One Day You’re Gonna Wake Up

May 4, 2007

By David Michael Green
dmg@regressiveantidote.net

One day you’re gonna wake up, America.

And, like every other one since last you can remember, it’s gonna be an ugly morning.

One day you’re gonna wake up and go to your lousy job with its lousy salary and non-existent benefits. You might even remember the good job you once had. Or that the government you once supported gave tax breaks to companies like the one that exported that good job of yours to the Third World (which is what they’re now starting to call your country). Or that that same government undermined the labor unions which fought to get you your good wages and benefits.

One day you’re gonna wake up and be furious at the monstrous tax burden you are carrying, a tab which accounts for fifty of the seventy hours you must work each week just to eke by. You might even figure out why your tax bill is so high. You might remember that the government you once supported shifted the tax burden from the rich onto people like you, and from the taxpayers of the time onto those of today. And that they borrowed money in astonishing quantities to fund their sleight-of-hand, so that you work thirty hours a week just to pay the interest on a mountain of money borrowed decades ago.

One day you’re gonna wake up in anger at the absurdly poor education your children are receiving. You’re gonna remember that it wasn’t always that way, that even after the military’s voracious appetite was temporarily sated, your country still managed to find a few bucks to at least educate a workforce. No more. And you’re gonna remember how you applauded when your educational system was twisted in to a test taking industry that is careful, above all, not to teach children how to think.

One day you’re gonna wake up literally sick and tired. You’re gonna want treatment for your maladies but you won’t be able to touch the cost. You’re gonna wonder what you were thinking when believed your country had the best healthcare system in the world, even though it was the only advanced democracy in the world that didn’t provide universal care, even though it devoted fifty percent more of its economy than those other countries to pay for a system that left fifty million people uninsured, and even though there were massive layers of unnecessary and harmful private sector bureaucracy skimming hundreds of billions of dollars of profits out of the system in the name of free enterprise.

One day you’re gonna wake up too tired to go to work anymore. You’re gonna want to retire in dignity but will be left instead to laugh bitterly at the cruelty of that joke. And you’re gonna wonder what in the world you had been thinking voting for a president who’s primary goal was to allow Wall Street to raid Social Security, destroying what had once been considered the most successful domestic program in human history.

One day you’re gonna wake up and wish that it wasn’t so bloody hot, and that there weren’t so many diseases and species eradications and violent storms lashing the planet. And maybe you’ll even remember that you once supported a government that lied about the very existence of global warming - back when it might have been curtailed - a government that scuttled the barest remedy for the problem in order to protect oil company profits.

One day you’re gonna wake up and wish you had a government that could simply and competently do the basic things it was designed for. A government that could protect you from foreign attack, that could come to your rescue after a devastating hurricane, that could properly manage a new program or other people’s security. An administration that didn’t pervert the purpose of every agency within the government to its opposite, using civil rights lawyers to fight civil rights, for example, or the EPA to protect polluters.

One day you’re gonna wake up and cry out for simple justice, blindly applied without bias. And perhaps you’ll remember when that principle died. When your country stood by and watched the politicization of its judicial system for purposes of partisanship, and said nothing. When it stood by and watched its highest law enforcement officials in the land lie about their failing memory of events and pretended to believe that was acceptable.

One day you’re gonna wake up and wish that you weren’t being drafted to go fight wars you don’t believe in. You’ll remember how soldiers were sent to their deaths for lies. You’ll remember how badly they were treated when they came home maimed and twisted. You’ll remember how real, patriotic, former soldiers were mocked and humiliated by dress-up, unpatriotic, former non-soldiers. And suddenly you’ll understand why no one would volunteer for the military anymore, and why people like you had to be drafted.

One day you’re gonna wake up and want very badly to run outside and scream in anger about a government that long ago stopped serving your interests in favor of the narrow interests of a tiny oligarchy. But instead you’ll stay inside and keep your scream tucked safely in your belly. Because you’ll know that in your country dissent has long since been outlawed, on pain of torture and death. You’ll remember concepts like due process, limitations on government search, seizure and wiretapping, habeas corpus, trial by peers, legal representation and prohibitions against cruel and unusual punishment as historical artifacts no longer even taught in schools.

On day you’re gonna wake up and want so badly to change governments. You’re gonna treasure the concept of democracy like no Soviet dissident ever did. You’re gonna crave the opportunity to own your own government, to make your own societal choices, to make a change of direction never before so desperately necessary. And you’re gonna wonder why you didn’t speak up as you watched first-hand the dismantling of the democracy you had been handed by previous generations of patriots. You’re gonna wish you had been patriotic enough yourself to demand, above all else, free and fair elections, and you’re gonna shake your head in puzzlement at how you stood by watching in silence those that patently were not.

One day you’re gonna wake up and want to get the hell out of your rotting, repressive country. You’re gonna remember a time when that wasn’t true. But, oddly enough, you’ll find that other countries remember too. They’ll remember your country’s arrogance, its unilateralism, its walls, its racism, and its politicized abuse of immigrants. And they’ll remember how your government undermined and violently replaced theirs whenever corporations from your country had their profits threatened. You’re gonna want to leave, but there will be nowhere you’ll be welcome. You’re gonna find out that walls can face both directions.

One day you’re gonna wake up in a hostile world where your country no longer has any friends. There will be governments of other countries - former long-standing allies - that cannot afford to have anything to do with you, lest their publics angrily remove them from office for collaborating with a country as hated as yours. Nor will those governments trust yours anyway. They will perhaps possess intelligence that could save your life, but they will not share it. They will possess forces that could help you survive real security threats, but they will not provide them. Your country will have become an international pariah, the South Africa of the twenty-first century.

And because no one will assist you, one day you’re gonna wake up fearing for your life as your country is brutally attacked by angry militants deploying weapons of mass destruction against your cities. Long dormant connections in your brain will resurface, and you will dimly understand why. On this day - perhaps March 20, 2023 - you might be assisted in your comprehension by the message of one of the attackers, someone whose family your country callously destroyed in its mission accomplished in Iraq, and who spent the next twenty years plotting this day’s revenge. And you will wonder again why you stood by as your country attacked Iraq on a completely bogus pretext. You’ll remember applauding when this mailed fist was long ago sent. And, just as it comes hurling back in your direction at a lethal velocity, stamped “Return to Sender”, you’ll wonder what you were thinking. And you’ll realize just how much you weren’t.

One day you’re gonna wake up, America, and you’re gonna find out what was happening while you were sprawled on the couch watching endless mind-numbing loops of CSI, Desperate Housewives or Dancing with the Stars.

One day you’re gonna wake up and realize that catching all the action during week seven of the 2011 NFL season really wasn’t so critical in the greater scheme of things after all.

One day you’re gonna wake up and wished you’d invested a little more energy into monitoring and choosing the people who made monumental decisions on your behalf.

One day, with a flash of remorse greater than you thought it possible that one human vessel could contain, you’ll remember the ignored warning shots across your bow. Moments later, you’ll discover the human capacity for searing remorse is actually even greater still, as you contemplate your inattention even to the shots that were fired right through the bow. With a fury you would yesterday have thought yourself incapable of, you’ll hurriedly attempt to affix Band-Aids to the tattered splinters remaining from your country’s once sturdy hull. But you’ll learn quickly the toll of those years spent wasted in a civic coma. You’ll find that no amount of patchwork can any longer save this sinking ship from its appointment with the dustbin of history.

In shame, you’ll regret the callous arrogance with which you laughingly dismissed those who sounded the early clarion call. “We are destroying ourselves”, they tried to tell you. But even on the rare occasion when you roused yourself from your stupor long enough to learn the slightest bit about the very threats that jeopardized your life and that of your species, still you found it more reassuring to follow the blustering worst amongst us, with their patently absurd pretended confidence, and their ever constant resort to the cheapest of false solutions, and the rudest of demeanors.

One day, you’ll desperately search for hope of any sort, but none will remain. Nothing will be left to save you.

One day you’ll realize that once there were solutions, but that that day is now long past. You’ll see that human technological capacity ran its evolutionary race with wisdom, and the latter came in second. You’ll sadly realize that you stood by while your country led the once great tool-making species to its own destruction.

One day you’re gonna wake up, America, and realize how far it’s all gone. But if that day isn’t very soon, it won’t matter.

Because one day you’re gonna wake up, and it will be far, far too late.

US Tax season: Action day against occupation and war

Haitham

16. April 2007

In the US, there is a saying that “two things are only certain in life: Death and Taxes“.

Tax deadline in the US is traditionally on April 15, however, this year it was extended to April 17th because April 15th was a Sunday and Monday is public holidays.

Anyway, here are relevant facts and figures for US taxpayers:

• Percentage of US discretionary budget spent on education and other social services: 8%
• Percentage of US discretionary budget spent for military: 57% (but the wars on Iraq and Afghanistan are funded in supplementary budget requests so must be add to that!)
• US Military Budget as a percent of World total military expenditures: 49%
• Number of Americans classified as “food insecure” in 2004: 38 million
• Number of Americans without health insurance: 45 million
• Total direct aid to Israel 1948-2006: $255 billion
• Total Cost of US Support for Israel: $1.688 trillion (not counting money and lives lost in Israel propelled wars like Iraq, not counting loss of $trillions in business with the rest of the world because of US support for Israel etc)
• Federal aid for each resident in Louisiana in 2002 (from their taxes): $1,500
• Direct U.S. aid for each Israeli citizen in 2003 (per capita income in Israel-$16,710; they do not pay taxes to the US): $581
• Direct U.S. aid for each Ethiopian citizen in 2004 (per capita income in Ethiopia - $110): $2.50
• Percentage of U.S. foreign aid that goes to Israel: 27%
• Population of Israel as percentage of total world population: 0.1%
• Number of Palestinian minors killed by Israeli security forces (2000-2007): 814
• Total number of Palestinians injured or killed (September 2000-April 2007): 31,296
• Number of bullets fired by Israeli security forces in the first week of the second Intifada: 1,300,000
• Number of unexploded Israeli bombs strewn across South Lebanon after the 2006 war: 1,000,000 or 1.4 per resident

If you need more info on how your government spent your taxes, check out this:
http://nationalpriorities.org/index.php?option=com_content&task=view&id=286&Itemid=61

Action: Tell Your Rep. TODAY: No More Money for Bush’s War!

[Source: Mazin Qumsiyeh, Image by Ben Heine]

White House tries to hide ease of tax scam?

Bush may really be trying to block Congress' compelling a federal prisoner to testify. The White House does not want Gitmo prisoners telling all to Congress.
---
Politics

Prisoner to Testify on Ease of Tax Scam

Morning Edition, April 12, 2007 · The White House doesn't want a federal prisoner to testify at a Senate Finance Committee oversight hearing Thursday. The prisoner is supposed to tell senators how he made thousands of dollars using false tax rebates. The Justice Department had cited security as the reason to block the testimony, but recently gave up on its efforts to do so.

HERE:

by Nina Totenberg

Tax cheat escapes $100 million repayment thanks to flawed court documents

Related
The IRS vs. Ragnor Danksjold
---
LARGEST TAX PROSECUTION IN HISTORY

Gonzales screws up again, or did he?
---
Tax cheat escapes $100 million repayment thanks to flawed court documents

By Matt Apuzzo

ASSOCIATED PRESS

4:46 p.m. March 27, 2007

WASHINGTON – Poorly written Justice Department documents cost the federal government more than $100 million in what was supposed to have been the crowning moment of the biggest tax prosecution ever.

Walter Anderson, the telecommunications entrepreneur who admitted hiding hundreds of millions of dollars from the IRS and District of Columbia tax collectors, was sentenced Tuesday to nine years in prison and ordered to repay about $23 million to the city.

But U.S. District Judge Paul Friedman said he couldn't order Anderson to repay the federal government $100 million to $175 million because the Justice Department's binding plea agreement with Anderson listed the wrong statute.

Friedman said he could have worked around that problem by ordering Anderson to repay the money as part of his probation. But prosecutors omitted any discussion of probation – a common element of plea deals – from Anderson's paperwork.

“I've come to the conclusion, very reluctantly, that I have no authority to order restitution,” Friedman said. “I hope the government will appeal me.”

Channing Phillips, a spokesman for the U.S. attorney's office, which prosecuted the case in cooperation with Justice Department headquarters, said the government would bring civil charges against Anderson.

“The IRS still has ample civil remedies available to recoup the money which are, in some respects, more efficient and quicker,” Phillips said. “Combined with today's nine-year prison sentence, this was a significant victory for the government.”

That will require a new round of litigation in a court that does not wield the threat of more jail time. Prosecutors have said Anderson has money stashed away in accounts around the world, a claim Anderson denied in court.

He appeared humbled but not overly apologetic Tuesday. He took responsibility for his actions but said he never intended to defraud the government.

Anderson told the judge that his millions in unpaid taxes weren't funding an opulent lifestyle. He often used jets but for business or charity, he said, and usually he flew business class, not first class, and sometimes even coach.

“For every time I ate in a nice restaurant, I also grabbed a doughnut or a burger in an airport,” he said. “I could have wasted millions. I could have taken a limo everywhere.”

Friedman was not persuaded. He sentenced Anderson near the high end of his sentencing range.

“I do think it's important to send a message in a case like this,” Friedman said. “It's about as serious as it gets.”

Anderson started a long-distance telecommunications business in the 1980s as the industry was being deregulated. When his first company, Mid-Atlantic Telecom, merged with another company in 1992, Anderson formed corporations in the British Virgin Islands to hide the income, prosecutors said.

Authorities said Anderson used other offshore corporations to disguise his ownership in other telecommunications companies that earned more than $450 million between 1995 and 1999. He allegedly did not file federal income tax returns from 1987 to 1993.

With credit for the two years he has been jailed, he will have to serve seven years in prison and will be eligible for release in less than six years.

Among the taxes allegedly owed to the District of Columbia are use taxes, equivalent to sales taxes, on art, jewelry and wine. The indictment alleges that Anderson bought a painting by Salvador Dali and several paintings by Rene Magritte, an 18-karat gold bracelet and more than $47,000 in fine wines, then had them shipped to a Virginia address to avoid Washington taxes.

I.R.S. Letting Tax Lawyers Write Rules

Exxon's tax lawyer will be right over.
---
March 9, 2007

The Internal Revenue Service is asking tax lawyers and accountants who create tax shelters and exploit loopholes to take the lead in writing some of its new tax rules.

The pilot project represents a further expansion of the increasingly common federal government practice of asking outsiders to do more of its work, prompting academics and other critics to complain that the government is going too far.

They worry that having private lawyers and accountants draft tax rules could allow them to subtly skew them in favor of their clients.

“It’s not the fox guarding the hen house; it’s the fox designing the hen house,” said Paul C. Light, a professor of political science at New York University, who studies the federal work force.

By DAVID CAY JOHNSTON

--MORE--

Maybe We Deserve to Be Ripped Off By Bush's Billionaires

By Matt Taibbi, RollingStone.com
Posted on February 20, 2007

While America obsessed about Brittany's shaved head, Bush offered a budget that offers $32.7 billion in tax cuts to the Wal-Mart family alone, while cutting $28 billion from Medicaid.

"Now, after she shaved her head in a bizarre episode that culminates a months-long saga of controversial behavior, it's the question being asked by her fans, her foes and the general public: What was she thinking?"-- Bald and Broken: Inside Britney's Shaved Head, Sheila Marikar, ABC.com, Feb. 19

What was she thinking? How about nothing? How about who gives a shit? How's that for an answer, Sheila Marikar of ABC news, you pinhead?

I'm not one of those curmudgeons who freaks out every time that Bradgelina moves the war off the front page of the Post, or Katie Couric decides to usher in a whole new era of network news with photos of the imbecile demon-spawn of Tom Cruise and Katie Holmes. I understand that we live in a demand-based economy and that there is far more demand for brainless celebrity bullshit than there is, say, for the fine print of the Health and Human Services budget.

But that was before this week. I awoke this morning in New York City to find Britney Spears plastered all over the cover of two gigantic daily newspapers, simply because she cut her hair off over the weekend. To me, this crosses a line. My definition of a news story involves something happening. If nothing happens, then you can't have "news," because nothing has changed since the day before. Britney Spears was an idiot last Thursday, an idiot on Friday, and an idiot on both Saturday and Sunday. She was, shockingly, also an idiot on Monday. It will be news when she stops being an idiot, and we'll know when that happens, because she'll have shot herself for the good of the planet. Britney Spears cutting her hair off is the least-worthy front page news story in the history of humanity.

Apparently, from now on, every time a jackass sticks a pencil in his own eye, we'll have to wait an extra ten minutes to hear what happened on the battlefield or in Congress or any other place that actually matters.

On the same day that Britney was shaving her head, a guy I know who works in the office of Senator Bernie Sanders sent me an email. He was trying very hard to get news organizations interested in some research his office had done about George Bush's proposed 2008 budget, which was unveiled two weeks ago and received relatively little press, mainly because of the controversy over the Iraq war resolution. All the same, the Bush budget is an amazing document. It would be hard to imagine a document that more clearly articulates the priorities of our current political elite.

Not only does it make many of Bush's tax cuts permanent, but it envisions a complete repeal of the Estate Tax, which mainly affects only those who are in the top two-tenths of the top one percent of the richest people in this country. The proposed savings from the cuts over the next decade are about $442 billion, or just slightly less than the amount of the annual defense budget (minus Iraq war expenses). But what's interesting about these cuts are how Bush plans to pay for them.

Sanders's office came up with some interesting numbers here. If the Estate Tax were to be repealed completely, the estimated savings to just one family -- the Walton family, the heirs to the Wal-Mart fortune -- would be about $32.7 billion dollars over the next ten years.

The proposed reductions to Medicaid over the same time frame? $28 billion.

Or how about this: if the Estate Tax goes, the heirs to the Mars candy corporation -- some of the world's evilest scumbags, incidentally, routinely ripped by human rights organizations for trafficking in child labor to work cocoa farms in places like Cote D'Ivoire -- if the estate tax goes, those assholes will receive about $11.7 billion in tax breaks. That's more than three times the amount Bush wants to cut from the VA budget ($3.4 billion) over the same time period.

Some other notable estimate estate tax breaks, versus corresponding cuts:

• Cox family (Cox cable TV) receives $9.7 billion tax break while education would get $1.5 billion in cuts
  
• Nordstrom family (Nordstrom dept. stores) receives $826.5 million tax break while Community Service Block Grants would be eliminated, a $630 million cut
  
• Ernest Gallo family (shitty wines) receives a $468.4 million cut while LIHEAP (heating oil to poor) would get a $420 million cut

And so on and so on. Sanders additionally pointed out that the family of former Exxon/Mobil CEO Lee Raymond, who received a $400 million retirement package, would receive about $164 million in tax breaks.

Compare that to the Commodity Supplemental Food Program, which Bush proposes be completely eliminated, at a savings of $108 million over ten years. The program sent one bag of groceries per month to 480,000 seniors, mothers and newborn children.

Somehow, to me, that's the worst one on the list. Here you have the former CEO of a company that scored record profits even as it gouged consumers, with gas prices rising more than 70 percent since January of 2001. There is a direct correlation between the avarice of oil company executives and the increased demand for federal aid for heating oil programs like LIHEAP, and yet the federal government wants to reward these same executives for raising prices on the backs of consumers.

Even if you're a traditional, Barry Goldwater conservative, the kinds of budgets that Bush has sent to the hill not only this year but this whole century are the worst-case scenario; they increase spending generally while cutting taxes and social programming. They commit taxpayers to giant subsidies of already Croseus-rich energy corporations, pharmaceutical companies and defense manufacturers while simultaneously cutting taxes on those who most directly benefit from those subsidies. Thus you're not cutting spending -- you're just cutting spending on people who actually need the money. (According to the Washington Times, which in a supremely ironic twist of fate did one of the better analyses of the budget, spending will be 1.6 percent of GDP higher in the 2008 budget than in was in 2000, while revenues will be 2.6 percent of GDP lower). This is something different from traditional conservatism and something different from big-government liberalism; this is a new kind of politics that transforms the state into a huge, ever-expanding instrument for converting private savings into corporate profit.

That's not only bad government, it's bad capitalism. It makes legalized bribery and political connections more important factors than performance and competition in the corporate marketplace. Beyond that, it's just plain fucking offensive to ordinary people. It's one thing to complain about paying taxes when those taxes are buying a bag of groceries once a month for some struggling single mom in eastern Kentucky. But when your taxes are buying a yacht for some asshole who hires African eight year-olds to pick cocoa beans for two cents an hour ... I sure don't remember reading an excuse for that anywhere in the Federalist Papers.

I also don't remember reading much about this year's budget. It was a story for about half a minute when it came out two weeks ago. It barely made TV newscasts, and even when it did, only the broad strokes made it on air. There was some fuss about the Alternative Minimum Tax and a mild uproar over the fact that the 2008 budget failed to account for estimates of the costs for wars in Iraq and Afghanistan. But overall, the budget was a non-starter as a news story. As it does every year, it takes a back seat to hot-button issues like gay marriage, the latest election scandal, etc. Already, the 2008 election presidential campaign has gotten far more ink than the 2008 budget. As entertainment, bullshit politics always triumphs over real politics.

Here's the thing about the system of news coverage we have today. If the Walton family, or Lee Raymond, or the heirs to the Mars fortune actually needed the news media to work better than it does now, believe me, it would work better. But they have no such need, because the system is working just fine for them as is. The people it's failing are the rest of us, and most of the rest of us, apparently, would rather sniff Anna Nicole Smith's corpse or watch Britney Spears hump a fire hydrant than find out what our tax dollars are actually paying for.

Shit, when you think about it that way, why not steal from us? People that dumb don't deserve to have money.

Matt Taibbi is a writer for Rolling Stone.

© 2007 Independent Media Institute. All rights reserved.
View this story online

41% Percent of Your 2006 Taxes Go to War

Issues: Budget Priorities and Tax Policy

Updated: 2/15/2007

Posted: 2/15/2007

This chart shows FCNL's calculations of how much of your 2006 tax dollars go to pay for current and past military activities.

	2006 (In millions of dollars)	2006 Percent (Of federal funds budget)
Current Military Spending	571,558	28%
Cost of Past Wars	263,542	13%
Total Percent		41%
Interest on Non-Military Share of Federal Debt	211,462	10%
Health Research & Services	393,547	19%
Responses to Poverty	241,012	12%
General Government	84,609	4%
Community & Economic Development	112,125	5%
Social Programs	97,716	5%
Science, Energy, & Environment	50,815	2%
Non-Military International Programs	29,764	1%

More on Budget Priorities and Tax Policy

How Joe Lieberman sees himself

Editor's note: I am moving over to the other blog. Be sure to also see the new articles below. --- One of the neocon liars who got the Iraq war going. Related Lieberman Suggests Tax For War On Terror A war tax. Imagine that. Perpetual war encouraged by politicians so they can grab taxpayer paid for pork. How f'ing insane this guy is, a first class whacko elected by some good citizens of Conneticut - the richest state per capita in the union. Think about it. ---

THE LORAX by JEFFREY GOLDBERG How Joe Lieberman sees himself. Issue of 2007-02-12 Posted 2007-02-05 Hillary Rodham Clinton, like many capable politicians, has the ability to arrange her face in such a way as to convey nothing but placidity and benign pity when confronted by a hostile or unpleasant comment. On occasion, though, when her benevolence or, worse, her honor is questioned, her facial muscles tighten, her lips purse, and her eyes seem to darken. Such was the case at a hearing of the Senate Armed Services Committee in late January, when Senator Joseph Lieberman, of Connecticut, the committee’s army of one—he is the last self-identified Democrat in Congress, and perhaps in America, to express admiration for George W. Bush’s course in Iraq—accused his colleagues (and not only Democrats but those Republicans who are irresolute in their support for the President) of providing encouragement to America’s enemies. The purpose of the committee meeting was to consider the nomination of Lieutenant General David Petraeus as commander of the ever-more American multinational force in Iraq, but Petraeus was marginal to the proceedings. The real cause of the cross-party and intra-party squabbling was a nonbinding resolution stating that President Bush’s plan to send more soldiers to Iraq was “not in the national interest.” Lieberman opposed the resolution, as did most Republicans. For the senators on the committee who would like to succeed President Bush—Clinton and the ranking Republican, John McCain—the hearing could also be understood as campaigning by other means. Clinton, for example, had been using it to help the electorate forget that she initially endorsed the invasion. The Iraq war has upended the Senate, as it has all politics. Previously stubborn hawks among the Republicans have become critics of Bush’s war plans. John Warner, one of the committee members, has begun invoking Vietnam when talking about Iraq. His colleague Chuck Hagel, of Nebraska, a Vietnam veteran and a possible Presidential candidate, has become an apostate among many Republicans for his attacks on the President, whose new plan for Iraq he called a “blunder.” Then, of course, there is Lieberman. He was the lead Democratic co-sponsor of the 2002 Senate resolution authorizing the war, and seems to have had no second thoughts. Indeed, it is difficult to locate a Republican who is quite as sunny about Iraq’s future as Joe Lieberman is. Even McCain, who supports the President’s new plan, is openly frustrated with the Administration’s prosecution of the war, and has been especially critical of Vice-President Dick Cheney; Lieberman won’t criticize anyone involved but the comprehensively discredited former Defense Secretary Donald Rumsfeld. Iraq is the reason that Lieberman calls himself an “independent Democrat.” Democratic voters in Connecticut abandoned him in last year’s primary, favoring the antiwar candidate Ned Lamont. Lieberman ran as an independent, and beat the ineffectual Lamont in the general election in large part because Republicans voted for him. In the campaign, Lieberman said that he would join the Democratic caucus if elected, and his victory was the deciding one that gave the Democrats control of the Senate. But he told me recently that his attachment to the Party is based in some measure on sentiment, and should not necessarily be thought of as eternal. “A lot of Democrats are essentially pacifists and somewhat isolationist,” he told me. He had particular problems with Senator Edward Kennedy’s proposal to deny the President funding for a troop surge, and with an idea recently raised by the senior senator from Connecticut, Christopher Dodd, to cap the number of American soldiers in Iraq. Lieberman was not willing to say whether he would remain a Democrat if the Party cut off funding for the war. “That would be stunning to me,” he said. “And very hurtful. And I’d be deeply affected by it. Let’s put it that way.” Lieberman’s Democratic colleagues know that if he switched parties they would lose their majority, and so they tend to indulge him, unless they are speaking to reporters off the record. Even when Lieberman defends Bush, which is often, his colleagues avoid criticizing him in public—except when it becomes a bit too much, as it did, apparently, for Hillary Clinton. Lieberman, after reviewing Petraeus’s testimony, said, “You have also said that you fear that there would be disastrous consequences for Iraq, for the region, for the world economy, for the United States in the war on terrorism if we exit Iraq prematurely.” “Correct, sir,” the General replied. Lieberman asked what effect the resolution would have “on our enemies in Iraq.” Petraeus said that, as a soldier, he had put himself “in harm’s way” to protect the right to free speech, but added, “A commander in such an endeavor would obviously like the enemy to feel that there’s no hope.” Lieberman, fortified by this response, said, “A Senate-passed resolution of disapproval for this new strategy in Iraq would give the enemy some encouragement, some feeling that—well, some clear expression that the American people were divided.” “That’s correct, sir,” Petraeus said. In that case, Lieberman said, he would “make a plea” to his colleagues on Petraeus’s behalf to defeat it. “If, God forbid, you are unable to succeed, then there will be plenty of time for the resolutions of disapproval.” As Lieberman spoke, Clinton’s mask of equanimity seemed to slip for a moment, until she could assimilate the idea that Lieberman had, in essence, accused the Democratic Party of encouraging America’s enemies. When it was her turn to respond, Clinton spoke with heat: “I very sincerely but wholeheartedly disagree with those who are trying to once again up the rhetoric about our position in Iraq instead of taking a hard look about what will actually, on the ground, change the behavior and actions of this Iraqi government.” What she wanted, she said, was “to send a very clear message to the Iraqi government that they cannot rely on the blood and treasure of America any longer.” Then she delivered a polite rebuke to Lieberman, saying that she rejected the idea put forward by her “friends on the panel who think that statements of disapproval are somehow going to undermine our effort, when I think they will send the clearest message.” (Last week, Democrats agreed to a milder, compromise resolution, sponsored by the Republican Warner; Lieberman still opposed it.) Three days after the hearing, I went to see Lieberman in his office. He was cheerful and easygoing and more convinced than usual of the essential rightness of his vision. I asked him if he thought that Democrats who voted for the resolution would truly be giving encouragement to the enemy. “The enemy believes—Ahmadinejad has said this repeatedly—that we don’t have the will anymore for a long battle,” he said, referring to the President of Iran. When I asked him if he understood why Hillary Clinton might have reacted the way she did, he said, “I can’t explain why she did that.” Then he shook his head, apparently in sorrow. Lieberman, who was the Democrats’ nominee for Vice-President in 2000, clearly believes that he owes his party nothing. Only five Senate Democrats campaigned for him in last year’s general election, and he has said that he will not necessarily support the next Democratic nominee for President. Dodd, who recently launched a campaign for the Democratic nomination—one that is seen as semi-quixotic, even though he has more experience than Clinton, Barack Obama, or John Edwards—certainly cannot count on Lieberman’s support. Their friendship was ruptured when Dodd campaigned for Lamont in the Senate election last year. Iraq has tested several relationships in the Senate. McCain and Carl Levin, the Armed Services Committee’s Democratic chairman, have taken to bickering in public and on occasion seem unwilling to even look at each other. At one hearing, Levin asked for a review of certain benchmarks agreed to by the Iraqi government. McCain said, “Well, if you want to look back, that’s fine, Mr. Chairman. But the fact is, I’m trying to look forward. I’m trying to stop from sending the wrong message to the men and women who are going to be at risk, some of whom are going to die, that we disapprove of their mission.” The exchange continued: LEVIN: According to the public-opinion polls, a significant amount of the troops that are there want us to change the direction in Iraq. So it’s not us sending the wrong message; the troops themselves and their families have indicated very strongly in large numbers that the message that they want to get to the Iraqis is get on with their own government, get on with their own nation. So we’re going to call— MCCAIN: Mr. Chairman, I think I’m familiar with the sentiment of many of the troops. And the fact is, they want to win. LEVIN: We all want— MCCAIN: And that’s what they want, and that’s why we’re changing the strategy, Mr. Chairman. And I’m sorry you don’t support the strategy. LEVIN: Well, it’s a strategy which has failed. But few relationships are as unhappy as the one between Connecticut’s two senators. A wall in Lieberman’s office is covered with photographs of the two men together. One is inscribed, by Dodd, “To Joe, our first appearance together as Senators! You obviously have forgotten the first rule of a junior senator. They should be seen and not heard!” Lieberman has, in past years, described Dodd as his “best friend” in the Senate. When I asked him if this was still true, his eyes narrowed, and he said, “I have so many good friends in the Senate. John McCain is a very good friend.” These days, most of Lieberman’s closest friends in the Senate are Republicans. One of them is the Maine Republican Susan Collins. “In the lame-duck session right after the election, I went up to him on the floor of the Senate and gave him a kiss and welcomed him back,” Collins said. “And one reason I did this was that his Democratic colleagues didn’t rush over. I think they were worried about the reaction they would get from him. Some of them were embarrassed. Here he is, he’s back. And he’s the kingmaker, he holds their fate in his hands. How ironic is that?” Lieberman says that he does, at times, feel isolated. He is a liberal on social policy and a conservative on defense, in the bygone style of the late Senator Henry (Scoop) Jackson. “I’m the Lorax,” he said. “I’m saving that one tree.” In another conversation, he told me that he was reading “America Alone,” a book by the conservative commentator Mark Steyn, which argues that Europe is succumbing, demographically and culturally, to an onslaught by Islam, leaving America friendless in its confrontation with Islamic extremism. “The thing I quote most from it is the power of demographics, in Europe particularly,” Lieberman said. “That’s what struck me the most. But the other part is a kind of confirmation of what I know and what I’ve read elsewhere, which is that Islamist extremism has an ideology, and it’s expansionist, it’s an aggressive ideology. And the title I took to mean that we Americans will have ultimate responsibility for stopping this expansionism.” Lieberman likes expressions of American power. A few years ago, I was in a movie theatre in Washington when I noticed Lieberman and his wife, Hadassah, a few seats down. The film was “Behind Enemy Lines,” in which Owen Wilson plays a U.S. pilot shot down in Bosnia. Whenever the American military scored an onscreen hit, Lieberman pumped his fist and said, “Yeah!” and “All right!” I asked him if Steyn’s book appeals to him in part because he feels alone. “Well, I’m surprisingly alone at this moment on the question of Iraq,” he said. “Which is to say, I’m surprised that I’m alone. But I do believe that on the larger question of Islamist extremism there are a lot of others in the Democratic Party who see that as well.” He went on, “One part of my sense of mission coming out of last year is to make this case within the Democratic Party, to be strong.” To Democrats, Lieberman’s most vexing quality is not his early support for the war—Clinton, Dodd, and Edwards, among other senators, voted for the Iraq-war resolution in 2002. It is that no development—not the absence of weapons of mass destruction, or the Administration’s innumerable and well-documented mistakes in post-invasion Iraq—has lessened his admiration for President Bush or his belief that the war has aided America in its fight against Islamic terrorism. “I’ve had a lot of disappointments along the way here,” Lieberman said. “So why do I trust President Bush in spite of the mistakes that were made, consequential mistakes? Because having watched him, having talked to him, I believe that he understands the life-and-death struggle we are in with the most deadly and unconventional enemy, Islamic extremism. And that he has shown himself, notwithstanding all these mistakes, willing to go forward with what he believes is right for the security of the country, regardless of what it has done to his popularity.” “Isn’t President Bush responsible for losing this war?” I asked. “Insofar as you have to hold the Chief Executive accountable, he bears responsibility for the mistakes that were made on his watch,” Lieberman said. “But I think he understands that now. And, look, Rumsfeld is no longer there. Gates”—Robert Gates, the new Secretary of Defense—“is there. There are a lot of changes happening. We’ve got a totally new plan for how to succeed in Iraq.” Lieberman is an Orthodox Jew who takes his faith seriously, but there are times when he seems to wander across the line that separates piety from sanctimony. One such moment came on January 14th, when he appeared with Chuck Hagel on “Meet the Press.” Lieberman attacked senators who were critical of the President—including, presumably, Hagel—and said that his children and grandchildren would be imperilled by the unchecked rise of Islamic fundamentalism. “That’s why I want to do everything I can to win in Iraq,” he said. “And I think that’s what my oath of office requires me to do.” Hagel became livid. “I am not, nor [is] any member of Congress that I’m aware of . . . advocating defeat,” Hagel said. “That’s ridiculous, and I’m offended that any responsible member of Congress or anyone else would even suggest such a thing. Senator Lieberman talks about his children and grandchildren. We all have children and grandchildren. He doesn’t have a market on that.” McCain told me that one explanation for Lieberman’s obdurate support for the President was politics. Lieberman, he implied, had invested too much in his advocacy of the war to back away now. “It might be that Joe was assaulted so harshly in the campaign that he felt that if he showed any chink in his armor, people would exploit it,” he said. “You could do the commercial yourself.” He added, “I think Joe has been critical. But you know, he’s a much nicer man than I am, so maybe it’s just that.” Christopher Dodd offered another perspective. A popular figure in the Senate who has the buoyancy of a natural politician, Dodd portrayed Lieberman as the last of the uncomplicated neoconservatives. “I think there was this assumption that democracy was just waiting to blossom,” Dodd said of Iraq. “Let’s assume the President believed this, that it wouldn’t take much to produce a democratic society in Iraq. I’m not opposed to that, and I think that may happen, but the idea that you could go from where they were was a leap of faith, and many took that leap. Joe took that leap. He thought this was one way to bring stability in the region.” Dodd went on, “I’m in the Brent Scowcroft school, the world as it is.” Once, this would have been a surprising statement, particularly to Brent Scowcroft, who might be called a Republican fatalist. But Dodd said that the last four years had been “sobering” for him. “I’d love to see a democratic Middle East,” he said. “But you’ve got to be a coherent society before you can be a democracy.” In the absence of weapons of mass destruction, “If you came to the country and said, ‘This guy’s a bad guy, we want to invade his country,’ I could not justify the loss of three thousand Americans for this, as much as I disliked Saddam.” I asked Dodd if he has spoken to any other senators who are as optimistic as Lieberman is about Iraq. “I’ll tell you, I bet this has happened fifteen times in the last few days—conservative Republicans have said to me that they’ve told the White House that this is the last vote you’re going to get out of them, a vote against the Iraq resolution,” Dodd said. “They’re angry, and they sure don’t believe the new plan is going to work.” Neither Lieberman nor Dodd was eager to discuss the unravelling of their relationship, in particular its most painful episodes: Dodd’s decision to endorse Lamont the morning after the Lieberman primary defeat, and his appearance in a Lamont television advertisement, in which he said, “People want different leadership in Washington.” Lieberman’s friends were, of course, upset by Dodd’s infidelity. “I found that whole thing almost unbelievable,” Warren Rudman, the former New Hampshire senator, told me. “I can’t imagine why Chris Dodd did that.” Dodd justifies his endorsement of Lamont as one of principle over friendship. “I’m the senior Democrat in the state,” he said. “What do I tell a twenty-year-old, what do I tell someone who wants to be a Democrat and join the process? ‘I’m sorry, the primary doesn’t count, it doesn’t make a difference’? It was painful. I didn’t like it. But I wasn’t going to turn around and tell people this doesn’t mean anything.” Dodd told me that the two still talk on the Senate floor. “Joe just said to me the other day, ‘I disagree with you on this, but at least you’re trying to get something done.’ ” Another explanation for his endorsement could be deduced from Dodd’s appearance last month in Dover, New Hampshire. Dodd’s campaign for President is not a juggernaut—he jokes that he is currently competing with the margin of error in most polls. (“Is the motorcade ready?” he called out to me from his S.U.V. in Dover. The motorcade consisted of my rented Chevrolet.) But Dodd believes that it is still possible for a New England liberal (he prefers the word “progressive”) to succeed in national politics, particularly when the country is turning decisively against the war. Dodd wants a binding resolution to stop the President’s Iraq buildup, even though such a measure would almost certainly fail. “There’s nothing wrong with losing a vote if you’re making a point that people want us to make,” he said. “Things are going to get a lot harder in the next month or two. If we’re going to stop this, we have to stop it before the new troops get to Iraq. You’re not going to cut off their funds once they’re there. The window is closing. The country is way ahead of the Senate on this.” Still, even Dodd, with his antiwar, anti-Lieberman credentials, seemed unprepared for the brash liberalism on display in Dover. At one point, he told a crowd of more than a hundred Democrats, “I’m a strong advocate, by the way, that military recruiters ought to be allowed on the campuses of the United States. If a corporation that can violate the law can recruit, then the Army, the Navy, the Air Force ought to be able to recruit good people.” This statement was met with near-silence. Finally, Dodd said, “It’s O.K. to applaud for that.” Few did. Later, a leader of the local Strafford County Democrats, Tim Ashwell, said, “This is a very antiwar community.” I asked him about Lieberman, and his hapless 2004 campaign for the Democratic Presidential nomination; Lieberman placed fifth in the New Hampshire primary, and dropped out of the race soon after. Ashwell didn’t find that surprising. “People don’t think of Lieberman as a Democrat,” he said.

Bush's budget math doesn't add up

Dave Zweifel

By Dave Zweifel, Jan. 31, 2007
January 31, 2007

Politicians like to manipulate numbers when it comes to justifying their positions on taxes and spending, but our president definitely needs to be crowned the champion manipulator just by virtue of his State of the Union speech last week.

Regardless of what one thought of his Iraq strategy or even his convoluted health care plan, the worst was his pronouncement that his policies will produce a balanced budget by the year 2012.

Indeed, the budget deficit today is about half of what had been predicted last year, but first let's put things in perspective. Our country is still running more than $200 billion in the red every year when just six years ago it was showing a surplus. Our national debt has now ballooned to $8.7 trillion, about 55 percent higher than it was when George Bush took office.

The Congressional Budget Office agrees that the budget could be balanced by 2012, but that assumes that Congress will let President Bush's tax cuts expire in 2010 along with many of the corporate tax breaks enacted by the Republican Congresses of the past 12 years. It also assumes that nothing will be done with the increasingly unpopular alternative minimum tax which was once aimed at millionaires but now catches many in the middle class.

And guess who is fighting against allowing the tax cuts to expire? The same guy, of course, who contends we're on course toward a balanced budget. Is that an incredible game or what?

According to a piece in the New York Times that ran a few days after the speech, an official in the budget office said that if the tax cuts are extended, the cost to the U.S. treasury would be $1.4 trillion over the next 10 years. The impact on the deficit in the year 2017 alone would be more than $400 billion.

South Carolina Democratic Rep. John Spratt, chairman of the House Budget Committee, told the newspaper that it is far too early to cheer any of the budget news. Rather, he added, it's a "bleak reminder of how much current policy will need to be changed to return the budget to a fiscally responsible course."

Further, none of Bush's rosy predictions consider increased spending for the war in Iraq. The logistical support for those 21,500 new soldiers isn't going to be free.

It wasn't hard to predict, though, that the president's talk was going to be a little hard to figure. At the very beginning he called on the now Democratic-controlled Congress to do away with the expensive practice of attaching "earmarks" to spending bills to send billions of dollars of extra money to pet projects back home, often without even identifying the member of Congress who proposed the earmark.

Funny, he never asked Congress to stop that practice in the days when his own party controlled both Houses and could have easily done something about it. Perhaps that's because the Republicans perfected the idea.

Gold-Plated Indifference: PAUL KRUGMAN - Bush & Health

THE COMPLETE ARTICLE
The New York Times
OP-ED COLUMNIST

Gold-Plated Indifference

By PAUL KRUGMAN

Published: January 22, 2007

President Bush is someone with no sense of what it’s like to be uninsured.

President Bush's Saturday radio address was devoted to health care, and officials have put out the word that the subject will be a major theme in tomorrow's State of the Union address. Mr. Bush's proposal won't go anywhere. But it's still worth looking at his remarks, because of what they say about him and his advisers.

On the radio, Mr. Bush suggested that we should "treat health insurance more like home ownership." He went on to say that "the current tax code encourages home ownership by allowing you to deduct the interest on your mortgage from your taxes. We can reform the tax code, so that it provides a similar incentive for you to buy health insurance."

Wow. Those are the words of someone with no sense of what it's like to be uninsured.

Going without health insurance isn't like deciding to rent an apartment instead of buying a house. It's a terrifying experience, which most people endure only if they have no alternative. The uninsured don't need an "incentive" to buy insurance; they need something that makes getting insurance possible.

Most people without health insurance have low incomes, and just can't afford the premiums. And making premiums tax-deductible is almost worthless to workers whose income puts them in a low tax bracket.

Of those uninsured who aren't low-income, many can't get coverage because of pre-existing conditions — everything from diabetes to a long-ago case of jock itch. Again, tax deductions won't solve their problem.

The only people the Bush plan might move out of the ranks of the uninsured are the people we're least concerned about — affluent, healthy Americans who choose voluntarily not to be insured. At most, the Bush plan might induce some of those people to buy insurance, while in the process — whaddya know — giving many other high-income individuals yet another tax break.

While proposing this high-end tax break, Mr. Bush is also proposing a tax increase — not on the wealthy, but on workers who, he thinks, have too much health insurance. The tax code, he said, "unwisely encourages workers to choose overly expensive, gold-plated plans. The result is that insurance premiums rise, and many Americans cannot afford the coverage they need."

Again, wow. No economic analysis I'm aware of says that when Peter chooses a good health plan, he raises Paul's premiums. And look at the condescension. Will all those who think they have "gold plated" health coverage please raise their hands?

--MORE--

The Fart Tax - What price flatulance?

January 3rd, 2007 at 7:51 am

The inimitable Pierre Eliot Trudeau once said that the government has no place in the bedrooms of the nation. The prefab Tony Blair, however, thinks that where the government really belongs is up the rectums of cattle, and who among us would disagree?

Farmers will be told today they could be penalised if they do not stop their flatulent animals farting so much methane gas. The environment secretary, David Miliband, will tell a farming conference in Oxford that agriculture now contributes 7% of all UK greenhouse gas emissions and more than a third of all emissions of methane -one of the most dangerous greenhouse gases…

Tomorrow, I imagine cows all over Great Britain will be getting a stern talking to. Let’s hope they start with Margaret Thatcher.

(Humour, Science, Politics, animals, Canada, Crime, Weird, Allegory)

Israeli Tax Authority boss questioned in bribery probe

Last update - 16:22 02/01/2007


PM's bureau chief, Tax Authority boss questioned in bribery probe

By Jonathan Lis and Yuval Yoaz, Haaretz Correspondents

The police fraud squad on Tuesday morning questioned Prime Minister Ehud Olmert's bureau chief and the director of the Tax Authority over suspicions that businessmen and figures in the political world were bribing senior members of the Tax Authority in return for tax breaks.

According to the suspicions, tax officials were also bribed to promote associates of the businessmen and political figures to senior positions at the Tax Authority.

Olmert's bureau chief, Shula Zaken, and the director-general of the Israel Tax Authority, Jacky Matza, were both questioned at the fraud squad headquarters in Bat Yam.

Police from the fraud squad have raided the homes and offices of senior officials at the Tax Authority and businessmen, searching for evidence. Investigators believe that the alleged bribery involves a large number of high-ranking officials.

Business people are suspected of having exercised influence in recent months on the activities of the Tax Authority.

The Movement for Quality Government has demanded that Attorney General Menachem Mazuz and Civil Service Commissioner Shmuel Hollander immediately suspend Zaken from her post, as well as other officials currently under suspicion.

Zaken's brother, Jerusalem City Councilman and Likud Central Committee member Yoram Karshi, is also being questioned in connection with the alleged bribery affair, as is businessman and Zaken confidant Simu Tubol.

Tubol, a contractor and owner of a company that produces construction materials, also owns two upscale Jerusalem restaurants frequented by senior politicians.

Several months ago, Tubol was questioned over suspicions of tax evasion.

The police investigation of the Tax Authority, which was conducted in secret for several months, included wiretapping of Shula Zaken's conversations.

She was recorded speaking with a women IDF officer identified as L., the commanding officer of H. the woman soldier who accused former justice minister Haim Ramon of having kissed her against her will. Ramon is currently on trial for the alleged indecent act.

I.R.S. Is Spending Less Time Scrutinizing Big Businesses

December 21, 2006

By DAVID CAY JOHNSTON
The Internal Revenue Service has cut deeply the time that it spends auditing the nation’s largest corporations, according to data made public yesterday.

The figures, obtained by Syracuse University researchers, showed that the I.R.S. had reduced the time spent on each audit by 21 percent in the last five years, to 958 hours from 1,210 hours. At the same time, the number of actual audits, which had increased in the last two years, has fallen back to the level of 2002.

--MORE--

Krugman -- Flat-Out WRONG

Dec 22, 2006

By Bonddad
bonddad@prodigy.net

Today's Paul Krugman writes an essay in the NY Times arguing that the Democrats should not try and fix the deficit. While is argument is clear and cogent, it is also 100% wrong. Below I will explain why.

Here is a link to the editorial

Now that the Democrats have regained some power, they have to decide what to do. One of the biggest questions is whether the party should return to Rubinomics — the doctrine, associated with former Treasury Secretary Robert Rubin, that placed a very high priority on reducing the budget deficit.

The answer, I believe, is no. Mr. Rubin was one of the ablest Treasury secretaries in American history. But it’s now clear that while Rubinomics made sense in terms of pure economics, it failed to take account of the ugly realities of contemporary American politics.

And the lesson of the last six years is that the Democrats shouldn’t spend political capital trying to bring the deficit down. They should refrain from actions that make the deficit worse. But given a choice between cutting the deficit and spending more on good things like health care reform, they should choose the spending.

....

But the realities of American politics ensured that it was all for naught. The second President Bush quickly squandered the surplus on tax cuts that heavily favored the wealthy, then plunged the budget deep into deficit by cutting taxes on dividends and capital gains even as he took the country into a disastrous war. And you can even argue that Mr. Rubin’s surplus was a bad thing, because it greased the rails for Mr. Bush’s irresponsibility.

As Brad DeLong, a Berkeley economist who served in the Clinton administration, recently wrote on his influential blog: "Rubin and us spearcarriers moved heaven and earth to restore fiscal balance to the American government in order to raise the rate of economic growth. But what we turned out to have done, in the end, was to enable George W. Bush

.....

With the benefit of hindsight, it’s clear that conservatives who claimed to care about deficits when Democrats were in power never meant it. Let’s not forget how Alan Greenspan, who posed as the high priest of fiscal rectitude as long as Bill Clinton was in the White House, became an apologist for tax cuts — even in the face of budget deficits — once a Republican took up residence.

I understand what Krugman is saying -- by actually balancing the budget the Democrats would allow another Bush to come in and screw things up.

While I am sympathetic to that argument from a political perspective, I am completely opposed to it from a policy perspective for several reasons.

1.) The dollar is approaching multi-year years. While there are several reasons for this, the lack of fiscal discipline in Washington is one reason. Restoring fiscal discipline to Washington will help to bolster the dollar. Here is a recent chart of the dollar to illustrate what I am talking about.

2.) According to the Bureau of Public Debt, the US has issued over $550 billion dollars of net new debt each year for the last 4 years. The debt/GDP ratio now stands at over 60% of GDP. Simply maintaining that pace under a "do not harm" governing strategy will increase the burden on future generations. In addition, if we don't start addressing this issue now, it could spiral out of control and get to the point where it addresses us.

3.) It would increase the market's confidence. Corporations have a ton of cash on their balance sheet right now. However, they aren't spending it. That leads to the question of why? One of the reasons is the uncertainty to the current economic situation. Businesses look to the Federal government and see a mess. They know that eventually someone will have to clean it up. And that means tax increases and spending cuts. As a result, businesses are shoring up their balance sheets for that possibility. Balancing the budget will free up these balance sheets for more domestic investment.

4.) The end of crowding out. In line with 2 and 3 above, the net new issuance of debt means there is over $550 billion in money invested in government bonds that could be invested in the domestic economy. The US economy desperately needs this money.

Update [2006-12-22 9:37:19 by bonddad]:: I wrote the preceding in a fit of pique, so I left a few things out.

5.) Krugman wrote that Dems should spend on things like health care, etc... That's a good idea. But -- where is the money for that going to come from? Thanks to Bush's policies we are in debt. There ain't any money there.

6.) As the chart below indicates, the US is more and more obligated to foreign holders of US debt. Some of this is the result of the trade deficit. However, thanks to the budget deficit, the US is floating lots of debt as well.

7.) The entire US system is currently based on a "rentier" system. Because the US floats all this debt, it has to create a tax system that promotes debt. Hence -- the need to cut capital gains taxes and income taxes on upper-income individuals. After these taxes get cut, the US is more able to promote the "borrow and squander" theory of budgeting. Until we dry up the supply of debt, politicians will be more likely to promote the current system.

While I respect Krugman's intellect and ability, here he is simply wrong.

For market and quick hit economic commentary, go to the Bonddad Blog

Bush give Big Oil free ride costing taxpayers tens of billions

December 22, 2006
Incentives on Oil Barely Help U.S., Study Suggests
By EDMUND L. ANDREWS

WASHINGTON, Dec. 21 — The United States offers some of the most lucrative incentives in the world to companies that drill for oil in publicly owned coastal waters, but a newly released study suggests that the government is getting very little for its money.

The study, which the Interior Department refused to release for more than a year, estimates that current inducements could allow drilling companies in the Gulf of Mexico to escape tens of billions of dollars in royalties that they would otherwise pay the government for oil and gas produced in areas that belong to American taxpayers.

--MORE--

The Complete Failure of Supply-Side Economics: Bonddad

Dec 13, 2006

By Bonddad
bonddad@prodigy.net


Starting with Reagan in 1980, the Republican Party embraced and implemented "supply-side" economics. The central theory of supply-side economics was politically an easy sell: if the government cuts tax rates – especially on the wealthy – the wealthy will feel more inclined to earn more money. This will encourage the wealthy to make even more money. This will lead to higher tax revenue, which will more than offset the loss of revenue from the initial tax cuts. The central problem is no matter how you look at the results, they didn’t work as advertised.

Reagan started the implementation in 1981, cutting upper-income taxes from roughly 70% to 50%. But a funny thing happened. Tax revenues were stagnant for 4 years from 1981 to 1984. For the years 1981-1984, revenues from individual taxpayers were (in billions) $285, $297, $288 and $298, (click on historical budget data) respectively. While the double-dip recession is partially responsible for the first two years, the economy came out of the recession November 1982. Yet for two more years, the rich didn’t feel unencumbered enough to increase their work efforts. At the same time, discretionary spending increased from $307 billion to $379 billion – an increase of 29%. This discrepancy between revenues and receipts then continued for the rest of Reagan’s presidency. Here is a chart from the St. Loius Federal Reserve that shows the discrepancy. Expenditures are blue and receipts are red.

There are three problems with Reagan’s overall economic policy. The first is the massive amount of debt he incurred for economic growth (which we’ll get too in a minute). The second was Reagan did not implement the other side of conservative fiscal policy – cutting spending. The third problem was the US did not achieve a super-human rate of national product growth. The median quarterly change in GDP during Reagan’s tenure was 3.85%. This is a good rate of growth. But the cost was substantial because to achieve this growth Reagan used debt which the US has not paid off.

Bush 43 has attempted the same policy with the exact same result. Bush 43 has cut taxes twice. Yet revenue from individual taxpayers has not increased sufficiently to make-up for the loss in revenue. Revenue from individual taxpayers was $994 billion in 2001 and $1.08 trillion in the third quarter of 2006. However, Bush 43 has increased discretionary spending from $649 billion in 2001 to $967 billion in 2005. As a result, the gap between federal revenue and spending is similar to Reagan’s graph.

On the chart above, notice the scale for revenue on the right is $100 billion less per line than the expenditure line on the left.

As with Reagan, the US has achieved a good rate of economic growth, but hardly super-human in level. In short, as with Reagan’s economic plan, the growth achieved is insufficient to stimulate the economy to high enough levels to make-up for the loss in revenue.

The end result of all of this is simple: Reagan and Bush have mortgage our economic future with debt.

What makes this system even more sinister from a policy perspective is the issue of "rentiers". This is the fancy, eco-geek way of saying there are people who sit back and make money off of the current system without doing much except lobbying the government to maintain their benefits. In the current system, the US economy needs large pools of capital that will buy government debt to finance the economy. These people don’t really do much except collect principal and interest payments on the national debt. That’s their job and function in the US economy. Ever wonder why the Republicans were so interested in passing a capital gains tax cut? Now you know. The current national economic structure needs people who are willing to buy US debt. Therefore, we need to encourage that behavior with a tax code that benefits people who buy government bonds. The problem is this structure becomes self-defeating. As the government issues more debt, it needs more people to buy bonds. To do that, it continues to cut taxes to make government debt a more attractive investment, which in turn increases the use of debt to finance the US government. And around and around the cycle goes.

This also partially explains why the US can't take a stronger stand against China. China has routinely violated their WTO commitments on a host of fronts. However, the US needs the Chinese to buy US debt to maintain the American way of life. Hence, the US' over-reliance on debt makes it impossible for the US to use the "bully-pulpit" to challenge trade violations.

"So BD – why do you always harp on "supply-side" economics? We know it doesn’t work as advertised. Never has, never will." Here’s why I always harp on it.

The Republicans still believe in it.

They’ll find all sorts of ways to sell it, to make the basic facts fit their premise and to lie about it. No matter how many facts they encounter, they will find a way to make their dream theory come true. Since they list this election, they will return to their political roots, one of which is supply-side economics. And we have to beat them to the punch. We have to tell everybody until the whole country knows it’s a scam.

As the Democrats start to implement policy they will face tough choices regarding taxes, spending and government debt. And there are no easy answers to the questions they will face. The Republicans will jump in with their magic elixir of supply-side economics to make the problem seemly go away.
We have to prevent that from happening.

For more discussion on current economic matters, visit the bonddad blog.

Why Supply Side Economics Is Evil: Bonddad

Nov 27, 2006

By Bonddad
bonddad@prodigy.net


Republicans are incredibly adept at selling a particular message – regardless of whether or not there is a valid theory behind the message. No other Republican statement qualifies better than “tax cuts pay for themselves.” It is an insidious phrase for two reasons. First – it doesn’t work. Secondly, it’s an easy sell that plays to the worst side of human nature – the desire to have something for nothing.

Here is a history of tax revenue from individual taxpayers for Reagan, Clinton and Bush 43. All information comes from the Bureau of Economic Analysis.

Tax revenues from individual taxpayers were $290 billion in 1981 and $451 billion in 1989 for an increase of 55%. Over the same period, the GDP price deflator increased from 59.128 to 78.569, or an increase of 32.87%. This makes the inflation-adjusted increase in tax revenues from individuals for Reagan's presidency 22.13%.

Tax revenues from individual taxpayers were $505 billion in 1993 and $994 billion in 2001 for an increase of 96%%. Over the same period, the GDP price deflator increased from 88.39 to 102.42 or an increase of 15%. This makes the inflation-adjusted increase in tax revenues from individuals for Clinton's presidency 81%.

Tax revenues from individual taxpayers were $994 billion in 2001 and $1.086 trillion in the third quarter of 2006 for an increase of 9.25%. Over the same period, the GDP price deflator increased from 102.42 to 116.431 or an increase of 13.67%. This makes the inflation-adjusted increase in tax revenues from individuals for Bush a decrease of 4.42%.

So one President who used supply side economics saw an increase of 22.13% in individual tax revenue. However, Reagan raised taxes six times during his presidency, making him somewhat less of true supply-side proponent. Bush has remained steadfast in his "tax revenues pay for themselves" beliefs, with the result being an inflation-adjusted decrease in individual tax revenues for the duration of his presidency.

Neither Reagan nor Bush 43 has done anything to lower spending. Reagan increased discretionary spending from $307.9 billion to $488.8 billion, an inflation adjusted increase of 25.88%. Bush increased discretionary spending from $649 billion to $967 billion, for an inflation-adjusted increase of 35%.

Because the Republicans have failed to acknowledge the obvious – that their tax cuts haven’t paid for themselves and they haven’t lowered spending in any meaningful way – we have seen an explosion of US government debt under Reagan and Bush 43.

The above chart illustrates the underlying insidiousness of supply-side policies. Milton Friedman once said that a tax cut without a proportionate cut in spending is not a tax cut. The above chart illustrates why. If the government does not cut spending it has to increase debt to pay for the tax cuts. Eventually the government must pay-off the debt and to do so they must raise taxes. Or, the government can continually refinance the debt, increase the interest rate expense in the budget which will have the same effect. Either way, the problem is clear: at some future point, the government will have to increase taxes to pay for the original tax cuts.

The Republicans have continually implemented the easy half of conservative economic thinking – cutting taxes. However, no Republican has demonstrated anything like a clear desire to cut spending. As a result, the US national debt has continually increased when supply-side economic policies are implemented.

Despite the fact that no Republican has lowered spending to match the tax cuts that haven’t paid for themselves, Republicans continually argue tax cuts pay for themselves. Why?
Because supply-side economics plays to the worst part of human nature -- that you an get something for nothing. Think about it -- you can cut taxes, not cut spending and still get everything you want. There is no sacrifice involved; no tough choices. Instead, the Republicans offer easy answers to very complicated policy questions. And the public buys it because they want to. Hell -- who wouldn't want what the Republicans are offering? I know I do. Making matters worse is the fact that government debt issues are not exactly a high priority in the news cycle. For example, the US Treasury has issued over $550 billion dollars in net new debt per year for the last four years, yet the news is full of stories stating the deficit is decreasing. The news stories make no mention of the budget gimmicks used to get that number. Instead, they report the official White House number and the public is none the wiser.

Most importantly, the Republicans continued use of this mantra prevents a serious policy debate regarding taxes from actually occurring. They will always fall back on this mantra in any tax debate. And their message will be heard because people want to hear that message.
Until Democrats find a way to effectively counter this message – or until human nature changes – we can expect to hear this message from the Republicans.