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