Via Paul Rosenberg at Open Left, this table summarizing a recent Winthrop poll:
Winthrop Poll On Stimulus
Seem pretty straightforward. The real irony, of course, is that the general public opposes what the government has done most of, and agrees with what the government has been reluctant to do.
Government by the financial elites, for the financial elites.
It seems there is no solution to California’s budget shortfalls (via Digby):
“I think that there will be across-the-board cuts again,” he said at a San Jose news conference….
“I can’t think of any good solutions,” said Assemblywoman Noreen Evans (D-Santa Rosa), who chairs the budget committee. Although the projected deficit would be smaller than the last one, she said, “the cuts are going to be harder to make because we’ve already made such substantial cuts.”
This is, in one sense, false. The solution to California’s budget woes is to raise taxes, primarily on the rich, and to allow municipalities to raise property taxes. The solution is dead simple.
However, in a more real sense, there is no solution. Because California’s constitution allows a minority rump of Republicans to veto the majority, no such tax rises can pass. And since California’s proposition system is what made property tax rises impossible, and since a proposition to remove the limits is unlikely to pass, there is no solution.
Californians are going to have grow up. They can’t have low taxes and services. It is simply not possible.
- The constitution needs to be rewritten to allow budgets to pass on a majority vote
- The proposition system itself needs to be ended, and any proposition now in effect should be able to be nullified by the legislature, on a simple majority vote.
- Taxes need to be raised, both income taxes on the rich, and property taxes. If necessary put limits on tax raises for primary residences only for as long as they are owned by one owner, with a reset when they are sold or passed on, but otherwise, taxes can be raised.
- Grow up.
I feel very little sympathy for Californians as a group though I recognize that many Californians are individually blameless. This has been coming for decades, and whenever given a chance to make things worse, Californians have done so, as when they kicked out the last Democratic Governor and installed the Governator, a man who never saw a budget problem which couldn’t be solved by floating more bonds and cutting services to the poor.
You get what you pay for. For years, Californians thought they could have government services without paying for them.
As goes California, so goes the country. Americans as a group still think they can have things they won’t pay for, and that they can have lots of billionaires and widespread prosperity. Has never happened. Will never happen.
Period.
And it isn’t lending it out cheap:
JPMorgan will on Thursday unveil a £1bn deal to buy Cazenove, the UK broker with which it has had a joint venture for the past five years.
The bank is to pay about 535p a share in a deal in which David Mayhew, widely recognised as one of the City’s best-connected corporate advisers, will retain the title of chairman of the Cazenove brand.
Last year myself and Stirling both noted that what would be done by banks if they were bailed out is to horde their money, not lend it out cheap, and save it to buy up competitors, make leveraged plays and so on. That is EXACTLY what has happened. Exactly.
During a downturn, if you have money, you don’t want to lend it out for low gains when you can buy up competitors, cheap. You don’t want to lend it out cheap, when you can make leveraged plays off the bottom of a stock and commodity market which is bound to go up because trillions are being poured into it by central banks. You want to take that money, and buy things while they are cheap, not lend it out for 4 or 5% returns, when you can make many many times that.
Why, exactly, governments expect banks who have better ways to make money to act like retail banks who don’t have any other way to make money but lend out at prime +3 or 4 percent is beyond me. They think they’ll do it out of gratitude for being bailed out, or some sort of sense of civic duty? Most politicians may be stupid, venal and corrupt—but it’s that very greed and venality which means they should understand that banks will do no such thing.
Banks will do it only if they are forced to do it. Remove retail banking from investment banking, insurance and brokerage services, and disallow any risky games on the markets for retail banks. Remove all special facilities from non retail banks because Goldman Sachs should not be doing highly leveraged plays with free money from the Federal Reserve. And reinstitute serious leverage limits, not just for retail banks but for everyone.
As for retail banks, if they don’t lend to the public at rates approved of by the Federal Reserve and Congress, they too should lose their access to special facilities. Banks are given the valuable right to borrow money for almost nothing, and to, in effect, print money by lending out money they don’t have. Those are privileges which are given to them in the expectation that they will use them to benefit the economy. If they refuse to do so, they should lose the privileges.
None of this is rocket science. Those of us who predicted both the crisis and what the bungling of the crisis would cause, however, are precisely the people who are not listened to by those in power. Obama is having his jobs summit, and forget nobodies like me, he isn’t even inviting somebodies like Stiglitz and Krugman.
If you’ve been right down the line, then you are precisely the sort of person who isn’t “serious” and shouldn’t be listened to when it comes to what it takes to fix the problem.
Why? Because everyone knows that fixing the problem will end the gravy train for a lot of very rich people. A lot of very rich people who give a great deal of money to Democrats in general, and gave a lot of money to Obama in particular. If the cost of keeping that gravy train and the donations it enables going is tens of millions of unemployed people, well, so be it. Because serious people know that real change isn’t going to happen under Obama or under this Democratic Congress, so there’s no point in even talking to people who might suggest it.
Plus ca change. Plus c’est la même chose.
A friend of mine noted that the Fed is supposed to try and achieve both price stability and employment, and thus seems to believe that leaving interest rates low is something the Fed should do.
But monetary policy alone isn’t going to get the US to full employment. It requires properly done fiscal policy combined with proper financial regulation to encourage lending to the real economy and real investment.
Right now what is happening is that banks have cheap money, but consumers and most businesses have expensive money. They risk creating another financial bubble, minus the part where some ordinary people manage to get rich off flipping houses because banks aren’t lending their cheap money to companies or people who create any significan numbers of jobs, they’re using that money for leveraged plays, buyouts and so on.
As usual, this was predicted by a number of people this time last year when TARP was formalized.
The Fed, Treasury, FDIC and federal regulators, under the direction of the President (and yes, the Fed does do what the President wants right now, if Bernanke wants to keep his job, which he does) could do a number of things to fix this, but doing so would require telling bankers who they’re going to lend to and what interest rates they’re going to charge, and /that/ would require being willing to threaten them with (and if necessary follow through with) withdrawal of special facilities, real audits, and having the FDIC take over banks who absolutely refuse to play ball. Which means a willingness to risk having those sweet sweet donation from the financial sector flip back to the Republicans.
The rest of what needs to be done rests in the combined hands of the President and Congress. For a pittance compared to the full so-called stimulus bill, cash for clunkers produced noticeable growth. If the government wants to pass a real stimulus bill, actually designed to create large numbers of jobs, it could get a lot of bang for only a few hundred billion dollars.
No one, not the Fed, nor Congress, nor the President, is serious about full employment. If they were they would have done, would be doing, and would be planning on doing different things than they have done.
Employment will probably start picking up again in the spring, but employment as a percentage of America’s population will not recover this economic cycle. My suspicion is that it won’t recover within 20 years.
That is a policy choice, either deliberately, or through stupidity (I suspect both.) Fixing it requires all three of the Fed, President and Congress to decide to do the right things for the population as a whole, rather than for their friends, donors and cronies in the financial industry.
I leave it to others to decide how likely that is to occur.
Apparently it is more important to the Catholic Church to discriminate against gays than to do unto Jesus’s most needy children as they would do unto Jesus. I’m sure Jesus will remember this when it comes time to review how they represented him on earth.
The Catholic Archdiocese of Washington said Wednesday that it will be unable to continue the social service programs it runs for the District if the city doesn’t change a proposed same-sex marriage law, a threat that could affect tens of thousands of people the church helps with adoption, homelessness and health care.
Would that some “Christians” remembered what was most important to Jesus. Which wasn’t same sex marriage marriage, last time I read the New Testament. Or they could stop calling themselves Christians, since it appears to be a lie, which is yet another sin.
Then he will say to those on his left, ‘Depart from me, you accursed, into the eternal fire prepared for the devil and his angels. 42 For I was hungry and you gave me no food, I was thirsty and you gave me no drink, 43 a stranger and you gave me no welcome, naked and you gave me no clothing, ill and in prison, and you did not care for me.’ 44 Then they will answer and say, ‘Lord, when did we see you hungry or thirsty or a stranger or naked or ill or in prison, and not minister to your needs?’ 45 He will answer them, ‘Amen, I say to you, what you did not do for one of these least ones, you did not do for me.’ 46 And these will go off to eternal punishment, but the righteous to eternal life.”
It seems there is a proposal to create a new board to set accounting standards (h/t Digby):
The mechanism is contained in an amendment set to be introduced in mid-November by Rep. Ed Perlmutter (D-Colo.) that would move final authority over the Financial Accounting Standards Board (FASB) from the Securities and Exchange Commission to a new body, a so-called “oversight” board, that would include the officials charged with managing systemic risks to the financial markets.
These regulators would have the authority to override FASB’s accounting guidelines by taking into account economic conditions. (emphasis added)
The key factor in Japanification is that you don’t allow bankrupt or insolvent banks or other major firms to fail. You let them keep bad loans and “assets” on their book at inflated values, and you let time go by, intending to write the bad loans down very slowly as time goes by. The effect of this is that real access to credit in the actual economy dries up, and as a result there is much less real growth.
Trading leverage at banks is up. There are fewer, larger banks, few, too larger to fail banks, that is. Credit for consumers is more expensive, and the non-government guaranteed mortgage market has seized up. Elsewhere Digby also notes that reports of mortgage fraud are actually up from last year.
There is going to be a recovery, it has already started in Asia. Job numbers should start turning around in the spring in the US, though the number of people employed as a percentage of the population will not recover this economic cycle, and probably not for a generation.
However, Japanification doesn’t mean you don’t get some recoveries. You do, then they sputter out. Employment never really recovers, wages stagnate and things are just generally lousy without plunging the country into an all out depression. So, yes, in that sense the country was “saved’ from a Great Depression, but choosing the worst alternative.
That alternative isn’t just Japanification, it is a continuation of the status-quo ante. The Bush years, and indeed the Clinton years to a lesser extent, were about financial plays. Instead of building a real economy, the chimerical returns of financialization were pursued. Real businesses return 5% and consider that good. Financialized companies, taking on too much risk and debt, slashing employees and capital and seeking returns through offshoring and outsourcing return 15%. Leveraged financial plays return far more even than that. The returns are fictional, the bailouts wiped out most of the profits of the last 8 years, but bonuses and salaries are paid on them, so they aren’t fictional to executives, and it is executives who make the decisions.
What Obama, Geithner and Bernanke have been doing is attempting to reboot the financialized economy. Rather than winding it down, breaking up banks, reinstituting Glass-Steagall, and regulating banks like utilities, they are attempting to get the Busheconomy working again.
The cost of all of this has been high. In the trillions. Instead of increasing progressive taxation to make the rich pay for their bailouts, what is being done is to make the poor and middle class pay. This may be through high interest rates (letting credit card rates go to 29%, among other things) or it may be forcing the population to buy private health insurance, but once again, the rich fail, and everyone else pays the price.
The end result of Japanifying, regressive taxation (whether direct or indirect) and attempting to restart the financial casino will not be pretty. There will not necessarily be any immediate disaster, and some numbers will look good. But the fundamental problems of the economy under Bush have not only not been fixed, they have been made worse and the evidence is being systematically buried. There won’t be another financial crisis immediately, but another one has been made inevitable.
Economically this is the legacy of this Congress, Federal reserve, and presidency.
When I wrote that Rasmussen found Republicans more trusted than Dems, the immediate response was “you can’t trust Rasmussen”, ignoring the fact that even Rasmussen hadn’t found such results for years. In other words, they were a leading indicator.
Republicans have moved ahead of Democrats by 48% to 44% among registered voters in the latest update on Gallup’s generic congressional ballot for the 2010 House elections, after trailing by six points in July and two points last month.
The Nov. 5-8 update comes just after Republican victories in the New Jersey and Virginia gubernatorial elections, which saw Republicans replace Democrats as governors of those states.
As was the case in last Tuesday’s gubernatorial elections, independents are helping the Republicans’ cause. In the latest poll, independent registered voters favor the Republican candidate by 52% to 30%
What a surprise.
Not.
Meanwhile, we have further stupidity from the “centrists”:
Seven members of the Senate Budget Committee threatened during a Tuesday hearing to withhold their support for critical legislation to raise the debt ceiling if the bill calling for the creation of a bipartisan fiscal reform commission were not attached. Six others had previously made such threats, bringing the total to 13 senators drawing a hard line on the committee legislation.
The panel, which has been championed by Conrad and ranking member Judd Gregg (R-N.H), would be tasked with stemming the unsustainable rise in debt.
Among its chief responsibilities would be closing the gap between tax revenue coming in and the larger cost of paying for Social Security, Medicare and Medicaid benefits. The Government Accountability Office recently reported the gap is on pace to reach an “unsustainable” $63 trillion in 2083.
The panel would also have the power to craft legislation that would change the tax code and set limits on government spending.
The legislation would then be subject to an up-or-down vote; it could not be amended.
Brilliant. Now, the purpose of this committee would be to provide cover to slash Medicare and Social Security. Imagine the reaction if, under a Democratic President, with a Democratic majority Congress, Medicare and Social Security got slashed. Who do you think would get the blame?
A number of Democratic Senators are strongly backing this. The hypothesis that Democrats want to be back in the minority is proving to have great predictive power.
A bill stripping abortion rights from women couldn’t pass in the Republican Congress. It may well in a Democratic Congress. Likewise a bill allowing Social Security and Medicare to be gutted couldn’t pass under Bush. Will it pass under Obama?
Dodd’s proposal for financial sector reform is out. It amounts to increasing discolosure, making banks pay for a bailout fund, adding another regulator, and giving more power to existing regulators.
For example:
Creates an Office of Credit Ratings at the SEC, which will be tasked with enforcing higher levels of disclosure, and will maintain a right to deregister an agency.
Disclosure is not the problem with credit agencies, and higher levels of disclosure will not solve the problem. As long as the model is that credit agencies get paid by those whose debt they rate, they will not be fixed.
Disclosure in general is not the issue. And anyone who thinks that either
a) new regulatory agencies will solve anything
or
b) that the old regulatory agencies, if given more power, will use it sensibly
is insane, or on the payroll. The old regulators had enough power (especially the Fed). The Fed could have stopped the credit bubble any time it wanted. The FDIC could have shut down any bank it wanted. Etc…
What is needed is to reinstate Glass-Steagall, or something close to it. Keep insurance, retail banking, investment banking and brokerage businesses separated from each other. Any company which is too big to fail should be broke up the second it gets that big. A proposal to do anything else is a joke.
Next.
It’s time to evaluate where health care reform stands at this point.
Guaranteed Issue: The best thing about the bill is unquestionably the fact that insurers have to issue policies to anyone who can pay. No one can be denied coverage, no matter what pre-existing conditions they have. This is a big deal. While it can help people of any age, it is most important to older people, who are more likely to have pre-existing conditions. This also helps people who are stuck with very expensive insurance because they have pre-existing conditions and if they cancel their insurance wouldn’t be able to get new insurance.
Individual Mandates and cost sharing: An individual mandate forces people to buy insurance whether they want to or not. Insurance works better when everyone is covered and in the same risk pool. It also shares costs throughout the population. Individual mandates seem unfair, but they are generally instituted as part of changes to the system which reduce overall costs significantly. For example, relatively speaking, Canadian GDP/capita costs were reduced by one third compared to what they would have risen to otherwise during the ten years after changing from a US style system to single payer.
If there is no cost reduction due to systematic changes in the system, however, all that an individual mandate does is share costs through the entire population and direct profits to private insurers and medical providers of various kinds by giving them a captive consumer based, forced by government mandate to buy their services.
People who don’t have insurance right now are primarily younger people or those who feel they can’t afford it. What individual mandates will do, then, is subsidize older people’s insurance costs and the price of guaranteed issue, which is very costly since it forces insurers to cover people who are very likely to get sick. The people who subsidize this are, generally speaking younger and poorer.
If subsidies were adequate, then in fact, it would be the government subsidizing the costs, through progressive income tax and corporate taxes. However, since the subsidies in the various bills do not cover the full cost, poorer and younger people will subsidize older people. Since many of those people didn’t buy insurance because they are right on the edge financially already it means that some of them will go without food, not be able to pay tuition, or lose their homes as a result. Many people are already on the edge already, this is one more burden for them.
No Robust Public Option: A robust public option is one that is large enough and with enough pricing power to force down costs, and one which is available to everyone. At this point, the public option will likely have between 5 to 9 million enrollees (the CBO says 6 million, but we’ll be generous). As such it will be smaller than most private insurers and will not have pricing power. If it were linked to Medicare and could use Medicare’s clout, it could reduce costs, but the Medicare +5 amendment, which would have had it paying providers at Medicare rates +5% was defeated.
The Congressional Budget Office has stated that the public option insurance plan premiums will be higher than equicalent private plans. This is likely because of denial of care issues, insurer cherry-picking and lack of clout mean it won’t be able keep reimbursement rates low relative to private insurers who have more customers and thus more pricing clout with doctors, hospitals and other providers. If the public option costs more than equivalent private plans, it goes without saying that it will not reduce costs.
Reduces Practical Access to Abortion: The Stupak amendment, passed Saturday evening, makes it illegal for any plan offered on the exchanges to finance abortions. Any woman who wants abortion access, after being forced to buy insurance that doesn’t include it, will have to buy it elsewhere. The practical result of this is a reduction in access to abortions. This, of course, primarily affects young, childbearing age women though their family members, boyfriends and so on will likewise be effected.
The Bottom Line: Who’s Getting What, and Who’s Paying
This bill does not contain a robust public option which will contain costs. It will give guaranteed issue and force cost sharing through an individual mandate. Older people will disproportionately benefit, and the people who will disproportionately pay are younger poorer people, and especially younger women, the poorer ones of whom will lose practical access to abortions.
For a long time I’ve read that the bright red line for many progressives was a robust public option. None of the bills, including the House bill, have a robust public option. In addition, the Stupak amendment removes practical access to abortions for many women.
It appears that the bright red line was not a robust public option. The bright red line was, and is, guaranteed issue. As long as a bill has guaranteed issue (in exchange for which insurance companies insist on an indvidual mandate, aka, cost sharing and forced customers) any other sacrifice is acceptable.
This health care “reform”, if passed in this form or worse, which it will be if it is passed at all, will blow apart eventually, because it will not contain costs or ‘bend the cost curve” and the US economy simply cannot indefinitely afford health care costs wich rise faster than inflation or wages. But for as long as it lasts, it will help some people at the cost of other, generally younger and poorer people.
If progressives really meant that a robust public option was their minimum requirement, when Medicare +5 failed they would have gone into opposition. They didn’t, therefore it wasn’t their minimum requirement. It remains to be seen if enough progressives really will vote against a final bill which still contains the Stupak amendment. Given progressives failure to live up to their threats to pull support if no robust public option was in the bill, I am forced to suspect that if Stupak is in the final bill, the final bill will pass.
The last couple weeks have been very revealing as to what various people, including politicians, progressive bloggers and activists, are really willing to fight for, and what their bottom line really is.
I would suggest that if progressives ever want their threats to be taken seriously by anyone again they go into opposition against this bill until such a time as it both has a robust public option and the Stupak amendment is out. Failure to do so will show that their threats were always hollow, that they are willing to sell out child-bearing age women, and that they prioritize the interests of older people over younger and poorer people.
In negotiation against a good negotiator, you get the minimum you are willing to settle for. Progressives have shown that their minimum is not a robust public option. It may not even be practical abortion access. They will not get a robust public option if they will not oppose the bill over it, and if they won’t oppose the final bill over the Stupak amendment, that too will most likely remain.
Obama and the Democratic leadership’s bottom line is they must pass some bill called “health care reform”. Unless you threaten to take away their bottom line, they will take away anything that isn’t progressives bottom line – and that includes practical abortion access, and a robust public option.
