The anti-business, socialist President strikes again

Republicans have attacked Barack Obama for being anti-business and socialist over and over and over again since his election in 2008.

So, how’s that been working out?

Well, business profits are up.  Way up.

The Fortune 500 generated a total of $824.5 billion in earnings last year, up 16.4% over 2010. That beats the previous record of $785 billion, set in 2006 during a roaring economy.

The stock market is up.  Way up.

The Dow Jones industrial average has soared 62 percent since President Barack Obama took the oath of office during some of the darkest days of the Great Recession. The Dow was just below 8,000 then and stands near 13,000 today.

Corporations have record amounts of cash on their balance sheets.

Apple Inc. (AAPL), the world’s most valuable business, led U.S. corporations in amassing a record $1.24 trillion of cash last year as memories of the 2008 credit crisis linger, according to Moody’s Investors Service.

Excluding Apple, with $97.6 billion of cash and no outstanding debt, the figure was relatively unchanged at $1.15 trillion, even as revenue and cash flow from operations rose to a record, Moody’s analysts led by Richard Lane said in a report yesterday.

Government (federal, state, and local) is smaller.

For the first time in 40 years, the government sector of the American economy has shrunk during the first three years of a presidential administration.

Spending by the federal government, adjusted for inflation, has risen at a slow rate under President Obama. But that increase has been more than offset by a fall in spending by state and local governments, which have been squeezed by weak tax receipts.

Source: New York Times, based on Bureau of Economic Analysis data

It seems the anti-business, socialist President has actually worked out pretty well for corporate America.

Carver County GOPer loves recycling — at least when it comes to discredited talking points

Earth Day may have been a few days ago, but Carver County Republican Secretary Vince Beaudette shows us his fidelity to Mother Earth in this week’s Chaska Herald by recycling long-since discredited talking points in relation to the 2008 U.S. Senate election between Norm Coleman and Al Franken.  Let’s look at a couple of the gems in Beaudette’s letter:

The Minneapolis director of elections said 32 absentee ballots were found in an election worker’s car a day or two after the election, and all votes happened to go to Al Franken.

This is one of the long-lasting myths of the 2008 election, but it’s just not true.  Here’s a summary of what happened with those 32 ballots gleaned from accounts in MinnPost and the St. Paul Pioneer Press:

• Minnesota law requires absentee ballots to counted at the precinct place the voter would have normally voted at if they were able to vote in-person on Election Day.
• Absentee ballots for Minneapolis are returned not to city officials, but county officials.  On Election Night, a batch of overseas ballots came in late, and were only delivered from Hennepin County officials to Minneapolis officials at 7 p.m., one hour before the polls closed.
• Minneapolis had 13 certified precinct support judges who were responsible for delivering the absentee ballots to the 131 individual precinct locations in the city.
• Because of the late arrival of this last batch of absentee ballots, 28 ballots were not able to be delivered to the precincts before the polls had closed and the vote-counting process had began.  No additional absentee ballots can be introduced at the precinct once that has happened.
• Those 28 ballots, as well as four absentee ballots that were erroneously not opened and counted at the precinct level that night were returned to City Hall that evening, where they were securely stored until they could be counted in the presence of a judge and attorneys from both the Franken and Coleman campaigns.  Ballots were never found or stored in cars for days, as Beaudette alleges.
• Of the 32 votes, 17 went to Franken and 8 to Coleman.  The other seven ballots were for third-party candidates or had no vote for the Senate race at all.

Here’s another classic:

Precincts in Two Harbors and Partridge Township sent Al Franken a net gain of another 350 votes, claiming miscounts, in the days immediately following the election.

Miscounts in elections are actually fairly common.  In 2006, an election won by Amy Klobuchar by a double-digit margin, her vote total changed by over 2,000 votes from the initial canvass to the final results.

Here’s an example of how this occurs, from the Pioneer Press story:

Like many stories that emerged during the recount, the Pine County error became something nefarious through the prism of the campaign and the national media. But it has an innocent explanation, one that the secretary of state’s office spelled out for callers.

Similar to Buhl, Pine County results must be written down, read over the phone and then typed in. Terry Lovgren, a county worker of 23 years, thinks she made the error.

Lovgren’s Election Day was fairly typical — hectic and stressful. She started around 8 a.m. and spent much of the day driving late-arriving absentee ballots to polling places in the farthest reaches of the county.

In the evening, she and Auditor Cathy Clemmer manned a computer, typing in the results from handwritten forms from 47 precincts that were piling up on her desk.

“We just start ripping and entering,” Lovgren said.

In rural Partridge Township, Coleman got 143 votes, edging out Franken’s 129 votes. That’s what the machine tape read at the end of the night and what was written on a ledger that was hand-delivered to the county offices in Pine City.

But that’s not what was typed into the county’s computer and transmitted to the state. Those figures showed Franken with a mere 29 votes.

The numbers sat there until the county canvass the Thursday after the election. Lovgren was taking notes while someone read results.

“Nope, that’s wrong,” someone piped up when Partridge Township was read.

“I felt ill,” Lovgren said. “I was sick that I had made that mistake.”

Nothing nefarious here, just a human mistake that was caught and corrected by the processes in place already.  In a close election, such mistakes are magnified and blown out of proportion by partisans looking to score political points.

The worst part about these consistent attempts by Beaudette (and others) to recycle these stories is that they know by now that these stories are false.  Yet they keep repeating them.

The question is:  why do Beaudette and those of his ilk feel they can’t make the case for voter ID legislation based on the facts?  Why do they have to keep repeating these lies?

10 Charts of the Year – Political Polarization

Today’s Chart of the Year comes to us from Peter Orszag, former Director of the White House Office of Management and Budget and current Vice Chairman of Global Banking at Citigroup.

What does this chart mean?

Our political system is so plagued by polarization, it’s difficult to move any legislation forward. In the late 1960s, significant overlap existed in votes cast by the most conservative Democrats in Congress and those cast by the most liberal Republicans. By the late 1980s, the common ground had diminished. Today, it has virtually disappeared.

10 Charts of the Year — Federal Spending and Revenues

Our Chart of the Year for today comes from the Senate Budget Committee, showing the gap between federal spending and federal revenues.

Source: Senate Budget Committee

What does this chart mean?

This chart demonstrates that revenue has to be part of the solution to the deficit. It shows that the last five times the budget was in surplus (in 1969, 1998, 1999, 2000, and 2001), revenue was near 20 percent of GDP. Revenue is now at 15.4 percent of GDP, near its lowest level in 60 years. – Sen. Kent Conrad (D-ND)

With logic like this, he can’t go wrong

I took some time today to visit the web page of Republican U.S. Senate candidate Joe Arwood.  Here’s a sample of what is posted there:

We can no longer afford the price tag of ineffective leadership, we shouldn’t have to pass a balanced budget amendment to get a balanced budget.  This is why I support a balanced budget amendment, to keep those in Washington accountable to us.

We shouldn’t have to pass the amendment to balance the budget, which is why he supports the amendment?  My head hurts.

It’s a wonder he hasn’t been able to raise more than $10,000 so far…

 

About those “people who don’t pay taxes”

Republicans have spent a lot of time lately complaining about the sizable portion of Americans who now don’t pay federal individual income taxes.  Current estimates show that over 45% of taxpaying units have a zero or negative federal individual income tax liability, a percentage that has grown over time.

To them, they say, it’s a “skin in the game” problem.   Minnesota Rep. Michele Bachmann, for instance, recently said ”We need to broaden the base so that everybody pays something, even if it’s a dollar. Everyone should pay something, because we all benefit.”

Let’s leave aside for the moment the fact that people who don’t pay federal individual income tax are still being taxed in substantial ways — including payroll tax and gas tax at the federal level (the individual income tax only represents 41% of federal revenue) — and look at just who these “nonpayers” actually are.  Are they “lucky duckies” as the Wall Street Journal like to call them?  And just how did they get to the point of paying no federal individual income tax?

Obviously, the key factor behind most of the folks who fall into the nonpayer category is their income.  Specifically, they don’t have a lot of it.  88% of nonpayers have household incomes of under $40,000.  Of the remaining 12%, almost half of them have incomes of over $100,000, including about 4,000 households with incomes over $1 million (that’s up 53% from 2007, even though the number of households with incomes at that level has fallen over that time).

There are other key attributes that tend to drive whether one is a nonpayer or not:  46% of nonpayers are elderly and 64% of nonpayers have dependent children.

So how did we get to this situation?  The short answer is that both parties have filled the tax code with targeted credits.  In the immediate WW-II period through the Nixon Administration, the percentage of nonpayers stayed pretty close to 20%.  The introduction of the Earned Income Tax Credit in 1975 spiked that percentage up slightly such that the percentages tracked closer to 25% until the late 1990s.

Since then, the tax code has been littered on a bipartisan basis with multiple credits that have, in part, caused the sharp increases we have seen in recent years.  The first step was the introduction of the Child Tax Credit in 1998, which gave a $400 tax credit for each dependent child on the return.  This credit was expanded in 1999, 2001, and 2003 (reaching its current level of $1,000).  In 2001, the child and dependent care credit was expanded, and in 2003, the new lowest tax bracket of 10% was established and taxpayers got a cut in capital gains and dividend taxes (this contributes greatly to the wealthy folks who fall into the nonpayer category).  In 2008, taxpayers received stimulus checks, and in 2009, the stimulus bill included the Making Work Pay Tax Credit (replaced in 2011 by a temporary payroll tax cut).

These provisions, building one upon the other and in combination with the weak economic conditions, have created the 45%-plus nonpayer rate we have seen in recent years.  Removing these tax credits would fully cut the number of nonpayers in half.

The real question, then, is where do we go from here?  Should we follow Republican logic to its conclusion, remove the credits, and raise taxes on 60 million lower-income Americans?

That’s where the question gets tougher.  Removing credits like these actually impact all Americans, and the middle class and wealthy would take the brunt of the damage.  Except for the earned income tax credit, all of the credits noted above provide greater benefits to the top three quintiles of Americans than they do the poorest in our society.  In total, the top 20% earn twice as much as a percentage of income (and far more than that in real terms) as the bottom 20% from these provisions.

As such, removing these credits — in and of themselves — is not a solution.  Not only would it take money out the pockets of those who can least afford it, but it would further squeeze middle-class families AND take substantial money away from the wealthy — the so-called “job creators” Republicans have been so anxious to protect.

The real answer to what we’re facing is a return to principles embraced on a bipartisan basis in 1986.  Simplify the tax code by removing all but the most essential credits and deductions.  Lower rates across this wider tax base.  Treat all income the same, regardless if it was earned through work, earned as a capital gain or dividend or inherited.

Such reform would accomplish goals that both parties have:  more people would be paying in, the tax code would be simpler (it shouldn’t be used as a backdoor way to handout money), and it can continue to be just as progressive (or even more so) than before.

What’s more popular than Congress? Just about everything. [UPDATED]

From a Washington Post story:

Here’s the percentage of Americans that approve of…

40% Barack Obama’s performance as President at its lowest point (Gallup, 2011)

39% Cloning sheep (ABC, 1997)

37% Bill Clinton’s performance as President at its lowest point (Gallup, 1994)

37% Corporal punishment for juvenile offenders convicted of vandalism (L.A. Times, 1993)

31% Believe in alien abductions (CNN, 1997)

24% Richard Nixon’s performance as President at its lowest point (Gallup, 1974)

23% Behavior of banks (Gallup, 2011)

22% George W. Bush’s performance as President at its lowest point (multiple polls in 2008)

21% Behavior of organized labor (Gallup, 2011)

19% Behavior of big business (Gallup, 2011)

19% Behavior of HMOs (Gallup, 2011)

18% Human cloning (Johns Hopkins, 2002)

14% Behavior of BP during Gulf oil spill (Washington Post, 2010)

14% Performance of Congress (CNN, 2011)

[UPDATE:  New data points added in italics above for comparison]

News Roundup, August 9

A few short items of note:

• U.S. Senators Amy Klobuchar and Al Franken will be in the area next week for the kickoff ceremony for Carver County’s fiber network project.  The event will be Tuesday, August 16 at the Carver County Public Works Building on Highway 212 in Cologne.  The event starts at 2:30 p.m.
• The special session is in our rear-view mirror by almost a month now, but the recriminations keep on coming.  The recent debt ceiling meltdown and the possibility of a double-dip recession has raised the possibility that the now-balanced budget may not be balanced next year.  Which would mean that we might get to relive the budget battle in January instead of in 2013.
• The combination of redistricting and the sour taste left in everyone’s mouth by the end of the legislative session has generated a lot of talk statewide about new faces entering the political scene and old faces meeting unexpected challenges.  One conservative radio host has said she expects at least 12 GOP incumbents to face primary challenges in 2012.  Are any of Carver County’s legislators looking over their shoulders?
• Chaska’s Kentucky Fried Chicken has closed.  You’ll have to Double Down somewhere else.
• The immensely popular Touch-A-Truck at the Chaska Community Center is coming up on Thursday, August 18, from 5 – 7:30 p.m.  Get there early!

The certainty myth

The recent fight over the debt ceiling has featured a lot of talk about “certainty”.  Specifically, how a lack of certainty about government regulation and the perceived excess spending by the federal government.

This has been a favorite line of conservatives to explain the economy’s weak performance.  How can companies grow with health care reform ramping up and Dodd-Frank waiting to get implemented and the Obama Administration advocating expiration of some of the Bush tax cuts?

And — if you don’t really think about it too deeply — it all sounds perfectly logical.  But, in fact, it’s not how business really operates.  Sure — all other things being equal — a stable regulatory environment is better for business than not.

But when in American history have businesses been assured of stability?  Business is not, nor has it ever been stable or predictable.  And it should never be.

Besides, we know that the real uncertainty that is causing businesses not to hire and not to expand is uncertainty of demand — not of government regulation.  Consumers have retrenched since the 2008 housing crisis and subsequent recession — doubling their personal savings.

When you have an economy that is 70% driven by consumer demand, a 2-3% reduction in spending is significant.  In fact, we see that the economy is still about $1 trillion in demand behind pre-recession levels, and some economists peg the total lost demand since 2008 at nearly $6 trillion.  You see now why a $800 billion stimulus package didn’t make everything sunshine-and-roses — it was far too small to turn the economy around on its own.

At a time when we’re fighting three wars and are still recovering from the worst recession in 70 years — one that was largely caused by bad actors in our corporate community — it’s foolish to be a business and assume stability and even more foolish to be a citizen or a legislator and take steps to immunize business from the aftereffects of problems that they helped to create.

The Clean Air Act and Clean Water Act — instituted in its modern form by Republican Richard Nixon — were a response to corporate failures to be good citizens.  Sarbanes-Oxley, instituted in 2002 by Republican George W. Bush, was a response to numerous failures of corporations to live by the normal rules of the market.  These were bipartisan reforms designed to protect Americans from corporate malfeasance.

Today, such normal logic has been turned on its head.

The Dodd-Frank bill, a relatively mild response to the Wall Street meltdown that tanked the economy languished in Congress for nearly two years before being passed on essentially a party-line vote.  Banks that were “too big to fail” before are now bigger thanks to federal action that allowed them to vacuum up the other banks of similar size.

Modest consumer protections – such as the establishment of the Consumer Financial Protection Bureau — that would require such radical steps as simplifying mortgage disclosure forms so you don’t have to be an attorney to understand them, improving transparency of credit card agreements, and trying to provide deeper understanding to consumers of how credit scores work are attacked as “big government” trying to control your life.

The one surefire way to get this economy up and running again is to stop putting the needs of corporations and the wealthiest among us ahead of the needs of the larger population.  We need to stimulate demand among the working classes.  How do we do that?  Investment in education.  Investment in infrastructure.  Investment in health care.  Investment in new technology.

This is not the time for forced austerity.  We are never going to solve our current fiscal problems without growing this economy.

Now is the time for selected and targeted investment in those things that will drive growth in the future and protect the vulnerable in our society, while aggressively weeding out and cutting other programs.  We can’t allow special interests to go to the front of the line and cripple our economic recovery at the expense of the American people.

Republicans driving the car over a cliff

When he was White House Chief of Staff, Rahm Emanuel famously said “Never allow a crisis to go to waste.”  Republicans in Washington D.C. have certainly learned that rule, and learned it well.  So much so that they are in the process of manufacturing a crisis in order to create the opportunity to get reforms they feel are necessary.

Let’s leave aside for the purposes of this post the sheer absurdity of the notion that after having passed a budget that increases the amount of the national debt over the debt ceiling that Congress then has to re-approve spending to that level.  What Congressional Republicans are doing right now is even more reckless than how Minnesota Republicans handled budget negotiations over the last few months.

President Obama has offered significant spending cuts and pared back his tax increases to the bare minimum.  In fact, what President Obama has offered as part of these negotiations is well to the right of Alan Simpson-Erskine Bowles Bipartisan Deficit Commission, the Senate  ”Gang of Six”,  and the Alice Rivlin-Pete Domenici Deficit Commission.

President Obama has offered a plan that is almost 4:1 spending cuts to revenue increases.  The revenue increases consist of eliminating loopholes, subsidies, and deductions — many of which Republicans have supported in the past.  The tax code should not be used to pick winners and losers, but rather to ensure a level playing field and to provide the necessary resources for government to perform its functions.  They would be accompanied by a lowering of rates overall to make the changes generate far less revenue than they otherwise would.  This used to be a core Republican value.

Normal people would jump at such a deal — a chance for real entitlement reform ($650 billion in savings over the next 10 years), real cuts in discretionary spending ($1 trillion over the next 10 years, taking such spending back to pre-WWII levels), and rational tax reform that generates about 20% of the overall solution.

But today’s Republicans aren’t normal.  They are devoted to “no new tax” ideology at any cost.  They are willing to drive the car off the cliff as opposed to forcing their wealthy and corporate patrons — who have benefitted the most over the past decade while the labor market and median incomes for the rest of us have stagnated — to chip in just a little bit more.

If Congressional Republicans can’t come to an agreement on the debt ceiling and the country goes into default, they will effectively raise the taxes of every American through increased interest rates.  Our stock market will feel the impact of lost confidence of investors.  There could even be a run on the banks.  This is not a risk we should even be considering, but Republicans are still — even at this late date — still holding out for complete capitulation from the President.

We shouldn’t also fail to point the rank hypocrisy of many of the Congressional Republicans at the heart of this crisis today.  During the Bush Administration, these same leaders voted seven times to raise the debt ceiling — from $5.95 trillion to $11.315 trillion.  They also voted for policies that destroyed our financial future.  As the New York Times pointed out over the weekend, if you take out the impacts of the recession and only look at policy changes, what happened in the Bush Administration caused far more damage than anything that has happened under President Obama (even extending out the impacts of the Obama policy changes to 2017).  Note that the cost of the Bush tax cuts alone is more than all of the policy changes under President Obama combined.

It’s time to stop the false equivalency.  There is a very real difference between Democrats and Republicans — both in Washington D.C. and in St. Paul.  Democrats aren’t willing to put their partisan goals ahead of the well-being of the American people.  Republicans are seemingly content to “take hostages” — including the American economy — to fulfill their ideological goals.

Compromise isn’t a dirty word.  Compromise isn’t weakness.  Compromise is necessary in a divided government, and it’s time Republicans started getting back to doing the serious work of the people instead of being led around by their special interest groups.