Last Call

Anyone still stupid enough to believe that Republicans are serious about reducing the budget deficit, I have a unique investment opportunity in Nigeria for you...

Sen. Jon Kyl, Republican of Arizona, believes that any extension to unemployment benefits "ought to be paid for." But when it comes to the $678-billion cost of extending the Bush-era tax cuts for the wealthy, the senator says no offsetting is necessary.

In an interview with Fox News' Chris Wallace Sunday, Kyl argued that Congress and the Obama administration should extend the tax cuts enacted by President George W. Bush during his first term.

Extending the entire package of tax cuts would cost the US $2.2 trillion over the next 10 years. The Obama administration has argued in favor of allowing to expire at least the part of the tax cuts that applies to people earning over $250,000 a year. That portion is estimated to cost $678 billion over 10 years.

"Tell me, how are you going to pay that $678 billion to keep those Bush tax cuts for the wealthy?" Wallace asked Kyl.

"You should never raise taxes in order to cut taxes," Kyl said. "Surely Congress has the authority -- and it would be right -- if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. 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 cost of a deliberate decision to reduce tax rates on Americans."

Tax cuts are free just like when Bush made them, especially when they are for rich people.  $678 billion over 10 years for the wealthy?  Nobody has to pay for it.  A fraction of that to help America's unemployed?  We have to pay for that but cutting spending elsewhere, otherwise it's irresponsible.

Yes.  Senator Jon Kyl believes you are that stupid, just like the rest of his House and Senate Republican buddies believe you are that stupid, and that you will shut up and do what your told and go back to hating Obama while these assholes continue the destruction of our economy like Bush started.

They're not even trying to hide it anymore, they're so sure that they will get control of the House next year.  They're so sure you'll say "There's no difference between the Dems and the GOP, I just won't vote" that they're already giving away their master plan like a James Bond supervillain, secure in the knowledge that we'll let them.

They know you don't give a damn anymore.  They're counting on it.  And you know what?  So is Obama, as Digby points out.

I'm guessing this is the return of the great Democratic strategy called "keeping your powder dry" --- for 2012.

Indeed, I'm inclined to think the White House believes they've already lost the congress so they are cutting their losses and looking ahead two years. And that means they would very much like to take a sharp turn to the right, particularly with talk of deficits and spending, in anticipation of the predictable Village narrative that they lost because they were too liberal. (All modern Democratic presidents do this, by the way, regardless of whether or not they lost their majority in the midterms. "Center-right" nation dontcha know.)

However if they do pursue a rhetorical conservative political strategy, they will be stuck with failed conservative policies, which they know are not going to be popular with anyone but the wealthy. It's a conundrum, at least when it comes to pesky voters (as opposed to pesky major donors.)

This is one of those gut check moments. The administration can make a real argument as Atrios suggests and do the right thing for themselves and the country or they can follow the demagogues, the Masters of the Universe and the Villagers and keep hoping that everything magically turns around so all those vaunted, precious Independents will come back in 2012 without them having to take any risks to Obama's personal popularity. (The liberals are expected to fall in line in the face of the inevitable GOP freakshow.) If Axelrod is the spokesman for the political team in the White House, and I assume he is, it appears they've decided to take the second course.

The congressional Dems are on their own for this one. "The legacy" is on the line and as with all recent presidents, that takes precedence over anything else.

Nope.  Obama sees the train coming, and he's getting out of the way.  The rest of us?  We're not going to be so lucky.  1994 by way of 1937, and the result is going to be a complete disaster.

Twelve-Step Program

Via Zero Hedge comes the 12-step con that Wall Street is pulling right now, as defined by Charles Hugh Smith.  Here's how things have gone:

1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans.

2. Sell these MBS as "safe" to credulous investors, institutions, town councils in Norway, etc., i.e. "the bezzle" on a global scale.

3. Make huge "side bets" against these doomed mortgages so when they default then the short-side bets generate billions in profits.

4. Leverage each $1 of actual capital into $100 of high-risk bets.

5. Hide the utterly fraudulent bets offshore and/or off-balance sheet (not that the regulators you had muzzled would have noticed anyway).

6. When the longside bets go bad, transfer hundreds of billions of dollars in Federal guarantees, bailouts and backstops into the private hands which made the risky bets, either via direct payments or via proxies like AIG. Enable these private Power Elites to borrow hundreds of billions more from the Treasury/Fed at zero interest.

7. Deposit these funds at the Federal Reserve, where they earn 3-4%. Reap billions in guaranteed income by borrowing Federal money for free and getting paid interest by the Fed.

8. As profits pile up, start buying boatloads of short-term U.S. Treasuries. Now the taxpayers who absorbed the trillions in private losses and who transferred trillions in subsidies, backstops, guarantees, bailouts and loans to private banks and corporations, are now paying interest on the Treasuries their own money purchased for the banks/corporations.

 That's the last five years in a nutshell, right there.  It created the financial crisis, the banks got paid to cover their "losses" as well as reap the profits on their side bets to the tune of trillions on each side.  Now they have the funding to finish the job.  Right now, we're at Step 9:

9. Slowly acquire trillions of dollars in Treasuries--not difficult to do as the Federal government is borrowing $1.5 trillion a year.

Money's pouring into the bond market, keeping interest rates low.  That's why the argument is made that we can borrow more money because rates are crazy low.  The banks, however, want crazy high interest rates in the long-term.  That brings us to the coming austerity hysteria end game.

10. Stop buying Treasuries and dump a boatload onto the market, forcing interest rates to rise as supply of new T-Bills exceeds demand (at least temporarily). Repeat as necessary to double and then triple interest rates paid on Treasuries.

11. Buy hundreds of billions in long-term Treasuries at high rates of interest. As interest rates rise, interest payments dwarf all other Federal spending, forcing extreme cuts in all other government spending.

12. Enjoy the hundreds of billions of dollars in interest payments being paid by taxpayers on Treasuries that were purchased with their money but which are safely in private hands.

Why should China get all the money from owning US Treasuries?  Goldman Sachs and friends want in on that deal now, and they have the capital funding to do it, courtesy of you and me.  Everyone else gets skunked, and the big financial players now literally own the United States of America.

Step 10 is coming very, very soon.  The austerity hysteria people will simply create the need for austerity by manipulating the Treasury market to put interest rates into the stratosphere and collect government taxpayer money...and we'll be indebted to them forever.  The biggest transfer of wealth in the history of the world is almost complete, and when it is, we're done.

And at this point, I don't think there's anything we can do to stop it.

Your Final World Cupdate

Holland vs. Spain for all the marbles, all the glory, all the history...the 2010 FIFA World Cup Championship match, and what a classic match it was.  The Oranje rolled out a 4-2-3-1 attack featuring their man of the hour Robin Van Persie up front, while Spain's own mirror image attack had superstar David Villa at point, and both squads knew everything was on the line.  No going back, no second chances, no worrying about tomorrow.  With a billion worldwide watching, it all came down to 22 men, a field, and a ball.  Spain opened up with a blistering assault in the first 15 minutes trying to cut through the nervous Holland defense, but the Dutch adjusted and clamped down on Spain, both sides drawing a number of bookings in the first half.  Holland hit back with a physical game that gave Spain a number of free kicks, but no ability to capitalize.  Arjen Robben had a solid chance to score but couldn't put it in either for the Dutch.  The second half is where the Oranje turned on the juice and went all out, hammering the Spanish Armada like the World Cup was on the line.  Referee Howard Webb of Britain handed out yellow cards like candy and indeed set a rcord for most bookings in a World Cup final only 67 minutes in.  Both sides ramped up towards the final minutes, but Spain's Sergio Ramos, given two outstanding chances to win the game for La Furia Roja, could just not find the inside of the net.

And we went to overtime.

The first 15 was all Spain as they realized that nearly the entire Holland squad had a yellow card on them, and one more from the ref would saddle them with a red card and a man down, and a golden opportunity to win.  Holland realized the same thing and pushed to try to eat up the clock.  In the second 15 minutes, Holland's luck finally ran out as John Hettinga picked up his second booking at 109' and a red, and that set up Spain's Andres Inesta to drill one in past Dutch keeper Maarten Stekelenberg at 116', and Spain, La Furia Roja, held on to win the 2010 FIFA World Cup championship with a score of 0-1, and you have to wonder now what Holland has to do to win a final...this is their third championship game, and they go home 0 for 3.

And in the end, Paul the Psychic World Cup Octopus was right.  Again.



Congratulations to Spain, your 2010 FIFA World Cup champions!

Inside Job

Meet the new Truthers, led by GOP Rep. Paul Broun of Georgia.

BROUN: Our President he is utilizing this crisis of this oil spill to try to promote this energy tax. And I’ve had numerous people, all over the district, question whether his poor response to this oil spill was purposeful so that he could promote his energy tax. I don’t know, maybe.

And let's not forget GOP Rep. Ron Paul of Texas, who goes a step further.

RON PAUL: Well you forgot he can write executives orders and do anything they want. So, it is a real mess. If a state needs some manpower, generally they don’t have manpower that might be able to help out and that maybe be their National Guard unit, they’re out in Afghanistan and Iraq. […] But yes, I’m very suspicious of BP and our government is doing and even the Obama administration, and that’s why I’ve challenged the principle, this agreement they have to set up this fund, this 20 billion dollar fund. That sounds like a lot of money but I think it could be a lot of mischief, and that was done by executive order.

Can you imagine how quickly a sitting Member of Congress would have been impeached if they had publicly said that Bush caused 9/11 on purpose?

Why is it completely acceptable then to say Obama caused the Deepwater Horizon disaster?  Obama Derangement Syndrome...catch it!

Zandar's Thought Of The Day

Steve M. immediately nails this NY Times headline:

"Wall St. Hiring in Anticipation of an Economic Recovery"

What recovery are you talking about, Steve asks.

The reality is that right now there is no such thing as the recovery, or even the economy. There's our economy and there's their economy. Their economy is in recovery. Ours isn't -- not even close.

And he's absolutely right.  Wall Street is hiring in anticipation of a recovery of Wall Street's economy, not Main Street.  The Democrats just don't seem to get this, nor do they seem to care.  And until the Democrats figure that out, they'll just keep handing the Republicans ammunition.

Come To The Dark Side, We Have Kooky

And the moment where Bill Kristol did a swan dive into the abyss of Teabagger lunacy  and fully embraced the nihilist philosophy has been marked for posterity's sake.

We are not now quite at a founding moment, or even a re-founding moment. But we have arrived at a genuine crisis, or a set of crises, and we may well be at a decisive moment for the country.

This sense of crisis is what animates the Tea Parties. I had the pleasure of attending the “Proud to be an American July 4th Tea Party” outside Independence Hall in Philadelphia. It featured patriotic songs and speeches, and expressions of support for our troops and praise for our country. Yet the mood of patriotic gratitude was mixed with expressions of alarm from my fellow Tea Partiers about the administration now in charge of our government. The combination of patriotic gratitude and urgent alarm produces a determination to act and a willingness to deal boldly with the crises in the economy, in foreign policy, and in self-government that the country faces.

In this respect, the Tea Parties are ahead of the two major parties. As established political parties are wont to do, both remain constricted in their views, attached to business as usual, and invested in established modes and orders—too much so to easily come to grips with a moment like the present.

Kristol throws not only the Democrats under the bus, but the Republican Party as well, and buys fully into the Second American Revolution nonsense.  Not that Kristol had much common sense to begin with:  after all, as one of the main cheerleaders for the costly and deadly wars in Afghanistan and Iraq as well as the Bush tax cuts and deregulation of everything, Kristol's batting zero on supporting "ideas that worked".  Perhaps his embrace of the Tea Party shows just how completely bankrupt these guys are in the idea department.

But Kristol actually admits that himself towards the end of his rant.

I was telling a friend about the Philly Tea Party, noting a few eccentric proposals from some of its participants. He commented, “Well, that’s better than talking points.” He’s right. At this moment, bold and seemingly impolitic or impractical ideas are more useful than the diligent repetition of mostly sensible short-term critiques and proposals. At a moment like this, talking points are not enough.

In other words, not only does Kristol admit that the "conservative" policies he's called for over the last thirty years are nothing more than useless talking points, he then goes on to admit that he believes the only hope America has is to fully embrace the crazy of the Tea Party nihilism.

The Stupid isn't working.  Let's go with the Stupid and Insane instead!  To recap, everything Bush did to wreck our country was fine with these assholes for eight years, 18 months of Obama however requires a revolution.

I miss having two political parties in this country that weren't bugnuts.

[UPDATE]  BooMan has more on this.

Kristol wants change to come from one of the two major parties after all. But he wants the GOP to become the party of 'radical choice.' He doesn't actually express a single radical idea that the GOP should promote, probably because he considers them crazy or impractical. He starts out quoting Alexander Hamilton and telling us we need to basically redo the Constitution which is now as flawed as any Articles of Confederation. He ends by telling us that the GOP needs to be open to the fundamental reforms espoused by people he thinks are loons.

And the essay seemed to have so much promise. 

That's about perfect, yes.

The Laffer Cliff

Our old friend Arthur Laffer is back, this time he's put the cards on the table ahead of time.  His plan?  Another $3.6 trillion stimulus.  How to accomplish this?  Eliminate all federal taxes for the next 18 months.

Any government program that would reduce unemployment has to make working more attractive for both employer and employee. Since late 2007 the federal government has spent somewhere around $3.6 trillion to stimulate the economy. That is a lot of money.
 
My suggestion would have been to take all $3.6 trillion and declare a federal tax holiday for 18 months. No income tax, no corporate profits tax, no capital gains tax, no estate tax, no payroll tax (FICA) either employee or employer, no Medicare or Medicaid taxes, no federal excise taxes, no tariffs, no federal taxes at all, which would have reduced federal revenues by $2.4 trillion annually. Can you imagine where employment would be today? How does a 2.5% unemployment rate sound?

That's fiscal responsibility right there.  Sure, people will immediately hire more workers and buy all kinds of useless crap instead of drastically slashing wages in order to give the same employees the same take-home pay under the new tax scheme and pocketing the difference on both ends or anything, while employees see nothing from this, they could see a one-time boost from income taxes, but that of course will be banked and not spent, or used to pay off debt.

In other words, what we'd have here is a $3 trillion or so plus transfer of wealth to the richest Americans and business owners, while the poorest Americans get...nothing.  Oh, and $3.6 trillion more in national debt, which of course will be paid for, right?

I wonder what the Tea Party fiscal faithful would make of Laffer's plan.  Because that's what Republicans want to do.  They give even less of a damn about balancing the budget than Democrats do.

More War Forevermore

The military slips and tells the truth about our wars in the Middle East.

The United States may still be in the Afghanistan and Iraq region for another ten years, according to Gen. George Casey.


“The types of conflict that we are fighting in Iraq and Afghanistan, and I think are likely to be fighting here for a decade or so, are focused on the people,” Casey, the army's Chief of Staff, said Friday night at the Aspen Institute's Ideas Festival.

“We are not going to succeed in either place by military means alone. You are only going to succeed when the people perceive there is a government represented by their interests, when there is an economy that can give them a job to support their families, when there are educational systems that can educate their family. All those things are essential to the long term success of the military operation.”


Regarding the larger war against “a global extremist network,” Casey also said America has another "decade or so of persistent conflict."

“States, non-states and individual actors who are increasingly willing to use violence” are not going away in the short-term. Casey added, “We believe this is a long term ideological struggle.”

Nine years down in Afghanistan, almost.  Another ten to go.  One has to ask themselves where our country would be without these costly, deadly wars.  If we couldn't solve the problem after 9 years of bombs and guns, what's another ten years going to accomplish?