Friday News Roundup - Hour 1
http://thedianerehmshow.org/shows/2011-02-11/friday-news-roundup-hour-1
House Republicans propose deep spending cuts. Fed Chief Bernanke faces questions about inflation. And the week brought surprise announcements from members of Congress. A panel of journalists joins Diane for analysis of the week's top national news stories.
Guests
David Welna
congressional correspondent, NPR.
Lynn Sweet
Washington bureau chief, Chicago Sun-Times, and columnist at politicsdaily.com.
John King
anchor of CNN's John King, USA, and chief national correspondent.
Comments
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Diane and guests,
I remain continually amazed at how uninformed public debate seems to be as per most public media outlets.
For example: Let’s compare 8 years of Clinton to 8 years of W. An economist could not ask for better conditions of experiment to confirm or debunk “supply-side economics” (Voodoo economics Bush 1 called them).
Clinton raised taxes on wealthy, and lowered for working and middle classes. What followed was longest sustained economic expansion in American history. Budget surpluses allowed government to pay down debt and end of Clinton's last year, ten year surplus of $5.6 trillion was forecast. On average, 2.5 times more jobs were created during Clinton years than each of Reagan, Bush SR, or W.
continued
W said “Heck no” to this real and potential prosperity & immediately ladled $630 billion in tax cuts to top 1%. After first year debt shot to 6.2 trillion dollars. In 2002, Secretary of Treasury Paul O’Niel raised objections to 2nd round of tax cuts but was informed by Cheney, “Reagan proved deficits don’t matter”- month later O’Neil was unemployed. Cheney and Bush insisted our economy was strong even AFTER “bubble burst” and it was clearly in tatters. (To be fair, some of this CAN potentially be linked to Clinton years, but then again Clinton wasn’t there for those 8 years of demise, while Bush administration, for example, repeatedly rejected bipartisan majority proposals to provide greater oversight of Fannie and Freddie).
8 years of Clinton- great prosperity. 8 years of W- America in tatters. I don’t mean to offend anyone- but it is difficult to understand how anyone can not come away from these facts without making some general conclusions. One course leads to prosperity- one to cliff. Gee, which way should we go?
The debate should be over, yet somehow John Wayne (I mean Reagan) stands so prominently in some people’s hearts and minds that they’d see the country come to ruin rather then question time -honored Reaganomic beliefs.
Ask this question- where did those trillions in our treasury and what was borrowed go. Wars might be one answer. Did we put trillions in a bomb and drop it on Iraq, never to be seen again? No -we spent it on such things as no-bid contracts benefiting organizations such as Blackwater and Halliburton. We spent it on companies that create body armor, humvees, ships, drones, et al. The point being is that this $ still remains in our economy somewhere- just not in US treasury.
During housing bubble years, we were told “best and brightest” college grads were lured to work at Wall Street and financial institutions. After financial collapse we were informed that for all their intelligence, these institutions, while making their megabillions through such policies as clever manipulation of bundling questionable mortgages into complex derivatives, didn't understand they were putting entire financial system at risk (even though many of them “bet upon” the imminent collapse and reaped substantial rewards when it occurred).
After collapse, so as to not repeat mistakes initiating 1st great depression the very same financial millionaires and billionaires largely responsible were “bailed out”. These corps promptly granted great bonuses to their employees. But I would argue their greatest accomplishment was yet to come. Even though Congressional Budget Office concluded that of all the choices available, extending Bush tax cuts would be LEAST effective “bang for buck” proposal to job promotion and economic growth, after lobbying efforts and efforts of powerful mostly right-wing media sources, these cuts were extended . It would seem a 4 year old child could see through the lunacy of such an approach, which GUARENTEES to explode the very deficits that these congressmen were supposed to be so concerned about. Bravo!
The mantra heard from corporations and individuals hoarding unprecedented wealth is that they are afraid to invest any of it in job creation because of “uncertainty”. There is nothing certain in life except death and taxes. Then again the tide seems to be to eliminate all taxes- and wasteful government spending. What clearly seems to be happening is an effort by the wealthy to virtually eliminate a government of and for the people, to be replaced with one established for and by the wealthy. No regulations- A free market economy. A free market economy without regulation will eventually produce a few kings, a lot of servants, and lots of unemployed. And infrastructure (roads, water, education) will stagnate. We need regulation folks. Lack of regulation is what allowed Goldman Sachs execs when appearing before congress after financial meltdown with their “life so great, we’ve got to wear shades” attitude, because although they knew they were in large part cause of America’s demise, they could never be held accountable.
Biggest paradox of all is apparent success of media forces in this country that have convinced people if we just decrease government spending that all will be better. Cuts of millions here and there or even billions will not put a dent in trillion (a million million) dollar deficits. Unless we consider taxing wealthy, or god forbid consider making cuts to our defense (offense?) budget, no substantial gains can be made.
I applaud current administration efforts in having the courage to tackle our health care issues, even at terrific political risk, because cost of staying the course (as W would have us do) was FAR GREATER than attempting to address issue. Health care costs, on projectory they were on, threatened to engulf economy.
It’s seems to me that W administration did incalculable damage to American way of life and prestige and ruled largely through promotion of fear.
These are my perceptions, but I would like to think they are informed by fact. If these opinions are even halfway accurate, I sincerely hope that many of them are eventually adopted by majority of countrymen and women, because greatest influence many of us have is simply the power of the vote.
Dear Drew Kelley,
You are living in a fantasy world of your own making. It is evident from the first part of your first (of many) posts. Clinton raised taxes on the wealthy alright and it almost made him a one-termer. After 1994 a Republican Congress forced him to lower taxes and cut spending, a little thing called "The Internet" brought government higher tax receipts than could ever have been imagined or achieved with his tax increases on the wealthy.
But his tax increases weren't his worst attempt to destroy the economy. That was achieved by his signing of the repeal of Glass-Steagall (removing the wall for financial institutions between savings and investment deposits) and the Community Reinvestment Act which pushed banks to lend to low-income people. Those two together nearly collapsed the economy just 10 years later.
As for Bush, his tax cuts early in his first term reversed the economic decline left at the end of the second Clinton term and made that recession a short one - BUT, a Republican House, Senate, and President couldn't stop spending. The internet bust depleted tax revenues leaving large deficits. It got them all booted (and rightly so) starting in 2006.
This is just an accurate reading of history, that's all.
Drew, you're a big government guy. You are a wealth-redistribution guy (raise taxes on the rich!). I get all that. But the simplest, most basic principle that every liberal misses is, Governments do not create growth. They can't. All they can do is take money from one side and give it to another. Only people with their own money can create growth and wealth. In a word Government isn't efficient enough, nible enough, or collectively "smart" enought to do that - and at the same time keep people free. It's been proven time and again in the American economy and other economies throughout the world and throughout history.
Well outlined Mr. Kelly,
After 20 years of republican/conservative madness (Reagan, Bush I & II), some have become so discolored and actually believe the bumper sticker mantras that are their guiding principles. I guess once afflicted by the cancer of conservatism, you are forever brainwashed....a great case in point is the follow-up letter directed to you...nothing he argues is valid.
I want a government that provides for it's citizenry while protecting us, not from the rest of the world, which is progressing well ahead of us by leaps and bounds in just about every area except selfishness, but from those that gather wealth and power to simply be able to gather more wealth and power..our own business "leaders". What a government can do it should do...not by stepping aside to leave markets undirected (they go to excess, not balance) This lays the best platform for success and prosperous growth without allowing the "fuedal lords" of capitalism to assume leadership roles & federal influence while gathering their wealth at the expense of its own population. And, not true that their aren't any intelligent or creative enough to govern appropriately (hence the fallacy 'smaller gov't is better'), they just aren't to be found in the republican party or as subscribers to the "ideals" of conservatism. If we want to get out of this darkness and confusion that clouds our country, we'll be taking your words to heart Mr. Kelly, and simply saying "no" to the nonsense that the Koch brothers and Mr. Murdoch and Ailes keep selling.
You're going to have to be more specific, cycle bear. Just saying "it's not valid" doesn't mean anything. That's just your opinion. Refute the facts, or ... well, you know.
As for the rest of your comment, you must be a great fan of Joseph Stalin. Read about his Collectivization policies. As for, "What a government can do it should do ... This lays the best platform for success and prosperous growth " name one in history where this has succeeded - without subjugating the citizenry.
Obama has stated that he would freeze the budget at his last two state of the union addresses. He caved last year and this year hasn't shown much backbone either. If I were a Repub member of Congress, I would let him make the first move to finally live up to his word.
It will be especially interesting to see if he incorporates any of his deficit commission's recommendations, another test of his character.
If you lift the cap on SS taxation, will the benefit be lifted as well? Or is this just a poorly disguised income redistribution program.
We could still leave the SS Tax at 4.2% but raise the cap to 1 million.
This would keep it solvent for decades.
Colin
Diane & Guests,
Switching the subject. This week's CPAC conference shows that there are just as many Conservative elitists as there are Liberal elitists. I for one do not really like either. I think most Americans feel the same. This fracturing of the political body into extreme postions is not what America needs to move forward and solve our problems. Although the CPAC attendees are feeling good about themselves, it will come back to haunt them if they do not moderate their postions. After all, Obama's election was a refudiation of their policies.
Agreed.
Would we have a problem with the budget if we had the tax rates from the Eisenhower administration? It seems that people today want government services but do not want to pay for them.
Would we have a problem with the budget if we had the tax rates from the Eisenhower administration? It seems that people today want government services but do not want to pay for them.
Would we have a problem with the budget if we had the tax rates from the Eisenhower administration? It seems that people today want government services but do not want to pay for them.
Diane says her show sells books. No, it sells corporate books from a hand full of publishers at the expense of thousands of other zinesters and publishers like myself who oppose this lopsided coverage. NPR reaps revenue sharing deals with books that are sold, refuses to talk about that, the publishing industry problems, and refuses to talk to writers advocacy groups and leaders against these unfair policies.
For the record, the 2% reduction in payroll taxes from individuals paying social security is being made up in the trust fund by contributions from the general fund. The total amount collected for social security is the same, the source is different.
Also, can we stop a moment from repeating that "social security is failing" and look at the real numbers?
According the the recent trustee's report, by 2018 the trust fund will have $3.7 trillion in current dollars. Combined with payroll taxes, that is enough to cover all promised benefits through 2042 (30 years).
If the government can't repay the social security bonds, the entire world is broke. The trust fund is backed by the full faith and credit of the US government.
Baby boomers are currently retiring (and at an accelerated rate because of the current difficulty in the job market). Almost all will be dead by the time social security has any difficulty.
Even though the demographics show that by 2035 only 2.1 workers will be paying for every beneficiary, increases in productivity should more that make up for the change.
When social security is discussed, often the problem is linked with medicare. Medicare must be changed and is a reason for health care reform but not a reason for changing social security.
Finally, with only a slight increase (around 40 cents a week per year for the average worker) social security can be made solvent at current levels of benefits for the next 85 years. That is as long as anyone can hope to be alive.
I have a question and comment about the health care mandate. We currently have a health care insurance mandate. It is called Medicare/Medicaid. We all have to pay it even if we are not receiving any services. We also have many non-paying beneficiaries of health care that are now complaining about having to pay for insurance. My question is this; if Medicare/Medicaid is required will the latest health insurance mandate be ruled constitutional? If not, then would the whole OASDI model be ruled unconstitutional?
Sue from Columbia Mo.
I know the mention of raising taxes is political suicide for anyone in congress or the President. But I think there are an awful lot of citizens who are willing to pay a little more to lower the deficit. Everyone has the opportunity to pay a $1 toward the presidential election campaign on their taxes. What if there were a similar option that would go toward the deficit, but not limited to $1.
Time must be spent calming down the tea party people. It is like people that won't take polio vaccine, or say US wants to spread aids in Africa. This is a political technique to keep reason and aid out. It is like me on election day, with multiple schlerosis, insisting I had to take off the birkenstocks that kept me stable, and put back the Staff that keeps me erect when I have to stand in one place, and go put some tennis shoes on and a cane, or else the tea party person at my polling station would say I thought I was Jesus Christ in sandles and with a staff and you can't fix this type of hubbub. So I had to go, exhausted, fall down, look drunk, but at least I didn't "think I was Jesus Christ." Poor Obamma is trying to work his way to these people. They don't know they have been 'fiddled with', exhausted, hurried and worried, and came running to the "New Preachy-Teachy thing," Devil in Wolf's clothing.
My tirade seems to have driven many of the normal DR shows commenters away.- I’m sorry to see that.
Ecgberht
I respect your attempt to cite facts to back your opinion-that’s refreshing. And respect your opinions, but not necessarily all your conclusions.
You say the point us “liberals” (I’d prefer to be thought of as progressive- and also say I speak for myself and no one else, but whatever) is that governments don’t create growth. Gov can do a lot. They can facilitate the transfer of wealth from the US treasury to the coiffures of large corporations- which I would argue has been done quite efficiently. Gov can enter into “wars of choice” with devastating consequences both to our economy and to foreign relations. Gov can play a large role in the quality of education, infrastructure, and help provide services that most associate with American way of life. Interests rates (in the 20%s during Reagan years, and zero now) can also have profound effects. Foreign trading policies are also relevant. It also can encourage “innovation”. These are just some of the ways gov can effect “growth”.
But you may be right in this respect- America’s last great hope seems to revolves around what those corporations and individuals decide to do when they climb down off their mountains of cash. Do they come up with innovative ways to stimulate job growth in America or not- that is the question. It seems to be largely in their hands whether America recovers or is permanently stunted. Whatever they choose to do, there are some risks involved- there will never be complete "certainty".
slaffey,
You can already do that. If you go to the IRS web page, there are instructions for how you can send the government money earmarked for the debt. In my opinion, anyone who does that is an enabler, but you can do it if you wish. Interesting that the Bill Gates's and the Warren Buffet's of the world who advocate for higher taxes also have that same opportunity - to send money to pay down the debt, but don't do it. Instead all of their donations go to charities of their choices. Do as I say, not as I do.
For the past two weeks your guests when asked about congressional salaries have simply stated that Republicans have cut the budgets of their offices by 5%. I find this answer rather than a discussion of the details completely unsatisfactory. According to CNN this amounts to an average cut of $75,000 to each Congressperson's office.
I think it would be fairer if they cut their own salary of $174,000 (more for House leaders) by 10% first as part of that cost consciousness. That would leave only $57,600 of sacrifice to be shouldered by their staff, constituent services, district offices or travel to their district in order to achieve the same net cuts.
I really think that an age of austerity is required and that the Republicans are asking others to sacrifice and not themselves. Let's all be honest about the scope of this problem and say often and clearly that sacrifice will be required from all in terms of spending cuts, higher tax revenues and entitlement program cuts in order to balance the (at this stage of the financial cycle and GW Bush political legacy, understandably) completely out of whack federal budget.
I am outraged that Republicans first actions in charge of the House did not cut their own salaries but placed the burden exclusively on their staffs to cut a mere 5% of their offices spending.
I also want to suggest a discussion on the DR Show and express strong criticism of the House Republicans permanent disregard for the democratic rights of the citizens in the District of Columbia. I'll be glad to participate when patriotic American citizens occupy the U.S. Capitol grounds a la Tahrir Square and insist that DC citizens be treated fairly and not more like Egyptians than Americans. If the District of Columbia was dominated by their party, Republicans would not stand for this. I and many other Democrats would not support the Democratic party in any efforts to disenfranchise voters while I see this as a platform plank of the Republican Party.
Diane and guests,
The issue of tax cuts didn't really come up, and when a caller talked about taxes he was politely brushed off. I think the Republicans disingenuous at least and nefarious at most by insisting on tax cuts without a way to pay for them, and then gnashing their teeth and wringing their hands at the deficit.
Everything the federal government does isn't bad. The National Park Service, air traffic controllers, food safety, the Smithsonian. All these things are worthwhile, are for the public good, and cost money. Of course some folks might not agree with me, but then I don't want to live in the kind of world they advocate.
I must call out the guests on two points, however. One, I don't think the wealthy suffered that much during this economic downturn, and there is evidence to support this assumption. And two, Social Security is NOT an entitlement program. I paid into it since 1975, and I will continue to pay into it for another 20 years, God willing. I just hope shortsighted, out of touch politicians don't destroy Social Security for the American people. And if they do, they will never get another vote from me or my family
Drew Kelly,
Thanks for the thoughtful reply, and please forgive my impertenance.
The Federal Government CAN do a lot. I agree. I just don't think it should. I think the Founders would have agreed with me. That's why Article I looks the way it does. And when you break down the examples you give, none of them provide growth - at least not sustainable growth. The reason is, they are all done with money taken OUT of the economy. Injecting money into certain businesses, manipulating interest rates, etc. may give "sugar highs", but these things all have unintended consequences as we are seeing. And every dollar that is spent on one of these sugar highs does not come from "the US treasury" as you say, it comes out of the pockets of taxpayers.
Take a serious look at Article I and see how limited the powers of the Federal Government SHOULD be. Then look at what we have. Most of the significant powers that the Federal Government weilds (from HUD to HHS to DOE to the various social programs of SS and MC) should be managed, if they exist at all, at the state level according to the Constitutuion. I just don't see how you justify them under Article I. And it is worth noting that once these limited powers were signed onto by the Founders, they found that the powers were STILL too broad, and that's where the Bill of Rights comes from more than 4 years later.
I repeat, the Government does not effectively create sustainable growth in the economy. It's not efficient enough, nible enough, or collectively "smart" enought to do that - and at the same time keep people free.
ecgberht on
February 10, 2011 @ 5:12 pm wrote: "You are living in a fantasy world of your own making."
PART ONE
And do are you - partially, anyway. I agree that Kelly's Comments are a bit overbroad (a fact he/she admits), but yours are at least just as bad.
I agree that Clinton does not deserve all the credit for the surplus, but funny how you Republi-Cons are usually so quick to argue that what happens during a President's term is entirely his responsibility (except when it comes to taking blame for 9/11, the Great Recession, etc.). The important point is that during the Clinton years (and to be fair Bush the First, too) the mindless philosophy of "tax cuts all the time" was rejected, and (contrary to "voodoo economics") the economy improved.
Concerning the repeal of Glass-Steagall, in case you forgot it was a Republican Congress that did that (with Phil Gramm leading the way), but I don't hear you blaming them.
As for the Community Reinvestment Act - please, believe that canard if you wish, but it's been pointed out that the vast majority of the toxic mortgages were issued by mortgage brokers who weren't covered by that law.
By the way, that "ten years later" you invoke is one of the prime pieces of evidence against your argument. The "toxic mortgages" which triggered the recession were all adjustable rate mortgages (ARM's) with artificially low initial rates. That was part of the problem. When they began to adjust to market levels (2 to 5 years after being issued - depending on the terms of the mortgage), the people couldn't afford the huge increase in payments, and the collapse began.
Well, do some quick math. The decline began in 2006 or 2007. If we take the later date, and subject 2 - 5 years, the mortgages that triggered disaster in 2007 were issued between 2002 and 2005. Hmm, who was President then, and which party controlled the government for almost that entire time?
TO BE CONTINUED
PART TWO
As for Bush the Second: when he took office unemployment was at 4.2%, by the middle of his third year (2003) it was over 6%, and throughout his term it never shrank back to where it was at the start. Yeah, tell me again what a great job he did.
And while we're on the subject of assessing blame, how come you Republi-Cons blame Obama for not reversing the recession that began under Bush, and claim the latter deserves no blame for it, but feel free to blame Clinton - when you're not blaming poor old Carter? If we followed the "logic" of the 2010 elections, the Democrats should have retaken the House in 2002!
No, you don't provide an "accurate reading of history", you provide a distortion of it, viewed through a partisan and ideological lens. Governments can't create growth? Tell that to the people who were gainfully employed thanks to government programs during the Great Depression. Tell that to America's booming economy during World War II (oh, maybe that rule doesn't count when the money is being used to blow up things and kill people).
I agree that government is not always the solution, and can sometimes be part of the problem, but neither is it always the problem as you worshippers of the "pure, perfect, sacred, and holy" free market seem to believe. The true task is to find the right balance between government and the marketplace. Mindless ideology, whether of the left or right, can't do that.
"I also want ... express strong criticism of the House Republicans permanent disregard for the democratic rights of the citizens in the District of Columbia."
Earth to David - From 2008 until 2010, Democrats could have done anything they want in Congress with respect to DC and the citizens you seem to think are forced to live there. I didn't hear you screeching then. We are a nation of laws. If you want to change the law with respect to DC, then work toward that. Don't just demonize the opposition party. It doesn't get you anywhere.
feldgary@gmail.com on February 11, 2011 @ 10:51 am wrote: "Would we have a problem with the budget if we had the tax rates from the Eisenhower administration? It seems that people today want government services but do not want to pay for them."
Very well put.