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Preview: RealClearPolitics - Articles - Joe Conason

RealClearPolitics - Articles - Joe Conason

Last Build Date: Thu, 09 Apr 2009 00:00:00 -0600

Copyright: Copyright 2009

Obama: The Extremists' Nightmare

Thu, 09 Apr 2009 00:00:00 -0600

Touring the ancient Ottoman capital of Istanbul, Obama stood as a living refutation of extremist propaganda before he spoke a single word. Son and grandson of African Muslims, he symbolizes what is often called "American exceptionalism" -- the durable belief that the United States is the world's hope to escape the old and bloody divisions that have been so ruinous for humanity over the centuries.

He rose through an open and democratic process, despite the legacy of racism and the vicious smears that denigrated his Christian faith while depicting him as a secret adherent of radical Islam. His middle name, uttered with a sneer by bigots during the campaign, is now an important asset (especially among the Shia in Iran, Iraq and elsewhere). He personally embodies the message that America bears no ill intentions toward Muslims or their nations.

The previous administration's inability to broadcast that message effectively was among its most salient and least noted failures. While American policy in the Mideast has often angered Muslims -- not without reason in places from Israel to Iran -- the United States has other and more inspiring stories to tell as well. American soldiers were dispatched to protect the people of Kosovo from their Serbian oppressors, who portrayed the conflict there as a centuries-old clash between Christianity and Islam.

Meanwhile, millions of Muslim-Americans live peacefully here, under the protection of a constitution that guarantees their religious freedom. And when those rights have been violated, fellow Americans of every persuasion have come to their defense.

No doubt Obama meant to emphasize those aspects of American life in his Istanbul speech, addressing Turkish students and young people across the developing world, who long to believe again that the United States stands for equality, fairness and decency. That belief was impossible to sustain during a decade of war, destruction and torture. Now the burden is on the president to revive latent admiration for our country and our values.

The president's diplomatic efforts resonate with special strength in Europe as well as across the Mideast, Africa and Asia precisely because he does not claim that his own beloved nation is without fault or flaw. He doesn't pretend that American exceptionalism means American perfection. When he rebukes anti-American prejudice abroad, as he did at a town hall meeting in the French city of Strasbourg, his credibility is enhanced by honest acknowledgment of our mistakes.

While he returns home to remarkably strong and consistent support from most Americans, right-wing commentators relentlessly attempt to portray him as unworthy of trust and deficient in patriotism. They dishonestly truncate his speeches abroad, slicing out his defense of the United States and his rejection of anti-American propaganda, while headlining his candor about our flaws. They accuse him of apologizing for the war on terrorism, of "submission" to America's adversaries and of "blaming America first" in seeking personal popularity abroad. They stand for policies that have brought us to the lowest stature in our history, and they have nothing to offer, no policy or plan, except lies and deceptions.

The remarkable popularity of Obama across the world is not an artifact of anti-American sentiment, but its opposite -- namely, the hope that America will again stand for liberal traditions of generosity and cooperation. Now he has made a beginning.

No More Refuge for Scoundrels

Thu, 02 Apr 2009 00:00:00 -0600

According to a new investigative report from "ABC News," Cassano is the subject of a criminal fraud investigation by the FBI that is examining how he and his colleagues in AIG's financial products division set up the scheme to insure more than a trillion dollars of junk mortgage paper held by major banks. He walked away from those bad deals with over $300 million in personal profit. Aside from the fascinating matter of how he managed to commit these catastrophic bets without interference from his superiors, the most pertinent question is how he gamed the gaping loopholes in the international regulatory and legal systems.

Evidently Mr. Cassano established dozens of separate companies, including many that were located offshore, to handle the allegedly fraudulent transactions -- a maneuver that was designed to keep the deals effectively off the books of AIG and to mislead regulators in the United States and Britain. The crooks at Enron Corporation used the same techniques, essentially, to conceal what should have been reported on their corporate balance sheets -- and they too used offshore locations as instruments of fraud.

Jack Blum, a former Senate staffer who helped to lead the investigation of the Bank of Credit and Commerce International more than a decade ago, told ABC reporters that the abuse of tax havens "is the other very important issue underneath the AIG scandal. All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."

Massive fraud has been at the center of this crisis from bottom to top, as everyone paying attention must know. The criminal mindset extended from the bankers and mortgage agents who made loans to unqualified borrowers and sometimes tricked them into signing agreements they could not fulfill. (Among the most industrious marketers were many with actual criminal records, whose entry into the mortgage industry was not blocked by the state regulators.) They marketed those same bad loans with false assurances of their soundness to convince investors to buy them -- and somehow induced rating agencies to offer hollow testaments to their creditworthiness. Investors then resold the toxic packages to other investors both here and abroad. At every step, the inflation of the bubble was hastened by fraud, forgery and deception.

At the highest levels, those fraudulent transactions were aided by the existence of "secrecy spaces" in nice quaint places from Switzerland to Anguilla, where the malefactors could rely upon local authorities to collude in their conspiracies. Not only do the governments in the tax and regulatory havens pretend not to see what their corporate visitors are doing, but they actively shut out the scrutiny of anyone who might take action.

The costs imposed on the world by those selfish little entities are too great to ignore any longer. Vast amounts of taxable wealth, last estimated to exceed $12 trillion, are hidden in the protected banks of tax-haven principalities, with annual losses to the U.S. Treasury that may well be greater than $100 billion. But those same places appear to have provided a regulatory twilight zone where financiers like Joseph Cassano could run wild and ruin the rest of the world for profit. The urge to cheat on taxes and the desire to evade regulation represent the same destructive impulse, which governments around the world should now take steps to suppress.

Blaming Obama for a Bush Economy

Thu, 26 Mar 2009 00:30:00 -0600

In fact, the economy had been shrinking for nearly a year by then, and the market was responding to bad economic news rather than the election result.

But facts are inconvenient for propaganda -- especially when politicians and pundits are seeking to escape blame for policies that have failed.

Among the boldest perpetrators of this con game over the past few decades is Mr. Limbaugh, who shares with his fellow Republicans a peculiar method of timing the blame for economic woe. When he was flacking for the first President Bush back in 1992, he wrote: "The worst economic period in the last 50 years was under Jimmy Carter, which led to the 1981-82 recession, a recession more punishing than the current one." But of course the president during the 1982 recession was not named Carter; that president was the sainted Ronald Reagan.

In January 1981, Reagan took the oath, and within his first three months had rammed through a budget that contained his historic "supply-side" tax cuts. Reagan budget director David Stockman had created computer simulations supposedly showing that those tax cuts would result in 5 percent growth in gross domestic product during the following year. Years later, when simulation failed to materialize as reality, Mr. Stockman referred cynically to that prediction as the "rosy scenario" -- and admitted that it was essentially a fraud. Contrary to the rosy scenario, 1982 was the worst year since the Great Depression, with negative growth of 2.2 percent.

According to conservative theory, the mere announcement of massive tax cuts for the rich by a Republican president ought to have stimulated euphoria in the markets and rapid growth. And according to that same theory, as explicated by Mr. Limbaugh, the prospect of a Democratic president with a progressive agenda was what drove the markets down last autumn.

But there is a double standard at work here. When a Democrat is elected president, he is responsible for economic contraction even if he has yet to be inaugurated for three months. When a Republican is actually president, he need not be held responsible, even well after he takes office.

If that strikes you as inconsistent, then you are beginning to notice how blatant deception passes for conservative ideology. But the deception is even worse than it appears at first glance.

The same Republicans in Congress and on the radio who lionize the late Reagan now complain bitterly about the tax increases on the wealthy in President Obama's budget. What they never mention is that their conservative idol, faced with the recession that they blamed on his predecessor, likewise raised taxes during an economic slump.

Terrified by the looming deficits that resulted from the supply-side tax cuts, the Reagan administration rolled back many of the cuts just a year after they had passed -- instituting what then amounted to the largest tax increase in American history. Those tax hikes took back about a third of the cuts legislated in 1981. But that historic tax increase is never mentioned when Republican legislators invoke Reagan -- and they still love to blame Mr. Carter for their hero's recession.

So even as critics roast President Obama and his Treasury secretary, honesty requires that they acknowledge that the problems faced by President Obama and Mr. Geithner are not of their making. He has held office since Jan. 20 -- and if held to the Reagan standard, he deserves at least a year to begin correcting the Bush recession.

Push Back Against AIG's Brightest

Thu, 19 Mar 2009 00:20:00 -0600

It should be obvious by now that the AIG traders, along with many others like them, deserved to be fired and perhaps prosecuted rather than enriched. The "too big to fail" argument for saving their firm and their sorry behinds always amounted to a kind of blackmail. The threat was stated explicitly in the remarkable letter sent last weekend by AIG chief Edward Liddy to Treasury Secretary Timothy Geithner, which sought to justify the latest bonuses.

According to Liddy, the bonuses cannot be withheld because "these are legal binding obligations of AIG and there are serious legal as well as business consequences for not paying," or so the company's outside counsel has told him. "Given the trillion-dollar portfolio at AIG Financial Products" -- the division that wrote all the toxic paper -- "retaining key traders and risk managers is critical to our goal of repayment." Attached to the letter was a "white paper" arguing that failing to pay the bonuses would touch off a chain of defaults that might sink AIG permanently and cost the taxpayers additional hundreds of billions of dollars and further damage the markets.

In other words, pay up, or we'll hurt you.

President Barack Obama has expressed fury over the bonuses and ordered Geithner to claw them back, but his advisers seem to take the extortion threat quite seriously. It is far from clear that the president will use the full weight of the government's ownership of AIG to stop these abuses.

Actually, the argument that withholding bonuses to certain employees would constitute a breach of contract with AIG's counterparties seems strained. Would any judge really entertain those claims? Would any company really want to make such claims in court?

As for those "key traders and risk managers" at AIG, perhaps the time has come to call their bluff. For many years these expensive suits have told us that they are indispensable; that if we don't pay them extraordinary sums and guarantee their losses, no matter the moral hazard, our economy will collapse. Now it has collapsed, owing to their dishonest machinations and obtuse blundering -- and they still claim that we have to pay them or else.

Or else what? The Liddy letter, which referred to the affected AIG employees as "the best and the brightest," suggested they will seek employment elsewhere "if their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury." A resume that begins with a recent stint at AIG Financial Products might not be all that attractive to employers in an industry that is shedding thousands of jobs.

Disgruntled AIG employees may not just quit; they may sue us if we don't pay their bonuses. But let's see what happens in five years or so, as their lawsuit moves through the courts. Let's see how many of these executives really want to answer hard questions in a deposition about their dubious activities at AIG. And let's see how many of them suddenly realize that they may have criminal liability -- like their old boss Joseph Cassano, the former head of AIG Financial Products, who has hired a top defense attorney.

Meanwhile New York State Attorney General Andrew Cuomo is dealing with this problem ably and forthrightly. He has subpoenaed the names and contracts of all the AIG employees whose bonuses are at stake in the current controversy. He should publish their names and let them demand their money in public. Let them explain to the world -- including friends, neighbors and family -- why taxpayers should pay their bonuses while autoworkers give up pensions and health care.

Even their own mothers may stop talking to them.

Dumbest Proposal Ever?

Fri, 13 Mar 2009 00:00:00 -0600

From those Republican politicians often deemed most thoughtful, such as former House Speaker Newt Gingrich, comes a droning chorus for tax cuts on capital gains. This is the conservative panacea in good times and bad, but it is of little relevance to the problems of the moment. Investors are not fleeing the markets because they worry about enormous returns that will be subject to punitive taxation; they are abandoning stocks and real estate because those assets are deflating like punctured balloons. Until there is a real prospect of capital gains, cutting taxes on them will scarcely affect investment and jobs.

Descending the intellectual scale brings us to the House minority leader, John Boehner. He responded to the frightening February data on job losses -- more than 650,000 laid off in a single month -- to demand a "freeze in government spending" and a presidential veto of the $400 billion continuing budget resolution.

While Boehner said he understood that the mass firings meant worsening economic conditions, he seems more worried about "wasteful pork-barrel projects," a problem that concerned him not at all when his party ran Congress. To him, an unemployment rate surging past 8 percent is a signal that the government should impose a spending freeze "until the end of this fiscal year." A spending freeze, of course, is precisely the opposite of the policies pursued by the Republicans during the last recession, when their own political butts were on the line.

So is the minority leader suddenly crazy? Is he just economically illiterate? Or is he convinced -- like the would-be revolutionaries of the Depression era -- that the worse our general situation becomes, the better for his party? All three could be true at once, but his motivation matters less than his ideas, which would be ruinous to everyone if enacted.

What makes someone like Boehner important and potentially dangerous is not that anyone takes his bonehead advice seriously, but that he and his caucus can block or stall policies that might rescue us from the worst consequences of the bust.

The fundamental issue not only in America but in the world economy is a crisis of demand. As the Nobel economist Joseph Stiglitz has explained -- most recently at a panel in New York City sponsored by The Nation magazine and the Nation Institute -- average wages have fallen for more than three decades. Among the results of that invidious pattern was rising indebtedness, as banks extended usurious credit to working families struggling to maintain their living standards. Years of rising inequality has upset the equilibrium that resulted in rapid and sustained economic growth for most of the postwar period in this country, and created a prosperous, well-educated and optimistic middle-class society.

Back when America worked well, the gaps between the top and bottom of the income scale were far smaller, the public sector was more robust, the labor movement protected living standards, and the rewards of work were more fairly distributed. There is only one way to stop the downward slide and begin to restore that proven pattern of economic dynamism with a wage-led recovery.

Public spending, even unto additional trillions, is the only instrument available to prevent a global depression, assuming that we have not already forfeited that chance. The stimulus bill and the Obama budget are only first steps. We will need another strong shot of stimulus before the summer -- not a spending freeze -- and we can only pray that the president and the Congressional Democrats will have the guts to push the Republicans out of the way.

Rushing Toward Irrelevance

Thu, 05 Mar 2009 00:00:00 -0600

At the Conservative Political Action Conference in Washington last week, Rush Limbaugh declared that new ideas ought to be shunned by every right-thinking American. The radio kingpin savaged those in his movement who have dared to suggest that the right needs policy alternatives to compete with Democratic plans for economic revival, universal health care, environmental stewardship and educational improvement. Ranting on for more than an hour, he warned against any reconsideration of the sacred platitudes of Reaganism. "Everybody asks me ... well, what do we do, as conservatives? What do we do? How do we overcome this?" said Limbaugh, and, of course, he had a simple answer: "One thing we can all do is stop assuming that the way to beat them is with better policy ideas." He went on to denounce the conservative "media and policy types" in the "Beltway establishment" who have written on "the concept that the era of Reagan is over." That cued loud booing from the audience, which turned into cheers as Limbaugh roared: "We have got to stamp this out within this movement because it will tear us apart. It will guarantee we lose elections." The image of a radio demagogue, dressed entirely in black, roaring against dissenters from the official line, provoked comparison with Fidel Castro or Mao Zedong. Here was the harbinger of an ideology in decline, exhibiting the pathological aversion to intellectual activity and unfettered debate that is always the surest evidence of political decay. The irony, of course, is that Reaganism was, at its zenith, a vehicle for policy ideas as well as a personality cult. What began with the founding of National Review and the Barry Goldwater campaign as a rump protest against stale Republican moderation became the dominant current -- with a vision of its own and a series of policy schemes, from supply-side economics to workfare, faith-based social spending, school vouchers and Social Security privatization. But while the world has changed radically since those ideas entered the political mainstream a quarter-century ago, Limbaugh and his millions of followers evidently feel that any attempt to cope with change is heretical. Some Republicans clearly understand that their party and their ideology are exhausted, even if they still can't come up with anything more creative than capital-gains tax cuts. (That means you, Newt Gingrich.) They also know that as a public spokesman and symbol, Limbaugh, whose utterances over the years have been larded with obnoxious racism and sexism, leaves much to be desired. Broadening the appeal of the G.O.P. and renewing the party platform is plainly essential after two elections that have shrunk its base and shriveled its message. Perhaps that is one reason why party leaders chose Michael Steele, an African-American from Maryland, as the new chairman of the Republican National Committee. Even the clueless Limbaugh seems to realize that his movement has a problem, as he demonstrated when he vowed to convene a "female summit" to figure out why the great majority of women cannot stand him. But Limbaugh and his dittoheads -- whose prejudices also find expression in the wisdom of "Joe the Plumber" Wurzelbacher -- maintain a stranglehold on the right. When Steele dared to assert his leadership and sniped at Limbaugh's show as "incendiary" and "ugly," he swiftly followed up with the same kind of humiliating apology heard from other Republican critics of the radio host. Having claimed to be the "de facto" head of the Republican Party, Steele had to back down and heel to the strongman. For Democrats, these clown shows are amusing and encouraging. As long as the Republicans kowtow to Limbaugh, they won't be able to muster substantive opposition to President Obama and the Congressional majority. That may be just as well for now. But every nation needs a compet[...]

Pushed To the Margins, Finally

Thu, 26 Feb 2009 00:00:00 -0600

So as President Obama convened his "fiscal responsibility summit" and then delivered his first address to Congress, the voices of free-market fundamentalism were muted in Washington, if not on cable television. The anticipated onslaught against Social Security from those claiming to represent future generations did not materialize at the Obama summit -- and neither did the presidential capitulation that liberals had feared. Instead, the White House wonks insisted on discussing the actual threat to America's future solvency, namely the swelling price of health care for the retiring generation of baby boomers and its effect on Medicare and Medicaid.

The problem with these programs, which have done so much to improve the health of America's poor and elderly, is neither the size of the boomer cohort nor even their impending geezerhood. The problem is the rate of cost increase per beneficiary, according to a landmark study released two years ago by the Center on Budget and Policy Priorities (and described with admirable clarity by Ezra Klein on the American Prospect website on Feb. 23).

Respected across the political spectrum for the accuracy and relevance of its data, that liberal think tank happens to be the former professional home of Peter Orszag, the Obama administration's budget director. The center's insights into federal spending will inform policy at the highest level -- which means that reforming the way we finance and deliver medicine will be central to this government's fiscal planning. Although there are many other matters that must be addressed if we are ever to regain control of deficits when economic growth resumes -- from the abuse of tax shelters by the super-rich to the absurd rip-offs by military contractors -- the biggest money is in the health sector.

But how can we cope with rising costs when we have yet to achieve the basic national goal of providing universal coverage? Perhaps now Americans will look abroad and notice that other countries provide quality care to all of their citizens, spending less than half what we do and achieving better outcomes.

In the coming decades, countries in Europe, as well as Canada and Japan, will be able to invest their resources in energy and education, while we try to figure out how to borrow enough to keep our hospitals open. What they all have in common is that they do not devote a huge proportion of their health spending to the profits of insurance companies -- and they negotiate budgets with health providers, such as pharmaceutical companies.

The superior performance of these alternatives is at long last coming to the attention of the mainstream media, which has so long ignored it.

As always, Congress will resist change on behalf of the insurance and pharmaceutical lobbies, preferring to do nothing. But perhaps in the coming years, the public will realize that such feckless politicians should be told to go do nothing somewhere else.

Stimulus a Landmark Victory for Obama

Thu, 19 Feb 2009 00:00:00 -0600

Entering the Oval Office, Obama had set a daunting and somewhat contradictory set of priorities for himself. He had promised to remake the American economy even as he tried to revive it, with green jobs, better health care and improved schools. Economic conditions grew increasingly dire as he and his newly assembled team tried to create a plan to reverse the deflating spiral of dread and despair.

At the same time, he had also vowed to break the partisan deadlock in Washington by reaching out to the Republican opposition with respect and friendship. Many members of his own party doubted the wisdom of that course, knowing that the embittered minority was unlikely to respond in kind -- and of course they didn't. But had the president rolled over the Republicans from the beginning, he would rightly have been blamed for violating the trust he had earned during the campaign among independents and at least some Republicans.

In his effort to honor that pledge of bipartisanship, he surrendered too much too early in negotiations over the stimulus. But in the end, he won -- and if he must return to Capitol Hill for more spending, as he almost surely will, then he need not make the same mistake again.

Nearly every poll now says that Obama's popularity and approval ratings remain at extraordinary levels. Just as important, he has displayed the capacity to persuade the public that his policies deserve support, as he did when he finally began to campaign on behalf of the stimulus last week. The latest Gallup survey shows that support for the stimulus rose markedly among Democrats and stabilized among both independents and Republicans as soon as he started speaking out forcefully.

Not only did the president win the debate over his bill, but he also rebutted the Republican argument over tax cuts versus spending, according to Gallup's Feb. 9 poll. By 50 percent to 42 percent, most Americans believe that government spending will do more to spur economic growth than tax cuts -- a stunning repudiation of conservative ideology. Although Republicans tend to prefer tax cuts by wide margins, Democrats remain convinced that spending works better and, ominously for the right, so do independents by a margin of 50 percent to 36 percent.

The Republicans slapped themselves on the back for denying the president a single vote in the House of Representatives, but the basic fact is that they could not come close to sustaining a Senate filibuster against this bill. Underlying that reality is the emptiness of their fiscal rhetoric and the paucity of their ideas. Out in major states such as Florida and California, their own G.O.P. governors have spoken out in favor of the stimulus because the party has no program beyond tax cuts for the wealthy.

So the approval ratings of the Republican Party and the Congressional minority declined during this struggle, while the ratings of the Democrats and the Congressional leadership improved, despite their uneven performance. Those numbers should bolster the determination of the president and his party to push ahead -- and to push back when they meet obstruction, as they inevitably will.

Stronger, Please, Mr. President

Thu, 12 Feb 2009 00:00:00 -0600

As the debate over the stimulus unfolded, the still mighty conservative propaganda machine incessantly churned out three talking points, encountering very little effective response from the newly empowered progressives:

We should reject the president's plan because we need tax cuts, they said, not spending. We should reject the president's plan because the plan is spending, not stimulus. We should reject the president's plan because the spending will increase the deficit.

And though this was rarely articulated with any candor, we should reject his plan because government always makes matters worse -- and the market will eventually solve the problem of falling demand without intervention.

Replying to questions from reporters, Mr. Obama seized the chance to gut each of these arguments in straightforward language. Tax cuts for the nation's wealthiest citizens won't solve our economic problems, he said, because "time and time again" the Bush administration followed that course, "and it has only helped lead us to the crisis that we face right now."

Spending is the main purpose of the stimulus package -- indeed, there is no stimulus without spending, as economists of almost every school agree -- so the stimulus bill involves spending because "that's the point." And as for the politicians now whining about the deficit, their irresponsible stewardship when they controlled Congress left the federal fisc drowned in red.

Making that last thrust on the deficit, Obama sharply mocked the sudden rediscovery of fiscal rectitude on the other side. "What I've been concerned about is some of the language that's been used suggesting that this [bill] is full of pork and this is wasteful government spending. First of all, when I hear that from folks who presided over a doubling of the national debt, then I just want them not to engage in some revisionist history. I inherited the deficit that we have right now and the economic crisis that we have right now." Regarding those duplicitous politicians, he added later, "I'm not sure they have a lot of credibility when it comes to fiscal responsibility."

Wisely, he also drew an important distinction between Republicans who actually want to engage in constructive dialogue and Republicans who merely want to emit obstructive noise. "I'm happy to get good ideas from across the political spectrum, from Democrats and Republicans. What I won't do is return to the failed theories of the last eight years that got us into this fix in the first place, because those theories have been tested and they have failed. And that's part of what the election in November was all about. OK?"

For most Americans, as the overwhelming poll numbers supporting the president indicate, the answer is yes, OK. Most Americans want the four million jobs that the president's proposal is designed to create or preserve. Most Americans agree that government must act.

But the president's hesitancy in rising to the attack since Inauguration Day did not serve him well. The same polls that bolster him show that the Republican talking points about spending and taxes -- no matter how illogical or even illiterate -- have created doubts even among his supporters.

What can he do about that? Among Mr. Obama's favorite themes is "consistency." From now on, he and his allies must deliver a strong, consistent message about the role of the public sector -- and the bankruptcy of ideological conservatism.

Stimulus Skeptics Wrong (Again)

Thu, 05 Feb 2009 00:00:00 -0600

At the top of the myth list is the Republican faith in tax cuts, particularly those designed to benefit wealthy investors. Anyone who has been paying attention knows that for every problem, conservatives have a consistent solution that involves reducing corporate or capital-gains taxes, or lowering the top rate, or instituting a regressive flat tax or consumption tax. (They like spending, too, on certain favored contractors, notably in the defense sector, that donate generously to Republican and right-wing causes.)

But the argument for tax cuts -- unless they are targeted toward lower-income workers, who will spend them immediately -- is contradicted by recent history and basic economics. As Moody's forecaster Mark Zandi has pointed out repeatedly, what creates the greatest stimulative effect is putting cash in the hands of people who must spend that money immediately, namely the poor and working families. The smallest stimulus is created by tax cuts, and in particular the capital-gains and corporate tax reductions most beloved by conservative Republicans.

It is worth recalling that the last time Congress debated these fundamental questions came during the winter and spring of 1993, when Republican members unanimously rejected President Bill Clinton's first budget. Back then, Dick Armey, a Republican representative from Texas and former economics professor, warned that Mr. Clinton's proposed increase in the top tax rate would lead to economic disaster. Those predictions were echoed by every right-wing politician and talking head and soon proved utterly wrong by the historic growth rates of the Clinton years.

Now we hear Armey offering the same kind of predictions about the Obama stimulus plan -- and he is treated as a sage rather than a dolt who bet the ranch on his ideology and lost.

Another persistent myth denigrates spending on food stamps, unemployment insurance, tuition aid and similar programs as "welfare" that doesn't promote growth. According to this argument, assistance to the poor doesn't qualify as "stimulus" because it doesn't create public assets such as roads or bridges. But the real purpose of fiscal stimulus is to boost demand in the economy and prevent the bottom from dropping out under prices for goods and services -- in short, to forestall a deflationary spiral.
Giving money to families that will purchase things immediately is the best kind of boost, as both Moody's and the Congressional Budget Office have noted in recent studies.

It is true that we need to make real investments in transportation, energy, education and technology for the future -- and that our future fiscal difficulties will be eased if we make those investments now. Yet the most immediate need is to promote demand, which will restore confidence and encourage investment.

What we ought to learn from this episode is that extreme inequality reduces national economic stability. The falling wages of working families forced them to rely too much on credit to maintain and improve their standards of living. Restoring the American dream means putting a floor under family incomes and reducing the gap between the richest and poorest, not only for the sake of simple justice but because that is the most reliable economic policy for the nation as a whole.

Let the Limbaughs Whine

Thu, 29 Jan 2009 00:00:00 -0600

With those words, he turned his ample silhouette into the rhetorical target of choice for Mr. Obama, who warned the Republican leadership that they "can't listen to Rush Limbaugh" and expect to accomplish anything useful. Hoping to preserve the spirit of bipartisan goodwill that attended his inauguration, the president is offering politicians on the other side of the aisle a stark choice. They can work with him, or they can join the radio extremist who wants him to fail -- and could not care less about the consequences for America. As always, Mr. Limbaugh articulates his opposition to the stimulus plan in the ideological jargon favored by his party. Evidently he fears that if the United States spends more money on highways, railroads and modernizing our electrical grid, we will shortly come to resemble the old Soviet Union, the People's Republic of China or even Cuba. Improving schools and expanding health coverage is just more "socialism" -- and why would any right-thinking Republican hope for that to succeed? But while he flatters himself as a "thinker," the sad fact is that Mr. Limbaugh often sounds as if he's motivated more by resentment than philosophy. During an interview with his soulmate, Sean Hannity, on Fox, he revealed that in this time of national distress, he is obsessing over an old grudge. "I disagree fervently with the people on our side of the aisle who have caved and who say, 'Well, I hope [Obama] succeeds. We've got to give him a chance.' Why? They didn't give Bush a chance in 2000. Before he was inaugurated, the search-and-destroy mission had begun." In reality, the Democrats displayed little appetite for obstructing George W. Bush, who lost the popular vote but got his way on tax cuts in the summer of 2001. The Democratic Congressional leaders and the entire country rallied to the side of the president after 9/11 -- and the Democrats were rewarded with savage assaults on their patriotism in the following year's midterm election. Even now, Mr. Limbaugh remains deaf to the bipartisan appeals of the Obama White House, which has tried, perhaps too hard, to change the tone in Washington. "I never hear Democrats talking about walking across the aisle," he complained to Mr. Hannity. "I never see any of them praise each other or brag about the fact that they do it. They brag about the Republicans that they destroy." What all this inane ranting proves is how remote Rush and his imitators are from the urgent concerns of the American public, including not only Democrats and independents but a growing number of Republicans, too. According to current polling data, the Limbaugh line is potentially perilous for any politician outside a firmly right-leaning district. As thousands of jobs disappear every week, as the security and aspirations of millions of families evaporate, most Americans hope fervently that the Obama stimulus plan will succeed. They hear nothing from the Republicans except demands for new tax breaks that will chiefly benefit the same privileged people who have made out so well during the past few decades -- and who now take taxpayer money and spend millions on private jets and fancy office furniture. When President Obama considers how much of his stimulus spending to apportion to tax cuts in a vain attempt to appease the opposition, he ought to remember how Mr. Limbaugh described the hidden attitude of Republican leaders. "I know what our [G.O.P.] strategy is. They're hoping he fails, so that they can go back and say, 'We wanted him to succeed. We gave it everything we got. We worked with him, but ...'" So perhaps the best course is not to worry too much about winning Republican votes in t[...]

Obama and the New Center

Thu, 22 Jan 2009 00:00:00 -0600

"On this day" he said, "we gather because we have chosen hope over fear, unity of purpose over conflict and discord. On this day, we come to proclaim an end to the petty grievances and false promises, the recriminations and worn-out dogmas, that for far too long have strangled our politics. We remain a young nation, but in the words of Scripture, the time has come to set aside childish things."

Such childish things, which he did not stoop to mention, as the scare tactics that typified the campaign against him only a few months ago. With that pithy phrase he dismissed the style of attack politics, employed by a generation of Republican strategists, that began 20 years ago with the frightening image of a black criminal named Willie Horton and was finally repudiated forever with the election of America's first black president.

However bipartisan his intentions, Obama's speech did not shrink from delineating the differences between himself and the former president who has at last departed the capital. Among several direct rebukes to his predecessor and the reigning ideology of the Republican right, the new chief executive promised, "We will restore science to its rightful place." He went on to vow that under his guidance, the nation would return to the values of the Constitution "once more," without resorting to the "false choice" between liberty and security so often imposed by the regime of George W. Bush and Dick Cheney.

That was not the only false choice rejected by Obama. While paying tribute to the productivity and creativity of the market, he refused to indulge the worship of the "invisible hand" so dear to Republican ideologues. The current economic crisis, he said, "has reminded us that without a watchful eye, the market can spin out of control -- and that a nation cannot prosper long when it favors only the prosperous. The success of our economy has always depended not just on the size of our gross domestic product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart -- not out of charity, but because it is the surest route to our common good." With those words he enunciated the most fundamental beliefs of his party, and pledged that they will guide his administration.

This speech was neither a programmatic list nor a call to compromise. Obama laid out the challenges that face the country and explained in broad strokes how he intends to address them -- with bold action, necessary expenditure and a summoning of citizens to service. What he invited the nation to do, regardless of party, was to return to the basic American principles that made us strong and great over the past century and that were violated, discarded and mocked by those in power over the past eight years -- and through the inordinate and unwholesome influence of the far right for much longer.

He will reach out to bring the Republicans back toward the center, where he hopes that goodwill and patriotic emotion can bring us together to lift us out of the ditch into which their ideology drove us. But now the center will be found in a different place -- and bipartisanship again describes a consensus led by liberal Democrats. "The ground has shifted," he warned those who will oppose his ambitious agenda. He has earned the assumption that he means it.

The Party of No Ideas

Thu, 15 Jan 2009 00:00:00 -0600

Leaving aside the boilerplate about wasteful federal spending -- which never troubled the Republicans on either side of Capitol Hill when they were legislating record deficits -- these recommendations seem harmless and pointless. Putting the stimulus bill online for public comment sounds like something Obama might want to do. He scarcely needs advice about communicating with the public from the other party. Abolishing earmarks was the dominant economic theme of the Republican campaign last fall, which was soundly rejected by voters. Awful as certain porky earmarks may be, they represent a miniscule portion of the federal budget -- and they remain just as irrelevant to the global economic crisis as they were three months ago.

So is that all? Reviewing the recent remarks of McConnell and Boehner, it is impossible to find much substance that addresses the problems of rising unemployment, falling demand, shrinking production and disappearing credit. There is no fresh policy platform and no honest effort to confront the costs of deregulation and disinvestment.

Expecting an original thought from the politicians who lead the Congressional caucuses may be unfair, but the dearth of ideas extends across the precincts of the right, from commentators and media outlets to think tanks.

The Heritage Foundation, for instance, provides no new proposals for coping with the recession. According to its policy analysts, the new administration should simply do what conservatives were demanding long before the bottom fell out. They want extensions of the 2001 and 2003 tax reductions "for as long as possible," or better yet, to "make them permanent." And they want further reductions in tax rates on individuals, small businesses and corporations through 2013, preferably "lowering the top rate by 10 percentage points and reducing rates by similar amounts for lower-income-level taxpayers," whatever that means.

Much the same kind of material can be found in right-wing commentary on websites and in magazines, where the argument revolves around silly claims that federal spending cannot increase employment and demand, or that the New Deal was a failure because it didn't end unemployment and poverty forever after those first hundred days. In short, conservatives are clamoring for more of the same and nothing but the same.

When read carefully, their real message is that the best thing to do for America is to do nothing at all, except to maintain or worsen the inequities of our tax system. Then at some point in the future, perhaps at the end of this year or next, the marketplace will work its magic and growth will resume.

According to the right's leading economic analysts, such passive policies will result in the best outcome someday. After all, they say, every other recession in American history ended eventually, a truism that offers very little comfort to someone losing a home today.

Such calls for government to do nothing at all tend not to be heard from anyone who must seek reelection next year, but show up in financial press editorials or buried in policy papers. Yet inertia is the right's program, whether we listen to the Republican Congressional leaders, the Heritage analysts or the conservative pundits. They are determined to sabotage constructive action by the new administration. They cannot let go of their ideology, regardless of the pain that will be inflicted as the recession deepens.

Hypocrisy From the Party of Pork

Thu, 08 Jan 2009 00:00:00 -0600

And today, at a moment when economists of all stripes agree that we must spend big and spend fast to forestall a depression, the timing of the Republican conversion is as dubious as its credibility. To delay the stimulus spending proposed by President-elect Obama for the sake of partisan posturing is to risk disaster. The Republicans' sudden reversion to the solemn frugality of their forebears would be amusing were it not so dangerous. Having established a record over the past decade or so as the wildest wastrels in the nation's history, they now present themselves as straight-laced accountants who simply cannot abide a misspent dime. Consider McConnell, chosen again by his fellow Republican senators to oversee policy and politics for their shrunken caucus. Last year, he barely achieved reelection in Kentucky -- and only won after a barrage of television ads touting his mastery of the Congressional pork barrel. He flew frantically from one town to another, boasting that he had brought home more than $500 million in federal discretionary funds during the past fiscal year alone, largely for projects that other states and cities must finance locally. Even when many other Congressional Republicans realized that their awesome waste and abuse had tarnished the party's image and led to their ouster in the 2006 midterm, McConnell resisted reform. Just over a year ago, the conservative Club for Growth lambasted him for opposing a Democratic proposal to eliminate budgetary "earmarks," which have led to so much corruption and abuse on Capitol Hill. The club complained that his "support for pork projects in the Omnibus [Budget Act] is a sad statement about the priorities of the Republican leadership in the Senate." Certainly nobody can say that the senior senator from Kentucky has failed to make his mark with those projects. His campaign for a sixth term last autumn might as well have been a tour of the many federally funded sites that literally bear his stamp. In Owensboro, residents can stroll through Mitch McConnell Plaza, an urban renewal project that is the pride of that riverfront town. In Lexington, students can take advantage of the wonderful Mitch McConnell Distance Learning Center at the university's law school. In Louisville, joggers can stretch their legs along the Mitch McConnell Loop Trail in the city's new $38 million park. There is all that in the Bluegrass State and much, much more -- thanks to taxpayers across the country whom McConnell is so eager to protect. None of that means the minority leader is unique among all the other politicians in either party, although he is plainly worse than average in avarice and hypocrisy. Nor is it wrong, obviously, for political leaders to propose safeguards against waste and abuse in the enormous stimulus package. Yet the budgetary concerns professed by the Republican leadership, whether feigned or sincere, must be balanced against the urgency of action. On Jan. 2, The New York Times explained what is at stake with admirable clarity on the front page. According to a survey of 50 top professional economic forecasters, the recession could reach bottom before the end of the second quarter in 2009, and growth slowly resume. America could, in other words, avoid the most frightening scenarios of mass unemployment, ruin and hunger that now confront us -- but only if "the Obama administration and Congress ... come through with a substantial public stimulus package, as much as $1 trillion over two years." And for the optimistic scenario to be possible, that package must pass within weeks, not months, after the new president's[...]

What Nixon Admitted (and Cheney Won't)

Fri, 26 Dec 2008 00:00:00 -0600

Asked by Frost to explain how he could justify illegal wiretapping, black-bag jobs and other gross violations of law in collecting intelligence on the movement against the Vietnam War, he replies in a blandly sinister tone: "Well, when the president does it, that means it is not illegal." "Fox News Sunday" host Chris Wallace put a similar question to Cheney concerning the dubious conduct of the Bush administration: "If the president, during war, decides to do something to protect the country, is it legal?" The vice president's response was long-winded and obfuscatory, but the same in essence as Nixon's. "In general proposition, I'd say yes," he began, and then went on to claim that because the president can launch a nuclear strike without consulting Congress, he can do pretty much anything that he claims is in defense of the nation during wartime. To buttress his novel theory -- which of course contradicted the very essence of the constitutional balance of powers -- Nixon cited historical parallels that were echoed by Cheney last Sunday, more than 30 years later. Defending actions that clearly violated the Constitution and the law, Nixon alluded to Lincoln's suspension of habeas corpus and compared the threat to the nation by internal dissension in the '60s to the Civil War a century earlier. "Lincoln said, and I think I can remember the quote almost exactly, he said, 'Actions which would otherwise be unconstitutional could become lawful if undertaken for the purpose of preserving the Constitution and the nation.' ... This nation was torn apart in an ideological way by the war in Vietnam, much as the Civil War tore apart the nation when Lincoln was president." In his interview with Chris Wallace on Fox, Cheney specifically referred to Lincoln (and threw in Franklin Roosevelt for good measure). As always, he lapsed into euphemism, but the meaning is unmistakable. Living in the aftermath of 9/11, he said, "we find ourselves in a situation where I believe you need strong executive leadership. What we did in this administration is to exert that kind of authority. ... If you think about what Abraham Lincoln did during the Civil War, what F.D.R. did during World War II, they went far beyond anything we've done in a global war on terror. But we have exercised, I think, the legitimate authority of the president under Article II of the Constitution as commander in chief in order to put in place policies and programs that have successfully defended the nation." In retrospect, however, the late president appears much more forthright than the current vice president. Unlike Mr. Cheney, who continues to make extravagant claims for the power of the president that have been explicitly rejected by the Supreme Court, Nixon at least acknowledged the thinness of his case. During the actual Frost-Nixon interview, the British talk show host, evidently stunned by his guest's claim of monarchical authority, questioned whether there was "anything in the Constitution ... that suggests the president is ... that far above the law." Replied Nixon, "No, there isn't. There's nothing specific that the Constitution contemplates in that respect." The founding document that every federal official swears to uphold is replete with limitations on the executive power. George Washington warned against those who would seek to expand that power by usurpation, and we have seen that come to pass. Among the most urgent tasks of the new president -- as he and his vice president seem to realize -- will be repairing the damage done to law and justice by Nixon's unrepentant heirs. [...]