How Conservative Economic Policies Are Destroying the US

We've been in the clutches of conservative economic orthodoxy since 1980, and this is the result.
April 1, 2013 | These were compiled by Dave Johnson at Campaign for America's Future:

In each of the charts below look for the year 1981, when Reagan took office.

Conservative policies transformed the United States from the largest creditor nation to the largest debtor nation in just a few years, and it has only gotten worse since then:

 

Working people’s share of the benefits from increased productivity took a sudden turn down:

 

This resulted in intense concentration of wealth at the top:

 

And forced working people to spend down savings to get by:

 

Which forced working people to go into debt: (total household debt as percentage of GDP )

 

None of which has helped  economic growth much: (12-quarter rolling average nominal GDP growth.)

 

There are, of course, many reasons for all this. But there is no doubt that we've been in the clutches of conservative economic orthodoxy since 1980 and this is the result. Whether it's the cause or whether it's because it has no capacity to react to external events properly doesn't matter. It has failed. And is still failing.

Venture Capitalist Nick Hanauer Says Rich People DON'T Create Jobs

The Ronald Reagan MYTH — The greatest PR SWINDLE of the our age

How We Got Here With the Economy and How to Get Out

Sunday, January 1, 2012 by CommonDreams.org
by Robert Freeman

It’s easy to get fixated with small-bore issues on the economy, even if they don’t seem so small-bore at the time. Stimulus packages. Bailouts. Debt ceilings. Deficit commissions. Payroll tax-cut extensions. They seem like life and death issues while they’re being fought out.

But, in fact, they are distractions from the one real question that dominates all others, which is this: for whom should the economy be run? Should it be operated “to promote the general welfare” of 297 million people, the 99 percent? Or should it be run to benefit 3 million, the one percent?

Right now, the answer is that the economy is a machine, with the government as its operator, for transferring two hundred years of accumulated national wealth to those who are already the most wealthy, the one percent. And we should be clear about two things: this is a choice; and it’s working. The rich are getting much richer while everyone else is being stripped of their incomes, their assets, their retirement security, and all the elements of the social safety net enacted since the Great Depression.

Until we confront the fact that the collective impoverishment of the many for the selective enrichment of the few is a choice — the consequence of an explicit policy regime going back 30 years — nothing will change. But if we can muster the maturity to confront this fact, that we are here by choice, and find the courage to act on it, we might yet be able to save the country. If we do not, then we are surely lost.

To understand how we got here, we need to quickly review the economic history of the last sixty years. Then we can discuss what to do going forward.

At the end of World War II, the U.S. bestrode the world like a colossus. Its only industrial rival, Europe, had blown its brains out 30 years before, in World War I. And it did it again, in World War II, with Japan joining in. In the history of the world, there has never been such asymmetry in power between one country and all the rest.

It was U.S. capital that rebuilt its allies’ economies, through the Marshall Plan in Europe, and through military spending in Asia. U.S. factories boomed, to service not only its own vast and ravenous market, but those of all the rest of the world. All the equipment (and much of the food) to rebuild the industrial world came from America.

It was truly the Golden Age. There was enough wealth so that capital, labor, and government could all drink deeply from the seemingly inexhaustible spring of capitalism.

But by the 1960s something began to go wrong. Our allies’ economies had by then been rebuilt, and with the newest equipment and technologies. Theirs were more efficient than ours. The Volkswagens and Toyotas that would later become a tsunami began to trickle in. Same with the Sonys and Panasonics in consumer electronics. Shipbuilding, steel, machine tools, industrial electronics and other major industries began to migrate out of the U.S. and into the hands of foreign companies.

At the same time, the then-99% began to place serious claims on national resources, and to insist on being a player in major national decisions.

Lyndon Johnson launched the Great Society program withthe goal of eradicating poverty. The women’s rights movement, the civil rights movement, the anti-Vietnam War movement, and the environmental movement all proved dramatically effective in redirecting national priorities and resources away from those favored by the wealthy elites and toward those of the rest of the people.

In other words, at exactly the time the profits of corporations were under assault by growing international competition, the people began to claim a greater share of society’s fruits. It couldn’t square. There was not enough output from the faltering economy to both satisfy people’s expectations of middle class affluence and economic security and capital’s demands for higher and higher returns. Something had to give.

Equally, the elites who had run the country for decades were indignant at the presumption of a mangy mob of un-bathed, pot-smoking, long-haired, bra-less, draft card-burning, tree-hugging hooligans who didn’t even have a job but wanted a seat at the table of national decision-making (sound familiar?). They were certainly never again going to allow such a scabrous cabal to decide that the country should not fight a major war (Vietnam) that was so enriching to the elites who had lied the country into it.

So the elites decided to take “their” country back.

The election of 1980 was the real watershed in modern American history. Ronald Reagan ran for president promising to cut taxes, increase military spending, and balance the budget — all at the same time. He called it “supply side economics.” His rival for the Republican nomination, George H.W. Bush, called it “voodoo economics” which, of course, it was. But people bought it and Reagan proceeded to rearrange economic power more substantially than at any time since Roosevelt enacted the New Deal.

Reagan cut marginal tax rates on the wealthy from 75% to 35%. At the same time, he dramatically increased military spending. The result was entirely predictable: with less money coming in but more going out, the government began to run massive deficits. Where Jimmy Carter’s worst deficit was $79 billion, Reagan was soon running deficits of $150 billion a year, year after year and increasing.

By 1992, the end of George H.W. Bush’s presidency, the annual deficit had reached $292 billion. In only 12 years, the supply side “revolution” had quadrupled the nation’s debt, from $1 trillion to $4 trillion. And this, in a time of peace and prosperity.

But that was always the hidden intention of supply side economics, to bind the nation to massive debts, debts from which it would never be released. Despite their sanctimonious pretenses, Republicans love debt because they are lenders. When there is more demand for debt, as when the government borrows hundred of billions of dollar a year, it commands a higher price, which is interest. This is simply supply and demand. And if you’re a lender, higher interest rates are better. This is why, even though Republicans controlled the White House for 26 of the past 40 years, they never once in any of those years produced a single balanced budget.

Bill Clinton came to power in 1993 but proved an ambiguous leader, at least from standpoint of economics. He once described himself as “an Eisenhower Republican” which seems fair. He did raise marginal tax rates on the rich, but only from 36% to 39%. (They were at 75% under the real Eisenhower.) For this, he was pilloried as a socialist. Worse, after the fall of the Soviet Union he cut military spending as a percent of GDP to the lowest level since before Vietnam.

With lower military spending, slightly higher taxes on the rich, and a technology-driven economic boom, Clinton was able to pay down the deficits left to him by Bush I. By 1997, the government actually produced budgetary surpluses, the first since the 1960s. The consequence was a 40% fall in long term interest rates. Again, it was simply supply and demand. With less demand for borrowed money, rates fell.

This is the real reason Clinton was so relentlessly hounded by the right. It wasn’t because he was being serviced by a stalking intern, though he played into that one with astonishing recklessness. It was because he interfered with the three primary mechanisms for transferring wealth to the already-wealthy: tax cuts, massive military spending, and skyrocketing national debt.

The rest of Clinton’s economic legacy is far less positive. He pushed through NAFTA, pitting blue collar workers from the industrial Midwest against workers in Mexico making $1 an hour. He “ended welfare as we know it,” destroying an essential element of the social safety net. He enacted telecommunications “reform” that ended up as grotesque consolidation in the nation’s media, to where five companies now control more than 80% of the nation’s media.

But by far the most damaging of Clinton’s economic accomplishments was the deregulation of the finance industry. He overturned Glass-Steagall, the Depression-era law that separated commercial and investment banking. Together with his deregulation of derivatives, what Warren Buffet called “financial weapons of mass destruction,” this opened the economy to what would be the financial mad house of the first decade of the twenty-first century.

George W. Bush took office in 2001 and would serve the very wealthy in six important ways:

• First, he cut their taxes substantially, first in 2001 and again in 2003. Over their life, the Bush Tax Cuts for the top 1% will cost more than it would take to restore Social Security to solvency forever.

• Second, he massively increased military spending with his fraudulently-justified and incompetently-prosecuted War in Iraq, and his equally-over-hyped and phony Global War on Terror.

• As with Reagan, these two actions produced his third gift to his “base,” as he called the rich: massive deficits. He turned Clinton’s budget surpluses into deficits within one year. He would eventually double the national debt in only eight years, from $5.6 trillion to $12 trillion.

• Fourth, he helped major industrial corporations move some seven million high paying manufacturing jobs out of the country, to low-wage countries where they could pay less for labor while putting downward pressure on American wages.

• Fifth, he turned a blind eye as the financial industry carried out one of the greatest economic frauds in American history: the housing bubble. 

• Sixth, and most drastically, he bailed out the banks and their owners.

Bush’s ideological soul-mate, Alan Greenspan, Chairman of the Federal Reserve, held interest rates at historically low levels to induce a boom in housing. This created illusory “wealth” that served to distract and pacify the working class as their jobs were being shipped overseas. He turned a blind eye to massive fraud in mortgage lending so that busboys, bartenders, gardeners, and day workers could buy homes they could never hope to afford. And he encouraged the securitzation of mortgages so that banks could offload the toxic sludge to unsuspecting buyers around the world. It was all so carefully engineered.

However, as had happened in the 1960s, something started to go wrong. Incomes began to fall as jobs were shipped overseas. The Iraq war caused oil prices to jump from $26 a barrel the day Bush took office to over $100 a barrel. It was a massive gain for the oil companies, his family’s business, but the inflationary effect coursed through everything in the economy. The busboys couldn’t make the notes on their houses, so started unloading them. But there were no “greater fools” left to buy them so prices started a downward avalanche which is still under way.

Since the height of the bubble in 2006, more than $8 trillion of housing wealth has been wiped out. Eleven million homes have been lost to foreclosure. More than one in four mortgages are underwater, with more owed on them than the home is worth. The share of home equity owned by homeowners themselves is now at the lowest level it has been since World War II. The balance has been transferred from the owners to the mortgage holders, the banks.

But the banks, in an almost psychotic orgy of greed, had leveraged their equity 30-to-1. They borrowed 30 dollars for every one dollar they held in capital. It makes for prodigious profits when prices are rising. If they go up only 3% (1/30) you double your investment! But if prices fall by 3%, your capital is wiped out. That is what actually happened. Housing prices, inflated far beyond what a rational market could bear, fell for the first time in American history. The banks went bankrupt. That was the financial collapse of late 2008.

Fortunately for the banks, Bush and his Treasury Secretary, Henry Paulson, formerly head of Goldman Sachs, were there to bestow the sixth and greatest gift on the wealthy: they bailed out the banks and their owners.

They arranged for the Treasury and the Federal Reserve to buy the banks’ toxic sludge so they wouldn’t have to take any losses on it. They paid 100 cents on the dollar for crap securities that that couldn’t fetch 20 cents on the dollar in open markets. They gave the banks trillions of dollars of loans at effectively no interest. And they allowed the banks to print trillions of dollars which they then used to inflate commodity and stock markets around the world, greatly enriching their wealthy owners.

What Bush and company didn’t do was require any givebacks from the banks. No equity. No firings. No changes in bonuses. No regulation of explosive derivatives. No restructuring of “too big to fail.” No settlements with consumers for intentionally defective mortgages. No re-investment in the economy they had plundered. And certainly, no prosecutions for any of the willful perpetrators of the Greatest Economic Collapse Since the Great Depression.

By 2009, Barack Obama inherited an economy in free fall, for which he is perhaps owed some sympathy. But his policy responses have been inept at best, complicit at worst.

He carried through with Bush’s bailout of the banks, passed phony “financial reform” which changed nothing, and studiously refused to prosecute any wrong-doing. He pushed through a tepid stimulus package where fully one third went to tax cuts for the wealthy. And he groveled to get a payroll tax cut that, in fact, does more to damage Social Security than anything any Republican president has ever managed.

In many other ways, however, Obama has proven to be Clinton II, or Bush III. He staffed his economic team with the very intellectual lights — Robert Rubin, Larry Summers, Tim Geithner, Ben Bernanke — who had engineered the Collapse, ensuring that capital’s right to pillage would not be qustioned. He went back on his word to fight for a public option that would have lowered the cost of health care insurance. He waved through the Bush tax cuts, not once but twice.

He never attempted anything so ambitious as a Rooseveltian jobs program. He made sure the Copenhagen climate talks failed so as to not burden American industrialists. He more than tripled Bush II’s deficits. And in his most damning assault on the economic security of more than 80 million Americans, he “put Social Security on the table” as part of his budget negotiations. With “friends” like this we should pray for enemies. At least we would know them for what they are.

Which brings us to today.

Over 56 million people are in poverty. The Census Bureau reports that half of all Americans (!) are in or near poverty. Almost 30% of those in the middle class have fallen out of it, and the rate of collapse is accelerating. A smaller share of men have jobs today than at any time since World War II. The past ten year’s wage gains have been the worst for any ten year period in the nation’s history, even worse than during the Great Depression.

The national debt that stood at $1 trillion when Reagan took office now exceeds $15 trillion. Debt as a percent of GDP is higher than it was in 1929, the year before the Great Depression. Meanwhile, corporate profits are at record highs, with corporations sitting on $2 trillion in cash, not investing it in the economy. They have $1.3 trillion parked in offshore tax havens like the Cayman Islands, out of reach of U.S. tax collectors.

Who could have imagined we could have fallen so far, and so quickly? Actually, in retrospect, it all makes sense. As wealth was steadily transferred upward and incomes were undermined, the damaging effects were masked by increased recourse to debt, both public and private. And the debt itself served to both accelerate and consolidate the transfer. But eventually the burden of payments became too much for an enfeebled workforce to carry and the whole thing came crashing down.

Any meaningful recovery will require a major investment by the federal government. The combination of lost incomes and lost consumer wealth have undercut the ability of consumers to generate demand, leaving the government as the only agent in the economy with the capacity to do the job. Clearly, private markets are not going to do it. Indeed, corporations have learned how to prosper mightily by crushing their American workers, a truly dysfunctional state of affairs that cannot stand.

The government should invest in the nation’s infrastructure which the American Society of Civil Engineers rates a “D”, down from “D+” only three years ago. This would employ potentially millions of now-unemployed workers, turning unemployment checks into tax payments to the Treasury. It would also bring the platform on which all the rest of the economy operates up to twenty-first century standards. Fortunately, the government can borrow long term at 2%, a fraction of the payback from such investments.

I’ve written elsewhere about a Manhattan Project-like investment in a green economy. Such an investment would revive employment, restore American competitiveness, help pay down the national debt, reduce our crippling dependency on middle east oil, and reduce carbon emissions into the environment. In all of these ways, it would be a win for virtually everybody in the economy, everybody in the nation, and for much of the planet.

I say “virtually” because it would not benefit those who have wrecked the economy and profited so mightily in the process: the money lenders, who would see less demand for borrowed money; the weapons makers, who would face a less hostile world; and the oil companies, whose crippling grip on the economy would be reduced. And we shouldn’t have any illusions about how hard these forces will fight to ensure that nothing changes. They will, and unless we fight back, well, nothing will change.

It is important to state once again that virtually all of the predation, all of the plunder of the last thirty years has been a policy choice, primarily enacted by Republicans, but more and more abetted by Democrats who have thrown in for a piece of the action. It’s also important to understand that nothing has changed in carrying out the agenda. Obama is as much about true “Hope” and “Change” as Bush was about “Compassionate Conservatism.” In fact, he and his wealthy masters are accelerating the looting.

Military spending is still growing at almost double digit rates after a decade of such increases. He is clearly going to put the knife into Social Security and Medicare when re-elected. He clearly has no plan, no “grand narrative” to restore the nation to prosperity. He clearly will not, can not, go after the banking industry, his biggest underwriter. And he gives all the signals of starting a war with Iran, which will make Iraq look like a silly child’s board-game gone awry.

The wealthy elites, fronted by Obama, have effectively abandoned the U.S. economy and the American people who are trapped inside. What this means is that the elections of 2012 are the last chance for the American people to reclaim their economic security, to fight off the neo-feudal servitude that is being foisted on them, and reclaim their political self-determination. As you can see from the above, most of the damage to the economy is the result of political decisions made to carry out nefarious economic ends. And they’ve worked.

We desperately need to elect a reliably progressive Congress to serve as an effective counterweight to the hopelessly corrupt, craven, and cowardly Obama and company. We need to demonstrate that it is people, not money, and not rigged voting machines, that still matter most in American elections. We need every man, woman, and child on deck with a sense of existential urgency that if we do not reclaim our country now, it will be lost forever. For it will.

In the American Revolution, Thomas Paine declared, “We have the chance to make the world anew.”

He was thinking of the escape from the European world of economic feudalism, social privilege, and political autocracy. Today, we have one last chance to save that “new world” from the retrograde civilization it pulled itself out of, but whose claim on it has never been renounced.

If we can muster a Paine-like courage to fight and win this new Revolution, the Revolution to Save the Country, we shall be worthy of respect equal to that which we reserve for Paine and his fellow Founders. If we do not, we will get what we deserve. As with so much of the past thirty years, it’s our choice.

Wars Without End

The Costs of Empire

by HOWARD LISNOFF

 

In “The Absence of a Draft Makes Americans Feel Immune to War” (December 7, 2011), Glen Ford of Black Agenda Report makes the argument that an all-volunteer military has ushered in the “most militaristic period in American history.” While I agree with Ford that this is indeed a grotesquely militaristic environment in which we now live, I cannot agree that the existence of an all-volunteer military has caused the latter to take place.

As a war resister from the Vietnam era, I can testify to the fact that the military was at least as vicious in its conduct of the war in Southeast Asia during the 1960s and early 1970s as it is conducting wars today. I make the point in my memoir Notes of a Military Resister that not a single division within the Army during that war was without a war crime attributed to it. Untold millions were killed, and the effects of that era are still being felt in the daily reality of abandoned land mines and the effects of Agent Orange. So much for an egalitarian military following the dictates of the rules of war!

The problem with militarism in the US is not the presence or absence of a military draft, but rather the hold that militarism and its trappings have on this society. Whether it’s for the purpose of nation building or the “protection” of big business interests (including military contractors) abroad, the military is the tool of choice for this nation. If the military existed for the defense of the nation, as it should have on September 11, 2001, then an argument could be make for the maintenance of a standing military force. But both the military and “intelligence” failed miserably in the months leading up to that tragedy, and the decade that followed has seen the emergence of a nation dedicated to constant warfare and an “intelligence” apparatus that uses technology to spy on anyone. The Patriot Act is but the most obvious expression of a government at war with its own people. In fact, the passage of the most recent Defense Authorization Act (signed by Barack Obama), allows the military to hold any citizen that the government deems a terrorist without that person’s access to the Bill of Rights. Chilling!

The question that begs asking is: how did this dreadful and dangerous scenario ever come to happen in the US? Readers have to go back to the administration of Ronald Reagan, The Great Communicator (actually, the Great Nincompoop), to find the seeds of this contemporary expression of endless war and militarism. Reagan made war acceptable to masses of those in the US through his conduct of the policy of low-intensity warfare.

Since this policy was directed, for the most part, against Central America, South America, and the Caribbean, most in the US felt no impact of these theaters of battle. Iraq, during the administration of George H.W. Bush, was next to lineup in the crosshairs of US policy. Oil and the projection of US power were the twin objectives of that war waged against our former ally Saddam Hussein. One day a dictator can be photographed shaking hands with US officials, and the next day he can be the target of our military might.

Following Bush, there was a bit of a hiatus in massive war making on the part of this nation. Then came George W. Bush and the hijacked general election. Osama bin Laden did the rest, allowing the opening up of the door of preemptive warfare that continues to this day in places as disparate as Somalia, Pakistan, Columbia, Iraq, and Afghanistan, to name a few. In the case of Iraq, as the last US troops leave, violence continues in the wake of the trashing of one of the “nurseries” of civilization.

Barack Obama carried on the policies of Bush without missing a step militarily. As the longest war in US history continues to drag on, Afghanistan, by most accounts, is in no better position as a society than it was at the onset of the war in October 2001. Women still suffer the consequences of right wing religious intolerance there. Since so little of actual democracy exists in the US today that hasn’t been bought off or privatized by massive business and military conglomerates, we’re not exactly the shining example to export our ideas of democracy anywhere else on the globe. Indeed, Occupy Wall Street protesters around the nation being bashed by the police are not the kinds of poster children for photo opts that the government wishes to use to portray democracy.

Largely absent from the Occupy movement, however, are the staggering costs of the US empire. In 2010, $680 billion of the federal budget went to the military, with an additional $37 billion going to the wars in Iraq and in Afghanistan alone. A pie chart showing the slice the military takes out the US federal budget indicates that military expenditures made up 54 percent of the budget for the fiscal year 2009. Compare the latter to 30 percent of the federal budget that went to human resources in the same year.

As I’ve fought militarism over the decades from a personal and activist perspective, I’ve seen firsthand how the nation uses the symbols of freedom and democracy to negate those same principles whenever they emerge on distant shores or right here at home. The military dictatorship in Egypt is allowed to consume its own people in the face of a democracy movement while stocks of US-made tear gas are used to subdue democracy fighters.

Candidates for political office who espouse peace and an egalitarian social-economic structure at home are relegated to the status of non persons through the stranglehold that both the Democratic and the Republican Parties have on the election process. Without the support of the 1 percent that holds over 40 percent of the wealth in the US, a candidate remains an unknown and unelectable.

And the symbols that militarism uses have a great hold on the ordinary people who labor and live within the system. The flag, patriotic songs, and the glamor of military service are drummed into the psyches of children from the time they reach kindergarten age until they become adults. The cold war so easily morphed into the war on terrorism! And the consumerist ethos brings the rest of the population into the fold. Myths about the beauty of democracy at home go unquestioned even as protestors are driven from encampments in places as far flung as New York City, Philadelphia, and Oakland, California. Myths about the goodness of the nation, dubbed American Exceptionalism, fly in the face of Nicaraguan deaths during the 1980’s contra war, the hundreds of thousands lost during the twenty years of the war in Iraq with its economic sanctions (not to mention the millions of Iraqis displaced by the war), and the millions of Southeast Asians and Americans who died as a result of US intervention in the 1960s and early 1970s. Smaller military operations are not counted here.

When George Orwell wrote the classic Nineteen Eighty-Four in 1949, he focused his sharp criticism on totalitarian regimes that called themselves socialist. Isn’t it somewhat ironic that his main character Winston Smith could find himself equally at home here in the US in 2011 as he was in the mythical land of Oceania. There was constant and unbridled government surveillance of the citizens in Oceania. There was constant warfare. And finally, there was total subservience to the state.

Reagan--No Loopholes For Millionaires

(Why don't Republicans understand that if Reagan were politically active today, he'd be a centrist Democrat--like Obama? Even before this direct video comparison, the way Reagan ruled the land was more similar to Obama than either of the Bushes who followed him. And Republicans LOVE Reagan. He raised taxes on them, and they spread their buttcheeks for him.--jef)

The Onslaught on Organized Labor

When Workers Blame Unions ...
By DAVID MACARAY

A regular CounterPunch reader who’s written me several times—an African American ex-Steelworker from Pittsburgh, now an aspiring playwright—laments that the younger workers he meets not only believe that Ronald Reagan was one of the greatest presidents America ever had, they blame labor unions for our troubles. They blame them for ruining the U.S. economy by driving out so many of the good jobs.

Mind you, this isn’t Wall Street or the Chamber of Commerce talking. These are regular working people. But instead of viewing organized labor as the one institution capable of propping up the middle-class by offering decent wages and benefits, they’ve reached the startling conclusion that America’s unions are a detriment, not an asset. Sadly, this ex-Steelworker said he can’t recall a time in his life when unions were less respected.

How badly have things deteriorated? Just consider the well-publicized event that recently occurred in Maine. Paul LePage, the state’s Republican governor, was so opposed to the contributions of the American labor movement being made public, he insisted on removing an 11-panel, 36-foot long mural that depicted the history of Maine’s working people, arguing that it didn’t give equal time to the state’s corporations and business interests.

According to Adrienne Bennett, a spokeswoman for LePage’s office, the governor believed the mural (painted by noted artist Judy Taylor and installed in the state’s Department of Labor building) was “too one-sided,” too sympathetic to labor interests—at the expense of business interests—particularly at a time when LePage was pushing a singularly pro-business agenda.

If the move weren’t so bloody depressing, it would be comical; indeed, it would be hilarious, the basis for a zany Saturday Night Live skit. It would be tantamount to the History Channel yanking a program that glorified the life of Harriet Tubman or Fredrick Douglass, arguing that the show was too “pro-Negro,” and didn’t give the slave-holders or white supremacists equal time.

Another indication of how bad things have gotten is the condition of the auto industry. Bob King, president of the once illustrious United Auto Workers (UAW), recently announced that his union was going to undertake an historical, massive organizing drive in the American South, and that this campaign was going to amount to a “do or die” effort on the part of the union.

Why would King portray the effort as “do or die”? Because the UAW is effectively fighting for its life. The non-unionized South already accounts for almost half of all the vehicles built in the U.S., and that figure continues to grow as more auto companies relocate to Dixie. Since 2007, the number of auto industry employees who belong to a union has dropped 46-percent. In 2007 there were 345,407 unionized car makers in the U.S.; today there are only 185,522.

As Detroit continues to sink, the South continues to rise. Astonishingly, prior to its opening, in 2009, the Kia plant in West Point, Georgia, had more than 100,000 applications for 2,100 jobs. But in order to keep the union from gaining a foothold (and counter to the law of supply-and-demand), Kia wisely offered high wages and generous benefits. To the folks of West Point, the Kia plant was a godsend, the best manufacturing job anyone had ever seen.

Of course, what organized labor—and, apparently, few others—realizes is that once the American union movement is more or less neutralized, the economy will not only turn into an extravagant and lopsided sellers’ market, the clamps will come down harder and more brutally than anyone could have imagined.

Without having the unions to use as leverage, the South’s oblivious “free riders” (non-union workers whose wages and benefits are artificially propped up by the existence and threat of the unions) are going to find out exactly what a true “free market” labor pool looks like, up-close and personal….and it ain’t going to be pretty.

Consider: With more than 100,000 applicants fighting and thrashing over 2,100 jobs—and with no worries or fears about having to compete with union wages and bennies—why on earth would a company pay more than it was required to pay? Why would a company, any company, part with one nickel more than it absolutely had to?


Without the resistance of organized labor, the law of supply-and-demand will spur an inexorable race to the bottom. And instead of Alabama becoming the New Detroit (as the glossy brochures advertise), it will, in time, resemble the New Bangladesh.

Reagan - The Documentary

(It's an Iframe embed code, so I can't resize to fit in my blog's 480 pixel width. You can toggle in full screen mode or here is the direct link so you can resize to whatever you'd like. I just noticed that the video doesn't even show on Google Buzz, so you Buzzers will have to click the link for sure. I thought Iframes, fixed the embed problem on Buzz. Guess not.)

I've never been a fan of Reagan, if that isn't obvious. And recently, several economists have made compelling arguments that our financial troubles today can be traced directly back to Reagan's initial tax cuts for the wealthy (he raised taxes on us poor folks 6 times). The redistribution of wealth in the US began again under Reagan which would culminate today into the greatest disparity between rich and poor this country has seen since the first decade of the 1900s. That is Reagan's most lasting legacy.

The fact he traded arms for hostages to fund covert operations in Central America seems par for the political course these days, and I wasn't surprised when old footage of the Mujahideen leadership meeting with Reagan in the White House, and there's Osama bin Laden, who was one of the Mujahideen leaders and a US ally while the Mujahideen fought the Soviet Union in Afghanistan in the 1980s. And there's also that infamous photo of Rumsfeld and Saddam Hussein in 1983, shaking hands on the deal in which the US sold Iraq the weapons they used on the Kurds. So none of that covert, secret stuff surprises me. I just assume that all presidents have similar dirty little secrets, and yes, they all lie about them.

But Reagan being such an iconic figure for the Republicans--I know for a fact there are members of the GOP who hold Reagan in higher esteem than any of our founding fathers, AND Jesus Christ as well. And many of those Tea Baggers who love Reagan--working class people who are suffering through this *sssshhh* depression (with a small "d"), can't grasp that Reagan policies are what led to the loss of their jobs, their pensions, and their tax dollars being funneled to the rich.

Saint Ronnie Raygun is also responsible for amassing such a huge mountaion of debt which we've never been able to pay off, and which has increased with every president since, most notably our current and previous presidents. President Ronald Reagan is more myth and real. Ronald Reagan was a flawed executive--as they all are--ultimately no better or worse than the others who held his job. I believe he had only the best intentions behind his bad decisions to knowingly break the law in the Iran-Contra Operation, he even admits (kind of) his error in judgment--even says some of his advisors were adamant he not pursue an illegal course.

This documentary presents a nice historical perspective on Ronald Reagan's political journey from president of the Screen Actor's Guild; to his initial affiliation as a liberal Democrat and fan of Roosevelt's New Deal; to being questioned in McCarthy's Pink scare in the Communist witchhunt in Hollywood in the 1950s--which though publicly, he did not name names, privately, he had become an FBI informant, giving the FBI a whole bunch of names. Then through the communist controversy, he embraced conservatism, became governor of California, and lost 3 campaigns for GOP presidential nominee before finally getting his party's support in 1980.

This film presents many points of view toward Reagan, from the Saint Ronnie views held by Grover Norquist and his bunch, to the candid views of some of his staff who disagreed with him on policy decisions, reporters who broke the Iran-Contra scandal story, political commentators, and his two sons, Michael and Ron. And here's the kicker: Reagan's views back then were closer to Obama's and Clinton's than to either of the Bushes. Reagan would be a moderate Democrat if his career had begun more recently and he was active in politics with the same views he had then. Ronald Reagan, blue dog Democrat, and not Saint Ronnie of the GOP. Would he have been as memorable as a Democrat? Probably not. He was big government, and even though he blasted big govt with his rhetoric, the size of the federal govt increased under Reagan and both Bushes. Goldwater spun in his grave like a plane propeller.

Reagan is a very fair account of Ronald Reagan's life, it seems by all accounts. It's not a character assassination, and you could argue that some of Reagan's worst moments sort of get glossed over without much depth (like his FBI informant role, the Iran hostage release after his inauguration, etc). While no one says anything horrible about the man, damning evidence is presented that should have knocked Reagan off anyone's high pedestal. He broke the law, and it was an impeachable offense. But he made the rich in this country so much richer, and for that, he is America's favorite president, even by many poor people who are clueless how connected his policies are to their poverty.

I enjoyed the film, and enjoyed the new perspective shown on those days. I was in 6th grade when Reagan was elected and a sophomore in college when his term ended, and during his two terms, I had become politically aware, and opposed his administration quite demonstratively. My mom worked the Republican Convention in Dallas in 1984 as a volunteer, and I was outside in the "Rock Against Reagan" demonstration where punk bands set up their equipment as close to Reunion Arena as we could get. See, there were no Free Speech Zones back then.--jef

Why Did Egyptians Succeed, Where Americans Fail?

Overthrowing the Invincible 
By ERIC WALBERG

Western media always welcomes the overthrow of a dictator -- great headline news -- but this instance was greeted with less than euphoria by Western -- especially American -- leaders, who tried to soft-peddle it much as did official Egyptian media till the leader fled the palace. Egypt's president Hosni Mubarak was a generously paid ally for the US in its Middle East policy of protecting Israel, and the hesitancy of the Western -- especially US -- governments in supporting fully what should have been a poster-child of much-touted US ideals was both frustrating and highly instructive.

Canadian government support for Mubarak was even more staunch until vice-president Omar Suleiman's 20 second resignation speech 11 February, clearly written with a metaphorical gun to one or both of their heads. This craven loyalty to an autocrat reviled by his people was the US-Israeli preferred solution. Much better to cool the passionate revolutionaries, allow the system, so beneficial to Israel, to adjust and survive.

But perhaps more important, much better to continue Egypt's state-of-emergency laws that allow the regime to keep Israel critics and devout Muslims under raps, and just as important, allow the US to "render" undesirable Muslims there to be tortured. Imagine if the records of these renditions over the past decade by the US (and Canada) to Egypt were to come to light, falling into the hands of the revolutionaries, much like Britain's secret treaties in WWI fell into the Bolsheviks' hands?

"They're not going to put the toothpaste back in the tube," quipped Canadian Prime Minister Stephen Harper glumly. He could well be articulating -- in his own tasteless way -- the sentiments of the Egyptian military establishment, which had no use for a Mubarak dynasty and sided with the rebels, though at a considerable cost. Those now in power, nominally headed by Minister of Defence and Commander in Chief of the Armed Forces Mohammed Tantawi, must push determined demonstrators out of Tahrir Square, get people back to work, shut down further strikes, and keep their US military advisers (not to mention the US president himself) assured that the centrepiece of Egyptian foreign policy remains in place. Truly a messy task.

 

It is hard to believe now that just a few weeks ago, Mubarak was invincible, his visage gracing at least one page in every newspaper every day, meeting with some Western leader, posing with Israeli notables, confident that he was in control of his desert ship-of-state. After the initial euphoria, and as evidence of his misrule and the perilous state that he left Egypt in pours out of newly liberated media, people are overwhelmed, irritable and depressed. People have undergone a wrenching shift in their thinking in the past three weeks.

Iranian leaders note the eerie coincidence with their own revolution of 11 February 1979 overthrowing the shah (1941-79). A national holiday, more than half the population of Iran was out on the streets celebrating along with Egyptians when Mubarak finally resigned last Friday evening. US commentators prefer to compare the revolution to the overthrow of Philippines president Ferdinand Marcos (1965-87) and Indonesian president Suharto (1968-98). They even suggest it could lead to another Iranian revolution. 

Despite the many differences, Iran and Indonesia are the closest parallels: an anti-colonial revolt against a repressive pseudo-Muslim autocrat whose corruption and nepotism undid him. Those revolts triumphed when the army and police gave up supporting the US-backed leader, much as Egypt's security apparatus did. The long repressed Muslim Brotherhood is the Sunni equivalent of the Iranian clerics. Even if the US can steer Egypt into the secular Indonesian model, it will still have to come to terms with the fact that Indonesia does not recognise Israel, that any future Egyptian government will almost surely renegotiate the 1979 peace agreement with Israel.

It seems that Egypt's suffering and oppression are something alien to Western experience. But this is far from the truth. As the fervour spread like wildfire during the first few weeks, I recalled how the leftist community in Toronto is just as self-righteous and eager for change, how neoliberalism has left Canadian society with yawning income disparities not much different than those of Egypt. The most obvious difference being that the general standard of living in Canada is higher and the middle class (still) more numerous. But the very idea of such a spectacular event as happened here to address issues of social justice is impossible to imagine there or in the US.

It struck me that the most stark and instructive parallel is not with Indonesia or Iran, but between pre-revolution Egypt and the current US, which, like Egypt, has reached the end of the same gruelling 30-year neoliberal road that Egypt did under Mubarak's reign, jettisoning any pretense of a just society. The coincidences abound: both the US and Egypt began their ill-fated journeys in that very 1981, with the ascendancy of US president Ronald Reagan and the assassination of Egyptian president Anwar El-Sadat, though El-Sadat had actually pre-empted Reaganomics with his infitah, dismantling of much of Egypt's socialism. 

Each US presidency since then has either embraced or been pressured by the exigencies of capitalism and electoral democracy to enact greater and great tax cuts for the wealthy and corporations, meanwhile cutting social services and increasing spending on so-called defense. Each "new" government has regularly flouted the consensus of the electorate on all major issues, from the environment, social services, jobs, to weapons production, invasions, drug laws and the Cubas and Irans which in defiance dare to flout the empire. 

Income disparity is arguably the strongest impulse to revolt. As measured by the Gini coefficient (0 is perfect equality) Egypt stands in a far better light at .34 than the US .45 (Canada is .32).

So why did Egyptians succeed spectacularly where Americans -- in even greater need of a revolution -- fail spectacularly?

Egyptians seem to be much more politically astute than their American counterparts, more willing to admit that their leaders take bribes, lie, follow policies dictated by business or lobbies and which counter public opinion. 

But the key to understanding why a revolution like Egypt's is impossible in the US is the fact that, unlike Egypt's army (composed mostly of conscripts), the US has a mercenary (excuse me, professional) army, which would have little compunction to fire on any group threatening the sanctity of the political establishment. Conscription is a vital brick in building a democratic society, a safeguard allowing the society to be dismantled if it turns into a jail or a brothel, a brick which has been lost to the US and its satellites. A brick that Egyptian protesters used to telling effect.

Senator John Kerry said that the Egyptian people "have made clear they will settle for nothing less than greater democracy and more economic opportunities". So what are Egypt's prospects of creating a thriving democracy? They would be wise to listen to Kerry and to observe the US system, though not to copy it but on the contrary to learn from its sorry state.

Why would Americans expect a president to be fair and hear them when he must raise a billion dollars from corporations to outspend his equally compromised rival in elections? New York Times analyst Bob Herbert looked enviously at Egyptians' longing for democracy, comparing the US political system to a "perversion of democracy", bemoaning that at the very moment Egyptians are discovering it, "Americans are in the mind-bogglingly self-destructive process of letting a real democracy slip away."

And yet Americans blissfully pledge their allegiance, weep on 4 July and during presidential inaugurations, despite the unassailable evidence of the injustices both domestically and abroad of the system they live under. Egyptians, though just as nationalistic, were able to see through the facade of their pseudo-democracy and rise up to overthrow the guilty parties. They are the heroes of all true democrats in the world. The few people particularly in North America who see through their own quite transparent political facade can only look on wistfully.

What became the anthem of the revolution — "Why?" by Mohamed Munir — was written, presciently, a month before the 25 January spark that burned away (let's hope) much of the chaff accumulated during 30 years of neoliberal "reforms". He cries out to his homeland like a spurned lover who vows to take his country back from the usurpers:

If love of you was my choice
My heart would long ago have changed you for another
But I vow I will continue to change your life for the better
Till you are content with me.

How different from the equivalent American song — Bruce Springsteen's Born in the USA — self-pitying and hopeless in this, the world's sole superpower:

You end up like a dog that's been beat too much
'Till you spend half your life just covering up...

The Reagan Mythology

Reagan would be moderate Democrat today, compared to the views of most of today's Republicans. Reagan wanted to eliminate the entire US/USSR missile programs back in the 1980s. Today's GOP would shit their pants twice if that was seriously brought up as part of a debate. They freaked out over Obama's missile treaty, which was practically nothing.

vidlink

Big is Bad

Nassim Taleb Says No to Big Corporations and Big Government
By RUSSELL MOKHIBER

The right likes big corporations but not big government.

The left likes big government but not big corporations.

Nassim Taleb hates both.

Taleb is the author of the best selling mega hit – The Black Swan (Random House, 2007).

And most recently of The Bed of Procrustus – Philosophical and Practical Aphorisms (Random House, 2010.)

Aphorisms as in:

"It is much easier to scam people for billions than for just millions.

"The difference between banks and the Mafia – banks have better legal-regulatory expertise, but the Mafia understands public opinion.

"In poor countries, officials receive explicit bribes. In DC, they get the sophisticated implicit, unspoken promise to work for large corporations.

"In politics, we face the choice between warmongering, nation-state loving, big business agents on the one hand, and risk-blind, top-down, epistemic, arrogant big servants of large employers on the other. But we have a choice.

"English does not distinguish between arrogant-up (irreverence toward the temporarily powerful) and arrogant-down (directed at the small guy)."

If he had to choose the lesser of the two evils – big government or big corporations – which would it be?

"Both are the enemies of progress," Taleb says.

"Big corporations – their job is to suck up resources for themselves. I came to that conclusion after reading Marx. I'm not a Marxist, but I realized that large corporations are just in cahoots with big government.

"When I was debating the chairperson of Pepsico, her sole argument was – I employ 600,000 people. 600,000 people will be unemployed if I don't sell people diabetes causing drinks.

"The second problem is – you are going to be fragile when you employ 600,000. And the society will pay the price of your fragility.

"The chairperson of Pepsico will have a free option. They know they can't go bust. They know that society will prevent them from going bust."

If Taleb doesn't like big corporations or big government, then what does he like?

Artisans.

Small business.

Like the old market in Lebanon – where he was born.

"I shock people when I say the most stable system is an artisan style system. That's the only one that doesn't blow up. The world now has become too complex

"It's the Levantine system of trade and commerce. No debt. And small size. That is the most robust. These people survive much longer."

He says big corporations should never be bailed out.

Ever.

Taleb says that Ronald Reagan started it.

"This is why I get along with Ralph Nader. Nader was the first to say that the difference between Republicans and Democrats is cosmetic.

"It is Ronald Reagan who bailed out the banks in 1983 and started this whole process."

Reagan of the Milton Friedman free market philosophy?

"Exactly. There is something about governments that will be susceptible to the pressure of lobbyists to bailout the big corporations.

"Had Reagan not bailed out Citibank in 1983, we would not be here."

Where would we be?

"If the government didn't bail out Detroit and the banks, we would have a better Detroit and better banks. Smaller and more competitive companies.

"People forget that much of the growth of companies came from debt building.

"Small companies are the energetic ones. The energy and innovation comes from small companies in California. And these companies neither go into debt nor do they get bailed out."

Okay, so government shouldn't be bailing out the big banks.

But what about cracking down on corporate crime?

"If two adults want to speculate, they should be free to do so, conditional on society not bailing them out.

"The government should be there to enforce the rule of no socialization of losses. You want to make sure the banks are never big enough to take these risks at the expense of society.

"The rule is as follows – if you want a bailout, you are under our regulation. And we want you small. And we don't want you to take speculative risks. In other words, you are a utility. And you obey our rules.

"If you are not to be bailed out, then you can do what you want, providing that you don't harm the public."

But Nader's argument is that you need a strong central government to counteract big corporate power. And that of course is what corporate crime enforcement is about. You need to try and control the abuses of large corporations – to keep them in line.

"I don't mind the idea. But I prefer to let the system destroy the corporation before it becomes so big.

"It's good to think about it this way – once a corporation becomes so big, it's going to bully the public. So, you need a big public to stand against it. But a robust world is one composed of very robust cities – not city states necessarily – but strong cities and municipalities – and very strong small companies."

Taleb says – do not give children dynamite sticks, even if they come with a warning label.

And he makes a policy recommendation in this regard – ban complex financial instruments because nobody understands them.

"I don't understand them. And I wrote a text book in 1987 about them. The motivation behind these instruments is regulation. Shocking but true. Regulation had the effect of having people skirt the regulation, hire an expensive lawyer, and design a complex product to get around the regulation."

But Taleb would impose a regulation to ban them?

"I said that a product that has been traded for a long time should be traded. But a product that requires mathematical methods should not be. So, vanilla options have been traded on exchanges for hundreds of years – since Amsterdam in the 17th century – they can be traded.

"Stocks can be traded.

"But these complex products have no reason to exist other than to skirt regulations. They don't need to be there. People don't understand them. And they are designed to take advantage of people's mental biases and misunderstandings of some classes of risk."

But doesn't it require big government to ban complex financial instruments?

"The government has been doing everything but what they are supposed to do. Financial regulation did nothing but help Goldman Sachs."

But that's because that's how they set it up. It didn't have to be that way.

"It was a 5,000 page law," Taleb says. "We could write a one page law – captain goes down with the ship. Bridge engineer sleeps under the bridge. Personal liability."

Death of the Middle Class

Mourning in America
by Leo Gerard November 16, 2010

The deficit commission report issued last week is another Saturday night special pressed to the temple of the American middle class.

“Turn over your money and your benefits or your country will die,” the report screams at workers. “You want your country to go bankrupt? No? Then you gotta delay retirement, get less from Social Security, pay more for health insurance and lose your precious few income tax breaks like the one that helps pay your mortgage while the banker is breathing down your neck right now.”

For 30 years, rich conservatives have successfully threatened the American middle class this way, ever since that rich conservative Ronald Reagan converted the White House into a castle.

The result is a country with greater income inequality than during the age of corporate robber barons at the turn of the 20th century. It is a country whose 21st century robber barons, the richest 1 percent of Americans, take nearly a quarter of all income and demand that politicians relieve them of their obligations. The rich — hedge fund owners who rake in billions, Wall Street banksters handed bonuses in the millions, CEOs paid eight-figure golden parachutes after they mess up — insist that politicians place government debt burdens on the middle class, the unemployed, the elderly, the struggling young, people whose income has stagnated for three decades.

The co-chairmen of the deficit commission complied with that mandate from the flush when they recommended the middle class bear the brunt of the cost of reducing the deficit. Simultaneously, conservatives in Congress are acquiescing by insisting on extending tax breaks for the nation’s wealthiest. Those are the very tax breaks that contributed dramatically to creating the debt – the one that the deficit commission now wants heaped on workers’ backs.

This will be the death of the nation’s strength — its successful working class. Without the slightest regret or hesitation, the rich are killing the great American middle, rendering it a casualty of their shirked social responsibilities. Their campaign has been abetted by Republicans since Ronald Reagan. The Gipper contended slashing taxes for the wealthy would increase revenues for the government. Republican George H. W. Bush rightly ridiculed Reaganomics as voodoo.

In the GOP years between the beginning of Reagan in 1981 and the end of Bush II in 2009, the federal deficit exploded as Republican presidents failed to control spending and repeatedly cut taxes for the rich.

Reagan reduced the rate on the richest first down to 50 percent, then to 28 percent. The resulting budget deficit converted the U.S. from the world’s largest international creditor to its largest debtor. And now, the deficit commission sends the bulk of the bill for voodoo economics to the middle class, not the rich.

While Reagan gave the rich those breaks, income inequality increased. The share of total income taken by the richest 5 percent grew from 16.5 percent the year before he took office to 18.3 percent the year before he left. In that same time, the share of total income that went to the poorest 20 percent of households fell from 4.2 to 3.8 percent.

Democrat Bill Clinton fulfilled a campaign promise by increasing taxes on the rich — to a 39.6 percent marginal rate. He balanced the federal budget and left Bush II with a surplus.

Then Bush II squandered it. He gave the rich more tax breaks, accumulated debts larger than all those created by previous presidents combined and worsened income inequality. During his administration, from 2002 to 2007, the pretax income of the richest 1 percent increased 10 percent every year. Over that same period, the median income for working Americans declined and the poverty rate rose.

From Reagan through Bush II, more than four-fifths of the total increase in U.S. income went to the richest 1 percent. Hedge fund owners, whose income is literally in the billions, pay income taxes at 15 percent – lower than the rate paid by their secretaries, who earn far less in a year than any of the top 10 hedgers do in half an hour.

Wall Street recklessness crashed the U.S. economy, throwing millions of middle income earners out of their jobs and their homes. The banksters went to Washington and got politicians to hand them bailout billions, and now those Wall Streeters plan to increase their bonuses — while unemployment remains stuck at 9.6 percent in the Main Street economy.

It is those guys, bankers grabbing year end bonuses totaling two and three times what middle class earners get for a year’s labor; it is the five-home wealthy demanding that the foreclosed-on middle class suffer for the deficit. The rich, who have received the greatest benefits from this society, have no intention of paying their share of this national responsibility.

The deficit, the Social Security shortfall, difficulties with Medicare – they could all be solved if the nation returned to taxing policies that existed under Republican President Gen. Dwight D. Eisenhower, when the rate on top earners was 91 percent. That was not even the high point. In the mid-1940s it was 94 percent. Generally it fluctuated between 81 percent in 1940 and 70 percent when Reagan began slashing it in 1981.

Those rates may sound confiscatory now, but it’s not like the rich actually paid them after they subtracted out all of their exemptions, deductions, loopholes, special deals, tricks and wiles.

The dozen years in the 1950s and 1960s when the rate on the richest officially was 91 percent is a time considered by many Americans to be among the nation’s greatest for the middle class, a period when American workers could afford to buy homes, send their kids to college and travel across American on vacation.

There’s no talk of that now. Raising taxes on the rich now is considered ludicrous. Ridiculous. The whole Social Security shortfall could be solved if the rich paid taxes on their entire incomes, not just the first $110,000, a break that means the wealthy pay a smaller percentage if their income toward Social Security than the impoverished. But the deficit commission didn’t propose that.

No, the rich have succeeded in eliminating as a possibility their paying an increased tax share. Now, the only consideration is cutting their taxes. They didn’t hold an actual Saturday night special to anyone’s head. The rich are snake oil salesmen slick, Bernie Madoff-style schemers. They sold voodoo economics to America, and now they’re intent on making the middle class pay for what that policy has wrought in deficits.

Reagan’s re-election ad was wrong. He didn’t institute “Morning in America.” It was mourning for the once great American middle class.

Fiddling in the Wasteland

Walking in Reagan's Shoes
By MIKE WHITNEY

The Fed's Beige Book, which was released on Wednesday, provides a sobering look at an economy that is sputtering-along on empty. Nearly all the districts reported slower activity amid "widespread signs of deceleration". The stimulus-fueled rebound which powered GDP above 5% two quarters earlier, has progressively dissipated slashing growth to an anemic 1.6%. As underemployment has soared to 16.5% and deflation has continued to tighten its grip, all talk of a "recovery" has ceased and policymakers have grown more tentative, unwilling to do anything that might cost them votes in the upcoming midterm elections.

Housing prices--which had been holding steady for nearly a year--have started to lose ground following the expiration of the homebuyer tax credit at the end of June. According to economist Joseph Stiglitz, "The foreclosure rate is increasing. Two million Americans lost their homes in 2008, and 2.8 million more in 2009, but the numbers are expected to be even higher in 2010." Residential construction activity has slowed to a crawl across the country as housing appears set for another leg down.

Not one sector of the economy is thriving. Everywhere demand is weak; from retail to real estate, from car sales to electronics, from manufacturing to exports. It's a wasteland.

The Obama administration has given up on stimulus and settled on an aggressive new campaign strategy. They've jettisoned "Recovery Summer" and shifted into full attack-mode. On Wednesday in Ohio, Obama delivered a blistering speech that rallied the Party faithful and left the GOP reeling in surprise. Here's an excerpt:

"I ran for President because for much of the last decade, a very specific governing philosophy had reigned about how America should work: Cut taxes, especially for millionaires and billionaires. Cut regulations for special interests. Cut trade deals even if they didn’t benefit our workers. Cut back on investments in our people and our future – in education and clean energy; in research and technology. The idea was that if we had blind faith in the market; if we let corporations play by their own rules; if we left everyone else to fend for themselves, America would grow and prosper.

For a time, this idea gave us the illusion of prosperity. We saw financial firms and CEOs take in record profits and record bonuses. We saw a housing boom that led to new homeowners and new jobs in construction. Consumers bought more condos and bigger cars and better televisions.

But while all this was happening, the broader economy was becoming weaker. Job growth between 2000 and 2008 was slower than it had been in any economic expansion since World War II – even slower than it’s been over the past year. The wages and incomes of middle-class families kept falling while the cost of everything from tuition to health care kept rising. Folks were forced to put more debt on their credit cards and borrow against homes that many couldn’t afford in the first place. Meanwhile, a failure to pay for two wars and two tax cuts for the wealthy helped turn a record surplus into a record deficit."

Notice how skillfully Obama absolves himself and his party of any blame in the crushing of the middle class and wrecking the economy. Many believe that both parties are equally culpable. And why the sudden transformation from president milquetoast to Jake LaMotta? Is Obama genuinely upset or is it just more political theater? Maybe Obama thinks he can avoid a GOP landslide by castigating the Republicans in public rather than pushing another stimulus bill through congress or closing down Guantanamo? In any event, a spirited bout of political mud-wrestling is bound to be more entertaining than two months of grandiose oratory and visions of the Elysian Fields.

Obama's speech sent up howls from the usual quarters. The Wall Street Journal took issue with Obama's "combative" style and dismissed the speech as "red meat" for disillusioned Democrats. The WSJ's editorial page, which serves as the stomping-grounds for the nation's far right ideologues, denounced the speech as "low rent rhetoric". And, while the president did provide some details of a $50 billion infrastructure upgrade and $200 billion in new tax breaks for small business, there's no mistake that the speech was meant to kick off the 2010 campaign season in grand style with a broadside aimed at the GOP leadership.

Obama must know by now that his abysmal performance has left downcast Dems with no reason to drag themselves to the voting booths in November. In the last few weeks the administration has been frantically trying to link together mini-events to create the impression that Obama is still serious about "change". The appearance of Mahmoud Abbas and Benjamin Netanyahu at the White House was a particularly cynical attempt to show that Obama is involved in an issue that is of vital importance to many of his supporters. The so called "summit" was nothing more than a photo op intended to establish Obama's bone fides as a peacemaker. But Obama was unable to get any concessions from Israel, so the public relations scheme fizzled without any real sign of improvement.

Perhaps developments in the Middle East don't matter--except of course to the small group of "professional leftists" that Obama has publicly repudiated already. What matters to most voters is the economy, and clearly, the outcome of the midterms will be decided on the condition of the economy and, more specifically, on jobs. On that front, there's both good and bad news. The nonpartisan Congressional Budget Office (CBO) recently released a report confirming that the American Recovery Act (aka--Obama's fiscal stimulus) did exactly what it was designed to do. It lowered unemployment by about 1.5%, provided jobs for roughly 2.5 to 3 million people, and increased GDP between 1.7 percent and 4.2 percent. Also, former Fed governor Alan Blinder and economist Mark Zandi released a report which showed that--without the emergency actions of the Fed and Obama administration--GDP would have plunged 12% rather than 4%, and unemployment would have skyrocketed to 16.5%. (rather than 9.6%) The two conservative economists concluded that, absent the monetary and fiscal stimulus, the budget deficits would have exceeded $2,600 billion in fiscal year 2011, nearly twice present projections. Bottom line: The stimulus and bank recapitalization programs worked. (although the TARP clearly rewarded crooked bankers who triggered the financial crisis)

Obama can also boast that (according to economist Robert Shapiro) of the 8.5 million jobs that were lost in the downturn, 7,800,000 of those jobs or 92 percent were lost either on Bush's watch or the first 6 months of the Obama administration. (before his policies were enacted) In other words, Obama can only be held accountable for about 41,000 lost jobs, while the Republicans are responsible for roughly 8 million jobs.

Even so, there's no indication that the job's situation is turning around anytime soon. Last Friday, the Labor Department reported that 67,000 new private sector jobs were created in August, a notable improvement. Unfortunately, at least 125,000 are needed to keep up with the growth of the potential work force. That means the economy will have to grow at a 2 to 2.5% GDP before we see a real decline in the jobless figures. And, now that the Fed and the administration are focused on "belt tightening", it is unlikely that the government will provide the necessary resources to dig out of the hole the country finds itself in. Gluskin Scheff's David Rosenberg summed it up like this:

"We are currently experiencing the recession with the slowest job creation in history. And based on our prior estimates, the recession will last around 85 months before we regain the unemployment rate seen at the onset in December 2007."

Meanwhile, the social safety net continues to get more and more frayed as the slump persists. Homeless shelters and food banks are stretched to the max while the Department of Agriculture’s Supplemental Nutrition Assistance Program (aka--the food stamps program) reports that 41 million people--more than one in eight people--now need government assistance to feed themselves and their families. That's up 10% from last year.

Ordinary working people are hurting bigtime, still waiting for the prophet Obama to lead them to the promised land. But Obama has abandoned "Big Government" as the answer, whether it be a second round of stimulus, government jobs programs, or expanded welfare assistance. He'll have none of it. Sure, he'll playfully joust with his GOP rivals, but he'll never seriously diverge from the path cleared by his ideological twin, Ronald Reagan.

An Energy-Independent Future -- Daily Show

4. How the D.C. Media Covers for the Establishment

by John LeBoutillier 

The POW issue was born during the Watergate scandal. Richard Nixon and Henry Kissinger knew Hanoi was secretly keeping American prisoners, but in the spring of 1973, they were in no position to get a Democratic Congress to pay ransom to North Vietnam.

Watergate was exposed because two Washington Post reporters, Bob Woodward and Carl Bernstein, defied the unspoken agreement between media and government that remains in effect—in exchange for protecting government secrets, the press gets privileged access to official sources. That tacit pact is the single biggest reason the POW puzzle has never been solved.

My own experience provides a vivid—and exasperating—example of this incestuous relationship between the press and the powerful.

In October 1985, Rowland Evans and Robert Novak held their semi-annual Evans & Novak Political Forum in Washington, D.C. for their newsletter subscribers. Each of us—I had been a subscriber since 1974—paid $450 for a full day of talks from “D.C. political insiders.” The line-up featured Senate Majority Leader Bob Dole, White House Chief of Staff Don Regan, New York Gov. Mario Cuomo, and President Reagan’s national security adviser, Robert McFarlane.

After the morning introduction, I walked up to Novak and asked him, “Is what is said in here today on the record?”

He smiled, shrugged his shoulders, and said, “You paid to attend this conference, and you are not a member of the media, so those press rules do not apply to you.”

I returned to my seat at a long table where I had a cassette tape recorder clearly visible on top of the white tablecloth. When McFarlane began talking, I turned on the recorder. In the Q&A period afterward, I asked McFarlane—a retired Marine who had been on Kissinger’s staff during the Nixon administration and had been secretly dispatched to negotiate with Hanoi for the remaining 600 POWs—“Do you believe there are still U.S. POWs held against their will in Vietnam and Laos?”

McFarlane took a long time before he began his answer: “I do think there has to be—have to be—live Americans there.” He paused. The room grew silent as we watched this clearly conflicted man struggle to continue. We knew we were hearing a rare unscripted answer. He began talking about the thousands of live sighting reports coming into the Pentagon and Defense Intelligence Agency from Vietnam and Laos. Of those Southeast Asians who claimed to have seen American POWs, McFarlane said, “They have no reason to lie, and they are telling things they have seen.”

A follow-up question centered on whether the U.S. government had done everything it could to pinpoint and recover these POWs. Admitting that it had not, he said, “And that’s bad, and that’s a failure.”

I gave the tape to Wall Street Journal reporter Bill Paul, who was based in New York. He listened to it and knew he had a big story in his hands. He called National Security Council spokeswoman Karna Small, who had attended McFarlane’s talk. She denied that McFarlane ever said the words we had heard from him that very day. Paul said, “But the Journal has a transcript.” Her reply: “The transcript is wrong.”

At that point Paul knew his story was even bigger—he had McFarlane’s spokeswoman lying about her boss’s answers just hours earlier. So he called her back and said, “The transcript is not wrong. In fact, we have it all on tape.”

Bingo!

She said, “I have to get back to you.”

Minutes later the Wall Street Journal’s D.C. bureau chief, Al Hunt, called Paul and took over the editing of the story. Meanwhile, Evans and Novak tracked me down and accused me of violating protocol by exposing “off-the-record remarks by McFarlane.” They had suddenly forgotten that I specifically asked Novak whether the session was on or off the record.

In other words, the media—Al Hunt and Rowland Evans and Robert Novak—banded together to protect McFarlane and their access to him at the expense of a dynamite story. A watered-down version eventually ran and garnered some national attention, but never the continual front-page coverage it deserved.

A few months later, at a private meeting of the House Special Task Force on POWs/MIAs, I delivered a talk about a recent report of POWs being held at a specific location in Laos. Rep. John McCain was sitting in the front row of the tiered hearing room. Until that day, he and I had always had a cordial relationship. But upon seeing me, he sneered and asked if I was “secretly taping this meeting, too?”

McCain should have been incensed that the national security adviser knew that U.S. POWs were still being held and that the press was suppressing the story. Instead he was furious at me for daring to reveal McFarlane’s statements.

The Vietnam War was brought to an end in large part by a healthy, skeptical, adversarial relationship between the media and government. Reporters’ suspicions that they were being deceived by military briefers every afternoon in Saigon at the Five O’Clock Follies were the precursor to serious critical coverage of the war. Yet somehow this skeptical media has always believed the very same Pentagon when it comes to POWs.

The incident from 1985 is but one example of many. In my 30 years fighting for the truth about the POWs knowingly abandoned by the Nixon administration, I have repeatedly witnessed an eager partnership between the officials who make national policy and the media that is supposed to cover them—not to cover-up for them.