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McConnell Busted on Research Report Suppression

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Senate Minority Leader Mitch McConnell (R-KY)In September, the Library of Congress’ Congressional Research Service released a study to Congress which showed there was little discernible growth affects from low taxes. Mitch McConnell and the GOP objected to the report and, for reasons yet unknown, the report was removed from the non-partisan CRS website. (Report pdf)

The study, though, is important as the nation continues to discuss tax rates and how they affect growth.

Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%.

There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth.

However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. The share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. The evidence does not suggest necessarily a relationship between tax policy with regard to the top tax rates and the size of the economic pie, but there may be a relationship to how the economic pie is sliced.

Timothy Noah, of The New Republic, adds this to the discussion:

The New York Times reports that on September 28 the Library of Congress’s nonpartisan Congressional Research Service withdrew, under pressure from Senate Majority Leader Mitch McConnell, R.-Ky., and other Senate Republicans, a widely-circulated study concluding that since 1945 tax cuts have had no measurable impact on economic growth. […]

Please note that Hungerford’s study didn’t say there is no relationship between tax cuts and economic growth. It said there is no discernible relationship. He is hardly the first academic researcher to make this observation. The conservative economist Martin Feldstein went fishing for such a relationship in a 1989 paper about economic growth under Ronald Reagan. Feldstein’s paper, coauthored by Douglas Elmendorf, current director of the Congressional Budget Office, reached pretty much the same conclusion (though Feldstein and Elmendorf did suggest that tax cuts could effect the “composition” of economic growth). “We really don’t have any evidence that [personal income tax rates have] any effect on growth,” Berkeley economist Alan Auerbach told Business Week in September. “A lot of the research showing otherwise is based on theoretical calculations.” There isn’t even any discernible evidence that capital gains rates affect economic growth. Hungerford made that observation in a 2010 CRS report, but others have said so, too.

If you can’t find any evidence that tax cuts foster economic growth, then any belief that they do must be based purely on faith. The CRS report’s true offense is to question the religion that favors tax cuts to cure any and all problems. For any congressional agency to venture an opinion about such doctrine violates the Constitutional separation between church and state.

Senate Democrats have demanded a hearing to learn why the report was taken down at the behest of McConnell and other GOP senators. As a nation locked in discussions over effective marginal tax rates and national debt, this information from the CRS would affect the discussion. The public needed this information in order to make an informed decision about the country’s future. McConnell was wrong to demand that it be pulled from the CRS website.

Written by Valerie Curl

November 2, 2012 at 8:01 AM

Romney Scores “Pants on Fire” By Politifact

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GOP Presidential Candidate Mitt Romney

An independent project of the Tampa Bay Times, Poltifact scored Team Romney’s latest campaign ads and statements in 19 different statements as “pants on fire.” The list and graphics are too extensive to post so go here to see them for yourself.

By contrast Obama scored only one “pants on fire.”

So, let me ask you this question: If you reward Romney by electing him president, how could you trust a President Romney to tell you the truth when he’s learned, from you, that lying works?

Maybe the morals and ethics – personal integrity and honor – of the nation have changed since my parents, grandparents and Church taught me the difference between right and wrong and to behave with integrity, honesty and honor. Romney is of my generation and my age so I know he was taught these same values. Yet, he has chosen, in this campaign, to disregard all he was taught while growing up about central personal values.

I’m not so naive to believe that politicians always tell the exact truth. They shade and spin the truth to their advantage. But to vote for someone who blatantly lies on a regular basis seems inconceivable to me. How could you ever possibly believe he would be truthful with you once he’s elected?

I am appalled that national polls show Romney tied with Obama. Are Americans really so easily misled and naive? Or is the hatred for Obama so strong, even though his policies saved the nation from another devastating Great Depression, that even a serial liar is an acceptable alternative?

Written by Valerie Curl

October 31, 2012 at 4:57 PM

The Founders Were Not Libertarians or Ayn Randers!

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To those who condemn government, I would ask you to read John Winthrop’s speeches and Scottish history.

John WinthropWinthrop’s speeches to his colony created the nation’s first free schools; he exhorted them to take care of the poor, the helpless and sick, the weak and defenseless because Jesus required it of them; his ideals caused them to create income taxation based on the religious principle of “do no harm.” He said those who have more should contribute more to the commonweal than those who have less because it was the moral thing to do to meet the needs of the commonwealth.

The South, on the other hand, as a result of the Scots-Irish immigrants came from a rougher sort as anyone who has studied Scottish history knows. Self-reliance in Scotland was necessary as civil society – and the rule of the King and Parliament and development of the commonweal – were extremely limited. That failure of government to develop a commonweal was one of the reasons why England prospered as Scotland stagnated and continuously plunged into tribal (clan) civil wars.

Prior to the Constitutional Congress, Madison, Mason and many others exhorted Jefferson and Washington to throw their hats in the ring with them to create a new national government out of the ashes of a dysfunctional Confederation. Finally, when representatives met, outside of the Confederation Congress, the members spent months writing and arguing the Constitution – without the Bill of Rights. Newspapers and tavern discussions dominated conversations across the states: how should a federal government be limited; does a new constitution need to explicitly state individual and state rights; should rights devolve to the people first or to the states first; should a federal government take pre-eminence over states. Those arguments consumed Americans and filled the newspapers.

Madison joined with Hamilton in arguing in the Federalist Papers that the nation needed a strong central government to deal with the challenges facing the new nation. England still threatened her merchant marines and trade routes. France wanted to be repaid. Individual state coinage was a complete fiscal disaster. In short, the new nation was being torn apart. However, a new central, strong government could solve those problems, Madison and his friend thought.

Not everyone was satisfied with the idea of strong central government. States’ Righters in the South pushed to have states rights prevail over individual rights, believing that states held pre-eminence over individuals. Northerners demanded individuals take precedence over states.

Finally, a compromise was formed after the original Constitution was ratified in which citizen rights were confirmed as Northerner’s wanted and state’s rights were confirmed as Southerner’s wanted. The outcome was the Bill of Rights.

Later, Washington came down on the side of strong federal government, which after much discussion, allowing Hamilton to set up a national bank and pay off the nation’s debts over Jefferson’s objections.

When I read Libertarians demand devolution or elimination of federal powers, I harken back to the arguments of our founders. None of them were Libertarians as many Libertarians would described today. The main disagreement that had existed two centuries ago was between the pre-eminence of individual rights via a strong federal government or state rights which held to a weaker federal government. It was not whether a person could opt out of societal responsibility, previously known as the commonweal, for self-interest. Although the North held to a stronger belief in social responsibility, the South really did not dispute those notions entirely. Even clans built strong social networks.

A month or so ago, I read a speech – or book preface – in which Libertarian economist and author Fredrick Hayek wrote that he was not a conservative. He wrote that conservatives look backwards, while he, a self described classical liberal, looked forward into the future. In other writings, he stated that a federal government should do what a individual cannot do alone, including building infrastructure, care for the needy, and providing health care. He wrote that these things were not against individual responsibility but rather fostered the ability of people to make decisions for themselves without destroying the social fabric (the commonweal).

The Mises Institute may be the hero of many libertarians, but Mises appears to have perverted Hayek’s concerns at a time of rising communism (authoritarian state control of industries) in parts of Europe. Fighting communism is a dead argument. Communism, in its purist form, no longer exists. Even China can no longer be called Communist. In actuality, China and Russia most clearly resemble their monarchies of the 19th Century.

Nevertheless, what some call socialism, particularly in the USA today, is nothing more than a response to the market and the requirement to compete globally. For example, 17% of GDP going to health care nationally when other OECD countries spend ~11% puts US companies at a financial disadvantage competitively. Moreover, a system based employer provided health care reduces the ability, incentive and motivation to start a new business. Even if one were to eliminate insurance companies, the costs of the health care delivery system would be beyond the financial means of a middle income family. That is why England, for example, has more start ups than the US: individuals and families don’t have to worry about being financially destroyed should a family member get sick. Essentially, the people have more freedom.

Hayek understood that essential freedom prospect and supported it. Hayek also understood the need to balance the “free market” with the need to protect the citizenry from corrupting, non-competitive legislation and legislation that would harm the public (the commons) due to industry specific, purchased legislation. Businesses will always – as they have always done – seek to protect their profits, regardless of the affects on society. That is why Hayek sought, in later years when communism was no longer a threat, to advocate for industry in general, rather than for businesses, and to protect workers from circumstances beyond their individual control.

Modern day Libertarians, all too often, align themselves less with Hayek and more with Ayn Rand in their philosophy. Rand espoused a selfish, self-centered economic philosophy that is the antithesis of Winthrop’s commonwealth.

It is also why Romney must be defeated. While Ayn Randers and many so-called libertarians aligned with him, he does not portray the values of Winthrop that dominated the US rise to prominence throughout the last 200 years.

No Principles

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2012 Presidential Candidates Romney and Obama

When I first read this story in The New Republic, I was shocked and disgusted. Now, I’m disgusted and appalled.

As you may have heard, Romney on Thursday scared the bejeezus out of Ohio autoworkers when, during a rally, he cited a story claiming that Chrysler was moving Jeep production to China. Thousands of people work at a sprawling Jeep complex in Toledo and a nearby machining plant. Many thousands more work for suppliers or have jobs otherwise dependent on the Jeep factories. It’s fair to say that they owe their jobs to President Obama, who in 2009 rescued Chrysler and General Motors from likely liquidation. If Chrysler moved the plants overseas, most of those people would be out of work.

The story turns out to be wrong. As Chrysler made clear the very next day, in a tartly worded blog post on the company website, officials have discussed opening plants in China in order to meet rising demand for vehicles there. They have no plans to downsize or shutter plants in the U.S. On the contrary, Fiat, the Italian company that acquired Chrysler during the rescue, just spent $1.7 billion to expand Jeep production in the U.S. That includes $500 million to renovate and expand the Toledo facilities, with 1,000 new factory jobs likely to follow. On Monday, about the same number of people will report for their first day of work in Detroit, when Chrysler adds a third shift to a Jeep plant it operates there.

The campaign does not appear to have announced the ad. The Obama campaign captured video of it, during a broadcast in the Toledo area. Here’s how it ends:

    Obama took GM and Chrysler into bankruptcy, and sold Chrysler to Italians who are going to build jeeps in China. Mitt Romney will fight for every American job.

Although the statements about Chrysler are true individually, together they imply that the Obama Administration’s action led to the outsourcing of American jobs. That is obviously false, both in the specific sense of what Chrysler is doing and in the more general sense of what the entire auto industry is doing. Just look at the numbers (or the graph below). According to the Bureau of Labor of Statistics, the number of autoworkers fell almost in half between 2002 and 2009, from around 1.1 million to around 600,000, as the industry was in something like a death spiral. Then, as Chrysler and GM were on the brink of true collapse, the Obama Administration stepped in with federal loans and a managed bankruptcy. Almost immediately, the automobile manufacturing sector started growing again. Since July, 2009, the workforce has risen by about 150,000 jobs and that’s purely in manufacturing. If you include parts manufacturing and other related jobs, it’s 250,000.

Auto Employment

And that’s the net increase. By providing Chrysler and GM with the financing they needed to avoid liquidation, the Obama Administration prevented those companies from putting more people out of work. Overall, according to estimates by the Center for Automotive Research, the rescue probably saved at least a million jobs.

Of course, this kind of deception is emblematic of the campaign Romney and his supporters have waged in the last few days. They insist that Romney never thought government should let Chrysler and GM collapse. But Romney’s vague and inconsistent rhetoric included statements that he would have opted for a “private sector bailout”—something that was not possible in 2009, because private investors were in no position to make the necessary loans.* As Detroit Free Press columnist Tom Walsh wrote on Friday,

    Throughout the primary campaign, [Romney] joined other Republican candidates in a chorus of bailout-bashing and union-bashing when the auto bailouts came up, painting the Obama administration’s crisis-management effort as a reckless campaign to run up the national debt and do favors for labor unions.

Romney and the Republicans were wrong then and they are still wrong. But Romney has gone beyond normal political bounds.

Politics is often a dirty, nasty business, and politicians do lie and mislead. However, Team Romney chose to go well beyond the bounds of normal decency with this blatant attempt to scare workers with closure of their plant – and loss of their jobs – when no such plans exist in order to win votes.

With this ad and similarly misleading talking points, Romney has exposed his complete lack of principles and ethics. He has stepped well over the boundary of decency and proven that he will say and do anything to achieve his desired goal of becoming president.

The final question remaining is if Romney is elected president how many other unprincipled lies and deceits will he conjure to achieve his own ends. Where is his conscience and what are his ethics?

I’ve been watching politics, in particular presidential politics, since the Nixon-Kennedy debates, and I have never seen a more deceitful, unprincipled campaign as Romney’s. Even Nixon’s paranoia and criminal campaign did not disgust this much.

Team Romney’s unprincipled attempt to scare workers with the loss of their jobs for purely self-interested reasons should be enough to disqualify Romney. There is no excuse – none whatsoever – for deceptively scaring workers with the loss of their jobs. It’s sleezy, disgusting, and reprehensible.

Additional Note: I hope my readers will send this blog or the links to their friends, especially to those in swing states. Romney is not qualified.

Important political stories:

Why Freddie Mac Resisted Refis

How to Act Human, Take Two: The Search for the Real Romney By James Lipton

Preventing National Decline

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Presidential Candidates Romney and Obama

I’ll be honest, I want Obama to win. Not because he’s a great president. We would need another TR or FDR for that. But campaign costs and the way campaigns are funded, along with Citizens United, make a real reformer president unlikely at present. Look what happened to Obama. He told Wall St during the ’08 campaign that he would raise their taxes and reform the financial system; when he actually tried they revolted to the tune of half a billion dollars in negative ads and lobbying.

Nevertheless, Romney will be a disaster as president.

This afternoon, I spent time reading some of my favorite financial and economics blogs: Simon Johnson and James Kwak’s Baseline Scenario and Jesse’s Café Americain. Through their blogs, I clicked over to a blog by Judge Richard Posner, appointed by Reagan, who now sounds more liberal than modern conservative Republican; then onto an interview with Glen Hubbard, Romney’s leading economics adviser (ugh, what a arrogant sleeze!); and then found a new blog, Capitalism Without Failure.

In each blog, I became more firmly convinced that if Romney is elected, Wall St and the uber wealthy will win; that we average people, like you and me, not only don’t count in their considerations, we’re irrelevant; and that any chance to reform the financial system into becoming a system that provides capital to businesses rather than a high stakes, high risk gambling casino will fail. Most of all, if the nation continues to celebrate the “greed is good” and “me first and only” ideology that has been fostered over the last 30 years, the nation will see another devastating depression within a few years. It will be far worse than the Great Recession and would likely spark violent revolutions worldwide.

Yesterday, I read a Business Week Charlie Rose interview with Jeremy Grantham who owns a highly successful equity fund business. He, too, is sincerely worried about coming events that the GOP ignores or has convinced its base is irrelevant or misleading (pdf). He told Charlie the U.S. is in for a major fall if it doesn’t wake up to what is going on worldwide and here at home.

Over and over again, I read the hazards that await the country if this nation doesn’t change paths. Obama, I believe, is attempting to change those paths if not well, considering the legacy of monied forces arrayed against him and his innate desire to cut a deal rather than being the progressive reformer TR was.

Romney, on the other hand, is a continuation of GW Bush on steroids, and the GOP Congress is worse. In Bloomberg View, Jonathan Alter writes that if Romney is elected, not only will we not know which Romney shows up at any particular moment, he’ll be constantly looking over his shoulder to the GOP Congress to see how he should act and what he should say. He’ll be led along by Norquist, DeMint, and Blackrock’s Schwartzman to name a few. Ryan will probably control the budget, just as Cheney controlled energy and national security.

Our nation is already suffering OECD ratings losses in a variety of competitive areas, from education to equity and mobility to loss of new business start ups to income security to health care to governmental ability to resolve problems and issues. Given the Romney-Ryan budget plans, neo-con national security advisers, and the whole far right wing conservative movement of the GOP, I cannot conceive of a Romney administration increasing the nation’s OECD competitive ratings…or even Harvard’s Business School Review’s competitive rankings.

It’s hard for me to believe that so many people have been conned by Romney. He’s a chameleon whose only beliefs are his destiny to become president (fulfilling Daddy’s dream?) and that the wealthy are superior beings. The US cannot be run as if it’s an LBO in the making. Or at least it should not be. As John Winthrop told his small community of colonists back in the early 1600s, the community needed to needed to take care of each other as Jesus required. And only in ensuring the economic viability and equitable opportunity of every colonist would that community become the “shining city on the hill” – the light of Jesus.

Yet, now, nearly one half of the nation would choose to elect a man, and a party, who choose to negate everything Winthrop told his Puritan parishioners and which that colony worked so diligently to achieve in terms of equity and opportunity, from free schools to physical and monetary care for the poor and disabled to income taxation based on ability to pay without causing family harm for the general needs of the commonweal.

There are plenty of things about which dislike the Obama Administration. But a Romney administration would be even worse – not by any stretch of the imagination better. Romney would lead the nation down the path of Depression and aggressive selfishness.

Money, Power & The American Dream

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Hat tip to one of my Facebook friends, Bruce Bartlett who advised Presidents Reagan and GHW Bush on tax policy, including Reagan’s tax reform of ’86, for letting me know about this video documentary.

The first 20 minutes or so describe the lives and luxury of the uber wealthy. But don’t be deceived into thinking this video is a rant against the wealthy. It’s not.

This video is an expose on how politics and wealth intersect…and how that intersection affects middle and working income and poor families.

This hour-long video needs to be seen by every voter of conscience, from whatever party, before casting their votes. It shows quite clearly how our system is broken, why it’s broken and how beloved nation has begun to fail to live up to its potential. Neither party is spared judgement.

I urge everyone to put aside everything else and take the time to watch the entire video documentary and to think about our nation, her well-being, and all her people before the election.

The US is not, nor has it ever been, pre-Revolutionary France or Russia wherein a few very wealthy held all the power and opportunity while everyone else struggled to survive, thrive and paid all the national bills.

John Winthrop and his Massachusetts colonists created the first free schools because the colonists knew education was vital to economic health, demanded that everyone help those who suffered hardships because doing so was the message of Jesus, and required each family pay a income proportional tax so the colony could pay for its needs and wants. Winthrop believed that only through building a strong, cohesive, educated community could the colony become the shining city on the hill that Reagan and many other politicians have cited rhetorically.

As you can see in this documentary, Winthrop’s dream of a shining city – Jesus’ shining city – is not just under attack but is threatened with having its lights extinguished. Yes, the political system is broken because of money in politics and the wealth that can be made through the use of and manipulation of political power. But much worse is erosion of the traditional social values of social cohesion, caring for the poor, and education of which Winthrop spoke and this nation held for over 300 years.

Fact Checking the Final Debate

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Romney-Obama In Presidential Debate

After a lot of confusing debating on foreign policy…with a bit of domestic policy, the debate is over. So, what are the financial and known facts? Washington Post’s ever diligent Wonkblog staffers have provided those facts and data. If you want more information or to confirm the accuracy was what was said then go here.

So far, it appears Obama won the debate. How that changes the ground game, who knows. Nevertheless, Romney softened his arguments, even going so far as to backtrack on all he said during the primaries. During the primaries, he took a very aggressive stance, even going so far as to state he would be willing to unilaterally strike Iran, a la Geo. Bush, almost immediately upon becoming president. During the primaries, Romney said leaving Afghanistan on schedule was a mistake. Now he agrees with that date. And that is only one instance during these three debates that Romney has changed his position while claiming he did not. What? Did what I hear watching the primary debates part of my imagination?

Nevertheless, my biggest concerns about Romney’s foreign policy stances have more to do with his advisers: most of them were all part of GW Bush’s initial foreign policy team. All are neo-con war hawks. That should scare every American because the neo-cons are not afraid of starting wars. They firmly hold to an idea of American Imperialism that always, always has been alien to this nation which is why Romney says he’ll increase defense spending well above what the Defense Department wants to another $2 trillion over 10 years.

Look, I’m a military brat. My dad was a master sargeant in the Air Force for over 23 years, mostly in the Strategic Air Command. My husband is a Vietnam Vet. I care about our GIs and how we behave around the world. How we are viewed by the rest of the world. That is why I endorse both Geo. Washington and Eisenhower’s view of military might. I also agree with TR’s “talk softly and carry a big stick.” We’re doing that now by being more strategic in our weaponry and getting our allies and the rest of the world to go along with us. Eisenhower said war should always be the last option after all other options had been exhausted.

We don’t need neo-con war hawks deciding foreign policy. Nor should we allow them any say in foreign policy. We cannot afford the lives and financial costs they would choose to rack up. Our children should be far too important to us than to use them as pawns in a game of Imperialism.

Written by Valerie Curl

October 22, 2012 at 8:34 PM

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