Let them have their tax cut if...

If your income declined from 2001 to 2010 or if your child is a member of the U.S. armed forces, then you should get the Bush tax cut, even if you're wealthy.  But if you benefited from the Bush bubble economy and haven't been personally contributing to our national defense - then its time to pay the piper that played your tune.

The middle class didn't make any progress in the last decade - the median wage didn't keep pace with inflation. More than half of American incomes were stagnant or declined as jobs were outsourced (and while companies were given tax brakes to cover the cost of outsourcing). All this despite the growing economy that benefited the already rich. For the small fraction of the elite and upper middle class who actually got stuck in the same trap as the middle of the middle class, we're willing to give you a break - that is, if you're in $250,000+ tax bracket and can show your income in 2010 is less than your income in 2001, then you get the Bush rates.

But for the rest of the wealthy -  well, do you remember your "trickle down" argument?  You told us you would invest your tax cuts to "grow the economy" so that the "rising tide would lift all boats." You didn't keep your end of the bargain: your boats floated while ours sank. This was happening to us before the recession - we were sinking during your "boom."

Now, we understand upper class families have it tough; we've listened to your crocodile tears about how hard it is to live on only five or more times the median household income - you're not rich - really - we believe you. We know you've earned your money, as you spend long hours hunched over your computer and talking on your phone in your air-conditioned office. How can our jobs compare? We re-roof houses in the blazing sun at minimum wage, work two jobs to get by, and deal with a classrooms full of rowdy kids with absentee parents and Republican government mandates to "teach the test." Obviously, the rest of us just don't know what hard work is; we deserve our stagnant wages. We also know how our vilification and "class warfare" is causing psychological scars to your delicate psyche.

Yes, higher taxes may make you work fewer hours. But somehow, I think we'll take that risk.

You of the upper middle class and privileged wealth have been sponging off the rest of the country - benefiting from economic and government systems that protect and increase your income while undercutting the vast majority of Americans. We want you to start paying your fair share of the government that advances your interests. It's time for those who really benefited from the George Bush version of capitalism and "fiscal conservatism" to step up and pay the bill.

Of course, not everyone wealthy is a sponge - many actually support our nation beyond the economic policies that benefit their class. So we're also willing to extend the Bush tax cuts to the wealthy who, either themselves or through their sons and daughters, put lives on the line for our country in the armed services.  I doubt that this would cost the treasury much - and it would certainly be a small price to pay for those who have served.

By the time an average middle class family pays for sales taxes, social security taxes, real estate taxes, medicare taxes and income taxes they are already sending more than their fair share of their wages to the government.  It's time for the upper middle class and the wealthy to stop whining.

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Do you really think that increasing your tax rate from 36% to 39% on only the income you earn over $250,000 is class warfare? 

The middle class is withering - be wary of its demise as we may find out what class warfare really means.   

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Deficits matter... to whom?

We keep hearing from the right that deficits matter.  But they matter to whom?

I think the answer provides both insight and explanation into behavior of the GOP.

Long-term deficits matter to the poor and middle class - not the uber-wealthy. Long-term deficits will, at some point, drop us into an era of high interest rates and high inflation - destroying the life savings and crippling the wage-driven economy for the middle-class and poor.

GOP presidents have been in charge for 80% of the deficits. GOP presidents had veto power over all that spending.  Did they just forget themselves? I can see it through a glass, darkly: the GOP wakes up one morning with a head slap and says "Damn, I forgot to stop the deficit spending."

Why should deficits matter to the uber-wealthy?  They can easily move money offshore into investments that are inflation protected.  They can even move themselves offshore if the peasants become a problem. It's really rather simple logic. If deficits mattered to the uber-wealthy, the Bush administration would not have run up massive deficits. People don't spend 8 years doing what they really oppose.

If you claim "deficits matter" while simultaneously creating deficits through both good and bad economic times, then you are either stupid or a hypocrite. As proven by behavior, as long as deficits are created by lowering taxes and providing services to the wealthy, the GOP is quite content to let the red ink run up. Indeed, the GOP doesn't mind deficits created for middle class spending as long as it also helps corporate interests and doesn't shift power out of their hands (for example, the GOP drug benefit in Medicare).  But any Democratic spending that might please the middle class and shift power out of GOP hands brings out the clarion: "deficits matter."  Notice how quickly the argument disappears when you say - "OK, let's tax the people who have the money to solve the deficit problem." 

If deficits matter to the wealthy, why didn't they wield their political clout in the Bush administration to maintain the Clinton surplus or (at least) keep deficits small? The answer, of course, is that you can't balance the federal budget except by 1) taxing the wealthy - as Clinton did, or 2) cutting services to the middle class - including social security and medicare - which the GOP threatens but has never done. Of course, during the Bush years the first option was unacceptable to the wealthy GOP base (who are needed for campaign contributions), and the second option would have lost votes of the independents and elderly the GOP needed to get Bush re-elected. It follows that the only way the GOP could maintain their position in the Bush years was to pretend that deficits matter while doing nothing about them.  Today, nothing has changed.

The GOP's historical behavior in simultaneously promoting deficit spending and tax cuts is unworkable. 

The only question is how badly will they wreck the country before the voters stop them.

P.S.  To the extent I understand economics - I'm a Keynesian and support deficit spending during bad economic times, along with increased taxation and spending cuts during good economic times.

Bush spent your tax cut.

It's time for Americans to grow up and admit it.  Between 2001 and 2008, we took our kids' credit cards (including the cards of the unborn) and maxed them out.  Nothing but IOU's left in the rainy day fund for when the crash came. 

Oh, we had our reasons - we needed that new Hummer, had to buy a 4800 square foot house with 12 foot ceilings, simply had to invade a couple countries to make sure that a handful of terrorists couldn't attack us.  You know the excuses.

Of course, we could have paid for it all at the time, but we believed in Santa Claus who told us that "tax cuts will stimulate the economy and will bring in more revenue in the long run."  Well, the long run is now, when the tax cuts are expiring.  How did that all work out for you?  Did you see the deficit disappear as the tax cuts worked their magic?

The Easter Bunny also assured us that once the rich got their tax cuts and invested it in America, the wealth would rain down on the middle class.  I'm not sure where the rich were investing, but we had the only decade since the Great Depression with stagnating wages in the middle class.  Looks like the Easter Bunny played us for fools.

Time to grow up.

The middle class sent their sons and daughters to fight and die in Iraq and Afghanistan - what did the wealthy do for their nation?  Well, they moved company headquarters to a PO Box in the Cayman Islands for tax breaks on foreign income and outsourced jobs to India to profit from lower wages.  The middle class held their families together the best they could despite stagnating wages and skyrocketing costs for education and health care.  The rich, they got richer.

It's time the wealthy pay for the wars that protected them and the capitalist system that allows them to take an ever-increasing share of this nation's wealth.

Why tax the wealthy?  Because that's where the money is.

Once we pay for the wars and the other deficit spending of the Bush administration, then I'll be glad to talk about how we need to change government spending to bring a better balance between the private and public parts of the economy.  Until then, its time to clean up the mess you've made.

Bush spent your tax cut.

History? What history?

"To sum up, over the long run, a low fed funds rate must lead to consistent—but low—levels of deflation."

The above is from the President of the Federal Reserve Bank of Minneapolis, a member of the Federal Open Market Committee that sets monetary policy (link below). The statement is appalling on many levels. To me, it indicates that at least one member of the Fed has simply gone down the rabbit hole with their logic, or is letting their politics determine policy. I'm not sure which interpretation is scarier.

Remember in the early l980's when the Fed (led by Volker) raised interest rates to fight inflation? It was painful (mortgage rates above 10%) but effective. By raising interest rates the Fed choked off the perception that one could make money by betting on inflation. We now have one of the members of the Fed arguing that to fight deflation we also have to raise interest rates - how is that supposed to work? One policy does everything?

Let's look at his argument a little closer. Mr. Kocherlakota is, in effect, arguing that low interest rates lead to a perception of deflation, which then encourages more deflation. Thus, there is a need to raise interest rates in the face of deflation so that people think that the Fed expects inflation and then, obviously, people will act as if deflation is over. He thinks companies that won't borrow money and expand when interest rates are extremely low will somehow decide to borrow and expand when interest rates are raised.

Some background: recall that inflation is caused by too much money chasing too few goods, which leads to an upward pressure on consumer prices, demands for increased wages, leading to more money available to buy goods - a classic positive feedback loop. High interest rates may break this cycle by reducing the amount of money chasing the available goods. There is no doubt that increasing interest rates is a psychological shock to the business community - but it also has an understandable, rational mechanism by which it breaks the inflationary cycle. No voodoo economics required.

Conversely, deflation is caused by too little money chasing too many goods. In a deflationary economy, companies aren't selling their products, so they cut workers and pay while trying to keep a high level of productivity. The the result is the amount of money available to buy products falls faster than then number of products available - again a classic positive feedback loop. So how can high interest rates break this loop? If businesses find the cost of capital greater why are they going to hire more workers? How does raising interest rates change the problem of too little money chasing too many goods? It seems to me that Mr. Kocherlakota is arguing that rational mechanisms are unimportant and the Fed only has to fool business into expecting inflation to break a deflationary spiral. The emperor just has to make people believe and he can parade around naked.

If our banking community has become this divorced from reality and logic, we are in for a long and painful ride.

Note: the above ideas were the result of my trying to follow a fairly obscure post of Paul Krugman
http://krugman.blogs.nytimes.com/2010/08/29/i-am-a-psychotic-ferret/  that points to an economic wonk's web site
http://delong.typepad.com/sdj/2010/08/stephen-williamson-makes-his-play-for-the-second-stupidest-man-alivetm-crown.html

Link to the text of Mr. Kocherlakota speech:
http://www.minneapolisfed.org/news_events/pres/speech_display.cfm?id=4525

with an eye of newt...

Here's is Newt Gingrich's defining statement on the "ground zero" mosque:

"There should be no mosque near Ground Zero in New York so long as there are no churches or synagogues in Saudi Arabia"

Maybe he's onto something.  Why don't we follow his logic and make all our constitutional freedoms depend on other governments granting those to their citizens as well?  Let's see...

There should be no free press in America so long there is no free press in North Korea.

There should be no handguns in America so long as handguns cannot be owned in Germany and Canada.

There should be no right to vote in America so long as citizens in Myanmar are subject to a military dictatorship.

And here's where we're heading:

There should be no logical arguments in U.S. politics as long as people are listening to  hypocritical family values politicians.

Seems like "eye of newt" and "tongue of dog" are bubbling in the same cauldron.

Link to the eye of newt: http://www.potw.org/archive/potw283.html 

Link to tongue of dog: http://www.newt.org/newt-direct/newt-gingrich-statement-proposed-mosqueislamic-community-center-near-ground-zero

Are you a strict constructionist?

The 1st amendment to the U.S. Constitution reads...

Congress shall make no law... abridging the freedom of speech, or of the press;...

Are any of the following correct interpretations?

a) Congress cannot limit political campaign donations because some money might be used to facilitate speech

b) Congress cannot limit your freedom to express opinions on the internet, even though it is not (in correct English) "speech" or text created by a printing "press."

c) Individual States cannot limit freedom of speech or the press, even though the amendment states that "Congress shall make no law..."

If you answered "no" to all of the above (a double negative, meaning the Congress and the States can limit) then congratulations: you are a strict constructionist and read the Constitution exactly as written without interpretation. Your philosophy of government is exactly in tune with simply "reading the words" of the Constitution. However, if you answered "yes" to any of the above (that Congress or the States cannot limit) then you have interpreted the Constitution in light of present technology, culture and what you consider to be logical implications of the written word - i.e. you believe in activist interpretation of the Constitution.

Don't get me wrong - I don't believe the activist v. constructionist Boolean split is really the only way (or the even the best way) to characterize judging or understand our Constitution. However, this is the paradigm chosen by the conservatives, who typically argue their constructionist ideology is the only valid approach and deride any "interpretation" as activist ideology. So for the present purposes I will accept their Boolean logic and discuss just what it takes to be a true strict constructionist.

Is prohibiting Congress from providing campaign finance regulations a strict construction of the Constitution?

To say that Congress cannot place limits on campaign financing, one must extend the Amendment by arguing that money facilitates speech, so the law prohibiting "abridging" freedom of speech also prohibits abridging conduct that facilitates speech. The Founders were fairly intelligent men, so if they really meant that Congress couldn't limit any conduct with facilitated speech, they could have written:

Congress shall make no law... abridging the freedom of speech, or of the press, or any conduct which facilitates these freedoms;

Of course they didn't do this, so anyone who wants the Supreme Court to override the U.S. Congress' campaign finance law must interpret the Constitution as if it had this extra clause. Curiously, present interpretation of the Constitution is actually in line with the true strict constructionist viewpoint - i.e. Congress may constitutionally limit campaign contributions as money is money and speech is speech. It's interesting that many conservatives want the courts to find for their personal interpretation that money is speech (clearly a valuable interpretation if you have money). This can only be considered judicial activism and a new interpretation of the Constitution. This idea of prohibiting conduct that facilitates speech is clearly broader than what is written, so judicial overturning of campaign finance laws should be anathema to strict constructionists.

Is prohibiting Congress from legislating communication of ideas on the internet a strict construction of the Constitution?

The Constitution doesn't say that all forms of communication cannot be regulated - only "speech" and "the press." So to argue that Congress cannot interfere with communication on the internet requires an extension of the ideas of "speech" and "press" to all forms of communication. That is, you must broadly interpret the ideas of "speech" and "press" as being the only forms of communication in the 18th century, so all our 21st century forms of communication are also covered by the amendment. Presently this interpretation is supported across all political parties - but that doesn't make it a true strict construction or a simple "read the words" version of the Constitution. Without this interpretation, we would need a new amendment to the Constitution to protect electronic communications.

Is prohibiting the States from controlling speech a strict construction of the Constitution?

If you are a strict constructionist, you can't argue that an amendment saying "Congress shall make no law" actually means "the States shall make no law." Indeed, the 2nd Amendment states that "the right of the people... shall not be infringed" rather than "Congress shall make no law" so the founders understood the difference between prohibiting Congress from action and providing a right that cannot be abridged by any level of government. The Founders could have easily written an amendment that applied equally to the states as well as Congress, so the differences between the 1st and 2nd Amendment cannot be simply swept under the rug.

Thus, to get to the idea that States cannot control speech from an Amendment that clearly deals only with Congress, you need to look at the 14th Amendment, which says

No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States;... 

Unfortunately, there still isn't anything for a strict constructionist to really dig into here without resorting to interpretation. The 14th Amendment might have been written explicitly with a clause something like...

No State shall make or enforce any law which Congress is forbidden to make under the Bill of Rights (Amendments 1 through 10 of the Constitution).

Of course it doesn't say this. So if you want to prohibit the States from abridging freedom of speech or the press, you have to "interpret" the 1st and the 14th Amendments together (which the Courts have done). That is, you have to interpret the 1st Amendment (which strictly limits the actions of Congress) as implying a "privilege" or "immunity" for speech and the press (rather than the "freedom" that is stated) and therefore the 14th Amendment bars the states from abridging these privileges or immunities.  It's not really a big reach to do this, but its clearly not a simple "read the words" interpretation of the Constitution.

Strict construction or hypocrisy?

Do we actually have any strict constructionist judges in the Federal District, Appeals, or Supreme Court?  Or are all judges actually "interpreting" the Constitution, with some hypocritically claiming that it isn't what they are doing? As I see it, claiming to be a "strict constructionist" and then interfering in a state electoral process (see Bush v. Gore, 2000, with writings by Scalia and Rehnquist) is simply an attempt at avoiding comparisons of the relative value of different interpretations. If you can say that "I'm right because I'm a strict constructionist and this is what is written," then you don't have to argue the validity and value of your interpretation. You are free to disdain and disparage the "interpretations" of others, while claiming a special ground for your "reading the words."

Most conservative judges and pundits would consider "yes" answers to all three of my examples to be correct readings of the Constitution, even while calling themselves "strict constructionist" and disdaining the interpretation implied by their "yes" answers.

I'm not saying that there aren't good arguments for conservative interpretations of the Constitution or that liberal arguments are necessarily better. But I am saying that we need to start our discussions with an honest playing field: the conservative readings are actually interpretations. These interpretations have no more inherent validity than liberal interpretations and are not necessarily closer to true strict constructionism. Judges and politicians and people of all beliefs have a right to interpret and argue about what the Constitution means in the context of our society, technology, and reasonable extension of the ideas to new conditions.

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Strict constructionism isn't.

Claiming special status for your reading of a holy writ is intellectual laziness

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Unbelievable

Logic be damned...

You do need to offset the cost of increased spending, and that's what Republicans object to. But you should never have to offset the costs of a deliberate decision to reduce tax rates on Americans.

Senator John Kyl, on Fox News Sunday, July 11, 2010.

So, deficits formed by cutting taxes are OK, but other deficits aren't. Where is the logic in this? What is the argument? If I go into debt because I spend to much that is bad, but if I go into debt because I take a pay cut then that debt is somehow different?

Is this is what passes for fiscal conservatism and concern about the national deficit and debt?