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Posted at 11:00 AM ET, 12/ 3/2010

Terrible jobs numbers

By Jennifer Rubin

As The Post reported this morning, the job numbers out today are awful:

After three months of holding steady, the unemployment rate rose to 9.8 percent in November, with payroll employment showing little growth, the U.S. Bureau of Labor Statistics reported Friday.

The jump is another sign of weakness in the recovery. The monthly report dashed the expectations of economists, many of whom had predicted much more robust job growth.

This is going to make the Democrats' position on taxes even more precarious. Do they really want to vote to subject anyone to a tax hike? I mean, at 10 percent or 12 percent unemployment (though we hope we don't get to those figures), would they give up their class warfare shtick?

As you might imagine, congressional Republicans are not missing the chance to highlight the Democrats' failure to hold down unemployment. Rep. Tom Price (Ga.) sends out a release:

"Nationwide, the unemployment rate has stayed at 9.4 percent or higher for 19 straight months," said Chairman Price. "Yet instead of sensible policies to encourage private sector job creation, Democrats have pushed one job-killing idea after another. Just yesterday, Speaker Pelosi's lame duck majority voted for higher taxes on small businesses all across the country. Well, higher taxes don't hire Americans. Small businesses do.

"Washington has built up some daunting barriers to job creation in recent years. Breaking down those barriers will be Republicans' number one goal next year."

Likewise, Rep. Eric Cantor, soon to be the Majority Leader, puts out a statement, which reads in part:

"Today's jobs report marks the 19th consecutive month in which unemployment has exceeded nine percent--an unacceptable result. We must do everything possible to bring that number down and get people back to work by ending the uncertainty that is plaguing the private sector. To start, Congress should reassure job creators and investors by taking the impending tax hikes off the table. I am hopeful that the negotiations between the Administration and Congressional leaders will result in legislation to ensure that tax rates will remain unchanged for the next several years. Political gimmicks -- like yesterday's vote in the lame-duck House - are emblematic of a dysfunctional Washington and a sad example of what millions of Americans profoundly rejected on election day. People want and deserve results, and Republicans will ensure - one way or the other - that no American has their taxes raised in this economic environment."

And with every upward tick of the unemployment numbers, the task of bringing unemployment down to a remotely acceptable number by 2012 becomes more daunting. The White House, no doubt, is keenly aware of this.

By Jennifer Rubin  | December 3, 2010; 11:00 AM ET
Categories:  economy  
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Comments

While true that Obama did not create the economic crisis of 2008,by adding so much to our debt, foisting an unwanted health care reform plan on us, the tax the rich and businesses more schtick, and the generally anti-business rhetoric, the admin has extended the recovery by years, IMHO.

And note how rarely we hear about a 'jobless recovery' these days from the media. We have that on steroids, you know. But in a much milder recession in the Bush years, all we heard was 'jobless recovery.'

The mainstream media really needs some new kneepads for Christmas. They spend so much time on their knees for this administration, doing what they do best.

Posted by: jmpickett | December 3, 2010 11:07 AM | Report abuse

Jennifer


You are moving way too fast on the topics to foster any kind of discussion on your comment threads.

May I suggest that you have an "Afternoon Roundup" - like Greg Sargent has his "Happy Hour Roundup" - and you put a whole set of topics in one thread ???


Then I also suggest that you actively comment WITHIN the thread - and try to set some boundaries of civil discussion.

When someone is out-of-bounds, tell them immediately - and try to get the posters to act civily toward each other ????

Already, the past two days I find the comments to be overly hostile - and several posters have been complaining about your prior works.

I would suggest that you confront all this - don't let them get their attacks in without a strong response from you.


Anyway, good luck with this blog.

Posted by: RainForestRising | December 3, 2010 11:10 AM | Report abuse

Jennifer, one minor correction. The higher percentage means that more people are returning to the workforce looking for a job that isn't there yet, not people newly losing jobs per se.

Also little noticed, two hours later a report came out showing that the service economy grew for the 11th straight month, while manufacturing orders fell slightly. This proves once again that we are now fully a service economy, not a manufacturing one. Anybody hoping for a return to those type jobs will have to wait a long time, as in forever.

Posted by: 54465446 | December 3, 2010 11:15 AM | Report abuse

wow, so right-wingers really live in a world where sugar doesn't make you fat and tobacco doesn't cause cancer. Pelosi has nailed you all on this. Businesses across America are socking away record profits, making record payments to upper management, all while shedding jobs, if nothing else, just not hiring. The wealthy are getting extremely rich off this country. It's time for them to pay their dues.

All you have done is take the argument against raising taxes on the poor and middle-class and just...apply it to the wealthy, the 2% of the country holding 98% of the wealth. Can't you simply look at that number and see the problem?

But no the Republicans want to keep taxes down across the board and cut Federal spending. Because that will have no effect on the job market. None at all.

This conversation is basically over. You people are living with your heads in the clouds. Which you can do of course...because you're so wealthy that the concept of unemployment is not a concern.

Posted by: chucklebuck | December 3, 2010 11:18 AM | Report abuse

Heh. A troll gives lessons on netiquette.

BB

Posted by: FairlingtonBlade | December 3, 2010 11:18 AM | Report abuse

Unemployment is up, and that's your cue to push for extending tax cuts to the rich? Right, because they've created so many jobs with them since Bush gave them to them.

Meanwhile, not a word of criticism from you about the Republicans' Christmas present to the economy: cutting off unemployment benefits. Apparently the greed-driven Republican leadership has not yet glimpsed the Ghost of Christmas Yet to Come. But mark my words, they will, and sooner than they think.

You blog thus far is a joke. Is thinking conservative an oxymoron?

Posted by: chaos1 | December 3, 2010 11:24 AM | Report abuse

The headline asked, how can Democrats justify tax hikes now? Short answer: easily. Long answer: Democrats are raising taxes only on those who can afford to pay them and don't pay enough now. That's a sound bite that possibly even Sarah Palin could understand, though she would reflexively disagree with it, since it includes words of more than one syllable.

Posted by: TruthtoPower4 | December 3, 2010 11:29 AM | Report abuse

We have plain and simply reached a point where the Republicans are consistently blaming the Democrats for our national problems all while denying any responsibility for them themselves or any responsibility for obstructing the Democrats as they try to fix the problems resulting from past Republican administrations. And denying that they are doing *that* as well. Even talking it up, as if obstructing the President and the Democratic congress is a good thing.

It's become nothing but a complete cycle of spin meant to keep Republicans in office, Democrats out of office, and the wealthy and businesses across the country loaded with government spending, favorable regulations and low taxes. The problem is that those are not helping the job situation. They are not helping the poor and middle-class get anywhere in life, indeed, they are slowly sinking. All of these things that supposedly are so good for business that will supposedly "trickle down" to the poor and middle-class just are not working. They have been shown to not work for the past 25 years. The Republicans are left with nothing more than to say that the Democrats are the problem...after 2 years in power. Ignoring the past 20 years of Republican dominance in DC, that led to those past 2 years. And the Republican obstructionism of the past two years as well.

They are like thieves and muggers who blame the victims for their crimes, saying that if they would just open their homes and give their goods away they wouldn't be robbed or assaulted. That the more security they have, the more crimes the thieves and muggers will commit. This has just gone off the deep end. It's simple: if cutting taxes on the wealthy combined with minimal regulation on businesses were the cure for the job problems that this country is facing, then we would not have these problems. We would not be in this situation. Taxes have been either cut or kept constant on the wealthy almost every year for the past 10 years. The Republicans insist on giving the patient even more of the old-fashioned drug that is killing them, obstructing a lot of wise and learned people who know a lot better than they do, who have their eyes wide open to the facts, who know that either way the Republicans will blame the Democrats for all the problems and take credit for all the good things that happen.

Posted by: chucklebuck | December 3, 2010 11:29 AM | Report abuse

It's easy, Jennifer. The rich have hoarded the tax cuts, they haven't created JOBS with them. Any jobs they are interested in are overseas. Please don't pretend to care. There is a proposal to extend the tax cuts for the middle class on the table, get behind that if you really care about jobs, at least that money does find it way back into the economy and grinds its way along. I thought you Republicans were worried about the deficit? Or was that just a lie to get tax cuts for the rich?

Posted by: SarahBB | December 3, 2010 11:30 AM | Report abuse

The time is right to cut a deal. Extend all of the tax cuts for two years and extend unemployment benefits.

Everyone gets something they want.

Posted by: sold2u | December 3, 2010 11:33 AM | Report abuse

the second thing that is so obvious is that if you are going to "micromanage" the situation by talking about possible tax increases on the wealthy as bad for the economy and for employment (assuming for the moment that that is true) then why turn a blind eye to the other issues on the table:

-decreasing federal spending
-decreasing the federal debt
-killing unemployment insurance
-rollng back the universal health-care coverage

and anything else that would change the balance of federal payments to the public vs public payments to the federal government. The Republicans harp on reducing the deficit partially because they are now a horse with two heads (the traditional GOP and the Tea Pary) and because they believe that "fiscal responsibility" is a good thing.

So how is that consistent with the idea of having the wealthy 2% of the country that hold 98% of the wealth paying less tax? Does that make "fiscal responsibility" inconsistent with job-creation? So in requiring a pay-go approach to UI how responsible is that, if you want to create jobs?

Forget about all the numbers that show that UI payments are among the most effective types of government spending in terms of stimulating the economy, and that taxes on the wealthy are so disproportionately low that the wealthy themselves are arguing for increasing their taxes, and giving away billions to charitable foundations, who want to spread their wealth all over the globe. IE a large amount of it will not remain in the US. It just becomes clear with every passing Congressional maneuver that the Republicans are not only out of touch with sound financial management, but indeed a true danger to this nations' health.

And at this point it's becoming a clear case of every man for themselves. The Republicans would be happy to hold onto the wheel while the ship of state slams onto the rocks, and then blame the Democrats for the disaster.

Posted by: chucklebuck | December 3, 2010 11:39 AM | Report abuse

I'd like a lefty to explain to me how your federal income taxes can be cut if you don't pay federal income taxes. As is the case for about 50% of US wage earners.

If you are going to cut taxes, you're probably going to have to start with the people who pay federal income taxes. Is this that hard to understand?

The top 10% pay 60-70% of federal income taxes, from what I recall. obviously they are going to get more money back.

I'm not rich, my business is 1/4 of what it was 2 years ago. I just don't think it is helpful to raise taxes on anyone in this economy. It's the exact opposite of what we need to do. 'Greed' has nothing to do with it for me.

Posted by: jmpickett | December 3, 2010 11:45 AM | Report abuse

By my count, this blog post contains 146 words from Jennifer Rubin and 237 words from Republican press releases, thus literally accomplishing what Fox has been accused of doing figuratively.

What's on the agenda for tomorrow? A post about the lazy unemployed?

Posted by: chaos1 | December 3, 2010 11:46 AM | Report abuse

Jennifer,
Grow up and get off of the talking points. The tax cut if implemented covers EVERYONE up to 200K/250K. Everyone gets to keep the tax break up that amount.

Over that amount, a 3% increase would incurred with the demise of the temporary tax cut Bush put in place because he found no way to pay for it.

Posted by: FoundingMother | December 3, 2010 11:52 AM | Report abuse

Jenny Poo,

You mean the Bush-Cheney tax cuts currently in effect have not created jobs since the end of the recession?

That cannot be true.

You and your fellow Neocons have maintained that the continuation of the Bush-Cheney tax cuts on those Americans making $250,000 a year or more will create jobs. Those Bush-Cheney tax cuts have been in effect for seven and nine years, respectively.

If the Bush-Cheney tax cuts have not created jobs now, will you continue to argue that the Bush-Cheney tax cuts would create jobs in 2011, 2012, 2013, etc.?

C'mon, Jenny Poo, let's read your logical argument for this one.

Posted by: MarkinJC | December 3, 2010 11:55 AM | Report abuse

When are people going to wake up and realize that tax cuts don't equal jobs? George Bush gave the biggest tax cuts in history and still we ended up with the worst economy since the Great Depression. If tax cuts automatically lead to job creation we would be swimming in jobs by now. Tax cuts for large corporations and the extremely wealthly means that anyone whose title starts with a C ends up with a huge bonus while the rest of us get our jobs shipped over to India ( a process we subsidize through tax breaks). As a senior manager for several small companies over the years I can honestly say that no one I know bases the number of people they will hire or how much they will spend based on their tax burden. Companies hire people, buy new products, and make investments when they need to period.

End of surmon you may continue with your normal schedule.

Posted by: pezbb | December 3, 2010 11:55 AM | Report abuse

Because there is no correlation between taxes and jobs....

Corporate profits are steadily climbing, yet no one is hiring. Why? Because the job of a business is not to create jobs, but to create profits. When there is no demand for goods/services, there is no profit to be made by expanding the workforce - only by CUTTING the workforce.

Until DEMAND rises, hiring will not rise. DEMAND comes from the working class and the middle class. This is why EVERY Republican talking point about taxes is just plan wrong - yes, poor people are the ones who give you jobs; raising taxes on the rich will not result in lower employment.

Posted by: kreuz_missile | December 3, 2010 11:56 AM | Report abuse

I thought the Republicans and conservatives were opposed to Keynesian theory (namely, that during a recession you stimulate recovery through a combination of tax cuts and spending increases). You can't cherry-pick it. We have a serious debt problem in this country, and if you want to pay it down, there's no way to do that solely with spending cuts. We will need increased revenues, and if letting a temporary tax cut expire and return us to previous levels, which were already lower even than what Reagan wanted while he was president, then that's what we need to do. There will be time for tax cuts AFTER we have eliminated our $14 Trillion dollar debt.

Posted by: JLErwin3 | December 3, 2010 11:56 AM | Report abuse

jmpickett,
When is the right time to raise a tax?

Posted by: FoundingMother | December 3, 2010 11:58 AM | Report abuse

We are faced with two serious issues at once--high unemployment and high deficit spending. If a tax increase doesn't hurt the unemployment rate, it should be passed. Taxing the upper 2% won't hurt unemployment (at least not by much) and so their tax cut should be allowed to expire. There is nothing you can say to me to make me believe that taxing the ubber-wealthy will hurt us. Spending should be directed toward job creation right now--education, highways, public works projects, green energy, etc. We should cut the fat, earmarks, and waste and spend that money getting the economy going. We need to extend unemployment insurance and put money into community colleges to retrain people. The jobs that went to India, China and Mexico are not coming back. Last, we should enforce financial and other regulations so we don't end up in this mess again. (We should have tied aide to banks and corporations to economic stimulation, but alas we blew it.)

Posted by: insightinc | December 3, 2010 12:02 PM | Report abuse

"While true that Obama did not create the economic crisis of 2008,"

...which, by the way, has not yet actually been fixed, just triaged...

"by adding so much to our debt,"

...which was necessary to keep the nation afloat, which not only was a good idea but also supported by the Republicans which just goes to show you how necessary it was...and in any case is just "debt" which means if nothing else principal payments plus interest, which in the long run merely adds pressure to the dollar...but since just about every country in the world had to increase debt as a result of the housing fiasco, that's been a nonissue for the overwhelming majority of this...it wasn't free, but it certainly hasn't been a big problem...


" foisting an unwanted health care reform plan on us, "

And how exactly does the fact that it was supposedly "unwanted" affect the economy? It doesn't, admit it.


"the tax the rich and businesses more schtick,"

So the threat of higher taxes on the rich has led to consistently high levels of unemployment all while the rich are socking away wealth at record levels? Would you mind explaining exactly how that works? Since that's exactly what has happened. Let me just guess one time. Taxes, having been brought low during the Bush administration, have allowed the wealthy to keep more of their wealth, thus increasing the rate at which wealth shifts from the poor and middle class to the wealthy. Combine that with low interest rates, having been brought low to spur business borrowing, not giving the wealthy an incentive to actually invest their money in traditional bonds, so they are socking them away in stocks and hedge funds. But stocks and hedge funds are investment conduits, so the money is actually being invested in American businesses and possibly overseas businesses. So the wealthy while paying low taxes are actually investing their wealth in growth areas. How is the "threat" of higher taxes affecting this? I simply don't see it. But I hear the complaints from the right-wing...but what they sound like to me is a threat to cut jobs even *further* if their taxes are raised. Why but that would assume that raising taxes on the wealthy would be bad for business, but not so bad that it wouldn't make sense for the wealthy to cut jobs in response. If the mere threat of higher taxes is forcing businesses to not hire, then why wouldn't the reality of lower taxes incite businesses to actually hire.

And if that's the case then why are we having a problem with unemployment right now. Taxes are relatively low, so hiring should be better than it would be if they were high. Unless the mere threat of higher taxes is enough to overcome the reality of low taxes? Is that really your argument? ...your argument is that the nation is suffering through 2 years of extended unemployment by even *talking* about raising taxes on the wealthy?

So what is going to happen with all this talk of cutting Federal spending?

Posted by: chucklebuck | December 3, 2010 12:02 PM | Report abuse


Mark Halperin at Time Magazine:


Is it hyperbolic to say the Democratic Party is in the midst of a nervous breakdown? I have been covering national politics since 1988, and I don't remember a situation quite like this. The signs of a crack-up are everywhere. Democrats still think they can somehow win a news cycle by demonizing John Boehner. Chuck Schumer goes on the Senate floor and suggests Democrats are getting the same political mileage out of "millionaires tax" that Republicans have gotten over the years from using "death tax." Politico has a story with blind quotes from Hill Democrats who are furious that the White House isn't using some sort of mythical leverage over Republicans to extract concessions in exchange for extending all the Bush tax cuts -- including continuing to try to trade for DADT and the Dream Act (rather than things dealing with jobs). Two members in good standing of the Professional Left -- moveon and the PCCC -- are spending its members' money on TV ads demanding that the president exercise this same mythical leverage to stand up to the GOP.


Read more: http://thepage.time.com/2010/12/02/donkey-doozy/#ixzz174LLJpSz

Posted by: RainForestRising | December 3, 2010 12:08 PM | Report abuse

I'll be happy to support the continuation of the Bush tax cuts for those earning over $250,000 just as soon as someone can prove to me that the cuts created jobs in the first place.

If you cannot do this, your only argument remaining is that the most well-off among us need more disposable income.

So either pony up the numbers or feel free to tell the American people how the wealthiest need more money in this, our most difficult time.

Posted by: eagoldb | December 3, 2010 12:09 PM | Report abuse

" and the generally anti-business rhetoric, the admin has extended the recovery by years, IMHO."

what, again, it's bad for the job market and the economy in this country to point out the fact that the American business market is screwing the poor and middle-class while socking away record profits?

Wait a minute, did we not just go through a $2T federal bailout of GM and the banking industry, or did that not actually happen?

And you're telling me that the job market still sucks because a bunch of rich businessmen got their feelings hurt as a result? Is that why they are paying themselves at record levels?

Good grief. I can't believe that people take this seriously. This is nothing less than blackmail on a national scale. "Raise our taxes and we'll cut jobs, keep taxes low and we'll cut jobs, cut Federal spending and we'll cut jobs, talk bad about us and we'll cut jobs, increase regulation and we'll cut jobs..either way you go we're going to cut jobs and we'll blame it on you".

I get the feeling that the main issue here is that American businesses want to cut jobs. Maybe it's just me, I don't know.

Posted by: chucklebuck | December 3, 2010 12:09 PM | Report abuse

Welfare for the wealthy.

Posted by: hodgensr | December 3, 2010 12:11 PM | Report abuse

54465446 | December 3, 2010 11:15 AM


You are incorrect on your point - jobsless unemployment claims went UP last week -

So, your point that the long-term unemployed are returning to the workforce may be true, however initial jobless claims are UP


So, you are wrong again. Perhaps you should read my comments first, and then echo those - your correctness will go way UP if you do that.

Posted by: RainForestRising | December 3, 2010 12:15 PM | Report abuse

"I'd like a lefty to explain to me how your federal income taxes can be cut if you don't pay federal income taxes. As is the case for about 50% of US wage earners."

That's an artificial semantics issue, hardly even worth discussing. Do you argue with people who think that 2+2=3?
Get to the real issue.

"If you are going to cut taxes, you're probably going to have to start with the people who pay federal income taxes. Is this that hard to understand?"

I don't think that many if any are seriously talking about actually *cutting* taxes, they are all disregarding the obvious benefit to the economy that would result from an across-the-board tax-cut ;)

"The top 10% pay 60-70% of federal income taxes, from what I recall. obviously they are going to get more money back."

Yes, and obviously that means a higher federal deficit if spending levels are kept the same. Maybe you've missed the recent Republican diatribes against the increasing Federal deficit.

:I'm not rich, my business is 1/4 of what it was 2 years ago. I just don't think it is helpful to raise taxes on anyone in this economy. It's the exact opposite of what we need to do. 'Greed' has nothing to do with it for me.":


...that all depends on what you think will happen as a result of increasing taxes.

The legitimate argument for controlling Federal debt is that high debt levels weaken the dollar, and assuming that a weak dollar is bad for business, that's bad for the economy and supposedly bad for unemployment.

The reality is that we are seeing many if not all of the traditionally held relations between business, the government, the economy, and jobs get shattered in the wake of the recent housing-market meltdown. Classical capitalist monetary theory has already crashed on the rocks, circa 1932. The question now is how much of the rest of it can be trusted to hold water.

I think that some here have put their fingers on the remaining shards of truth. Companies are not in business to employ people, they are in business to make money. Except for the charitable organizations which are in business...to employ people, and to distribute wealth outwards rather than collecting it. So this raises the question of exactly what kind of businesses does the government want to support going forward. Companies that are extremely profitable, or those with high employment.

I think that you are going to see a concession made in the form of changes to tax policy and indeed to Federal spending. Certain businesses and certain individuals will see their taxes go up, and certain others will see taxes go down. Same with the Federal debt, some spending will be held in high esteem and some will be cut as wasteful and counterproductive. Sweeping statements usually fail to hold water, and the details are where progress can be made. They will haggle it out eventually and then the American Dream will be safe going forward.

Posted by: chucklebuck | December 3, 2010 12:18 PM | Report abuse

Heh. A troll gives lessons on netiquette.

BB


-------


Exactly and that applies to you - and this comment as well.

You fit the definition of troll as well.


I wouldn't be surprised if you live in a tree too.

Posted by: RainForestRising | December 3, 2010 12:21 PM | Report abuse

I'd like a lefty to explain to me how your federal income taxes can be cut if you don't pay federal income taxes. As is the case for about 50% of US wage earners.

If you are going to cut taxes, you're probably going to have to start with the people who pay federal income taxes. Is this that hard to understand?

The top 10% pay 60-70% of federal income taxes, from what I recall. obviously they are going to get more money back.

Posted by: jmpickett | December 3, 2010 11:45 AM | Report abuse

---

Let me help, snark free. Focusing purely on federal income taxes is a nice way of framing the debate, given that it ignores the plethora of taxes paid by that bottom 50%. Sales tax is typically 5% - 10% and if one is making little money, you're spending it. Let's add in property taxes. But wait! you say. Renters don't pay property tax. Their rent does, however, need to pay for the property taxes paid by the property owner. Add in other excise taxes such as gasoline, drivers license fees, etc. And let's not forget the heffalump in the room-FICA. 14% of income up to $100K (I include the employer match as it is lost income).

So, let us dismiss the canard that the poor don't pay taxes. Furthermore, there are many tax cuts that can be targeted at the lower half of the income spectrum such as a payroll tax holiday. That one was proposed by the Rivlin/Domenici commission.

Now let's talk about federal income tax. Using your numbers, which sound about right to me, those in the range of 50% - 90% range pay 40% of income taxes. Let's even find that balance point such that half of income taxes are paid by the top X% and the other half paid by the rest. Because they were purely rate based, the Bush tax cuts most heavily benefited that top X%.

How about a rebalancing of the tax cuts? Take the project loss of revenue, $4T over one decade. Let's give a nod to deficit reduce and put $1T away. Of the remaining $3T, a combination of rate and excise cuts such that one third of the benefits acrue to the bottom third, one third to the upper tier (50% - 90%), and one third to high earners (top 10% of income).

Nah. It'd never work.

BB

Posted by: FairlingtonBlade | December 3, 2010 12:23 PM | Report abuse

Folks,
Here's the underlying problem with most current Economic Opinions/the "Official" Economic #s are not accurate(Notice I was nice and didn't say Lies)so how can you have an educated opinion on our "Crisis" with bad #s.
Examples:
GDP is overstated
Unemployment is understated
Inflation is understated
Deflation is understated(Because we have Deflation&Inflation occuring at the same time(Stagflation)which is ignored
Deficits are understated
Tax Revenues are overstated
There are too many other examples for comfort,the over and understatement of these #s is substantial,not minor,if anyone wants more details on these bad #s,anytime/anyplace. You'll never hear this discussed from our dear Blogger in Chief.

Posted by: rcaruth | December 3, 2010 12:29 PM | Report abuse

The economy is recovering, albeit slowly. Job growth is always the last to recover. It will happen.

It is, however, unwise to increase taxes in this environment. I wouldn't start increasing taxes until unemployment is below 8% and falling steadily.

Posted by: sold2u | December 3, 2010 12:31 PM | Report abuse

the other problem here is that clearly what is bad for business is not necessarily bad for the American consumer and vice-versa

assuming that the federal deficit doesn't rise to catastrophic levels where it either grows beyond control due to interest or it undermines our bond status leading to higher interest charges or it simply requires a disproportionately high level of interest payment (and these are all legitimate concerns, and we cannot allow national debt to continue to rise as a fraction of GNP and when GNP is flat that means the debt has to be flat as well...though a weaker dollar will artificially raise GNP on several levels)

We cannot deny the fact that businesses will cut workers if it is seen to be in the good interests of the business. We account for mismanagement by assuming that successful management will step into a breach left by incompetent management. We assume that this will keep American businesses successful in the overall sense.

We cannot account for a general failure of American management theory any more than we can account for a general failure of American fiscal management at the Federal level. We are in a position now where things are not critically bad yet they are not good and the different parts of the nation are pointing fingers at other parts. But there are certain realities here. People need jobs. They are not going to get those jobs unless someone hires them. We have to assume that either they will be hired out of charity, or they will be hired as the result of government incentive, or they will be hired because it is seen to be financially prudent for them to be hired by the company that hires them.

All of these could be mistakes just as they could be benefits. In the long run the only sensible thing to do is to push forward and hope that the situation will work itself out. We have 300M stories in this country, all tied to the other 5B people in this planet. Unemployment will work itself out one way or another assuming that it is true that money is a sufficient reward for work and services performed and that the capitalist market is self-correcting.

Tax policy is a whole 'nother issue. Tax policy is nothing but politics. And you can bet that taxes will be raised or lowered in this country by the sheer number of congressmen and women who feel that they should go up or down, and on whom they should go up or down. I don't care how many businesses argue that raising taxes or even the spectre of raising taxes will hurt employment or hurt the economy. What matters is how many Congresspeople actually *BELIEVE* it. And even then that only affects taxes it doesn't affect *businesses* and certainly it doesn't affect *hiring*. Because that would assume that there is a direct relation between taxes and hiring and businesses have no say in this other than to actually be the place that people work. Which is complete bullcrap.

And that is the real problem here. A whole lot of bullcrap being talked at high speed.

Posted by: chucklebuck | December 3, 2010 12:31 PM | Report abuse

"Businesses across America are socking away record profits, making record payments to upper management, all while shedding jobs, if nothing else, just not hiring."

Yep.
Why do you think that is?
As far as the business world knows, this is the last year they are going to going to be able to operate on the same business model they've been accustomed to for a decade. It's also the last year that they can be sure that there will even be a profit for their share-holders.
If you had been listening to economists for the past 18 months, you would know that exactly this would happen.
Let this sink in to whatever occupies the space between you people's listening holes:
Businesses aren't going to add any jobs, unless they know how much the government is about to add to their costs.
Is that so hard to understand?
As far as the bail-outs, dollars to doughnuts says the unions were the ones that benefited from most of those that went to manufacturers. All that does is strengthen the toxicity of the poison in the system.

Posted by: MrMeaner | December 3, 2010 12:33 PM | Report abuse

"It is, however, unwise to increase taxes in this environment. I wouldn't start increasing taxes until unemployment is below 8% and falling steadily."

A blatantly simplistic statement with a completely arbitrary number, with an obvious lack of either statistical or logical support. Generally the kind of bullcrap that is the problem here.

People opening their mouths and spewing crap like this, how can they not realize that simply issuing an opinion is not the way to run a country? Or is it that they simply don't care, they just want their opinions to be heard, no matter how stupid and unsupported?

Posted by: chucklebuck | December 3, 2010 12:34 PM | Report abuse

Geez, Chuckles, do you debate people like this in real life? I guess you must wonder why everyone leaves the water cooler when you show up.

Blatantly simplistic statement? Well, I guess Econ 101 is pretty basic, but you should take it sometime. You might learn something.

Posted by: sold2u | December 3, 2010 12:40 PM | Report abuse

""Businesses across America are socking away record profits, making record payments to upper management, all while shedding jobs, if nothing else, just not hiring."

Yep.
Why do you think that is?
As far as the business world knows, this is the last year they are going to going to be able to operate on the same business model they've been accustomed to for a decade. It's also the last year that they can be sure that there will even be a profit for their share-holders.
If you had been listening to economists for the past 18 months, you would know that exactly this would happen."

...gee, either *that* or they are doing it simply because they can.

Whatever external forces say or do that have the ability to impact a company's bottom line say or do, they will always have an incentive to record record profits and pay their upper management record compensation. It's called MONEY.

And as such, they will always have an excuse to whine and complain and say the sky is falling if it allows them to sock away record income. And I'm quite sure that there will always be some economists somewhere who will say that this will happen. Because it obviously will.

Whether this will happen or not is not the question it is OBVIOUS that it will happen. The question is whether taxes should be raised on these people and this organization in order to contain the financial burden taken on by the state in the process of helping them to remain in business in the first place.

I'm sure that there are 500 arguments being made every day right now as to why the Federal government should inject funds into American Capitalism but American Capitalism should pay less tax. How much intelligence does it take to realize this, and understand why?

Posted by: chucklebuck | December 3, 2010 12:41 PM | Report abuse

I don't think it's stupid, chuckle, to point out the lack of wisdom in increasing taxes in a really bad economy. Even many Democrats have gone on the record that all rate cuts should be extended. Not the Nancy Pelosi wing of the party of course, but a good number of more moderate members. Are they idiots too?

Posted by: jmpickett | December 3, 2010 12:42 PM | Report abuse

"Geez, Chuckles, do you debate people like this in real life? I guess you must wonder why everyone leaves the water cooler when you show up."

given the choice between unpopular truth and popular bs, I'll take the unpopular truth every time

"Blatantly simplistic statement? Well, I guess Econ 101 is pretty basic, but you should take it sometime. You might learn something."

I did. I got an A in it. Also several economics and business-management courses beyond that on my way to a minor in economics.

I didn't think that the world needed another Ph.D in economics. Maybe I was wrong.

Posted by: chucklebuck | December 3, 2010 12:44 PM | Report abuse

I think foisting an unwanted health care plan on the country isn't particularly helpful as far as encouraging small business to hire. Lots of uncertainty in that law for business. This is not an unknown perspective, you know. At least outside the DC beltway bubble. Many of you civil servants and others in related employment are doing quite well in the recession unlike many elsewhere in America.

Posted by: jmpickett | December 3, 2010 12:45 PM | Report abuse

"Whatever external forces say or do that have the ability to impact a company's bottom line say or do, they will always have an incentive to record record profits and pay their upper management record compensation. It's called MONEY."

And that's called survival.
It's a fail-safe mechanism.
It's a sign that those who would know, are betting that there's a chance that the sky might actually fall.

Posted by: MrMeaner | December 3, 2010 12:47 PM | Report abuse

"Deflation is understated(Because we have Deflation&Inflation occuring at the same time(Stagflation)which is ignored."

You don't have inflation and deflation occuring simultaneously; deflation is when the dollar gains value (causing prices to drop/deflate), inflation is when it loses value (causing prices to rise). "Stagflation" is a stagnant economy (flat GDP usually with high unemployment) plus inflation.

Posted by: kreuz_missile | December 3, 2010 12:48 PM | Report abuse

"I don't think it's stupid, chuckle, to point out the lack of wisdom in increasing taxes in a really bad economy"

That assumes that raising taxes in a bad economy is a dumb idea.

That assumes that it is dumb to raise taxes simply because the economy is bad.

That is exactly the kind of simplistic nonsense that is the problem in the current political environment, that has created the current political environment. Funny how in Europe they are facing the same challenge and responding to it with tax hikes and spending cuts and calling them necessary "austerity packages".

Are the Europeans "dumb", then, simply for raising taxes in a bad economy? Or are they just smart people pursuing a dumb policy at least in the near-term?

Or maybe they're right through and through. If you're worried about the debt and the economy is flat even decreasing, then you need to either raise taxes or cut spending or both, there are no two ways about it. The Republicans are all for cutting spending, as if that will have no impact on the economy. At that point it is purely hypocritical for them to push a tax-cut or even just a return to the Bush tax cuts.

And in any case there is no direct correlation between taxes and the economy. The economy is one thing, tax is another. Always has been that way, always will.

Companies will be happy to pay 50% tax on their profits if their profits are high enough. You have to adjust tax policy to the individual case, not make sweeping generalizations. That's why we have such complicated tax laws.

Posted by: chucklebuck | December 3, 2010 12:51 PM | Report abuse

"Many of you civil servants and others in related employment are doing quite well in the recession unlike many elsewhere in America."

Then why have the negative economic numbers been mainly due to cuts in employment in the government sector, while the private sector employment has been rising?

Posted by: kreuz_missile | December 3, 2010 12:52 PM | Report abuse

"I think foisting an unwanted health care plan on the country isn't particularly helpful as far as encouraging small business to hire. Lots of uncertainty in that law for business. This is not an unknown perspective, you know. At least outside the DC beltway bubble. Many of you civil servants and others in related employment are doing quite well in the recession unlike many elsewhere in America.

Posted by: jmpickett | December 3, 2010 12:45 PM | Report abuse

"Whatever external forces say or do that have the ability to impact a company's bottom line say or do, they will always have an incentive to record record profits and pay their upper management record compensation. It's called MONEY."

And that's called survival.
It's a fail-safe mechanism.
It's a sign that those who would know, are betting that there's a chance that the sky might actually fall.

Posted by: MrMeaner | December 3, 2"


...that argument can be made about any increase in regulation or taxes, anything that isn't favorable to business.

And companies can argue for increased profits in any case.

The connection is tenable at best. It is the mark of a good CEO to blame the problems of his company on external forces and to take credit for all of its strengths. The point of having a government is to regulate, and taxes are required for effective regulation. There is no point in having a Federal government that is simply going to kowtow to American corporate interests and threats.

If they win the argument that a tax increase would be bad for business and American employees will suffer as a result, then you can bet that next year they will argue that a tax cut is necessary or that business and employees will suffer. It will never end. The simple issue is that our government must show some backbone not act as paid representatives of American capitalism.

Posted by: chucklebuck | December 3, 2010 12:56 PM | Report abuse

""Whatever external forces say or do that have the ability to impact a company's bottom line say or do, they will always have an incentive to record record profits and pay their upper management record compensation. It's called MONEY."

And that's called survival.
It's a fail-safe mechanism.
It's a sign that those who would know, are betting that there's a chance that the sky might actually fall."

...so you are saying that businesses justify socking away record profits and paying their management record compensation out of a "survival instinct"?

So it's not enough that they are making a good healthy profit and that they are well-compensated? That's not "survival"?

It sounds to me like "taking as much money out of the system as you can while you can still take it". But then I'm just "simplistic" that way. A true Republican would say that these companies are sowing the seeds of their own destruction in taking such large profits and payments out of their own companies. Clearly they operate in an anti-competitive environment, or they are simply unconcerned with the well-being of the company and its ability to compete going forward. Indeed it might even be seen as gross mismanagement. Instead of reinvesting the profits back into the business they are simply sucking it dry of cash. How can they then claim that they are not responsible for its failure if indeed such a large cash-flow inspires competition to the point that they are no longer able to make a profit?

Oh I see: by blaming the Democrats. I get it.

Posted by: chucklebuck | December 3, 2010 1:06 PM | Report abuse

“If anything, taxes for the lower and middle class and maybe even the upper middle class should even probably be cut further, but I think that people at the high end — people like myself — should be paying a lot more in taxes. We have it better than we’ve ever had it....The rich are always going to say that, you know, just give us more money and we’ll go out and spend more and then it will all trickle down to the rest of you. But that has not worked the last 10 years, and I hope the American public is catching on,”
- Warren Buffett

http://www.mediaite.com/online/warren-buffett-trickle-down-theory-hasnt-worked-video/

"Tax cuts are one of many ways to stimulate the economy. Building infrastructure, for example, is another. We have to choose. And if the primary goal is stimulating the economy, tax breaks to the rich are simply not cost-effective. Numerous studies have shown that the poor spend nearly all of their income, while the rich save a significant amount of theirs."
http://www.nytimes.com/2010/09/26/business/26view.html

Posted by: kreuz_missile | December 3, 2010 1:06 PM | Report abuse

Further tax cuts are necessary.

Only Japan and Guyana have a higher corporate tax rate than the US, which is at 39%. That takes a huge portion of what could be expanding a business, adding employees, or just giving employee raises.
By the time you add in the individual rates at 35%, and the state taxes that can be as high as 10.5%, it's obvious what is killing the economy.
Just how much should the government be allowed to confiscate, and waste?

Posted by: MrMeaner | December 3, 2010 1:11 PM | Report abuse

""Tax cuts are one of many ways to stimulate the economy. Building infrastructure, for example, is another. We have to choose. And if the primary goal is stimulating the economy, tax breaks to the rich are simply not cost-effective. Numerous studies have shown that the poor spend nearly all of their income, while the rich save a significant amount of theirs."
http://www.nytimes.com/2010/09/26/business/26view.html"


but this is hardly the entire argument.

The real issue is the fact that the savings of the wealthy are not spurring the economy sufficiently. And that points to a breakdown in the American financial structure as well as a breakdown in globalization, at least from the perspective of the United States. There is nothing inherently wrong in the wealthy saving their money, unless it begins to work against the nation as a whole instead of *for* it. And this is where the Republican position consistently breaks down. They are forced to choose the status quo or a hypothetical future position relative to the status quo. Either the current situation is bad and whatever has led to it becomes of questionable value, or the current situation is good and then whatever has led to it is assumed to be of high value.

If they're going to run around talking about how 9.8% employment is a bad thing then everything and anything that has led to this is also on the table as a possible problem, a causal factor. And that includes tax cuts for the wealthy. Despite their obvious desire to paste "good" on tax cuts for the wealthy. The main issue here is that the wealthy have found ways to not only take record profits out of American business but also to isolate those profits from both the Federal government as well as the poor and middle class.

That is why 2% of the country have 98% of the wealth and that is why that ratio is getting worse by the day. It is getting so bad that even the wealthy themselves are feeling guilt about it...but not so much that they want to give some of their wealth to *American* charities (although obviously some do) but they want to give it to *foreign* charities. The main issue is that they do not want to give wealth away to *Americans* in need, they want American workers to actually "earn" their money.

Heck, that's how they make such large profits in the first place, isn't it? They don't get rich by giving-away their money. Do they.

The bottom-line is that Federal debt is increasing and the poor and middle class are worse off (and trillions have been lost in retirement plans and pension plans) because the wealthy have sucked them dry and are hiding the money. When that became clear, they began to bleat that any increase in taxes on them would merely make the situation even worse. These are crocodile tears at best. The wealthy would have a simple choice: either pay more in tax or move their money offshore. But no more hiding.

Posted by: chucklebuck | December 3, 2010 1:16 PM | Report abuse

"It sounds to me like "taking as much money out of the system as you can while you can still take it"

Actually, it's more like throwing soft stuff in the bottom of a hole, anticipating that you are about to be shoved in to it.

Posted by: MrMeaner | December 3, 2010 1:18 PM | Report abuse

Just so your aware. The middle class did not get a tax cut. The average houshold received 1800 back from the IRS. Then the federal govenment because tax revenues were down (mainly from give to's to the rich) cut federal spending to the States. Which in turn jacked up State taxes to pay for the shortfall and most of Bush's unfunded federal initialives. The States then cut revenue to the Cities and Towns which bumped up fees and property taxes. So, in reality the 1800 went in one pocket and came out of another. While the rich that got tens of thousands back are laughing all the way to the bank. Such a deal.

Posted by: rlsrd | December 3, 2010 1:28 PM | Report abuse

"Only Japan and Guyana have a higher corporate tax rate than the US, which is at 39%. That takes a huge portion of what could be expanding a business, adding employees, or just giving employee raises. "

THAT'S A DEAD ARGUMENT IN THE LIGHT OF RECORD CORPORATE PROFITS AND PERSONAL INCOME.

American companies are, in the main, not spending their money to expand business, add employees or give their existing employees raises beyond upper management. They are simply taking it out of the business.

Don't you know that companies are having to engage in "failsafe" maneuvering in light of all the talk of raising taxes?

Beyond that the investment system is simply failing to recycle that money back into the economy. Somewhere between domestic and foreign investment and federal deficit spending, the economy is simply not growing.

Thus you can infer that between domestic and foreign investment and federal deficit spending, the economy is at best holding steady at about $15T GDP and 9.8% unemployment. That's not bad enough for the Republicans, they also want to cut federal deficit spending. Given all that has been said here if they cut federal spending American companies will just use that as an incentive to make even more profit and to pay their upper-management even higher salaries. Unemployment will rise to make up the difference.

Really it's pretty obvious that going forward the solution is a cut on *corporate* taxes and an increase in *personal* taxes. There is no problem with a company making a large profit in the face of competition. The problem is in the ownership of the company simply sucking the profits right out of it and storing them in tax-havens. When "survival" equates to socking away far more wealth than any rational person would need to survive, to the point that they are draining the financial system of the capital that it needs to function?

This is a problem. Not a solution. And definitely not good for the American public at large. And if anything for many reasons a *weaker* dollar would be a good thing. As "to save" means that money is assumed to be worth more in the future than it is is now, to the point where it is worth not spending it now. A little bit of inflation would go a long way towards solving that problem, but the effect would be felt disproportionally by the poor and middle-class.

The wealthy are simply not going to suffer as a result of fiscal mismanagement. They are only going to make out like bandits. It's just a question of how much.

Posted by: chucklebuck | December 3, 2010 1:29 PM | Report abuse

"THAT'S A DEAD ARGUMENT IN THE LIGHT OF RECORD CORPORATE PROFITS AND PERSONAL INCOME."

THAT'S THE ARGUMENT, AS IT RELATED TO JOB CREATION.
Where are all of the jobs that produce those corporate profits?
They're in countries with lower corporate tax rates, and fewer regulation obstacles.

Posted by: MrMeaner | December 3, 2010 1:34 PM | Report abuse

and for those of you who say that is exactly the concern here, that the poor and middle-class will suffer as a result of fiscal mismanagement, I put it to you that they are going to suffer anyway and they are suffering when they are losing wealth relative to the wealthy.

Again it is a question of how much, not "if".

Plain and simply put drastic measures are required to resolve the negative cash flow. If you are an ardent supporter of free-markets, this is your time to crow that the Republicans are also anti-capitalist, in advocating changes in government policy to benefit the poor and middle-class. You can forget about helping *all* Americans "equally" and "fairly". That's simply not going to happen. The wealthy are going to make out like bandits regardless. Just a question of how, when and how much.

At some point you've got to put your foot down and say that you're going to do something for the Average Joe first, before it's too late. And that something has to not help the wealthy 50x more than it helps the poor and middle class or it will defeat the purpose. You will end up with large numbers of poor and large numbers of the supposedly "middle-class", with virtually no money to spend beyond that which they need to keep themselves fed and a roof over their head. And lucky to even do that.

Posted by: chucklebuck | December 3, 2010 1:38 PM | Report abuse

"And this is where the Republican position consistently breaks down. They are forced to choose the status quo or a hypothetical future position relative to the status quo."

It's more that a sleight of hand is going on. They say taxes will stimulate the macro economy, which used to mean the US economy. But in a flat earth of free trade, the macro economy is no longer the US economy, it's the global economy. This is what Reich talked about with "the Great Decoupling."

It used to be that the rich happily bore the burdens of high taxation because they were better off for it - it meant an educated workforce with the economic means to buy lots of their products, which made them significantly richer than a weaker economy with lower taxes.

Now, however, the workforce isn't necessarily US anymore, nor is the market. Both are global, so they can go to lower wage areas for employment and sell to higher earning areas to maximize profits, which has only worked with the US as consumer over the past 30 years due to the advent of cheap credit. Thus, to an extent, the tax cut argument may be right - if the sum of global GDP rises, which doesn't necessarily mean US GDP will rise with it, or even if it does, it can be based on the rise of corporate profits alone even if individual incomes from the middle and working class decline.

This is what has made the financial crisis so bad and why we can't recover with the normal tools we have before - tax cuts go not to increase in spending, but to paying down debt, which just sends them overseas. The US is not the engine of the global economy anymore, so companies now look elsewhere to sell goods.

The result - the corporate world doesn't need to care much for the United States anymore, with one exception - the US must continue to fund the US Defense apparatus to keep the flow of commodities open and keep the US taxpayers funding the insurance of global commerce rather than corporations who benefit from it. This underlies the whole Republican economic strategy.

Posted by: kreuz_missile | December 3, 2010 1:38 PM | Report abuse

If cutting taxes raises employment. Then why not cut taxes to zero?

And if we don't pay any taxes, will the unemployment rate stay at zero forever?

LOL.

Posted by: camasca | December 3, 2010 1:39 PM | Report abuse

"They're in countries with lower corporate tax rates, and fewer regulation obstacles."

Yeah, where they can pay workers five dollars a day to live as slaves.

The future of America, sacrificing the working class to the false Gods of unfettered capitalism (the kinds who see Teddy Roosevelt as a socialist...).

Posted by: kreuz_missile | December 3, 2010 1:40 PM | Report abuse

that analysis is also overly simplistic

taxes need not be spent to educate the workforce or to address other corporate needs, it can easily be more efficient and cheaper for a company to take care of its own needs than to pay taxes to the government. Plus obviously they have more direct control.

Indeed, "control" is a major feature of government. Not "meeting the needs of the corporate world". That is only a side issue. We have a government, it exists, it functions, and the private sector adapts to the government far faster than the government adapts to the needs of the private sector.

This indeed is the situation: corporate America is doing quite well, while the government is floundering due to indecision.

Posted by: chucklebuck | December 3, 2010 1:43 PM | Report abuse

We should drop corporate rates to zero for a year, actually.

And wages factor least, compared to regulatory costs and tax rates.

Posted by: MrMeaner | December 3, 2010 1:45 PM | Report abuse

in any case I think the main problem here is that the Republicans are engaging in deep deception while the Democrats are trying to make up for it and carry the American public at large at the same time.

The real issue here is the stupidity of the American public combined with the greed of the corporate sector, that is funding this situation, that has voted for the Republicans, not only keeping them in office after GW but also putting 60 more of them in office this past election. I can understand the wealthy voting Republican in order to protect their own interests. I don't understand the poor and middle class voting Republican in order to help the wealthy exploit them even further.

But if a fool and their money are soon parted, surely the same must be true for their political power, if political power is correlated with money. And it's clear that there is a strong correlation between political power and money.

Posted by: chucklebuck | December 3, 2010 1:48 PM | Report abuse

I don't want to write a whole doctoral dissertation here, so quit whining about stuff being simplistic.

It is more efficient for them to pay taxes and have the government do it, because otherwise they would essentially have to hire individuals from birth and educate them from the ground up, not knowing what their aptitude would be. With the government doing it, the burden of paying the cost is split with individuals who pay both income and property tax to finance education, and assures all are educated from a young age so that they can take their pick later in life based on performance, rather than make too heavy an investment up front.

As far as "meeting the needs of the corporate world," of course that isn't the purpose of government, but we are talking about policy toward the corporate world and how it is being worked in practice. Not analyzing the ENTIRE system.

Posted by: kreuz_missile | December 3, 2010 1:52 PM | Report abuse

RFR:

The raw numbers went down, the seasonally adjusted numbers went up. I don't like using seasonally adjusted numbers at Christmas time because the revisions next week/month will be much wider than at any other time of the year.

However in the interest of fairness to you I will say that you are correct in that specific area.

Posted by: 54465446 | December 3, 2010 1:55 PM | Report abuse

""It sounds to me like "taking as much money out of the system as you can while you can still take it"

Actually, it's more like throwing soft stuff in the bottom of a hole, anticipating that you are about to be shoved in to it.

Posted by: MrMeaner | December 3, 2010 1:18 PM | Report abuse "

even assuming that the American people want American businesses to fail or might enact policies that would result in the largescale failures of American businesses (as opposed to American businesses themselves doing that)

How much more clear can it be that the wealthy have far more money than they need to survive if their business were to fail? Meanwhile you have the poor and middle class working two and sometimes 3 jobs just to make ends meet. Your best-case scenario is financial hell for most of the country. Yet you have people saying that this would all be solved if the Democrats stopped talking about raising taxes on the wealthy!

IT IS NOT GOING TO CHANGE. The wealthy will always try to extract as much capital as possible to whatever they think makes sense. That's why some businesses fail even in a good economy. There will always be those who think that they need even more money to survive bad times. Always. Regardless of what the government does, the wealthy will continue to accrue wealth, and the poor and middle class will continue to lose wealth.

Yet if the entire system were to fail tomorrow (for example if the banking system had gone up in smoke in 2007) all of that saved wealth would vanish into thin air. We would all suffer equally.

Posted by: chucklebuck | December 3, 2010 1:57 PM | Report abuse


Back to blaming stupid Americans, again.

It's become a classic


Posted by: MrMeaner | December 3, 2010 1:57 PM | Report abuse


"I don't want to write a whole doctoral dissertation here, so quit whining about stuff being simplistic.
"

but it is counterproductive for you to simply if your simplifications are erroneous.

You just give more fuel to your enemies, to use to torch both you and your arguments. In an argument about finance, as in many other aspects of life, it is much better to say nothing than to say something which is wrong. Once on record as erroneous, even your vote is the vote of an idiot. That is why the expert-opinion fallacy continues to sway the unwashed masses.

Posted by: chucklebuck | December 3, 2010 2:01 PM | Report abuse


"Back to blaming stupid Americans, again.

It's become a classic"

...the economy is only a problem for stupid people. For smart people, it's an opportunity to make a hell of a lot of money.

It's a simple question of how long do you have to get screwed by people in the pursuit of wealth before you wake up and realize it. They are not screwing you because *they* are dumb.

Posted by: chucklebuck | December 3, 2010 2:06 PM | Report abuse

The American public isn't stupid, it's just being manipulated because macroeconomics on the level we're talking about takes some pretty intense study and long term strategizing to play it out.

War is the same way, people think of achieving objectives in war short term - kill bad guys, end war. So how do you get troops to put their lives on the line for reconstruction projects and community outreach with restrictive ROEs trying to avoid killing the enemy? Achieving the objective of defeating the enemy in a counterinsurgency requires action that is five to six steps removed from direct action. rebuild infrastructure and governance while securing population -> Provide room for education and economic growth -> build foundations of modern society -> Expand enlightenment principles of society -> Create legitimate and sustainable government capable of defending itself. Too complicated and booring, much easier to talk about finding and killing bad guys and having overly simplistic debates about who is more patriotic in soundbyte media wars.

Same for tax policy, why take the time to explain complex economic processes when we can just say "hey, if the rich have more money, they have more to hire people..that must be why they're not hiring, they don't have enough money!" Then, when somebody points out that they have more than enough money so that must not be the problem, just shout "CLASS WARFARE!"

Posted by: kreuz_missile | December 3, 2010 2:07 PM | Report abuse

"Only Japan and Guyana have a higher corporate tax rate than the US, which is at 39%. That takes a huge portion of what could be expanding a business, adding employees, or just giving employee raises.
By the time you add in the individual rates at 35%, and the state taxes that can be as high as 10.5%, it's obvious what is killing the economy.
Just how much should the government be allowed to confiscate, and waste?"

For 6 solid years during GW's reign of terror this tax model worked just fine.

It's even working fine today if you are still making over the median American income.

The only people suffering under this tax model are those who are sinking financially. And technically that is only happening because they are making poor life choices.

The question is exactly what those poor life-choices are, isn't it.

Posted by: chucklebuck | December 3, 2010 2:09 PM | Report abuse

They're not erroneous, you're just misreading it because you are addressing role of government, and I am addressing corporate strategy in manipulating government. Two different issues.

Posted by: kreuz_missile | December 3, 2010 2:09 PM | Report abuse

"even assuming that the American people want American businesses to fail"

what?

"or might enact policies that would result in the largescale failures of American businesses"

"The American people" don't have the power to enact those policies. In fact, we're half-way through a "cleansing" of those in DC who seem hell-bent to enact those policies

"(as opposed to American businesses themselves doing that)"

That's just insane.
Why would....better yet, HOW CAN business cause itself to fail on a mass scale?
You're speaking gibberish

"How much more clear can it be that the wealthy have far more money than they need to survive if their business were to fail?"

You act as if the only people dependent on the success of major corporations are a bunch of rich guys.
There are small investors, and public and private pensioners who depend on corporations' ability to turn profits.
And who are you to say how much someone needs to survive?

"Meanwhile you have the poor and middle class working two and sometimes 3 jobs just to make ends meet."

One wonders how much more those people could earn if the government wasn't taking 39% of the profits from their employers.
Damn shame, that.

Posted by: MrMeaner | December 3, 2010 2:11 PM | Report abuse

I stand by what I said earlier. Your opinion is academic to a fault. Some things *are* pretty simple. Simplicity is not bad. Poor logic is bad. There's a difference.

Posted by: chucklebuck | December 3, 2010 2:13 PM | Report abuse

""(as opposed to American businesses themselves doing that)"

That's just insane.
Why would....better yet, HOW CAN business cause itself to fail on a mass scale?
You're speaking gibberish"

Look up "CDO" when you get a chance and come back to this thread when you finish reading about them. They're just one of many ways that companies can kill themselves through poor corporate management.

"How much more clear can it be that the wealthy have far more money than they need to survive if their business were to fail?"

You act as if the only people dependent on the success of major corporations are a bunch of rich guys.
There are small investors, and public and private pensioners who depend on corporations' ability to turn profits.
And who are you to say how much someone needs to survive?

..so now you're justifying the taking of record profits and record salaries to protect small investors and the dependents of corporate management? That's fine, but what about the people who are getting exploited in the process? You can't make money out of thin air. You must take money from Peter to give money to Paul.

""Meanwhile you have the poor and middle class working two and sometimes 3 jobs just to make ends meet."

One wonders how much more those people could earn if the government wasn't taking 39% of the profits from their employers.
Damn shame, that."

...indeed by your own logic one must assume that this is happening to cover small investors and dependents of government employees. Not to mention the actual federal and state employees who overwhelmingly make far less than the upper management of the American private sector. Look that's the point that the Republicans are banking on, that people know about debt, see a country mired and debt and want to do something about it, not make it worse.

Again: you do not pull profits out of thin air. Every dollar that you win? Someone loses.

Posted by: chucklebuck | December 3, 2010 2:20 PM | Report abuse

so it comes down to two basic arguments.

are you stupid enough to still hold faith in the Reagan nonsense of 1980 or are you smart enough to see those who benefitted from 30 years of Reaganism, not to mention "globalism" pay their fair share back into the system.

Or are you happy with the status-quo, all things considered.

Posted by: chucklebuck | December 3, 2010 2:24 PM | Report abuse

Then point to one error in logic.

I showed how your retort was unfounded, I note you completely ignored that part and just stand by what you said earlier. Corporations don't want the burden of education because then they are just as tied to the worker as the worker is to the employer. Corporations want the ability to cut out a bad employee, and they also want the ability to replace him/her, without one that has been completely indoctrinated form a young age into another company. They want to treat employees with a basic level of education as capital, much easier for them that way.

Posted by: kreuz_missile | December 3, 2010 2:24 PM | Report abuse

also I would like to say one other thing in general, the Republicans see the 60 seat swing as a sign that the electorate wants them to undo everything that the 2010 congress and President have done.

I just don't see how the fact that they were each elected to represent a single congressional district in a state (and in some rare cases, a sizable portion of a state) means that the entire country wants them to reverse the policies of the Federal government over the past 2 years. I don't get that. I think that's a crippling oversimplification. One might even say a biased viewpoint.

Posted by: chucklebuck | December 3, 2010 2:30 PM | Report abuse

If you think that a corporation that turns big profits, means someone had to be exploited, you have absolutely zero understanding of how business works, much less of the intricacies of an entire economy.

"Again: you do not pull profits out of thin air. Every dollar that you win? Someone loses."

I'm perplexed.
Do you not realize how insane that is?
Seriously?
Who loses?
If a corporation makes a profit, it means that somewhere, someone has received a product or service done by holdings of that corporation.
Is it possible that I really haven't awaken, and this is all part of a really bizarre dream that I'm still having?

Posted by: MrMeaner | December 3, 2010 2:31 PM | Report abuse

Bush! Buussshhh! Buuuussshhh!!! De-Regulation. NO Regulation. Tax cuts for the Rich. Double the National Debt. Destroyed the World economy. Right Matters?

Right Matters solution - to make the RICH richer, adding one trillion dollars to the National Debt.

Right Matters? Let me ask, are you RICH or stupid?

Posted by: chucky-el | December 3, 2010 2:31 PM | Report abuse

"Then point to one error in logic."

I already have. You tend to make sweeping assumptions and act as if they are true. When they are clearly not clearly true uniformly, if at all.

Every time you do that you will simply irritate people who don't agree with what you say because from their viewpoint what you say is obviously not true. Not to mention those who might see the truth in what you say but realize that you generate resentment from trying to make your simplification apply to everyone.

Go back and look at everything that you have said here, realize how you oversimplify to the point of error & in the process generate disagreement instead of agreement. That's all I have to say on this.

Posted by: chucklebuck | December 3, 2010 2:33 PM | Report abuse

It's not a tax hike - it's letting irresposnsible tax cuts expire just as they were intended. Also, the Dems do not want to let them expire for the people that really need the money - just for people who don't. People making 250K a year do not need more tax breaks - they will only stick it in the bacnls who are sitting on loads of cash already.

Posted by: sux123 | December 3, 2010 2:38 PM | Report abuse

"If you think that a corporation that turns big profits, means someone had to be exploited, you have absolutely zero understanding of how business works, much less of the intricacies of an entire economy.

"Again: you do not pull profits out of thin air. Every dollar that you win? Someone loses."

I'm perplexed.
Do you not realize how insane that is?
Seriously?
Who loses?
If a corporation makes a profit, it means that somewhere, someone has received a product or service done by holdings of that corporation.
Is it possible that I really haven't awaken, and this is all part of a really bizarre dream that I'm still having?
"

...either that or you *also* make a lifestyle out of vast oversimplification?

Look the world is full of people like you, saying things that are just plain wrong and clogging-up the channels of civil discourse. It's a quaint notion that corporations provide value to their customers that is equal or at least in close proximity to the value of what they receive in compensation. But just analyze that statistically. If that were really true and the company engaged in fair transactions then half of the transactions would be bad for the company, and half good. The payments that you make to Peter would be made with money that you earn fairly in your dealings with Paul, and all would be good. Value would be equally divided between customer and supplier, and only those who were truly wasteful would be in trouble. Participants who were good savers would be in good shape, financially. Certainly there is nothing wrong with this, in the abstract. Even if we take globalization into consideration, this model still works. The problem is that this conclusion does not match the fiscal reality of this country, where the wealthy increase their wealth, not just hold water. Given that, there has to be some imbalance in the exchange of money or "compensation" for goods delivered and services rendered. Either Paul is making stupid trades with you, or you are exploiting your financial advantage to force Paul to deal with you on a disadvantageous basis. The distinction between the two is not really clear...is Paul stupid to do business with you at all? Who really knows. But certainly Paul would be wise to group together with your other clients and try to leverage their numbers into a better business arrangement. And so, individuals tend to form groups for their own advantage. That's what this entire discussion is about, just what group of people are going to get what out of this situation.

"Fair" was left down the hallway at the bridal store, long before the wedding dress was bought, never made it to the rehearsal much less got an invitation to the wedding.

Posted by: chucklebuck | December 3, 2010 2:43 PM | Report abuse

"I already have. You tend to make sweeping assumptions and act as if they are true. When they are clearly not clearly true uniformly, if at all."

I do not. I state the result at the macro level. Not once do I state every entity within it functions in the same manner. I could characterize you making the same flawed argument everytime you throw out ther term "Republicans," when you are clearly speaking to the net result of Republican policy rather than the individual desires of each individual Republican.

Posted by: kreuz_missile | December 3, 2010 2:48 PM | Report abuse

I mean, it's pretty simple, given progressive taxation (especially with state taxes at 50% of federal tax) if we lived in a closed society, balancing the budget would be a "simple" matter of balancing tax revenue with tax expenditures. Some error on either side would be expected. Again: how fair is it for a person to pay a higher *percentage* of tax based on their higher income? That's double-jeopardy, if you ask me. Not to mention getting taxed once on income and again on profit from investing income, which I think is one of the few legitimate things that GW has said. But if you wrap it all up as "profit" and tax it accordingly, then that's a straightforward issue. If you just tax "income" then you have a real problem, because it is easy to disguise income. Income can come in many forms.

"Profit" is straightforward.

"Profit" is a very basic accounting concept. Taxation based on profit merely requires accurate accounting. To tax "income" is an obvious distortion of taxation.

You complain about business owners that pay 39% profit of their taxes, what about workers that pay 39% their income in taxes. And that's just Federal taxes. So what of it, as long as the Federal government spends that money? As a whole, what they pay in tax they get back in business. They then pay tax on that business. The tax is a percentage of the business. In the long run this is good for them.

It is especially good for them, overall, if the government spends more than it takes in in taxes.

Again in the end it seems to me that if the economy is bad it is due to one of three things. Globalization, poor investment and corporate management decisions on the part of corporate America, or poor investment and personal finance decisions on the part of the public sector. And it's hard to say that when you're making $250k/year and up.

It is really hard to say that when you are making more than the median income for American workers. When you are doing better than the Average Joe, it's really hard to say that someone else is the problem. Well hard to say that and remain credible LOL

And yes I generalize about the Republicans saying that, but you have to admit that it's very easy for wealthy people to blame the problems of poor people on the poor people, themselves. Knowing full well that they are the problem. Speaking individually, not generalizing across all Republicans.

Posted by: chucklebuck | December 3, 2010 3:05 PM | Report abuse

Why don't you just say that you're a statist, and be done with it?
I hear what you're saying, and reject it, because it is pure fantasy.
We live in the real world. You can't punish corporations, only drive their operations overseas.
If you look at the big picture, Capitalism under free trade, is basically a means to the same ends as is sought by the global progressive movement.
It is the equalization of the world's economies over a long-term. The only difference is Capitalism does it by creating prosperity, rather than confiscating existing wealth.
The best way forward is to tighten our belts on spending, and compete for capital ventures with lower tax rates and fewer regulations.
We can cut a lot of spending by eliminating some of the agencies that's only purpose is to limit development.

Posted by: MrMeaner | December 3, 2010 3:07 PM | Report abuse

Jennifer, several other folks have already articulated (far more knowledgeably than I could) the several fallacies that underlie your question. But I would just like to emphasize one facet that really bugs me.

We've tried trickle-down economics twice in my lifetime (1980s and 2000s). Both times, the deficit exploded. Since living within one's means is supposedly a conservative virtue, I would turn the question around: When we're already drowning in debt, how can Republicans justify driving wider the gap between revenue and spending?!

Posted by: DCSteve1 | December 3, 2010 3:09 PM | Report abuse

"It's a quaint notion that corporations provide value to their customers that is equal or at least in close proximity to the value of what they receive in compensation. But just analyze that statistically. If that were really true and the company engaged in fair transactions then half of the transactions would be bad for the company, and half good."

Meaning a "fair" profit is zero? Why would anyone take risk then?

"Either Paul is making stupid trades with you, or you are exploiting your financial advantage to force Paul to deal with you on a disadvantageous basis."

This ignores competition. If a company is earning a higher risk-adjusted return than normal, new companies will enter its markets and drive prices down to where profits are appropriate for the level of risk taken.

Posted by: sold2u | December 3, 2010 3:09 PM | Report abuse

...the real lesson in life is that there is the Truth, and there is "what someone wants to believe because it empowers them, and in their empowerment increases their political strength, which in turn makes them more wealthy".

Democracy is a dangerous thing for this reason. It teaches the public to believe in and embrace falsehoods because within the relative sphere of influence of democracy, those falsehoods increases their political power. Man cannot find the truth through democratic processes, the very process hides the truth. And only when the process fails, only when the people are forced to admit that they cannot resolve their problems through democratic elections, will the numerous truths that are obscured by democracy be revealed.

The truth is discovered only by having a good battle between logic and the facts, not by engaging in political gamesmanship. Especially when "the facts" and "logic" are defined through a political process. In this situation, democracy is the problem, not the solution.

Posted by: chucklebuck | December 3, 2010 3:16 PM | Report abuse

See?
That's all you had to say.
I think everyone knows EXACTLY what you are saying.
These are dangerous times, folks

Posted by: MrMeaner | December 3, 2010 3:21 PM | Report abuse

"It's a quaint notion that corporations provide value to their customers that is equal or at least in close proximity to the value of what they receive in compensation. But just analyze that statistically. If that were really true and the company engaged in fair transactions then half of the transactions would be bad for the company, and half good. The payments that you make to Peter would be made with money that you earn fairly in your dealings with Paul, and all would be good. Value would be equally divided between customer and supplier, and only those who were truly wasteful would be in trouble"

chucklebuck, Your assumption that corporations should endeavor to be "fair" seems Marxist to me. Your definition of "fair" being, I assume, that the corporate guys get as much as the worker guys. If the corporation is making a zillion dollars and the workers are getting less than 50% of that zillion but are making on average $200,000 anually, is there an unfairness there?

If my company starts making a whole lot more money - 20% over last year, and I get a raise of 15%, I'm going to be pretty happy about it. I'm not going to be angry that I got "cheated" out of 5%.

It seems that the left has an inate belief that there is a set amount of money out there and everyone gets a portion of that pie. The economy grows with monetary expansion. That's how we got out of the Depression.

It's not an either/or zero sum game. The rich can get richer at the same time that the poor and middle class get richer too. As a matter of fact, I believe it more likely to be the case that *when* the rich get richer, those lower on the spectrum will too.

Posted by: RitchieEmmons | December 3, 2010 3:21 PM | Report abuse

""It's a quaint notion that corporations provide value to their customers that is equal or at least in close proximity to the value of what they receive in compensation. But just analyze that statistically. If that were really true and the company engaged in fair transactions then half of the transactions would be bad for the company, and half good."

Meaning a "fair" profit is zero? Why would anyone take risk then? "

Profit and value are two different things, but of course you know that so I am not sure as to your question. I said that in a fair trade a company receives value that is equal to the value of goods and services provided. Profit is a different issue. Profit is value-added on top of investment. This is what I thought that you would say in response, that if trades are fair how can anyone make a profit? The simple answer is that trades can still be fair and profits be made, if the seller adds fair value in the process of making the trade.

Think about that last part. It is simple to accrue wealth if you add value for your trading partners, and receive cash value in return. It is also simple to accrue wealth if you add no value for your trading partners yet still receive an excess of cash over value in return.

Which one involves less work?

Of course you can always argue that "value" can be measured in different ways and in the free market "value-added" is indeed profit. And that if you *earn* it without suffering criminal prosecution as a result, it's legitimate income.

Posted by: chucklebuck | December 3, 2010 3:23 PM | Report abuse

Deflation is understated(Because we have Deflation&Inflation occuring at the same time(Stagflation)which is ignored."

You don't have inflation and deflation occuring simultaneously; deflation is when the dollar gains value (causing prices to drop/deflate), inflation is when it loses value (causing prices to rise). "Stagflation" is a stagnant economy (flat GDP usually with high unemployment) plus inflation.
Posted by: kreuz_missile

No Kreuz,We have Inflation* in food,energy,and other "Small"ticket items that people must buy regularly,we have deflation in housing,durable goods,in "Bigger Ticket" items that involve
discretionary spending,both going on at the same time.
*Of course,Food and Energy are excluded from the official Inflation #s,I wonder why?

Posted by: rcaruth | December 3, 2010 3:24 PM | Report abuse

Our kind Jen is moving too fast? I thought conservatives were supposed to be the dumb ones.

I've never seen so many liberal heads esploding (to use my beautiful bride's "wise Latina" accent.)

What reading Jen's liberal commenters' contributions confirms more than anything is that people who occupy the same physical world inhabit two different realities -- one that I like to call "Reality," and another, which, with kindness, must be called "What some insist on wishing Reality were."

And so heads esplode when Jen, punk rocker that she is, formidably and with her trademark Reason and verve, points entertainingly to Reality and says, "See."

Posted by: johnnyramone | December 3, 2010 3:24 PM | Report abuse

"See?
That's all you had to say.
I think everyone knows EXACTLY what you are saying.
These are dangerous times, folks"

...and this is why we don't live in a democracy. The Republicans operate under the fallacy that we live in a democracy and that since they hold a majority in the House of Representatives that they can resolve this issue through democratic means. That's not going to happen.

Thankfully.

Posted by: chucklebuck | December 3, 2010 3:25 PM | Report abuse

Its simple. Let Bush tax cuts expire on those earning more than 250,000$ per year(that includes me, I am a small business man); use that money to provide tax cuts to small business, not to me personally, and small wage earners; where it will do the most good stimulating the economy.

Posted by: kakish | December 3, 2010 3:30 PM | Report abuse

We live in a constitutional republic.
"democracy" is impossible.
Now, if you want to reduce the government to a size that would make direct-rule possible, we can talk

Posted by: MrMeaner | December 3, 2010 3:32 PM | Report abuse

What a load of hysterical mush. Two days ago stocks exploded upwards as there was a ton of of good economic data. Today there's more wailing and shrieking as there's a bump in numbers. Next week they'll be more good news. Followed by hysteria and gloom and the nation will be doomed again.

It's whatever sells papers or in this case hits on a web page. Yawn. The economy is recovering, albeit slowly. Funny how two days ago 10 of the 12 Fed regions were showing growth, added jobs, etc now today the hysterics have returned.

Posted by: jollyroger2 | December 3, 2010 3:34 PM | Report abuse

"They're not erroneous, you're just misreading it because you are addressing role of government, and I am addressing corporate strategy in manipulating government. Two different issues.

Posted by: kreuz_missile | December 3, 2010 2:09 PM | Report abuse "

I recognize that, that's why I said what I said. Not all companies manipulate government the same way. I think that we agree that there is some degree of manipulation, but to say that any given CEO or owner would agree with your statement is just going too far. There are plenty of reasons why a company would rather pay to educate workers or any other government service, rather than have the government do it. What you said wasn't even true in the main, except maybe in the cases where it was true in the main.

But this just dovetails into what I was saying earlier, and others have said: it is a fallacy to assume that what is good for corporations is good for workers. Wasn't too long ago that many large US corporations were paying their employees to train overseas workers to take over their jobs. Profit is, very simply, revenue minus expenses. There are many ways to boost revenues, and many ways to cut expenses. In the long run to remain profitable a company has but one option: keep revenues higher than expenses. The easy way to boost profit is to cut wages and salary-related expenses, make the remaining workers produce twice the value for half the wages. You simply walk in one day and fire your production staff, then have a guy standing in the parking lot offering jobs to people to do the same work for half the salary.

There's only so far the government should go to promote jobs. After a certain point the problem is clearly with the corporate sector.

Posted by: chucklebuck | December 3, 2010 3:34 PM | Report abuse

"Its simple. Let Bush tax cuts expire on those earning more than 250,000$ per year(that includes me, I am a small business man)"

Why don't you cut out the middle-man, and just give your employees a raise? Or hire someone else for your business, or use that extra money you don't need to invest in another business venture?
Wouldn't all of that stimulate the economy, without having to filter through the hands of a countless number of bureaucrats?

Or is it a matter of, to quote a chuckle-head,
"Which one involves less work? "

Are you too lazy to help this economy?

Posted by: MrMeaner | December 3, 2010 3:40 PM | Report abuse

""Either Paul is making stupid trades with you, or you are exploiting your financial advantage to force Paul to deal with you on a disadvantageous basis."

This ignores competition. If a company is earning a higher risk-adjusted return than normal, new companies will enter its markets and drive prices down to where profits are appropriate for the level of risk taken."

...but surely you've factored that into your risk-assessment, when you chose what price to charge Paul for your services. Indeed some would say that you should charge higher fees to make up for projected lost income in the face of future competition :)

"the fact that you might need a lot of money" is always a wonderful rationale for charging exorbitant fees

It's also one good way to keep your customers from paying anything to future competition, you realize this? If you take every dime that they have now, there is no money left for them to pay people later.

Posted by: chucklebuck | December 3, 2010 3:41 PM | Report abuse

Except it would not benefit the GOP in any way to help create jobs. Right now they are thrilled. They will win the White House in two years and the rich will win the final prize: a life exempt from all taxation, a permanent ruling plutocracy.

Heck of a job, President Door Mat!

Posted by: sufi66 | December 3, 2010 3:42 PM | Report abuse

jollyroger wrote:

"What a load of hysterical mush. Two days ago stocks exploded upwards as there was a ton of of good economic data. Today there's more wailing and shrieking as there's a bump in numbers. Next week they'll be more good news. Followed by hysteria and gloom and the nation will be doomed again."

Actually the opposite has happened. The market has held up exceptionally well today. This indicates that traders and institutions probably believe two things:

1) the tax cut extension is guaranteed now
for all

2) Bernanke is God.

I'm not 100% sold on the former, though it is the logical assupmption, but I'm sure of the latter.

Posted by: 54465446 | December 3, 2010 3:55 PM | Report abuse

"It seems that the left has an inate belief that there is a set amount of money out there and everyone gets a portion of that pie. The economy grows with monetary expansion. That's how we got out of the Depression.

It's not an either/or zero sum game. The rich can get richer at the same time that the poor and middle class get richer too. As a matter of fact, I believe it more likely to be the case that *when* the rich get richer, those lower on the spectrum will too. "

It's more complicated than that and more simple at the same time. First, it is somewhat true that if both the richer and the poorer get more wealthy at the same time, that all will be happy. It is also true that in terms of relative wealth, even if the poor become less wealthy, as long as their buying power increases, they are likely to be happy.

It is also true that their happiness may not solely depend on their economic status either absolute or relative.

However I think that we are in a period of gross distortion, where the problem is not a small percentage of change in wealth but a gross change for some and many of the rest living on the edge of a financial cliff, slipping towards it through forces beyond their control. I think that if 5% unemployment would be considered "good" then doubling that number is not a huge calamity. The problem is the effect that it is having on the other 95%.

Obviously if you have a job and you are making good money then it becomes difficult to complain about your income or working conditions when there are 500 people out there down the street that would be happy to do your job for half your salary. So we reach a point where the poor are one thing, the middle-class another, and the poverty-line becomes very fuzzy and broad. Even if people are making ends meet today, there is no guarantee that they will make ends meet tomorrow.

The second issue is the rise in corporate profits in the face of the various rescue packages combined with a stagnation or even deflation in average personal wealth for the 98% of the country that is not considered "wealthy" ie earns less than $250k (and the AMT). The main correlation between those two issues is the rate of inflation. These problems will only get worse if inflation becomes a problem, which will happen if the Fed tries to either raise the prime rate to stimulate the bond market, continues to borrow to fund the deficit, or weaken the dollar to increase our competitiveness globally. So we start to see that clearly, even at the Federal level what is good for the goose is not necessarily good for the gander.

But some would say that this was obvious back in the 1930s why the Republicans think that this is the case *now* is beyond understanding. They just seem to want to continue to promote the fantasy that Corporate America operates in the best interests of the people...why I don't know...I guess that not enough people have lost their homes in the foreclosure debacle, or their life-savings in 401ks...

Posted by: chucklebuck | December 3, 2010 3:56 PM | Report abuse

""Either Paul is making stupid trades with you, or you are exploiting your financial advantage to force Paul to deal with you on a disadvantageous basis."

This ignores competition. If a company is earning a higher risk-adjusted return than normal, new companies will enter its markets and drive prices down to where profits are appropriate for the level of risk taken."

...but surely you've factored that into your risk-assessment, when you chose what price to charge Paul for your services. Indeed some would say that you should charge higher fees to make up for projected lost income in the face of future competition :)

Businesses choose to price their services at what the market will bear. Think Exxon would rather charge $200 a barrel of oil? Then why don't they charge that? They can't. I am sorry, but you look at business like a marxist political scientist and not as an economist.

Posted by: sold2u | December 3, 2010 4:00 PM | Report abuse


Certainty equals ignorance when it comes to economics.

Posted by: mbus | December 3, 2010 4:00 PM | Report abuse

I am sorry, but you look at business like a marxist political scientist and not as an economist. "


Sorry dude I'm not going to get into that debate. If you want to dismiss my opinion that way, feel free. It's a free country.

Posted by: chucklebuck | December 3, 2010 4:07 PM | Report abuse

I am sorry, but you look at business like a marxist political scientist and not as an economist. "


Sorry dude I'm not going to get into that debate. If you want to dismiss my opinion that way, feel free. It's a free country.

Oh, you're not going to convince me of anything, but I do find your take on capitalism interesting to say the least. Was I right, though? Are you a poli sci academic?

Posted by: sold2u | December 3, 2010 4:10 PM | Report abuse

Appallingly ignorant.

Posted by: melanief | December 3, 2010 4:15 PM | Report abuse

You seem to have no understanding of the supply/demand relationship, or even what it is that corporations do.
It's embarrassing, actually.
Reading Paul Krugman for any reason other than comedic value, leads to insanity.
It's just a guess, but obviously somewhere you were led down a strange, fantastical world of complete delusion

Posted by: MrMeaner | December 3, 2010 4:16 PM | Report abuse

Let's summarize:

GOP WINS AND ECONOMY TANKS

Posted by: BurfordHolly | December 3, 2010 4:18 PM | Report abuse

"No Kreuz,We have Inflation* in food,energy,and other "Small"ticket items that people must buy regularly,we have deflation in housing,durable goods,in "Bigger Ticket" items that involve
discretionary spending,both going on at the same time"

For one thing, Inflation refers to the value of the dollar, not the price of goods; the price of goods is used to CLACULATE the rate of inflation so you may disagree with the metric of inflation as the proper means of gaging prices, but by definition you cannot have inflation and deflation simultaneously. For another thing, your assertion is incorrect. http://blogs.wsj.com/economics/2010/11/08/sarah-palins-qe2-criticism-includes-inflation-hyperbole/

"If you look at the big picture, Capitalism under free trade, is basically a means to the same ends as is sought by the global progressive movement.
It is the equalization of the world's economies over a long-term. The only difference is Capitalism does it by creating prosperity, rather than confiscating existing wealth."

This is exactly the problem, though. For one thing, equalization of the global economy over the long-term likely requires a reduction in the standard of living for avrage Americans in the short term (which in terms of balancing the global economy could end up being several generations) without precautions taken by governments from the planning side to protect economies in a gradual transition, like getting away from unilateral economic disarmament policies like free trade pacts with nations that are nowhere near our living standard. Second, for a global economy to be balanced and running at maximum efficiency would require outsourcing a large number of industries who would be better served in other geographic locations. This may make sense from an economic standpoint, but would put US sovereignty in peril. We can't have large segments of our economy completely in the hands of other nations. Furthermore, even the Friedmans of the world recognize the need for government as a referee of the economy, thus a global system requires either a more interdependent world of sovereign nations, or a global government to oversee the process. This is why the pure free traders out there are every bit as Utopian and delusional as the international socialists are. Economic interdependence won't inherently bring about a peaceful world, won't eliminate the divisions of nationalism, religion, or other cultural divides. It just puts our economy, sovereignty, and freedoms at greater risk. we must balanced the best interests of the economy with the best interests of the nation, and the government has a responsibility to safeguard the nation's interest in the global economy.

Posted by: kreuz_missile | December 3, 2010 4:54 PM | Report abuse

"This ignores competition. If a company is earning a higher risk-adjusted return than normal, new companies will enter its markets and drive prices down to where profits are appropriate for the level of risk taken."

This assumes too academic a view of economics, it ignores barriers to entry, economies of scale, sticky prices, startup costs, time delay to enter the market, etc., which taken together can result in either monopolistic competition or what borders on a natural monopoly depending on the size of the market in question.

Posted by: kreuz_missile | December 3, 2010 5:04 PM | Report abuse

"This is exactly the problem, though. For one thing, equalization of the global economy over the long-term likely requires a reduction in the standard of living for avrage Americans in the short term (which in terms of balancing the global economy could end up being several generations) without precautions taken by governments from the planning side to protect economies in a gradual transition, like getting away from unilateral economic disarmament policies like free trade pacts with nations that are nowhere near our living standard."

I wouldn't disagree with almost any of that.
But it doesn't necessarily have to reduce our standard of living.
We just have to make it more attractive to do business here, than it has been in some time.

The tax cuts are a must. Nothing we can do will have an effect if we can't compete on our tax rates. The disparity in wages has already been mentioned. When there is such a disparity, how many tools do we have at our disposal to compensate for that advantage?
Tax rates, regulatory costs, and the size of the bloated, useless government that we have to support, that's about it.
It's not going to be easy, even if we do the right things.
We can remove regulations that are keeping us from new development, but we still have the problem of an activist judiciary, and special interests keeping us from consuming our own resources, by keeping projects tied up in the court system for decades.

Posted by: MrMeaner | December 3, 2010 5:15 PM | Report abuse

"This ignores competition. If a company is earning a higher risk-adjusted return than normal, new companies will enter its markets and drive prices down to where profits are appropriate for the level of risk taken."

This assumes too academic a view of economics, it ignores barriers to entry, economies of scale, sticky prices, startup costs, time delay to enter the market, etc., which taken together can result in either monopolistic competition or what borders on a natural monopoly depending on the size of the market in question.
___________________________________________

I am not an academic at all - but I have analyzed more companies than I can count. And pricing power is a very, very rare thing. Not only that, but we have the FTC and DOJ who enforce antitrust laws and they often times disapprove mergers if they think the concentration in the industry will be too high. FWIW, Obama has been even more laissez-faire in antitrust enforcement than Bush. All of Christine Varney's bluster about bold new antitrust enforcement turned out to be a whole lot of nothing. Why? Because there is no pricing power right now. Zero.

Posted by: sold2u | December 3, 2010 5:19 PM | Report abuse

I'm not talking pricing power. I'm talking market size. What you're talking about is technically true of the macro economy or big markets, but in small town America there's a reason why WalMart owns towns in some areas and Target owns them in others. There isn't a large enough market for competition to a Supercenter, the Supercenter can lower prices to destroy competition before it comes on line, etc., leaving travel to other towns as the only true competiton, and if the towns are isolated enough the cost of gas offsets the value in most cases; laws to regulate those markets, almost making them like a natural monopoly, are often the saving grace.

"We just have to make it more attractive to do business here, than it has been in some time."

The taxes aren't the issue, except maybe to corporate headquarters which, while a convenient target and a real issue as far as evading US taxation, is minor in the jobs picture. The far bigger obstacle is the wages our workers would require and complying with our labor standards. Reducing those to draw businesses in would lead to a decline in our standard of living.

Posted by: kreuz_missile | December 3, 2010 5:35 PM | Report abuse

"without precautions taken by governments from the planning side to protect economies in a gradual transition, like getting away from unilateral economic disarmament policies like free trade pacts with nations that are nowhere near our living standard."

The Chinese aren't going to be able to keep it's people down much longer. The more people taste success, the more liberal (in a classical sense) that government will have to become.
And until we get our debt under control, a trade war with China would be national suicide.
We just need to make America an inexpensive place to start and operate businesses, and drastically cut the size of government

Posted by: MrMeaner | December 3, 2010 5:35 PM | Report abuse

Well, obviously the answer is to force the Chinese to pay it's workers more.
We can't do that?
Well now what?
We've still got those taxes we can lower, and the regulations we can eliminate, along with the federal employees who enforce them.
Any other ideas that don't involve a trade war with the people who technically own us?

Posted by: MrMeaner | December 3, 2010 5:44 PM | Report abuse

As they become more free, they will become more economically liberal, or as they become more economically liberal they will become more free; both theories based more on wishful thinking than on hard economic analysis. At the same time, they don't own us. They own less than 5% of our Federal debt, what they do own is mostly our private debt, and them trying to do us harm with that will hurt them more than it will hurt us by devaluing their investment. Nor am I talking about a trade war or anything on the scale of Smoot-Hawley, just an international economic strategy with a spine that can provide leverage to the system the way it used to.

Lower all the corporate taxes to zero and eliminate all the regulations, and you still have a major decline in the US standard of living and no real gain in the US labor force - they'll move their corporate HQs back here, but still outsource thier labor force where they can pay $3 a day for a worker vs $8 an hour for a US one (unless of course you think a US worker will work for $3 a day in the kinds of conditions you read about in The Jungle)?

Posted by: kreuz_missile | December 3, 2010 5:55 PM | Report abuse

"without precautions taken by governments from the planning side to protect economies in a gradual transition, like getting away from unilateral economic disarmament policies like free trade pacts with nations that are nowhere near our living standard."

The Chinese aren't going to be able to keep it's people down much longer. The more people taste success, the more liberal (in a classical sense) that government will have to become.
And until we get our debt under control, a trade war with China would be national suicide.
We just need to make America an inexpensive place to start and operate businesses, and drastically cut the size of government

Posted by: MrMeaner
==================

So, are you therefor in favor of a national health system? Heath care costs are now our number one cost disadvantage in manufacturing.

Posted by: rapchat1 | December 3, 2010 6:07 PM | Report abuse

@MrMeaner

Also - according to a University of Chicago Study, executive wages add more to the cost of a US based companies products than labor does.

Are you going to come out in favor of a 90% reduction in executive wages to bring them more in line with what executives receive in other countries?

Posted by: rapchat1 | December 3, 2010 6:18 PM | Report abuse

"Are you going to come out in favor of a 90% reduction in executive wages to bring them more in line with what executives receive in other countries? "

Why does the Left care what corporate executives make? It isn't their money - its the shareholders. The more they make, the more taxes the government gets. So why do they rail against executive comp? I'm mystified.

Posted by: sold2u | December 3, 2010 6:46 PM | Report abuse

Whether you believe that the Chinese hold 750 billion, or the 1.7 trillion that most believe they actually hold, that is a pretty big hit to the dollar, if they were to be dumped at once.
It would be even worse, if coordinated with other countries who wouldn't mind seeing us taken down.
This would be a perfect time, if they were so inclined.
We are printing money, in some misguided attempt at Keynesian black magic that's has a success rate of 0%, and are as economically vulnerable as we've ever been.
There will come a point, especially if we continue to decrease our buying power, that the Chinese won't need us anymore, if they really do now.
Now is not the time to be threatening anyone.
Lets right our own ship, and get ourselves in to a better bargaining position, globally.

Posted by: MrMeaner | December 3, 2010 7:10 PM | Report abuse

I don't understand why all the major media buy into the Administration's use of the misleading U3 unemployment number (9.8%) when the official U6 number is released at the same time and is a much, much more meaningful measure of unemployment (17%).

This is one in six Americans! Just think of that number and the immense suffering it represents. But we get no sense of outrage coming from our elected officials. What if the President and all members of Congress had to work without pay until U6 came down to, say, 10%? Or to 8%?

Posted by: rebecca81 | December 3, 2010 7:22 PM | Report abuse

Well,

With big juicy tax cuts set for renewal, why hire? Just roll in the tax cuts to make money. They never created jobs, just look at the record. They only created additional wealth for people who never had to hire an additional person.

It's not surprising there is no more hiring. The fix is in.

Want proof? Ask a conservative to tie tax rates to employment rates. They will run away like the dishonest cowards that they truly are.

Posted by: colonelpanic | December 3, 2010 8:14 PM | Report abuse

If you're just going to reprint press releases from members of Congress, pretty soon readers will lose interest. We already know what Eric Cantor thinks about Barack Obama, in the same way we know what Newt thinks of the healthcare reform bill. They're agin' em.

Of course the uptick of unemployment doesn't suggest that raising taxes on high-income individuals and businesses is the culprit, or cutting them is the enemy. In fact, it's probably a good idea, because we the taxpayers need the cash. Anybody who's not running for office on a GOP ticket should recognize that simple truth.

One thing we learned from the financial crisis: wealth doesn't trickle down very far. It tends to puddle around the ankles of a class of superrich. Some of whom then use it to influence the American Congress.

Posted by: Samson151 | December 3, 2010 8:33 PM | Report abuse

"Are you going to come out in favor of a 90% reduction in executive wages to bring them more in line with what executives receive in other countries? "

Why does the Left care what corporate executives make? It isn't their money - its the shareholders. The more they make, the more taxes the government gets. So why do they rail against executive comp? I'm mystified.

Posted by: sold2u
=======================

I was referencing a posting that essentially said we had to race for the bottom on labor costs in order to compete internationally. My point was, that executive pay now drove the final product cost more than labor costs.

Why do fake conservatives all hate unions when executive pay adds more to the cost of American made products?

Posted by: rapchat1 | December 3, 2010 9:49 PM | Report abuse

Whether you believe that the Chinese hold 750 billion, or the 1.7 trillion that most believe they actually hold, that is a pretty big hit to the dollar, if they were to be dumped at once.
It would be even worse, if coordinated with other countries who wouldn't mind seeing us taken down.
This would be a perfect time, if they were so inclined.
We are printing money, in some misguided attempt at Keynesian black magic that's has a success rate of 0%, and are as economically vulnerable as we've ever been.
There will come a point, especially if we continue to decrease our buying power, that the Chinese won't need us anymore, if they really do now.
Now is not the time to be threatening anyone.
Lets right our own ship, and get ourselves in to a better bargaining position, globally.
Posted by: MrMeaner
============================

The Keynesian track record may not be perfect but it is far better than zero - which puts it WAY ahead of supply side idiocy which has been such a total disaster in every application that it really deserves a negative number.

Supply side economics is nonsense. Like a soviet 5 year plan, it ignores demand and makes the absurd assumption that if businesses have more capitol they will magically decide to hire more employees - but companies only hire when they need people to meet a demand for their goods or services. Even if they are relativity low on capital they will hire if demand is good; and no matter how much money they have on hand, they will not hire if demand is weak.

All national economies are in effect trickle up - a lot of people with a moderate amount of money will create a prosperous economy in which some will grow rich, some poor, but most will see gains. Trickle down economics is complete nonsense - countries with a few rich people and a bunch of poor people have little or no economic activity and tend to fall into political and economic chaos. The Laffer curve is a curve, not a straight mine as so many fake conservatives seem to believe. Lowering taxes only stimulates growth when capital is the restraining factor on growth - but right now demand is weak and the top of the economy is drowning in capital. We had a top marginal taxe rate of over 90% until 1962, and the country generally prospered. Today our top marginal tax rate is roughly 39%, and the capitol gains tax rate, which is the bulk of what the really wealthy pay, is a mere 15%. Yet the economy is in shambles.

Posted by: rapchat1 | December 3, 2010 10:01 PM | Report abuse

If you want to write a column, Jennifer, you should use some facts. First, we are not talking about a tax increase. We are talking about the final act of the Republican tax cut enacted ten years ago. The GOP dictated that this tax cut would end today, because they couldn't find any way to pretend that they could pay for it. Indeed, their tax cut, ten years ago, completely failed to help the economy. It produced no identifiable job growth: tax cuts for the wealthy have never been shown to provide economic growth in recent US history.

All the statistics I've seen show that in the past 40 years, 1) tax cuts for the wealthy grossly distort income to the wealthiest Americans, generally, the top 1% (I presume it includes you?), and 2) tax cuts for the wealth produce NO new jobs, unless you count gardeners.

Today, Jennifer, one percent of this country's taxpayers earn over 20% of its income. Although some of those people do indeed create jobs, the vast majority of them do not. Some, like the idle rich named DuPont and Walton, clip coupons and fund far-right Republican candidates. Others create imaginary "products" on Wall Street. At the same time, the American middle class has dropped by huge percentages, losing jobs, houses, savings, and self-respect.

Even the wealthy who create jobs, as you yourself point out in this "column," have produced fewer jobs this past quarter than are needed simply to employ new workers coming into our job force because they have finished high school or college. For this they should get a tax cut?

So let me revisit my advice: in addition to learning some economics, you should probably actually try to read the tax code. Its generosity to truly pointless but powerful interests might surprise you.

Posted by: thmas | December 3, 2010 10:14 PM | Report abuse

And the solution to high unemployment numbers is to fire Democrats and hire Republicans? Okay. But Republicans are the captains of industry. They're the ones who do the hiring and firing. It is they who refuse to hire, supposedly because Democrats won't inject "certainty" by passing every GOP scheme imaginable to include continued tax reductions for the ultra-wealthy. Does Obama, or anybody in his administration, have a knob that can be turned to inspire hiring? No. But you cannot tell that from the rhetoric from politicians and the media that follow every absurd statement politicians make. The GOP is the father of the economic downturn. Bush refused to raise taxes to pay for his wars. Bush objected to no spending bills during his eight years as president. Bush wanted hands off his social class so financiers were able to suck billions out of the economy by fraudulent means leading to an economic catastrophe that, without government intervention, would have created a Second Great Depression. This gets blamed on Democrats who suggested affirmative action to allow people of lesser means to buy homes. The condition that those home buyers have the means to pay their mortgages was tossed to the wind by financiers because creating paperwork and marketing it properly produced high profits and little risk as long they could palm the noxious stuff off to credulous investors. A fine mess concocted by the conservative brains that continue to perceive the world as they wish it were rather than as it is.

Posted by: BlueTwo1 | December 3, 2010 11:51 PM | Report abuse

"Are you going to come out in favor of a 90% reduction in executive wages to bring them more in line with what executives receive in other countries? "

Why does the Left care what corporate executives make? It isn't their money - its the shareholders. The more they make, the more taxes the government gets. So why do they rail against executive comp? I'm mystified.

Posted by: sold2u
=======================

I was referencing a posting that essentially said we had to race for the bottom on labor costs in order to compete internationally. My point was, that executive pay now drove the final product cost more than labor costs.

Why do fake conservatives all hate unions when executive pay adds more to the cost of American made products?
___________________________________________

I have nothing against unions. They can negotiate the best deal they can. However, if they go on strike, they breach their contract and the employer can fire them and replace them. Free market, all is fine.

BTW, your comment about executive pay is a non sequitur.

Posted by: sold2u | December 4, 2010 12:27 AM | Report abuse

"Are you going to come out in favor of a 90% reduction in executive wages to bring them more in line with what executives receive in other countries? "

Why does the Left care what corporate executives make? It isn't their money - its the shareholders. The more they make, the more taxes the government gets. So why do they rail against executive comp? I'm mystified.

Posted by: sold2u
=======================

I was referencing a posting that essentially said we had to race for the bottom on labor costs in order to compete internationally. My point was, that executive pay now drove the final product cost more than labor costs.

Why do fake conservatives all hate unions when executive pay adds more to the cost of American made products?
___________________________________________

I have nothing against unions. They can negotiate the best deal they can. However, if they go on strike, they breach their contract and the employer can fire them and replace them. Free market, all is fine.

BTW, your comment about executive pay is a non sequitur.

Posted by: sold2u
====================

No its not a 'non-sequitur'. Please quit being willfully dense.

If someone is going to argue we have to cut labor wages to third world levels to make America more competitive, then it is perfectly valid to point out that the amounts US executives earn add even more to the cost of making US products - and that therefor their compensation must also be forced down to similar levels seen in competing countries.

As for unions, perhaps you have no personal issue with them, but they are certainly a favorite target of todays right wing.

BTW - in effect corporations are a collective for investors, not that dissimilar to unions in their own way.

Posted by: rapchat1 | December 4, 2010 12:48 AM | Report abuse

Hang in there lady. Wait until the grown ups come back into town (DC) in the new year. And then we'll fix it, provided I don't get hindered by Hillary Clinton and her propped up puppets out here in South Asia - who are like that villain guy in Titanic, they don't quit even when their ship's obviously sinking, still trying to get away with whatever bluff they pulled on eachother right up their chain of command all the way to Hillary Clinton. Come new year they'll all have been proven to have lied and bluffed their way into positions and into holding offices as reward for something none of them will ever be able to deliver. lol.

Posted by: darkasnight1234 | December 4, 2010 3:15 AM | Report abuse

sold2u wrote:

" I have nothing against unions. They can neg otiate the best deal they can. However, if they go on strike, they breach their contract and the employer can fire them and replace them. Free market, all is fine."


Your comment shows complete ignorance of about 80 years of Federal law and SCOTUS cases.

Other than that, it was fine.


Posted by: 54465446 | December 4, 2010 12:19 PM | Report abuse

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