Commentary: Change I No Longer Believe In

obama-change

I really dislike writing about national politics, as it is too polarizing and tends to induce meaningless partisan debate.  Sometimes though, you just cannot avoid it, and this week really is about the national calamity that faces this nation.

There was a time when I bought into the Obama hype about hope and change.  It did not take long for reality to sink back in.  But to be fair, the near collapse of the nation’s financial markets, along with a collapse of the real estate market and the near collapse of the US auto industry did not happen under Obama.

Still, history will judge Obama on how he reacted in a time when the nation was at a low point.  I am not going to tell others what to think of Obama, I think like anyone he is complex and a mixed bag.  But I know how I will judge him.

I will judge him on the debt ceiling crisis.  He had a choice: he could solve the problem of the debt ceiling as Harry Truman had and simply raise it.  Or he could bargain and eventually capitulate.  That is what he did.  What we now see, in this nation with teetering financial markets and gloomy forecasts, are the result of that capitulation.

The problem I face is that I do not exactly have anywhere good to go.  I am fundamentally opposed to the other side of the aisle.  I think most third parties are naïve at best and dangerous at worst.

The crisis was in every single way self-inflicted and I am reminded of Star Wars I, in that this was the phantom menace and I am not even sure who was pulling the strings behind the stage on this one. It may have been stupidity matched with sheer stupidity.

Because, while the President may go down as Capitulator in Chief, Republicans are just plain reckless.

I can see my conservative friends and readers saying, here we go, blame the Republicans.  The truth is, I blame both sides and I just laid out exactly where and how much blame Obama gets.  Now it’s the Republican’s turn to take their lumps.

I saw the comment from someone lamenting on how horrible it was trying to balance the budget.  I think I have established myself as a guy who would be pretty fiscally responsible.  I agree we need to move back toward the balanced budgets we had 20 years ago in the 1990s.

But I am not sure that in the depths of the worst recession since the great depression is really the time to be cutting spending in massive amounts.  And I am very much believing that you do not risk the full faith and credit of the United States of America to do this.

That is what happened.  It is a fact.  We will be paying for this, perhaps forever.

Last night the S&P (Standard & Poor’s) removed the United States government from its list of risk-free borrowers for the first time ever.  It’s not exactly clear what that means other than symbolically.

As the New York Times reports this morning, “It described the decision as a judgment about the nation’s leaders, writing that ‘the gulf between the political parties’ had reduced its confidence in the government’s ability to manage its finances.”

“The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge,” the company said in a statement.

What does that mean?  Well it could mean that investors would demand higher interest rates from the federal government which would raise costs of borrowing.  That’s not a good thing.

“What’s changed is the political gridlock,” said David Beers, S.& P.’s global head of sovereign ratings. “Even now, it’s an open question as to whether or when Congress and the administration can agree on fiscal measures that will stabilize the upward trajectory of the U.S. government debt burden.”

However, experts say that the fallout could be relatively modest and “because Treasury bonds have always been considered perfectly safe, many rules prohibiting institutions from investing in riskier securities are written as if there were no possibility that the credit rating of Treasuries would be less than stellar.”

This pales in comparison to what would have happened had there not be a raising of the debt ceiling.  The message has been sent.

As one columnist wrote, “I still think it was terribly wrong for the Republicans to use the threat of default to insist on massive spending cuts, though President Obama also deserves blame for playing his hand so poorly.”

He added, “Putting on my pragmatist hat again, I also think Congress could not have chosen a worse time to rein in spending. Yes, the country’s enormous debt – and the entitlement programs that are driving the federal deficit – needs to be brought under control.”

You have to consider how poor the economy is and then ask whether “choking off spending” will make matters worse.  That is what we have done.

Again, this is not just about blaming Republicans.  They had the wrong policy, but Obama mishandled the crisis, which he could have put a stop to immediately.

From the left, the criticism has been deafening.  Liberal economist Paul Krugman wrote that the Obama administration has insisted that the economy was on the mend.

“But,” he wrote on Thursday before this mess reached full-force, “the economy wasn’t on the mend.   Yes, officially the recession ended two years ago, and the economy did indeed pull out of a terrifying tailspin. But at no point has growth looked remotely adequate given the depth of the initial plunge.”

He attacks both sides.  First the Republicans: “Republicans won’t stop screaming about the deficit because they weren’t sincere in the first place: Their deficit hawkery was a club with which to beat their political opponents, nothing more – as became obvious whenever any rise in taxes on the rich was suggested. And they’re not going to give up that club.”

Then Obama: “But the policy disaster of the past two years wasn’t just the result of G.O.P. obstructionism, which wouldn’t have been so effective if the policy elite – including at least some senior figures in the Obama administration – hadn’t agreed that deficit reduction, not job creation, should be our main priority.”

He also blames the Fed: “Nor should we let Ben Bernanke and his colleagues off the hook: The Fed has by no means done all it could, partly because it was more concerned with hypothetical inflation than with real unemployment, partly because it let itself be intimidated by the Ron Paul types.”

The weirdest part, as pathetic as Obama looked in this crisis, he came out okay.  Writes the Washington Post Friday, “Through the wreckage of the last month emerges Obama. Battered and bruised, for sure. But still standing.”

Perhaps it is just good by comparison.  The Post reports, “Compared to Congress, Americans liked his handling of the debt-ceiling negotiations: 46 percent approve, 47 percent not so much. They trust him more to make the right decisions on the economy (47 percent) than congressional Republicans (33 percent). And they like job he’s doing, again relatively speaking. Obama’s approval rating rests at 48 percent.”

Meanwhile, Congress is at an all-time low, and considering they have been low for the 25 years I have watched politics, that is saying something.  “At 82 percent disapproval, Congress has the highest negative rating in the history of the poll. Boehner’s job performance got a thumbs down from 57 percent of those surveyed. His approval rating is just 30 percent. Folks were none-too-pleased by the debt-ceiling mess. They didn’t like how anybody behaved. Not Republicans (72 percent). Not Democrats (66 percent).”

Those of you defending the Tea Party, you are a vast minority in this country, “And the disapproving view of the Tea Party, which has members of Congress who profess to do its bidding, continues to grow. The Times poll from April put the approve-disapprove at 26 percent-29 percent. Today, it’s 20 percent-40 percent. Not only that, now 43 percent think the Tea Party has too much influence on the GOP. In April, it was just 27 percent.”

Despite it all, President Obama may survive and gain reelection not because he has been a good President, but because the Republicans have been worse.  They have focused on stupid things like the “birther” controversy.  And they were reckless and nearly plunged the country into economic disaster for no good reason.

Moreover, the cast of characters that are lining up to take on the President next year are, shall we say, “challenged.”  And that’s being kind.  When Michelle Bachman is taken as a serious candidate, you are not about to unseat a sitting president.

Unfortunately, I take no solace in these numbers.  I see a needless crisis and a void in leadership, and a Washington that has no idea what real people have to deal with on a daily basis.

They don’t feel our pain, they are simply playing a game.  As Simon and Garfunkel once said, “Anyway you look at this we lose.”  It is the Phantom Menace and the politicians have conspired to create a fake crisis because they want to distract us from focusing on the real one.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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79 Comments

  1. rusty49

    Before the debt debacle even got rolling S&P had already warned in April that they might downgrade our credit rating. The ratings agencies wanted a 4 trillion cut package and Congress didn’t get anywhere close to that because the Democrats refused. This lowering of our credit rating falls largely on Obama’s shoulders as he has escalated the borrowing and spending and dug this hole much deeper that our nation is in now. Under Obama’s watch we’ve now suffered the first downgrade of our debt in our country’s history. Sorry, liberals can try and deflect the blame, but this happened 3 years into his presidency. Obama the community organizer is incompetent and has never run anything in his life. He’s now out campaigning and still muttering the same old tired cliches but is weakness as a leader is apparent unless you’re still blindly drinking his koolaid.

  2. rusty49

    David, you’re the one that completely whiffed on this column. It’s your usual headline, “I’m fair and blame both sides”, then you almost completely go on the attack of the GOP. You’re only problem with Obama is that he should’ve just raised the debt ceiling and not capitulated to any cuts. Are you kidding? That’s why we’re in this mess.

  3. David M. Greenwald

    Yes I blamed both sides, this should have been stopped months ago, instead it was allowed to go to the brink, that’s on Obama. I never said was going to agree with the Republicans on the issue itself. If your primary concern is the deficit, then it should be carved into more equitably, but I think this is a very bad time to take money out of the economy.

  4. medwoman

    Rusty49

    Are you really asserting that our current fiscal state is a direct consequence of the Obama presidency? If so, I would suggest that you have misread not only David’s blog, but the entire history of the bilaterally poor decision making that preceded Obama’s election by many years.

  5. medwoman

    David,

    As I was reading your post this morning I recalled a management training session I attended in which one session centered around the strategy game “Win all you can”. This is a game of group collaboration vs competition in which you can work together as a group to earn points by always playng “Y”cards or you can sabotage the members of your own team and steal their points to increase your individual score by playing an “X” card. There are two major learnings from this game. The maximum number of points will be accrued by a group if no one ever plays an X card and the individuals scores, while all the same, will top those of any other group. The second learning is that you cannot be a “Y” card ( or collaborative player ) in an “X”card driven game without being taken advantage of. I think Obama’s major failing is that he is a “Y” card player in an “X”card game. I think he, rather naively believes, even after three years that he is dealing with other individuals who are ultimately reasonable. After three years of listening to Republican leadership who stated outright that their major goal was not jobs, or the deficit, or he overall well-being of our country, but rather the defeat of Obama, I am hard pressed to see how he could still believe this, but I suppose we all have our delusions . After all, I played my Y cards all the way to the end.

  6. davisite2

    Obama’s “capitulation” is strategic and reflects his basic political thinking.The Republican House Speaker was in serious danger of being rejected by the more radical Republican House elements and probably replaced with Cantor, giving the Tea Party control of the House and guaranteeing permanent political gridlock for the rest of Obama’s first term. Obama’s “capitulation”, touted by House Speaker Boehner as giving him “”95% of what he wanted(whether really true or not)” has silenced, for now, this threat to remove him as Speaker. Obama feels that he can work with Boehner if the House Speaker is not politically “on the ropes”.

  7. David M. Greenwald

    Davisite: As Medwoman points out in her cards game analogy, the dominant strategy now is not compromise, it’s isolating the Republicans, that’s how he wins. At such, Boehner’s deposed would have helped. I find the idea that Boehner is now a voice of moderation appalling.

  8. rusty49

    A question to all you fairminded? liberals:

    If a plan had passed that either led to a cut of 4 trillion dollars or eventually led to a balanced budget would our credit rating have been cut?

  9. davisite2

    Political analysis of the national scene is always problematic as it is short on information of what goes on behind closed doors. It generates a feeling of frustration that we, the voters, have extremely little control and input into the decisions that will effect our lives. Local politics is another story entirely, especially in Davis, where we CAN have a major say in the decisions that will impact our community. Proceeding with the surface water project NOW is such a decision.Let’s collect the signatures required to put this issue directly before the Davis voters.

  10. Dr. Wu

    [quote]I really dislike writing about national politics, as it is too polarizing and tends to induce meaningless partisan debate[/quote]

    Indeed–enough said, but since we are on the topic a couple of comments:

    1. I voted for Obama in the primaries and general election (voted McCain in previous primary so I am not a knee-jerk democrat). Some of my friends told me Hillary would have been a better President. Of course we will never know but I think they were right. We need a tough MF to deal with Congress; Obama isn’t.

    2. The S and P AA rating is a joke. Italy has a AA rating. Our debt is denominated in dollars which we control, so while we may print our way out of the problem we will not technically default. Italy probably will imho since the ECB will eventually get bailout fatigue. These are the same clowns who rated toxic mortgage debt AAA. Some of the smart money is betting that treasury yields may actually fall Monday (opposite of what ought to happen)–we’ll see.

  11. Alphonso

    To keep the discussion somewhat real here are some figures to keep in mind-

    Deficit when Bush entered offce $5.7 tril
    Deficit when Bush left office $10.4 tril – and of course when Obama started
    Current Deficit (under Obama) $14.3 tril

    So under Bush the deficit increased $4.7 tril
    and so far under Obama the deficit has increased another $3.9 tril

    What are some of the contributors toward the $8.6 tril (combined Bush and Obama cumulative deficits)

    Unfunded wars $1.5 tril
    Tax cuts $2.2 tril
    Stimulus packages $1.6 tril (Bush and Obama each had stimulus packages of almost equal size)
    Increased debt service $1.0 tril (interest costs)
    Down Revenue (due to recession) and other spending $2.3 tril (under both Administrations)

    The problem is the national debt is rising at an increasing rate, the economy is still sluggish and people are saving instead of spending.

    If you look at this picture it is obvious both parties contributed to the problem and both parties need to fix the problem.

  12. Dr. Wu

    [quote]The problem is the national debt is rising at an increasing rate, the economy is still sluggish and people are saving instead of spending.

    If you look at this picture it is obvious both parties contributed to the problem and both parties need to fix the problem. [/quote]

    Alphonso: Well said.

    I’d also add that many people expect something for nothing. Tax revenue as a percentage of gdp is only 15%–as low as it has been in postwar era, while govt spending is at 25%. that is a 10% gap. The only way to meaningfully change this is to cut entitlements (in particular Medicare) and probably raise taxes.

    But during the big kabuki that has become our Congress, citizens were writing, calling and emailing their congresspeople 99 to one–don’t touch Medicare. We have met the enemy and he is us (pardon the grammar).

  13. David M. Greenwald

    “If a plan had passed that either led to a cut of 4 trillion dollars or eventually led to a balanced budget would our credit rating have been cut?”

    We could also argue whether if the situation had not been pressed to the brink whether we would be here. To me you are ignoring a lot. Republicans wants to get there without any sort of notion of compromise.

    I happen to believe that the policy is exceedingly stupid. Republicans are against taxes because they argue it takes money out of the economy. Most of the time it merely transfers money within the economy. But it’s also not clear to me why Republicans believe that taxes are worse than spending cuts. In essence, you are taking money out of the economy. In this case, you are taking money out of the economy and not sending it anywhere. So you are advocating contracting the economy by $4 trillion during a time when we may be growing at a rate of .5 to 1% – are you really trying to create a depression? Because that is what it appears to be doing.

  14. Don Shor

    I’m going to say this early in the discussion so people aren’t shocked when their posts get pulled:
    Do NOT attack other blog participants directly. Stick to the topic.

  15. E Roberts Musser

    [quote]He added, “Putting on my pragmatist hat again, I also think Congress could not have chosen a worse time to rein in spending. Yes, the country’s enormous debt – and the entitlement programs that are driving the federal deficit – needs to be brought under control.”[/quote]

    You cannot have it both ways – “could not have chose a worse time to rein in spending; the federal deficit needs to be brought under control”…

    [quote]“But,” he wrote on Thursday before this mess reached full-force, “the economy wasn’t on the mend. Yes, officially the recession ended two years ago, and the economy did indeed pull out of a terrifying tailspin. But at no point has growth looked remotely adequate given the depth of the initial plunge.”[/quote]

    The media spin that has been going on has been disgraceful. There is no way the recession was ever over, no matter what the media said, or the economic indicators (which are largely a joke), etc. I watched what was going on in CA, knew it must have been going on in every other state – the horrible budget cycles with horrendous drops in tax revenue. Anyone w an ounce of brain knew the recession was not over. But the political spinmeisters for the liberals, who so desperately want Obama re-elected, refused to stop their obfuscation, deception. Paul Krugman was one of the worst in this regard…

    [quote]The weirdest part, as pathetic as Obama looked in this crisis, he came out okay. Writes the Washington Post Friday, “Through the wreckage of the last month emerges Obama. Battered and bruised, for sure. But still standing.”

    Perhaps it is just good by comparison. The Post reports, “Compared to Congress, Americans liked his handling of the debt-ceiling negotiations: 46 percent approve, 47 percent not so much. [/quote]

    Sure Obama came out okay, just like the recession was over 2 years ago. LOL I don’t believe these statistics for one minute…

    [quote]Those of you defending the Tea Party, you are a vast minority in this country, “And the disapproving view of the Tea Party, which has members of Congress who profess to do its bidding, continues to grow. The Times poll from April put the approve-disapprove at 26 percent-29 percent. Today, it’s 20 percent-40 percent. Not only that, now 43 percent think the Tea Party has too much influence on the GOP. In April, it was just 27 percent.”[/quote]

    Had it not been for the Tea Party (and I am no lover of the Tea Party for a number of reasons), we would have had serious consideration of another round of stimulus money going out Congress’ door… that seemed to be the Democrats solution to the jobs problem – I could not believe it, after the abysmal showing of the last round of stimulus money. The one thing the Tea Partiers did that was positive is insist that we start addressing fiscal responsibility – something both sides of the aisle have not really been willing to tackle in a serious way.

    As far as taxing the wealthy, I would have let the Democrats have that bone, if only to prove it would not make a dent in the national deficit. The bigger issue is why companies like GE are paying no tax and getting tax credits…

    [quote]Despite it all, President Obama may survive and gain reelection not because he has been a good President, but because the Republicans have been worse. They have focused on stupid things like the “birther” controversy. And they were reckless and nearly plunged the country into economic disaster for no good reason.[/quote]

    And you are not blaming Republicans? LOL The fact of the matter is Obama never would stick his neck out and put a plan on the table. He wanted others to do his dirty work for him, so that he could stay above the fray and point fingers elsewhere. Obama loves to play President, he just doesn’t want to BE PRESIDENT – w all its attendant risks and responsibilities. He did the same thing with ObamaCare – no plan himself, just left it up to Congress to somehow work it out. Same thing w banking regulation. And now his lack of leadership has come home to roost. Parts of the Dodd-Frank regs have been declared unconstitutional. Parts of ObamaCare are trickling out that are truly frightening… particularly the costs.

    Obama has never understood that by over-regulating business and the health care industry, he has frightened business (or given them the excuse they need) to horde money rather than create jobs. Meanwhile he has not done a single thing to stop robo-signing; robo-courts or other disgraceful myriad evil practices of the banking industry and Wall Street. And healthcare is very unlikely to improve under Obamacare, but be much more expensive, as favorite businesses with union ties are being allowed to be exempted from Obamacare.

    [quote]Unfortunately, I take no solace in these numbers. I see a needless crisis and a void in leadership, and a Washington that has no idea what real people have to deal with on a daily basis.[/quote]

  16. E Roberts Musser

    What has happened is the moderates have left Congress. What we are left with is polarized opposites who act much like children in a sandbox throwing things at each other, and a feckless leader who hasn’t a clue what to do. In part, I blame the media, for glorifying 60 second sound bites of the extremists, while largely ignoring the moderates. Most of the country is in the middle, not on the extreme left or right.

  17. E Roberts Musser

    [quote]The problem is the national debt is rising at an increasing rate, the economy is still sluggish and people are saving instead of spending.

    If you look at this picture it is obvious both parties contributed to the problem and both parties need to fix the problem.[/quote]

    AMEN! But you also have to look at what underlies the problem. Obama keeps villifying business, as he allows companies like GE to get off scott free with paying no taxes. I don’t begin to understand why GE is paying no taxes and actually getting tax credit. Something is very wrong w this picture. If someone can explain this to me, please do…

    Another problem this country is having w jobs is the outsourcing problem. Businesses are in front of Congress as we speak, begging to be allowed to hire qualifies employees FROM OTHER COUNTRIES, BC THERE ARE NOT ENOUGH QUALIFIED EMPLOYEES HERE. Microsoft is one of the companies making this pitch. We have a sea of unemployed, and yet we are going to go overseas to hire? We are outsourcing basic services like computer and telephone assistance to India and other third world countries. This is a dangerous precedence – this is very much a part of why there are no jobs here – they are being outsourced…

  18. 91 Octane

    A few points:

    1. I agree with ERM, the recession hardly ended when obama took office. Krugman’s take on this is horse do do.

    2. Let’s not forget all the stimulus that was injected into the economy to turn it around, which clearly has not done so. It seems spending increases are not exactly the answer.

    3. I think spending cuts are problematic, but so is debt ceiling raising. What are we prepared to do? Borrow and spend forever?

    4. I take issue with the statements “now its the republicans turn to take their share of the blame” as if they haven’t been blamed numerous times already. George W. Bush is still often a target, and its almost three years since he has been out of office.

  19. Rifkin

    [i]”But I am not sure that in the depths of the worst recession since the great depression is really the time to be cutting spending in massive amounts.”[/i]

    We have not yet had any massive cuts. According to the plan agreed to last week, we will not have any massive cuts in the next 10 years. The plan calls for $900 billion in reductions in planned increases over a decade. In other words, our borrowing is going to continue apace.

    The problem in our economy is not a lack of federal spending. The problem in our economy is a massive build-up of housing inventory, one which keeps getting worse as banks try to sell off foreclosed properties.

    The problem in our federal budget for the long-term is threefold:

    1. We spend too much on healthcare for the elderly (Medicare) and the poor (Medicaid);

    2. We spend too much on weapons systems and defense personnel; and

    3. Social Security. Even though it is true that the taxes collected to pay for SS have exceeded the amounts spent up to now, we are already running a pretty large SS deficit this year ($45 billion) and it is going to grow exponentially for the next 20 years.

    I don’t know all the answers to these 3 problems, but I think part of the overall solution should include:

    1. Reducing the amount we spend on old people for medical care in the last year of their lives. Keeping people breathing, as opposed to living well, is a huge part of the cost of Medicare;

    2. Get out of Libya, Iraq and Afghanistan as soon as possible, and then cut the defense appropriations in half and then a few years later in half again.

    3. Gradually ratchet up the age for which a person qualifies for Social Secruity. As the elderly form a larger percentage of our national population and as they live longer, that starting age needs to slowly rise until we meet a point of equilibrium.

  20. Rifkin

    [i]”Reducing the amount we spend on old people for medical care in the last year of their lives. Keeping people breathing, as opposed to living well, is a huge part of the cost of Medicare;”[/i]

    For anyone interested in my claim, I found this number: 27% of the Medicare budget goes to patients for the last year of their lives. The source is the USA Today in 2006 ([url]http://www.usatoday.com/money/industries/health/2006-10-18-end-of-life-costs_x.htm[/url]): [quote]“There’s a tremendous opportunity for both improving quality and enhancing efficiency in the care of people with very serious illnesses at the end of life,” says geriatrician Joanne Lynn, who spent much of her career at think tank RAND studying end-of-life care.

    She says substantial progress could be made in slowing rising costs if the U.S. health system could find better ways to reduce hospitalizations for people at the end of life, such as providing more in-home services.

    [b]The Estimates show that about 27% of Medicare’s annual $327 billion budget goes to care for patients in their final year of life.[/b] [/quote] In my personal experience with one of my aunt’s dying from cancer, I have a stark memory of how much money her doctor’s were trying to waste in her final days. Rose was two or three days from death and her oncologist in Palo Alto ordered an MRI, which at the time cost more than $1,000. Fortunately, her oldest son was a medical doctor himself and knew enough to say no, to say the MRI was medically unnecessary. I later tried to figure out why that doctor ordered an MRI for a patient so close to death. I don’t know, but my guess (having spoken with my cousin who made the decision to not have it) is that the doctor was doing what so many doctors do: he was making a financial decision, not a medical decision. Either he believed that not ordering an MRI would put him at risk for a malpractice lawsuit or he made money from the radiologists when he ordered MRIs and other such tests.

  21. medwoman

    Rich

    I had to respond right away since we have the unique situation where I agree with you, almost completely. On all counts ! With a couple of caveats.

    1) Amount of health care spent upon keeping the extremely elderly and terminally ill alive is a futile and exorbitant cost. I have a few suggestions for lowering these costs : 1) Invest in prevention. Since the bulk of our medical costs is devoted to the sequelae of a relatively few,and largely preventable conditions ( cardiovascular disease, diabetes, cancer and chronic respiratory conditions) prevention would save us trendous amounts of money. 2) Provide care outside of the Emergency room and keep patients out of the hospital. again, a little bit of money spent on early intervention would save us huge and unnecessary expenditures in the long run especially by preventing hospital acquired infections and other complications of over treatment. 3) Seriously take on the issue of tort reform. Defensive medicine is still very much with us.
    I am relatively protected because of the group within which I work. But, this is a huge source of unnecessary testing and “just in case” treatments in the fee for service world. 4) Provide universal palliative and hospice care so that the elderly and terminally I’ll never have to make distasteful and expensive decisions out of fear of or actual suffering.

    2) Complete agreement on this one

    3) Agree with the goal overall, but am not so sure about the unintended consequences. A limited example from my field.
    As recently as four to five years ago we had a nursing shortage which was so acute and severe that we, and most hospitals, were casting around desperately for nurses. We were bringing in fliers for short term stints for however long they would stay, recruiting new nursing grads from the Phillipines and other foreign nursing schools, and, most pertinent to this discussion were encouraging basically anyone educable and with so much as a glimmering of interest to go in to nursing. Move forward 4 years and one major recession and what has happened is that many nurses who were planning to retire didn’t , others who had gone to part time increased their hours. This has happened in nursing in California to the degree that one recent applicant, known to me personally applied for one of 3 opening along with 2,000 other completely qualified applicants. I don’t know if these kind of numbers would be representative of the wider economy, but they are certainly sobering.

  22. E Roberts Musser

    [quote]1. We spend too much on healthcare for the elderly (Medicare) and the poor (Medicaid);

    2. We spend too much on weapons systems and defense personnel; and

    3. Social Security. Even though it is true that the taxes collected to pay for SS have exceeded the amounts spent up to now, we are already running a pretty large SS deficit this year ($45 billion) and it is going to grow exponentially for the next 20 years. [/quote]

    1. One of the problems w healthcare costs is all the unnecessary tests that are done…

    2. Ironically the two things that drive our economy are DEFENSE SPENDING (DEVELOPING AND BUILDING WEAPONS) and CHRISTMAS. Don’t believe it? 50% of most retail companies’ sales profits are from Christmas. Defense spending is much like the oil industry – it provides jobs, jobs, jobs, and not just for the defense industry itself, but all the offshoots like the restaurants that surround the R&D companies, etc.

    3. Social Security is NOT AN ENTITLEMENT PROGRAM, IT WAS EARNED. But unfortunately previous administrations (e.g. Clinton) have raided SS using it as a slush fund, put IOUs in the place of the funding they took, and never paid the funds back.

  23. rusty49

    But it’s also not clear to me why Republicans believe that taxes are worse than spending cuts. In essence, you are taking money out of the economy. In this case, you are taking money out of the economy and not sending it anywhere.

    David, that borrowed money has to be paid back with interest. Where do you think the money comes from to pay the debt back. OUT OF THE ECONOMY

  24. Alphonso

    “2. Let’s not forget all the stimulus that was injected into the economy to turn it around, which clearly has not done so. It seems spending increases are not exactly the answer. “

    That conclusion is over used. The stimulus did not do everything that was hoped for, but it kept us from falling off a cliff. Companies like GM and CITI would have gone under and the housing market would have been worse without stimulus. Remember both Presidents spent about $800 bil each on their stimulus packages. Also more money escaped as a result of the tax cuts than the stimulus programs and that also was intended to stimulate the economy and increase opportunities for more jobs. Have tax cuts worked any better than the stimulus plans?

  25. JustSaying

    Good summary of the current situation, David. With the addition of Rich’s (and others’) excellent research, we get a good handle on how we got here and why.

    No need to be concerned about the polarizing debate associated with national politics–politics is partisan. And your local topics, including almost every Judicial Watch story, expose an even wider philosophical/partisan gap amongst readers.

    I would, however, fire your headline writer. She almost never gets you right. She misunderstands the points you’re making in an article, sensationalizes beyond believability and misleads readers into a story that’s nothing like what she’s promised. She should be all out of second chances.

  26. medwoman

    Elaine ,

    “You cannot have it both ways- ‘could not have chosen a worse time to rein in spending : the federal deficit needs to be brought under control”
    this is not a matter of having it both ways. it is a matter of recognizing that there is another option which many of us think would be a necessary part of a balanced approach which would be to increase taxes or at least close loopholes. Would this solve the problem?
    No, not alone. But then no one is proposing “tax and spend “alone although that is what many of the Tea Party persuasion would like to claim.

    “As for taxing the wealthy, I would let the Democrats have that bone, if only to prove that it would not make a dent in the national deficit”
    I would like to quote you on this one. “Every penny counts”

    “Obama would never stick his neck out” This has been a major disappointment for me on many fronts. I wanted a single party payer option, the immediate end to the discriminatory anti gay policy of the military, a prompt start on the winding down of all foreign wars, a commitment to a comprehensive immigration policy …… So many disappointments ! However, I do not pretend to have inside knowledge of why he does what he does and I doubt that you do either. As I posted earlier, I believe it is because he genuinely believes in amoretti collaborative form of government with a less directive executive. I believe this based on his words prior to his election, and his actions since. I am aware that this is not what you believe, but I doubt that either of us have a direct “in” to his thought processes.

  27. Rifkin

    [i]”Companies like GM and CITI would have gone under and the housing market would have been worse without stimulus.”[/i]

    You are confusing the TARP with the Obama stimulus package in this example.

    [i]” previous administrations (e.g. Clinton) have raided SS using it as a slush fund”[/i]

    I’m interested to hear an actual case where this occurred.

    The unfortunate fact is that the outlays for Social Security are now higher than the amounts paid in. The deficit this year is $45 billion. That deficit is going to grow and grow.

    So we have a few choices: we can just print money and make it worthless; we can slowly ratchet up the age of eligibility; we can lower the benefits; and we can take some or all of it away from wealthier old people.

    My own view is that, as the elderly are a larger share of our total population, moving the age of eligibility up a few years (toward 70) is the most reasonable change. (For equity purposes, we could have a lower number for those who worked most of their lives in jobs like farm labor, mining, ditch digging and so on, which they cannot do past age 65 and lack skills to change over to softer jobs.)

    I am also not against the idea of making Social Security more of a welfare program than it already is. For those of you who don’t understand how the payments work, the return on investment for Social Security recipients is almost double for those on the low end than it now is for those on the high end. In other words, the people who pay the most in get back at age 65* a return which is far lower as a percentage of the amount paid in than those who paid in the least, even though in absolute dollars the higher end payees get checks which are higher. That makes it a wealth transfer program to some extent.

    I am all for a wealth transfer program. That helps us get rid of poverty among the elderly. It seems to me we could make this transter in the future even greater. One way to do that would be something like a wealth test: disqualifying all seniors with a total wealth of $2 million or more from receiving any Social Security payments. The percentage of seniors with $2 million or more is probably under 20 percent. That leaves more money for the 80% who are poorer.

    I realize, of course, that conservative Republicans are never going to accept a wealth test. I am simply advocating it because it is a way to keep Social Security afloat for those who need the money the most.

  28. Rifkin

    [i]”the people who pay the most in get back at age 65* a return which is far lower as a percentage of the amount paid”[/i]

    *There is a mitigating factor in this. How much of a difference in makes collectively, I do not know. The mitigating factor is that wealthier people live longer.

    If you divide our population into five quintiles, the bottom (poorest) quintile lives the shortest, the second from the bottom lives a bit longer, the middle longer than the lower two and so on.

    As such, because those in the highest income quintile live the longest, it is possible that they end up getting as much or more of a return on the money they pay into Social Security than those whose percentage return is higher.

    To see this on a small scale you can take two people: the first never made much money and gets a Social Security check which represents for him a 6% ROI beginning at age 65. Say he dies at 72; the second person made a lot more money (and for that paid in more to SS and gets a check worth an ROI of 3%. Say the second person lives to age 95.

    Even though the second person’s checks would have been higher at the start if SS were not a wealth transfer program, she certainly will get a much better ultimate return on Social Security just by living that much longer.

  29. Frankly

    [i]”Tax revenue as a percentage of gdp is only 15%”[/i]

    Dr. You are not factoring state and local taxes.

    Here is a graph that shows stable fed revenue from taxes as a percent of GDP:
    [img]http://www.cscdc.org/miscjeff/TaxRevPerGDP.jpg[/img]

    Now here is a graph that on the surface would seem to support government raising taxes on business.
    [img]http://www.cscdc.org/miscjeff/TaxRevPerGDP2.jpg[/img]

    There are two main problems with the Democrat demand that we raise taxes on business.

    1. Besides prison guards, firefighters and UC management, the wealthy in this county are business owners and they have paid a larger and larger share of the total tax burden. The wealthiest 10% pay about 70% of the total tax bill.

    2. We are deep into global competition where businesses have more choice where to locate… and they will locate in low-tax countries on a total cost-benefit determination. The US, despite tax loopholes, is still has some of the highest business taxes in the world. The most glaring of these is a tax code that punishes repatriated profits of the multi-nationals. Increase taxes to business and we will lose more jobs.

    This last graph says it all:
    [img]http://www.cscdc.org/miscjeff/FedExpPerGDP.jpg[/img]

    Link to article: [url]http://www.deptofnumbers.com/blog/2010/08/tax-revenue-as-a-fraction-of-gdp/[/url]

    I love looking at the Forbes Tax Misery Index because it tells the complete tax story relative to other countries:
    [img]http://www.cscdc.org/miscjeff/TaxMisery.jpg[/img]

    Note the total individual and corporate tax rates. It is actually sales/VAT tax and social security taxes that are the big difference between the higher tax countries on the top of the chart. In it very interesting to me that these are not progressive types of taxes that US liberals seem to love… everyone pays higher prices for products in these countries, and although employers pay higher social security taxes (which also leads to higher prices for products), so do the employees.

    Why don’t Democrats focus on higher consumer taxes? That would see to help medwoman since fewer people would purchase $9000 jackets.

  30. Superfluous Man

    DMG,

    “The problem I face is that I do not exactly have anywhere good to go. I am fundamentally opposed to the other side of the aisle. I think most third parties are naïve at best and dangerous at worst.”

    A downfall to the plurality voting/winner takes all system?

  31. Frankly

    Just returning from a visit to Home Depot where I gave of my sales tax money to Woodland because Davis stores lack the products I needed…

    Thinking more about the federal budget mess…

    I think I would be for adding a national sales tax and/or VAT tax and increasing social security taxes for a trade of lowering corporate taxes, eliminating the business expatriot tax, and lowering the individual income tax rate.

    Here is my thinking on this…

    1. Since social spending to the masses is what is driving up federal spending, we should increase the taxes paid by the masses. The lack of association with costs and value are unhealthy and corrupt the democratic process with a tyranny of the majority. Every decision stakeholder needs some skin in the game. I know liberal Dems hate this idea, but they are wrong.

    2. By lowering the corporate and individual tax rates we would attract more capital investment, businesses and wealthy individuals to locate in the US… thus increasing employment and tax revenue to offset the tax revenue decrease resulting from increases in sales and social security taxes.

    3. Higher sale tax will cause the US to stop consuming so much and relying on this domestic consumption as part of government’s tired and old economic policies, and hopefully start exporting more to foreign countries as more business and capital locate here.

    While we are at it, we should implement a flat tax to replace the asinine IRS tax code we have today. It is a mess… it also contributes to business uncertainty because, frankly, few business managers can do accurate pro-forma assessments of their tax expense for business investment. The same is true for individuals… many tend to claim not enough exceptions, or have too little taken out of their paychecks. In either case their spending habits are impacted by a tax code that is so complex even the best-trained tax accountant has trouble estimating her tax liability.

    Rich, please, quickly shoot holes in this because I feel I need a shower supporting any increase in taxation.

  32. Don Shor

    [i]because Davis stores lack the products I needed…[/i]
    Like what? I am always curious about this.

    I would be fine with all taxes on investments being eliminated as long as the personal income tax is increased to make it revenue-neutral. Tax income, not investments, on a progressive structure.
    It is interesting how VAT’s are used in Europe. I guess the trade-off of having nearly universal guaranteed health care is acceptable. Every European with whom I have discussed this (caveat: not many) has been amazed that our basic health care is not covered.

    I got the president I expected with Obama, and will not hesitate to vote for him again.

  33. medwoman

    Don,

    I also got the president I expected and will vote for him again. This does not mean that I will not continue to hope for much, much more.

    Jeff,

    I honestly do not know why Democrats don’t focus on consumer taxes. This has always seemed more equitable and less punitive to me.
    If we were to set the bar high enough that we were only taxing luxury items (defined loosely as those which are nonessential ) we would not be affecting Jeff’s undying belief in the free market and could still satisfy my desire to see those who contribute to society not penalized if they haven’t clawed ( or earned, or inherited ) their way to the top.

    Does anyone have insight into why this isn’t more of a focus?

  34. Rifkin

    [i]”I think I would be for adding a national sales tax and/or VAT tax and increasing social security taxes for a trade of lowering corporate taxes, eliminating the business expatriot tax, and lowering the individual income tax rate.”[/i]

    To my way of thinking, the income tax is the fairest tax there is. However, I would change it in several respects:

    1. I would make it a flat rate tax, something like 25%, regardless of income;
    2. I would give every adult a personal exemption of something like $25,000 a year, but would give no exemptions for children. So a single person would pay income tax on every dollar over $25,000; and a couple filing jointly would pay on every dollar over $50,000;
    3. I would eliminate all income tax deductions and credits, including mortgage and charity deductions and “tax-free” muni-bond credits;
    4. I would treat all income** the same as earned income, so that there would be no distinction between income from royalties, rents, welfare payments, medical plans, car allowances, dividends, interest, short or long-term capital gains and earned income.
    5. I would get rid of all state income taxes, but have the IRS redirect some share (say 10%) of the income tax collected to the states, based exactly on how much each state’s residents paid in income tax. This would get rid of the problem where high-income earners are better off establishing tax residencies in states with no state income tax;
    6. I would eliminate all corporate income taxes for domestic corporations. When they make profits, they could reinvest them in the U.S. tax free. Otherwise, the owners of the company who are paid the profits in dividends would pay income tax on those profits, but they would never be taxed twice;
    7. For global companies operating in the United States, they would have to pay the same flat-rate income tax on any profits which they invest or expend outside of the United States or repatriate to another country as dividends.

  35. Rifkin

    My guess–I grant it is really just a guess–is that my system would collect more in income tax than our current system collects. I think it would also be beneficial in these respects:

    1. It would be progressive without having a progressive rate structure, because the lowest income earners would pay no tax. If we would get rid of all minimum wage laws, I would further favor giving a more generous Earned Income Tax Credit (which is a welfare for work program that began in the Reagan Administration) to those who are of working age but make too little to live above the poverty line;
    2. As a flat tax without deductions or credits, it would be far simpler and hence far less expensive to comply with the tax laws and far less expensive to enforce. That said, business income is always going to be complicated* and my changes would not change that;
    3. It is fair to the extent that, in my mind, the government should never really be grabbing more than 25% of what a person makes;
    4. While most people make most of their money through their jobs and are paid a taxable salary, a lot of income “earned” by the richest Americans is taxed either at a very low rate or, due to exemptions and credits, not taxed at all. Also, because all income would be taxed, including the value of a medical plan, it would help divorce us from the problematic system that medical care is tied to one’s job;
    5. Because the flat rate is still reasonably low and because domestic corporations would pay no income tax, it would not discourage investment, despite the fact that capital gains would be taxed at the same rate as income.

    *Think, for example of a sole proprietorship which owns its own building. Obviously expenses like power and water and property taxes and labor costs are justifiable expenses to the business. Those have to been written off the gross income. But exactly how machinery, office equipment and the building itself are depreciated is not always cut and dried. And for some companies, entertainment is a legitimate expense; for others it is not. So even in my “simple” system, we would still have to have an IRS and still have to have a lot of rules which govern accounting for businesses.

    **A tough question is how to treat gifts. My instinct is to say they should never be taxed. But then you run into the problem of people who really are doing work for someone else but claim the money they get is a gift. I am not sure how to crack that nut.

  36. Rifkin

    [i]”I would further favor giving a more generous Earned Income Tax Credit (which is a welfare for work program that began in the Reagan Administration) to those who are of working age but make too little to live above the poverty line.”[/i]

    I realize that I said I would get rid of all tax credits in one breath, and then in the next advocate for a better EITC.

    Perhaps I am just being inconsistent. However, the EITC, which Milton Friedman, when he invented it, is really a negative income tax, not a true tax credit.

    Why is that? Well, tax credits count against incometax owed, the EITC does not. We have, for example, some tax credits designed to encourage oil exploration in the United States. So if you take someone who made $250,000 in earned income and owed say $75,000 in income tax on that, he could lower his income tax bill to say $30,000 if he invested in an oil exploration porject which came up dry. That is, the $45,000 credit counts against taxes owed.

    By contrast, people who claim the EITC generally would owe little or no income tax without it. So a person whose income tax bill is say $500 for the year can get a “rebate” of $10,000 or so with the EITC. (I am using that $10,000 figure for example purposes. I don’t know the actual number.)

    A lot of lefty liberals–most of whom don’t know too much about microeconomics–fear the idea of getting rid of the minimum wage. They think it boosts the income of the poor. It does that, for some poor, but it harms the interests of many others.

    Say someone who has very few work skills wants to work for a business in Davis like the Redwood Barn ([url]http://redwoodbarn.com/[/url]). But that worker only generates $4 an hour to the business. Since the minimum wage is $8 per hour, the Redwood Barn cannot afford to hire that person (unless his skills, once he has some time on the job, improve dramatically).

    But if we get rid of the minimum wage laws and let him work for the Redwood Barn for a market rate–which in his case would be somewhere around $4 an hour or maybe a bit less, depending on the availability of labor at the time–he could qualify for a negative income tax of say $4 per hour, so that his income would be roughly what the minimum wage now is. The worker is clearly better off, because he was not employable before. And the business is better off, because it benefits from employing him.

    Obviously, like any welfare system, it will be paid for by everyone else who makes enough money to pay income tax, where their money is transferred to the poor guy.

  37. Mr.Toad

    What about a guy who generates $16/hour but only earns $4? In this economy you would foster a race to the bottom with the rich getting richer and the poor getting poorer. Oh that’s already happening.

  38. Mr.Toad

    ” I agree we need to move back toward the balanced budgets we had 20 years ago in the 1990s.”

    Although Bush 41 repudiated his “No new taxes” pledge in 1990, during a budget showdown with the democratic congress, when the dems threatened to shut down the government unless Bush capitulated, it was not until 2000 that there was a budget surplus.

    I remember seeing an interview in 2001 with David Blitzer, who, at the time, was the chief economist at Standard and Poors. He explained that the US had about 10 years to get its financial house in order until the bills started coming due for the old age care of the baby boomers. We did not listen to him and instead instituted the Bush tax cuts, added the Medicare prescription benefit and fought two wars. Now we have one political party who is completely opposed to raising taxes and oddly its the same one that claims some sort of conservative superiority after a decade of the most erosive profligate policy this country has ever experienced. As an example, never before has this country gone to war without raising taxes.

    Anyway it should be no surprise that after warning us for 10 years that S&P finally pulled the plug on the USA AAA credit rating. Those of you that think the downgrade is the result of the latest spectacle of debt ceiling politics haven’t been paying attention. If you ask me the absolute refusal by Republicans to raise taxes under any circumstances is at the root of the problem that S&P sees undermining our ability to service our debt without totally debasing our currency.

    Social Security is not that big a problem, minor changes can keep it solvent, medicare is more problematic but the congress and the president will work on it and fix it over time by reducing benefits and raising deductions. Defense will be cut because the empire is broke. The one piece that is missing is increasing revenue. My guess is that the next presidential term will see tax increases not matter what you are told in the election.

  39. Rifkin

    [i]”What about a guy who generates $16/hour but only earns $4?”[/i]

    That can happen in the very short run, but not after that (unless his skills are limited to one employer). If a person is generating $16 an hour and is making $4 per hour, another employer would hire him for some amount close to $16 an hour. The new employer would be better off doing so, as any amount less than $16 per hour is money in the bank for the second employer.

    Also, the primary employer, who offered just $4 per hour would be harming his business, because in a short amount of time his employees would leave, costing him money in retraining, rehiring and so on.

    Back in my early 20s, I experienced a real-world example of this in the commercial fishing business, where I worked as a deck-hand on a salmon Seiner. Some captains tried to screw over their workers by offering very low shares, because there was an excess of kids who wanted to work as deck-hands. Others, like my boss, gave a full share to anyone who earned it.

    All of the best deck-hands who had jobs on bad boats quickly quit and moved to boats where they got paid what they were worth. Mediocre deck-hands (or total wash-outs) would try to stay on the bad boats. But having them around cost the captains too much money and caused other problems. Before long the most miserly captains would realize that being cheap hurt their bottom lines.

    Again, new captains would often try this scam. But it always failed, because everyone could figure out who the good workers were and they would get hired on by better boats.

    [img]http://www.alaska-in-pictures.com/data/homepage/5/salmon-fishing-juneau_3535.jpg[/img]

  40. Rifkin

    One thing I never hear many self-styled “conservative” Republicans complain about is the massive waste in defense contracting. The LA Times has a very good article ([url]http://www.latimes.com/business/la-fi-fighter-jets-grounded-20110807,0,4799249,full.story[/url]) today about the billions we have thrown away on a fighter plane, the F-22 Raptor, that we never needed even when it was first designed: [quote]“For all that gigantic cost, you have a system you can’t even use,” said Winslow T. Wheeler, a defense budget specialist and frequent Pentagon critic at the Center for Defense Information. “It’s a fundamental explanation on how the country has gotten itself in the financial mess that it’s in today.”
    [/quote] We have thrown $65 billion into this one stupid airplane. We have some 45 or 50 million Americans with no health insurance. Wouldn’t we have been better off giving medical vouchers for primary care only of $2,000 each to 32.5 million Americans? Those 32.5 million people could have avoided using emergency rooms for say a bad case of the flu or having an infection looked at. Some might have got a physical or others treatment for migraines or allergies or whatever.

    I realize that $65 billion is not enough for full medical coverage, that $2,000 a person goes fast. But jeez, for all the complaining about waste, fraud and abuse, and all the claims among the far right about how much compassion they have, the F-22 Raptor is the sort of expense our government can no longer afford. It does stop us from being able to help a lot of people with basic, primary healthcare.

  41. jimt

    When doing the debt accounting; don’t forget the budget for 2009 was approved on Bush’s watch in 2008; not by Obama. The budget for 2009 was not changed on a time at t =1 day after the president is sworn into office.
    I believe the fiscal year for the federal budget is October thru September. So Obama has approved budgets starting in October 2009; not January 2009. Most of the additional debt racked up in 2009 occurred under the budget approved by Bush.

  42. jimt

    If you look at the history of federal debt accumulation under different administrations; it is very clear that under Democrats there has been more a policy of spend and tax; and under Republicans there has been a policy of spend just as much and borrow. So far it looks like under Obama the policy is like that under prior Republican presidents; spend just as much and don’t increase taxes; borrow instead.

  43. jimt

    Rich,

    I like your 3 ideas for reducing the costs of SS, medicare & medicaid. Seems to me these are some of the best ways to put a dent in the deficit (I’m also for re-instituting the pre-Bush tax brackets, indexed for inflation).
    I heard that when social security was first instituted, the average time that a recipient collected it was 5 years before death; and now it is 16 years. Seems to me moving the age up 2 years (for people 50-60 now), 4 years (for people 30-50 now), and 6 years (for people under 30 now) would be a good idea.

  44. Don Shor

    Rich,
    One of the reasons I think the debt ceiling agreement is reasonably balanced is that it will force significant cuts in defense and in payments to Medicare providers (not recipients). So both sides have incentives to reach agreement, and if they don’t then cuts will hit two areas most in need of reform. There are significant risks in creating this SuperCongress committee, but the way I see it this is a gradual process of implementing Simpson/Bowles as finessed by the Gang of Six.
    My opinion is that unemployment is the pressing issue, while debt and deficit are long-term problems. So the part of this that is unfortunate is that it will increase public-sector unemployment at the worst possible time for that. But everybody knows what needs to be done in the long run for deficit and debt reduction. The solutions just have to get past the Tea Party.

  45. Mr.Toad

    The person who can generate $16 has a good chance to move up if there are jobs available. In an economy with double digit unemployment your model fails to work efficiently. In a better economy where the supply of labor is in balance with the demand for labor it works but not under present conditions.

  46. David M. Greenwald

    Rusty:

    Have you actually read the S&P report?

    I ask in light of your question yesterday.

    Here’s what they actually wrote, page four:

    “We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.”

  47. biddlin

    I wish That President Obama had used his executive powers and shut the obstructionists down from the jump, as we musicians say ! This will, I hope, be his queue to treat the do nothings as debris, to be swept aside and get on with the business of saving what is left of the middle and working classes in this country .

  48. E Roberts Musser

    [quote]“Obama would never stick his neck out” This has been a major disappointment for me on many fronts. I wanted a single party payer option, the immediate end to the discriminatory anti gay policy of the military, a prompt start on the winding down of all foreign wars, a commitment to a comprehensive immigration policy …… So many disappointments ! However, I do not pretend to have inside knowledge of why he does what he does and I doubt that you do either. As I posted earlier, I believe it is because he genuinely believes in amoretti collaborative form of government with a less directive executive. I believe this based on his words prior to his election, and his actions since. I am aware that this is not what you believe, but I doubt that either of us have a direct “in” to his thought processes.[/quote]

    ACTIONS SPEAK LOUDER THAN WORDS!

  49. E Roberts Musser

    [quote]” previous administrations (e.g. Clinton) have raided SS using it as a slush fund”

    I’m interested to hear an actual case where this occurred. [/quote]

    From http://www.craigstiener.us:

    [quote]When it is claimed that Clinton paid down the national debt, that is patently false–as can be seen, the national debt went up every single year. What Clinton did do was pay down the public debt–notice that the claimed surplus is relatively close to the decrease in the public debt for those years. But he paid down the public debt by borrowing far more money in the form of intragovernmental holdings (mostly Social Security).[/quote]

  50. E Roberts Musser

    From answers.yahoo.com:
    [quote]So why do they say he had a surplus? The national debt is made up of public debt and intragovernmental holdings. The public debt is debt held by the
    public, normally including things such as treasury bills, savings bonds, and other instruments the public can purchase from the government.
    Intragovernmental holdings, on the other hand, is when the government borrows money from itself–mostly borrowing money from social security,
    as Clinton did. If you reference the link, you will notice that while the PUBLIC DEBT went down in each of those fiscal years claimed to have
    held surpluses, the INTRAGOVERNMENTAL HOLDINGS went up each year by a far greater amount–and, in turn, the total national debt (which is public
    debt + intragovernmental holdings) went up. Therein lies the discrepancy.

    When it is claimed that Clinton paid down the national debt, that is patently false–as can be seen, the national debt went up every single year.

    To verify that my link is to a valid government information source, please follow these steps:

    1. Go to the US Treasury Website http://www.treasury.gov/Pages/default.as…

    2. Click on “Bureau of the Public Debt” located at the bottom of the page: Takes you to
    http://www.publicdebt.treas.gov/

    3. Scroll down to the section “The U.S. Public Debt” and click on “See the U.S. Public Debt to the Penny.”

    4. This takes you to the link I originally provided:
    http://www.treasurydirect.gov/NP/BPDLogi…%5B/quote%5D

  51. E Roberts Musser

    [quote]I am also not against the idea of making Social Security more of a welfare program than it already is. [/quote]

    From heralddemocrat.com:

    [quote]A lot of people seem to think that Social Security payments are “handouts” by the government. Yes, the government does manage our SS funds; however, many of us have worked for years and have paid into Social Security. Between the employee and the employer, about 13 percent is paid right off the top of our wages.

    No, Social Security is not a freebie! Neither is Medicare! I pay approximately one-fourth of my SS check for my health care. SS holds out almost $100 and this is automatic. On top of that, if we want decent care, we buy supplemental policies and prescription policies. Medicare pays the doctors a very low percentage of their actual fees and most doctors/hospitals care enough about senior citizens, they accept what Medicare/supplements pays.

    Saying all that, I might remind those who can remember back 20-25 years ago, we were told Social Security was going bankrupt. Do you remember why? The Federal Government was using our funds to support other programs and now we have a stack of IOU’s that, if the funds were put back into the Social Security system, we would be in great shape! Don’t say that those on SS/Medicare are taking government handouts! We have been ripped off![/quote]

    From wikipedia:

    [quote]Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:
    social insurance, where people receive benefits or services in recognition of contributions to an insurance program. These services typically include provision for retirement pensions, disability insurance, survivor benefits and unemployment insurance.
    income maintenance—mainly the distribution of cash in the event of interruption of employment, including retirement, disability and unemployment
    services provided by administrations responsible for social security. In different countries this may include medical care, aspects of social work and even industrial relations.
    More rarely, the term is also used to refer to basic security, a term roughly equivalent to access to basic necessities—things such as food, clothing, shelter, education, money, and medical care.[/quote]

    From irondailynews.com:
    [quote]People who work hard all their lives should not have to depend upon private charity to keep from starving. Forty-four million people, 1/6 of all Americans currently receive Social Security checks. They are retirees, widows, orphans, and the disabled.

    Of the people who depend upon Social Security alone for their income, 90 percent are women. Alan Simpson, who co-chairs the commission on entitlements, cannot understand why seniors are concerned, since they will not be affected by any changes.

    I do not want my children and grandchildren moving into poverty when they can no longer work. Incidentally, the use of the term “entitlements” is intended to sound as though we are all welfare cheats, when, in fact, if I have paid into the system according to the law, then I am surely entitled to collect it under the law.

    Social Security is not welfare, it is a cooperative program to ensure financial security in our lives. It should be strengthened, not weakened by privatization, or by making it voluntary.[/quote]

  52. J.R.

    “But everybody knows what needs to be done in the long run for deficit and debt reduction.”

    I completely disagree with this assertion Don.

    But since you made it, perhaps you can enlighten me and tell me what it is that everyone knows needs to be done.

    Does it include big cuts in Medicare and SS and government services? If yes, Nancy Pelosi and Barbara Boxer do not know this.
    Does it include big cuts in Defense and tax increases? Do Republicans know this?

  53. E Roberts Musser

    [quote]Why don’t Democrats focus on higher consumer taxes?[/quote]

    Consumer taxes are the most regressive taxes there are. If consumers have to pay more taxes on basics like gasoline and eggs, for instance, the poor are hit disproportionately hard. A luxury tax was tried on yachts, and it essentially destroyed the industry, putting the poor construction employees out of work – again low income folks were hit the hardest. A tax on junk food was tried, but that also ended in disaster, bc it was not clear what constituted “junk food”.

    A simplified income tax seems the most sensible approach, with everyone paying some tax, even the poor at $10 a year as an example, so everyone has “skin in the game”. While it sounds good to reduce corporate taxes to spur the economic sector and creating jobs, the fact of the matter is big corporations are paying zero tax – like GE, Honeywell, etc. In fact some, like GE, are getting tax credits if you can believe it! These same companies are in Congress now, arguing to be able to employ foreign workers, bc there are supposedly not enough qualified folks in this country to do the job. Yet they just fired huge numbers of NASA workers, scientists at the top of their game in the WORLD. It is all about cheap labor. Our gov’t needs to put a stop to outsourcing, and I’m not sure what mechanism will work – BUT THE OUTSOURCING HAS GOT TO CEASE, OR THIS COUNTRY IS DOOMED. SO DOES THE NONTAXATION ON HUGE CORPORATIONS HAVE TO STOP, unless I’m missing something…

    I’m all for easing up taxes on small businesses, to create jobs. But I cannot wrap my mind around any excuse for allowing a big company like GE not paying any taxes and getting tax credits to boot…

  54. Rifkin

    [b]Elaine:[/b] [i]”Clinton raided SS using it as a slush fund, put IOUs in the place of the funding they took, and never paid the funds back.”[/i]

    [b]Rich:[/b] [i]” I’m interested to hear an actual case where this occurred.”[/i]

    [b]Elaine:[/b] [i]”What Clinton did do was pay down the public debt–notice that the claimed surplus is relatively close to the decrease in the public debt for those years.”[/i]

    That is what you mean by using Social Security as a slush fund? I really don’t know why you are blaming Clinton for this? His budgets were accounted for the same as George HW Bush’s, Ronald Reagan’s and everyone who has come since.

    When Clinton was president we had a “unified budget.” Because Social Security was running a surplus, it made it appear as if the rest of the government budget was in balance.

    But you have multiple times attacked Bill Clinton for this. The unified budget started in 1983 when President Reagan, Senate Majority Leader Bob Dole and Speaker of the House Tip O’Neil agreed to massively increase the FICA tax. That is when unified budgeting began as a measure of the annual federal deficits.

    The Reagan Administration and the CBO tried to make it look as if the deficits they were running were not as bad as they were.

    Every president and every Congress since 1983 has used this same accounting standard. As such, it is bizarre that you have chosen to use it to attack the third of five presidents whose budgets were measured by unified accounting. You seem to hate Clinton for no good reason over this.

  55. Frankly

    Don: [i]My opinion is that unemployment is the pressing issue, while debt and deficit are long-term problems.[/i]

    David: [i]Here’s what they actually wrote, page four:

    “We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.”[/i]

    From the WSJ: “The Keynesians have fired all their ammo and here we are.”

    The GOP are unsung heroes forcing us to do what we should have done decades ago. There are no more shortcuts available. The extreme gap between spending and revenue is the result of a stupid majority mindset that the quantity of government distributions of other people’s money grows on trees.

    As the current crash of the S&P indicates, the economy is still drastically sick with structural infections. We have burned though every known Keynesian fiscal antibiotic, and now the patient’s only chance for survival is severe diet and extreme exercise. We all worried about the pain we would experience through the Great Recession. The government’s fiscal policies got us into the mess initially, and their attempts to fix it have failed… while adding trillions to our national debt.

    It is fascinating to me to listen to and read the political demands from Democrats pushing for the US to head more in the direction of Greece. What more evidence do they need to see that their ideas are flawed and destructive?

    Did Bush and Obama really help this country preventing another Great Depression? I think we lost the valuable learning opportunity it would have provided.

  56. E Roberts Musser

    To Rifkin: From quaap.com:

    [quote]Factcheck.org and the Clinton Surplus

    I am a huge supporter of Factcheck.org. They provide a great service which roughly corresponds to the efforts of Snopes.com, but instead of random urban legends, they look into the words and writings of the political world.

    I have noticed a somewhat Democratic/Progressive leaning in their work: it’s hard to pinpoint, but it’s there. Part of it may be that the “conservatives” out there are mass producing spin and sometimes outright nonsense, if not more than the “liberals”, at least with greater amplification and distribution due to things like Foxnews and the Drudge Report. “Liberals” just don’t have quite the same unity of message or the distributions channels to really publicize their bullshit in the same way. But I digress.

    Factcheck’s surplus
    UPDATE: I’ve noticed with horror that many republicans are linking to this article to defend their idiotic points. Please understand that while Clinton did not have a surplus, under his watch the growth of the debt slowed quite a bit, especially compared with his successors, Bush II and Obama, both of whom have spent like drunken prostitutes on payday. debt
    There is one article in particular that bugs me:

    http://www.factcheck.org/askfactcheck/during_the_clinton_administration_was_the_federal.html

    Basically it purports to confirm the common belief that during the Clinton Administration, the US federal government had a budget surplus. This is a fairly widespread belief, being believed by most Democrats, and many Republicans (especially those who want to take partial credit for it).

    The problem is, it is ridiculously easy to debunk it. If there was a real surplus (more revenue in than than spent), the debt would be reduced. However, the US Treasury Department maintains much data, and it clearly shows that at no point did the US Federal debt go down:

    Fiscal Year End Total Debt
    09/30/2001 $5,807,463,412,200.06
    09/30/2000 $5,674,178,209,886.86
    09/30/1999 $5,656,270,901,615.43
    09/30/1998 $5,526,193,008,897.62
    09/30/1997 $5,413,146,011,397.34
    09/30/1996 $5,224,810,939,135.73
    09/29/1995 $4,973,982,900,709.39
    09/30/1994 $4,692,749,910,013.32
    So why does Factcheck “confirm” that there was a surplus for several years during the Clinton administration? Because they are using different definitions and therefore a different set of numbers.

    Differential accounting
    There are two kinds of Federal debt: public debt, and intra-governmental debt. Public debt is money owed to the public, ie people who bought US Treasury bonds: regular people, companies, foreign governments, etc. Intra-governmental debt is money owed to the government. This seems to make no sense, but it actually does.

    The US government takes in money through normal means like income taxes, and this money goes into the general fund, but they also take in money through secondary means, such as Social Security taxes. These other taxes do not go into the general fund, but instead go into trust funds and are entirely separate. For social security, if more money comes in through the Social Security tax than goes out through Social Security payments, they are required by law to purchase US Treasury bonds with the excess money. So now the Treasury Department owes money to the Social Security Trust Fund (This in itself is not necessarily a bad thing: there is no sense in letting money sit around losing value to inflation). This debt is called intra-governmental debt.

    When Factcheck states that there was a surplus, they are looking at only the public debt and are not including the intra-governmental debt. Looked at this way, yes, there was a surplus. So much money was coming in through Social Security taxes (and used to buy Treasury bonds) that the general fund exceeded the budget by several hundred billion.

    Is this a valid way to view the matter? After all, the money the government owes itself shouldn’t count, right? Well, yes, it should. The social security money was already earmarked for future social security payments, and the Social Security Trust Fund will want to get its money back when it comes time to make more payments. So yes, this is real debt and I can’t think of any reason to exclude it.

    It should be noted that even without the Social Security money the deficit did go down most years and came within $18 billion of being a completely balanced budget (down from $430 billion under Bush Sr). The expenditures most years increased only modestly as compared with Bush Sr and especially George W Bush. So for this Clinton and Congress during that time period should be commended. However, I see no way to call a $18 billion deficit a “surplus”.[/quote]

  57. Rifkin

    Elaine, you have well proven you can quote what a lot of others have written. However, you still have not defended your original claim that Bill Clinton treated SS money as a slush fund. You have ignored the fact that since 1983 the federal government has reported its debts and deficits on a unified basis. It seems like you just hate Clinton and thus blame him for the accounting change which began 10 years before he was president.

  58. Frankly

    Clinton benefited from the timing of the dot com bubble from 1995 – 2000 which jacked up capital gains, income tax payments and social security payments. It was several orders of magnitude smaller than the housing bubble, but still significant. Clinton also benefited from the timing since the financial pain did not occur until Bush took office.

    One difference between Bush and Obama… Bush never blamed the prior administration for the dot com bubble recession or the failures in national security that led to the 9-11 attacks. Three years later and Obama is still blaming the Bush administration every chance he gets.

  59. medwoman

    Wesley506

    I was referring to the portion of our ever escalating cost of medical care that is due to our willingness to sue over every adverse outcome. This drives up the cost of medical care in several ways. First, doctors have an incentive to practice defensively, often ordering expensive and unnecessary tests because of the fear of “missing something ” and subsequently being sued for it. Often this is done not for any sound medical indication, but because the patient is demanding it and sometimes actually threatening to sue “if anything happens.”

    Sometimes it is not really the patient who is the initiator. My favorite example is a patient of mine for whom I had performed a tubal libation.
    Luckily for me, prior to the procedure, we had had an extensive discussion about the failure rate of the procedure which at the time was believed to be one in 250, and she had signed a consent stating she understood the risks and limitations. Three years later, she was pregnant.
    She was understandably upset, but seemed to adjust well, kept me as her obstetrician throughout the pregnancy, delivery, and postpartum period. A few months later, I received a notice that I was being sued for “wrongful life” with a ridiculously large demand that would have financed the raising and education of this child and her three others all the way through Harvard. For this I do not blame the patient who is not well versed in legal nuances but rather the lawyer who convinced her to proceed knowing this was a case they could not win, and hoping that my insurer would settle. We didn’t back down and the case was a complete waste of time, energy and money on a meritless case.

    An example of a case that never saw a lawyer, but had tremendous financial and potentially serious medical consequences is one involving the overuse of imaging studies. A 32 year old man, for unclear reasons was obtaining his health care in Emergency Rooms almost exclusively.
    He presented to various ERs over a 3-5 year period at least 10-12 times and on each occasion had a CT done.
    CT unlike mammography which has minimal radiation exposure, or US which has none, exposes the patient to potentially dangerous levels of radiation if done repeatedly. It is unclear whether some pf these physicians did not have his records available or did not get an adequate history, but what is clear is that many of these studies were ordered because the docs were concerned that they would be sued if they missed something.

    I do not think that we can address the issues of exorbitant medical costs without limiting the incentive to sue, with multimillion dollar payouts for cases where there is a poor outcome even when everything was done as well as humanly possible medical.

  60. rusty49

    “One difference between Bush and Obama… Bush never blamed the prior administration for the dot com bubble recession or the failures in national security that led to the 9-11 attacks. Three years later and Obama is still blaming the Bush administration every chance he gets.”

    Jeff, exactly. These liberals conveniently forget that Bush also inherited a recession. He just didn’t cry and play the blame game like the Obamanation.

  61. Alphonso

    JB said
    “One difference between Bush and Obama… Bush never blamed the prior administration for the dot com bubble recession or the failures in national security that led to the 9-11 attacks. Three years later and Obama is still blaming the Bush administration every chance he gets.”

    That is not true of course-I guess it is easy to forget

    “Predictably, the drumbeat from the Bush team was reproduced with zero distortion from the always reliable media. While Fox News’ Sean Hannity made the argument during the November 2002 mid-term election “this president — you know and I know and everybody knows — inherited a recession,” CNN made the case for him two months earlier. On September 18th, 2002, CNN’s John King announced, “That’s why the president, in almost every speech, tries to remind voters he inherited a recession.” Five days later, his colleague Suzanne Malveaux regurgitated the same line, reporting, “[Bush] took up that very issue earlier today, saying — reminding voters that the administration inherited the recession.””

  62. Frankly

    Alphonso:

    I say Bush didn’t blame the prior administration but Obama did and you go off looking for quotes from others to prove… what?

    I love this one from Obama in February 2009:
    [quote]“We cannot and will not sustain deficits like these without end. Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to the next budget, the next administration or the next generation.”[/quote]
    Here is another great one from his inaugural address:
    [quote] “an end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics.”[/quote]
    From his first press conference:
    [quote]“What I won’t do is return to the failed policies of the last eight years.”[/quote]
    On the gulf spill which happened 18 months into Obama’s term:
    [quote]“For too long, for a decade or more, there has been a cozy relationship between the oil companies and the federal agency that permits them to drill. It seems as if permits were too often issued based on little more than assurances of safety from the oil companies. That cannot and will not happen anymore.”[/quote]
    Some more looking back blaming the previous administration:
    [quote]“The policies that crashed the economy, that undercut the middle class, that mortgaged our future, do we really want to go back to that, or do we keep moving our country forward?”[/quote]
    Here is a more recent press conference. You have to watch it because he keeps blaming and blaming and blaming.
    [url]http://www.youtube.com/watch?v=yorcY31cF6k&feature=related[/url]

    So, what quotes can you find from Bush blaming his predecessor? Note; I have lots more of Obama doing this.

    It is a sign of a weak leader to keep looking back over his shoulder.

  63. Frankly

    [i]” do not blame the patient who is not well versed in legal nuances but rather the lawyer who convinced her to proceed knowing this was a case they could not win, and hoping that my insurer would settle.”[/i]

    Medwoman, I agree with this. Do you support Texas-style tort reform where the plaintiff would need to reimburse the defendent for legal costs?

  64. Don Shor

    [i]I say Bush didn’t blame the prior administration but Obama did and you go off looking for quotes from others to prove… what? [/i]
    That the Bush administration routinely blamed the prior administration. In other words, that your assertion was incorrect. I also remember squabbles between the Clintons and the Bush team about the national security efforts prior to 9/11.

  65. Rifkin

    Jeff, every president has luck or misfortune with regard to events in the market which make the times he is in office prosperous or not. Yet your flippant contention about Clinton just being the beneficiary of the dot-com bubble terribly misses the mark, because it ignores the real technological gains developed in the United States which bore fruit in the period Bill Clinton was president.

    In other words, for your own purposes it appears to me you want to make it seem as if all the economic progress which took place during Clinton’s time in office was a mirage, was “the dot-com bubble.” That is a complete misread of economic history. There were hundreds of important technological and scientific breakthroughs in the 1990s which allowed many American companies to make extraordinary profits. Those gains, most of which made the U.S. more competitive in the world, were real.

    Do I give Clinton credit for those? No. As I noted up front, Clinton was fortunate to be president during such an era. Most of the research and development which led to that period of great technological change had been going on for 20 years before it bore fruit.

    But not giving him credit for the good works of many U.S. companies is not the same thing as dismissing that prosperous time as just being “the dot-com bubble.”

    The dot-com bubble did occur. It did overstate the value of the stock market on the whole and especially the NASDAQ. But it was not the real story of the 1990s economy. It was the real story of the very end of a strong period of real growth, which came to an end before GW Bush took office.

    What made Clinton in real terms better economically than his successor was that under Clinton we had much better fiscal discipline* than we had under GW Bush. Bush massively (by hundreds of billions of dollars) expanded agriculural welfare paid to farmers and farm corporations. Bush put in place the very expensive (by hundreds of billions of dollars) Medicare Part D program, which was, sadly, written by Big Pharma for the benefit of Big Pharma. Bush got us into the Iraq War which was terribly expensive. And Bush cut tax rates to such an extent that our debt ballooned under him. In short, Bush was terrible when it came to fiscal responsibility. Obama, in that respect, has been even worse.

    *Clinton might have been a much worse president if he did not have Newt Gingrich and Dick Armey to keep him in line. My own view is that the best arrangement of president and Congress we have had in my adult life were the 6 years of the Clinton presidency in which the president was successfully partnered with his opposite party running Congress. The worst years were when no Republicans running Congress ever stood up to the spending mania of GW Bush; and likewise, no one checked Obama’s horribly wasteful stimulus plan and Afghan plan when the Dems were running Congress.

  66. Frankly

    Rich,

    I agree with your points. I was just contrasting Clinton’s record with Bush’s record relative to the argument from the left that Clinton’s performance with the economy was so much more stellar. You and I both know that Presidents are mostly beneficiaries of timing as it relates their economic performance. However, there is no doubt that there was much less spending discipline under the Bush administration. I do think Clinton deserves his marks for this… even though a GOP congress made him toe the line.

    But, related to Bush’s spending, part of that was the result of 9-11 after Clinton had made drastic cuts to defense spending.

    Also, the housing bubble was contributed to by the wild economic optimism caused by the dot com run-up. The RE run-up started before Clinton, but accelerated under his watch. I purchased my current home in 1998 when real estate was very heated. Unemployment was low and people had money even though the general market was flooded with valuations exceeding any rational assessment of P/E ratios.

    Those on the left continuing to skewer Bush should consider the consequences of the current GOP behavior. Bush spent like a drunken sailor. He supported amnesty. He focused on some liberal causes like fighting the global aids epidemic and reducing the cost of drugs for seniors. His record on environmental policy was not as bad as the left media makes it. He presided over seven solid years of unprecedented economic prosperity while the US recovered from the damage of 9-11 and fought two wars. He essentially won a very difficult war in Iraq… the first case of successful nation building by the US for more than half a century… and one that didn’t require us to drop two nuclear weapons and it resulted in historically-unprecedented low numbers of military casualties. However, the left still hates Bush. I think some of it is because the left hates white male Texans, but that is a point for a different post.

    The evolution of the Tea Party and a more conservative GOP is at least partially the result of the left’s demonstrated hate of even moderate Republicans. It has been proven that it does not pay political dividends to be a moderate Republican because the left still froths with vitriol and uses every wedge issue to get their people back in power, and the right becomes disappointed too as their principles are ignored. I think the same is now true for the right as has developed… but the level of partisan animosity and polarization we see today built from a new level of incivility in political discourse promulgated by the left and hosted by the liberal old and new media. Fox didn’t start it, they exploited a void caused by it.

    Democrats are more apt to wear their political emotions on their shelves. They transparently hate their opponents and love their politicians. My interest was some objective leveling of this as Clinton and Bush’s record on the economy and the point that Bush didn’t blame Clinton and Democrat ideology like Obama blames Bush and Republican ideology.

  67. E Roberts Musser

    To medwoman: Very thoughtful post on lawsuits, and I agree with your observations.

    To Don Shor: Loved the article on Greenspan, and I agree he caused a huge amount of damage. Did you know Greenspan (a supposed Republican) was caught at a Democratic fundraiser when he was supposed to remain politically neutral?

    [quote]It seems like you just hate Clinton and thus blame him for the accounting change which began 10 years before he was president.[/quote]

    No, I’m an equal opportunity criticizer… and I don’t agree w your assessment, but we can agree to disagree 🙂

  68. Frankly

    Don: [i]”That the Bush administration routinely blamed the prior administration. In other words, that your assertion was incorrect. I also remember squabbles between the Clintons and the Bush team about the national security efforts prior to 9/11.”[/i]

    Where are those quotes? Obama’s are frequent and plentiful. Bush didn’t blame… like a real leader, he set out to try and fix what was broken.

    The problem you and others have with this argument is that your man is excessive on rhetoric and limited on action other than his decisions for inaction. Bush was the oposite.

  69. Frankly

    rusty: I don’t know about you, but I was already planning to work until I drop so many thousands of losses in my portfolio don’t really matter at this point.

    However, how does the stock market performance impact Cal Pers?

    Might we be seeing a bigger bill for the bloated public sector pensions?

    I get this “hope and change” thing now… I sure hope it changes in 2012.

  70. Alphonso

    [b]Do any of you liberals own stocks? [/b]

    Anyone holding equities is hurting (and I hold lots of equities) – the interesting thing is the downgrade has not really impacted bonds.

    Another thing to consider – the Tea Party folks refused to touch the Bush tax cuts and I think that program saves taxpayers around $200 bil per year. Protecting those savings (or more realistically a portion of it) has cost us over two trillion dollars in equity valuation so far. Penny wise and a pound foolish comes to mind. Of course you can blame both sides – our process is not working and we are killing ourselves. I listened to the S&P folks (explaining the downgrade) and they kept talking about our inability to govern ourselves and they were talking about both parties

  71. Rifkin

    [i]”However, how does the stock market performance impact Cal Pers?”[/i]

    It could have had a huge impact if all of the events of the last week took place at the end of June. The day that matters for CalPERS in June 30, the last day of the fiscal year. Where the market value of the PERS portfolio stands on June 30 sets the contribution rates its member agencies will pay 2 years hence.

    So unless the stock market fails to rebound by June 30, 2012, this crash will have no impact on CalPERS. My guess is that this is a temporary crash due to a loss of confidence. I think things will return to the equities markets will return to the status quo ante in a few months. Now is probably a ripe time to buy, if you believe in gambling on stocks. (I don’t ever gamble on stocks. I buy my equities mostly on a dollar-cost averaging basis.)

    [i]”the interesting thing is the downgrade has not really impacted bonds.”[/i]

    Last night, around 8 pm, I was talking to a friend of mine who is an Edward Jones broker. I said to him: “The stock market will fall a bit tomorrow. Probably less than 200 points. Probably closer to 100. The real dive is going to be with the bond market. Bond traders are going to sell, sell, sell due to the fear of rising interest rates, brought on by S&P’s downgrade.”

    As Alphonso correctly points out, I was …. wrong, wrong, wrong on both counts.

  72. E Roberts Musser

    [quote]I get this “hope and change” thing now… I sure hope it changes in 2012.[/quote]

    AMEN! However, I want a change for the better, and the Republican Presidential slate so far is abysmal…

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