Kimball Corson
08/15/2012, Pago Pago, American Samoa

The Real Economic Stimulus Program We Still Need

A core component of our continuing economic malaise is the high level of private consumer debt compromising on consumer expenditures on goods and services. Most of that debt is mortgage debt. The problem of course is that with the collapse of housing prices, the face value of mortgage debt remained the same, as did its principle and interest servicing obligations. Banks believe this allocation of risk is appropriate because consumers obtained the value of rising home prices. In microcosm, the banks are correct, but that does not address the macro problem of our national doldrums. Too, much of the capital gains of home owners did more than evaporate so their upside gain was illusory and many are now stuck underwater. The notion of writing down the face value of their mortgages terrifies banks which have been permitted to carry to mortgages on their books, not at true market values, but at such values as those banks determine is appropriate. Talk about bogus financials.

The proposed use of eminent domain to acquire properties with underwater mortgages at fair market values and then resell them also at fair market values entails two problems: one is a source of interim financing for the purchases (relatively minor because of the resales at market prices) and the second is how to treat the assigned mortgage obligations. If those obligations are to be written down proportionately, additional financing is required. At a macro level, the question is who should bear what percentage of the losses. Some mix across the home owners and the bank lenders seems appropriate but no formula has emerged and, if private financing sources are used, those providing the new financing would seek a return on their investment as well.

Inasmuch as the federal government can issue our fiat currency in large quantities without the risk of default or of inflation when labor and other resources are unemployed in large quantities, as now and as modern monetary theory suggests, it is the logical entity to fill the financing gap here and, like a large insurer, shoulder much of the mortgage loss by spreading it out as debt incurred on a new, large, national, macro stimulus expenditure program. The idea is to shoulder most of the private losses entailed with the mortgage obligations write downs and convert them to new federal debt.

This is how the bailout should have been handled as it helps both banks and homeowners and provides the needed economic stimulus and relief now missing from our economy. There is no good reason a program of this type could not still be adopted, especially inasmuch as banks have paid back, often with interest or other significant returns, the bailout monies of TARPs I and II. The effect of this type of stimulus program should have a substantial and solid multiplier effect, increase national economic activity significantly and raise federal tax revenues which could be used in part to pay down some of the federal debt incurred, if so desired.

It is not too late to set matters right. We are still stuck in the mud.

Comments [0]

Kimball Corson
08/14/2012, Pago Pago, American Samoa

For All you Reagan Lovers Out There

With some help from David Thomas who bothered to pull some of the numbers:

Spending during Reagan's two terms (FY 1981-88) averaged 22.4 percent of GDP, well above the 20.6 percent of GDP average from 1971 to 2009. In addition, the public debt rose under Reagan from 26 percent of GDP in 1980 to 41 percent of GDP by 1988. In dollar terms, the public debt rose from $712 billion in 1980 to $2,052 billion in 1988, a roughly three-fold increase.

Reagan, the conservative, right? And he didn't inherit Bush's financial crash and collapse and the Bush created Great Recession like Obama did. Did you forget that, too?

The Reagan miracle was not due to his cutting taxes (he cut and raise different taxes in almost like amounts, with a net tax cut of about 1 percent of GDP -- absolute peanuts). The Reagan economic miracle was due to Reagan running a Keynesian stimulus spending program of almost $1 trillion dollars to get us out of the 1981 recession. You got that wrong, too, didn't you?

When it comes to economics, conservatives have trouble walking and chewing gum. They also lie a lot, too.

Comments [0]

Kimball Corson
08/14/2012, Pago Pago, American Samoa

Many persist in misunderstanding this article, me and the economics of what is, and what we should want to have as an economic system and why. They get put off by the title to the point of not understanding the positive, empirically based economics that leads me to the titles' conclusions. They should focus on that positive economics and learn the economics of what is, not some acute abstraction of its earlier theoreticization, as presented by libertarianism. That is an intellectual and theoretical seduction into the ethers and way too far removed from what is. Indeed, it is a religion of sorts. Most Americans know better, if they just connect the dots by looking around themselves. Somethings are terribly wrong.

"It Is Time to Consider a Policy of Income Distribution" or
"Understanding Why and How Capitalism Has Failed"

It is time to put what is unspeakable for many on the table for discussion. Capitalism in America is seriously compromised and failing. It is not working, except for large global, multinational corporations or niche companies which address their immediate needs. The rest of the economy is permanently in the doldrums. It is broken.

This is so for three key reasons. To begin with, our balance of trade leaves our economy permanently depressed. What we spend abroad for oil and such is money we don't spend at home. It is lost to generating domestic aggregate demand. Next, the huge number of continuing unemployed and underemployed leave labor markets and also the economy permanently depressed. The unemployed and underemployed buy less than the fully employed, again depressing aggregate demand. Also, the ratio of those employed to the population has substantially dropped in the last five years.

Thirdly and finally, our distribution of income has become so badly skewed that the number of dollars going into the purchase of consumer goods and services, as opposed to secondary financial assets, is permanently depressed and damaged, again further lowering aggregate demand. Middle and lower class American spend a much higher percentage of their income on consumer goods and services than rich Americans do. But relative income has been redistributed from them to the rich and that has badly lowered aggregate demand, again injuring the economy.

Income redistribution would largely ameliorate the last two problems which would be a major improvement for our economy. Consider it.

Ours is a consumer driven economy. With most income in the hands of the rich, as a nation, we consume less and too little. This problem is serious and it is bound up with the key failing of capitalism that Karl Marx understood and most present day economists now also understand, but dare not speak out about. But, first, the numbers on the skewed income distribution and then a discussion on how capitalism has failed us in key regards.

Currently, the top 50% get 85% of all the income and the bottom 50% receive only 15% of all income. The top 1% get 24% of all income. Then the 400 highest families on average receive an income of $345 million per family. There are now over 1000 billionaires -- not millionaires, billionaires -- in the US with combined net worth of over $4 trillion.

Wealth, too, is massively concentrated, but that is a much lesser problem.

As to wealth, a different matter, the top 1% are now estimated to own between 40% and 50% of the nation's wealth, more than the combined wealth of the bottom 95%. This is important primarily because wealth in the form of capital - plant and equipment, primarily - generates income, especially for those at the top end of the income distribution. To be sure, families with incomes up in the many millions rarely get all their income in the form of salary for the head of the household. Most is income from capital.

Consider now the key problem of capitalism, its big Achilles heel if you will. Capitalism works well at it front end, that is, in regard to competition and the allocation of most productive resources. Its front end theories are well developed and extensive. It fails miserably and is hugely atrophied at its back end, on how income gets distributed. All it says is that, if there is perfect competition throughout the economy, each factor or type of input to the production of goods and services, including labor as an input, will be paid the value of what the last unit of that factor is worth to the productive process, that is, the value of its marginal product. That is true for all inputs. But all this assumes perfect competition, which is a far cry from our situation in America. Capitalism's feeble mechanism for income distribution has failed and failed massively in America. It is an evil genie we cannot put back in its bottle. The system, at a theoretical level is, in addition to being unstable as I will point out later, simply badly broken and theoretically deficient.

First, competition for labor is not perfect. Wages are very inflexible and resistive to being lowered. The market mechanism doesn't work well. Unions also intervene. The owners of capital - plant and equipment -- do all they can to 1) take advantage of workers and 2) make production processes as capital intensive and free of labor as possible. Our manufacturing sector in America has been made very productive where it can be highly capitalized and machines substituted for labor. Therefore, labor's participation and so its income generally have fallen, relatively. Government purchases at excessive prices of outsourced goods and services and substantial educational/intelligence differentials have also worked to skew the income distributions against the disadvantaged. Lobbied for financial advantages for the rich and wealthy from various levels of government also in myriad ways skew the income distribution. $500 an hour lobbyists are njot for nothing. The intelligence and educational advantages of the rich are not to be underestimated either.

Second, very few workers are paid the value of their marginal product. Few even know what that is. Pay tends to equal what an employee can induce the political system in the business within which he works -- be it of a firm, corporation or other form of island-like dictatorship -- to pay him. CEO's do well. So do others officers and those tightly tied into the businesses money flow. Others more toward the bottom struggle. What the top takes as extra, the bottom has to give up. That is true wsithin and across industries. Many -- now 25% unemployed (9.2% looking -> 17% including those who are now not -> 25% counting in the underemployed, too) lack even the chance to struggle. Worse, pay at marginal value rates can be awful, too. Marx's surplus theory of labor is not necessarily wrong. Distributionally, Capitalism's system simply does not work well, neither in theory or fact. In America, it is politically and financially corrupted beyond quick repair.

The idea that the factors of production are paid the value of their marginal product -- about all economics has to say on distribution and then in a perfectly competitive economy -- is a joke. It is the Achilles heel of capitalism and the reason so many European and American intellectuals and European countries reject much of the distributional side of capitalism, that, and the perceived dishonesty and corruption involved. American economists also recognize the problem but are too silent about it because big multinational corporations pay millions for research by their universities. Their silence is substantially bought off. Harvard, Columbia and Berkeley study and research the inequalities in detail, but there is hardly a word, even from those institutions, on anything remedial.

However, Charles Lindblom, a Sterling Professor Emeritus of Political Science and Economics at Yale University and author of the two wonderful and easily understandable books, 1) The Market System: What It Is, How It Works, and What to Make of It (a book anyone wanting to understand economics should read) and 2) Politics And Markets, has this to say about the problem at a macro level:

"While the Market System is the best mechanism yet devised for creating and fostering wealth and innovation, it is not very efficient at assigning non-economic values and distributing social or economic justice."

That is putting it mildly, as Lindblom does all things.

Classical economists such as Adam Smith, Thomas Malthus and David Ricardo were concerned with the theory of income distribution -- how it was supposed to work between the main factors of production, land, labor and capital. They focused on and developed the value of the marginal product concept. Modern economists now no longer really believe that, but they have no real alternative theory for the distribution of income under capitalism, yet they now fully recognize that "income inequality diminishes growth potential through the erosion of social cohesion, increasing social unrest and social conflict causing uncertainty of property rights. Extreme inequality can effectively reduce access to productivity enhancement measures, or cause such measures to be allocated inefficiently toward those who already have, or can no longer absorb such measures." Wikipedia.

But again, American economists won't really speak up because of the corporate monies going to their institutions. (I once asked an MIT professor in his office why top American universities had no Marxist economists on their staffs, unlike great European universities. He flatly and quickly said, American corporate funding sources wouldn't stand for it and would withdraw research funds.)

O.K. so the distributional side of capitalism is not only defective, but badly broken. Why and what can we do about it? How can we compensate so as to limp along? Those are the questions.

As to why the distributional side is broken, there is an emerging consensus, beyond the idea that compensation according to the value of one's marginal value is too thin and too theoretical a reed to stand on without more, especially with its assumption of perfect competition which is itself a bad joke.

The causes of the egregious skew in the income distribution and why capitalism's distributional side fails are reasonably well known and understood: summarizing, they are 1) intelligence and educational differentials, 2) use of government by high income individuals and companies for self interest and advantage, 3) compensational abuse by executives at the expense of others within their firms, 4) using the economic system opportunistically, knowing there will be little enforcement of the laws -- probably in about that order. Each and all are used to destroy compensation equal to the value of the marginal product which is the ONLY theory capitalism has for distributing income and that, assuming perfect competition. Capitalism leaves the distribution of income too much up in the air and vulnerable to the abuse of crony capitalism and other market and governmental abuses. Regulators become the captives of the regulated. The capitalist system fails.

As to how to effectuate income redistribution back in the direction from which it has been skewed, two methods are most suggested.

Years ago, Milton Friedman proposed the negative income tax. Rather than have a sea of social programs to help those short of income, with all the bureaucracy and expense that entails, instead we should simply pick an income level, say, the poverty level; if you are above it, you pay taxes; if you are below it, you receive a check for cash, all with minor adjustments for disincentive effects. A negative income tax system could be used with a highly progressive income tax, especially at the top end, to correct annually for the distributional system failure we observe. Too, instead of tipping at the poverty level, a sliding scale could be used instead of a single point, so checks in various amounts, depending on income, were sent out from the tax revenues obtained, again, with adjustments for work disincentive effects. We could tailor the distribution to what we want as a matter of social policy.

Alternatively to a negative income tax, we could do what many advanced European and Scandinavian nations do or did before their governments, like that of Greece, became corrupted. They use free markets on the front end to generate income and wealth and then correct for serious income inequality by partial redistribution of income in the form of free health care, free or subsidized higher education for those qualified, subsidized transportation and some other free or subsidized social services which give their citizens overall a much better general standard of living than ours, on average -- according to multiple measures, e.g., infant mortality, children living in poverty, homelessness, educational achievement on average, number of persons jailed per 1000, percentage of population receiving medical care, etc. These methods of redistribution do not significantly undermine the incentive to work, either for those taxed at the top to pay for it or those at the bottom, more on the receiving end.

By either or both of these means we could significantly correct the income distribution problem and improve aggregate demand and our economy substantially. Several points should be made regarding proposed income redistribution by either of these means.

First, excessive spending in Europe, over and above tax receipts, especially by the PIIGS, is little different than our own excessive spending in the U.S. over our own tax receipts. Neither our, nor European deficits are a necessary condition of income distribution by either of these proposals. Deficits arise in many instances from poor government management. They are not necessary under either system. Smart cookies, those Europeans and Scandinavians, when they don't mismanage their spending. When some do, they become PIIGS, looking for bailouts just as we have become a mess from our own corruption.

Second, there is this criticism. The work disincentives would be excessive. This is not true. Adjustments can be made to the negative income tax proposal, as Friedman did, to ameliorate that problem. As to the European alternative method, the disincentive effects are essentially non-existent because too many day to day needs and wants remain to be provided for and work per se is not undermined.

Third, we are not taxing or taking away the wealth or capital of those owning most of it. It is not expropriated from them and then becoming owned by the state, as in Socialism. So this is not Socialism, as many misunderstand the word. There is only taxation at highly progressive rates at the top end the income which is in minor part from personal labor, but mostly from that capital. Any attending problems for the economy, by way of residual labor disincentive or capital market distortion effects, are minimal and certainly less than the distortions and problems we now face.

Finally, no one is proposing full equality of income. In their study for the World Institute for Development Economics Research, Giovanni Andrea Cornia and Julius Court concluded that both very high egalitarianism and very high inequality cause slow growth. According to them, considering the inequalities in economically well developed countries, public policy should target an 'efficient inequality range'. The authors claim that such efficiency range roughly lies between the inequality observed of a typical Northern European countries ( a Gini coefficient of about 25) and that of countries such as the USA, France, Germany and the UK (Gini coefficient of about 40).The idea here is that for most countries, there is an optimum inequality of income, but surely for us, well below the inequality we have. Ours is a major problem.

The impediments to income redistribution are buried in the sentiments promoted strongly by libertarians in America (1) that every penny a person can finagle out of the economic system is theirs by God given right, (2) Socialism or anything remotely resembling it is anathema, (3) government and taxes are evils which should be, if not abolished, then at least be chopped to a tenth of their present dimensions. The sentiments have promoted excessive income inequality in America. Indeed, we have already have had income redistribution in America during the last 40 years, just in the wrong direction! The economic system that it has produced is not only not working; it is unworkable. Marx may yet have the last laugh.

Beyond what I describe here, capitalism, with its partial reserve banking system and capital gains taxes at less than 100 percent as well as excessive rents from land appears to be flawed as well in this regard: it seems too much to be inherently unstable. Less than 80 years ago we had the decade long Great Depression. Now we have what will surely be a decade long Great Recession (or worse, depending on how present events develop). These are not hallmarks of a stable economic system. We drag the world up and down with us. Governments appear unable or unwilling to fix things or even address the real issues.

If we do not redistribute income as I suggest, we can expect aggregate demand to remain depressed and our economy to stay in the doldrums.

Comments [0]

Kimball Corson
08/14/2012, Pago Pago, American Samoa

Some Thoughts on Property

The rights of property are implicit in our social compact. The Constitution reflects that by addressing how property can be taken from individuals lawfully in the form of taxes. Conservatives sometimes seem to reject that notion, contending that what they can get their hands on is theirs by divine right, but this claim improperly rejects our social compact and the Constitution.

Property is indeed a social construct. Rights to it need not be defined in a one person world. As more people press on resources, rights increasingly get defined in property. The scarcer the resource relative to the number of people seeking its use, the greater and more detailed are the rights defined in and to that property or resource. In short, economics explains the definition of property rights. Where land or natural resources are involved -- which exist without production costs per se -- the rights of owners too much entail unearned economic gains which the Georgists contend extract unearned surplus rents from others. The law has yet to understand that concept well or do much about it.

Exclusive property rights are frequently compromised by external law limiting or controlling the use or disposition of property, a point that grates on libertarians as we observe in their opposition to the EPA, zoning and any regulation that would compromise exclusive ownership and use rights. Much squabbling here revolves around their rejection of the notion of a social compact, the constitution and societal reactions to their property uses that impact others, often by imposing costs on them.

The state, as with the notion of contract and as an arm of our social compact, identifies and reactively defines and enforces the property rights of ownership and use. Conservatives want enforcement of exclusive and unfettered rights of use -- they buy into that part of the social compact -- but they fight any appropriation or restrictions on the use of property -- rejection of the compact. They have to learn better and recognize they live in a social order under a compact, not in the backwoods.

Regarding land, a concept emerging is that by eminent domain, the state can act to force the sale of property to put that property to its highest and best use for the social order. That is, redefine and expand the use rights in and to that land. The concept gives conservatives a snit fit, but it is taking hold and could be generalized across other types of property as well. To be sure that would be a move in a socialist direction and compromise on the backwoods mentality.

Too many understand too little of what I have said here.

Comments [1]

Kimball Corson
08/14/2012, Pago Pago, American Samoa

Is the Economics Profession in the US Bought Off?

In five words: Yes, for the most part.

The problem of being bought off is not isolated to just Chicago economists. It is endemic to the profession which this year finally adopted a toothless code of ethics under the aegis of the American Economic Association.

George Mason University was paid $2.5 million by the Koch brothers to take the renamed Mercantus Center from Rutgers University which no longer wanted it. That was blatant. However, all top departments are loaded with research dollars which at least say what is studied, if not the general conclusions, -- though not so blatantly as with The Cato Institute and The Heritage Foundation --and indicate what topics should be off limits for study and publication because they won't be funded.

Then there are the individual economists who consult and whore themselves out as mouthpieces, saying things and taking positions they never would in their classes. Finally, some professors receiving research funds really believe the garbage they research and write on and so see no ethical problems at all with what they are doing. That is a swelling, defensive trend.

The money is significant. I once had a meeting with an MIT professor the morning after a huge snow fall. I was barely able to make it the short distance to Sloan Hall from where I was staying, crawling on my belly part of the way. When I arrived, there were eight faculty members in the economics department at their desks. They had been picked up at their homes by helicopter. Why? Because if they weren't there in their offices, the department would lose hundreds of thousands of dollars in research funds for the day.

The system stinks. Corporate America has too much corrupted the system at all levels and some of the finer professors and scholars. They have become greedy and impressed with their own importance. I see no quick and easy solution to the problem.

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Kimball Corson
08/12/2012, Pago Pago, American Samoa

On Being Highly Resistive to Indoctrination

One of my basic observations, having been in the economics PhD program and in the law school there, is those at and from the University of Chicago usually have much too strong a tendency to implicitly assume that anything government does is bad and work their analysis up from there to favor free market results.

Probability alone should otherwise imply a greater spread to Chicagoans' research results and conclusions. The bias is clear and discernible, leaking through particularly in regard to assumptions made, matters taken as given and topics selected for study or comment.

The implicit or explicit view of much Chicagoan analysis is no matter what it does or how it does it, government always gets it wrong and markets -- even when they crash and burn right under our noses -- always get it right. All crashing and burning is also government's fault. Government is always slandered and markets apologetics are more pervasive and strained than those of Catholic theologians, at least with non-Chicagoans.

MIT, Harvard, Yale, Princeton and Columbia are more diversified and empirical in their views with fewer axes to be monolithically ground. The thing about the bias is it is quite predictable. Honest open ended research seldom is.

My indoctrination took only long enough to get me through my exams but I did learn very well the core issues, and the controversies surrounding them as well as how to debate them, so my education was clearly well worth it.

Moreover, I think the thoughts I do and come to the conclusions I have independently, on my own and in large part in SPITE of the education I received under seven then or later Nobel Laureate economists at Chicago and Richard Posner, a famous teacher in the law school there.

Only Milton Friedman induced me to think independently by encouraging me to argue with him and thereby impliedly take adverse positions. He was a good friend and very occasionally conceded I was at least partially correct in an argument (e.g., He said regulators become captives of those regulated -- I did a paper showing this was not true in Canada, Switzerland and Sweden).

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Kimball Corson
08/12/2012, Pago Pago, American Samoa

Geez, Republicans

Debunking conservatives is tiresome, repetitive business, especially when there is no coherency to their larger macro positions and much is simply nitpicking.

Again, for the billionth time, Obama's large budgetary deficits arise from --

1) reduced tax revenue at given rates because the economy is down from the recession;

2) reduced tax rates yielding even less tax revenue put in place by Bush, and

3) increased social safety net expenditures due to the Great Recession and its lingering effects.

All are the legacy of the conservative Bush administrations, as was excessive war mongering expenditures which won us the hearts and minds of the Arab world.

If conservative politicians were serious about reducing the deficits they could

1) adopt policies to induce economic growth to a) increase tax revenues and b) reduce social safety net expenditures and

2) increase tax rates on all, but especially those getting more income, to also increase tax revenues.

Is this rocket science or are we awash in idiots?

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Kimball Corson
08/12/2012, Pago Pago, American Samoa

A Passing Observation

A democracy can function no better than the informed intelligence of its electorate. We are dummying down and becoming less accurately informed at an accelerating rate. Our future therefore quite properly looks bleak. America is a gang of corrupt or slow witted rowdies that can't shoot straight.

Do you doubt it? Consider this: That we have dummying down in our schools, universities and public life is a well observed phenomena. It cannot be without implications. How many have a clue about Ryan's budget proposals? or know the House passed them twice? or know they are the centerpiece of the Republican party or know that, wanting to be elected, Romney is back pedaling away from them like crazy? This is basic walk and chew gum stuff.

Next, how many can economically critique the Ryan Budget proposals and get the basic aspects of the critique correct. Ryan argues that America cannot borrow and spend its way to prosperity, but that is false. Borrowing and spending is exactly how America has became prosperous. Ryan simply does want government doing any of it because he is an ideologue. He wants the fat cats to have that money instead so they can keep it out of circulation by sitting on it or playing with it in the stock and bond markets.

It is a recipe for more and worse malaise.

Is this hard to figure out, at least in its basic outlines?

Comments [0]

Kimball Corson
08/12/2012, Pago Pago, American Samoa

Libertarian Economic Misconceptions

I read with alarm this reaffirmation of free markets by one Libertarian:

"Spontaneous order is a natural phenomenon that occurs when complex organization emerges from individual interacting without central coordination."

Although it is high and knowledgeable sounding, my response is the Libertarians have to be kidding. More like spontaneous opportunism . . . if history is any guide. The crash of 2008-09 arose largely out of deregulation and opportunistic greed in markets that had been freed from meaningful regulation. But conservative Libertarians simply ignore that, just like they ignore the ensuing Great Recession. None of it happened, in their books. The facts cannot be allowed to interfere with their ideologies.

Multiple markets on Wall Street and all over the country, too largely freed from effective regulation and in a frenzy of greed, simply failed and collapsed, substantially wiping out the shadow banking system, the housing market, the mortgage markets and threatening to destroy our entire banking system, but Libertarians in America, in their misguided zealousness for, and ignorance of free markets didn't even notice or have rationalized it all away as this quoted nonsense indicates.

Spontaneous order was not at all what ensued. Not even close. Chaos was more like it. What happened cannot be rationalized away by blaming government for easy money, the Community Reinvestment Act, Freddie Mac or Fannie Mae or anything else nor can these events be ignored by the Libertarians either. Markets simply failed in a fit of unrestrained greed and collapsed.

Free markets do not always allocate resources correctly nor do they always properly value assets. Those are myths. Like the humans who participate in them, markets can make mistakes and get things wrong. They can fail. Libertarians do not understand economics well, as this indicates. Their ideologically streamlined models are simply absurd as this note makes clear.

And I say this as a well-trained Chicago economist who never has believed everything he has heard or read or was taught.

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Kimball Corson
08/12/2012, Pago Pago, American Samoa

So What Is Paul Ryan's Trademark Budget Plan?

It privatizes Medicare; cuts Medicaid, cuts food stamps, cuts other safety net expenditures and cut expenditure on transportation infrastructure. To further satisfy the rich, it cuts the top tax rate from 35% to 25%, eliminates the Alternative Minimum Tax, cuts the 35 percent corporate rate to 25 percent, eliminates taxes on foreign profits and eliminates the Estate Tax.

As to Medicare, the Ryan budget eliminates it as a government-run program and converts it to a privatized program where seniors receive a voucher or premium support to purchase health insurance from private insurers. It would also repeal Obama's health care program, the ACA.

The Ryan plan would also force states and localities to drastically cut services, due to the substantial cuts in federal funding they would receive. The plan cuts federal funding for the federal-state Medicaid by 34 percent. It is a clear recipe for recession in my view on these two points alone.

The Congressional Budget Office said the plan would force most seniors to pay more for their health care than under the current Medicare system. However, The Heritage Foundation has praised the budget proposal and the Koch brothers think it is ducky.

A study, based largely on Congressional Budget Office calculations, finds the Ryan Budget Plan will add trillions of dollars to the cost of Medicare due to the lower efficiency of private insurance as compared to the current Government program. Other studies indicate that unlike Obamacare or the ACA, health insurance costs will not be reduced.

Ryan and his allies say this is a bold plan - reforming entitlements like Medicare and Medicaid - and that slashing discretionary spending is needed to reduce the deficit and debt. But critics argue that the pain comes primarily from the poor and middle class. An analysis from the liberal-leaning Center on Budget Policies and Priorities says that 62% of the spending cuts in the Ryan budget would come from low-income programs, while 37% of its tax benefits would go to those making more than $1 million per year.

The Republicans call the Ryan Budget Plan -- the Path to Prosperity: A Blue Print for American Renewal. Mitt Romney has endorsed the Ryan Plan lock stock and barrel. But Nobel-Prize winning Economist Paul Krugman called the Plan "ridiculous and heartless" due to a combination of income tax rate reductions for the wealthy) and large spending cuts that would affect the poor and middle classes very adversely. The New York Times editorial board wrote: "We are also certain that repealing [Obama's healthcare] reform - the Republicans' No. 1 goal - would do enormous damage to all Americans and make it even harder to wrestle down health care costs, the best way to deal with the country's long-term fiscal crisis."

This pig won't fly with the American people. Romney has his foot in his mouth and is back pedaling. He and Ryan are going to get hammered.

Now watch the flip flopping and watering down on this monstrosity start. This duo of cads will really start to weasel.

Comments [0]

Kimball Corson
08/12/2012, Pago Pago, American Samoa

Why Choose Ryan and Disavow His Signature Budget?

I smell a rat. Did party leaders and planners force Ryan on Romney? It looks like that is a possibility. Otherwise, why chose Ryan for the only thing he is known for, and then disavow it? Something is fishy here. Is there an internal split being patched over?

Within minutes of tapping Paul Ryan as his vice presidential nominee, the Republican nominee Mitt Romney was distancing himself from the congressman's controversial budget plan, which includes steep cuts to government programs and basically throws Medicare to the wolves on Wall Street.

The Romney campaign sent out talking points on Saturday that made the case that he was supposedly his own man on matters of Medicare and Social Security and that he wouldn't be tied to the Ryan budget plan he once insisted he'd sign into law immediately and once called "marvelous." Clear double speak from an errant rat.

Is America too dumb to notice, even on an issue this important.

Comments [1]

Kimball Corson
08/10/2012, Pago Pago, American Samoa

Letters spill out across the page.
One arrangement evokes genius,
Another, stamps an idiot's brow;
Who's to say? The gatekeepers
Of convention or does Merit
Yield up a true intrinsicness?

Comments [0]

Kimball Corson
08/09/2012, Pago Pago, American Samoa

How and Why Much of America Has Shifted to the Far Right

Conservatives today -- especially those of religious or libertarian disposition -- have their historical political roots in the John Birch Society and its beliefs. That Society was co-founded in the late 1950s by Robert Welch and, Fred Koch, the father of the contemporary Koch brothers, crusaders on the far right.

In the late 1950s and 1960s, "Birchers," as they were called, were thought to be far right wing kooks, well outside of the political mainstream, who were laughed at and ridiculed. Not so now. They are border line mainstream.

Contemporary conservatives have no coherent explanation for how they became who they are because they ignore their history and they refuse to acknowledge the indoctrination efforts on them and the American public by Koch & Friends who used Powell Doctrine and spent about two billion dollars on the effort since about 1972, much by setting up bogus think tanks like The Cato Institute and The Heritage Foundation to generate bogus research that mainstream economists reject and often cannot duplicate-- at least those who are not bought off.

Conservatives today think a Rockefeller or Eisenhower Republican is a border-line Communist. That is how far the right has shifted to the right. Why, I always ask them. Incoherent stares and sometimes simple reaffirmations are the only responses I receive.

Kooks without a coherent history. Just born that way, perhaps.

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Kimball Corson
08/07/2012, Pago Pago, American Samoa

The Trial of My Attempted Murderers Is Postponed

From mid August 2012 to mid January 2013. But the delay is not going to pin me here in American Samoa further. The prosecutors' office has agreed to fly me back on their nickle if I do not go further than Tonga or Fiji. I have already lived in Tonga for a year, so my target will probably be Fiji, especially for the cyclone season.

However, I will go to Tonga with a friend to photograph the great humpback whales this year just before the cyclone season starting in early November and to say good-bye to friends there before I then scamper to Fiji to hole up for the season.

However, I do have to wait here until the end of August for a new outboard motor that is coming in then by ship. It is due to arrive August 28, 2012.

With good conditions, it is only a few days sail from here to Tonga and slightly more from Tonga (Vavau) to Fiji.

Ah, foot loose and fancy free again . . . almost.

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Kimball Corson
08/06/2012, Pago Pago, American Samoa

Why Obama and the Republicans Are Failing Us So

Robert Kuttner puts it well with a bit of my aggressive editing:

"Government needs to do two things that neither Democrats nor Republicans have been willing to do.

"First, we need a massive program of mortgage refinance, not just for borrowers with plenty of equity (who have been refinancing) but for underwater homeowners with negative equity.

"The administration has been unwilling to embrace such a strategy for fear of the impact on bank balance sheets. However the Treasury has supported the idea of Fannie Mae and Freddie Mac supporting more refinancings. But Ed DeMarco, head of the agency that regulates Fannie and Freddie has opposed the idea. DeMarco's own agency thinks the approach would help. . . Obama should begin . . . a far more aggressive program of mortgage refinance by firing DeMarco.

"But even with more robust efforts to deal with the overhang of excessive mortgage debt and depressed housing prices, the economy will still be stuck in a hole.

"We need massive public investment on a scale that is far outside mainstream debate. How massive?

"It took World War II to cure the Great Depression, and during the war the government ran deficits averaging 25 percent of GDP for four straight years.

"Government also had high surtaxes on the wealthy, with top rates of 91 percent. It turned around and spent and invested that money. The war restored the productive capacity of America, put fifteen million people to work, and restored household purchasing power -- even though most of that production was blown up. . .

"There is so much that we could spend that money on -- energy self sufficiency, infrastructure, a smart electrical grid, public transportation, better education at all levels -- all of which would not only create economic activity and jobs, but would make for a more productive economy.

"But nothing like this is part of the mainstream conversation. If you propose this sort of thing, you are packed off to the Museum of Un-reconstructed Keynesians. White House economists quietly admit that you are right, but you are politically radioactive (even with a Nobel Prize.)

"Though President Obama strikes the right rhetorical notes, the actual budget debate is the Republicans demanding that we cut more while the Democrats respond that we should cut a little less. Nobody is declaring that only massive public investment will cure the shortfall in private purchasing power. [No one is even seriously arguing that any significant spending cuts are going to damage the economy and the recovery.]

"And so we will continue with growth depressed, and unemployment stuck above 8 percent, with some slightly better months of job growth like July, and some worse ones like April, May, and June.

"Despite this feeble performance, President Obama may get re-elected, thanks to the reliable ineptitude of Mitt Romney. Unless Obama's feistier campaign performance translates to a Democratic Congress and a much bolder recovery program, Obama's second term will be a time of continuing economic frustrations."

This man has it absolutely correctly. With Krugman, he is one of the very few to understand. I too have been saying as much. Obama and the Republicans take us in wrong directions. Even if he were not blocked by the Republicans, Obama would be too timorous and fail. Too, the Republicans push very hard in all the wrong directions. It's a mess.

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