Free Markets, Free People

Monthly Archives: February 2011


NYT screams for adults while acting like a child

Reading the first paragraph in an NYT editorial gave me a rather cynical chuckle this morning

Are there any adults in charge of the House? Watching this week’s frenzied slash-and-burn budget contest, we had to conclude the answer to that is no.

Really – is that the answer?  Or is the answer there haven’t been any adults in charge for years – decades even – as evidenced by the horrendous fiscal mess we’re in today.

The NYT’s answer?  Apparently the status quo is alright with the Grey Lady.  Check this out:

First Speaker John Boehner’s Republican leadership proposed cutting the rest of the 2011 budget by $32 billion. But that wasn’t enough for his fanatical freshmen, who demanded that it be cut by $61 billion, destroying vital government programs with gleeful abandon.

Here we go … speaking of acting like adults, it would be nice if the NYT would try it.  As Rand Paul pointed out, $32 billion is about 5 days of government spending.  $61 then would be about 10.  And the $81 billion they’re now talking about – tack on 4 more days. The NYT wants you to seriously believe that eliminating that pittance would destroy “vital government programs”?   We’re talking a multi-trillion dollar budget here guys.  Until we’re talking trillions in cuts, we’re not talking about serious cuts.

In fact, what the NYT is worried about is cuts to some programs it considers to be vital but apparently others don’t. 

If the Republicans got their way, it would wreak havoc on Americans’ lives and national security. This blood sport also has nothing to do with the programs that are driving up the long-term deficit: Medicare, Medicaid and, to a lesser extent, Social Security.

Well here’s the bad news for the NYT – to get the budget back on a sustainable track, it is going to require a little “havoc” within the budget and certainly a dramatic lessening of spending.

Obviously I agree that the programs such as Medicare, Medicaid and Social Security have to be addressed.  But that doesn’t exempt the other areas where spending may be less in terms of those programs but just as wasteful, unnecessary or unneeded.  You aren’t going to address the problems of Medicare, Medicaid and Social Security in a Continuing Resolution – that’s a ‘red herring’.  The fact that the big 3 haven’t been addressed yet doesn’t mean they won’t be nor does it mean discretionary spending shouldn’t be.

So, if the mean old Republicans end up cutting $81 billion out of the 7 month Continuing Resolution to fund government (since the Democratic Congress didn’t do its primary job and pass a budget) what will that mean?

Several credible economists have said that an $81 billion cut could result in up to 800,000 layoffs throughout the American economy.

The House freshmen seemed even less concerned about the effect of their budget slashing. “A lot of us freshmen don’t have a whole lot of knowledge about how Washington, D.C., is operated,” Representative Kristi Noem, a Republican of South Dakota, told the Conservative Political Action Conference last week. “And, frankly, we don’t really care.”

Frankly, he shouldn’t.  My guess is government will trundle along without a hiccup if the worst case (and you know that’s what is going to be presented here) scenario of 800,000 layoffs materializes.   It won’t, of course.   We all know how this works – if in fact the cuts were to cause layoffs, most would come through attrition and early retirement packages vs. being “let go”. 

No, this is the usual “if they do that, the baby ducks will die” rhetoric in which any cut is countered with the worst imaginable scenario whether feasible or not.  Government’s job is not providing employment.  It is doing the people’s business and protecting the nation.  And it should do that in as lean a posture as possible.  That’s what an adult would say.

Of course Obama has bowed up and claimed he will veto any such “job killing” measure.  If I were the GOP I’d be saying “go ahead, make my day”, because it then becomes a matter of explaining that the GOP attempted to cut spending and the size of government, but Big Government Obama, who depends on the votes of public service unions to win reelection, opted for them over the will of the people.

~McQ


Chauncey De Vega doubles down on “stupid”

First, I have no idea who “Chauncey De Vega” is.  But I do know his type. So when the story broke about his post on AlterNet calling Herman Cain a “monkey” and a “minstrel”, I thought it something that others could handle quite well, thank you very much.

And, deservedly, De Vega was roundly criticized – not only for the language he used, but for the stereotypical and foundationless characterizations he used in his absurd commentary.  Just another in a long line of clueless, historically ignorant and confused “commenters” on racial issues who feel the need to use inflammatory language to be noticed.  Another race obsessed jerk who cannot fathom that others of his race may, through their own experiences in life, see things of a political nature different than he does.  Apparently he is “the one” that decides what is proper and acceptable for blacks to believe and anyone who doesn’t toe that line is a “race traitor”.  In his post, Herman Cain was the race traitor of the day.

Today De Vega doubled down on his stupid rant.  AlterNet, where the original was posted, made it clear that his first post was in the “Speak Easy” which is a forum provided by AlterNet for “unedited” pieces.  This follow up was in a different area which means, one assumes, that De Vega was edited and the inflammatory name calling was deleted prior to publication.  Of course that doesn’t change the substance, and the substance, such that it is, isn’t much more acceptable, intellectually, than was the original post.

Why?  Because it is an exercise is attempting to justify being an ignorant jerk.  It sheds no new light on anything except the writer’s prejudices – which he willingly exposes.  One assumes he thinks he’s being convincing, but a quick read through the piece leaves you with the understanding that this is simply “stereotypes are us” on steroids.  There’s really nothing thought provoking or even particularly interesting about De Vega’s words.   It is the work of a man whose mind was made up years ago and who now proudly wears the blinders of ignorance for all to see.

As most race-baiters realize, the absence of racism within today’s society would be a disaster for them.  They’ve built a cottage industry around the word and are seeing their bread and butter slip away.  De Vega is reduced to mischaracterizing the speech of another black man (I heard the speech), denigrating him and his beliefs and thereby indicting the crowd that listened and cheered his words as “white masters” to keep the hate alive.

Peddling racial hate is a much tougher job today as witnessed by the fact that he and others feel it necessary to attack any black who strays from what they consider the only way blacks should think.  Those sorts of successful blacks give lie to their race-baiting rhetoric.  The Chauncey De Vegas of this world deserve the all the condemnation and derision they earn through their vile and hateful rhetoric.  They belong in a past era of this country’s racial history and are no more acceptable today than is the KKK.  Ironically, both, as it turns out, are in the business of trying to sell the very same thing.

~McQ


A little history lesson–Egypt and Iran

This, from Austin Bay, does an excellent job of making the point about Egypt that I have been trying to get across in a meta sense. He does it with a look back at the Iranian revolution. It, in many ways, mirrors what is happening in Egypt today. Bay makes the point that in all such revolutions, the key is organization. And unfortunately authoritarians usually do a better job of organizing than do democrats.

A democratic movement will never march in lockstep, but common principles — such as dedication to individual rights — must translate into a common spine to resist, with armed force when necessary, inevitable manipulation, threat and attack by tyrants, terrorists and their vicious partisans.

Recent history bears tragic witness. In the aftermath of their popular rebellion of 1979, the hodgepodge collection of Iranian liberals and nationalists fragmented. The Ayatollah Ruhollah Khomeini’s radical Islamic totalitarians divided the democratic coalition and attacked them individually. Abolhassan Bani-Sadr, Iran’s first president after the 1979 revolt, identifies the failure to form a unified democratic front as the Iranians greatest strategic error.

In an essay published in the Christian Science Monitor last month, Bani-Sadr said most Iranian political organizations "did not commit themselves to democracy. Lacking the unity of a democratic front, one by one they became targets of power-seeking clergy in the form of the Islamic Republic Party … ."

I remember the Iranian revolution vividly. I remember Bani-Sadr and the hopes he had for a free and democratic Iran. And I also remember the relentless Ayatollahs and their eventual success at the "divide and conquer" strategy they used. Iran has never gotten off the mat since.

Bay is much more optimistic about the outcome in Egypt than I obviously am.  I think it is much to early to determine that they are headed in the right direction.  Bay says there are hopeful signs.  Good.  But … and there’s always one of those when talking about an authoritarian regime willingly handing over power … we’re so early in the process it’s impossible to tell if the military is really serious about the handover or whether nationalists, secularists, “moderate” Islamists and activists can indeed form a united front or will instead fracture at various points. 

History says “fracture”.

Bay puts the “key” to success in his conclusion:

How the military receives the counter-proposal is crucial. Rejection or ambivalent delay sends the ominous message that there is at least one strong faction of military Bonapartists who prefer pharaoh to freedom. The give and take of sincere negotiations among revolutionary factions and the military, ending in authentic compromise, however, will not only forward the process of building a democratic front but signal the emergence of genuine democratic politics.

You can be guaranteed there are what Bay calls “Bonapartists” within the military.  And in Egyptian history it isn’t unheard of for more junior level officers to resort to violence to take over (Gamal Nasser anyone?).  In the sort of revolutionary atmosphere now prevalent in Egypt it should be remembered that not all revolutionaries want democracy or freedom.  You can rest assured there are power struggles going on within a great number of these factions both within and outside the military.

Given Bay’s quoting of recent history, I’m not sure how he is so optimistic at this early date in the process, but he does seem to think that a united Egyptian democratic front may emerge from all this turmoil.  I remain skeptical and doubtful (even if I’d love to be proven wrong).  And … I have history on my side.

~McQ


GM to pay 400 million in bonuses without loans being paid back … where’s the left on this?

Giving the left the benefit of the doubt, maybe they didn’t know about this.  Because I’m sure, just as they blasted Wall Street for paying bonuses after receiving bailout money and TARP funds, they’d be keen to be consistent and do the same to GM.

Less than two years after entering bankruptcy, General Motors will extend millions of dollars in bonuses to most of its 48,000 hourly workers as a reward for the company’s rapid turnaround after it was rescued by the government.

The payments, disclosed Monday in company documents, are similar to bonuses announced last week for white-collar employees. The bonuses to 76,000 American workers will probably total more than $400 million — an amount that suggests executives have increasing confidence in the automaker’s comeback.

But the comeback was and is still financed by taxpayers money and borrowing.  What in the world is GM doing paying out bonuses when it still owes at least $40 billion in loans?  That $400 million would be a nice chunk toward that payback, wouldn’t it?

But the bonuses drew criticism from an opponent of the auto industry bailout in Washington who said GM should repay its entire $49.5 billion loan before offering bonuses.

"Since the taxpayers helped these companies out of bankruptcy, the taxpayers should be repaid before bonuses go out," said Republican Sen. Charles Grassley of Iowa. "It sends a message that those in charge take shareholders, in this case the taxpayers, for a sucker."

Yeah, kind of hard to argue otherwise, isn’t it?  And no, for you that believed all the hype, GM hasn’t paid back its loans despite the commercials it made claiming it had.  It isn’t even close to paying them off.

That said, I’m sure, once the story gets out that the left will be just as consistent in slamming GM for paying bonuses without repaying its loans as it was with taking Wall Street (properly I might add) for precisely the same reason.  (HT: Maggie’s Notebook).

Oh, and by the way:

Ford Motor Co. announced plans last month to pay its 40,600 U.S. factory workers $5,000 each, the first such checks since 1999. The Dearborn, Mich., company, which avoided bankruptcy and did not get a government bailout, made $6.6 billion last year.

Ford also plans to pay performance bonuses to white-collar workers in lieu of raises, but it would not reveal the amounts.

Good for them and congratulations.

~McQ


Secular democracy in Egypt? The devil is in the details

The committee empaneled to rewrite the Egyptian Constitution and given 10 days to do so has named it’s head

Egypt’s new ruling military council has appointed an Islamist judge to head the committee drawing up a new constitution, angering some of those who argued last week’s revolution would deliver the country to the Muslim Brotherhood.

Of course there are some who continue to argue this is all a secular movement (how does one conclude a group calling itself the Muslim Brotherhood is somehow a “secular” group as the West would define “secular?) and that the end result will be a strong democracy as demanded by the people.

Uh, probably not.  Careful monitoring says that most likely the next government will be anything but “secular” as defined by the West:

But the make-up of the new committee, and the fact it has been given just ten days to come up with a new constitution, has dashed hopes that it will remove Article 2, which makes Islam the state religion and says Shariah is the main source of law.

There is something very concrete for you to watch for and monitor – the status of “Article 2” in any new constitution.  The double-talk isn’t just confined to the word “secular”.  “Moderate” gets a going over too.   What anyone in the West would consider a “moderate” here would most likely be called a “secular liberal” there.   The West might consider Egypt’s “moderates” as fairly radical here.   As an example of having to read carefully, look at this:

"Al-Bishry is a figure who is accepted by all Egyptians," said Aboul Ella al-Madi, leader of Al-Wasat. "He has criticised the Coptic Church but he has also criticised the Muslim Brotherhood and the former regime.

Sounds great right?    But what is “Al-Wasat”?  It’s an offshoot of the Muslim Brotherhood.  And you have to love the fact that he feels qualified to speak for “all Egyptians”.

Another claim made by those appointing the committee is it includes a “Coptic Christian” (The NYT names him as Maher Samy Youssef, a judge and Coptic Christian).  Or maybe not:

But Bishop Markos, a member of the Coptic Church’s Holy Syndicate, said no one from the Military Council had been in touch since it came to power.

He said: "We do not know the result of this but we hope the committee will be wise enough to take into account the rights of all Egyptians."

And Islamists in general (using “Islamist” in the generally accepted sense of “religious radical”)?

In another sign of increased freedoms for Islamists, the Gama’a Islamiya, the radical group responsible for a wave of terror attacks in the 1990s, held a public meeting in a town in southern Egypt on Monday night, according to a local newspaper, Al-Masry al-Youm.

Nice – radical terror groups go main stream and hold public meetings. 

Back to the head of the committee …. a person who knows Egypt pretty well has weighed in:

Wael Abbas, the best-known human rights blogger in Egypt, who was sentenced to prison by the Mubarak regime last year, said it was a "worrying" choice.

"There is no such thing as a moderate Islamist," he said. "We want a secular state that respects all religions and which belongs to all religions."

Take that one sentence to heart – “there is no such thing as a moderate Islamist”.  We’ve come to understand that over the years, yet many of us seem to want to ignore that when it comes to Egypt.  Note that Abbas wants a real secular state as you and I might define it, not one as the Muslim Brotherhood would.

This move by the military council is one, I think, that is calculated to further calm fears that the military plans to continue to hold on to control.  The NYT says:

Though the Supreme Council of the Armed Forces, which seized power with Mr. Mubarak’s exit, has repeatedly pledged to uphold the goals of the Egyptian revolution, many in the opposition have questioned the army’s willingness to submit for the first time to a civilian democracy after six decades of military-backed strongmen.

So appointing the committee helps calm those fears:

“The move to appoint the panel is the first concrete thing the army has done since taking over,” said Hossam Bahgat, a prominent civil rights lawyer and Mubarak critic. “We have only had communiqués. We have been analyzing the rhetoric. But now is the first concrete move, and there is nothing about it that concerns us.”

That last sentence is very telling, especially the claim “there is nothing about it that concerns us”.  The fact that Bahgat isn’t concerned doesn’t mean others shouldn’t be concerned.   An Islamist judge heads the committee and:

The biggest surprise was the inclusion of Sobhi Saleh, an Alexandria appeals lawyer and former member of Parliament who is a prominent figure of the Muslim Brotherhood. The Mubarak government repeatedly portrayed Mr. Saleh as extremist. Mr. Saleh has espoused some views many here might consider excessive, like advocating a ban on public kissing in most places, and he was released from an Egyptian intelligence prison recently.

Is that a “moderate” position?  Would such bans be “secular” in scope?  My guess is the answer would be  “yes” from someone like Saleh if passed by a Parliament (using the democratic process to pass authoritarian laws).   Anyway, you then have to love this analysis of the committee by Saleh:

“The committee is technical and very balanced,” Mr. Saleh said. “It has no political color, except me because I was a member of Parliament.”

Well yeah, so who is it that will lend “political color” to this work?  A radical member of the Muslim Brotherhood on a committee headed by an Islamist judge.

There’s no question there’s a lot of “hope” going on in Egypt right now – but as when “hope” was a prominent word here in the US during the last election cycle, everyone is being left to write their own interpretation on the large blank page “hope” has provided.   The problem there, as it was here, is what the people of Egypt “hope” will come about and what they will actually get out of this process – as it appears to be lining up – are probably not the same thing at all.

~McQ


Observations: The QandO Podcast for 13 Feb 11

In this podcast, Bruce, Michael, and Dale discuss the situation in Egypt, and CPAC.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Egypt – Remember when the military taking over, dissolving Parliament and suspending the Constitution was a bad thing?

Just sayin’.  Because to hear some in this country, that’s the best thing that’s happened since sliced bread.  Yes, the euphoria over what is happening in Egypt that has gripped an element of the fairly naïve here in this country has been truly breathtaking to behold.

Don’t get me wrong – I’d like as much as anyone to see “democracy flower” and everyone live happily ever after as true statesmen come to the fore and deliver Egypt from the tyranny of dictators and forever ensure one man, one vote, representative government and government of, for and by the people.

I just don’t live in moon pony land.  That’s not to say it couldn’t happen, but it is to say that’s very unlikely to happen. 

Why?

Well let’s consider the facts concerning this benevolent military takeover.  It hasn’t taken over anything.  The military has been in defacto charge of the country since Nasser.

Yes, Mubarak is gone.  So what?  Who replaced him?  Omar Suleiman.  He’s a product of the military, Egypt’s intelligence chief and named in a 2007 diplomatic cable found in WikiLeaks as Mubarak’s “consigliore”.  He’s been in that position in 17 years and has been the main means of the Mubarak regime’s ability to oppress opposition.  He’s now serving on the “Armed Forces Supreme Council “.

And speaking of the Armed Forces Supreme Council, others who serve on it are Defense Minister (and Lt. General) Anan and the new Prime Minister (and Air Marshal) Shafiz – both very stalwart supporters of Hosni Mubarak.

This 18 member body has dissolved the Parliament, suspended the constitution and banned labor strikes.  And although it has promised elections in 6 months, well, that’s 6 months away, isn’t it?  We really have no idea if that Council really means to actually hold the election or will find ruling the state to be much more to their taste than turning it over to the rabble.

The military  – of all institutions – played this whole thing very well.  It was in charge but it pretended it wasn’t.  It took the side of the protesters, nominally, and removed one of its own to be replaced by 18 of its own.  What has happened is a very well done defusing of a volatile situation while in reality nothing much has changed in terms of who is in charge of government.

That’s not to say some things aren’t different – for instance, that well-known “secular” organization (according to our chief of intelligence) the Muslim Brotherhood (yup, real secular name there, skippy) is attempting to take advantage of the situation as well and has applied for status as a political party.

And it appears, despite reassurances to the contrary, that the MB is setting itself up to be another in a long line of theocratic parties that use elections (at least once) to legitimize their rule.   Read these two paragraphs carefully:

The Brotherhood’s charter calls for creation of an Islamic state in Egypt, and Mubarak’s regime depicted the Brotherhood as aiming to take over the country, launching fierce crackdowns on the group. Some Egyptians remain deeply suspicious of the secretive organization, fearing it will exploit the current turmoil to vault to power.

But others – including the secular, liberal youth activists who launched the anti-Mubarak uprising – say the Brotherhood has to be allowed freedom to compete in a democracy alongside everyone else. Support by young cadres in the Brotherhood was key to the protests’ success, providing manpower and organization, though they never came to form a majority in the wave of demonstrations.

The question is, once it has competed in “a democracy” and won, does it ever plan to compete again?  Nothing has changed in the MB’s charter.  And having watched other “Islamic states” come into existence, democracy is not one of their foundations – although it would certainly be useful in a peaceful takeover vs. having to do so through violence.   Bottom line, though, the end state is the same.   See any number of authoritarian regimes (such as Venezuela or Iran) which began with “free and open elections”.

To answer the question on the minds of some reading this, no, I don’t consider myself cynical about this, I instead see my pessimism grounded in observing the experiences of like states and the results that’ve unfortunately resulted.  I consider my take to be quite realistic.  And that’s a pity as I’d like nothing more than to see a magic flowering of democracy in Egypt. 

The irony of course is the same people who said a democracy could never be established in Iraq are now saying democracy is spontaneously establishing itself in Egypt.  Of course democracy in Iraq has been established, however tenuously, by the presence of the US military.  However, in Egypt, those now ruling the country are from the military.  I’d appreciate someone – anyone – pointing out why Egypt, without a US military presence or the presence of any other entity capable of forcing the country down the road to democracy will suddenly become a democracy? 

In fact it seems the fox is guarding the hen house in Egypt.  There’ll be a lot of busy work in the interim -  a new or at least amended constitution (who is going to pass it or debate it with Parliament dissolved?  The military council?  The people?), the organization of political parties and elections, etc.   All the while, I expect the military to quietly consolidate its power over the next 6 months while others are buzzing around doing the busy work that will keep them out of the streets.

Will the military willingly turn over its power to a president elected by the people?  If I knew that I could probably make a fortune.   Let me just say it like this – if the winner of the election is a candidate that is acceptable to the military (say some military officer from “the club’’), then probably “yes”.  Accepting such a candidate would most likely keep the military’s grip on government in place, just with a new (and somewhat more benevolent) face.

If the winner isn’t acceptable to the military (such as a theocrat from the MB – one of the reasons they play this “we’re secular” game is an attempt to head off those sorts of charges.)  I expect to hear charges of vote fraud, illegal activities and arrests to ensue, along with a declared “state of emergency” after which the military will retain control and begin the inevitable crack-down on dissent.  It will also claim to want to hold new elections at some time in the unspecified future – to keep the West off its back and the people at home.

Not a rosy picture, that’s for sure – and I could be completely wrong.  But unfortunately, I just don’t think so.

Call it wisdom – intuition, experience and observation combined to come to a conclusion.  And it isn’t necessarily a pretty one.

~McQ


Budget buzz–Obama’s effort seems to be unpopular on both sides of the political spectrum (update)

All sorts of coverage on the Obama budget, most of it negative.  While the White House spin machine works overtime to attempt to fashion a message saying the effort confronts the harsh fiscal reality we’re faced with and makes tough cuts and decisions, that’s not the way others are interpreting it.

Andrew Sullivan figured out Obama’s budget is a very political one:

But the core challenge of this time is not the cost of discretionary spending. Obama knows this; everyone knows this. The crisis is the cost of future entitlements and defense, about which Obama proposes nothing. Yes, there’s some blather. But Obama will not risk in any way any vulnerability on taxes to his right or entitlement spending to his left. He convened a deficit commission in order to throw it in the trash. If I were Alan Simpson or Erskine Bowles, I’d feel duped. And they were duped. All of us who took Obama’s pitch as fiscally responsible were duped.

Uh, yeah.  And it only took 3 years for Andy to figure it out. Speaking of the Simpson Bowles commission, Sullivan cites a David Brooks column where Brooks talks about a group of Senators who are taking the lead in writing up the recommendations of the commission for implementation. Says Sullivan of the effort:

They have to lead, because this president is too weak, too cautious, too beholden to politics over policy to lead. In this budget, in his refusal to do anything concrete to tackle the looming entitlement debt, in his failure to address the generational injustice, in his blithe indifference to the increasing danger of default, he has betrayed those of us who took him to be a serious president prepared to put the good of the country before his short term political interests. Like his State of the Union, this budget is good short term politics but such a massive pile of fiscal bullshit it makes it perfectly clear that Obama is kicking this vital issue down the road.

Lovely to see someone else finally realize that leadership is something this president knows nothing about, never has exercised and wouldn’t know how to do with a self-help book in front of him.  And, as Sullivan correctly surmises, this atrocity of a budget is firm proof of that (and no that doesn’t mean I endorse the Simpson Bowles commission – the point is about leadership).  Sullivan also finally ferrets out that the commission was nothing more than an artifice the president used to cover his rear and make it appear like he was focused on doing something about the fiscal shape of the UFederalSpending0471.002-thumb-440x330S government.  Instead we get exactly what those of us who’ve been on to this president’s act all along expected – pure politics.

John Hinderaker at Powerline gives graphic proof (left) that the media water carriers who are parroting the White House line about the President’s budget containing “steep” or “painful cuts” aren’t fooling anyone.  As you can see the only steep incline over the next few years is up.  There is nothing significant about any “cuts” or “savings” the Obama budget puts forward on the overall level of government spending except to keep the slope headed in a direction we can’t afford.

Instead it is more of the same simply couched in the same old obfuscating rhetoric that calls spending “investment” and taxation “savings”.  Someone needs to get the point across to Obama that the smoke and mirrors company in which he’s so heavily invested isn’t working for him anymore.

In fact, just to make the point even more evident, take a look at this chart by Doug Ross.  The yellow line you see (right) are the “steep” and “painful cuts” the president and some of the media are trying to pretend his budget is making.   Tough stuff, no?  No.  His steep and painful cuts are a veritable drop in the bucket and really do nothing structurally to actually cut spending to affordable and sustainable levels.  As Rep. Paul Ryan has said, Obama “punted” with this budget.110214-budget

Megan McArdle thinks, given this budget by the president, that it may finally be time to panic.

I was a laconic hawk when the deficits shot up in 2008, 2009, 2010.  A few years of deficits in an unprecedented crisis weren’t going to kill us; we had time to get them under control.

But I’m starting to think that it’s time to panic.  This deficit is $700 billion higher than the CBO projected in August 2009, of which $500 billion is lower tax revenues, and $200 billion is new spending.  It’s also $500 billion less revenue and $100 billion more spending than the CBO was expecting as late as August of last year, thanks to the extension of the Bush tax cuts.  For all that I keep hearing about deficit reduction and PAYGO rules, somehow those "fiscally responsible" Democrats have given us the largest peacetime deficit in history, one that keeps growing beyond all expectations–and for all their alleged worries about the budget deficit, so the Republican role in all of this has been to goad Democrats into cutting taxes even further, so that the wealthiest earners could enjoy their fair share of our collective fiscal insanity.

I know the arguments for stimulus, but at this point, I don’t think we can afford the luxury of a more stimulating economy.  Our politicians can’t be trusted to do the right thing later; we need to make them do it now.

I can’t emphasize that last sentence more.  If ever there was a time to do what is necessary to take a knife to the bloated government budget, it is now.   The public is as much on board as it will ever be and while it may whine and even scream and holler about some thing’s, most of the voters in this country know something pretty drastic must be done and done soon.

Even “Johnny one-note” Paul Krugman isn’t happy – for the usual reasons:

Andrew Leonard is right: the Obama budget isn’t going to happen, so in a sense it’s irrelevant. But it still has symbolic meaning. What is Obama saying here?

The important thing, I think, is that he has effectively given up on the idea that the government can do anything to create jobs in a depressed economy. In effect, although without saying so explicitly, the Obama administration has accepted the Republican claim that stimulus failed, and should never be tried again.

My favorite line in the Krugman piece was this:

What’s extraordinary about all this is that stimulus can’t have failed, because it never happened. Once you take state and local cutbacks into account, there was no surge of government spending.

Remember, what was spent was about $300 billion more than Krugman recommended.  But if it never happened I assume Krugman will now quit attempting to say that the trillion dollars which was thrown out there to stop the fall and stimulate growth did it’s job, right?  That was his previous stance and all that was needed was more spending to have an even greater effect.  Correct?   Now he’s in the middle of rewriting history:

Yes, I know, it’s argued that Obama couldn’t have gotten anything more. I don’t really want to revisit all of that; my point here is simply that everyone is drawing the wrong lesson. Fiscal policy didn’t fail; it wasn’t tried.

MIA – a trillion dollars.  Yeah, it “wasn’t tried”, was it?  About the nicest thing Krugman can muster to say about the Obama budget (in another article) is it isn’t the Republican budget:

It’s much less awful than the Republican proposal, but it moves in the same direction: listening to the administration, you’d think that discretionary spending, not health care, is at the heart of our long-run deficit problems — and you’d also think that the job of rescuing the economy was done, with unemployment still at 9 percent.

It could be worse — the GOP proposal is — but it’s hardly something to cheer about.

Well, we’ll see how much either is to cheer about when we take a look at the Republican budget.

Finally, to inject a little humor into a basically humorless debate – even if the humor is unintentional – read Jonathan Chait’s piece in The New Republic.  You get the idea he was on his third or fourth scotch and up late when he wrote it.  It is the journalistic equivalent of trying to turn a sow’s ear into a silk purse and coming up with an ugly fuzzy pouch that smells like bacon.  Even his title points to a very tentative approval, something he had to talk himself into in order to make the attempt:  “Why Obama’s Budget Is OK”.   And while some of his points are valid (the president’s budget is a political document) how he got from some of his observations to some of his conclusions can only be explained by booze and sleep depravation.

UPDATE: Steve Eggleston has a good post up full of charts that makes the point with the government’s own numbers that Paul Ryan was right yesterday – “doing nothing would be better than passing [Obama’s] budget”.

~McQ


New Media feudalism?

Huffington Post was just sold to AOL for $315 million.  Good stuff.  An online media effort makes big bucks.

But David Carr throws out some interesting commentary about that and the online culture that does cause me to pause and think  about it.  The paragraphs that grabbed my attention were:

It will be interesting to see how the legions of unpaid bloggers at The Huffington Post react to the merger with AOL. Typing away for an upstart blog — founded by the lefty pundit Arianna Huffington and the technology executive Kenneth Lerer — would seem to be a little different from cranking copy for AOL, a large American media company with a market capitalization of $2.2 billion.

[…]

Perhaps content will remain bifurcated into professional and amateur streams, but as social networks eat away at media mindshare and the advertising base, I’m not so sure. If it happens, I’ll have no one but myself to blame. Last time I checked, I had written or shared over 11,000 items on Twitter. It’s a nice collection of short-form work, and I’ve been rewarded with lot of followers … and exactly no money. If and when the folks at Twitter cash out, some tiny fraction of that value will have been created by me.

He has a point.  Maybe not the one he thinks he has, but there is a point to be made here.  It’s one thing to labor away at a blog like QandO which is a personal decision and a labor of love.  I don’t do it for money nor do I expect to earn a living doing it here. If someone were to come along and offer a pile of money for the place, I’d take it, but it would be money I and the other bloggers earned by developing the place and writing here.

But what about those sites which encourage community, give bloggers access and then use the demographics (which bloggers helped create) to actively sell advertising and raise revenue?  And, like HuffPo, what if they sell?

Well, without out legal agreement that your participation is worth x amount in either area (advertising or a sale) you haven’t a leg to stand on.  You agreed to whatever stipulations they had in place when you entered your first post, if there even were any.

So what happens now with HuffPo?  The paid bloggers/journalists will most likely continue to be paid.  But what about the bulk of bloggers/diarists/citizen journalists there?  Will they continue to write?

I mean that’s a big change.  Those that have helped build that sites reputation now know what their work built.

So will they be willing to continue on adding to its value without compensation?  Or will they demand a piece of the pie or withhold their content?

And if they do withhold their content, will others be willing to step forward and take their place.

HuffPo also has the argument that all of the value isn’t to be found in the contributions of the bloggers/diarists/citizen journalists there.  And that’s probably true – but HuffPo (and now AOL) can’t deny part of the value must be contributed to them.

The point of all of this is it changes, fairly dramatically, the thinking of many who participate online in a “free” capacity helping build a brand.  HuffPo definitely has a brand.  

You have to ask then, what are AOL’s expectations for non-paid bloggers?  And, on the other side, are non-paid bloggers willing to continue working for nothing but adding value to AOL’s brand?

Interesting questions, interesting times.  For whatever reason I keep hearing the “echo” of “union” floating around.  Hopefully bloggers will avoid anything like that – a loose federation or association would serve as well, but I have to say, if bloggers are adding value to a site such that a 2 million dollar investment can grow to 315 million, they ought to have an understanding going in that they get a share in compensation for their contribution – or not.  Their choice.  But there should be a choice.  And a smart entrepreneur is going to attract the brightest and best by providing one.  And such a site or sites would keep the “feudal” sites from becoming more prevalent than they are today.

~McQ


It is budget day in Washington DC

Today is the day President Obama’s budget is published.  It promises “cuts” and “savings”.  Before we venture too far in our analysis of the budget, let’s be clear on what those two words usually mean in Washington.  A “cut” in spending usually means that whoever is saying it is talking about not spending as much as originally planned.  And neither have a thing to do with debt reduction.   What they actually mean is they’re still going to spend buckets of money we don’t have – they’re just not going to spend “buckets and buckets” of it.

“Savings” is normally used in about the same way.  I call it wife math (my apologies to the ladies, but come on, admit it, you’ve used it).  Wife math announces, “I saw this scarf on sale for $75.  It is normally $100.  I "saved" $25.”   Of course what she really did was spend $75 that perhaps the family didn’t have or couldn’t afford.

So when you see or hear the words “cuts” and “savings” in discussions of the budget this year, please understand the context of the words when used in those discussions.  “Cuts” mean they don’t plan spending as much as they originally planned to spend.  In the case “cut”, not a single dollar has yet been spent, but they’re going to try to convince you that those “cuts” translate into “savings”.  For most of us “savings” means we have spent less money on necessities (by being frugal)  and the money we’ve saved (i.e. actual money in hand – not borrowed, but earned) can be applied to paying down something else– such as credit card debt or something.  Yeah, it’s real money we have in hand, not spending we “cut” from something we didn’t have the money for to begin with.

Not so with double talking Washington – “savings” in their jargon means not spending as much.  It is slightly different than “cut” in that “savings” are usually “realized” from a proposed program of spending while “cuts” usually come from an existing program of spending.   In the case of “savings” what is “saved” can’t be applied anywhere because we’re in a cycle of deficit spending.  It isn’t revenue they’re talking about that they can spend elsewhere to reduce the debt, it is borrowed money of which they don’t plan on borrowing as much.

This year alone we’re looking at a record deficit of 1.6 trillion dollars.  What they’re talking about “saving” over the next 10 years (1.1 trillion – or 110 billion a year – chicken feed in 3.x trillion dollar budgets) is simply proposed reductions on what they had planned to borrow.  Meanwhile the debt continues to climb.

Keep in mind that we’re looking a 4 years worth of budgets from the administration with over a trillion dollars in deficit spending.  What they’re trying to do is soften that with is 1.1 trillion in “cuts” and “savings” over 10 years that will help “reduce the deficit”.  I’m sure you’re able to do the math and realize total debt keeps climbing.  But also remember that “cuts” and “savings” are what are going to be trumpeted, not the truth:

An administration official, who spoke on condition of anonymity before the budget was released, said one-third of the $1.1 trillion in deficit reduction the administration is projecting over the next decade would come from additional revenue with the bulk of that reflecting the limitations on tax deductions by the wealthy.

So not only are they “cutting” money they don’t have or haven’t spent, they’re “saving” money that will trim the deficit (while the debt still goes up) by assuming revenue not in hand.

The point?  Well, when you see things like this from AP Economics Writer Martin Crutsinger …

“Two-thirds of [the budget's] savings [of $1.1 trillion over 10 years] would come from spending reductions including $400 billion in savings from a five year freeze on spending in many domestic government agencies. The other one-third of savings would come from tax increases. The biggest tax hike would come from a proposal to trim the deductions the wealthiest Americans can claim for charitable contributions, mortgage interest and state and local tax payments. The administration proposed this tax hike last year but it never advanced because of widespread congressional opposition."

… You’ll now know how to translate it. 

I mean where else would you find a line like “the other one-third of savings would come from tax increases” than in a Washington DC budget discussion?

Confused?

Well join the club … and it will get worse.

~McQ

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