Congratulations to the Tea Party

Sequestration is underway, and Tea Partiers are claiming victory in their war against deficits. They see this as the first win in their campaign to impose austerity on the American people. Many Republicans, fearful of being challenged from the right in a primary, have argued that “everyone knows that spending is out of control.” Never mind that Federal nondefense discretionary spending — all spending minus defense and entitlements — is on track to hit its lowest level as a share of GDP in more than 50 years, according to data from the Congressional Budget Office.

These self-proclaimed deficit hawks argue that we need austerity because, just like many American families, we have to “tighten our belt.” Unlike many American families, the U.S. government can print money. Also, it can spend on a scale that alters the unemployment rate around the country, stimulating the economy and producing more revenues. And it can borrow money at rates that approach zero per cent. Nevertheless, the acolytes of Grover Norquist insist that we must shrink government until it is the small enough to drown in a bathtub.

If only we could be certain of how austerity works. Does it enable the economy to flourish? For that, we would need something like a controlled experiment.

The United Kingdom government “austerity programme” is a series of sustained reductions in public spending, intended to reduce the budget deficit. How’s that working out? The U.K. economy is 3.3% smaller than it was in 2008. The U.S. economy is 2.9% larger (both adjusted for inflation). Get it? The U.K is in recession and the U.S. isn’t.

What’s the number one cause of deficits? Recession. Hail Britannia! As Paul Krugman put it:

“It's important to understand that what we're seeing isn't a failure of orthodox economics. Standard economics in this case—that is, economics based on what the profession has learned these past three generations, and for that matter on most textbooks—was the Keynesian position. The austerity thing was just invented out of thin air and a few dubious historical examples to serve the prejudices of the elite.”

Think about that if you have some extra time today. Maybe you are trying to get through the shrunken TSA while trying to catch a plane that is delayed because of layoffs of air traffic controllers. Or maybe you are driving over unsafe bridges and on roads with potholes, with your kids whose Head Start program was shutdown, to get some meat at the market, where, because of a lack of meat inspectors, prices have shot up.

And think on this: the sequestration is the result of Republicans refusal to close tax loopholes that it said were unfair and non-productive when negotiating a way to avoid the fiscal cliff.  They claim that the President “already got his tax hikes.” Of course, last time I checked, Republicans controlled the House of Representatives and had a filibuster/veto in the Senate. So go ask John Boehner to name names: Which Republicans voted for a tax increase?  

“ …. and tell ’em Big Mitch sent ya!”

The Republican Opposition to Chuck Hagel Explained

Republicans promised not to abuse the filibuster. They promptly broke that promise, along with precedent and filibustered Chuck Hagel’s nomination to be Secretary of Defense. What made the Senate Republicans hate Chuck Hagel so?

If it were true that he is an anti-Semite, as alleged by anonymous Republican staffers, I would be right there with them. But he’s not, at least according to the Anti-Defamation League of the B’nai Brith. So, that was a rather libelous smear.

They said that he was bad for Israel. Again, if it were true, I’d be all like, “Screw him.” But there’s no evidence there, either. In fact, the evidence was quite the opposite, starting with Chuck Shumer’s endorsement of him.

These and other false accusations were largely propagated by such groups as Americans for a Strong Defense which is run by former Mitt Romney campaign staffers, according to ABC News. Another group, Use Your Mandate, claims to be composed of anonymous Democrats and Independents, but uses  "Del Cielo Media, an arm of one of the most prominent Republican ad-buying firms in the country, Smart Media" according to The New York Times.

Okay, I get it. Republicans hate Chuck Hagel. But it wasn’t always thus. Straight-talking John McCain said he would make a good Secretary of State, back in the day when he was also pushing the line that Sarah Palin was qualified to be President.  And lest we forget, Chuck Hagel himself is a – wait for it – Republican!

Lindsey Graham took after Hagel like a woman scorned. Ostensibly, it was all about Benghazi  The question was what did the President know and when did he know it. Fey! Suffice it to say, Hagel was not in the government on September 11, 2012.

The highlight of the hearing might have been when Senator Graham asked the nominee if he could name one Senator who was intimidated by the Israel lobby, or one dumb thing that the Senate did because of intimidation by the Israeli lobby.

The line of questioning was revealing in this way: it revealed why I would never be confirmed by the Senate. To wit: I would have answered, ‘Damn straight Senator. Someone who is intimidated by the Israeli lobby is you. And one dumb thing you did because of intimidation is ask that question of a Senator who has a perfect voting record on Israel, you shmuck!”

Maybe it sounds like I am being a little harsh on Lindsey. Of course, that may have to do with the fact that when Elana Kagen was being confirmed by the Senate, he had to ask her if she remembered where she was on the day the Underwear Bomber failed in his attempt to blow up a jetliner. She offered up some legal mumbo jumbo about giving terrorists legal rights.

"No, I just asked you where you were at on Christmas," Graham said.

"You know, like all Jews, I was probably at a Chinese restaurant," Kagan replied, garnering a good guffaw from the audience.

But not from me. See, I couldn’t figure out why it was even vaguely relevant. Except that Graham was trying to defeat the President’s nominee by highlighting the fact that she didn’t celebrate Christmas like real Americans do.

So, naturally, I was amused, but not very much, to see Lindsey Graham trying to portray Chuck Hagel as no friend of the Jews. Then again, it’s hardly news that Lindsey Graham is a hypocrite. At least he didn’t join the Log Cabin Republicans in criticizing Hagel for his 1998 opposition to James Hormel’s appointment as ambassador to Luxembourg.  (Hagel’s opposition to Hormel, for which he has since apologized, was based on the fact that he was openly gay.) Graham wasn’t in the Senate when Republicans stood unified against Hormel, and surely he would have been with them.

Some of the criticism of Hagel was just plain ludicrous. Senator Rand Paul (R-KY) bought into the report in Breitbart that Hagel had spoken to the Friends of Hamas, a group that is distinguished from all other groups by its non-existence. Tailgunner Ted Cruz (R-TX) said that we don’t know if Hagel spoke to radical groups, but, at a minimum, he shouldn’t be confirmed until we have answers. (Relatedly, we don’t know if Ted Cruz masturbates while watching “2 Girls 1 Cup,” but it may be significant that he has never denied it.)

I think we can all agree that Cruz was not amusing himself with coprophagia when he told the Senate that the Hagel nomination had

 “something that was truly extraordinary, which is the government of Iran formally and publicly praising the nomination of a defense secretary. I would suggest to you that to my knowledge, that is unprecedented to see a foreign nation like Iran publicly celebrating a nomination.”  

When it was suggested that Cruz had gone too far, the ranking member of the committee, Sen. James Inhoffe,  (R-OK) defended Cruz, saying Hagel was “endorsed by [Iran], and you can’t get any cozier than that.”

Not that it matters much, but here’s the basis for that claim: Foreign Ministry spokesman Ramin Mehmanparast was asked a question about Hagel's views on Israel and U.S. sanctions on Iran at his weekly news conference. He ducked the question, and replied,

 “We hope there will be practical changes in American foreign policy and that Washington becomes respectful of the rights of nations.” 

In the last analysis, it was straight talking John McCain who committed what amounts to a cardinal sin in Washington: he told the truth about why Republicans wanted to filibuster, smear and block Senator Hagel’s nomination. 

“It goes back to … there’s a lot of ill will towards Senator Hagel, because when he was a Republican he attacked president Bush mercilessly, at one point said he was the worst president since Herbert Hoover, said the surge was the worst blunder since the Viet Nam war – which is nonsense – and was very anti- his own party and people. People don’t forget that.”

There you have it! It was all about Hagel’s breach of Ronald Reagan’s 11^th commandment “Thou shalt not speak ill of any Republican.”

Still, it all seemed a little over the top. There must be a deeper level of resentment for Chuck Hagel than what can be ginned up by faux outrage about his criticism of the George W(orst) Bush. What could it really be?

The answer is that the time has come for Republicans to send a message. They must circle the wagons, and let it be known that any defectors will be punished for the rest of their lives. Why? Because Republicans know that they are on the wrong side of the tax debate, the wrong side of the austerity debate, the wrong side of the background check  and assault weapons debate, the wrong side of the gay marriage debate, the wrong side of the immigration debate, the wrong side of the entitlement debate, the wrong side of the voting rights debate.

Maybe there is a philosophical consistency in their positions taken by conservatives, though I am yet to discover it. Be that as it may, in every area mentioned above the public is on the side of the Democrats, sometimes by a wide margin. Democrats won the popular vote in five of the last six presidential elections. A majority of votes cast for members of the House of Representatives were for Democrats, although gerrymandering gave the majority of the House to Republicans. And of course, the Senate is and will be for the foreseeable future, in the hands of Democrats. Republicans know that they are increasingly perceived as a party that can’t govern, doesn’t try to, and stands against the idea that government should work. Far be it from me to say that it is the party of racists, but General Colin Powell intimated as much.

At a time like this, Republicans are bracing themselves against a wave of defections. Governors who opposed Obamacare are starting to accept the idea of expanding Medicaid. Chris Christie earned himself a non-invitation from the CPAC convention because he praised the President's efforts on behalf of his state when Hurricane Sandy hit, and he was unstinting in his recriminations against the Republicans who blocked relief to the devastated parts of New Jersey.

So, now you know. If you’re a Republican and you’re sick of being in the “party of stupid,” in the words of Bobby Jindall, the party of Christine O’Donnell, Michelle Bachmann, Herman Caine, Rand Paul, Newt Gingrich, Rick Perry, Sarah Palin and the rest of the rejects from the funny papers, keep your mouth shut, and your head down.

Otherwise, John McCain will chase you off his lawn with a rake, Lindsey Graham with throw another hissy fit, and Ted Cruz will reprise the tactics of Joe McCarthy to destroy you.

“… and tell ’em Big Mitch sent ya!”

Errata: In paragraph 6, the word “Feh!” is misspelled.

Minimum wage. It's the least we can do.

About 1.7 million people earn the Federal minimum wage of $7.25 per hour. Let’s pretend they each work 40 hours a week, and 50 weeks a year, which is to say that they each work 2,000 hours per year. (They don't because most minimum wage jobs are also part-time.) Raising the minimum hourly wage $1.00 would therefore cost employers of these workers, $3,400,000,000. Where’s it going to come from?

Let's take a look at the top fifty employers of minimum wage workers. The average compensation of the CEOs of these companies is $9,397,302. Ninety-two percent of these companies were profitable last year, and 78% were profitable over the last three years. Compared to pre-recession levels, 75% have higher revenues, 63% have higher profits, 63% have higher operating margins, and 73% higher cash holdings. The recession is over and everything is looking up for these companies. Except the wages of minimum wage workers, which haven't seen an increase since 2009. 

  

The fast food industry is one of the biggest employers of minimum wage workers. Here’s the executive compensation of some of the best paid CEOs in the fast food business.

MacDonalds                  18,403,830
Burger King                   17,072,427
Wendy’s                        10,174,638
YUM                           142,069,337
Starbucks                     483,279,878
Sonic                             17,630,484
Domino’s Pizza              47,821,255
Total:                           736,451,849

Wal-Mart paid its CEO a mere 14.4 million, and we don’t know how much the CEO of Subway made. We do know that he is worth 1.5 billion, and is reputed to be compulsively frugal. Let’s just put him down for making 5% on his money, and call him good for 75,000,000. Add them all together and you get well past one and a half billion dollars.

It’s kind of hard to believe that these guys (they are all men) wouldn't find it worth their while to get out of bed and do whatever they do for half that amount.  If the other half went to increasing the pay of the minimum wage workers, there would be over 22% of what was needed to give every single minimum wage worker in the United States a $1.00/hr raise.

Take a minute to drink that in. By paying 9 CEOs something just south of Croesus, we can finance a quarter of what it takes to pay workers not quite enough to live on. Of course, if the CEOs want to make more money, their path is clear. Hire more low-paid workers and wring your wealth from the sweat of their brow.

“… and tell ’em Big Mitch sent ya!” 

Carly Fiorina -- a 40 year low

Carly Fiorina was on Meet the Press today, where she was introduced as the former CEO of Hewlett-Packard. It would not have been polite to introduce her as former advisor to losing presidential candidate John McCain, who had her ass handed to her when she ran against Barbara Boxer for the U.S. Senate.

Much kinder to boost her bona fides by referring to her storied career in business. In doing so, if we are to continue in the spirit of generosity, let us overlook the fact that during her tenure, HP stock lost half its value and then she was shit-canned by the HP’s Board of Directors. She was given $20 million dollars to walk away and never bother them again, though a restraining order would have been cheaper. Anyway, it must have been money well spent, because the share value of the company jumped on news of her departure. Be that as it may, she’s still a reliable spokesperson for the failed policies various described as trickle-down or supply side economics.

That anyone would try at this late date to defend these policies and be able to maintain a straight face is not a testament to the validity of these ideas, but rather to the shamelessness of the kleptocratic class.

I found one thing she said to be of particular interest. “Small business formation is at a forty year low,” said Ms. Fiorina. Now, I have no idea if this is true of false, except for the fact that it was uttered by a woman who has been thoroughly discredited so many times before. Let’s assume it is true. The question is why is small business formation stalled?

Ms. Fiorina suggested that the reason is that the tax-code is too complex. That’s nonsense, of course. If you want to start a niche boutique, or dress factory employing 5 or 6 cutters and sewers, and a salesperson or two, there’s not too much to know about the tax code that can’t be learned by purchasing Quickbooks. This is not to suggest that you shouldn’t have an accountant. But if you think that the reason you are having trouble competing with Walmart is that they have a better grasp of the tax code, then you shouldn’t be in business anyway.

The reason that small business formation is at a 40 year low (if it is) is that big corporations have consolidated power under the laissez-faire economic policies of the previous administration, and the recession which these policies caused has paralyzed our abilities to deal with this problem. One of the longest lasting legacies of the Bush years will be the reactionary Supreme Court which gave us the Citizens United decision.

I am assuming that everyone who reads this knows about how Walmart moves into neighborhoods, and undercuts the competition, putting them out of business. It then purchases in quantities from suppliers that are so significant that the suppliers can’t survive without Walmart’s business. Next step: demand price breaks from suppliers to the point that the only way they can avoid going out of business is to turn to Chinese manufacturers. Goodbye, more American jobs.

Along the way, Walmart pays its workers coolie wages. You could stop right there and say that’s immoral, and you would be right. It is indefensible to pay people for working full-time for you and leave them unable to provide for their basic needs. It’s just unconscionable. In a by-gone era, Unions would have protected our fellow workers and preserved the dignity of labor. Walmart, and the candidates it supports are on the forefront of the “let's kill unions movement.” But it’s worse than that.

The workers, who labor for the Walton family but can’t provide for their own, must turn to local governments and charities to keep the wolf from the door. Who pays for that? Of course, it is not the people who get paid $20 million dollars to leave their jobs, or the Walton family who own more than the bottom 40% of Americans combined. No, it’s the folks who would like to start a mom-and-pop grocery or a small business, but can’t because local taxes are too high. It’s the former factory workers who are now out of work because their jobs are being done in China.

And there’s another reason that our would-be small business owners can’t open their doors. There are no customers in their communities. Why? It’s because a Walmart worker or an unemployed factory worker can’t afford a new dress. That’s not justice.

By the way, I was just kidding when I said I didn’t know if Carly Fiorini was lying when she told us that business formation was at a 40 year low. Of course, I know, and so do you. Remember, that last March, John Boehner said, that business formation was at a 30 year low? Well, that wasn’t true either. The very highly regarded Kauffman Index shows that, despite a drop from 2010, U.S. startup activity remains above pre-Great Recession levels. The Index shows that 0.32 percent of American adults created a business per month in 2011, the last year for which figures are available. This is a 5.9 percent drop from 2010, but still among the highest levels of entrepreneurship over the past 16 years. As Casey Stengel was fond of saying, “You could look it up.”

“ ... and tell ’em Big Mitch sent ya!”

Foreign Aid -- Your tax dollars at work

The Iron Dome is a missile defense system that has been 90% successful in intercepting and destroying Palestinian rockets coming from Gaza, directed at Israeli civilian population centers. It distinguishes between those rockets that are heading for residential areas and those that would fall harmlessly in forests and elsewhere. It was developed with Israeli technology heavily subsidized by American foreign aid.

Was the American foreign aid well spent?

If not for Iron Dome, Israel would have sustained numerous civilian casualties from the thousand or so rockets launched by Hamas terrorists. Under such circumstances, Israel would have been compelled to invade Gaza.

Where would Egypt stand if Israel had invaded Gaza? Evidence is mounting that President Mohamed Mosni, of the Muslim Brotherhood, would offer more than rhetorical support to the Hamas government in Gaza. Note, Egypt is the second largest recipient of American foreign aid. Turkey, a member of NATO, is siding with Egypt against Israel because it still has not received an apology for Israel’s actions when blockade runners on the MV Mavi Marmara attacked Israeli commandos in 2010.

Meanwhile, with Israel engaged in a ground war in Gaza, Iran could proceed with its nuclear ambitions unchecked. If it gets a nuclear bomb, the Saudis and the Jordanians will surely want them too. A nuclear arms race in the Middle East is a terrifying thought but the threat of loose nukes raises the stakes exponentially.

Syria is already a catastrophe and the war is spilling into Israel. For now, Israel can protect herself from attacks from the Golan Heights. But what if she were involved in a ground war with the Gazans backed by Egypt?

What would America’s course be in the nightmare described above? NATO unraveling, American foreign aid recipients using military force against Israel, nuclear Iran, an arms race in the mid-East, and Israel facing a threat from the North and the potential for nuclear bombs falling into the hands of Hamas terrorists: it’s not a pretty picture. America’s commitment to Israel is supposedly inviolate, and the credibility of the United States depends upon standing by Israel. Beyond that, if Israel is not defended by the United States, the entire Middle East will be taken over by Islamists, including Jordan where the Monarchy is enduring mass public protests even as I write these words.

Think about it next time you hear someone complain about the United States giving foreign aid to Israel.

“… and tell ’em Big Mitch sent ya!”