Four Deformations of the Apocalypse, Reagan was Wrong.

A friend pointed me to this Op-Ed from the Aug 1st issue of the New York Times. It is written by David Stockman, a director of the Office of Management and Budget under President Ronald Reagan. This was one of the so called architects of "Trickle Down" economics. Now he has seen the error of his ways.

From the Op-Ed:

IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.

More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.

The bolding is mine because I thought that was a great point. We have all seen this happen since deregulation started. After the Glass-Stegal was enacted by FDR, our economy was stabilized and we didn't have the huge bubble and bust recessions we have seen lately. But let Mr. Stockman tell you in his words.

The first of these started when the Nixon administration defaulted on American obligations under the 1944 Bretton Woods agreement to balance our accounts with the world. Now, since we have lived beyond our means as a nation for nearly 40 years, our cumulative current-account deficit — the combined shortfall on our trade in goods, services and income — has reached nearly $8 trillion. That’s borrowed prosperity on an epic scale.

It is also an outcome that Milton Friedman said could never happen when, in 1971, he persuaded President Nixon to unleash on the world paper dollars no longer redeemable in gold or other fixed monetary reserves. Just let the free market set currency exchange rates, he said, and trade deficits will self-correct.

It may be true that governments, because they intervene in foreign exchange markets, have never completely allowed their currencies to float freely. But that does not absolve Friedman’s $8 trillion error. Once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors.

Oh, SNAP... did he just tell them they were wrong? Let's continue, shall we?

The second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party’s embrace, about three decades ago, of the insidious doctrine that deficits don’t matter if they result from tax cuts.

In 1981, traditional Republicans supported tax cuts, matched by spending cuts, to offset the way inflation was pushing many taxpayers into higher brackets and to spur investment. The Reagan administration’s hastily prepared fiscal blueprint, however, was no match for the primordial forces — the welfare state and the warfare state — that drive the federal spending machine.

Soon, the neocons were pushing the military budget skyward. And the Republicans on Capitol Hill who were supposed to cut spending exempted from the knife most of the domestic budget — entitlements, farm subsidies, education, water projects. But in the end it was a new cadre of ideological tax-cutters who killed the Republicans’ fiscal religion

Through the 1984 election, the old guard earnestly tried to control the deficit, rolling back about 40 percent of the original Reagan tax cuts. But when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts.

By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s. Then, after rarely vetoing a budget bill and engaging in two unfinanced foreign military adventures, George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier.

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Once again, the emphasis is mine... but I think he meant them to be this way. I only wish this had gotten more news when it was written.. However now, I want to make sure we see this.

The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.

But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets

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Deregulation anyone?

The fourth destructive change has been the hollowing out of the larger American economy. Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12 percent, to 68 million from 77 million. The only reason we have not experienced a severe reduction in nonfarm payrolls since 2000 is that there has been a gain in low-paying, often part-time positions in places like bars, hotels and nursing homes.

It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.

This was very interesting to me... one of the creators is now crying about it's creation. Seems like Dr. Frankenstein is hating his monster isn't he?

Of course it is pretty obvious why this didn't get more notice.. It goes against the grain of all the financial talk the GOPers are pushing, even the so called "librul" New York Times didn't push it further.. Why not? Why are not all the financial wonder kids talking about this... the fact the designer is hating his fashion..

I know we all knew this... but maybe someone who didn't will read it and think a little about the oft pushed tax cuts solve everything.

The President's Weekly Address: Honoring the American Worker

From the White House blog:

The President talks about his fight to make America work for the middle class and make sure hard work is rewarded -- rather than greed and recklessness .

I think this is great, the President is laying out everything that has been done for the Middle Class and adding some things he wants to get done. I wish more of the people who are claiming he has done nothing would look at this.

Get this to everyone so they learn what the Democrats have done for everyone. I say Democrats because they have had very little if any help from the Republicans. If they can't view the video, here is a LINK to the transcript.

I hope you all have a safe and happy weekend. Enjoy the holiday, but take a minute to thank the ones who are working to see you have a great time and another minute to all who have gone before, making this the greatest country on Earth.

The President's Weekly Address: The End of Combat Operations in Iraq

From the White House blog:

With the end of combat operations in Iraq days ahead, the President salutes our troops for their service and pledges to fulfill America’s commitment to them as veterans. 90,000 troops have left Iraq since the President came into office, and by the end of next year even the troops taking part in the non-combat mission will be home. The administration is upholding the sacred trust with our veterans by building a 21st century VA, making it easier for veterans with PTSD to receive the benefits they need, funding and implementing a Post-9/11 GI Bill, and devoting new resources to job training and placement to help those veterans looking for work in a tough economy.

Join the President, Dr. Jill Biden, and even Drew Brees of the New Orleans Saints in saluting our troops for their service.

Since I deal with the VA system quite a bit through my dad, my uncle and others, I can attest to the fact things are going smoother than they were. Payments are being made faster, and it seems the care is getting better.

We see more and more, caring doctors and nurses, rather than someone who is just putting in their time until they go home... and trust me it used to be just that way.

We owe these veterans everything. No matter how we feel about the wars, no matter that we supported it or not, we OWE our veterans. They are doing the job most of us couldn't and wouldn't do. They and their families deserve must more than we could ever repay.

This is one of those times, when it is difficult, I know to separate the warriors from the war... it is always hard to do that... but we must. We must remember our military every day. As I said they are doing a job a lot of us wouldn't or couldn't do. And they are doing it for each of us.

Please take a moment and thank a veteran, a military person, or the family of them, for their sacrifice, their service and their unselfish giving of their lives, or a portion of it for each of us. Because of them, we can criticize the wars, we can do lots of things people in other countries can't... because of our freedoms and the veterans who have fought, bled and died to preserve.

The President's Weekly Address: No Corporate Takeover of Our Democracy

From the White House blog:

The President calls out Republicans for blocking campaign finance reforms that would address the Supreme Court decision opening the floodgates of corporate money into elections.

This is something we should all be concerned about. This corporate takeover of the elections and our Democracy. With the Citizen's United case it has opened the floodgates of money to elections and to special interest groups and allows them to donate without disclosing names or individuals who have given.

We have had enough problems with elections in this country. Now we have to worry that the one with the biggest pocket, not necessarily the best person for the job, will be winning.

It reminds me of the old days, when people bought votes, dead people were voting and the like. We can't allow this to happen. We shouldn't allow this to happen.

The President's Weekly Address: Honoring Social Security, Not Privatizing It

From the White House blog:

On the 75th anniversary of Social Security, President Obama promises to protect it from Republican leaders in Congress who have made privatization a key part of their agenda. He makes clear that, especially in light of the financial crisis, gambling Social Security on Wall Street makes no sense.

As I am sure we all do, I have many friends and family who lost a bundle of money when the market crashed in September 2008. It is still not stable enough to plan on keeping anything in it as far as I am concerned.

Just a few weeks back, it fell again and this week has been down a lot. Can you imagine what that would do to our Social Security. Most people don't have enough to live on in the first place.... To have lost 50% or more would be enough to send the majority of people to the bread lines we still fear we are going to see.

I hope this Congress doesn't even think seriously about this. I believe they would sorely test the President and we would see him angry and adamant in a veto.

Report by CBO Shows The Recovery Act Reduced the Deficit

I found the link to this report on BobCesca.com and had to share the report and some of the information with you.

This report was written by Economists Alan Blinder and Mark Zandi and published by the CBO. This chart shows what the deficit would be without the Recovery Act and how it is WITH the Recovery Act.

From the Wonk Room at Think Progress comes this:

Their conclusion is that had the combined financial and fiscal policies not been enacted, “GDP in 2010 would be about 6.5 percent lower, payroll employment would be less by some 8.5 million jobs, and the nation would be experiencing deflation.”

Blinder and Zandi break out their estimates separately for the financial policies and the fiscal policies. They estimate that the American Recovery and Reinvestment Act and other fiscal policies have saved or created 2.7 million jobs and without them, unemployment would stand at 11 percent and job losses would have totaled 10 million. On top of this, they estimate that if nothing had been done to address the financial crisis — no Troubled Asset Relief Program, no bailout of American International Group Inc, and no investment in the auto industry — our economy would have 5 million fewer jobs than we do today and unemployment would be sharply higher, at 12.5 percent.

However, one tidbit in the report that has received little notice is that by acting, Congress actually reduced our potential deficit problem. Given the policy steps taken, Blinder and Zandi estimate that by the end of the 2010 fiscal year, the federal budget deficit will be $1.4 trillion and it will fall to $1.15 trillion in fiscal year 2011 and $900 billion in fiscal year 2012.

The bolding is mine... because I wanted to make sure you saw it. For some reason all these so called Deficit Hawks are ignoring this in their reports and talking. Here is more:

However, had Congress done nothing, the deficit would have ballooned even higher, hitting over $2 trillion by the end of the 2010 fiscal year, $2.6 trillion in fiscal year 2011, and $2.25 trillion in fiscal year 2012. That’s right, doing nothing would have meant that the 2012 federal budget deficit would likely be over 2.5 times as large as taking the steps we took.

Once again bolding is mine. This is something we should be shouting from the rooftops and lording over the GOPers who are claiming now to want to reduce the deficit. A deficit that is largely due to their policies and the spending that went on during the years of 2001 and 2006 especially and to a smaller extent from 2006 to 2008.

Here is a nifty little chart that shows all the spending and how it is divided by category

As is shown by this chart the Bush Tax Cuts and the downturn of the economy added much more to the deficit than anything President Obama and the current Congress has done.

If you want to read the entire article from the Wonk Room, just give it a click.

We need to get this out and let people know the TRUTH about what is going on with the Finances of our Country. I have not seen this on any media outlet and I know it will never get much play if any on Faux Noise, because it tells the truth.

I hope you read the report and post these charts so everyone can see them... Please feel free to take anything you want... Linky love if you can, but is not necessary. I just want everyone, including some of the RWNJ's out there to see these and try to explain how the GOPers are going to fix this.
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The President's Weekly Address: Medicare Officially Safer After Health Reform

From the White House blog:

The President discusses a new Medicare Trustees report showing Medicare to be on much stronger footing as a result of the reforms in the Affordable Care Act. In addition, seniors are also already getting help with prescription drug costs when they fall into the infamous “donut hole.”

The President lays out the reforms in Medicare and shows how much the new Health Care Reform has helped already.

For me personally, this is all good news. Helping us with the Donut Hole is wonderful. This is a terrible problem for seniors who are on high cost meds. I have one I take that costs almost $2,000 a month. Yes it is crazy, but that's what we all face. Anyone who takes medicine on a daily basis faces these costs.

The saving grace in all this is our prescription drug coverage, however when Medicare D was enacted instead of trying to get lower priced drugs, the provision put in this Donut Hole. Once an individual reaches $2700 in prescription costs, until they pay out of their pocket $6,154 they are responsible for the entire cost of their meds. As you can see it doesn't take long to get there.

After the $6,154 the Medicare D coverage starts again and pays 95% of the costs. Now some supplemental plans or Medicare Advantage plans do help out with this. But even with that, I reach the Hole every year and have to pay more for my meds for several months.

I am glad this is one of the steps that was taken in the Health Care Reform. These are the little things some people think was not needed, but trust me, if you are on Medicare and you hit that hole, this is huge.

Just the fact that so far the reforms has helped Medicare's solvency is wonderful. Wonder how the GOBP will spin this.... Since according to them it was going to harm the plan so much. Of course if they do what they usually do, they will just ignore it. They never talk about the things they predict which never happen. Those are ignored and hopefully forgotten.

We should point this out over and over again, how wrong they were and if given the chance, ask them about it. If we don't start challenging some of their outlandish claims and reminding them of the lies they told, they are going to get away with it again and again, but if we start holding them accountable, maybe someone will take notice.

Those are my thoughts anyway... What are yours?