Category Archives: economy

Number Crunchola

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There’s been a lot of whoop-dee-doo in the news today about the budget deficit not being as bad as predicted. Andrew Taylor writes for the Associated Press:

President Bush touted new deficit figures Tuesday showing considerable improvement upon earlier administration predictions, saying it shows the wisdom of his tax cuts.

Bush himself announced the figures — a task that for the most part has been left to lower-ranking administration officials in the past. The new figures show the deficit for the budget year ending Sept. 30 will be $296 billion — much better than the $423 billion that Bush predicted in February and a slight improvement over 2005.

This is from President Bush’s announcement:

Here are some hard numbers: Our original projection for this year’s budget deficit was $423 billion. That was a projection. That’s what we thought was going to happen. That’s what we sent up to the Congress, here’s what we think. Today’s report from OMB tells us that this year’s deficit will actually come in at about $296 billion. (Applause.)

That’s what happens when you implement pro-growth economic policies. We faced difficult economic times. We cut the taxes on the American people because we strongly believe that the American people should lead us out of recession. Our small businesses flourished, people invested, tax revenue is up, and we’re way ahead of cutting the deficit — federal deficit in half by 2009.

As a matter of fact, we’re a year ahead of fulfilling a pledge that I told the Congress and the American people. I said to the American people, give this plan a chance to work. We worked with Congress to implement this plan. I said, we can cut the federal deficit in half by 2008 — or 2009. We’re now a full year ahead of schedule. Our policies are working, and I thank the members of Congress for standing with us.

Bush and his budget team are slackers. If they’d projected a $600 million deficit, today that deficit would be cut in half already.

Joel Havemann writes in today’s Los Angeles Times:

This will be the third year in a row that the administration put forth relatively gloomy deficit forecasts early on, only to announce months later that things had turned out better than expected. To some skeptics, it’s beginning to look like an economic version of the old “expectations” game. …

… Early in 2004, it projected a deficit of $521 billion for the fiscal year that was then 4 months old. It used that figure as the benchmark for its promise to cut the deficit in half within five years. That made its task easier: The high estimate, when reduced by reality, gave the administration a head start on its pledge.

See? I don’t know why the President is messing around with these wimpy little incremental steps.

Brad DeLong writes,

[The] Bush forecast of six months ago was deliberately high balled by $60 billion or so—precisely so that the administration could claim now that recent news on the deficit has been very good. As nonpartisan budget analyst Stan Collender wrote half a year ago, “The Bush administration held a conference call … to say that the 2006 deficit would be $400 billion or more … [This administration] has a well-established history of overstating the deficit early in the year and then taking credit when it turns out to be lower than projected, even if it has done nothing to make that happen.”

Paul Krugman has written extensively about the Bush Administration creative number crunching. For example, he wrote in July 2003:

The numbers tell the tale. In its first budget, released in April 2001, the administration projected a budget surplus of $334 billion for this year. More tellingly, in its second budget, released in February 2002 — that is, after the administration knew about the recession and Sept. 11 — it projected a deficit of only $80 billion this year, and an almost balanced budget next year. Just six months ago, it was projecting deficits of about $300 billion this year and next.

There’s no mystery about why the administration’s budget projections have borne so little resemblance to reality: realistic budget numbers would have undermined the case for tax cuts. So budget analysts were pressured to high-ball estimates of future revenues and low-ball estimates of future expenditures. Any resemblance to the way the threat from Iraq was exaggerated is no coincidence at all.

And just as some people argue that the war was justified even though it was sold on false pretenses, some say that the biggest budget deficit in history is justified even though the administration got us here with cooked numbers.

In another departure from reality, today the President credited his 2001 tax cuts for today’s budget reduction. To which Professor DeLong says,

This afternoon, the Bush administration will claim that because of its supply-side policies, the 2006 budget deficit will be about $300 billion, much lower than the $423 billion the Bush administration forecast last February. It will claim that its 2003 tax cuts have more than paid for themselves. It will claim that the tax cuts have accelerated economic growth enough to produce a net gain in revenue.

Does it think that reporters won’t ask the obvious questions—like, didn’t you guys say back in February that your forecasts already included the effects of the 2003 tax cuts on revenue? Do you really think your audience is too stupid to realize that revisions in the forecast since February come from things that have happened since February and not from things that happened three years ago? Didn’t Republicans like Dick Cheney claim that the 2001 tax cut wouldn’t create a deficit, that the 1993 tax increase wouldn’t reduce the deficit and that the 1981 tax cut wouldn’t increase the deficit? Shouldn’t people who are zero for 3 be less sure of themselves?

Finally, Professor DeLong provides another clue why righties cannot govern:

How did the Republican Party ever get into the business of claiming that tax cuts in America today don’t just expand the economy enough to make back some of the revenue lost, but expand it enough to make back all? It’s not because any group of reality-based Republican economists believed it. In his 1998 book “Principles of Economics,” Mankiw derided Ronald Reagan’s early-’80s supply-side experiment as “fad economics” peddled by “snake oil salesm[e]n … trying to sell a miracle cure.” It’s because a Republican journal of ideas called the Public Interest thought it would be a politically convenient claim to make. As its editor Irving Kristol later explained, his “own rather cavalier attitude toward the budget deficit and other monetary or fiscal problems” arose because “the task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority — so political effectiveness was the priority, not the accounting deficiencies of government.”

OK, so let’s see if I can get this straight — Kristol wanted to create a conservative majority, and to achieve this he and other movement righties pushed the not conservative (in any traditional sense of the word) notion that deficits don’t matter. In other words, the plan was to convert people to conservatism by selling them on an unconservative policy. I assume they think this conservative majority would be good for America, even if they have to wreck the economy to create the majority.

And they call us moonbats.

Happy News Roundup

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Congratulations to Italy on winning the World Cup! “A joy so big I have never felt,” said coach Marcello Lippi.

The photograph of the sun beaming down on an Italian flag is one I took early this year in Tuckaho, New York, from outside the Generoso Pope Foundation building. I had planned to send it to Michelle Malkin to get her worked up over il riconquistare — the nefarious plot to claim America as Italian territory in the name of Amerigo Vespucci, Giovanni da Verrazzano and Cristoforo de Colombo — but I never got around to it.

If I’d only realized this was an omen of a World Cup victory and placed bets then … oh, well.

Getting all the happy news out of the way early so I can go back to snarking — Paul Krugman writes that the economy of the world’s greatest city — New York, New York — is thriving.

Update: Via Avedon — some great editorial cartoons.

Ohio

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George Will is afraid.

Brown is a harbinger of a momentous, and ominous, aspect of the 2008 presidential election: For the first time in living memory, one of the major parties — Brown’s — will be essentially hostile to free trade, the foundation of today’s prosperity. The Democratic Party’s protectionism operates under the dissimulating label of “fair trade.”

“Brown” is Sherrod Brown, whom you might recall is the Democrat running for Senator from Ohio instead of Paul Hackett. Although I like Hackett and was distressed that he felt he’d been shoved out of politics — Sherrod Brown is good, too. He’s real good.

Brown, whose career voting record is, according to the American Conservative Union, more liberal than another Cleveland area congressman, Dennis Kucinich, makes scant concession to conservatism, cultural or economic. He opposes bans on same-sex marriage (DeWine also opposed the ban that Ohio voters overwhelmingly passed in 2004), human cloning and partial-birth abortion.

I think I’m in love.

But he does favor a line-item veto and a constitutional amendment to require a balanced federal budget. That amendment, which would constitutionalize fiscal policy, is a terrible idea but a convenient gesture by Brown, who knows it is going nowhere.

Pretty much the same game Republicans played with a proposed balanced budget amendment in the 1980s and early 1990s. What took the wind out of those sails was Clinton’s balancing of the budget.

But back to Wills’s fear that Dems will destroy the economy with “protectionist” policies — I argued here that unfettered globalism is hurting the U.S. more than it’s helping. Members of the investor class, like Will, can’t see it, because their stock portfolios look just fine and the GDP is growing, if not at record rates. But globalism in practice has given us corporate profits based on the exploitation of foreign labor, which in turn is eroding wages and employment standards within the U.S. Robert Kuttner argues that it may be compromising national security as well.

Will continues,

A serious student of trade policy, Brown notes that the trade deficit for all of 1992 was $39 billion, but was $724 billion last year and $68 billion just for January 2006. He wants U.S. trade policy to force “stronger labor and environmental standards” in less-developed nations. He says the point is to “bring up their living standards.” Oh, please. The primary point is to reduce the competitive advantages of nations with lower labor costs and lighter environmental regulations — nations that many Ohioans believe have caused their state to lose 222,800 manufacturing jobs in the past 10 years.

I see it this way — unfettered globalism amounts to importing lower wages and worse working conditions for Americans. We can either passively accept the destruction of a way of life for millions of Americans as the cost of doing business, or we can pro-actively work to export our employment standards to the rest of the globe. This will not only prevent countless Americans from falling out of the middle class, but it will improve the lives of workers everywhere. So corporate profits will be a little less robust — think of it as the cost of doing business.

Put another way — does this glorious global economy exist to serve humankind, or does humankind exist to serve the glorious global economy?

This is a question We, the People and our elected representatives need to be thinking about now, and we need to be very clear in our minds what our answer is. We’ve been stumbling along for the past few years with conservatives and neoliberals selling us a vision of global economy utopia that doesn’t add up. These people should be called upon to show us, in very concrete terms, how washing machines manufactured in Mexico and exported to India are going to enrich American workers. They need to be very specific about where jobs will come from to replace the manufacturing jobs we are losing. Platitudes about boats and rising tides, or band-aid answers about education, are not going to cut it. We need details. We need to see the plan. Now.

It may not have caused Will any inconvenience that Ohio lost 220,000 manufacturing jobs in the past ten years, but I ‘spect lots of Ohioans are keenly bothered by it. And just about every time a citizen of Ohio loses his Union job and health benefits, Sherrod Brown likely gains another supporter.

Naked Planet

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In today’s Boston Globe, Robert Kuttner writes

The Dubai ports affair invites a closer examination of the premise that the freest possible commerce in goods and services is all benefit and no cost. Let’s see whether we are ready to take a serious look at complications of globalism.

Kuttner first places globalization in the context of national security:

There have long been national-security exceptions to the supposed ideal of free trade. The effort to contain proliferation of nuclear technologies and materials is one, but hardly the only one. The Defense Department and the corporate community regularly joust over which exports of advanced technologies should be constrained because of potential military uses.

The United States has an entirely schizophrenic view of trade in other weapons. It is the largest exporter of arms; this is presumably good for both business and for the project of knitting together other countries’ military establishments with ours. Then US intelligence officials worry about these weapons falling into the wrong hands, which they often do.

But at least in the area of defense, there is a serious conversation about the limitations of free trade.

Elsewhere, nobody seems to be talking — “Anyone who raises the complications of globalism is dismissed as an economic imbecile,” Kuttner writes.

The American Right as well as “neoliberals” like Thomas Friedman and much of the Democratic Leadership Council have been pushing us toward utterly unfettered and unregulated global “free markets” as fast as they can, selling it as the ultimate win/win — more goodies for everyone. And last week saw President Bush in India praising outsourcing —

“It’s true that a number of Americans have lost jobs because companies have shifted operations to India,” he said in a speech previewing his trip to India and Pakistan next week. “We must also recognize that India’s growth is creating new opportunities for our businesses and farmers and workers.

“India’s middle class is now estimated at 300 million people,” he said. “That’s greater than the entire population of the United States.”

Bush continues by picturing all those Indians buying American goods — “McCurry Meals from McDonald’s, home appliances from Whirlpool” — and you can almost hear those cash registers go ka-CHINK.

I suspect Whirlpool was chosen as an example because Whirlpool washing machines are still manufactured in Ohio. Most other major appliance manufacturers have moved manufacturing operations to Mexico or China. But on closer inspection Whirlpool may not be such a great example, either. From the trade journal Modern Plastics Worldwide (February 1, 2006):

Whirlpool (Benton Harbor, MI) said it will open a new refrigerator facility in Ramos Arizpe, Mexico, a $100 million investment scheduled to start production in mid-2006. The first phase of the new facility will produce about 250,000 units annually, with production gradually increased to reach 500,000 units annually.

Whirlpool, considered one of the two largest OEMs in this market along with Sweden’s Electrolux, already is a major manufacturer in Mexico, with five plants and 7500 employees. And the company isn’t done yet. Between 2004 and this year, Whirlpool will invest about $250 million in Whirlpool Mexico, allowing the company to double both sales and its labor force there, and almost triple supply purchases in Mexico, according to a report in MexicoNow. The company’s new washing machine plant in Monterrey started operating last summer, and initial production is meant for export.

Oops! I guess not all Whirlpool washing machines are built in Ohio.

So maybe I’m an economic imbecile but I can’t see how “opportunities” are being created for American workers when appliances are built in Mexico and sold in India. And whenever I have asked this of righties, I’m told a little pain is the price of progress — once upon a time horse-drawn carriage manufacturers went out of business, too.

Yes, but as I understand it people stopped buying horse-drawn carriages because they were buying automobiles instead — automobiles mostly manufactured in Detroit. So automobile manufacturing replaced carriage manufacturing; when one door closed, another was already open. Electric lights replaced candles. Home computers replaced typewriters. One kind of manufacturing was shoved aside as another took its place. Yes this was stressful on individuals who lost jobs, but technological innovations do create many new opportunities.

But outsourcing is different. What new opportunities will be created for workers by outsourcing manufacturing overseas? Please spell it out for me. I can’t see it. Yes, American-owned businesses might make more money, but there’s no law that says that money will be used to create more jobs for American workers. It’s more likely to create more jobs for Mexican workers. How can American labor compete other than by pricing itself down?

I see that annoying yellow happy face from the Wal-Mart TV ads merrily flitting about, cutting wages everywhere. And not just wages.

Kuttner continues,

As Americans, for instance, we have benefited from a social compact of protections enacted by our democratically elected representatives — minimum wage laws, safety and health laws, social insurance, consumer safeguards, the right of workers to unionize, and so on. When we trade with nations that have no such protections, we run the risk of importing the absence of a social compact along with the products. That doesn’t mean we should seal up our borders, but it does mean we should look harder at the terms of engagement.

Shouldn’t we insist on certain social minimums in nations that want to trade freely with us? Should we allow the exploitation of foreign labor to lead to the battering down of wages and standards at home?

It’s an article of faith among righties that, somehow, this will not happen. But they can’t explain why it wouldn’t. Don’t tell me about the horse-drawn carriage guys; that example doesn’t apply.

Righties tell us that when American companies make lots of money, it trickles down to workers, somehow. But the Dubai port episode reminds us that ownership of business is increasingly global and multinational. Last year a consortium of China’s Qindao Haier Ltd. and two U.S. equity partners attempted a takeover of Iowa-based Maytag. This takeover failed; at the moment the FTC is looking at a merger between Maytag and Whirlpool. But consider — had the takeover gone through I assume Maytag would have become a subsidiary of a Chinese company that manufactures in Mexico. And this provides opportunities for American workers, how?

We need to have a serious and honest national discussion about the loss of manufacturing jobs in America. We need to find a realistic middle way between knee-jerk protectionism and knee-jerk globalism. I’m not sure what that way might be, but Bush’s happy talk and assurances that, somehow, it’s all going to turn out just fine is not workin’ for me.

Bush Budget Follies

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Once again it’s time for the Bush Fantasy Budget. Here’s a roundup of commentary, starting with Eric Alterman:

You can skip “The Note” today, and almost every article written about the Bush “budget.” Typical of Bush, it’s a lie from start to finish. The Times notes “omissions include any costs for the war in Iraq after 2007, any additional reconstruction costs for New Orleans after 2006 and any plan for preventing a huge expansion in the alternative minimum tax after the end of this year,” and that’s just for starters, here. Bush has done to the country’s fiscal sanity what he’s done to Iraq’s physical infrastructure. We are talking shortfalls of trillions of dollars, all to no useful purpose. Congrats to all his enablers on all fronts, including the Washington Post’s Kool-Aid drinking Amy Goldstein who writes, with a straight-face that this phony-baloney budget is aimed “taming the deficit to satisfy conservatives, who complain that Bush has presided over a rapid expansion of federal spending.” Here. This is the kind of MSM reporting that backed up Bush on claims like “You can’t talk about Saddam Hussein without talking about Al-Qaida.”


New York Times editorial:

President Bush’s $2.77 trillion budget is fiction masquerading as fact, a governmental version of the made-up memoirs that have been denounced up and down the continent lately. The spending proposal is built around the pretense that the same House and Senate that are set to consider a record deficit of $423 billion will now impose a virtual freeze on everything other than Pentagon and homeland security outlays. The budget writers even fantasized an end to Social Security’s lump-sum death benefit — a whopping $255 per recipient — as if Congress would dare to do something so heartless and easy to exploit in an election year.

The point of all these imaginary financial projections is to give the president leeway to cement in place hundreds of billions of dollars in tax cuts the nation can ill afford and does not need. The cuts were made temporary in the first place because there was no way to even pretend that budgets could be balanced in the future with such an enormous loss of revenue.


Scot Lehigh, Boston Globe:

IF GEORGE W. BUSH had been candid when he stood in the House chamber last week to report to the nation, here’s one thing he would have said: ”My fellow Americans, we are steadily squandering our children’s future.” …

…Although they favor very different remedies, a remarkable consensus exists among fiscal experts, regardless of where they fall on the ideological spectrum, about the magnitude of our budgetary problems.

”I just came from a panel with [former OMB director] Alice Rivlin of Brookings and Bob Bixby from the Concord Coalition, and we couldn’t stop agreeing on the long-term budget danger,” Brian Riedl, chief budget analyst at the conservative Heritage Foundation, said on Friday. ”We may disagree on the solution, but among economists and think tanks, there is not much disagreement that the budget deficits within the next five, 10, or 20 years will reach levels that are practically unheard of.”


E.J. Dionne, Washington Post:

The roots of our fiscal madness, on display once again yesterday with the unveiling of President Bush’s new budget and its deficit in excess of $350 billion, were planted on Oct. 27, 1990. …

… Ever since Bush 41’s defeat in 1992, Republicans — especially Bush 43 — have committed themselves to the proposition that they will never, ever cross the tax-cutting Republican right. Taxes will be cut in good times and in bad. They will not be raised, no matter how much the government decides to spend. If preserving Republican unity requires throwing the entire cost of the war in Iraq onto the next generation, go for it. Does the Pentagon need big spending increases? Fine, but don’t even think about paying for them with new taxes.

Tax cutting is now the idol of the Republican shrine.


Jonathan Weisman, Washington Post

The president’s budget acknowledges the cost of Bush’s call to make his tax cuts permanent — $1.35 trillion over the next decade and nearly $120 billion in 2011 alone. But beyond 2007, the budget assumes no military expenditures in Iraq or Afghanistan and no effort to address the unintended effects of the alternative minimum tax, a parallel income tax system that was designed to hit the rich but has instead increasingly pinched the middle class. It also assumes Congress will cut domestic spending every year after 2007.

Those factors led Goldman Sachs economists to tell clients yesterday that the deficit forecasts are “unrealistic.” …

… “This budget is not going to happen,” said Stanley E. Collender, a federal budget analyst at Financial Dynamics Business Communications. “Of all the budgets I’ve seen recently, this is the one going nowhere the fastest.”

Hale Stewart, BOP News:

The logic here is baffling at best. Bush has continually stated he wants to half the deficit (which he created — he inherited a surplus and three consecutive balanced budgets). Yet, he continually proposes spending cuts that are disproportionate to his revenue decreases. According to the CBO, overall revenues have increased 8.16% since 2001 while overall spending has increased 32.68%. … They continually use special appropriations for Afghanistan and Iraq. As a result, the budget does not contain the cost of both campaigns. This allows the administration to play hide the ball regarding the overall cost.


Max Sawicky, TPM Cafe:

There will be many more shoes to drop regarding the Bush Administration’s budget for Fiscal Year 2007, to be released today. I want to hit a quick one. By now it is pretty widely understood that the destabilizing element in the budget in the long run is health care, which means Medicare and Medicaid. All cuts proposed today and performed thus far have completely neglected this elementary fact. Worse, the Administration substantially worsened Medicare funding by adding a drug benefit with no accompanying revenue.

Otherwise, it’s a great budget. (sarcasm off)

Darts and Dolts

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I hate to quibble with Anatole Kaletsky, who wrote this in the London Times:

For the past five years, America has been led by a president who is clearly not up to the job — a man who is not just inarticulate, but lacking in judgment, intelligence, integrity, charisma or staying power.

Who (with a brain) could argue with that? But then Kaletsky writes,

While America has been run by one of the most doltishly ineffectual governments in history, it has forged ever further ahead of Europe in terms of wealth, science, technology, artistic creativity and cultural dominance.

Why does America’s prosperity and self-confidence seem to bear so little relationship to the competence of its government? The obvious answer is that America, founded on a libertarian theory of minimal government, has always had low expectations of politicians. In America, it is not just business that thrives independently of government, perhaps even in spite of government. The same is also true of other areas of excellence which in Britain are considered quintessentially in the public domain — higher education, leading-edge science, culture and academic research. Because Americans expect so little of their government, they are rarely disappointed. They do not slump into German-style angst when their governments fail to find solutions to the nation’s problems.

Kaletsky then tosses in some anti-Gubmint proverb from St. Ronald Reagan. But the attitude he describes has not been common throughout American history. Through most of our 225 or so years we have expected the government to work for us. And most of the time, it has. It’s only been in the post-Vietnam era that conventional wisdom said government can’t be expected to walk and chew gum at the same time, so to speak.

When you are dealing with big things, like a huge and prosperous nation, it takes a long time for momentum to stop. If the people of the world are still lining up for American movies and blue jeans, this is the result of many decades of momentum. Since Reagan, the Right has been trying to undo generations of progressive reform, and by now they’ve dismantled quite a bit of it. But a lot of us are still benefiting from The Way America Used to Be Before Reagan. Boomers like me are still benefiting from the fact that our fathers got free educations on the GI Bill and our newlywed parents got cheap housing and cut-rate mortgages from other government programs, for example. Our parents’ prosperity got us off to a good start and put us on the road to security, equity, and stock portfolios. In a very real sense, many of us today are living better lives because government in the 1940s and 1950s effectively responded to the needs of citizens.

Each generation of middle-class, working Americans on the whole has been more educated and more affluent than the generation before. Even though we boomers bellyached a lot that our parents had it better than us, in the end we kept the momentum going. I wonder if the same thing will be true for my kids’ generation, though. The 20-somethings of today really are having it harder, I believe. Jobs are less secure, wages are stagnant, benefits are being cut, pensions are things of the past. Maybe I’m being too pessimistic, but seems to me the momentum may be about to stop.

Put another way, the full effects of having a dolt in the White House now may not be felt for another 20 years. I wonder what commentary the London Times will publish then?

What’s in a Word?

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Steven E. Landsburg is an asshole. That’s my opinion. Ezra, on the other hand, says Steven Landsburg is a dick. Hmm, which is worse — dick, or asshole? I say asshole, but I’ll listen to arguments.

Max says he’s an idiot savant, but that sounds too grandiose. How about “morally autistic”? But in an earlier post Max said Landsburg has the “moral sensibility of a biscuit.” Better.

Kevin Drum came up with “condescending, juvenile, obtuse, and soul cankered.” Best comment: “Have we no workhouses?”

Party Time

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An editorial in today’s Boston Globe begins,

THE EARLY DAYS of the Bush administration seem like another era: no Sept. 11 attacks; no war in Iraq; no Hurricane Katrina; no $317 billion deficit. The president’s chief ambition early in 2001 was to cut taxes deeply to soak up large budget surpluses. Yesterday, two sections of that law took effect, and will reduce taxes for the wealthiest Americans by about $27 billion over the next five years.

After you’ve digested the Globe editorial, take a look at this post by Hale Stewart discusses a Congressional Budget Office study that proves “supply side” doesn’t work, and cutting taxes does not stimulate the economy sufficiently to make up the loss of revenue. If the government cuts taxes, it loses revenue. Simple as that.

At the New York Times, via True Blue Liberal, Bob Herbert shows us how Congress is attempting to pump federal revenues — by sacrificing the poor.

Consider the budget that will soon be sent to the president for his signature. Members of the House and Senate have agreed on legislation that achieves something approaching $40 billion in savings over five years primarily by hammering the sick, the poor, the elderly and college students and their families.

This is the same Congress that genuflects each time the president asks for yet another gift-wrapped tax cut for the wealthiest among us. The textbooks tell us that the U.S. is a representative democracy, but only the upper strata are truly represented.

The nearly 800-page budget bill would allow states to jack up the premiums and co-payments of millions of low-income Medicaid recipients. It would also allow some Medicaid benefits to be rolled back.

One of worst aspects of the Medicaid provisions is that large numbers of poor people, faced with the higher premiums and co-payments, will inevitably decide to take a pass on the health care they need. Some will die.

But others are doing very well, of course, as described in this editorial in today’s NY Times, which begins:

There is no shortage of numbers and studies detailing the widening gap between what American companies pay workers and the millions of dollars those same companies pay top executives. But just in case anyone hasn’t been paying attention, here enters David Brooks, chief executive of the bulletproof vest manufacturer DHB Industries Inc., to provide a fuller picture.

Thanks to defense contracts, Mr. Brooks (not to be confused with Bobo, the Times’s famous keyboarding vegetable) is a fabulously wealthy man. He recently threw a $10 million private party for his daughter and her friends at the Rainbow Room at Rockefeller Center. Meanwhile, much of the body armor Brooks sold to the DoD has been recalled for being defective.

The editorial continues,

Meanwhile, the party came less than three months after the release of a report on ballooning pay for chief executives that singled out Mr. Brooks for making $70 million in 2004 compared with $525,000 in pre-Iraq-war 2001. The report said he made an additional $186 million in 2004 selling company stock.

The same report, by the Institute for Policy Studies, a left-leaning research center, and United for a Fair Economy, a group seeking to narrow the gap between rich and poor, found that in 2004 the ratio of C.E.O. pay to worker pay at large companies had ballooned to 431 to 1. If the minimum wage had advanced at the same rate as chief executive compensation since 1990, America’s bottom-of-the-barrel working poor would be enjoying salad days, with legal wages at $23.03 an hour instead of $5.15.

One of the conceits of winger philosophy is that people are rich because they deserve to be rich, and vice versa. Wealth naturally finds its way into the hands of the virtuous and hard-working. Another conceit is that markets must be “free” and business unregulated to allow “nature” to take its course; oversight and regulation interfere with the mandate of heaven, as it were, and cause wealth to flow to people who don’t deserve it. This is not just bad economics; it is immoral, they say.

Republicans must think they are doing God’s work by tweaking law and public policy to be sure the wealthy get wealthier, and the poor are punished for being poor. Why this is any less “artificial” than regulations keeping business honest and preventing exploitation of labor isn’t clear to me, but then I’m not a Republican.

In Republican World, war profiteers are God’s Chosen People. If Defense Contractor Brooks is making lots of money in spite of the fact that he sells defective products that put our soldiers at risk, it’s God’s Will. And blessed are them that inherit big bucks, because they are virtuous and wise and deserving by birth and don’t have to work at it real hard.

And has anybody else noticed how many of the leaders and spokespeople of today’s conservatism are the children of the leaders and spokespeople of yesterday’s conservatism? Well, it worked for them, huh? Can’t argue with success.

See also: Los Angeles Times series on how economic changes in the U.S. have shifted financial risks.

Happy People

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I keep seeing variations of the same conversation on the television talk shows: The bobbleheads tell each other the economy is doing great but wonder why the President isn’t getting credit for it. Here’s just one example, from MSNBC’s “Hardball” for November 29.

JOHN FUND, WWW.OPINIONJOURNAL.COM: Well, in the White House you have two divisions. You have the people who say what, me worry? There is nothing going wrong, and anything that‘s going on is somebody else’s fault.

And then there are those who are panicking because they see this administration as rutterless [sic], and they’re worried that the president at the top isn’t paying sufficient attention.

[CHRIS] MATTHEWS: Which—can you give me a couple of names in the everything’s fine category?

FUND: Andy Card, the White House chief of staff.

MATTHEWS: How about in the I’m worried?

FUND: I would say you would go into Al Hubbard, the vice president’s shop, various other people. They’re people who worry that the good news [on] the economy—because the economy is doing very well—is not seeping through.

The administration’s ratings of the economy are down, even though the economy is up.

MATTHEWS: Yes, the market is up almost 11,000, the best market we have had in months.

Let me go to you Tom DeFrank.

Is that the way you see it? There‘s sort of a split screen between the people in the White House who are scared to death because they do see unfair to get credit for the economy and a continuing erosion, I think, on the war front?

TOM DEFRANK, NEW YORK DAILY NEWS: Yes, there definitely are two factions. And the problem is the president is basically the only faction that counts.

MATTHEWS: And he listens to the happy people.

The good news on the economy is not seeping through. Geez, I wonder why?

The good news has sure seeped through in Washington DC. Ruth Marcus writes in today’s Washington Post:

It was the $1,260 thigh-high giraffe-print boots that started me thinking about Jack Abramoff, Benjamin Ladner and how Washington has changed.

I happened to notice the boots as I was flipping through the latest issue of DC, “The magazine of luxury lifestyle.” Oversized, overstuffed with ads for oversized jewels and undersized clothes, DC is one of a trio of glossy magazines launched this year to appeal to the region’s ultra-high-end market.

I don’t expect — possibly not even the people who put out DC expect — to see anyone actually wearing these boots anytime soon. Rather, the boots — and the $9,100 Louis Vuitton carpet bag with ostrich trim and the $1,900 mink throw featured in the same spread — symbolize a growing Washington phenomenon: extreme wealth.

According to”The Note” for December 2:

The Bush/Cheney/Evans economy got a shiny segment in the first half-hour of NBC’s “Today” show this morning with CNBC’s Jim Cramer giving rave reviews for retail sales, the stock market, and jobs.

Cramer went on to say that home heating is the one thing keeping America’ economy from being great instead of just good.

“The President’s in the bunker. It’s a really great story he could tell, but he doesn’t seem to be that adept at it anymore,” added Cramer.

Of course, that very morning the President did make a Rose Garden appearance to crow about the great economy. So he gave it a shot. Yet Reuters reported the next day:

President George W. Bush, trying to lift his sagging approval ratings, has launched a push to take credit for recent positive economic news the public has largely shrugged off.

In one example of the pessimism, an ABC/Washington Post poll taken in the month ended Nov. 13 showed 64 percent of Americans described the economy as poor or not so good, with only 36 percent judging it to be good or excellent.

Paul Krugman discusses this phenomenon in today’s column:

Yet by some measures, the economy is doing reasonably well. In particular, gross domestic product is rising at a pretty fast clip. So why aren’t people pleased with the economy’s performance?

Like everything these days, this is a political as well as factual question. The Bush administration seems genuinely puzzled that it isn’t getting more credit for what it thinks is a booming economy.

He offers an explanation:

It should have been a good year for American families: the economy grew 4.2 percent, its best performance since 1999. Yet most families actually lost economic ground. Real median household income – the income of households in the middle of the income distribution, adjusted for inflation – fell for the fifth year in a row. And one key source of economic insecurity got worse, as the number of Americans without health insurance continued to rise.

We don’t have comparable data for 2005 yet, but it’s pretty clear that the results will be similar. G.D.P. growth has remained solid, but most families are probably losing ground as their earnings fail to keep up with inflation.

Behind the disconnect between economic growth and family incomes lies the extremely lopsided nature of the economic recovery that officially began in late 2001. The growth in corporate profits has, as I said, been spectacular. Even after adjusting for inflation, profits have risen more than 50 percent since the last quarter of 2001. But real wage and salary income is up less than 7 percent.

In other words, it ain’t tricklin’ down. And the rising tide ain’t liftin’ all the boats.

There was an exchange on yesterday’s “This Week With George Stephanopoulos” that was priceless, and I’m sorry I haven’t been able to get my hands on a transcript. In the roundtable segment, the Usual Bobbleheads were utterly mystified as to why the plebians don’t appreciate the great economy. Then Robert Reich spoke up and repeated many of the things Krugman says above. And the bobbleheads stared at Reich for a moment, then collectively shrugged off what he had said. Nah, that can’t be it. Then George Will offered an explanation that made no sense at all, and I’m very sorry I can’t repeat it here. I seem to have repressed it.

I wonder if Barbara and Jenna have their giraffe-print boots yet?

Reality Bites

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Could an epidemic of second thoughts be spreading on the Right?

If so, it’s spreading slowly. Righties are still righties, and many’s the winger who will insist he still feels fine even as flesh is consumed and internal organs are shutting down. But reality can be catching, and nobody avoids it forever.

In Salon, Joe Conason reports that some righties are grudgingly acknowleding that, maybe, um, we need some government regulation after all.

On the day that avian flu reaches these shores, even the most conservative Americans may begin to understand why effective government and global cooperation are as important as “free markets” and national sovereignty. With millions of lives at stake, they may well wish that we had spent more to bolster public health agencies at all levels — including the United Nations — instead of entertaining the simple-minded demagogy of the right for the past two decades.

Indeed, the pandemic threat is already exposing the limits of “free market” rhetoric among Washington’s right-wing think tanks, which have remarkably little to say about the subject that now preoccupies officials and experts around the world. …

…After many years of undermining global and national efforts to combat the HIV/AIDS pandemic, organs of Republican propaganda like Heritage suddenly consider public health to be a pressing concern of the federal government, right next to national defense on the list of priorities. Conservatives tend to change their attitudes quickly when their own lives and families might be endangered.

Conason reminds us that another repository of conservative “thinking,” the Cato Institute, in the pre-Katrina past called for the abolishment of FEMA — “presumably because everyone should depend on free-market solutions in case of an earthquake or hurricane” — and wanted the U.S. to stop paying dues to the U.N., thereby defunding the World Health Organization.

“The withdrawal of American participation and support from world organizations has always been a matter of principle for the Republican right,” Conason says, “although conservative ideology has yet to explain how we can close our borders to bird-borne disease.”

Details, details.

“The Cato attitude toward bird flu is much like the libertarian solution to global warming: If the ‘free market’ can’t solve the problem, let’s pretend it isn’t happening,” Conason writes. But the free market is not cooking up the stockpiles of vaccines and Tamiflu we’re likely going to need.

(Republican problem-solving amounts to denying there’s a problem until it bites their butts. Poverty, jobs, environment, health care, you name it — every time, Republicans will insist there is no problem until the crisis actually gets in their faces and threatens to hurt them in the next election. Then, of course, they will blame the problem on Democrats. On the other hand, Republicans are prone to manufacturing crises where none exist in order to enact some policy they know won’t sit well with the public.

Democrats on the whole will recognize problems shaping up down the road, although their solutions may or may not work as promised. However, I have to think back quite a while to remember a time when Democrats were in a position to enact much of anything that wasn’t compromised to death by Republicans before it became law. But if a Democratic remedy misfires, Republicans exploit the failure to expound their anti-government theories, never mind that the problem would not have evaporated had government not responded to it. )

Reality is settling over the GOP like a bad hangover. At the Washington Post, Shailagh Murray writes that some in the GOP regret they overindulged in pork when they wrote the highway bill.

The highway bill seemed like such a good idea when it sailed through Congress this summer. But now Republicans who assembled the record spending package are suffering buyer’s remorse.

The $286 billion legislation was stuffed with 6,000 pet projects for lawmakers’ districts, including what critics denounce as a $223 million “Bridge to Nowhere” that would replace a 7-minute ferry ride in a sparsely populated area of Alaska. Usually members of Congress cannot wait to rush home and brag about such bounty — a staggering number of parking lots, bus depots, bike paths and new interchanges for just about every congressional district in the country that added $24 billion to the overall cost of maintaining the nation’s highways and bridges in the coming years.

But with spiraling war and hurricane recovery costs, the pork-laden bill has become a political albatross for Republicans, who have been promising since President Bush took office to get rid of wasteful spending.

So why couldn’t they see this coming? Did the war thing just slip their minds? Did a ouija board tell them not to worry about natural disasters? Of course, part of the problem is that there used to be presidents who took the governing thing seriously and who would have refused to sign the bill. Murray continues,

President Ronald Reagan once vetoed a highway bill because it contained 152 pet projects. Despite the pork inflation, Bush had no complaints about the current package when he signed it on Aug. 10. “This bill upgrades our transportation infrastructure,” he declared. “And it accomplishes goals in a fiscally responsible way.”

Junior wouldn’t recognize fiscal responsibility if it bit his butt.

That was before Katrina devastated New Orleans and the Mississippi Gulf Coast, leaving tens of thousands homeless and requiring billions of dollars in unanticipated rebuilding costs. Trying to live within a tight budget, Republican leaders in the House and the Senate are in the process of pushing through politically difficult cuts in Medicaid, Medicare, food stamps, farm subsidies and student loans.

Making sure the poor and disadvantaged make all the sacrifices–that’s the Republican way. And since entrenched poverty so excacerbated the damage of Katrina, it’s so sensible to make the problems of poverty even more intractable. The Guardian observes,

If the budget cuts passed by the US senate on Thursday are anything to go by, the whole thing will end in tears. Republicans – disgracefully – targeted most of the cuts on the elderly and the poor through restructuring (ie cutting) some Medicare and Medicaid programmes. Worst of all, part of the cuts originally aimed (creditably) at cutting America’s ludicrously high agriculture subsidies was amended so the brunt would be taken by chopping $844m from food stamps for the poor rather than from farm subsidies. Meanwhile, Republicans are hoping to pass yet more tax cuts for the wealthy. An administration that can tackle a serious budget problem in this way deserves all that may be coming to it.

The Republicans may hope to pass yet more tax cuts for the wealthy, but there are signs the soak-the-poor crowd may be losing their edge there, too. Robert Kuttner writes in the Boston Globe,

AFTER HIS reelection, President Bush set two top domestic priorities — privatization of Social Security, and ”reform” of the tax system. Privatization ran into a wall of opposition once the public grasped that the price would be a big cut in guaranteed retirement checks.

On Tuesday, Bush’s blue-ribbon commission on tax reform issued its recommendations, and they are hitting with a similar, resounding thud. The political right wanted a flat tax, a consumption tax, or a national sales or value-added tax in place of the progressive income tax. Not only did the commission fail to support any of these, but it took on one sacred cow — capping the mortgage interest deduction that would raise taxes on the upper middle class. … it was far from what the drown-the-government crowd wanted, and one more sign that Bush is losing control of the agenda.

Damn those economists. They actually check their math.

And here’s the biggest jaw-dropper of the day: Jim VandeHei writes in WaPo that

President Bush has ordered White House staff to attend mandatory briefings beginning next week on ethical behavior and the handling of classified material after the indictment last week of a senior administration official in the CIA leak probe.

Bush? Ethics? The Apocalypse is at hand, I tell you …