Far East Cynic

Out the door……

Heading back where it is really cold for a few days for work. I am expecting some long days at least at the start of the week.

Driving to the hotel I was listening to an NPR show with Grover Norquist. He is the worthless bastard who came up with the idea that you can never adjust tax rates upwards once they have been cut. No matter how many wars you start-no matter how bad a recession the country is in, no matter how pressing your need to improve infrastructure is.

During the program, he kept coming back to the talking point that “Europe got it”-they cut spending. I thought that was rich-since it’s only partially true and ignores some real differences between Europe and the US. He also blithely ignores the fact that most European countries can leave Iraq and Afghanistan-and several have done so. The US is in the position of being unable to. Norquist also ignores that even with austerity-the results have been only piecemeal;. For every Germany -there is an Ireland of Greece. And that Europeans-even with reduced spending, still have social safety nets that we do not.

But that does not make a good sound bite – as well as it requires a level of comprehension that most of Norquist followers are incapable of rising to.

So instead – we will end 2010 with a major cave in on two signature issues. For a guy who is a Nazi and a Socialist-Obama has actually ended up looking like George Bush. He will end the year leaving tax cuts in place for millionaires who have already seen major jumps in income-while the average American has seen a net drop in his or her earnings / buying ability. And second-he will end the year still mired down in the quagmires that are Iraq and Afghanistan.

Now the second was probably unavoidable-but the Tax Cut thing was just a case of lousy poker playing. The deal was simple-only extend for those making less than 250K. Take it or leave it. If the GOP had left it, fine-all of the tax cuts would have expired. That’s a much better idea in the long run, and Obama would have been able to lay the blame at the feet of people who love making rich people richer.

The idea that the Bush Tax cuts remaining in place will somehow help the economy has already been proven incorrect. If so we would be on a track of greater growth. If anything – it proves how bankrupt the ideas behind supply-side economics are. For tax cuts to create jobs-business and individuals have to invest the money. The track record shows that companies are not disposed to do so – if anything, they are hanging on to cash and hoping to be able to respond to rising demand eventually with fewer workers. In that way, they would have seized on the opportunity to cut their labor forces permanently. They were going to make money either way-but this way they make even more money for fewer “survivors”.

But somehow – in the twisted world we live in – these folks were made to be the victim. When in reality it is just the opposite-average Americans are the victims. Especially since Norquist’s fans love both the wars and the tax cuts, will be in the position of cheering on what was always a fiscally irresponsible policy -at least as far as reducing the deficit goes.

But as  I have pointed out before-that has never been a priority for most supply-side advocates. It certainly was not for the Bush administration who created this mess to begin with. There are people who are actually celebrating the fact that the Bush tax trap worked.

What’s really disgusting is that we saw it was coming. And the administration caved-when it had no business doing so.

But hey- tax cuts for the rich it is, while we ignore our crumbling nation and debate how to starve future senior citizens.

And people ask me while I am so on fire to move out of this country and back overseas……………………………..

  1. Skippy,
    Obama said:

    “Make no mistake, allowing taxes to go up on all Americans would have raised taxes by $3,000 for a typical American family and that could cost our economy well over a million jobs,” he said at the White House.”

    So what is it. Do me along with the rest of the “unwashed” deserve to keep just a little of the money that we make?

    The wars I agree are going no where, and we should rethink our strategy. Next step is to go through and cut out spending waste. Wheter it be in overbloated weapons systems, as well as finding out who is in the country illegally and getting benefits that they don’t deserve.

  3. Norquist is a dishonest hack, an idiot, or both. He was useful to Jack Abramoff, but the fact that no serious Republican threw Grover into a well proves that there aren’t any serious Republicans left.

    On Europe, it’s widely ignored in North America that VATs, some income taxes and service fees are being raised as spending is being cut. Things are so bad that you pretty much have to do both: cut spending and raise taxes. The math doesn’t work out any other way. Of course, Congress won’t do that, at least not voluntarily. They’ll wait for the American debt crisis to get even worse and the international bond market will do it for them. Once your interest charges go through the roof, things will change rapidly.

    As a general proposition, I would agree that a recession is a horrible time to raise taxes. But there are two points that I’d like to make about that.

    First, I’m increasingly inclined to agree that the U.S is in a structural recession. Having outsourced your industrial capacity over the last thirty years, I don’t know where the middle-class jobs that have been lost are going to come from. I think that’s it’s entirely possible that you could have unemployment where it is now for some time to come.

    Second, the debt problem is just more serious than the recession. Pretty soon, the interest on the debt is going to equal the defense budget … and you spend more on defense than the rest of the world combined. Interest, Medicare and Social Security are going to wind up being an unfunded mandate of about $55 – 72 trillion dollars in a couple of decades. Ten percent unemployment is pretty easy to deal with compared to that.

    I would disagree with Skippy-san about one thing. This isn’t Shorter Bush’s fault; at least, not entirely. Tax rates have consistently gone down and federal spending has consistently gone up since the Kennedy administration. Some administrations were worse than others, but none tried reversing the trend.

    Whether you “deserve” more of the money you make is entirely besides the point. Your government already pissed it away on tax cuts, wars and entitlements. It was gone years ago. Deal with it.

    I’m not aware of another country that’s come out of a debt spiral like the one you face. Sure, you can bail out Brazil or Argentina, maybe even Greece or Ireland. But the American economy is orders of magnitude larger.

    Who’s gonna bail out the United States?

  7. Richard,

    Why would China bail out a strategic rival, only to receive pennies on the dollar they’re owed for their trouble? Why, for example, would they want to bail out things like the Sixth Fleet, which impairs their ambitions, when they can destroy it outright with crippling interest payments?

    Here’s one thing to keep in mind, if the IMF or World Bank even can bail you out – a highly dubious proposition at best – they aren’t going to do it in a way that allows you to keep a giant military. Because the size of one’s military is completely dependent on one’s foreign policy, it is therefore the very definition of discretionary spending. Accordingly, it will be the first thing to go when the shit hits the fan.

    Does anyone seriously think that your average Iowa shitfarmer is going to stand for his Social Security being slashed while you still have hundreds of thousands of troops propping up regimes like Egypt’s and the House of Saud? You’d quickly find that support for keeping Europe “safe” would evaporate in the face of that.

    And that’s just the long-term threat. The real short term issue is how long the dollar remains the world’s reserve currency. Recent events being what they are with the idea of a “basket currency”, I’d say that changes within the next five years. Once you lose that national advantage, the death spiral becomes almost impossible to pull out of. And don’t think that a return to the gold standard will save you, because you don’t even have gold like you used to and that just makes you vulnerable to international raids on foreign deposits, like Nixon faced.

    As much as I hate to admit it, I’ve pretty much given up hope on the United States. For all the screaming about the deficit over the last two years, Obama and the Teapublicans essentially threw away another trillion dollars on Monday, none of it paid for, and none of it likely to accomplish much of anything. They essentially gave away more than a hundred billion dollars of the total cost of the 2009 stimulus that the Tea Party can’t stop bitching about. And the Tea Party is pissed that they only gave away $400 billion of it in stupid, ineffective tax cuts that you can’t afford.

    That’s not the sign of a serious people, and if anyone else were acting like Americans are, you’d think long and hard before giving them a dime. Imagine if Argentina was burning money on bullshit like this in the 80s. After Monday, I can’t think of a serious reason to even consider bailing the United States out when the time comes. Sure, your economy will wither and die, and Canada will have to build a giant fence, but I understand that there’s some political currency in that.

    Of course, most Americans probably think that everything’s going to be fine because you’re so “exceptional.” Well, you know, a stellar way of demonstrating that exceptionalism is to pay your fucking bills!