Americans Hate Congress Want Jobs

This New York Times poll is interesting. It shows that despite the media onslaught and the lies pumped out by the Republicans, nearly two-thirds of Americans believe that creating jobs ought to be a higher priority than making cuts. If we broke it down by class, I'm certain that amongst working class people - the majority of Americans - the number would probably jump to about seventy-five percent. It's heartening to see that despite all the bullshit rhetoric spewed by Fox News and John Boehner amongst others, that the debt ceiling fiasco has damaged the Republicans in particular, though Obama and the Democrats also emerge damaged from this fiasco (72% vs 66% disapproval, respectively). The poll also indicates that the highest number in polling history have a negative view of Congress - a whopping 85%. Amongst some other goodies in the poll:

The Tea Party is now viewed unfavorably by 40 percent of the public and favorably by just 20 percent, according to the poll. In mid-April 29 percent of those polled viewed the movement unfavorably, while 26 percent viewed it favorably. And 43 percent of Americans now think the Tea Party has too much influence on the Republican Party, up from 27 percent in mid-April...

Though Republicans prevented tax increases from being included in the debt-ceiling deal, half of those polled said the agreement should have included increased tax revenue, while 44 percent said it should have relied on cuts alone. That issue is likely to be revisited soon: Congress is preparing to appoint a special committee to recommend ways to reduce the deficit. Sixty-three percent of those polled said that they supported raising taxes on households that earn more than $250,000 a year, as Mr. Obama has sought to do — including majorities of Democrats (80 percent), independents (61 percent) and Republicans (52 percent)...

But there was uncertainty about whether the debt-ceiling deal would help or hurt the economy: nearly half said it would have no effect, while 24 percent said it would make the economy worse and 22 percent said it would improve it.

This is a demonstration of two things: First is the fact that despite what many pessimists think, the American people are not simply empty vessels for right wing propaganda. They have suffered through several years of a housing crisis that continues to rip apart working class families. They are suffering from their own debt crisis and they are facing ongoing job insecurity or unemployment and underemployment. The rhetoric of the media or the Tea Party can have an influence but it is only one source, and not necessarily the most important, by which American workers try to figure out what the hell is going on.

Secondly, and most importantly, it shows that there is space to build an alternative to the Democrats & the Republicans, both of whom have effectively the same agenda - massive cuts & austerity - but who only disagree on the particular way that it will be implemented, whether all-out class war is the way to go or a phoney "balanced approach" in which the very rich give back a small portion of the many tax breaks that they have received in the last thirty years. However, the problem remains that that alternative will have to be built in struggle, through mobilization. But the trade union movement in the US, even more than in Canada, is split, conservative and pathetic. The heads of the US unions have largely been happy to wallow in the filth of their obscene salaries as their rank and file membership have seen their wages and conditions eroded and the aggressive anti-union policies of the American ruling class de-unionize the workforce to the point of making unions extinct. The union movement is a sick horse that the leaderships are riding into the ground. And when they are done, most of those union leaders - people like James Hoffa Jr., a former company-side labour lawyer - will walk away to plum jobs in the political machinery of the Democrats (or Republicans in the case of some of the more odious leaders like Hoffa) or into the corporate sector. It is frankly scandalous that during the entire recession and during this whole debate and move towards austerity that the American union movement has not lifted a finger for a national mobilization to challenge the Tea Party. Having allowed the inspiring Wisconsin movement to wither on the vine, they seem determined to prevent any effective mobilization. It will take an explosion by rank and file movements within the existing union movement and, perhaps even more, explosions by the unorganized to renew American unionism and take the latent class anger and hunger for a choice other than the Tweedle-Dee/Tweedle-Dum politics of Washington and turn it into reality.

Republocrats Agree To Sodomize Americans, Fund Israel

...and I don't mean sodomy in the fun frolicky sense of the world. What I mean is that they've agree that the deficit will not be "fixed" by raising taxes on the wealthy - whose tax breaks (along with multiple unwinnable and expensive wars & a defence budget that is unspeakably high) caused the deficit to begin with - but rather by cutting social programs & punishing the income-challenged majority of the US population.

But don't worry, they may gut Medicare, Social Security, education and even spending on collapsing infrastructure; Americans may continue to lose their homes to foreclosure at record rates and joblessness may remain stuck at historically high levels - but Israel's annual booty of greater than $3 billion will remain untouched.

The $3.075 billion in aid granted to Israel would remain intact under the 2012 State and Foreign Operations Act, Chairman of the House of Representatives' Appropriations Committee, Rep. Hal Rogers said in a joint statement with Rep. Kay Granger, chairwoman of the foreign operations subcommittee of Appropriations.

At least we know where their priorities lie. (And, for the record, no I don't think it's because the zionists/Jews control America - it's because Israel is a central strategic plank in America's Middle East hegemony and the Middle East remains key in terms of oil and empire).

As for Obama: can we now agree that he's betrayed every hope that was placed on him, except that he would be America's first African-American president?

Obama, U.S. lawmakers strike deal to raise debt ceiling - The Globe and Mail

Could US Debt Debate Fragment The Republicans?

Tea Party Republicans: ready to go all the way

Republican House Speaker John Boehner must be wondering at this moment what to do with his rather large embarrassment of riches - with the emphasis on embarrassment. The mid-terms swept Republicans into decisive control of Congress and shifted the terrain of official debate distinctly to the right, at least as far as economic questions were concerned. Driven by a right wing insurgency grouped around the Tea Party, questions of unemployment, poverty, foreclosures and stimulus spending were buried beneath a clamour of spartan enthusiasm to slash government spending and "live within our means" - even if that meant expanding the means of the rich so that they could continue to improve how they lived. As a counter-response to the huge swell of enthusiasm for the election of Barack Obama, this seemed to revive the Republicans from the recently near-dead.

But zombies and vampires and other undead things no longer exist according to the old principles that guided them when they were alive. Zombies eat brains. Vampires drink blood. Tea Party Republicans feed on the fantasy of a mythical past that they want to recreate. Of course the Republicans have, for a long time, been the right wing of the American ruling class. They have talked about debts and favoured attacks on social programs while cutting taxes for the rich. But the reality since Reagan has been big increases in the deficit and debt under Republican administrations, usually for defence spending and tax cuts for the rich. But the infection of right wing populism that they have toyed with since Reaganism, has come back to take control of the whole Republican body.

Thus we have the ironic situation where Boehner is emboldened to challenge Obama because of the influx of Republicans. He demands that Obama surrender to the Republican agenda (which Obama dutifully does) - and then Boehner is barely able to round up enough votes to carry his own plan in Congress. With the stakes about as high as they can get - with the first ever default in US history looming just a few days away and the danger of a sharp spike in interest rates and a nose dive for the already ailing economy - many Tea Party partisans were ready to do like Slim Pickens in Dr. Strangelove and ride a nuclear missile to ground zero, cowboy hat in hand, whooping all the way down.

But the Republican Party machine is more than just the populists who have drunk the kool aid. It is primarily made up of men (and a few women) who are integrated into the ruling class and its institutions. And while the American ruling class would like to see some austerity to foor the bill they ran up with the last decade of speculative mayhem, they are willing to compromise, as they have always done with the other wing of American capital, represented by the Democratic Party. And the modus operandi of the Democratic Party since the 1930s has been to maintain hegemony through a process of negotiation (as long as the rich generally win) and cooptation, thus maintaining an illusion of fairness and consensus.

But while the Tea Party may be backed by the billionaire Koch brothers, it seems clear that the base of the "movement" are middle class - small business owners and managers of various sorts - many of whom have probably been squeezed terribly by the crisis since 2008, the loss of investments, foreclosures, etc. They don't have the same ties or stakes in the system as the head honchos. Nor do they have the savvy to know what the real effects will be if the United States defaults. They are not driven by rational logic or even mainstream economics but rather by mystical visions of a better past that can be recaptured and a future probably involving the rapture of Jesus Christ and his heavenly host.

But while the Tea Party partisans may be driven by irrational faith, it also seems clear that if the Tea Party wing of the party continues to balk at supporting any bill that doesn't include much deeper, unsupportable cuts, the "moderate" wing of the Republicans will be forced to compromise with the Democrats and break with the rookies and their ultra conservative allies.

That raises the question of what will happen if the Republicans split.

Chances are that they'll paper over the differences and achieve some sort of concord in the wake of what many will see as a betrayal of principle. Boehner will probably lead his fellow veteran Republicans further to the right as a way to mend fences and keep the party together. But if the Tea Party newbies ultimately feel betrayed by the sight of Republican Congress members voting with the Democrats against them, we could see a splintering of the Republicans and a third party challenge emerge.

Certainly the Tea Party has the base and the mobilizing ability to have an impact, though I think that it's over-rated and their barnstorming success reflects the element of surprise as much as anything. They would also find it much more difficult to win seats if they were a standalone party outside of the many levers of influence that make up the Republican Party machine. And not all Republicans who were willing to vote for a Tea Party supported candidate on the Republican ticket will be willing to make the shift to a whole new party. I think that they would be in for a rude awakening. But in the meantime, we could be in for a very stormy season in American politics. With any luck, upheaval and instability at the top will encourage those at the bottom to fight for a different vision - one that appears in every poll that has been conducted on the issue - where jobs and services come before tax cuts to the fabulously wealthy.

G.O.P. Fervor Cuts 2 Ways for Boehner - NYTimes.com

US Debt War Will Lead To Recession

Hate to say it folks but there's about a snowball's chance in hell that the world won't have returned to recession by the end of this year. There are many factors involved that make this likely - the necessary slowing of China's growth, the defaults and austerity packages rolling around the south of Europe and the UK, the lack of any life in the North American economy. But it's also certain that the US debt situation has cemented that inevitability.

The irony of the hullaballoo between Obama and the Democrats on one side and those zany Republicans on the other is that it has focused the attention of everyone in the USA - not to mention the planet - on the fact that America is choking on debt. Being America, which recoils from government spending, other than enormous and wasteful military budgets, like Dracula recoils from garlic, the obsession is with government debt, rather than total debt. But that is another story. It is unlikely that anyone in the USA, by the end of this Gong Show, will think that the US economic or political system is stable.

The fear of instability is a self-feeding depressant when it comes to consumer spending and investment, especially when the vast majority of the population already feel that their incomes and investments in things like houses are unstable. Of course, the Republican demand that the Debt Ceiling Cage Match do a quick lap before returning early next year for a second round will only exacerbate the instability effect. But, then, from the point of view of the reality-challenged Tea Party, it will be an excellent opportunity to have an issue that they love - government taxation and expenditure – with which to beat Obama as he heads for re-election.

But instability fears aside, there are less ephemeral reasons to expect that the economy is going to take the off ramp to Downersville no matter what the ultimate solution to the debt ceiling crisis is.

First is the possibility that the split in America's two corporate parties is so profound that neither is willing to blink prior to the default date. They may both be so certain that the other party will be blamed for the fiasco - and so confident that the default will just be a minor bump - that they take the chance. So, let's take a look at what a default will mean.

At the most obvious level, no one will want to buy American bonds. Or, rather, they will want to be paid a premium interest rate before they will buy bonds to make up for the obviously heightened risk that the US won't make a payment. But, as economist Paul Krugman points out, this is already taking place in the context of what's called a liquidity trap. Basically, even with interest rates that approach zero, people would still rather not borrow or spend money, which they feel has more value and stability than debt. In other words liquidity is trapped because people hang on to it. If people are already not willing to borrow money when it is practically free, they are certainly not going to do so if interest rates rise significantly to make up for instability. And that's the trillion dollar question - would an increase in interest rates on short term government debt feed through to private interest rates. Again, according to Krugman:

What gets tricky here is the question of whether private borrowing costs rise in tandem. For corporate bonds, maybe not. But the GSEs (public enterprises - like the recently nationalized Fannie Mae and Freddie Mac - sw) pay rates that are tied to the cost of government borrowing, and they are the main sources of housing finance, so mortgage rates would probably rise.

The upshot of it all is that an increase in interest rates at present will definitely choke off the borrowing necessary to give the US economy any lift at all. It will mean an increase in foreclosures, already at record highs, and bankruptcies as debt servicing costs rise.

And that is only the most obvious effect. What is the great unknown is what the effect will be upon global stocks and the world financial system. After all, the US dollar is widely held as the international currency reserve and trillions of dollars in US debt are held by banks, countries and corporations around the world. The dollar will likely drop as Treasury Bills can only be sold at high interest rates and there is a "flight to stability" - we already have seen this with the appreciation in the value of the Canadian dollar or, rather, the depreciation of the US dollar. Will the global financial system lock up, as it did in 2008, as no bank can trust any nation, bank or corporation not to be over-exposed to devalued US debt, which must be written off against assets?

Of course, there will be a very immediate and obvious effect for a large section of the US population if a default happens - their cheques won't come. Social Security cheques won't get mailed, nor Medicare or other programs. People who do business with the federal government won't get paid and so, likely, their employees won't get paid either. With government spending there is something called a "multiplier effect" - basically, every one dollar that the government spends on things like infrastructure or services, is multiplied by the impact it has on the broader economy; the dollar pays a wage that is spent on consumer goods that helps to hire more workers, etc. Default will be like the multiplier effect running in reverse.

AUSTERITY

But even if Tweedle Dee and Tweedle Dum do manage to agree a compromise, which still seems most likely, there will be seriously negative economic effects. We saw with the Greek economy last year that when they implemented austerity measures as a condition for the first bailout, the result was to send the country into a recession that led to higher unemployment and lower tax revenues - which led to the need for a second tranche of bailout money this year (leading to strikes, riots, etc). That's because, according even to the IMF, every one percent cut in the deficit leads to a half a percentage decline in growth rates over two years. At present the US deficit - the annual revenue shortfall - is running at about $1.2 trillion with an accumulated debt of over $14 trillion. Both the Democrats and Republicans are agreed on plans to cut government spending by close to $3 trillion over ten years. It's not at all clear how they come to that number and for certain it is being boosted for public effect but using simplistic math it works out to something like $300 billion per year. That's 30 percent of the budget deficit, which can't be right or it's completely insane. But, for certain, what both Republicans and Democrats are talking about is austerity and austerity in the midst of an already weak economy will push its head back under water in what Krugman has called "the great mistake of 1937" when President Roosevelt and Congress decided to rein in spending, sending the US into a deep spiral that only ended with the massive arms build-up - and thus public spending - of the Second World War.

It's all so unnecessary. First off, the public debt is nothing compare to the private sector debt in the US economy. The US government - other than by idiocy - is nowhere near foreclosure, bankruptcy or risk-generated high interest rates. It is probably the most solvent part of the US economic system. Secondly, much more, if not all of they money could be generated by restoring tax rates on the wealthiest Americans that have been cut in the last thirty years. According to Tea Partiers - and agreed in practice by Obama and the Democrats. The "alternative plan" by Harry Reid, Democratic Senate Majority Leader, contains no tax increases on the wealthy. His plan is backed by Obama. But here's the thing - tax cuts have less negative effect on the economy than do cuts to "entitlements" and public services. The reason is simple: the rich have a surplus of income, which they put in the bank. Workers have little more than enough to get by and so spend their money buying goods and services rather than saving it. The utter failure of tax cuts, which were the mantra of the Bush years, ought to be obvious from the fact that the US economy is in the tank and debt levels have never been higher. Well, debt levels have never been higher for some. As Joseph Stiglitz, a Nobel winning economist wrote in an article in Vanity Fair in May:

The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top....

That is the real reason why the Democrats and Republicans can contemplate the pain of the cutbacks versus either stimulus spending to help the economy or tax increases on the top one percent to reduce the deficit. Because they are closer to the top one percent than they are to the bottom 99. As Stiglitz goes on to say:

Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent.

So, don't lose any sleep for the politicians who are bickering over which of them gets to drive the high speed train into the depths of hell. They aren't losing sleep. After all, it's us who will be on the train. They'll be watching it on Fox News and CNN and congratulating themselves on what a great job they've done.