"Yes, He Can"

Elections have consequences. President Obama’s new budget represents a huge break, not just with the policies of the past eight years, but with policy trends over the past 30 years. If he can get anything like the plan he announced on Thursday through Congress, he will set America on a fundamentally new course. The budget will, among other things, come as a huge relief to Democrats who were starting to feel a bit of postpartisan depression. The stimulus bill that Congress passed may have been too weak and too focused on tax cuts. The administration’s refusal to get tough on the banks may be deeply disappointing. But fears that Mr. Obama would sacrifice progressive priorities in his budget plans, and satisfy himself with fiddling around the edges of the tax system, have now been banished. For this budget allocates $634 billion over the next decade for health reform. That’s not enough to pay for universal coverage, but it’s an impressive start. And Mr. Obama plans to pay for health reform, not just with higher taxes on the affluent, but by putting a halt to the creeping privatization of Medicare, eliminating overpayments to insurance companies. On another front, it’s also heartening to see that the budget projects $645 billion in revenues from the sale of emission allowances. After years of denial and delay by its predecessor, the Obama administration is signaling that it’s ready to take on climate change. And these new priorities are laid out in a document whose clarity and plausibility seem almost incredible to those of us who grew accustomed to reading Bush-era budgets, which insulted our intelligence on every page. This is budgeting we can believe in. Many will ask whether Mr. Obama can actually pull off the deficit reduction he promises. Can he actually reduce the red ink from $1.75 trillion this year to less than a third as much in 2013? Yes, he can. Right now the deficit is huge thanks to temporary factors (at least we hope they’re temporary): a severe economic slump is depressing revenues and large sums have to be allocated both to fiscal stimulus and to financial rescues. But if and when the crisis passes, the budget picture should improve dramatically. Bear in mind that from 2005 to 2007, that is, in the three years before the crisis, the federal deficit averaged only $243 billion a year. Now, during those years, revenues were inflated, to some degree, by the housing bubble. But it’s also true that we were spending more than $100 billion a year in Iraq. So if Mr. Obama gets us out of Iraq (without bogging us down in an equally expensive Afghan quagmire) and manages to engineer a solid economic recovery — two big ifs, to be sure — getting the deficit down to around $500 billion by 2013 shouldn’t be at all difficult. But won’t the deficit be swollen by interest on the debt run-up over the next few years? Not as much as you might think. Interest rates on long-term government debt are less than 4 percent, so even a trillion dollars of additional debt adds less than $40 billion a year to future deficits. And those interest costs are fully reflected in the budget documents. So we have good priorities and plausible projections. What’s not to like about this budget? Basically, the long run outlook remains worrying. According to the Obama administration’s budget projections, the ratio of federal debt to G.D.P., a widely used measure of the government’s financial position, will soar over the next few years, then more or less stabilize. But this stability will be achieved at a debt-to-G.D.P. ratio of around 60 percent. That wouldn’t be an extremely high debt level by international standards, but it would be the deepest in debt America has been since the years immediately following World War II. And it would leave us with considerably reduced room for maneuver if another crisis comes along. Furthermore, the Obama budget only tells us about the next 10 years. That’s an improvement on Bush-era budgets, which looked only 5 years ahead. But America’s really big fiscal problems lurk over that budget horizon: sooner or later we’re going to have to come to grips with the forces driving up long-run spending — above all, the ever-rising cost of health care. And even if fundamental health care reform brings costs under control, I at least find it hard to see how the federal government can meet its long-term obligations without some tax increases on the middle class. Whatever politicians may say now, there’s probably a value-added tax in our future. But I don’t blame Mr. Obama for leaving some big questions unanswered in this budget. There’s only so much long-run thinking the political system can handle in the midst of a severe crisis; he has probably taken on all he can, for now. And this budget looks very, very good. - Paul Krugman, 2008 Nobel Prize Winner in Economics

FRIDAY F U N

• How Long Can I Keep Thawed Meat Before Cooking It?
• Mathematically generated graphic images
• Gallery of Exploding Servers (not waiters or waitresses)
• This most definitely is the cell phone that I want. Be sure to check out every feature.

Bits and Pieces for the Week of February 22 - 28

"The complexity of Naomi Klein's portrayal of the rise of disaster capitalism, The Shock Doctrine, has won its author the inaugural £50,000 Warwick prize for writing." It's really a pretty easy read... it blew me away. (7 of 6)

"GOP hates earmarks — except the ones its members sponsor." (7 of 6)

Meteor Blades at DKos does a great job of promoting Hilda Solis for Secretary of Labor. "Solis would arguably be the most liberal appointee in Obama's Cabinet." Which I think is sorely needed. (7 of 6)

Bits and Pieces for the Week of February 15 - 21

CALIFORNIA DREAMIN' and I'm not talking about the song (Mike)

A (humorous) visual metaphor for T.A.R.P. (Mike)

Will Obama finally (and correctly) legalize marijuana? (Mike)

Verizon makes million$ in profit due to unanswered calls to California's state unemployment service. (Mike)

Follow the Stimulus Act dollars (Mike)

If California Republicans think that their party's representatives in the state government have their best interests in mind, then someone is putting kool-aid into their drinking water. (Mike)

U.S. banking executives are complaining about future compensation... look what a conservative politician is offering bankers in Great Britain. (7 of 6)

Former President Bill Clinton explains the GOP mind frame and his support of Obama's economic plan. (7 of 6)

February 24th is FREE PANCAKE DAY!

Visit an IHOP near you, get some free pancakes and help your local Children's Hospital.

Many people whom I know keep asking me (for some reason) if things are going to get worse in the economy. So I keep telling them, yes, things are going to get much worse. I was going to resume funding my 401K when the market "bottomed out" (my prediction) at 7,500. However, I just found out (after asking myself) that things are going to get much worse, so I'm holding off on that 401K thingy for a bit longer. Hey, don't bitch at me... I've been much more accurate about this economy's demise than nearly all the so-called economic experts, and my degree is in Physiology, to boot!

What's the secret of my success at prediction? Well, all you have to do is know that anything Former President Bush (god I love saying that) touched during his 8-year tenure has or will turn to shit (economy, environment, Middle East, military, health care, human rights, civil justice, etc.).

As you know it takes much longer to fix something than to screw it up. So if Bush had 8 years to screw things up, it will take decades to repair it all. Don't be looking for an economy like we had under Clinton for another 20 or more years. Sorry.

Lesson Learned? Not Yet, It Seems...

February 20, 2009 Predatory Legislators With millions of homeowners now struggling to repay money they clearly never should have borrowed, our leaders have been righteously wagging fingers at predatory lenders who allegedly enticed innocent borrowers, and the country, into a financial snake pit. While the mortgage industry clearly deserves a good share of the blame, unindicted co-conspirators abound. The ringleaders are still at-large and are, in fact, busy hatching a plan to dwarf the earlier mistakes. Contrary to the message bouncing off the marble walls of the Capitol, most borrowers in the inflating housing bubble clearly understood the terms of their loans. Most knew that they could not afford their mortgage payments once their teaser rates expired, but enthusiastically jumped into the debt pool anyway believing that guaranteed real estate appreciation, or a quick and profitable sale, would keep them afloat. Although both lenders and borrowers were acting in their own perceived self-interest, what can we say of our economic policymakers who are expected to protect the good of all? Their actions encouraged the whole sad circus. Were it not for the excessively low interest rates provided by the Fed, the lax lending standards and moral hazards supplied by Congress courtesy of Freddie, Fannie, and the FHA, and the many real estate subsidies built into the tax code, none of these predatory loans would have been possible. Had lenders exercised better judgment and had borrowers avoided overly burdensome debt loads, both parties would clearly be in better financial positions today. Instead, as borrowers were demanding the credit to fuel their dreams of instant real estate riches, lenders were being ordered to accommodate them. In past generations, homebuyers were required to save for down payments and postpone their purchases until they could actually afford conventional 30-year fixed mortgages. But in recent years, as home ownership became a matter of public policy, the government accused lenders of discrimination and urged lower standards and easier terms. With government guarantees in place, the mortgage industry was happy to both expand their revenues and promote a better society. But by denying credit, even if it requires borrowers to forgo something they clearly want, lenders not only provide a valuable service to borrowers, but to society. Given the mess in which we now find ourselves, due to the bad loans made during the real estate bubble, this lesson should have been well learned. Unfortunately it hasn’t, as the same dynamic is now playing out on a much larger scale. Faced with a prospect of downgrading its lifestyle, the U.S. government is instead borrowing trillions of dollars to artificially inflate our deflating bubble economy. The money is being used to both expand the size of government and finance additional consumer spending. Given our financial position, this is the exact opposite of what we should be doing. Our global creditors are now making the same mistakes made by subprime mortgage lenders. They are loaning us money that we will never be able to repay. In the process, they are enabling the largest expansion in the size of our government since the New Deal and crippling an economy already suffering from excess consumption. Although it may sound harsh, it would be far better for all involved if our foreign friends simply cut us off. Since their loans are merely fueling the growth of our government and artificially pumping up consumer spending, their savings will not only be lost but their sacrifice will severely exacerbate our problems as well. Just as homebuyers did earlier in this decade, the U.S. government will borrow as much money as the world is foolish enough to lend, and it will use those funds to smother the life out of our economy. At this point government is growing like a cancer, feeding mainly off the funds it borrows from abroad. In the process, it is placing a horrific debt burden on its people, committing them to either a lifetime of crippling interest payments or run-away inflation. There is nothing inherently wrong with foreign lending. If funding were directed toward private business to enable capital investments, the loans would not only benefit lenders, but they would benefit our nation as well. The funds would fortify our industrial base and provide the necessary foundation upon which to rebuild a viable economy. If foreigners were to cut us off, there would be some immediate pain, but tough love is exactly what we need right now. Forcing Americans to live within their means, particularly the U.S. government, will be just as beneficial to the long-term health of our economy as similar restraint would have been had it been exercised by mortgage lenders. It’s too bad so few of us seem capable of making this connection, or learning anything from the mistakes of the past – even when the ink in the history books has barely dried. Mr. Schiff is president of Euro Pacific Capital and author of "The Little Book of Bull Moves in Bear Markets" (Wiley, 2008).

Sure, the Treasury can always print more paper money, but that just makes our wallets fatter without increasing our net worth.

FRIDAY F U N

• How to create and attach a DTV converter box to your aluminum foil helmet
• Siftables are quite amazing
• The entire 25 years of Harper's Index is now avaialble online
• Ask Doctor Math any math question
• How many per second
• A history of miniature golf
• Free, legit audio/video software lets you convert, burn, play, edit, compose, etc. For example, I use one of them to convert videos for playing on my blackberry.
• A three-year-old critiques her father's drawings

The Pope's Hypocrisy

The speaker of the United States House of Representatives, Nancy Pelosi, went to visit the Pope... he proceded to lecture her on the morals of abortion and assisted suicide.

The Vatican says the pope lectured Pelosi about abortion and assisted suicide. Pelosi says they talked about poverty and global warming -- and she showed him pictures of her grandchildren. "His Holiness took the opportunity to speak of the requirements of the natural moral law and the Church's consistent teaching on the dignity of human life from conception to natural death," the Holy See said in a statement. Benedict emphasized that "all Catholics, and especially legislators, jurists and those responsible for the common good of society" should work to create "a just system of laws capable of protecting human life at all stages of its development."

Before he preaches about "natural moral law" he should have thought twice about reinstating neo-Nazi Bishop Richard Williamson. I know of no higher "natural moral law" than the lesson we learned from the Holocaust.

FRIDAY F U N

• Concerts on Demand from the BBC
• 9 FREE Screensavers That Actually Do Something Useful
• Look out, Coke and Pepsi, Cow Urine is on the way!
• Check out the great free software from Stardock.com; I'm installing "Fences" right now.
• The last moments of this woman's life caught on tape

Bits and Pieces for the Week of February 8 - 14

In case you are wondering, the Senate really does need 60 votes to pass the Stimulus Bill, but in this case not because of the threat of Republican filibustering. (Mike)

True to their anti-American stand, Republicans once again vote in unison against helping America. (Mike)

More octuplet outrage. Take a look at some of the government-subsidized expenses described near the end of the article. (Mike)

After 61 days of waiting, Labor Secretary nominee Hilda Solis finally gets past "The Senate Health, Education, Labor and Pensions Committee". Finally, if she is approved by the full Senate... a pro-Union, pro-safety, pro-green job, Labor Secretary. Could this be Obama's Frances Perkins? I hope for all of us she is half what Perkins was! (7 of 6)

Oh please, just shoot me now and get it over with. (Mike)

Obama's first, huge and devastating fuck-up. President Hillary Clinton would have never allowed this. (Mike) (2-10-09 Update here)

If you can possibly ignore the horrendously awful chatter and interruptions of the CNBC news hosts during the interview, these two economists have some very good advice. (Mike)

Disabled Veteran found not guilty of felony Marijauna rap. "...several jurors shook hands with an emotional Loren J. Swift after finding him not guilty of a marijuana charge that would have sent him to prison... During the trial, Swift testified he smoked marijuana to relieve physical pain, as well as to cope with post traumatic stress syndrome." I guess there is some justice in this world. This man would have lost his benefits and healthcare if found guilty. (7 of 6)

From Meteor Blades:

"....The last thing Republicans want to see is for the stimulus package to succeed. They want to slam the door hard on even the possibility that the gentle shift in outlook and policy generated by our current economic crisis could be the start of something more comprehensive and truly transformative. When they vote on the stimulus package, both today and after the conference committee does its work, many will be crossing their fingers in the fervid hope that it will fail, a disaster for most Americans, but, as they see things, a chance of redemption for the right-wing rule that has plagued us for so very long."

I'm not yet convinced that Obama's plan of inclusion of Republicans in legislation planning is worth the potential for inadequate government economic stimulus. In times of crisis our leaders should be acting quickly and decisively, not looking for buddies.

"On the Edge"

A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts. It’s as if the dismal economic failure of the last eight years never happened — yet Democrats have, incredibly, been on the defensive. Even if a major stimulus bill does pass the Senate, there’s a real risk that important parts of the original plan, especially aid to state and local governments, will have been emasculated. Somehow, Washington has lost any sense of what’s at stake — of the reality that we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again. It’s hard to exaggerate how much economic trouble we’re in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world. Consumers, their wealth decimated and their optimism shattered by collapsing home prices and a sliding stock market, have cut back their spending and sharply increased their saving — a good thing in the long run, but a huge blow to the economy right now. Developers of commercial real estate, watching rents fall and financing costs soar, are slashing their investment plans. Businesses are canceling plans to expand capacity, since they aren’t selling enough to use the capacity they have. And exports, which were one of the U.S. economy’s few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners. Meanwhile, our main line of defense against recessions — the Federal Reserve’s usual ability to support the economy by cutting interest rates — has already been overrun. The Fed has cut the rates it controls basically to zero, yet the economy is still in free fall. It’s no wonder, then, that most economic forecasts warn that in the absence of government action we’re headed for a deep, prolonged slump. Some private analysts predict double-digit unemployment. The Congressional Budget Office is slightly more sanguine, but its director, nonetheless, recently warned that “absent a change in fiscal policy ... the shortfall in the nation’s output relative to potential levels will be the largest — in duration and depth — since the Depression of the 1930s.” Worst of all is the possibility that the economy will, as it did in the ’30s, end up stuck in a prolonged deflationary trap. We’re already closer to outright deflation than at any point since the Great Depression. In particular, the private sector is experiencing widespread wage cuts for the first time since the 1930s, and there will be much more of that if the economy continues to weaken. As the great American economist Irving Fisher pointed out almost 80 years ago, deflation, once started, tends to feed on itself. As dollar incomes fall in the face of a depressed economy, the burden of debt becomes harder to bear, while the expectation of further price declines discourages investment spending. These effects of deflation depress the economy further, which leads to more deflation, and so on. And deflationary traps can go on for a long time. Japan experienced a “lost decade” of deflation and stagnation in the 1990s — and the only thing that let Japan escape from its trap was a global boom that boosted the nation’s exports. Who will rescue America from a similar trap now that the whole world is slumping at the same time? Would the Obama economic plan, if enacted, ensure that America won’t have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger. But the Obama plan would certainly improve our odds. And that’s why the efforts of Republicans to make the plan smaller and less effective — to turn it into little more than another round of Bush-style tax cuts — are so destructive. So what should Mr. Obama do? Count me among those who think that the president made a big mistake in his initial approach, that his attempts to transcend partisanship ended up empowering politicians who take their marching orders from Rush Limbaugh. What matters now, however, is what he does next. It’s time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation’s future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge. - Paul Krugman.

Time for a Spine

I am losing my patience with President Obama... quit kow-towing to everything GOP... they are not our friends... they will bury you if they get the chance... start going on the offensive. Please, get a spine!
From Theda Skocpol...

In response to what you are saying: Obama is, sadly, much to blame for giving the Republicans so much leverage. He defined the challenge as biparitsanship not saving the U.S. economy. Right now, he has only one chance to re-set this deteriorating debate: He needs to give a major speech on the economy, explain to Americans what is happening and what must be done. People will, as of now, still listen to him -- and what else is his political capital for? Speaking as a strong Obama supporter who put my energies and money into it, I am now very disillusioned with him. He spent the last two weeks empowering Republicans -- including negotiating with them to get more into Senate and his administration and giving them virtual veto-power over his agenda -- and also spending time on his personal cool-guy image (as in interview before the Super Bowl). The country is in danger and he ran for president to solve this crisis in a socially inclusionary way. He should be fighting on that front all the time with all his energies -- and he certainly should give a major speech to help educate the public and shape the agenda. That is the least he can and should do. Only that will bypass the media-conserative dynamic that is now in charge.

"Obama--Let Daschle Go"

It turns out that former Senator Tom Daschle waited nearly a month after being nominated to be Secretary of Health and Human Services before letting President Barack Obama know that he had not paid years of back taxes. The tax problem resonates at a time of deepening economic pain, as joblessness soars and Wall Street executives are rightfully chastised for using bailout money for multi-million dollar bonuses. But the serious issue here is Daschle's ties to health care firms. In a letter to the HHS ethics office on January 16th (cited in the Washington Post on Sunday) Daschle wrote that he wouldn't participate in any matter over the next year in which "a former client of mine is a party or represents a party." How does one define that? And won't this then mean that Daschle is unable to play a role in passing critical healthcare reform until 2010? After all, the same Washington Post story notes that the Health Industry Distributors Assn., which represents medical product distributors, wrote Daschle "last week" to express concerns about proposed Medicare changes and "reminded him of the $14,000 speech he delivered at its conference last year." Other special interests from which Daschle collected speaking fees ranging from $12,000 to $40,000 included the National Association of Boards of Pharmacy and America's Health Insurance Plans, which represents the for-profit health insurance industry. He also gave "policy advice" to United Health, a conglomerate that sells insurance, helps the government administer Medicaid, advises drug companies and physicians and dispenses prescriptions. In fact, when all is tallied up, the former Senator received more than $300,000 in income from health related companies that he might regulate. Experts who study this gray zone debate whether giving a speech, consulting, and otherwise taking money from special interests in return for services is different from lobbying. Nonetheless, Daschle's activities clearly pose the appearance of a conflict of interest. This was a campaign about change. Obama spoke eloquently of ending the way Washington does business and curbing the exploitation of public service for private gain. And he followed through with his early executive order attempting to slow the "revolving door" that has allowed so many former government officials to quickly enter the ranks of registered lobbyists. But slowing that revolving door is only the first step in ending the legalized corruption of the town's lobbying culture. Daschle's tax problems have, so far, attracted the lion's share of scrutiny. And he may well make it through the Senate---though one leading Democratic Senator told me Sunday that he may not vote for his former colleague's confirmation. But Daschle's potential conflicts of interest should persuade Obama to make this a "teachable moment" and find another public servant to tackle the critical task of healthcare reform. If Obama stated clearly that regulators in his administration should not have any financial ties to the industries they regulate, he'd revive the change brand he campaigned and won on. Sure, there are a slew of reforms that need to be put in place to dismantle the legalized corruption of lobbying in DC,, but Obama could begin by asking Daschle to step aside. My pick for his replacement: Howard Dean. - Katrina vanden Heuvel

Bits and Pieces for the Week of February 1 - 7

As the Super Bowl is about to take place today... I reflect on former Arizona Cardinal, Pat Tillman. Great story by Marcy Wheeler on the injustice the Tillman family has had to endure. I wish his family peace and possibly find the answers they deserve. Go Cardinals! (Hey, when in Rome... root for the home team... the Cardinals stadium is only about 8 miles from my house) (7 of 6)