GOP Elites Point a Gun at the Middle Class

'Shock Doctrine': Paul Ryan's attack against the middle class might have been expected to draw an outraged response. Instead, the punditry rallied around the GOP Rep.
By Dean Baker, AlterNet
Posted on April 12, 2011

House Budget Committee Chairman Paul Ryan put out a budget proposal last week that will leave the vast majority of future retirees without decent health care by ending Medicare as we know it. According to the Congressional Budget Office (CBO) analysis, most middle-income retirees would have to pay almost half of their income to purchase a Medicare equivalent insurance package by 2030. They would be paying much more than half of their income in later years.

This sort of broadside against the living standards of the middle class might have been expected to draw an outraged response in a nation that exalts the lifestyle and values of the middle class. Instead, the punditry rallied around Mr. Ryan's plan to deal with the problem of runaway entitlement spending, crediting it for being "serious" even if they did not embrace all the details.

If there is any doubt that our political system is controlled by an elite who is completely removed from the bulk of the population, this response to the Ryan plan ended it. There is nothing at all serious about the Ryan plan. It is a naked attempt to redistribute yet more money to the country's rich at the expense of everyone else.

The proposal to end Medicare relies on market efficiencies to get health care costs under control, as though we had not tried this before. Has Representative Ryan never heard of Medicare Advantage or Medicare Plus Choice? Doesn't he know that we already have the opportunity to see the effectiveness of private insurers in containing health care costs in the vast non-Medicare insurance market?

Based on this extensive experience, we know that the private insurance market does not control costs. This is why the CBO calculated that Ryan's plan would hugely raise the cost of health care for seniors. If every senior got a Medicare equivalent policy under Representative Ryan's plan (which most will not be able to afford), the added cost of his system would be more than $20 trillion over the next 75 years.

This comes to more than $60,000 for every man, woman and child in the country. That would be money out of the pocket of ordinary workers and retirees that will go to the insurance and pharmaceutical industries, highly paid medical specialists, and other health care providers.

When it comes to redistributing money upward, the bar for intellectual coherence is set very low. Pundits from across the political spectrum had a hard time containing their enthusiasm for Ryan's plan even if few were willing to embrace it in its entirety. And if there was not enough substance over which to get excited, then there was always the 37 footnotes which Washington Post columnist Charles Krauthammer trumpeted last week.

In principle, the country's elite should be laying low right now. After all, their greed and ineptitude has given us the worst economic collapse since the Great Depression. But after getting the Wall Street banks back on their feet with trillions of dollars of government subsidized loans, the elite are once again making a full-frontal assault on the living standards of the middle class. Last week it was Medicare, but they promise to be back to attack Social Security in the not too distant future.

The ostensible rationale for this attack is the country's huge budget deficit. This is garbage. As all the pundits know, the country has a huge deficit today because the Wall Street boys drove the economy off a cliff. If the government deficit were not propping up the economy, we would be looking at 11 or 12 percent unemployment, rather than 8.9 percent. Spending creates jobs, and at this point, it is not coming from the private sector, so the government must fill the hole.

Over the longer term, the projections of huge deficits are driven by the projected explosion in health care costs. President Obama's health care reform took steps toward constraining these costs, although probably not enough. Remarkably, Ryan's plan abandons these cost control measures, virtually guaranteeing that quality health care becomes unaffordable for all but a small elite.

And the pundits call Ryan's plan "serious." Yes, it is very serious. It is a serious plan for taking tens of trillions of dollars from low-income and middle-income people and giving them away as tax breaks to the rich and to the health care industry. It is about as serious as a robber with a gun pointed at your head.

Governors Cut Taxes — and Medical Aid to the Poor

Tuesday, April 12, 2011 by The Los Angeles Times
In Maine and elsewhere, it's an early test for 'tea-party'-backed Republicans who say the strategy will create jobs and boost state economies. 
by Noam N. Levey

AUGUSTA, Maine— In their drive to cut medical assistance to the poor while pushing tax breaks benefiting the affluent, congressional Republicans are following the lead of a group of governors who have championed this approach to balance state budgets.

The strategy — reprising the supply-side economics of the Ronald Reagan era — has caught on with conservatives who say that lowering taxes for corporations and wealthy taxpayers will boost state economies.

But the moves are sparking a debate in capitols from Arizona to Wisconsin to Maine over who is being asked to sacrifice and whether the strategy will produce more jobs.

The issue is also emerging as an early test for "tea party"-backed governors and legislators who swept to power on pledges to remake government by cutting taxes and slashing government programs.

In Washington, House Budget Committee Chairman Paul D. Ryan (R-Wis.) took up that standard last week with a plan to cut $5.8 trillion in federal spending, in large measure by scaling back Medicaid, Medicare and other health programs while also slashing the top tax rate for wealthy households and corporations.

In Maine, where November victories gave Republicans control of both the governor's office and the Legislature for the first time since 1967, a debate over that approach is underway.

Gov. Paul LePage, a pugnacious newcomer to state politics who spent part of his childhood homeless, took the reins of a relatively poor state with serious budget pressures and one of the nation's most generous healthcare safety nets.

Maine provides subsidized health coverage to more than a quarter of its residents. Today about 90% of residents have health insurance, compared with 83% nationally.

Providing that support hasn't been cheap. Maine also has some of the highest taxes in the country. Families with incomes as low as $39,550 a year are subject to an 8.5% state income tax.

That reflects the state's values, said Christopher St. John, executive director of the left-leaning Maine Center for Economic Policy. "Maine has a high-cost system because the state made a decision to expand its public-sector coverage.… It was something that Maine residents decided was a priority."

But with the state struggling from the lingering effects of the recession and the decline of historic industries such as timber, fishing and shipbuilding, taxes have become an increasingly popular target.

"It is like a red flag for anyone looking to locate here," said Christopher Hall, vice president of the Portland Regional Chamber, one of the state's leading business groups. Hall is among many Maine residents who have concluded that without more jobs, the state has to make changes.

"We built an edifice we can't support," he said.

The new governor's budget proposal would begin cutting back taxes, lowering the top income tax from 8.5% to 7.95%.

Among other tax breaks, the governor wants to exempt estates worth less than $2 million from Maine's inheritance tax. Currently, only estates under $1 million are exempt.

Unveiling his budget, LePage called it a "jobs bill" that "makes tough choices and puts people first." But there is a price for the $200 million in tax relief that LePage has proposed.

The governor's budget takes aim at programs that support residents like Mary Nason, a 47-year-old working mother from Winslow, whose family receives subsidized health coverage through MaineCare, the state's Medicaid program.

Nason, who counsels people suffering from depression, and her husband, who works at Home Depot, cannot afford the health insurance that his employer offers.

Nor could they go without coverage. Nason was diagnosed 16 years ago with bipolar disorder. Her husband has heart disease, and their 5-year-old son suffers from asthma. The family's 10 prescriptions would cost more than $800 a month without insurance, she said.

With an income of about $36,000 a year, Nason and her husband, who lost their house last year, earn just under twice the federal poverty level, making them eligible in Maine for Medicaid.

LePage is proposing to cut off eligibility for parents who make between 133% and 200% of the poverty level. That would mean Nason could stay on the program for now, but if her family income rose above $37,000 a year, she and her husband wouldn't be able to get back onto MaineCare.

"If we face the choice, I'd have to stop working," Nason said, explaining that she and her husband would have to keep their incomes down to stay on the government program. "I want to work. … But we can't go without health insurance."

LePage's critics say people like Nason illustrate why slashing healthcare programs can stunt job growth, not stimulate it.

"No one seems to be asking about the potential unintended consequences here," said state Rep. Peggy Rotundo, a Democrat. "It's a penny-wise, pound-foolish approach."

LePage declined through a spokeswoman to be interviewed. But Tarren Bragdon, a top LePage advisor who also heads the conservative Maine Heritage Policy Center, said the cuts would ultimately help the state's neediest people.

"You have to make tough choices if you want to build a better future," he said. "If you cut welfare without cutting taxes, you're just being mean."

LePage, meanwhile, is barreling forward. He also wants to scale back a program that helps low-income seniors and disabled people pay Medicare premiums.

At least 48,000 poor residents could lose some healthcare aid under the governor's proposals, according to estimates from the Maine Department of Health and Human Services.

LePage is not the only governor pushing to reduce healthcare assistance and taxes.

Pennsylvania Gov. Tom Corbett has already allowed a state-subsidized insurance program for 41,000 working poor to lapse, citing the state's "very, very tight budget."

Gov. Jan Brewer of Arizona is looking to cut more than 100,000 people from her state's Medicaid rolls.

And New Jersey Gov. Chris Christie and Wisconsin Gov. Scott Walker are developing their own plans to scale back Medicaid.

All four Republican governors have also championed corporate tax breaks. Christie also has proposed to cut inheritance taxes on wealthy estates.

In Maine, newly empowered Republicans in the Legislature say they have no choice.

"We have been providing services that other states are not. We are an outlier," state Senate President Kevin Raye said from his office off the Senate chamber. "Our highest priority is to make Maine more attractive for business."

The Ryan Budget Plan and the Beltway Media

Tuesday, April 12, 2011 by Fairness and Accuracy In Reporting (FAIR)
Mr. Serious

NEW YORK - The budget proposal released last week by Rep. Paul Ryan (R.-Wisc.) includes tax cuts for the wealthy, tax hikes for the middle class, drastic cuts in spending and a radical restructuring of Medicare that would shift most of the cost of healthcare to seniors. Its dubious claims of deficit reduction rely on fatally flawed assumptions and inexplicable projections (Center for Budget & Policy Priorities, 4/7/11; CEPR, 4/11).

But much of the media coverage about the plan has presented Ryan's proposal as a serious solution to long-term budget problems, or at least the starting point of a serious conversation about the topic.

In Time magazine (4/18/11), readers learned that Paul Ryan--described as having "jet black hair and a touch of Eagle Scout to him"--has unveiled an ambitious package of huge budget cuts designed to dig the country out of its crippling debt crisis. For Ryan, reining in spending is nothing less than an act of patriotic valor.

The magazine also declared that he is "a PowerPoint fanatic with an almost unsettling fluency in the fine print of massive budget documents."

Deep into the article, readers get this parenthetical warning:

(He's also been criticized for peddling fuzzy math and rosy projections. A Washington Post factcheck deemed his budget full of "dubious assertions, questionable assumptions and fishy figures.")

So someone with "an almost unsettling fluency in the fine print of massive budget documents" has presented a budget plan full of obvious problems.

How can both things be true?

For too many media outlets, probing the details of the plan is less important than telling an appealing political story: that finally someone has presented a "serious" budget proposal. Lacking evidence to demonstrate the plan's seriousness, media cite Ryan's biography in order to supply the necessary credibility.

Thus the Washington Post (4/6/11) explained that Ryan is "wonky" and "an unlikely revolutionary." The Post added that "Ryan studied economics in college, and in Congress he has embraced the weedy issues of the federal budget." The Post's lead wondered if Ryan can "really manage the hardest sales job in U.S. politics." The paper seemed to think so:
So far, the sales pitch appears to be classic Ryan. He will make his case with earnestness and a hope that a quiet explanation of budget math can swing the country in a way that previous politicians could not.

Ryan's "budget math" relies on, among other things, wildly implausible estimates concerning unemployment and government spending (Conscience of a Liberal, 4/6/11). As salesman to the corporate media, it seems Ryan is largely succeeding.

He's been making the media swoon for months now, as the January 25 New York Times made clear:

He is the guy with the piercing blue eyes, love for heavy metal on his iPod and a reputation among Democrats, including President Obama, as a Republican who has put forward budget ideas that are thoughtful and serious, if not in sync with their own.

New York Times columnist David Brooks (4/4/11) called Ryan's budget plan "the most comprehensive and most courageous budget reform proposal any of us have seen in our lifetimes.... The Ryan budget will not be enacted this year, but it will immediately reframe the domestic policy debate." Brooks went on to declare that "the Ryan budget will put all future arguments in the proper context," closing with this: "Paul Ryan has grasped reality with both hands. He’s forcing everybody else to do the same."

Even those who disagreed with Ryan's plan found ways to praise it. In Time (4/18/11), Fareed Zakaria wrote that "Ryan's plan is deeply flawed, but it is courageous." Zakaria adds that "Ryan makes magical assumptions about growth--and thus tax revenues," and that other aspects are "highly unrealistic." But still he concludes that he applauds it as "a serious effort to tackle entitlement programs."

And on NBC's Chris Matthews Show (4/10/11), pundit Gloria Borger declared:"We have to give Paul Ryan an awful lot of credit because, as all of our august colleagues have said, yes, it does define the conversation for 2012."

In a piece for Time.com, reporter Michael Grunwald (4/7/11) noted the incongruity of such praise and wondered, "What's so brave about fuzzy math in the service of Tea Party ideology"?

The Washington Post factcheck of the Ryan plan by Glenn Kessler (4/6/11)--the one cited in passing by Time--represented a genuine attempt to assess Ryan's proposal. When Ryan claims that the Congressional Budget Office (CBO) found his plan would produce surpluses by 2040, most outlets report it as fact--like the April 5 Los Angeles Times, which explained that Ryan's budget, according to the CBO, "would dramatically improve the nation's overall fiscal picture, reducing deficits projected in President Obama's budget and moving the federal government into surplus by 2040."

The Post's Kessler, however, reports that this claim "seriously overstates the case," since the CBO analysis "reflects the scenarios that Ryan has concocted. There are, for instance, no real revenue estimates, just an assumption that federal revenues will remain at about 19 percent of GDP." The spending cuts imagined by Ryan are equally implausible--a "bare-bones government...not experienced since before the Great Depression."

Kessler also noted that Ryan claims substantial savings--$1.4 trillion, in fact--from a repeal of the new healthcare law--without any explanation for why he rejects the CBO's determination that a repeal would actually cost hundreds of billions. The verdict was, as Time parenthetically noted, that Ryan's plan was based on "dubious assertions, questionable assumptions and fishy figures."

This illustrates one of the awkward ironies of corporate media "factcheck" articles. If the essential claims made by a politician are in fact wildly misleading, then it's not nearly enough for that to be said one time in one brief article. That assessment should be part of every single report on Ryan's budget, if journalists intend to do their job.

In Some States, Working Poor Could Pay More Taxes

Tuesday, April 12, 2011 by National Public Radio
by Pam Fessler

Several states want to scale back or eliminate a tax credit for the working poor, as they try to balance their budgets. Anti-poverty groups say some of these same states also want to cut taxes for businesses.

Governors say they're trying to balance the need to promote jobs with deficit reduction. But advocates say the poor are being asked to bear an unfair share of the burden.

The tax break is called an earned income tax credit, or EITC. About half the states offer residents an EITC on top of a similar credit available from the federal government.

Ramona Spencer is a single mother of five who lives in Lansing, Mich. The state's Republican governor, Rick Snyder, has proposed eliminating the Michigan EITC, which is 20 percent of the federal credit.

"Four hundred dollars may not seem like a lot to a lot of people," Spencer says. "But when you are already living on the bottom rung of society, you feel the difference."

Spencer says she used the credit last year to buy glasses for her disabled adult son, whom she cares for. She's worried about what she'll do if the state Legislature agrees to the governor's proposal.

"My son would either have to go without the glasses, or we would forgo doing other things. We would literally not have the gas to go or maybe not be able to pay one of our utilities," Spencer says.

Four hundred dollars may not seem like a lot to a lot of people. But when you are already living on the bottom rung of society, you feel the difference.
- Ramona Spencer, Michigan mother of five

But in some ways, Michigan is in the same boat as Spencer. Money is tight. The state faces a $1.8 billion deficit, and Snyder says eliminating the state EITC would save $340 million.

"We're in a severe budget situation, and when you looked at the priorities of what we could do, my view is let's help people on the very front end, on the safety net feature, and work hard to make sure we're keeping those programs in place, " he recently told reporters.

Snyder says his budget would preserve other safety-net spending, such as state Medicaid and welfare.

But anti-poverty advocates note that Snyder's budget also would cut business taxes by $1.8 billion.

"How does this make sense in terms of shared sacrifice?" asks Gilda Jacobs, CEO of the Michigan League for Human Services.

Jacobs says eliminating the state EITC will push 14,000 Michigan children into poverty. And, she says, it will hurt the local economy because the poor tend to quickly spend the money they get on things such as housing and food.

"The people that receive the EITC, they don't pay high expensive lobbyists, so they're easy pickings," she says.

But Snyder says it's really about creating jobs in a state with severe unemployment.

Other states are also targeting the EITC. Scott Walker, Wisconsin's Republican governor, hopes to save $41 million by revising his state's credit for the working poor. And New Jersey Gov. Chris Christie, also a Republican, last year proposed a cut in his state's EITC, and the Legislature adopted the change. Lawmakers in Kansas and North Carolina are looking at similar proposals.

Nick Johnson of the Center on Budget and Policy Priorities in Washington, D.C., says it's odd because the EITC has long been favored by both Democrats and Republicans as an effective anti-poverty tool. One reason is that it goes only to people who work.

"We're not necessarily talking about the very poorest of the poor," Johnson says. "We're talking about working families who are trying to stay off of welfare, trying to avoid turning to the state for other kinds of help."

But the credit has drawn criticism from fiscal conservatives, in part because it's refundable. That means people can still get it, even if they don't owe taxes because their incomes are so low.

"Actually, it's a transfer payment is what it is," says Michael LaFaive with the Mackinac Center for Public Policy, a Michigan-based think tank. "In order for them to spend this money, it first has to be taken from other people and business. So these transfer payments just effectively rob very productive people and shift it to lower-income individuals."

LaFaive thinks the best way to fight poverty is with a healthy economy and the best way to get that is to let individuals and businesses keep the money they earn.

Spencer, who earns $13,000 a year teaching kids nutrition and gardening, takes issue with any suggestion that she's getting a handout. She says she's received direct government aid in the past and knows what that's like.

"That part is humiliating. Being able to get a credit is not. I feel like I've earned that, and I'm entitled to it. It is not a poverty handout," she says.

Spencer just hopes the tax credit sticks around long enough that she can keep getting it until she's able to earn enough money that she no longer needs any help at all.

Chopped: Education, Labor, and Health and Human Services

Tuesday, April 12, 2011 by Washington Post
Budget deal: Cuts of $38 billion include accounting gimmicks, target Obama priorities
by Philip Rucker

WASHINGTON - More than half of the $38 billion in spending cuts that lawmakers agreed to last week in the 2011 budget compromise that averted a government shutdown would hit education, labor and health programs.

Although the pain would be felt across virtually the entire government — the deal includes a $1 billion across-the-board cut shared among all non-defense agencies — Republicans were able to focus the sharpest cuts on areas they have long targeted. The Education, Labor, and Health and Human Services departments, which represent about 28 percent of non-defense discretionary spending, face as much as a combined $19.8 billion, or 52 percent, of the total reductions in the plan. Funding for federal Pell grants, job training and a children’s health-care initiative would face cuts, senior congressional aides said. A multitude of other programs — from highway and high-speed rail projects to rural development initiatives — also would experience significant reductions.

But some of the worst-sounding trims are not quite what they seem, and officials said they would not necessarily result in lost jobs or service cutbacks. In several cases, what look like large reductions are actually accounting gimmicks.

The legislation includes $4.9 billion from the Justice Department’s Crime Victims Fund, for instance, but that money is in a reserve fund that wasn’t going to be spent this year. Crime victims would receive no less money than they did before the deal.

The bill contains some policy provisions, including language preventing Guantanamo Bay detainees from being transferred into the United States for any purpose. And it eliminates funding for four Obama administration “czars”: the “health care czar,” “climate change czar,” “car czar” and “urban affairs czar.” But those positions are already vacant, and Democrats beat back a GOP effort to defund other “czar” positions.

Republicans were able to terminate more than 55 programs in the areas of health, labor and education, resulting in a total savings of more than $1 billion. In addition, two minor components of President Obama’s health-care law will be eliminated: the Consumer Operated and Oriented Plan and the Free Choice Voucher programs.

The bill would cut U.S. contributions to the United Nations and international organizations by $377 million, and to international banks and financial institutions by $130 million. It also would prohibit pay raises for foreign service officers, although other federal employees would not be affected.

The Washington region would be spared from potentially painful cuts to the Metro system, as the budget measure would fully fund the federal government’s $150 million share of the agency’s budget, congressional sources said.

But District officials are livid about some policy provisions attached to the bill, particularly one that would ban federal and local funding for abortion. Mayor Vincent C. Gray (D) and several members of the D.C. Council led a rally Monday on Capitol Hill to protest those provisions and were arrested.

The full extent of the cuts did not become clear until Tuesday morning, after congressional aides worked all weekend and all day Monday to shape a detailed spending plan based on the framework that Obama and congressional leaders agreed to Friday. Budget aides tallied cuts into the evening Monday, racing to prepare a bill that was introduced in the House.

(A summary of the cuts provided by the House Appropriations Committee is available here, and a detailed list of program cuts is here.)

Of the $38 billion in overall reductions in the budget that funds the government for the rest of the fiscal year, about $20 billion would come from domestic discretionary programs, while $17.8 billion would be cut from mandatory programs. The latter cuts, known as “ChIMPS,” affect permanent programs protected by law. The money they lose this year could be put back in their budgets next year.

House Appropriations Committee Chairman Hal Rogers (R-Ky.) hailed the historic nature of the spending cuts in a statement Tuesday morning.

“My committee went line-by-line through agency budgets this weekend to negotiate and craft deep but responsible reductions in virtually all areas of government,” Rogers said. “Our bill targets wasteful and duplicative spending, makes strides to rein in out-of-control federal bureaucracies and will help bring our nation one step closer to eliminating our job-crushing level of debt.”

Although the pain would be felt across virtually the entire government — the deal includes a $1 billion across-the-board cut shared among all non-defense agencies — Republicans were able to focus the sharpest cuts on areas they have long targeted. The Education, Labor, and Health and Human Services departments, which represent about 28 percent of non-defense discretionary spending, face as much as a combined $19.8 billion, or 52 percent, of the total reductions in the plan.

In addition, the Environmental Protection Agency, long a target of conservatives, will see a $1.6 billion cut, representing a 16 percent decrease from 2010 levels. At the Department of the Interior, affected agencies include the Fish and Wildlife Services ($141 million cut from last year), the National Park Service ($127 million cut from last year) and “clean and drinking water state revolving funds” ($997 million cut from last year).

Democrats were able to beat back the most severe cuts originally proposed by House Republicans and protect funding for some cherished programs, such as Head Start, AmeriCorps and the implementation of the new health-care and food safety laws.

“Race to the Top,” Obama’s signature education reform initiative, will receive an additional $700 million in funding. In addition, the Securities and Exchange Commission received a $74 million increase from 2010 levels, which will help fund new securities enforcement measures.

But Democrats agreed to key concessions in important areas and were not able to reduce military spending.

White House press secretary Jay Carney said Monday that the deal demonstrates “a commitment to making tough choices that are not the kinds of choices in an ideal world the president would want to make or that Democrats would want to make.”

Less-painful cuts

Some of the cuts may have only a limited effect on people’s daily lives. The Crime Victims Fund provides money — for counseling and other services — that comes from fees levied on criminals, according to U.S. officials and victims’ advocates. By law, all the money collected must be spent on victims. But Congress has limited the amount that can be spent each year, allowing excess money to grow in a reserve account. Those savings constitute the $4.9 billion listed as a cut, advocates and officials said.

“It would be a disaster for crime victims if this were really a cut,” said Susan Howley, director for public policy at the National Center for Victims of Crime.

The bill includes savings of nearly $500 million on the federal Pell grant program, which aids low-income college students. But those savings are reflected in an administration plan already underway to limit grants to the academic year to preserve the maximum grant amount of $5,550.

The year-round component “was costing more money than was originally anticipated and was not having a noticeable effect” on completion rates, Education Department spokesman Justin Hamilton said.

Another cut, $3.5 billion for the Children’s Health Insurance Program, would affect only rewards for states that make an extra effort to enroll children. But officials with knowledge of the budget deal said that most states were unlikely to qualify for the bonuses and that sufficient money would be available for those that did.

And about $2.2 billion would be cut from the COOPS program, a provision of the new health-care law that subsidizes loans to civic and community groups that come together to create health insurance cooperatives. This represents more than one-third of the program’s $6 billion budget.

‘We’re on a battleship’

Most lawmakers will not discuss the specifics of the spending cuts until a final analysis is revealed. But Rep. George Miller (Calif.), the ranking Democrat on the House Education and the Workforce Committee, issued a statement after the deal was announced Friday saying that he “had concerns.”

“Poor and middle-class families have already received more than their fair share of pain in this economy while the wealthy and special interests have paid no price,” he said.

The House and the Senate plan to vote on the budget bill this week. Some conservative lawmakers have said they will not support it. Many freshmen House Republicans — who had resisted backing down from the GOP proposal of $61 billion in cuts — said they will remain undecided until they have a chance to read the measure.

“I’m not sure that this agreement will look quite as good under the light of day,” said freshman Rep. Bill Huizenga (Mich.). “We’re on a battleship. The wheel has been turned. And I understand that. I get that. I just want to make sure that we’ve turned the wheel all the way.”

It remains unclear how deep a conservative backlash might be — 54 House Republicans voted against a short-term spending bill earlier this year, many arguing that it did not contain deep enough cuts. Privately, though, Republican leadership aides said the legislation would almost certainly pass when it comes to the House floor on Wednesday.

Across the Capitol, Sen. Rand Paul (R-Ky.), a freshman tea party adherent, issued an open letter to fellow senators saying he would vote against the bill because it is “simply not credible or serious.”

“Think about it another way before you vote: The entire budget cut [skims] 3 percent off the top of our historic $1.65 trillion deficit. That means the side of Big Government got 97 percent of what they want,” Paul wrote. “I prefer to be on the other side. The side of the people who sent us here to Washington to do something. To cut spending.”

The legislation is not expected to include funding for an alternative engine for the Joint Strike Fighter program, according to a source with knowledge of the decision. The Ohio district of House Speaker John A. Boehner (R) stands to gain from the costly and controversial defense project.

The budget bill also will not include the more controversial policy provisions, or “riders.” Republican efforts to defund Planned Parenthood and peel back environmental regulations led to a stalemate last week.

Other policy riders kept out of the final bill include efforts to prevent regulation of the for-profit college industry and to defund Obama’s health-care law and National Public Radio. But the bill does include provisions that would limit NASA’s cooperation with China and that would remove wolves from the endangered species list in Montana, something Sen. Jon Tester (D-Mont.) had been seeking.

The deal also includes several other concessions Republicans sought. It guarantees that the Senate will debate and vote on repealing Obama’s health-care law and ending federal funding to Planned Parenthood. That’s designed to force politically vulnerable lawmakers to vote on the hot-button issues. The legislation also would block a funding increase, sought by the administration, for the Internal Revenue Service to hire additional agents to enforce the administration’s agenda on a range of issues.

Why the United States Is Destroying Its Education System

Monday, April 11, 2011 by TruthDig.com
by Chris Hedges

A nation that destroys its systems of education, degrades its public information, guts its public libraries and turns its airwaves into vehicles for cheap, mindless amusement becomes deaf, dumb and blind. It prizes test scores above critical thinking and literacy. It celebrates rote vocational training and the singular, amoral skill of making money. It churns out stunted human products, lacking the capacity and vocabulary to challenge the assumptions and structures of the corporate state. It funnels them into a caste system of drones and systems managers. It transforms a democratic state into a feudal system of corporate masters and serfs.

Teachers, their unions under attack, are becoming as replaceable as minimum-wage employees at Burger King. We spurn real teachers—those with the capacity to inspire children to think, those who help the young discover their gifts and potential—and replace them with instructors who teach to narrow, standardized tests. These instructors obey. They teach children to obey. And that is the point. The No Child Left Behind program, modeled on the “Texas Miracle,” is a fraud. It worked no better than our deregulated financial system. But when you shut out debate these dead ideas are self-perpetuating.

Passing bubble tests celebrates and rewards a peculiar form of analytical intelligence. This kind of intelligence is prized by money managers and corporations. They don’t want employees to ask uncomfortable questions or examine existing structures and assumptions. They want them to serve the system. These tests produce men and women who are just literate and numerate enough to perform basic functions and service jobs. The tests elevate those with the financial means to prepare for them. They reward those who obey the rules, memorize the formulas and pay deference to authority. Rebels, artists, independent thinkers, eccentrics and iconoclasts—those who march to the beat of their own drum—are weeded out.

“Imagine,” said a public school teacher in New York City, who asked that I not use his name, “going to work each day knowing a great deal of what you are doing is fraudulent, knowing in no way are you preparing your students for life in an ever more brutal world, knowing that if you don’t continue along your scripted test prep course and indeed get better at it you will be out of a job. Up until very recently, the principal of a school was something like the conductor of an orchestra: a person who had deep experience and knowledge of the part and place of every member and every instrument. In the past 10 years we’ve had the emergence of both [Mayor] Mike Bloomberg’s Leadership Academy and Eli Broad’s Superintendents Academy, both created exclusively to produce instant principals and superintendents who model themselves after CEOs. How is this kind of thing even legal? How are such ‘academies’ accredited? What quality of leader needs a ‘leadership academy’? What kind of society would allow such people to run their children’s schools? The high-stakes tests may be worthless as pedagogy but they are a brilliant mechanism for undermining the school systems, instilling fear and creating a rationale for corporate takeover. There is something grotesque about the fact the education reform is being led not by educators but by financers and speculators and billionaires.”

Teachers, under assault from every direction, are fleeing the profession. Even before the “reform” blitzkrieg we were losing half of all teachers within five years after they started work—and these were people who spent years in school and many thousands of dollars to become teachers. How does the country expect to retain dignified, trained professionals under the hostility of current conditions? I suspect that the hedge fund managers behind our charter schools system—whose primary concern is certainly not with education—are delighted to replace real teachers with nonunionized, poorly trained instructors. To truly teach is to instill the values and knowledge which promote the common good and protect a society from the folly of historical amnesia. The utilitarian, corporate ideology embraced by the system of standardized tests and leadership academies has no time for the nuances and moral ambiguities inherent in a liberal arts education. Corporatism is about the cult of the self. It is about personal enrichment and profit as the sole aim of human existence. And those who do not conform are pushed aside.

“It is extremely dispiriting to realize that you are in effect lying to these kids by insinuating that this diet of corporate reading programs and standardized tests are preparing them for anything,” said this teacher, who feared he would suffer reprisals from school administrators if they knew he was speaking out. “It is even more dispiriting to know that your livelihood depends increasingly on maintaining this lie. You have to ask yourself why are hedge fund managers suddenly so interested in the education of the urban poor? The main purpose of the testing craze is not to grade the students but to grade the teacher.”

“I cannot say for certain—not with the certainty of a Bill Gates or a Mike Bloomberg who pontificate with utter certainty over a field in which they know absolutely nothing—but more and more I suspect that a major goal of the reform campaign is to make the work of a teacher so degrading and insulting that the dignified and the truly educated teachers will simply leave while they still retain a modicum of self-respect,” he added. “In less than a decade we been stripped of autonomy and are increasingly micromanaged. Students have been given the power to fire us by failing their tests. Teachers have been likened to pigs at a trough and blamed for the economic collapse of the United States. In New York, principals have been given every incentive, both financial and in terms of control, to replace experienced teachers with 22-year-old untenured rookies. They cost less. They know nothing. They are malleable and they are vulnerable to termination.”

The demonizing of teachers is another public relations feint, a way for corporations to deflect attention from the theft of some $17 billion in wages, savings and earnings among American workers and a landscape where one in six workers is without employment. The speculators on Wall Street looted the U.S. Treasury. They stymied any kind of regulation. They have avoided criminal charges. They are stripping basic social services. And now they are demanding to run our schools and universities.

“Not only have the reformers removed poverty as a factor, they’ve removed students’ aptitude and motivation as factors,” said this teacher, who is in a teachers union. “They seem to believe that students are something like plants where you just add water and place them in the sun of your teaching and everything blooms. This is a fantasy that insults both student and teacher. The reformers have come up with a variety of insidious schemes pushed as steps to professionalize the profession of teaching. As they are all businessmen who know nothing of the field, it goes without saying that you do not do this by giving teachers autonomy and respect. They use merit pay in which teachers whose students do well on bubble tests will receive more money and teachers whose students do not do so well on bubble tests will receive less money. Of course, the only way this could conceivably be fair is to have an identical group of students in each class—an impossibility. The real purposes of merit pay are to divide teachers against themselves as they scramble for the brighter and more motivated students and to further institutionalize the idiot notion of standardized tests. There is a certain diabolical intelligence at work in both of these.”

“If the Bloomberg administration can be said to have succeeded in anything,” he said, “they have succeeded in turning schools into stress factories where teachers are running around wondering if it’s possible to please their principals and if their school will be open a year from now, if their union will still be there to offer some kind of protection, if they will still have jobs next year. This is not how you run a school system. It’s how you destroy one. The reformers and their friends in the media have created a Manichean world of bad teachers and effective teachers. In this alternative universe there are no other factors. Or, all other factors—poverty, depraved parents, mental illness and malnutrition—are all excuses of the Bad Teacher that can be overcome by hard work and the Effective Teacher.”

The truly educated become conscious. They become self-aware. They do not lie to themselves. They do not pretend that fraud is moral or that corporate greed is good. They do not claim that the demands of the marketplace can morally justify the hunger of children or denial of medical care to the sick. They do not throw 6 million families from their homes as the cost of doing business. Thought is a dialogue with one’s inner self. Those who think ask questions, questions those in authority do not want asked. They remember who we are, where we come from and where we should go. They remain eternally skeptical and distrustful of power. And they know that this moral independence is the only protection from the radical evil that results from collective unconsciousness. The capacity to think is the only bulwark against any centralized authority that seeks to impose mindless obedience. There is a huge difference, as Socrates understood, between teaching people what to think and teaching them how to think. Those who are endowed with a moral conscience refuse to commit crimes, even those sanctioned by the corporate state, because they do not in the end want to live with criminals—themselves.

“It is better to be at odds with the whole world than, being one, to be at odds with myself,” Socrates said.

Those who can ask the right questions are armed with the capacity to make a moral choice, to defend the good in the face of outside pressure. And this is why the philosopher Immanuel Kant puts the duties we have to ourselves before the duties we have to others. The standard for Kant is not the biblical idea of self-love—love thy neighbor as thyself, do unto others as you would have them do unto you—but self-respect. What brings us meaning and worth as human beings is our ability to stand up and pit ourselves against injustice and the vast, moral indifference of the universe. Once justice perishes, as Kant knew, life loses all meaning. Those who meekly obey laws and rules imposed from the outside—including religious laws—are not moral human beings. The fulfillment of an imposed law is morally neutral. The truly educated make their own wills serve the higher call of justice, empathy and reason. Socrates made the same argument when he said it is better to suffer wrong than to do wrong.

“The greatest evil perpetrated,” Hannah Arendt wrote, “is the evil committed by nobodies, that is, by human beings who refuse to be persons.”

As Arendt pointed out, we must trust only those who have this self-awareness. This self-awareness comes only through consciousness. It comes with the ability to look at a crime being committed and say “I can’t.” We must fear, Arendt warned, those whose moral system is built around the flimsy structure of blind obedience. We must fear those who cannot think. Unconscious civilizations become totalitarian wastelands.

“The greatest evildoers are those who don’t remember because they have never given thought to the matter, and, without remembrance, nothing can hold them back,” Arendt writes. “For human beings, thinking of past matters means moving in the dimension of depth, striking roots and thus stabilizing themselves, so as not to be swept away by whatever may occur—the Zeitgeist or History or simple temptation. The greatest evil is not radical, it has no roots, and because it has no roots it has no limitations, it can go to unthinkable extremes and sweep over the whole world.”

The Tyranny of Our Collective Comfort Zones

Monday, April 11, 2011 by CommonDreams.org
Hiding From Shame, Addicted to Optimism
by Phil Rockstroh

The technologies that inflicted upon the world the ongoing tragedies in both the Gulf of Mexico and Japan serve a dangerous addiction, an addiction to blind optimism, a habituation of mind that allows us to dwell within provisional comfort zones but renders vast spaces of the world into deathrealms.

After each catastrophe, there ensues a scramble to contain the damage leveled, as, concurrently, the apologist of the present system explain the anomalous nature of the event. Yet, this much should be obvious: Attempting to clean up the mess, after it occurs, as oppose to altering the way of life that incurs the damage, is analogous to an addict believing a few days in detox will serve as a solution to his addiction.

In the same way drug dealers are reliant on an addict's unwillingness to reflect on the carnage created in his life, as well as, the havoc reaped in the lives of those near him, engendered by his addiction, the small group of hyper-wealthy elites who benefit from the current system rely on collective cognitive dissidence (or, as it has been termed, the fear of fear itself) to dissuade the public at large from peering deeply into the pernicious situation.

One of an addict's biggest obstacles is his optimism i.e., he is convinced he can figure out somehow, someway to use his drug of choice in a less destructive way…and, by reflex, rebels against the deepening sorrow that he must change.

When large, powerful corporations create messes beyond their ability to control the damage wrought by their institutional cupidity, those in charge spare no expense aggressively confronting the problem…that is, of course, by means of public relations blitzes aimed at the general public, while tsunami-sized waves of campaign contributions flood the coffers of elected officials.

Apropos, a school of thought has developed in which framing the perception of a catastrophe supersedes all other considerations. An after the fact casuistry, possessed of crackpot optimism, similar to the following, is affected: Dated technologies were at fault in that particular mishap, but, not to worry, in the near future, new innovations will safeguard against similar calamities.

Sure thing: The future will be bathed in the benign light of new technological wonders; our dread will be washed away by sparkling clean coal. Magical technological innovations will soon render nuclear power so safe that the only danger to the general public will be posed by the risk of being smothered by its profoundly huggable properties.

Such are the free market capitalist's versions of End Time belief systems, a variation of the type of magical thinking that induces an individual to scan the empty sky, waiting for Jesus to float earthward and redeem the ceaseless folly perpetrated by mankind.

If we are willing to accept being lulled back into our comfort zones by such fantasies (that are as craven as they are preposterous) we might as well wait around for hazmat crews of leprechauns riding flying unicorns to arrive on the scene and clean up the messes that corporate capitalist greedheads inflict on our increasingly besieged planet.

In a manner similar to how the indefatigable salesmen of the consumer state sell optimism, but, in reality, deliver anomie, the propagandist of the neo--liberal paradigm promise peace and prosperity -- yet their shock troops, comprised of the political and media elite, instead level class warfare at home and perpetual war abroad that renders landscapes blighted and mindscapes shell shocked.

Among their most pernicious contrivances has been to convince the passengers seated aboard the runaway train of the corporate state that the blur of landscape out the train's windows is caused by their own poor vision and the impending crash will be due to their negative thoughts. The implicit message imparted is: "If only you would have thought more optimistically and worked harder, you'd have been one of life's winners and you would have been cruising above the impending carnage in your private jet. How sad for you, loser. And, by the way," they lie, "did you know socialists are manning the controls of the doomed train?"

While these practitioners of the art of weasel word wizardry insist they sell hope, in reality, they sell shame.

Growing up in the deep south, being raised, as we say there -- not brought up, but raised--like corn, hogs (or Lazarus or zombies from the grave) and socialized there, shame is a subject with which I'm well acquainted; it has taken me a lifetime (and it remains an ongoing process) to sort through and shake out the shame-based sensibility acquired there.

"If you think that I am dumb, There is another universe of stupidity that I can show you!" -- comment posted on my FaceBook page when a stubborn, inconsiderate fact would not yield to his rightist umbrage.

What is the origin of such an outlandish, inadvertently self-satirizing statement?

Shame (its flip side being southern pride) arises, descends, converges and intermingles from manifold influences and multiple traumas: The bizarre-as-a-talking-serpent concept of sin passed down through Calvinistic belief systems; the legacy of degradations inflicted from being on the losing (and morally wrong) side of the Civil War; as well as, the degraded social milieu that circumscribes the lives and fates of large numbers of the permanent white underclass residing in the region.

Shame stains southern sensibilities like red clay on Sunday whites.

A large number of the blustering, willfully ignorant, southern men that I grew up around, whether they are khaki clad, country club smoothies or leather jacket-donning punk rock belligerents, were twisted inside out, kicked and stomped insensate by shaming authority figures before they shed their baby teeth. If one listens closely, one can detect the voice of shame-bearing demons hissing in their every utterance.

Yet the knowledge of the origin and source of their suffering remains buried deep within these men. To acknowledge shame (even to oneself) is considered a tacit admission of having something to be ashamed of i.e., "If you ain't got nothing to be ashamed of, you miserable peckerwood, then you wouldn't have no need to feel it." So, more or less, the line of thinking, rather train wreck of pathology, passing for thought, goes.

Accordingly, a strong impulse arises to explain it all away -- to claim the entire episode is a misunderstanding, or to dismiss their feelings as being trivial, or merely an indulgence of weak-willed, thin wrist losers, or impugn the motives of those who find grievance in the situation. This mode of mind has made multi-millionaires of the black magicians of rightwing talk shows, experts at performing emotional sleight of hand tricks that displace the shame of their listeners on a host of targets.

The cordiality of my fellow southerners is as facile as it is fragile. In southern culture, a great deal of psychic energy goes into distancing oneself from shame. Brooding beneath southern culture's superficial charm and gentility is the unspoken threat: "Be nice, now" that often translates to, "ya'll do as I say -- and there won't be any trouble."

More often than not, it is all made personal. Affronts are long remembered and resentments cultivated, and being confronted with information outside of one's realm of experience and field of reference is regarded as condescension.

Being made to feel "less than," by insults, real or imagined, can bring on a noxious cascade of shame and its concomitant host of desperate evasions and violent displacements to mitigate the feelings of unease engendered.

This is how it was explained to me on FaceBook recently by a feller named Frank who was addressing the issue of his loathing of liberal/socialist tyranny: "My facts are correct. The far left is nothing more than the new set of communists looking to take over. Just a call me a southern god fearing commie killer who cannot wait to put more notches on his weapon if the day ever arises again. I did enjoy killing them so. Your sheep I will never be. That's a fact. [R]eal Americans have better things to do that listen to your drivel. I'm out of here."

Just what kind of demented cultural circus produces these crack-brained battalions of killer clowns for Liberty? A culture with a brutal and rigidly enforced (but furiously denied) class structure that inflicts constant humiliation, yet, because of its nebulous structure, remains hidden from view.

Therein exists the allure and tenacity of neo-confederate hagiographic nonsense. Pride is held near, and clutched closely to oneself, because the corporate state has left the white underclass bereft of little else. It is painful to admit to being powerless and devoid of a means to change the trajectory of one's fate. One feels demoralized and diminished as a result.

Moreover, nationwide, under the present system, riddled with vast economic inequity, the negative repercussions for disobedience and failure are more than most people can endure, economically as well as psychologically. In a culture where success is deemed the end all/be all of all things, failure is devastating. In a corporate structure rigged to benefit a privileged few, and upward class mobility is merely a mind-fogging, cultural myth -- then failure is altogether likely.

Combine this, with the pernicious, puritanical/Calvinistic notion that failure is due to flawed character, and you have a troubled population…staggered by self-doubt, roiling in the unfocused rage of the humiliated, and primed and stoked for demagogic displacements.

While nice liberals retreat to their comfort zones, the forsaken laboring class constructs insulating walls of resentment. In the US, more and more, the criteria that forges personality and informs our condition is wrought by the calculus of enclosure: guarded gate communities; isolation in motor vehicles; the insular pixel fiefdoms of the internet; long work hours, often spent in cubicles, comprised of meaningless labor, and cut-off from both the norms of nature and resonate human contact.

These conditions create an existence as redolent of the aromas of existence as plastic covered cheese-food. In cultural terms, it is as if the people of the US have become mummified in plastic packaging wrap… have been rendered -- Body Bag People.

Of course, one yearns for the void to be filled. But with hearts and minds mortared closed, sealed off from the shock and humiliation experienced from the daily economic exploitation of a hidden, intractable class system – what penetrates these self-constructed prisons is loud, stupid, even fascistic in tone and theme e.g., violent video games; the empty spectacle of steroid-fueled professional sports hype; the exercise in Rock and Roll imperium that US militarism has become; fundamentalist sermons that long for the blood and thunder of Armageddon. In short, all the Sturm and Drang necessary to pierce protective walls, yet, at the same time, insure one remains ensconced in one's comfort zone.

Yet the sense of powerlessness is not mitigated for long, a nebulous sense of unease nettles. The world appears to bristle with threats…a low-grade hysteria is maintained and ceaseless war is both convenient and inevitable. Yet all the ramparts and fortifications of the national security state still do not create a sense of safety; instead, its siege mentality increases the interior void of the US populace, and, as a result, the vitality of life is barred entrance.

Blood sacrifices must be made to the god of the inner abyss...corpses are tossed into the void.

Over the top? Given the fact of the hundreds of thousands of corpses the US empire has lain under the native soil of nations from the Persian Gulf to Central Asia (and now North Africa) in only the past decade up to the present -- which, in combination with a government that practices and a general public that is indifferent to the use of torture -- the image limned above doesn't seem hyperbolic in the least.

At what point, does it become incumbent upon an individual to seize back his identity, to reject being defined by the exploitive, dehumanizing demands imposed (and small bribes proffered) by corporate/governmental elites?

The ongoing tragedy in Japan reveals how dangerous it can be to refuse or defer the challenge.

The Problem of Unemployment

Hating Keynes
By MIKE WHITNEY

Why do so many people hate John Maynard Keynes?

Anyone who spends time on the economics blogs knows that Keynes is blamed for everything from the Wall Street bailouts to quantitative easing. But, why? There's nothing in Keynes The General Theory of Employment, Interest and Money that suggests that he would have supported the bailouts or QE2. Yes, he would have made sure the financial system didn't collapse, but that doesn't mean he would have issued blank checks to insolvent financial institutions run by crooked bankers. He wasn't a moron nor was he a tool of big finance. He simply believed that when the economy was in freefall, it's crazy to worry about deficits. Put the economy back on a solid growth-path first, he thought, then rising revenues would lower the deficits automatically. It's a reasonable solution that's worked many times before. Only, now, the austerity zealots have grabbed the policy levers in Washington and shut off the fiscal stimulus spigot, so tried-and-true economic theory has been jettisoned to placate the nutballs. It's a real mess. 

Still, that doesn't answer our question: Why do so many people hate John Maynard Keynes?

Is it because they don't believe the government should ever meddle in the "free market" or is it because Keynes remedies usually involve a lot of red ink? Or is there a different reason altogether, a political objective that disguises itself as "principled Libertarianism" but, in fact, is an effort to crush the middle class and transfer more wealth to the uber-rich? Keep in mind, the GOP-led congress never had any problem running up deficits and doubling the national debt when G.W. Bush was in office. Only recently have they found religion. There's good reason to be skeptical.

Do Keynes critics know that he believed that budget deficits should be balanced during the good times? Of course not, because his most ferocious critics have never read anything he's ever written. They'd rather base their judgments on blog-blabber than give the man a chance and thumb through the original text. That's why they dismiss his many insights with a wave of the hand as if he was some big spending Democrat who didn't give a whit about the red ink he was generating. But that's baloney. Keynes is the best friend capitalism ever had. He put a human face on a system which--stripped of its niceties-- is little more than a bloody scrimmage for survival. His emphasis on full employment helped to strengthen the middle class and create the most prosperous and productive economy the world has ever seen. The General Theory was a path-breaking work that revolutionized economics. It wasn't an attack on capitalism or free markets, quite the contrary, it was an in-depth study of how the system could be made to operate more efficiently. The central idea was that the system works best at full employment because additional incomes generate greater demand which leads to more investment and a virtuous circle. Here's an excerpt from an article in the The Library of Economics and Liberty:

"Contrary to some of his critics' assertions, Keynes was a relatively strong advocate of free markets. It was Keynes, not Adam Smith, who said, "There is no objection to be raised against the classical analysis of the manner in which private self-interest will determine what in particular is produced, in what proportions the factors of production will be combined to produce it, and how the value of the final product will be distributed between them." Keynes believed that once full employment had been achieved by fiscal policy measures, the market mechanism could then operate freely. "Thus," continued Keynes, "apart from the necessity of central controls to bring about an adjustment between the propensity to consume and the inducement to invest, there is no more reason to socialize economic life than there was before" ("John Maynard Keynes", The Library of Economics and Liberty)

There's a lot in Keynes with which even the most ardent "hard money" tub-thumper would agree, but since his views have been reduced to "Keynesian this" and "Keynesian that", it's hard to convince people otherwise. But Keynes wasn't the spendthrift that many seem to think. In fact, he was quite conservative. And it's doubtful that he would have thrown his support behind "too big to fail" or the Fed's policy of shunting the losses of speculators onto the public's balance sheet. Neither of these are consistent with his views of a free market. Calling the bailouts "Keynesian" is not just unfair, it's ridiculous.

Obama's American Recovery and Reinvestment Act (ARRA), on the other hand, was clearly Keynesian. It provided fiscal relief directly to the economy and--according to the CBO---it substantially lowered unemployment, narrowed the output gap, and increased growth. The ARRA stopped the financial crisis from turning into another Great Depression, which proves that Keynesian stimulus works.

But there's more to Keynes than just fiscal stimulus. The man had a keen grasp of investor psychology, human nature and the workings of markets. Here's a clip from The General Theory that gives a sample of his thinking:

"Our desire to hold money as a store of wealth is a barometer of the degree of our distrust of our own calculations and conventions concerning the future....The possession of actual money lulls our disquietude; and the premium we require to make us part with money is the measure of the degree of our disquietude."

That's brilliant, and it explains why a sudden downturn in the market can quickly turn into a full-blown crash. Investors get scared, withdraw their money and hunker down. Pretty soon, the equity share supporting the markets vanishes and a bank run ensues thrusting the economy into a protracted swoon. And it's all because people lose confidence in their ability to anticipate what will happen in the future. Investment is all about anticipation; anticipation and confidence. Here's how Keynes summed it up:

"It would be foolish, in forming our expectations, to attach great weight to matters which are very uncertain. It is reasonable, therefore, to be guided to a considerable degree by the facts about which we feel somewhat confident, even though they may be less decisively relevant to the issue than other facts about which our knowledge is vague and scanty. For this reason the facts of the existing situation enter, in a sense disproportionately, into the formation of our long-term expectations; our usual practice being to take the existing situation and to project it into the future, modified only to the extent that we have more or less definite reasons for expecting a change.

The state of long-term expectation, upon which our decisions are based, does not solely depend, therefore, on the most probable forecast we can make. It also depends on the confidence with which we make this forecast — on how highly we rate the likelihood of our best forecast turning out quite wrong. If we expect large changes but are very uncertain as to what precise form these changes will take, then our confidence will be weak.

The state of confidence, as they term it, is a matter to which practical men always pay the closest and most anxious attention."

If Keynes is right, then what does that tell us about Bernanke's QE2, unquestionably the most misunderstood and contentious policy in the Fed's history? Has Bernanke fulfilled his role as steward of the system by reducing uncertainty and building confidence in long-term expectations, or has he merely added to investor anxiety by implementing programs that no one really understands? And, if confidence is not restored soon, then what will happen when the Fed ends its bond purchasing program (QE2) at the end of June. Here's what Keynes said on the topic:

".... a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation,.... Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits — of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.... Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die..."

This quote illustrates the difference between Keynes "the psychologist" and Bernanke "the technician". Fixing the economy is not merely a matter of moving the right lever at the central bank. Lowering interest rates and adding to the money supply can be helpful in effecting a rebound, but, by themselves, won't do the trick. "Animal spirits" need to be revived by reducing uncertainty as much as possible. Here's how Keynes summed it up:

"The other set of fallacies, of which I fear the influence, arises out of a crude economic doctrine commonly known as the quantity theory of money. Rising output and rising incomes will suffer a set-back sooner or later if the quantity of money is rigidly fixed. Some people seem to infer from this that output and income can be raised by increasing the quantity of money. But this is like trying to get fat by buying a larger belt. In the United States to-day your belt is plenty big enough for your belly. It is a most misleading thing to stress the quantity of money, which is only a limiting factor, rather than the volume of expenditure, which is the operative factor."

This is really great stuff. The money supply alarmists have been pointing to the spike in base money as an indication that the country is quickly morphing into Zimbabwe, which is absurd because the transmission mechanism which the Fed traditionally counts on (the banks) is still on the Fritz. Yes, the banks are loaded with reserves, but households and consumers don't have access to those reserves and they're still deleveraging. Piles of money don't create inflation by themselves. Spending those piles does. At present, lending is flat and bank reserves are out of circulation. The danger of inflation is minimal.

Keynes could see that monetary policy alone could not restore confidence or put the economy back on track. He also knew that interest rates and credit easing did not provide an effective transmission mechanism for increasing demand, which is why the government needs to provide fiscal support when businesses slash investment and consumers are forced to increase their savings. Here's Keynes again from Chapter 12 of The General Theory:

"For my own part I am now somewhat skeptical of the success of a merely monetary policy..... I expect to see the State, which is in a position to calculate the marginal efficiency of capital-goods on long views and on the basis of the general social advantage, taking an ever greater responsibility for directly organizing investment."

This is what fiscal stimulus is all about; helping the economy to recover by generating activity (eg. government spending) when consumers are on the ropes and businesses refuse to invest. 

The alternative is higher unemployment, lower revenues, falling prices, soaring defaults, slower growth and a reinforcing downward spiral. That said, we could see deflationary pressures reemerge as early as next month when Bernanke's QE2 ends and the flaws in the Fed's strategy become more apparent. Here's Keynes on the topic:

"The way to keep economies booming was by maintaining a high volume of investment and increasing the propensity to consume 'by the redistribution of incomes...so that a level of employment would require a smaller volume of current investment to support it." (Robert Skidelsky, "Keynes; The Return of the Master", page 68, Public Affairs, New York)

So Keynes supported redistribution? You bet. He had the foresight to realize that gross inequality leads to flagging demand. When workers no longer have sufficient wherewithal to keep the economy growing via consumption, then the system has to be rejiggered to shore up demand. It's not a question of Big Government "soaking the rich" to create a socialist Utopia. That's bunkum. It's a matter of recognizing the inherent shortcomings of the system and finding ways to make it operate more efficiently. And, that was Keynes strong-suit, transforming an unstable, crisis-prone system into a vehicle for widespread prosperity and wealth creation. 

That's why he devoted so much time to unemployment, because he knew that unemployment was symptomatic of a deeper problem, an unwillingness of the private sector to invest. When businesses withhold investment--because they see no growing demand for their products--then joblessness rises, spending falls and the economy slips into a deep funk. Keynes realized that this state of affairs (Depression) can last indefinitely unless the government steps in and fills the gap created by the absence of private sector spending. Thus, when consumers have to trim their spending and patch their balance sheets, and businesses cannot find profitable outlets for investment, it's up to the government to run deficits for as long as it takes to rev up the economy and create a self-sustaining recovery.

Keynes remedies will work if the right polices are implemented. Unfortunately, today's politics don't support the policies. So, when the Fed's bond buying program ends, economic contraction will likely resume and the country will face the prospect of another excruciating slump.

The Party of Compromise

Shareholder Anger at CEO Pay
By LAURA FLANDERS

The ink on the compromise that kept the government open—barely--isn't even dry and they're already talking about the next round of cuts in Washington.

The New York Times led off this week with an article about Obama's plan to reduce the deficit by making unspecified "changes" to Medicare, Medicaid and Social Security. Sure, it also mentions increasing taxes and cutting military spending, but when we're embracing the conservative frame that entitlement programs are too big, that's not much to cheer about.

Meanwhile, of course, CEOs are raking in the cash and still not hiring, at least not Americans. Daniel Costello wrote in the Times this weekend that top executive pay at 200 major companies was up 12 percent from last year—a median pay rate of $9.6 million. Viacom's CEO made $84.5 million in just nine months, and Ray Irani at Occidental Petroleum's pay went up 142 percent from last year.

The Dodd-Frank financial regulation package includes rules that give shareholders a say on executive pay, Costello notes, but they are mostly cheerily ignoring them. H.P. got a grade of D on an A to F scale for its pay packages, but rejected criticism—until its shareholders voted against approving the pay rates. Now they're "under review."

But Beazer Homes' chief executive had to return $6.5 million of his compensation in a settlement with the S.E.C. over inaccurate financial statements. Activist shareholders can't do it alone, but some government support could help.

So here's an idea, President Obama. Instead of changing wildly popular programs that keep Americans healthy and secure, take those CEO pay numbers and make a speech about them. Take it on the road, to Ohio, Wisconsin, Indiana, Pennsylvania, New Jersey, Florida, and anywhere conservative governors are attacking working people's rights. If shareholders are angry, imagine how angry everyone else will be.

You'll have support for taxing the rich faster than you can say "deficit."

Cell Phones and Cancer: the Risk is Real

An Interview with Devra Davis
By RUSSELL MOKHIBER

There is a book you ought to buy.

It's called Disconnect: The Truth About Cell Phone Radiation, What the Industry Is Doing to Hide It, and How to Protect Your Family by Devra Davis (Dutton, 2010).

Buy it from a book store – if you can find a book store that carries it.

Davis said that when the book was published in September 2010, she traveled to San Francisco, a hot bed of calls for right to know legislation when it comes to cell phone radiation.

"When I went there, I found out that no book store in the city had my book," Davis told Corporate Crime Reporter last week.

Has there been an explanation for that?

"The publishers are saying the book stores just aren't buying it," Davis said.

"This book has sold the fewest copies of any book I have written. And for non fiction, my books sold reasonably well."

"I don't have the time to know what is happening, but I smell a rat."

Davis is convinced that cell phone radiation causes brain cancer.

She is convinced by the evidence.

"Today, there is no debate that x-rays directly disturb electrons, break their bonds, disrupt the making of proteins, and impede the ability of cells to fix damage," Davis writes. "And yet there has not been much debate about the potential dangers of radiation from cell phones. It's been assumed that they are safe."

Thus, the "disconnect" from the title of her book.

What is your explanation as to why there is that disconnect?

"We know there is a big difference between ionizing and non-ionizing radiation," Davis says. "And cell phone radiation is non-ionizing."

"There is a paradigmatic conflict between the way the world of physics and the way the world of biology understands the nature of non-ionizing radiation."

"At its core, the physics paradigm believed as a matter of faith that it was physically impossible for the weak radiation from cell phones to have any biological effect."

"This belief was wrong 40 years ago. And that was shown by the work of Allan Frey. But because of this belief and because it was convenient to believe it, cell phones have never been tested for safety."

So, your explanation for the disconnect is money and power?

"Those are terms you can use," Davis said. "I can say that it proved to be very convenient because there is just about 100 percent use of cell phones for adults. In fact, in Australia, there is more than one phone per person. These are convenient devices. And it proved to be too inconvenient to deal with the fact that holding a small microwave radio next to your brain for hours a day is not a good idea."

"We know that brain cancer can take at least ten years to develop from the first exposure," Davis said. "It has a latency period of at least ten years on average. We know that because a few studies have been done on heavy cell phone users. And those studies have found that they have a doubled or greater risk of brain tumors after ten years of use."

What convinces Davis that cell phone radiation causes brain cancer?

"The first is the compelling biological studies done in cell cultures – human cell cultures – and looking at how they respond to pulsed digital signals from cell phone radiation," Davis says.

"And in particular, recognizing that the preponderance of the evidence is negative in large part because the preponderance of the evidence has been sponsored by industry."

"In the upcoming paperback edition, my book will have an afterward. In it, I say that in 1994, after Henry Lai and his colleague Narenda Singh produced a finding that pulsed digital signals from cell phone radiation could damage DNA in the brains of animals exposed to cell phone radiation, the industry mounted a full court press."

"When the abstract of that finding showing DNA damage from pulsed digital signals was produced, the industry went to the agency that funded the work – the National Institutes of Health – and accused the investigators of fraud and misuse of funds.

Davis says that this story has been told by Louis Slesin of Microwave News – before her book was published.

But it didn't make it into her hard cover book.

She says the story will appear in the afterward to the soon to be published paperback edition of her book.

We ask her why it didn't make it into the hard cover edition of her book.

She hesitates.

Then says – "I can't answer that."

She won't explain what she means.

But the hard cover book is filled with stories like that of Franz Adlkofer – a former tobacco researcher who had a falling out with the tobacco industry.

He too didn't believe that cell phone radiation could damage living cells – until he did the tests.

"They first got results suggesting that cell phone radiation could have an effect on the DNA inside certain types of cells," Davis says.

"Adlkofer thought for sure there was a mistake. Adlkofer believed that it was physically impossible for cell phone radiation to have a biological effect. That was the dogma. And that dogma was shared widely. But he relished the opportunity to set up these big lab studies. He coordinated twelve labs looking at the basic functioning of cells."

"They repeated the tests and got the same results."

"So, he thought – we must have the wrong equipment – our equipment isn't good. So, having a lot of money, they went out and bought new equipment to do the testing."

"After repeating the results – these were twelve different labs working independently – he concluded that it looked like the radiation was having an effect. He concluded it had a very damaging effect on DNA, causing it to unravel."

Davis tells the somewhat complex story of how the industry went after Adlkofer, how he fought back to vindicate his study.

Davis says that brain cancer is a rare disease – right now it's 6 in 100,000 in the United States – still twice the rate of the developing world.

"But if the rate of brain cancer goes from 6 per 100,000 to 18 per 100,000, well, that's a tripling of the rate."

And you are expecting that, right?

"Yes," she says. "But it is not going to happen until I'm dead. That's why I wrote the book."

So, in a nutshell, what is your advice for consumers?

"Do not keep the phone on your body," Davis says. "Men should not keep it in their front pocket or in their breast pocket. Fine print warnings come with all of these phones. Nobody reads them. They toss them away."

"Never hold a cell phone next to your head. Use a speaker phone. Use an ear piece."

What about policies the government should pursue?

"The government should be issuing safe use guidelines about this right now. Other governments have done this."

What about our government, why hasn't our government done this?

"I'm filing a Freedom of Information Act lawsuit today. I am requesting information about why the FCC changed its web site overnight to correspond to the position of industry."

"I was told that there were two memos explaining the reasons – but they said they weren't going to give them to me. Jim Turner is filing the lawsuit for us pro bono."

[For the complete Interview with Devra Davis, see 25 Corporate Crime Reporter 15(11), April 11, 2011, print edition only.]

How the Media Promotes Ignorance and Stifles Debate

Sunday, April 10, 2011 by CommonDreams.org
by Rania Khalek

 

Friday night, my eyes were glued to to the news, as I awaited any and all emerging details about the possible government shutdown. As outlets began reporting that republicans and democrats had finally reached a deal, I immediately felt a sense of relief.  Thank goodness, I thought, so much unnecessary suffering averted.  But the relief didn’t last long, because in the pit of my stomach was fear for the many millions of people who will be affected by the $38 billion in budget cuts passed by congress. Unfortunately, the media feels differently, preferring to discuss ad-nausium the budget cut’s political ramifications for the two parties.

The same thing happened when the GOP was determined to shutdown the government if democrats did not sign on to defunding Planned Parenthood.  Again, the media’s focus was not on the health of the 3 million people the organization treats every year, by providing cancer screenings, HIV and STI checks, and contraceptives.  They focused on how this painted republicans as partisan ideologues, or the democrats as supporters for women’s rights, which party was to blame for the almost-shutdown, and most notably, the consequences this would have on their popularity.

Almost all of the reporting by the establishment media centers around how X will affect the democrats favorability numbers, or how Y will affect the republicans chances in 2012.  Whether I was watching MSNBC or CNN, the sole concern was always on the political implications of the budget cuts, rather than the real life consequences for the many millions of Americans already suffering from unemployment, foreclosures, and sky-rocketing medical costs.

And therein lies the problem with our media establishment: Every major policy issue is strangled by the established “right vs left” consensus.  Whether it’s civil liberties, our endless wars, healthcare reform, or the economy, all are presented through the prism of democrat and republican disagreement.  Not only does this ignore the tribulation of people around the country, but most importantly the media omits discussion of issues that receive bipartisan support, which has increasingly become the case, issue after issue.

There is very little that republicans and democrats in office disagree on.  They both support the wars, the private insurance industry, tax cuts for the wealthy, deregulation, budget cuts during an economic recession, and the list goes on.  Perhaps this is because both parties are corporately owned by the same interests.  The only real difference today remains their position on social issues.  Republicans are still against women’s reproductive rights and marriage equality, while democrats remain pro-choice and advocates for ending institutionalized discrimination against homosexuals (although they don’t do a very good job at consistently standing up for these rights).  While these issues are of great importance, they are not the only problems afflicting the nation.

Look no further than the lack of coverage on economic suffering for proof.  Republicans want to cut all social spending, while democrats prefer to cut a fraction of social services that benefit the public at large.  So rather than discussing alternatives to austerity aimed at the working class and poor, the media solely focuses on how much austerity is enough.  Poll after poll shows that Americans overwhelmingly support increasing taxes on the wealthy to reduce the deficit.  In addition, major cuts to Medicaid, Medicare, or Social Security to balance the budget are wildly unpopular.  But the mainstream narrative does not even challenge whether budget cuts are necessary, or if other alternatives for deficit reduction exist, let alone the public’s opinion.

The media also refuses to bring up defense spending, which costs upwards of $1 trillion annually.  Probably because both parties agree that the national security and warfare state are untouchable.  Which is interesting, given that the public prefers cutting defense spending rather than social spending to reduce the deficit.  Then again public support for the Afghanistan war is at an all-time low, but the bipartisan Washington consensus in support of the war remains unmoved.  The fact that war spending is draining our treasury should be a significant story for the media, particularly since the government just launched another war in Libya, while ironically calling for fiscal responsibility.

If they aren’t even capable of exposing the cost of war, it is no surprise that the casualties of war, both the injured and dead, soldiers and civilians, are completely omitted from discussion.  Again, this makes sense, given the bipartisan support for war, with tactical nuances making up the few points of contention.  This was most apparent in the lead up to the Iraq war, which enjoyed strong bipartisan support, with the media following suit by forcing a pro-war narrative and firing those who loudly dissented.

The same is true for healthcare reform.  Americans overwhelmingly support a single payer, medicare-for-all system, but since democrats and republicans are both in the pockets of the private insurance industry, single-payer is not a viable topic for debate on the airwaves.  Even climate change has become a forgotten issue.  Now that President Obama and his fellow democrats have adopted the Bush approach — i.e. refusing to cut greenhouse gas emissions, regulate resource exploiting industries, or invest in alternative energy — climate change and it’s very real, disastrous effects, are almost never examined.

It is no wonder so many Americans are turned off by politics.  Many don’t realize how political decisions effect their everyday lives, from the quality of the water and air that they breath, to the seat-belts they wear and sick days they receive.  If not for independent media outlets like Democracy Now! and independent journalists like Glenn Greenwald, Jeremy Scahill, and Marcy Wheeler, to name a few, I would be an apathetic liberal uninterested in “silly political debate”.

If the goal of the establishment media class is to portray significant political decisions as boring ideological nonsense, then they have succeeded.  One doesn’t need to attend journalism school to understand that the mainstream media has failed at its job of informing the public and holding those in power accountable.  Instead they have successfully promoted ignorance and stifled debate, to the detriment of truth and social justice.

Thrill is Gone; So is the Alternative

(Right here is where I go bonkers insane as Obama raises a billion dollars to campaign for the job he has--and sucks at--while people are desperately unemployed in an economy that people keep saying is improving, yet continues to grow weaker right as inflation starts to take hold. These people have no clue how offensive it is for a rich guy to beg money for a campaign to keep him in a job at which he is shitty, so he can sell out a few more times to his corporate buddies. Yep, I'm starting to twitch...--jef)


Sunday, April 10, 2011 by The Times-Union (New York)
by Bob Franken

What were they thinking? What possessed his strategists to decide to make President Barack Obama's re-election effort official on the same day his administration was making its final surrender on Guantanamo Bay?

Is their campaign slogan "Cave You Can Believe In"? It certainly won't be "Change You Can Believe In."

Given how it's widely believed Obama will be the first candidate ever to raise and spend a billion dollars in a presidential election campaign, "Big Bucks You Can Believe In" might be more appropriate. It looks like he'll need every bit of that treasure to turn burnout into turnout.

The danger for him is that so many Obama supporters have joined the ranks of the formerly ardent. They are disgruntled by what they perceive as an abandonment of lofty promises. Instead of raising taxes on the rich, they see him kissing up to corporate interests.

He's done little, they feel, to rein in Bush-era hard-line national security practices and now he's buckled under political pressure to wimp out on his pledge to close Guantanamo.

So the world still has the American Devil's Island to despise and will witness military tribunals there instead of civilian courts. The decision amounts to a vote of no-confidence in the Constitution. The brutal terrorist defendants get to be tried not as the low-life violent criminals that they are, but as warriors and martyrs.

Yes, the landscape has changed from 2008, when candidate Obama inspired millions with his message of politics unusual. The thrill is gone, their idealism deflated by a leader who has succumbed to harsh reality and expedience, who's all too willing to make his bargains with the defenders of the rich-get-richer status quo.

They still thirst for leadership to take the nation out of the same old partisan cynical desert. Obama, they fear, has intentionally moved to the center of that wasteland.

Sulking progressives contend that he has settled for bits of his big picture that are too small or illusory, perhaps playing into the hands of those special interests whose biggest interest is removing him and regaining full control.

The Democrats seem to have one major factor in their favor. That would be the Republicans. Some of those on the GOP presidential list range from kooks to nuts, with too few candidates offering more than sound bites.

While it is true that an unpredictable future makes presidential matchup polls silly at this stage, let's be wild and crazy and cite one anyway. A week-long Farleigh Dickinson University Public Minds survey of 800 registered voters nationwide, released March 31, shows that Obama runs statistically even with former Arkansas Gov. Mike Huckabee and former Massachusetts Gov. Mitt Romney, while he is 15 percentage points ahead of former House Speaker Newt Gingrich and 20 in front of former Alaska Gov. Sarah Palin.

However, Public Minds had a glaring omission. It overlooks Donald Trump. How does one overlook Donald Trump?

As of April 5, a different firm -- Public Policy Polling -- did a survey that shows Romney in the lead among New Hampshire Republicans who took part, but, get this, Donald Trump has moved to within six points 27-21. PPP has Huckabee at 15 percent in the state, Gingrich at 13, Palin at 10, tied with U.S. Rep. Ron Paul of Texas, while former Minnesota Gov. Tim Pawlenty and Rep. Michelle Bachmann, R-Minn., have 4 percent each.

Obama probably should use some of his campaign money to sponsor Republican debates, so voters can hear just how loopy some of those candidates are and see that they have a choice between undelivered promises and the opposition's dangerous plans.

What a dreary message. Perhaps the all-encompassing slogan for the election should be, "It's mourning in America."