What A Real Purge Looks Like

In an article posted on CNN's website, former House Repub Leader Eric Cantor is giddy about using the phrase "civil war," using it three times in the text of his piece.  "Spend just a little time watching what has been described as a "civil war" within the Democratic Party over the issue of trade policy and you get a real sense of the predicament Hilary Clinton finds herself in," writes Cantor as he links to a Politico article in which the term is used only once, and that in the headline.

More significantly, however, Cantor employs "free trade" twelve times, such as when claiming

Today, the ascendant progressive elements of the Democratic Party are working overtime to purge the remaining pro-free trade faction of the party both in Congress and in the contest for the presidential nomination. If they are successful, this will have a profoundly negative impact on America's ability to be a reliable advocate for free trade.

Unfortunately for the country, the Trans-Pacific Partnership, which Cantor lustily supports, is not a free-trade agreement. Dean Baker explains

The Trans-Pacific Partnership (TPP) is often referred to in the media as a "free-trade" agreement. This is not true. Most of the pact is about putting in place a business-friendly regulatory structure, not reducing trade barriers. Perhaps more importantly, the deal will explicitly increase protectionist barriers in the form of stronger and longer copyright and patent-related protections.

These forms of protection impose the same sort of costs as any other form of protection. Markets are not smart enough to know that they aren't supposed to create distortions for protections that our politicians like (e.g. copyrights and patents) as opposed to the protections they ostensibly don't like (tariffs and quotas).

These distortions are likely to be large since copyrights and patents raise prices by many multiples of their free market price. For example, the patent protected version of the Hepatitis-C drug Sovaldi sells for $84,000 for a treatment in the United States. A high quality generic version is sold in India for less than $1,000. This gap implies that the patent would have the same effect in creating distortions as a 9000 percent tariff. Since the TPP would strengthen such protections, we can assume that the resulting distortions would increase.

Details, details. More interesting, though, is Cantor's statement  "In the current debate over Trade Promotion Authority in Congress, lack of trust in President Obama seems to be a more animating factor in Republican concerns than any animus towards free trade."

"Animus" is a derogatory term, particularly compared to the far more positive "lack of trust in."  Further, the remark is preceded by  "As Republican districts have become more conservative overall, Republican officials have less to fear politically from an anti-trade Democratic challenger."     Cantor is defending his GOP colleagues when he ascribes "Republican concerns" to a lack of trust (otherwise known as "animus") in the President rather than principle, which he calls "animus toward free trade.

In a bizarre twist, Cantor remarks

Today, the ascendant progressive elements of the Democratic Party are working overtime to purge the remaining pro-free trade faction of the party both in Congress and in the contest for the presidential nomination. If they are successful, this will have a profoundly negative impact on America's ability to be a reliable advocate for free trade.

If progressives are trying to "purge" any group from the ranks of their Party, they are late to that party, as events in Louisiana recently, and in Iowa four years ago, illustrate. According to The Associated Press

The proposal’s been called a sham, a fake, a gimmick, even money laundering. It’s also become the linchpin of a budget deal between lawmakers and Gov. Bobby Jindal’s administration. And it’s all about protecting Jindal’s record as he eyes a presidential campaign.

Without it, a financing proposal that shields public higher education and health care services from deep cuts could go down in flames.

The dispute centers on a bill by state Sen. Jack Donahue, R-Mandeville, chairman of the Senate Finance Committee, that would create the Student Assessment for a Valuable Education, or SAVE, tax credit.

Only it wouldn’t lessen anyone’s taxes at all.

The proposal would involve raising a new “assessment” on college students. The students wouldn’t actually pay the fee because it would be covered by the state through the tax credit, paid directly to colleges.

It’s a pass-through that doesn’t provide any net new revenue to the state or to colleges.

If no one pays the new fee and no one actually gains any new revenue from the tax credit, what’s the point of the bill?

Creating a tax credit — at least on paper — can be used as an offset to count against tax increases used to generate new money for the state’s budget, like a cigarette tax hike.

And that matters very much to Gov. Bobby Jindal, so he can claim Louisiana didn’t raise taxes to balance the budget.

Jindal, expected to announce his White House bid in New Orleans on June 24, won’t support any tax changes he — or national anti-tax activist Grover Norquist — considers a net tax increase.

Oh, but that's only Bobby Jindal, Eric Cantor might say.   However, when moderating a presidential debate (excerpt below) in Iowa on August 11, 2001, Fox News' Brett Baier

phrased it this way: “I’m going to ask a question to everyone here on the stage. Say you had a deal, a real spending cuts deal, 10-to-1, as Byron said, spending cuts to tax increases…. Who on this stage would walk away from that deal? Can you raise your hand if you feel so strongly about not raising taxes, you’d walk away on the 10-to-1 deal?”

All eight candidates raised their hand. Literally all of them, if offered a debt-reduction deal that’s 10-to-1 in their favor, would simply refuse.

Republicans don't have to purge their ranks of candidates who don't "work overtime" to lower the taxes of the wealthy and pad their accounts. They've already done it.











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Coming Our Way


Optimism is such a fine thing.  But it won't be found here, at least not today.

In his interview on August 21 with Time's Michael Scherer, President Obama promised that if re-elected

I will continue to reach out to them and work with them wherever I can. And I think it’s important to note that even in the two years that Republicans have controlled the House, we’ve gotten a lot of stuff done. We have passed a payroll tax cut that affected almost every American. We’ve helped veterans get hired as they come home. We’ve gotten two major trade deals that open up markets and are contributing to us doubling exports.

So even in a pretty sour political circumstance, we’ve been able to get some things accomplished. And I believe that in a second term, where Mitch McConnell’s imperative of making me a one-term President is no longer relevant, they recognize that what the American people are looking for is for us to get things done.

Last August, Congress agreed as part of the Budget Control Act of 2011 (in which the debt ceiling was raised) a deal to create a super committee .   If this committee failed to devise a plan to trim at least $1.5 trillion from the national debt over the following ten years, $109.3 billion in cuts, half from the Defense Department and half from (mostly discretionary) social spending would take effect.

Several Republicans already have complained about the Pentagon's contribution to holding the line on the national debt.  And their presidential nominee, apparently satisfied with cuts to Medicare, education, transportation, and the like, a week ago Sunday on Meet the Press criticized the defense spending portion of the sequester when he argued "I thought it was a mistake on the part of the White House to propose it.  I think it was a mistake for Republicans to go along with it."     Romney was even more explicit when on September 11 he stated  "The return of our troops cannot and must not be used as an excuse to hollow out our military through devastating defense budget cuts."

That doesn't quite square with the approach last summer of Romney's running mate, who after voting for the bill bragged to Sean Hannity

What conservatives like me have been fighting for, for years, are statutory caps on spending, legal caps in law that says government agencies cannot spend over a set amount of money.  And if they breach that amount across the board, sequester comes in to cut that spending, and you can’t turn that off without a super-majority vote. We got that in law.

But now GOP leadership is appalled. On Tuesday, House Speaker John Boehner called a press conference to blast the President over the latter's alleged failure to suggest an alternative to sequestration.  But as Suzy Khimm explains

Of course, Republicans — Boehner included — had agreed to the deal as well. The defense cuts were part of those consequences. What’s more, House Republicans refused to agree to a debt-ceiling deal that didn’t include some kind of consequence if the supercommittee failed. The White House, conversely, would happily have signed a clean debt-ceiling increase. But the Republicans said there would be no deal if there wasn’t some kind of deficit-reducing backstop in the event the supercommittee failed. That’s where the sequester came from.

And Democrats insist that they chose their particular poison: Rep. Chris Van Hollen (D-Md.) told Politico that they offered the GOP the option of having “a lot of special interest tax loopholes” eliminated instead if the supercommittee failed, but that Republicans chose the defense sequester option instead.    

Majority Leader Cantor even claimed "How is he going to lead to make sure our military is not hollowed out?"

President Obama, though, has offered an option.  His 2013 budget, unanimously rejected by the Senate in a sort of political theater after Republicans brought it up without the policy language or specific proposals attached, calls for eliminating all the automatic cuts for the full ten years.

Congressional Republicans and the party's presidential nominee are not the only ones who want to protect the Pentagon at the expense of the poor and elderly.  Khimm notes "The president instead wants to avoid the cuts by allowing the Bush tax cuts for the wealthy to expire and by cutting spending on mandatory programs such as Medicare and Medicaid, among other changes."

"In a second term," Barack Obama tells the New York Times, they (will) recognize that what the American people are looking for is for us to get things done."  

Hopefully, the President is simply naive.   But he hinted in his nomination acceptance speech what those "things" might be.   In Charlotte, he declared

I refuse to ask middle class families to give up their deductions for owning a home or raising their kids just to pay for another millionaire’s tax cut.I refuse to ask students to pay more for college; or kick children out of Head Start programs, or eliminate health insurance for millions of Americans who are poor, elderly, or disabled – all so those with the most can pay less.

He will not support eliminating the deduction for interest paid on home mortgages, or increasing college tuition, or cutting Head Starts or eliminating- eliminating- health insurance for some of the poor, elderly, or disabled... not in order to reduce taxes for the wealthy.  But as part of a Grand Bargain including tax cuts for the rich (or for simply not reducing them), those "things" apparently are on the chopping block.   Quite a Socialist, that Barack Obama.




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Running Interference For The Big Boys


They're at it again.

Yes, those fun-loving," reform" minded, tax base-expanding Republicans.

Representative Pat Tiberi of Ohio, a member of the House Ways and Means Committee, has told Think Progress "the tax code shouldn’t be used as a tool to just bring revenue in and beat up people who are trying to be successful…So I think we’ve got to lower the tax rates, both for corporations and for American individuals."       But Tiberi, who apparently never has heard of the payroll tax, state income tax, local and state property taxes, and excise taxes, is not referring to the need to reduce the burden on the poor or the middle class.    He argues "If you don’t have skin in the game, even if it’s ten bucks a quarter, I think it changes the debate on what the role of the federal government is and what the role of state government is."

House Majority Leader Eric Cantor is little better, saying on C-Span 2 "We also know that over 45 percent of the people in this country don’t pay income taxes at all, and we have to question whether that’s fair. And should we broaden the base in a way that we can lower the rates for everybody that pays taxes."

I think we know who Cantor wants to see pay lower taxes.      According to the the Center for Budget and Policy Priorities (its graph, below), the budget passed by House Republicans, authorized by Ways and Means Committee Chairman Paul Ryan of Wisconsin ,would cut the after-tax incomes of people with incomes below $10,000 by 2 percent.     But on average millionaires would enjoy $265,000 in new tax cuts in addition to the $129,000 additional they would get from extension of the Bush tax cuts suppported by Ryan, and their income would increase by 12.5%.

While congressional Republicans target the poor and the middle class, the wealthy remain protected.      Yesterday, the Senate blocked consideration of the Buffett rule, which would have required individuals with incomes above $1 million (minus charitable contributions), to pay at least 30% of their income in taxes.       With one Democrat (Pryor of Arkansas) joining 45 Republicans, the 50 Democrats and one Republican voting for cloture fell nine votes short .        The GOP, a month earlier, had garnered 45 votes to block consideration of a Democratic bid to end taxpayer-funded oil subsidies.

The GOP agenda to expand the share of national wealth coveted by the rich and and cut the middle class out extends beyond individuals to corporations.    In the period 2008-2011, 26 corporations- with a total of $205 billion in U.S. profits- were fed subsidies by the U.S. Treasury, courtesy of the American taxpayer.    In all, they enjoyed an income tax rate of -3.1% and handouts of $78.3 billion.       And the Ryan budget passed by the House would cut the corporate tax rate from 35% to 25%.

But the GOP is taking no chances, especially because it's unlikely the Senate will pass the House budget.   Today, the House, with only ten Republicans in opposition and ten Democrats in support, passed 235-173 a one-year, 20% tax deduction for all businesses with fewer than 500 employees, which would include professionals such as lawyers, consultants, hedge fund managers (you knew they would be included, didn't you?), and the Los Angeles Dodgers.

When Republicans talk about "broadening the tax base," they're talking about making sure elderly people, students, recipients of a child care tax credit or earned income tax credit, and all others poor enough not to pay federal income tax make up for the taxes they're cutting for the wealthy and corporations.       And when Mitt Romney, a supporter of the Ryan budget, accuses President Obama of waging class warfare, he's only disappointed that he and his crowd don't have the playing field all to themselves.







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Audacity, Demonstrated

In the early 1600s, it was "Tom's criticizing Dexter for dubious line calls is a case of the pot calling the kettle black, since Tom's about the worst line judge I've ever see," shortened, thankfully, to "a case of the pot calling the kettle black." Soon afterward, it was "it takes a thief to catch a thief" (actually, pretty ridiculous); later, "you say she's a bad cook? it takes one to know one!", this too thankfully shortened, to "it takes one to know one."

They all fit no one as well as House Majority Leader Eric Cantor who, criticizing Minority Leader Nancy Pelosi for commending the Occupy Wall Street protesters, commented "Believe it or not, some in this town have actually condoned the pitting of Americans against Americans." John Branch, before the action on Wall Street, was prescient (but regrettably his cartoon cannot be posted here without approval).

Fortunately, Steve Stegelin also was right on point:

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Not Solely The Tea Party

To the Obama administration, a valiant John Boehner stood tall against the tea party nutcases. The House Speaker might as well have been part ML King, part Gandhi, part Nelson Mandela, the way top Democrats pictured him resisting the tea party and its Panderer-in-Chief, Majority Leader Eric Cantor.

But the real obstacle to financial sanity, as observed Sunday on The New York Times editorial page, was

the Republican Study Committee, 178 fiscal hard-liners who make up two-thirds of the entire caucus (including many of the Tea Party members). Its chairman, Jim Jordan of Ohio, was one of the biggest obstacles to a deal and refused to support it.

It is this larger group that Mr. Boehner and his lieutenants fear the most. The Tea Party alone could not topple the speaker. But the Republican core could.

The demonization of the tea party is understandable, perhaps an effort to divide the GOP, setting its far right majority against its extreme far right. And maybe Democrats, recognizing growing dissatisfaction in the nation with the movement, believes it can marginalize the tea party out of existence.

But that is misplaced anger. Most (32 of 60) members of the Tea Party caucus put aside their ideological extremism to vote with a majority of their party and side with corporate America in supporting the debt agreement signed a couple of days later by the President.

And now, albeit a bit late, comes some common sense from some of its members outside the Beltway. The day before The Times' editorial, Politico reported

For tea party activists, the super committee smacks of everything they railed against in the last election cycle: Concentrated power in the hands of lawmakers who might be inclined to make closed door deals involving trillions of dollars.

Organizing a rally at his congressman's office, a 35-year-old tea party member complained "The super Congress is antithetical to what America is supposed to be.....small elite group having override powers for the rest of Congress … is anti democracy. It’s anti-American.” Similarly, a leader in a 9/12 group in Florida, uncertain whether the super-committee will " be accountable to us or to Congress," remarked "it's Congress' job to deal with this. There's enough committees."

Sunday, Senator John Kerry and presidential adviser David Axelrod, both justifiably angry about the debt ceiling negotiations and Standard and Poor's disgraceful downgrading of U.S.A. debt, pressed the case of tea party omnipotence. On Meet the Press, Kerry argued “I believe this is, without question, the tea party downgrade," about the same time Axelrod on Face The Nation maintained "The fact of the matter is that this is essentially a tea party downgrade. The tea party brought us to the brink of a default."

If they want to believe this, O.K. Politically, it might even be a winner. But it's not accurate. Though the tea party is more an Astroturf, than grass roots, movement, Democratic leaders and the mainstream media rarely so identify it and their efforts to finger it for blame deflect attention from the role of the Republican Party itself in tearing down the economy.

Somehow, President Obama has been able (unfortunately) to resist the left of his party and back a program antithetical to the latter's wishes. Speaker Boehner, however, has been pictured as willing- but unable- to resist the right of his party. But as The Times explained

Through a combination of fear and fervor, Republican leaders in Congress and in the presidential campaign have lined up behind a radical new strategy in which all major decisions are made under threat- to shut the government in April, to implode the economy in July, to cut off money for the Federal Aviation Administration in August. Party leaders have said they will do this again and again, in perpetuity.

It would be comforting if it were just a minority of a minority. Instead, it is a major political party, aided and abetted by its big donors.

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Contemplating The Other Side

Following the Senate Minority Leader's regular Wednesday meeting with his caucus, Politico's Manu Raju observed "it's unclear whether McConnell can win over his troops, considering strong comments from Republicans."

He may not have to- at least on his initial proposal, which would cede control (and responsibility) for raising the debt to President Obama. While the President is mulling McConnell's offer, Bloomberg News' Paul Kane and Lori Montgomery report

Senate Majority Leader Harry M. Reid (D-Nev.) is working with McConnell on this approach. Aides said the two are discussing a strategy that would pair McConnell’s debt-limit proposal with at least $1.5 trillion in spending cuts identified through bipartisan talks that Vice President Biden has led in recent weeks.

The deal also could create a committee of 12 lawmakers who would be assigned with identifying trillions of dollars in additional savings. The panel’s recommendations would be fast-tracked to votes in the House and the Senate and would not be subject to amendment, a process similar to the one Congress uses for closing military bases.

The Republican leader in the Senate offers a clean bill which would result in the debt ceiling being lifted- and the Democratic President (through his Vice-President) begins to negotiate short-term spending cuts and, alarmingly, a process to "fast-track" future spending cuts. With the popularity of Social Security and Medicare (and, to a lesser extent, Medicaid), that may be the only path to slashing those dreaded entitlements so loathed by the media and Washington establishment. And that may be the only way (in a second term) of, as presidential candidate Obama once threatened promised, "fundamentally transforming the United States of America." (Remember these heady days?)

McConnell's original proposal, which the MSNBC stable of prime-time liberals were convinced amounted to a surrender by the GOP, apparently threatens Barack Obama's plans to run in 2012 as America's Great Deficit Hawk, as Jane Hamsher argues. But if House Repub leaders, most of whose members would reject the McConnell scheme, wish to satisfy a) the GOP's popular base, which wants to see spending cut and thinks it wants government immolated; b) the GOP's corporate base, which is eager for the debt limit to be raised; and c) its desire to derail Barack Obama's re-election hopes, they should heed Jon Walker:

I don’t see why Eric Cantor won’t try to call President Obama bluff over threatening to veto a short term deal.

As I have explain in more detail Obama threat to veto any short term increase has created a serious credibility problem for the President. You can’t both say default would be a huge problem and that you will single-handily cause a default simply because you won’t grant the GOP request for a short term increase so they can have a few more days to negotiate.

The Republicans are already trying to shift the responsibility for the debt ceiling unto Obama. From their perspective I see no reason why on July 29th the GOP shouldn’t bring to the floor a 30 day increase paired with a small amount of some of the most politically palatable cuts. They could message such a move with something like, “we need more time but we are unwilling to risk the full faith of the US credit.”

If Obama rejects the short term increase Republican will wash their hands and claim whatever bad happens to the economy because of a default is now totally Obama’s fault for unreasonably rejection their modest request for more time.

Either Obama will be forced to break his veto promise, forced to prove he lied about August 2nd being the drop dead date, or risk allowing the GOP to have a believable story for why Obama should be solely blamed for the bad economic consequences of default.

Putting Barack Obama in the position of considering a veto of anything would be awfully discomfiting to a President who values bipartisanship over loyalty and pragmatism over principle. Intrinsic to President Obama's brand is the ability to 'get it done,' which can be packaged to independents as making Washington work and changing the dynamic of government. Alternatively, Obama could wield the veto pen- as he has threatened- and be blamed for risking default, which would be unpleasant for the moderates, whose vote he treasures, and Wall Street, whose campaign contributions he has proven adept at eliciting.

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Boehner Speaks, Obama Comes A-Runnin'


Disturbed by the thought of discussion of a budget deal in which oil companies and the uber-wealthy might almost sacrifice a little, House Majority Leader Eric Cantor and Arizona Senator Jon Kyl have left the debt discussions led by Vice-President Biden.

It is, on the face of it, two immature individuals taking their ball and going home. And no doubt Cantor would rather have House Speaker Boehner negotiate, and be accountable for, an agreement which would include an increase in revenue, better to cement his relationship with the extreme conservatives most House freshmen are.

Howard Fineman, though, tired of the trite (though increasingly useful) "good cop, bad cop" cliche, remarked that Boehner and Cantor "think they are playing a sort o bad cop and worse cop routine here, where Boehner, the golfing buddy --"

They not only think it- they are playing it and quite successfully, thank you. President Obama's press spokesman, following the departure of Cantor and Kyl, maintains "we believe that we can move forward as long as no one in the talks takes a “my way or the highway” approach." Undeterred, Boehner challenges Obama:

If the president wants this done, he must lead. We have an extraordinary opportunity to do something big for our economy and our country. With presidential leadership, we can seize this moment and deliver something important for the people we serve.

With Cantor out, Boehner has a stronger hand and is able to say

Gee, I'd like to, but you know these newbies in my caucus don't even want to talk about revenue enhancement and are adamantly opposed to hiking the debt limit. But if you insist, I'll take your offer back to them and see what they have to say.

Fortunately, with Obama not directly involved, the Vice-President is able to play the same game, arguing that he likes the deal but has to run it past the big guy. So, recognizing the "good cop, bad cop" show and not being completely naive, the President, of course, refuses.

Not exactly. According to USA Today yesterday (I always wanted to write that):

President Obama is getting directly involved in bipartisan talks about increasing the nation's $14.3 trillion debt ceiling, agreeing to meet Monday with Senate Democratic and Republican leaders.

Obama and Vice President Biden will meet Monday morning with Senate Majority Leader Harry Reid, D-Nev., and in the evening with Senate Minority Leader Mitch McConnell, R-Ky.

The goal is "to discuss the status of the negotiations to find common ground on a balanced approach to deficit reduction," White House spokesman Jay Carney said.

McConnell said he hopes Obama requested the meeting "in order to finally explain what it is that he's prepared to do to solve our nation's fiscal crisis."

The President should "finally explain what it is that he's prepared to do to solve our nation's fiscal crisis." Further, he should explain what the other side is prepared to do to solve the fiscal crisis. The Democratic party has proposed generous cuts, eliminating tax loopholes, and increasing taxes on multi-millionaires; the Republican Party wants this great country to default on its debts, drive interest rates up, and increase the cost for businesses and consumers to borrow money. And the GOP is doing this in order to slash Medicare. The President could explain this in prime time, on television. He could do it, in the manner of presidential statements and speeches, in a lengthy address. Alternatively, he could do it in a matter of a few minutes, keeping it simple. Of course, it might be difficult for a man who brags "And I'm prepared to bring down our debt by trillions of dollars -- that's "trillions" with a 't.'"

This is an obvious course for a President who is determined to keep the social safety net intact, defending and protecting government programs which have remained popular with the vast majority of the American people. That is, of course, assuming Barack Obama wants to protect these programs.

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Revoking Medicare


Eric Cantor says it. The House Majority Leader claims "The Democrats are doing "nothing to save Medicare from collapse" while "Republicans have offered a plan to guarantee benefits for seniors and those approaching retirement while ensuring that this important safety net exists for Americans under 54 years of age."

Mitch McConnell says it. The Senate Minority Leader contends "what Paul has done here is implement a premium support proposal at the end of the period, which is a very sensible way to go to try to save Medicare."

And of course, The Serious One, Paul Ryan himself, says it, hallucinating "We're saving Medicare for the elderly."

George Will disingenuously writes that Medicare "would be made permanently solvent." That might be technically true, given that Medicare would not be changed but instead eliminated, which would not leave the program insolvent. Or leave the program program at all.

The GOP has learned well one of the core axioms of politics: if you're explaining, your're losing. That is not far from "the best defense is a good offense," an invalid principle for a football or a basketball team, but a good one for a party caught red-handed trying to abolish Medicare.

We're not trying to eradicate Medicare, Republicans say, by radically restructuring it. We're trying only to save it from the other party, which wants to maintain the program. Or something like that.

But the Ryan budget, approved in the House with the support of all but four Republicans, does propose to end Medicare. When Politifact valiantly and dishonestly to claim that the voucher proposal is not intended to replace Medicare, Paul Krugman noted

I know that serious people are supposed to be shocked, shocked at the Democrats calling the Ryan plan a plan to dismantle Medicare — but that’s just what it is. If you replace a system that actually pays seniors’ medical bills with an entirely different system, one that gives seniors vouchers that won’t be enough to buy adequate insurance, you’ve ended Medicare. Calling the new program “Medicare” doesn’t change that fact.

Matt Yglesias explained

“Medicare” refers to a single-payer universal health insurance program instituted by the Social Security Act of 1965. If a political movement committed to having that program “wither on the vine” and die puts forward a bill to abolish that program and replace it with a system of private vouchers, then it doesn’t matter whether or not the voucher program is still called Medicare. That’s what House Republicans voted to do, and there’s nothing even slightly misleading about calling this an effort to end Medicare. What’s misleading is the effort to use nomenclature to obscure the nature of the change.

You may buy a Buick, a Ford, or a Honda and choose to call it a Mercedes. That would be your prerogative. Or a state government may give all its children a voucher they can spend on education at a private, sectarian or non-sectarian, school. That would not make it a public education, any more than your Ford Taurus is a Mercedes-Benz S-Class. And Paul Ryan's model for health care for the elderly is no Ford Taurus; more like a Yugo.

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Doing The Bidding For The Oil And Financial Sectors


Which is the GOP more dedicated to- the oil industry or the financial services industry?

On behalf of the oil industry: A procedural vote which would have enabled debate on S 258, the Close Big Oil Tax Loopholes Act, was defeated in the U.S. Senate on Thursday when it received only 52 votes, eight short of the needed 60. Oil companies receive approximately $2 billion a year in "incentives" and made approximately $38 billion in profits in the first quarter of 2011, The bill would have applied to the five largest, most profitable multinational oil companies: BP, Exxon Mobil, Shell, Chevron and Conoco Phillips.

The debate on the motion to proceed to consider the bill to return some money to the Treasury received two (2) "aye" votes (the ladies Maine) from the (when convenient) party of deficit obsession, leaving 45 Republicans voting in favor of their oil industry benefactors. Fifty (50) Senators who caucus with the Democratic Party voted in favor of discussing a bill to end the tax breaks, with two (Mary Landrieu and Mark Begich) who voted with the GOP/oil industry representing states dominated by the oil industry.

Is there any mystery why nearly every Republican voted with the industry? As the chart, below, from the Center for Responsive Politics via DailyKos illustrates, the top six, and 12 of the top 13, recipients of campaign contributions from the oil and gas industries since 1989 are Republicans. Each of them voted no, as did Landrieu, the only Democrat, at #7, to crack the 13. The bottom 13 are all Democrats (including Independent Bernie Sanders, one of the few authentic Democrats left in the Senate) and they all voted to discuss the issue.




Loathe to admit they are doing the bidding of the corporate sector, Republicans instead argued, against all evidence, that removing the "incentives" would cause the price of gas to rise, presumably more than the roughly 27% it has risen in the past year, in presence of those "incentives." Supply contributed far, far less to the increase than have other factors, including speculation. As Reuters' David Sheppard explains

Goldman estimated in a research note on March 21 that every million barrels of oil held by speculators contributed to an 8-10 cent rise in the oil price. As unrest spread in North Africa and the Middle East, investors accumulated the equivalent of almost 100 million barrels of oil between mid-February and late March on top of their existing positions, adding approximately $10 to the 'risk premium', Goldman said.

The U.S. Commodity Futures Trading Commission said that as of last Tuesday, hedge funds and other financial traders held a total net-long positions in U.S. crude contracts equivalent to a near record 267.5 million barrels.

Using Goldman's estimates, that indicates the total speculative premium in U.S. crude oil is currently between $21.40 and $26.75 a barrel, or about a fifth of the price.

Pursuant to the Dodd-Frank financial reform law, speculation in the oil futures market could be restricted by the U.S. Commodity Futures Trading Commission, whose chairman earlier this year asserted "We could have helpful limits in place that could guard against markets being adversely impacted by excessive speculation. We could do that now if we wanted. And, as you can tell, I want." But as Pat Garofalo notes at Think Progress

even assuming the CFTC follows through with implementing the law, it will be hard pressed to enforce any limits if the budgets cuts envisioned by House Republicans are actually enacted. H.R. 1, the House Republican approved spending plan for the remainder of 2011, includes a nearly one-third cut in the CFTC’s budget. Such a draconian cut would require the CFTC to lay off more than 30 percent of its staff. “We’d have to have significant curtailment of our staff and resources,” CFTC Chairman Gary Gensler said. “We would not be able to police…or ensure transparent markets in futures or swaps.”

House Republicans are doing their share. On May 4

splitting along party lines, the House Agriculture Committee voted to delay by 18 months implementation of rules governing derivatives, the kind of complex financial instruments that were blamed for putting the financial system in jeopardy. The bill would require regulators to gather additional comments and further examine the potential downside of the rules.

Committee Chairman Frank D. Lucas (R-Okla.) said in a statement that he was trying to avoid rushed rulemaking. “We can’t ignore the concerns of businesses that we’re relying on to further our economic recovery,” Lucas said.

Translation: The casino will remain open- we can't impede the ability of corporations to bid up prices for the American consumer by speculation and other gambling in the derivatives market. While the goal is to rescind Dodd-Frank, the strategy aims to undermine the legislation because (not despite) "Unnecessary delay in implementing the Dodd-Frank Act will increase risk to the American people and leave significant uncertainty in the marketplace.”

House Majority Leader Eric Cantor admits, with no hint of shame,that he leans on counsel from the CME Group, which describes itself, with no shame but only pride, "As the world’s leading and most diverse derivatives marketplace."

While the CME Group specializes in trading contracts and derivatives products related to oil and food, Cantor was fourth in his chamber in campaign contributions from the securities and investment industry during the last election cycle. Number 10 was Spencer Bacchus, a Republican from Alabama. Once elected, the incoming chairman of the Financial Services Committee informed us

In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.

And so is Bacchus' party. Talking Points Memo reported earlier this month:

Forty four of their 47 members have signed on to a letter threatening to filibuster any nominee to head the new Consumer Financial Protection Bureau unless it is dramatically weakened.

"We will not support the consideration of any nominee, regardless of party affiliation, to be the CFPB director until the structure of the Consumer Financial Protection Bureau is reformed," reads a letter, co-authored by Senate Minority Leader Mitch McConnell and Sen. Richard Shelby (R-AL), ranking member of the Banking Committee.

Congress created the CFPB, despite GOP opposition, as part of the Wall Street reform law, to protect consumers from predatory actors in the financial industry.

Shelby was #24 in contributions from the securities and investment industry and McConnell, #21 , despite hailing from states in which media buys are relatively inexpensive.

All is not lost. The presumptive- though far from inevitable- nominee for the Bureau is the extraordinary Elizabeth Warren and House Democrats are distributing a letter urging President Obama to tap her for a recess appointment. If Obama follows their advice, a major blow will have been struck for consumers. It would not be sufficient for reversing the three decades-long trend toward deregulation of the financial industry, but it is necessary.

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The Preposterous Ms. Rice


If at first glance, the following statement appears stupid, remember: this individual has been, unofficially, given immunity from criticism by American media. Media Matters, with emphasis, has reported this exchange (video, below) between GOP TV's Brian Kilmeade and former National Security Advisor and Secretary of State Condoleezza Rice:

BRIAN KILMEADE: The president in his speech — did a great job on his speech Sunday night — talked about coming together like we did on 9/11, he wants to see it happen again. Do you think a nice gesture would be to invite President Bush out on Thursday when he comes down to Ground Zero to greet the families?

RICE: Well, obviously, I'll leave that to the two of them and to the administration. But President Bush had at Ground Zero probably the most important moment maybe in American history. It was when this wounded nation watched their commander-in-chief stand on that rubble and say that they will hear us, we are going to avenge this. And it's not just avenging Osama bin Laden, as important as that is. But it's all the field generals that have been brought to justice over the last years, it is improving now the prospects for an Afghanistan that might actually be stable, it's a worldwide net against al Qaeda, it's victories of democracy in places like Iraq. And so, slowly but surely this is all coming into place and President Bush began that with that call to the nation — that clarion call to the nation at Ground Zero.

In December, 2001 the Administration (with the advice of General Tommy Franks) let Osama bin Laden escape from Tora Bora into Pakistan as it outsourced the operation to local Afghan warlords. Four months later, President Bush declared of bin Laden, "We haven't heard much from him. And I wouldn't necessarily say he's at the center of any command structure. And, again, I don't know where he is. I'll repeat what I said. I truly am not that concerned about him. I know he is on the run." In June, 2005 the C.I.A. closed "Alec Station," the unit dedicated to tracking down bin Laden. Three months later, Weekly Standard Editor Fred Barnes commented President Bush "just said that’s not a top priority use of American resources."

And now, the GOP's 2008 vice presidential nominee exclaims "We thank President (George W.) Bush for having made the right calls to set up this victory." The House Majority Leader says "I commend President Obama who has followed the vigilance of President Bush in bringing Bin Laden to justice."

Republicans are not speaking with one voice and their remarks about the bin Laden kill have varied dramatically. But only one person has:

-with hearty machismo, paraphrased George W. Bush as declaring "we are going to avenge this" as the President was preparing to use the attack as an excuse to invade Iraq;

-refered to "victories of democracy in places like Iraq" (places like Iraq- were there several?), now the beneficiary of a regime friendly to Mahmoud Ahmadinejad's Iran); and

-claimed "President Bush began that with that call to the nation — that clarion call to the nation at Ground Zero." The eloquence of that "clarion call"- an effective use of the bully pulpit- led to two wars paid for with borrowed money as the President ran up a huge debt so he could bestow tax breaks on the wealthy. Bush neglected to use his "clarion call" to ask of Americans any sacrifice while he ran two wars- and the more important one, Afghanistan, on the cheap.

There always will be persons of teflon, such as General David Petraeus. But the mainstream media has a couple excuses there- Petraeus is a man in uniform (see Powell, Colin) and he did enjoy considerable success in Iran. But why no scrutiny of Condoleezza Rice? The mushroom cloud woman was a failure as a foreign policy figure in the Bush Administration. That didn't prevent her, however, from incomprehensibly claiming "President Bush had at Ground Zero probably the most important moment maybe in American history." Posting at DailyKos, Joan McCarter nails it:

Gettysburg, Yorktown, Pearl Harbor, 4 July 1776, 20 July 1969.... Bush shouting inanities. Yeah, that seems right.

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Bad All Around


There must be an explanation somewhere. Somewhere.

But what could be the explanation for the apparently imbecilic balanced budget amendment (text here) 47 Republican Stepfords have introduced in the U.S. Senate.

If one is to believe economist Bruce Bartlett and political scientist Jonathan Bernstein, it is probably due to ignorance. Section 1 reads

Total outlays for any fiscal year shall not exceed total receipts for that fiscal year, unless two-thirds of the duly chosen and sworn Members of each House of Congress shall provide by law for a specific excess of outlays over receipts by a roll call vote.

But in criticizing the ever-pandering presidential candidate Tim Pawlenty for refusing to specify spending cuts and merely endorsing a balanced budget amendment, Bartlett notes that

for such an amendment to be operational and not just a meaningless expression of intent then there has to be a point in the budgetary process where the federal courts can enjoin spending or force tax increases. This is obviously a very bad idea in principle, but it’s also impractical. For example, as a legal matter we would have no way of knowing that the budget was in fact unbalanced until the fiscal year had ended, but even a federal court can’t make people give back federal funds that have already been paid out for interest on the debt, Social Security and Medicare benefits, wages and salaries, payments for goods and services etc. Thus a balanced budget amendment of the sort Pawlenty proposes is effectively unenforceable.

Not only can it not be enforced, but it probably cannot be implemented. Bernstein finds

there’s nothing here (or in the rest of the resolution) to force Congress to actually take any actions. Congress doesn’t pass a law every year specifying total receipts and total outlays; at best, it passes a non-binding budget resolution, but everyone who follows budget politics knows that the numbers in the budget resolution have no fixed relationship to what Congress eventually does that year (which, in turn, has only minimal effects on actual government revenues and expenditures, most of which are not affected by what Congress does).

In other words, there is simply nothing in this amendment to force Congress to do anything about deficits.

If the amendment was law, Congress could simply continue to pass annual appropriations bills, and....well, there is no "and." What it amounts to in practical terms, as far as I can see, is a statement of principle; we might as well put in the Constitution that global warning is a hoax and evolution a communist plot, for all the good any of it would do.

Bartlett explains

The gross domestic product is not a concept defined in law and is revised constantly; from time to time, the Bureau of Economic Analysis revises the GDP data all the way back to 1929. And of course, the 18 percent figure is totally arbitrary; the proposal effectively assumes that most federal outlays consist of funds that are appropriated annually, rather than of mandatory programs such as Social Security, Medicare and interest on the debt. Even if Congress was willing to cut mandatory spending, it is practically impossible to do so quickly unless it is willing to reduce the monthly checks going to current retirees and other actions difficult to contemplate.

Section 2 of the proposal reads

Total outlays for any fiscal year shall not exceed 18 percent of the gross domestic product of the United States for the calendar year ending before the beginning of such fiscal year, unless two-thirds of the duly chosen and sworn Members of each House of Congress shall provide by law for a specific amount in excess of such 18 percent by roll call vote.

Invoking gross domestic product as a baseline is faulty, Bartlett argues in a separate blog posting, because

The gross domestic product is not a concept defined in law and is revised constantly; from time to time, the Bureau of Economic Analysis revises the GDP data all the way back to 1929. And of course, the 18 percent figure is totally arbitrary; the proposal effectively assumes that all federal outlays consist of funds that are appropriated annually, rather than consisting primarily of mandatory programs such as Social Security, Medicare and interest on the debt. Even if Congress was willing to cut mandatory spending, it is practically impossible to do so quickly unless it is willing to reduce the monthly checks going to current retirees and other actions difficult to contemplate.

An amendment which cannot be enforced or implemented and whose numbers don't add up without "actions difficult to contemplate" evidently is worthless but relatively harmlesss.

But no. The measure reflects ignorance and pandering to the ultra-far right of the far right of the party but also a sprinkling of nefariousness. Bartlett notes rests on the assumption that federal outlays "consist primarily of mandatory programs such as Social Security, Medicare and interest on the debt." While the GOP will not push to pay back a portion of the debt, it may not be so "difficult to contemplate" that it will move to "reduce the monthly checks"- or worse. On March 29, House Majority Leader Eric Cantor told NPR

I mean, just from the very notion that it said that 50 percent of beneficiaries under the Social Security program use those moneys as their sole source of income. So we've got to protect today's seniors. But for the rest of us? For - you know, listen. We're going to have to come to grips with the fact that these programs cannot exist if we want America to be what we want America to be.

The Majority Leader, second in command to a Speaker who may face a primary challenge from a tea party candidate, now is on record as supporting the abolition ("cannot exist") of Social Security and Medicare- assuming he wants "America to be what we want America to be."

The proponents of this constitutional amendment may be silly, reckless, and out to destroy the nation's elderly. Impressively ambitious.

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Eric Cantor, Unintentionally Hopeful

By their enemies, you shall know them (or, in this case, it).

A vote against the Dodd-Frank Wall Street Reform and Consumer Protection Act was not unreasonable for individuals who have been awake the past couple of years and recognize that huge financial institutions must be regulated.

Mark Thoma at CBS Moneywatch observes

This bill is not going to end the problem of too big to fail. If the banking system is threatened, then one way or the other it will be bailed out. The consequences to the economy would be too large to do otherwise. Thus, banks that are big enough to pose a systemic risk enjoy an advantage over other banks. Banks that pose a systemic risk will be assumed to be safer than other banks due to the implicit government guarantee. This gives large banks an advantage over smaller banks that do not, on their own, threaten the financial system if they fail.

In addition, the implicit guarantee gives large banks the incentive to take on too much risk, and this is a reason to regulate the amount of risk they can take (and I don’t think the proposed legislation does enough in this regard).

More comprehensively, Senator Russ Feingold of Wisconsin, who has been "a lonely voice for sanity in the financial markets," explained

At the start of this process I made clear that I had a simple test for financial reform -- will it stop another financial meltdown? This bill fails that test, and I won't support legislation that fails to protect the people of Wisconsin from the pain of another economic disaster. And I don't need to be lectured about this issue by people who supported the repeal of Glass-Steagall, which paved the way for this terrible recession.

I had hoped I would be able to support the legislation, given the clear need for strong reform. I cosponsored a number of critical amendments during Senate consideration of the bill including a Cantwell-McCain amendment to restore Glass-Steagall safeguards, Senator Dorgan's amendment that addressed the problem of "too big to fail" financial institutions, and another "too big to fail" reform offered by Senators Brown and Kaufman that proposed strict limits on the size of those institutions. Each of those amendments would have improved the bill significantly, and each of them either failed or was blocked from even getting a vote.

After that, it wasn't a close call for me. It would be a huge mistake to pass a bill that purports to re-regulate the financial industry but is simply too weak to protect people from the recklessness of Wall Street. That would be like building an impressive-looking dam without telling everyone that it has a few leaks in it. False security is no security at all.

This bill is not going to end the problem of too big to fail. If the banking system is threatened, then one way or the other it will be bailed out. The consequences to the economy would be too large to do otherwise. Thus, banks that are big enough to pose a systemic risk enjoy an advantage over other banks. Banks that pose a systemic risk will be assumed to be safer than other banks due to the implicit government guarantee. This gives large banks an advantage over smaller banks that do not, on their own, threaten the financial system if they fail.

In addition, the implicit guarantee gives large banks the incentive to take on too much risk, and this is a reason to regulate the amount of risk they can take (and I don’t think the proposed legislation does enough in this regard).

(Open Left's Chris Bowers here summarizes both the weaknesses and strengths of the final bill and its deficiencies are detailed here by professor Michael Hudson)

The strongest argument in favor of the legislation, however ironically, comes from a fervent opponent, House Minority Whip Eric Cantor of Virginia. He contends

This legislation is a clear attack on capital formation in America. It purports to prevent the next financial crisis, but it does so by vastly expanding the power of the same regulators who failed to prevent the last one.

This reasoning one hears from professional Republicans, officeholders, pundits, and talk show hosts, though generally not, to their credit, from the conservative rank-and-file. The proposed legislation would strengthen the hand of regulators who enabled the current crisis when they were too weak to regulate industry. Therefore, it must be stopped.

Stop us before we serve the American public! Regulation failed because conservative ideology demanded that it do so, that it be passive in the face of opposition from business. This bill, if Cantor is to be believed, expands their power and thus is destructive.

Thank you, Representative Cantor. You have confirmed that some opponents fear that the financial services industry may no longer have their way with the American people. We can only hope your fear is realized.

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Irresponsible And Reckless

Responding to threats of violence against House members who voted for health care reform, Representative Eric Cantor (R.-VA) on March 25 declared "Let me be clear -- I do not condone violence. There are no leaders in this building, no rank and file members in this building, that condone violence, period."

Then he went on to condone violence.

I've received threats since I assumed elected office, not only because of my position but also because I'm Jewish. I've never blamed anyone in this body for that, period. Any suggestion that a leader in this body would incite threats or acts against other members is akin to saying that I would endanger myself, my wife or my children. Just recently I have been directly threatened. A bullet was shot through the window of my campaign office in Richmond this week, and I've received threatening e-mails. But I will not release them, because I believe such actions will only encourage more to be sent....

I want to stress this and it's very important. Legitimate threats should be treated as security issues and should be dealt with by the appropriate law enforcement officials. It is reckless to use these incidents as media vehicles for political gain.

That is why I have deep concerns that some, Chris Van Hollen and Tim Kaine in particular, are dangerously fanning the flames by suggesting that these incidents be used as a political weapon. Security threats against members of Congress is not a partisan issue and they should never be treated that way. To use such threats as political weapons is reprehensible.

I'm not naive enough to think that letters, statements or press releases will prevent anyone disturbed enough to commit violence from acting. But I do know that such letters, statements and press releases can very easily fan the flames. By ratcheting up the rhetoric, some will only enflame these situations to dangerous levels. Enough is enough. It has to stop.

Shorter Cantor: I need to be on record denouncing violence, which I then blame on people who bring it to the attention of the public and thereby provoke justifiably angry people.

There is another problem with Cantor's statement, however. But as Jed Lewison notes at Daily Kos (its video below), there is

virtually no way somebody would ever have targeted that particular office if they were going after Cantor. For starters, neither his campaign site nor his official site list the building as his campaign office. The building itself does not have any markings to suggest that it housed his campaign office. And if all that weren't enough, the office isn't even located in his congressional district.

It's highly unlikely, therefore, that an individual would have known the office was Cantor's. The bullet did not enter his office but instead hit the outside of a building which houses his office. And Cantor told a newspaper he wasn't sure the shot was not random.

But that didn't stop the #2 Republican in the House of Representatives. And now he has been called on it. On Thursday, a report on the blog of the Richmond, Va. Police Department includes

A Richmond Police detective was assigned to the case. A preliminary investigation shows that a bullet was fired into the air and struck the window in a downward direction, landing on the floor about a foot from the window. The round struck with enough force to break the windowpane but did not penetrate the window blinds. There was no other damage to the room, which is used occasionally for meetings by the congressman.

The Richmond Police Department is sharing information about the incident with appropriate law enforcement agencies.

At this time there are no suspects.

So let's agree with "The Lonely Conservative," who on 3/25- but evidently before the police report was issued- blogged

So, which side is more violent? Will the main stream media report this non-stop for the next three weeks? Probably not.

Hopefully, this conservative's (premature) wish will come true and the media will "report this non-stop for the next three weeks." A GOP leader, anxious to claim that violent attacks are made not only on Democratic but also upon Republican officeholders, calls a press conference to announce that a bullet has been "shot through the window of my campaign office." But he realizes that its location was not widely known, there is no evidence that the culprit even knew it was his office, and probably that the bullet never penetrated the outside walls. But he does believe that the media message will be this: violence is bipartisan and its victims, bipartisan.

It's one thing for Sarah Palin to encourage violence and Newt Gingrich to condone violence. It's quite another for a top Republican to condemn as "reprehensible" using incidents as "a political weapon" at the same time he himself is knowingly and brazenly distorting a criminal matter and using it as a political weapon.