Path to Fiscal Sustainability Requires Taking the Long View

I’d like to suggest that solving our fiscal problem requires more than just sacrifice, which most assuredly will be necessary. It requires smart people with the ability to take the long view. We need to think strategically when we envision the fiscal future we desire, and implement structural reforms that put us on a long-term path to fiscal sustainability.

Let’s take defense spending as an example. During the presidential campaign, Mitt Romney promised to increase defense spending by $2 trillion over the next decade. President Obama argued that the United States already spends more on defense than the next 10 countries with the largest defense budgets combined. He actually understated the disparity. We spend more than the next 13 countries combined, and this includes China and Russia. This year American tax payers shelled out $718 billion for troops, and tanks, and airplanes, and ships, and etcetera. That accounted for 20% of the $3.6 trillion  federal budget.

Failing to reach agreement on reducing the United States’ federal deficit by the end of this year will result in automatic spending cuts as mandated by the Budget Control Act (BCA) of 2011. Among other things, this would slash an estimated $55 billion from defense spending in 2013. Making such cuts willy-nilly will degrade our national security in ways we can’t fully appreciate, and damage the US economy in ways we can -- America’s humongous military-industrial complex accounts for an estimated 10 million jobs. Cut defense by the 10% sequestration in the BCA and you’re looking at upwards of 1 million jobs lost.

Now that doesn’t mean we should buy tanks the army doesn’t want just because the manufacturing plant is in some congressman’s district. Nor should we keep plants open in order to manufacture advanced weapons systems to sell to our new friends in the Middle East. Friendships there change more often than Mitt Romney’s policy positions. What’s needed is a reduced defense budget based on an overarching defense strategy that reflects national security realities now and in the future and the military force structure needed to effectively deal with them.

We must move to this new force structure incrementally, and the spending cuts we realize must be allocated not just to deficit reduction, but to new programs aimed at helping veterans adjust to civilian life, and elements of the military-industrial complex convert to commercial endeavors.

If we were to take Mr Romney at his word, his presidency would have moved us toward war with Iran; an indefinite presence of thousands of US troops in Iraq; a more militant posture towards Russia; a trade war with “currency manipulator” China; a troop presence in Afghanistan until at least 2014; and a Reagan-like military buildup at home. If Mr Romney’s positions still reflect Republican foreign policy objectives, we are in for a knock-down, drag-out battle right here at home on the defense budget alone.

Then we have Medicare and Social Security to address. And once again, America is at war on multiple fronts.

Another Voice is Heard From on Fairness Op Ed

Another voice, let's call him "A," is heard from on my opinion piece on "fairness."

On Oct 1, 2012, at 4:32 PM, "A" wrote:

Enjoyed reading your article on the subject in yesterday's Herald.  Well written...but not your best argument.  Consider:

1)  You say liberals argue that it isn't fair that !% of the population control over 40% of the wealth in America.  Why is that not "fair?"  What percentage would you consider fair?  Suppose every 50 years all debts were cancelled and all property that had been sold would be returned to its original owner.  Would you consider this fair? (Read Leviticus 25)

The median family income in America is something like $50,000.  The personal income in Guatemala is $1340/yr.  Would you support taxing the people in the USA who make over $1340/month (12 times as much as a statistical Guatemalan) and giving money to the Guatemalans?  Why not? Wouldn't that be fair?  Why should Americans have 20% of the world's wealth (or whatever the % is?)  Want to try Mali?

As your hero, Ronald Reagan once said, “here you go again.” Your first point is what’s referred to as a “strawman.” Look it up, and then you’ll understand why I’m not going to respond to it.

2)  You start off talking about fairness then let your socialist bias creep in.  You say that "policy distortions lead to inequality?"  This supposedly includes unregulated or under-regulated financial institutions.  Please provide the list of unregulated financial institutions you're referring to.

Come on! We’ve been through this before. What the hell do you think caused the 2008 financial crisis. Oh, let me guess, irresponsible borrowers. You’re so predictable. I even sent you a link to a web site that tracks Wall Street scandals. Do your homework!

On failing to prosecute fraud: http://georgewashington2.blogspot.com/2010/12/letting-fraud-continue-will-not-restart.html

About Bank of America lying to its shareholders: http://www.nytimes.com/2009/08/24/business/24judge.html?_r=1&adxnnl=1&ref=business&adxnnlx=1349539210-IsHDuYPZU1y7GfLUkUnaOQ

About the failure of the SEC and the Justice Department to stop fraud and abuse: http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216?page=4

About Greenspan’s perverted Ayn Rand view of the economy: http://www.nytimes.com/2008/10/09/business/economy/09greenspan.html?hp

Preview, here’s what Alan said in Senate testimony:

Greenspan: I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms...

Waxman: In other words, you found that your view of the world, your ideology, was not right, it was not working.

Greenspan: Absolutely, precisely. You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.

On the Senate naming names: http://www.nytimes.com/2011/04/14/business/14crisis.html?ref=business

3)  You say preferential tax treatment for special interests are bad for America.  Does this include a) deductions for home mortgage interest? b) charitable gifts? c) deductions for job-related expenses? d) tax breaks for married people? e) tax breaks for dependent children (and dependent adults, for that matter).  Please explain how these are bad for America. 

Maybe you're thinking of taxing capital gains at less than ordinary income.  Since this encourages investment in business, which grows the economy, how is that "bad" for America?

I think that most informed Americans now understand that the very wealthy end up paying a smaller percentage in taxes than the rest of us do -- it’s been beat to death, with even Warren Buffet chiming in on the issue.

It’s easy to understand the effect of tax policy on dividends and capital gains in lowering taxes, and the fact that people in upper income brackets are going to benefit far more than others, who may feel fortunate just to be able to set aside some of their wages in a regular savings account. But there are other far more complex and esoteric tax dodges that the very wealthy use to reduce their taxes, sometimes to zero. You can read about some of these strategies in this Bloomberg Business Week article.

So tax policies (especially those effecting estate taxes) contribute to a widening gap between the rich and the rest, and they also reduce government tax revenue over and above the major reductions that resulted from the Bush tax cuts.

Other policies that reduce the revenue stream include those effecting taxes paid by corporations. Although we hear over and over again how these “job creators” are being squeezed, it turns out that U.S. corporate taxes actually paid (the effective rate) fell to a 40-year low in fiscal year 2011, despite the current rebound in corporate profits. The U.S. both taxes its corporations less and raises less in revenue from corporate taxes than its foreign competitors due to the use of overseas tax havens, loopholes, credits, and deductions in the tax code.

The decline in government revenue has been accompanied by a a steep rise in college tuition and a decline in programs at the federal and state levels that aid lower income people advance in education and, in turn, earnings, thus further depressing the middle class. Another factor in the decline of the middle class is the decline in union membership. It was 40% in the 1950s, but is just 12% now. Without a prosperous, vibrant middle class the nation lacks the primary engine for a strong economy and, in turn, a broadening of the tax base.

In addition, declining tax revenues and the lingering effects of the 2008 recession (including joblessness and increased expenditures on “safety net” provisions) have led to reduced expenditures at the federal and state level on infrastructure improvements -- repairing roads and bridges, improving the electric grid, spreading high-speed Internet, and creating state-of-the-art transportation systems -- which greatly impacts U.S. productivity; another hit on the economy.

We are also seeing a reduction in investments in research and development. These R&D reductions have a big effect right here in the Tri-Cities, where work at PNNL on alternative energy and CO2 sequestration, among other things, have experienced cutbacks, and the Lab has laid off about 200 people.

4)  You say all sorts of things have "decimated the middle class," without explaining how that is so. First of all, no one even knows what defines the middle class ($200K in Manhattan might be considered middle class; so would $40K in small town Mississippi), [Your candidate, Mitt Romney, says it’s $250K and below, but he’s totally out of touch, so we can’t go by that] but you don't provide any example of how the middle tax has been "decimated."  [I think I just did] I realize the median family income has dropped some (not sure, maybe $2-3K) over the past decade, but this is hardly devastating. 

Moreover, do you think the middle class lives better or worse than when you and I were growing up?  I'd argue almost everyone lives better.  They work fewer hours, eat better (too well?), have better health care, live in bigger houses with more conveniences (avg size of new house is >2000 square feet; I bet it was 1200 in 1950), and recreation opportunities are an order of magnitude better. 

The sense of the middle class taking it in the shorts is caused by several things--not the least of which is the global economy and America's movement to a post-industrial society.  Let's face it, the technological age requires smarter, better-educated people--and the world has caught up with us in this regard.  Consider South Korea--a basket case that killed baby girls 60 years ago--now sends something like 80% of its children to COLLEGE.  We graduate 70% from HS (52% or so in Chicago)!  Combine this with a rate of illegitimacy approaching 40% (70% in some places), and you have a permanent underclass--largely of its own choosing. [I was with you until your last line -- why is it you always want to blame the poor for being poor? Is that part of your religion? Will you forgive them for being poor in the year of the Jubilee?]

So, you want to know what negatively impacts the middle class?  Poor personal choices--not preferential depreciation tax breaks for oil companies and certainly not too-big-to-fail companies like AIG or GM.  I've said this before, and I'll say it again--finish HS, learn a trade, get a job, get married, stay married, then have children--do these precisely in this order and you have a 98% chance of being a member of the middle class (or upper class). [I agree that doing the things you’ve outlined will increase an individual’s chances of success in life, but I certainly don’t agree that other factors don’t bear on the problem. Are you arguing that the reason so many people are out of work today is due to their “personal choices?”]

The government can't fix this problem. [Is that why you’re voting for Mitt Romney, because he can’t fix our problems? If so, I suggest you vote for someone else; e.g., Ron Paul.] No policy can.  Actually, government makes things worse in many cases [“Government’s not the solution. Government’s the problem.” Ronnie Reagan] --especially when we make it acceptable to bear children out of wedlock. [This is nonsense] It can only be fixed when society realizes our culture must change. [Do you even know what “culture” is? If you do, you’d know that cultures change organically, not through social engineering -- would you have us emulate China and impose a “Cultural Revolution?” Really, I get so fed up hearing you conservatives rail against government support for Planned Parenthood, while at the same time decrying our culture, by which you mean the culture of those on whom you look down.]

5)  I agree with your comments on political campaign giving.  Our campaigns are too long and cost too much.  I'd support reducing the amount of money any organization or person can give.  And I'd eliminate the ability of ANY public organization to contribute.  SEIU would lead the list.  How can it make sense for public employees to contribute to the election of people who will determine their salary and benefits?  This is a conflict of interest on the face of it. [This is surprising -- I agree with you]

6) Finally, you argue that it isn't fair that we have too many wealthy people in Congress.  Nonsense.  The argument is just the opposite.  We want highly trained and educated people in Congress, and if they're independently wealthy maybe they can concentrate on doing what's best for the country, not what's best for them financially.  I suppose you'd like 30% of congress to be HS dropouts!

(The democrats--hypocrites that they are--complain about Romney's wealth but nary a peep about JFK's or any democrats).

Did I say that it’s “unfair” that we have too many wealthy people in Congress? Golly, I misspoke, if I said that. But I know I didn’t say that. You simply twisted my meaning so you could call it “nonsense.”

I wrote “We depend on our elected officials to represent the people, all the people. And yet the median net worth of our congressional “representatives” is almost nine times the typical American household. Fully 250 members of congress are millionaires, and 57 have a net worth that puts them comfortably in the 1%.”

I probably confused you by leading into this statement by writing that, “On a related issue of fairness, voters, both liberals and even many conservatives I know, question the “fairness” of the unrestricted flow of cash to political parties, candidates, and their surrogates. This flood of money resulted from the 2010 Citizens United case in which the Supreme Court decided (5 to 4) that bans on corporate contributions were unconstitutional, or as Mitt Romney put it, “Corporations are people, too” (the ruling applies to unions and NGOs, as well). Justice John Paul Stevens wrote in his dissent, “The ruling threatens to undermine the integrity of elected institutions across the Nation.” In this sense, when we complain that campaign financing is no longer “fair,” what we mean is that it is not “balanced” -- it allows moneyed interests (which go unnamed) to wield disproportionate influence on both elections and the elected.”

You mentioned in your diatribe that “How can it make sense for public employees to contribute to the election of people who will determine their salary and benefits?  This is a conflict of interest on the face of it.” Amen, brother! I’m making essentially the same point.

Now you conservatives and your Tea Party faction are fond of selectively quoting the Founding Fathers. Let me do the same.

The founding fathers were familiar with European Aristocracy and the tyranny of the aristocratic order. They believed in a republic based on shared political power, not one ruled by a wealthy, landowning aristocratic elite. That’s why every Revolutionary state government abolished the laws of primogeniture and entail that had served to perpetuate the concentration of inherited property. Abolishing aristocratic forms of inheritance would, according to the North Carolina statute of 1784, "tend to promote that equality of property which is of the spirit and principle of a genuine republic."

John Adams, in a letter to a contemporary in 1776 wrote, “The balance of power in a society, accompanies the balance of property in land. The only possible way, then, of preserving the balance of power on the side of equal liberty and public virtue,is to make the acquisition of land easy to every member of society; to make the division of the land into small quantities, so that the multitude may be possessed of landed estates.”

In the 1790s, Jeffersonians, in arguing against the policies of Alexander Hamilton and the federalists, made the point that the people must remain vigilant and not let elites manipulate politics, or an aristocracy of wealth would re-emerge in the young republic and eventually destroy it. No republic, the Jeffersonians argued, can tolerate inequality and survive.

Thomas Paine, resurrected by the Tea Party as a sort of guiding light, said, “Separate an individual from society, and give him an island or a continent to possess, and he cannot acquire personal property. He cannot be rich. So inseparably are the means connected with the end, in all cases, that where the former do not exist the latter cannot be obtained. All accumulation, therefore, of personal property, beyond what a man's own hands produce, is derived to him by living in society; and he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came” (Agrarian Justice, 1779).

“The land must not be sold permanently, because the land is mine and you reside in my land as foreigners and strangers. Throughout the land that you hold as a possession, you must provide for the redemption of the land. If one of your fellow Israelites becomes poor and sells some of their property, their nearest relative is to come and redeem what they have sold.” [I take this to mean we should retain the inheritance tax, amen.]

I'm done. [I doubt it]

A [R]

Charles Murray Defines a New American Divide

Breakfast with my friend, the conservative

My friend, let’s call him Bill, a conservative and life-long Republican, provided me a copy of Charles Murray's article in the weekend (1-21-22, 2012) Wall Street Journal, "The New American Divide" (a review, really, of his book, "Coming Apart: The State of White America, 1960-2010"). Murray is the "W.H. Brady Scholar” at the American Enterprise Institute, a conservative "think tank." Bill and I talked about Murray’s article over breakfast one cold, rainy Thursday morning in February.

Bill found Murray’s article compelling and worked hard to convince me that Murray had it right, no pun intended. I am writing this post to elaborate on the points I made (or failed to make) in that talk, during which Bill, the conservative, wolfed down bacon, eggs, hash browns, and toast; a breakfast he’s had every time we’ve breakfasted together (sometimes he adds biscuits and gravy). I had oatmeal. I’m a liberal, so sometimes I’ve had an omelet, or pancakes. Once I had a waffle.

Mr. Murray characterizes the poor

In the interests of brevity, I will pass over some of Mr. Murray's statements with which I disagree, since in my view, they are irrelevant to his main thesis, which is that there has developed in America a "new upper class" and a "new lower class," these classes are moving further apart, and the wedge driving them apart is, “changes in social policy during the 1960s.”

It is important to understand that Murray is addressing only “white America,” because, he argues, the cultural divide is “not grounded in race or ethnicity.” One might be tempted to point out that there are significant cultural differences grounded in race and ethnicity (I’m Italian-American and I can testify to this) and these differences would confound any serious attempt to analyze “America’s cultural divide” (visualize a bunch of overlapping venn diagrams).

According to Murray, the lower classes are "characterized not by poverty but by withdrawal from America's core cultural institutions,” which he posits are: marriage, honesty, industriousness, and religiosity. Now this statement in and of itself I’d find laughable, if I were in a laughing mood, which clearly I am not.

The poor are characterized by their state of poverty, pure and simple. They live in “the projects,” plagued by violence and drugs. Parents, often single mothers work multiple jobs, often during off-shift hours, leaving children to fend for themselves. The kids go to decrepit, cinder-block built, windowless, inner city schools that look like prisons, except for the gang graffiti, and that struggle to attract qualified teachers (read this frightening and heartbreaking description by a teacher, Frank Marrero).

The poor shop at bakery outlets and they get whatever food they can with food stamps or at food banks. The family’s health care consists of going to the emergency room when seriously injured, or too sick to tough it out. They couldn’t evacuate the Ninth Ward when Katrina hit New Orleans because too few of them could afford to own an automobile, so they stood on roof tops while we watched them die.

Mr. Murray’s class consciousness 

Now that I have that off my chest, let’s get back to Mr. Murray’s withdrawal symptoms. Are marriage, honesty, industriousness, and religiosity America’s core values? I find it surprising that a conservative like Mr. Murray would leave out liberty. For myself, I agree with how John F. Kennedy characterized America’s core values when he said, “I believe in human dignity as the source of national purpose, in human liberty as the source of national action, in the human heart as the source of national compassion, and in the human mind as the source of our invention and our ideas.

According to Mr. Murray’s data, the new lower classes are:

• getting married much less frequently than the new upper classes (although marriage for both classes has declined);
• they are much less honest (according to his crime rate statistics);
• they don’t work nearly as hard; and
• they are markedly less religious.

For Mr. Murray, these differences define the new cultures of the new upper classes and new lower classes. Now anyone who doesn’t understand that Mr. Murray is simply stating the facts (as he sees them) would suspect him of being prejudiced against the poor, and this would be unfair, because Mr. Murray is not [necessarily] prejudiced against the “lower classes,” he is prejudiced against helping the lower classes. We’ll get to that later.

Before we examine the “changes in social policy” to which Mr. Murray ascribes the expanding division between the classes, let’s examine his statements regarding the abysmal state of what he considers America’s core values in the lower classes. As conservative Republican journalist and former speechwriter for George W. Bush, David Frum, says in a review in the Daily Beast. Murray details the social problems that have burdened the working class with “remarkable – and telltale – uncuriosity as to why any of this might be happening.”

Marriage

Poor people get married less frequently than people who aren’t poor. Why is that? Are they less morally upright than people who aren’t poor? Is it  because they’re less religious and therefore less morally upright? But we don’t want to conflate the issues, so let’s hold off on that proposition. Let’s instead examine the facts, which indicate that poor people get married less frequently because studies have shown that there are social and economic disincentives for them to get married.

Social barriers include marital aspirations and expectations, norms about childbearing, financial standards for marriage, the quality of relationships, an aversion to divorce, and children by other partners. Economic barriers include men's low earnings -- unemployed/under-employed men are less attractive marriage partners -- women's earnings, and the marriage tax (Edin and Reed, 2005).

I'm sure my friend, Bill, and other conservatives will be cheered by the fact that in our state, Washington, same sex couples can now be legally married.

Honesty

According to Murray, violent crime has “ravaged” the lower classes, while remaining at approximately the same rate for the upper classes. If Mr. Murray would broaden his view of crime to include non-violent, so-called “white collar crime,” and look at it in terms cost instead of rate, he would find that the lower classes can’t hold a candle to the upper classes when it comes to crime.


According to the FBI, white collar crime costs the United States three hundred billion dollars annually -- that’s $300 billion every year. You don’t make that kind of money selling dime bags to college students.

The biggest criminals in America come from the upper classes, they have always come from the upper classes, new or old, and in 2008 they came very close to destroying the American economy. Some day we may actually see some of these upper class people prosecuted.

In the meantime, for the lower classes justice is swift. According to  the Equal Justice Initiative, “In America, poor people accused of crimes, even in death penalty cases, are appointed lawyers from the local bar who are often unprepared and always underpaid.” The poor are cajoled, bullied, and fooled into plea bargains by prosecutors and overwhelmed public defenders whose priority is rapid adjudication, not justice. In the United States, we may not be able to put poor people to work, but we can sure as hell put them in jail.

Industriousness

Let’s face it, life is tough for poor people, but if only they’d work harder it could improve, right? “He becometh poor that dealeth with a slack hand: but the hand of the diligent maketh rich” (King James, Proverb 10).

Murray argues that men in the “lower classes” simply aren’t making themselves “available for work.” This makes it sound as if employers are beating at the doors of the these shiftless men and being greeted with, “Leave me alone! I’m not available for work.”

But good, middle income jobs are disappearing faster than 2012 Republican presidential candidates. According to Business Insider, middle-income jobs have been replaced by low income jobs, which now make up 41% of total employment. Manufacturing has declined as a share of GDP, and productivity growth has enabled factories to produce more with fewer people. Where more people are needed, they are found in Mexico, China, the Philippines, and elsewhere than America. Although Murray’s lower class Americans are struggling, America’s “corporate citizens” are not. The Department of Commerce reports that corporate profits accounted for 14 percent of the total national income in 2010, the highest proportion ever recorded.

One of the most compelling object lessons for Americans concerned with where our labor situation is headed comes from Apple’s experience with the much admired iPhone, which is now manufactured not in America, but in China -- it’s a very scary story. 

Technological advances require higher skills. For the low-skilled, low demand has meant lower wages, both relative and absolute. This in turn reduces the incentive to find a job, especially if disability payments or a working spouse provide an income. The fact is that structural changes in rich economies have reduced the demand for all less-skilled workers. The U.S. and other G7 economies are all disadvantaged relative to the abundance of cheap labor available in many emerging economies.

In the post-industrial societies of the G7, job growth must be linked to aggressive, ahead-of-the-curve training and education programs; programs promoted by farsighted governments. When we fail to do this, we find just the situation we have today, with some 35% of 25- to 54-year-old men with no high-school diploma having no job, up from around 10% in the 1960s. Of those who finished high school but did not go to college, the fraction without work has climbed from below 5% in the 1960s to almost 25% (The Economist, 2011). Given this situation, Mr. Murray might have asked, “Are the poor poor, because they are uneducated (under-educated), or are they uneducated because they are poor?” He didn’t.

In the 1970s America was at the cutting edge of policies to get the hard-to-employ into work. Jimmy Carter’s administration experimented with wage subsidies, ran an array of training schemes and introduced a public employment program, which at its peak provided more than 700,000 jobs. But these policies were tainted by association with “big government.” Ronald Reagan scrapped them, slashed funding and reoriented training towards the private sector. America’s government today spends 60% less, after adjusting for inflation, on “active” labour-market policies than in 1980, and much less as a share of GDP than almost any other rich country. (The Economist, 2011).

In today’s bizarre political climate instead of bipartisan support for job growth programs,  Republicans thwart the President’s jobs bill, attempt to cut training and job search programs, intensify their long-running attack on unions, and promote putting school children to work as school janitors. Their solution to unemployment in the lower classes is a balanced budget amendment; something for which every unemployed American surely pines.

I could go on and on and on, but unlike Mr. Murray, I am not writing a book. The bottom line is that structural changes in rich economies like America’s could have been anticipated, and worker training and education programs could have prepared America’s workforce to succeed in the new economy, but it didn’t happen, and libertarian-leaning people like Mr. Murray would have fought government involvement in promoting structural realignment in any case. So, we are where we are, but not because Americans don’t want to work.

Religiosity

In the interests of full disclosure, I should say that I hold with no organized religion. According to Mr. Murray, more Americans are leaning my way, “the U.S. as a whole has become markedly more secular since 1960,” but the decline in religious affiliation is more pronounced among the lower classes; something Mr. Murray finds, “especially worrisome.” Why?

Perhaps Mr. Murray, like Karl Marx, sees religion as “the opium of the people;” something the lower classes need as, “the heart of the heartless world.” In religion, the poor, unemployed, oppressed lower classes can be comforted by the illusion that when they die, things will get better. Well, if we leave the future of our poorer fellow Americans in the hands of libertarians like Mr. Murray, that’s about the only hope they can have.

When Catholics read that their bishops have been shuttling known pedophile priests from parish to parish like communion wafers from mouth to mouth; and evangelicals watch with horror as their pastors, like Ted Haggard, Paul Barnes, and Lonnie Latham, and most recently, Albert Odulele, confess tearfully to soliciting male prostitutes or sexually assaulting men and boys; or when the aforementioned white collar criminals are seen leaving their churches with bibles clutched prominently in their grasping hands, as Ken Lay did in 2006, it’s no wonder that people are leaving organized religion. The fact that the new lower classes are leaving faster than their new upper classes brothers and sisters may simply show that they have less need to seem morally upright.

Or maybe the poor see the absurdity in the church’s anti-choice, anti-contraception stance? Even people who aren’t college educated see the contradiction in this.

Changes in Social Policy

According to Murray, “The elites put in place a whole set of reforms which I think fundamentally changed the signals and the incentives facing low-income people and encouraged a variety of trends that soon became self-reinforcing” (Jennifer Schuessler, NYT, 2012).

As David Frum has pointed out, Murray gives us no specifics on either who “the elites” are, or just what reforms they put in place. But it’s not hard to figure this out, since Murray is a libertarian, thus by definition, anti-big government, and the 1960s saw the introduction of a plethora of large, far-reaching social programs that dramatically changed the landscape of the poor, the disadvantaged, and the disenfranchised in America.

The so-called elites referred to by Murray were scholars and experts formed into task forces by John F. Kennedy and later used, as well, by Lyndon Johnson in crafting Kennedy’s New Frontier  and then Johnson’s Great Society. These programs encompassed civil rights (Civil Rights Act, Voting Rights Act), poverty, education (including Head Start), health care (Social Security Act of 1965, medicare and medicaid), consumer protection, labor, and other areas of the economy and society, including the National Endowment for the Arts, the Corporation for Public Broadcasting and National Public Radio. Conservatives fought these programs at their inception and forever after. We would all, not just the poor, be poorer were it not for these programs.

But Murray, although not coming right out and saying so, is leaving us with the impression that the great social justice programs of the 1960s actually resulted in a whole segment of society, the “new lower classes,” not getting married, having children out of wedlock, being uneducated/under-educated, being “unavailable” for work, and deserting the church. Why doesn’t Murray just say this? Because his data don’t support the conclusion, and any attempt to construct such an analysis, given holes in the data and all the confounding factors, would be futile.

An America Divided

America is divided, that’s clear. What’s not clear in Murray’s exposition is what really divides America. Wealth, wealth, and wealth. Anyone who doesn’t know this by now hasn’t been paying attention.

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). And there’s been an astounding 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%. (Domhoff, 2011).

As Charles Krugman has pointed out, changes in tax rates have strongly favored the very, very rich...tax policy has very much leaned into that growing inequality, not against it, and anyone who says otherwise should not be trusted on this issue, or any other (Krugman, 2011).

One thing that Murray says that we can agree with is that the top tier of the new upper classes “run the country.” Murray says, “they are responsible for the films and television shows you watch, the news you see and read, the fortunes of the nation’s corporations and financial institutions, and the jurisprudence, legislation and regulation produced by the government.” This is a remarkable admission by a man who decries a divided America, but seems blind to where the real division lies.

Richard "Doc" Hastings Playing the Same Old Republican Saw

You have to hand it to Richard "Doc" Hastings (R-WA) -- he stays on message, no matter whether the message meshes with the facts. Republicans want you to believe that if we just cut taxes and eliminate “burdensome” government regulations, jobs will suddenly pop up like mushrooms in May. Never mind that Republicans have being playing the same old saw since time immemorial with the same results, i.e., the rich get richer, and the rest of America gets screwed.


Hastings went on Fox News recently to propose that environmental regulations be lifted so logging could resume in National Forests in Washington. The state is facing a 4 to 5 billion dollar budget shortfall in the next 2 years. Budgets for education, health care, and help for the state’s poor and disabled are being slashed, and Hastings is going on Fox to lament environmental regulations on slash and burn logging?

What's up Doc? Total Timber sales revenues in 2011 amounted to about 4% of the state’s deficit and money going into the State's coffers from that revenue stream is minuscule. How about spending a little time working on the other 99% of the problem and stop playing with that old Republican saw in our forests?

When it comes to the Washington State budget shortfall, thoughtful people (not you, Doc) have some difficult decisions to make. Decide what your priorities are on the League of Education Voters web site and see how you fare in cutting the deficit.

Republican Zealots Threaten America's Security

Based on an article by Nicholas Kristof in the NYT, 7/23/2011

We tend to think of national security narrowly as the risk of a military or terrorist attack. But national security is about protecting our people and our national strength — and the blunt truth is that the biggest threat to America’s national security this summer doesn’t come from China, Iran or any other foreign power. It comes from budget machinations, and budget maniacs, at home.

House Republicans start from a legitimate concern about rising long-term debt. Politicians are usually focused only on short-term issues, so it would be commendable to see the Tea Party wing of the Republican Party seriously focused on containing long-term debt. But on this issue, many House Republicans aren’t serious, they’re just obsessive in a destructive way. The upshot is that in their effort to protect the American economy from debt, some of them are willing to drag it over the cliff of default.

Republican zealots yelling about America's debt and the Democrat's "tax and spend" policies are in fact, fanatics willing to ruin our economy in order to have their way. No tax hikes, no way, no how. No new revenue, not even from corporations that pay no taxes, like General Electric. Not even from corporations like Exxon-Mobile that are making billions in profits and still accepting taxpayer handouts in the form of government subsidies.

No, the Republican Tea Party members and sympathizers would rather cut programs that can serve to bolster America's long term economic recovery, keep America at the forefront of science and technology, educate our young people, and help the elderly and disabled. That's the Republican way. It's always been the Republican way (During the 1960s Ronald Reagan was the key participant in an American Medical Association (AMA) sponsored campaign to prevent the enactment of Medicare).

Republicans under George W. Bush drove the American economy into the toilet with unwarranted tax cuts for the wealthy, a prescription drug program that has cost over $549 billion and was not paid for, and two costly wars that were not only not paid for, but were underway when Republicans slashed taxes. It was no less than fiscal criminal negligence.

Now Republicans are feigning righteous indignation over the Nation's enormous national debt and preparing to stand firm on their demands for massive cuts to social programs and no new taxes. Well, to hell with them!

Why corporations should pay taxes

"General Electric, the Nation's biggest corporation, had a very good year in 2010.  The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion."

"So what? Why should corporations pay taxes in the first place?

"Why shoudn't they?"

"They're not people."

"They are according to the US Supreme Court. That's why they can contribute lots of money to politicians they like."

"If corporations have to pay taxes, they'll just pass the cost on to consumers."

"Maybe, maybe not. It depends on their competition. In any case, corporations pay taxes on their profits. They can afford to do that. In addition, corporations must be regulated or, as we know too well, they'd screw over everybody. Who's going to regulate corporations? Government, that's who. It costs money to regulate. Corporations should pay their fair share. And it ain't zero."