In the past week, the new Administration has taken actions in international relations that seem somewhat controversial in light of campaign promises and rhetoric. It must always be remembered that even if a candidate genuinely intends to do as promised during an election, that candidate, when elected, will not have the only say in all events. Sometimes, a candidate’s promises or assertions are undone simply by the wealth of previously unavailable information presented upon achieving office. In other matters, there is at least supposed to be, although Bush II largely ignored it, a legislative process. And, there is always the “big picture” of overriding considerations. With that in mind, I now attempt to address some of these recent Administration moves.
The US military facility housing enemy combatants at Bagram Air Base, Afghanistan, is operating legally, and is apparently in compliance with the Geneva Conventions. Many civil liberties groups have decried its continuing function in light of the President’s promise and actions to close Guantanamo. However, they fail to realize that a no charges or review required holding facility within a combat zone is perfectly legal under US and international law. Guantanamo was not such a facility. I was at first slightly disappointed with the Administration’s announcement of plans to continue Bagram operations, but, in review, I realized that Bagram was one of the few operations initiated under Bush that did not fly in the face of law. However, I think that the current Obama administration needs to take a look and ensure that Bagram is held to the highest standards and prevent the abuses that were commonplace under Bush. Bagram should be considered a Prisoner Of War camp, and, as such, should be administered under all of the guidelines of the Geneva Convention and Hague Protocols.
The continuation of extraordinary rendition is another matter, and a troubling one at that. Again we have secured assurances from our allies in the War on Terror that they will abide by Geneva and international proscriptions on abuse and torture of detainees. Those assurances were not heeded in the last seven years, and I doubt that, lacking rigid US oversight, they will be heeded now. It is my hope that President Obama’s back-pedaling on this matter is the result of access to privileged information to which the general public is not privy. I want to believe that the continuation of this program is the result of perceived true necessity and that the continuation will not be followed with the same absolute disregard for law shown previously. Most American allies practice both ordinary and extraordinary rendition, and it is not a new practice developed because the War on Terror; it is practice with a long history that has simply come to light because of the frequency of its use resulting from the current war. Rendition is practiced by Britain, Israel, Saudi Arabia, Egypt, Russia, Korea, and others; even France has been known to use it.
There are real world situations out there wherein strict adherence to the law is not always the most prudent course available. I hope that recent Obama administration actions will prove this to be the exception rather than the rule. The legacy of American abuses left by the Bush Administration proved imitable for Russia in its unilateral action recently in Georgia. If the US is to lead by example, then the US needs to set an example for ethics and the Rule of Law. It is imperative upon the Obama Administration that the example set for the world be of the highest integrity to better foster the necessary various coalition partnerships as the world unites to face the numerous challenges presenting themselves for resolution.
Recently, the UK denied a former Guantanamo Bay detainee’s lawsuit seeking damages from a company providing air travel in the American extraordinary rendition program. The UK ruling was apparently engineered from an American “national secrets” claim. Claiming national secrets to deny access for a former detainee’s lawsuit in Britain may have legitimacy, but this recent action by the Administration sets a bad precedent. Former detainees who had been denied their rights under the Bush handling of facilities and procedures at Guantanamo Bay should be entitled to some form of reparation. If a person is wrongly incarcerated and treated inhumanely as a consequence, then every ideal worth holding demands compensation for the victim. It has been well established that Guantanamo Bay was used to wrongly incarcerate people, deny them due process, and conceal their abuse at the hands of US and foreign operatives both at Gitmo and at secret and foreign locations across the globe. Citing national secrets to further deny an abused individual’s due process is not in keeping with the moral high ground our new President proclaimed in his campaign.
Human rights organizations widely protested recently the failure of Secretary of State Hillary Clinton’s conference in China to address China’s long and continuing tradition of human rights abuses. This criticism is valid and merited; however, it is, at the moment, futile. The US is not seeking, nor should it, military confrontation with China. The human rights issue is one over which China might be willing to wage war. There are other problems, as Bill Clinton discovered upon taking the Office of the President. The Chinese and American economies are so large and intertwined that the disruption possible that raising the human rights issue might bring would be catastrophic, not only to the Chinese-American economy, but to the world. The policy established by President Clinton was one of détente wherein the cultural/diplomatic exchange between the two countries might, as happened during the ‘70’s with US-USSR, bring a better understanding and respect for the other’s culture. The point of detente is to provide an example and hope that the example helps the each side to embrace, however tentatively, the virtues of the other’s culture. For now, this approach will have to suffice, however distasteful that may be. Additionally, there is the issue of cultural difference at the most fundamental level. Many westerners fail to understand that what they believe to be human rights abuses are not perceived as such by the Chinese. The culture in the West is organized on the concept of the individual as the fundamental element, while, even now, the East still organizes on the concept of the community. Generally, Westerners believe that any abuse of the individual, even for the sake of the larger community is unacceptable, while, in the Orient, the individual is seen as expendable for the sake of the community. Where the West sees abuse, the East frequently sees necessity.
In summation, I believe that the Administration has, for the greater part, done what it can as far as addressing these issues in light of the promises to improve the American standing and role in international affairs. Many of these issues are long-standing in nature while others address abuses under the Bush administration. In any event, they are better moves than might have been expected from a McCain Administration, which, in all likelihood, would have simply retained the admittedly unacceptable status quo.
26 February 2009
23 February 2009
More False Arguments before Georgetown City Council
Georgetown, Kentucky is proposing a 3% tax on meals served in restaurants that operate in the city. Because previous city governments failed to rein in profligate, irresponsible spending and simultaneously to placate their constituents, the budget deficit for the city of Georgetown last year had swollen to nearly 4 million dollars. That represents an incredible debt for a city claiming little more than 20 thousand residents. Through massive cuts, mostly in payroll and services, the budget deficit currently looks to be closer to a more reasonable 2 million dollars. Now the Georgetown Mayor and City Council are looking at raising revenue, a task that should have been the first undertaken. The restaurant meal tax has been largely misrepresented by the Tourism Board, the Mayor, and in front of the City Council as being limited in scope and impact. The justification is the false claim that the restaurant meal tax is discretionary for the individual and will fall mostly on visitors and tourists. As for the tax being discretionary, not everyone has the time or competence to prepare meals in their home. Most work lunches are taken away from the home, and therefore most of that local, as opposed to tourist, dining will be impacted by the restaurant meal tax.
The point of all this is that now is not the time to impose this sort of new tax upon an already distressed market. While revenue generation would be accomplished, that revenue would be reduced from current projections as has happened in other communities. The destabilizing of the local restaurant economy would not be long term, lasting perhaps six months, but the shock effect would in all likelihood lead to some closings while also preventing new businesses from opening, and this is exactly opposite to the effect that Georgetown’s government should be seeking at this time.
The following comes from an email I sent to City Council members and the Mayor regarding the Tourism Board’s own survey, which does not support the contention for the meal tax falling primarily upon visitors to Georgetown. Also, I have included the results from an informal telephonic survey which I conducted of other Kentucky communities which have imposed a restaurant meal tax.
The Tourism Board’s own survey:
The results of the Interstate vicinity restaurant survey counted a total of 4,004 cars. Of these, 38% were from Scott County, 49% were from other Kentucky Counties and 13% were from out of state. The results of the South Broadway restaurant survey counted 1,243 cars. Of these, 69% were from Scott County, 26% were from other Kentucky Counties, and 4% were from out of state.
| Overall Results | ||||
| Cherry Blossom | South Broadway | Total | Percentage | |
| Scott County | 1,502 | 869 | 2,379 | 52% |
| Kentucky Other | 1,404 | 339 | 1,633 | 36% |
| Out of State | 505 | 48 | 553 | 12% |
| Total | 1,909.15 | 1,256 | 4,557 | |
Please note, that since Kentucky truck license plates do not include the county of origin, all Kentucky trucks were counted in the Kentucky Other County category. Obviously, this would result in some Scott County vehicles not being counted in the Scott County numbers. Also note that it is impossible to determine if a Scott County license is that of a Georgetown resident or a resident of the county. Data for 2003 obtained from the Georgetown/Scott County Chamber of Commerce reports that the total population of Scott County was 36,726. The population for the City of Georgetown was 19,013, or 52% of the total Scott County population. It would be reasonable to assume that of the Scott County license plates counted, 48% were not residents of the City of Georgetown.
http://www.georgetownky.com/revdevelop2.html
So, apparently, the Tourism Board’s own figures show that the majority of Georgetown diners on any given regular day are more likely than not to be from Georgetown, not out of town. The use of the population county/city ratio to claim equivalent percentages represented in Scott County license plates at eateries is ridiculous. One usually eats close to where one lives, which means that Scott County plates in Georgetown restaurant parking lots are probably owned by Georgetown residents. Additionally, since Kentucky motor vehicle plates stay with the vehicle, there is a high probability that out of county plates still belong to Georgetown residents who bought second-hand vehicles. In my own immediate family, there are seven vehicles; of these, four have out of county plates. Finally, these figures are from 2005, when there was considerably more travel going on and the presence of out of town diners was more likely. The current economic situation has greatly curtailed travel for all purposes, and decreased travel results in increased localized dining. All one need do to realize that Georgetown restaurants are patronized most by locals is to visit these Georgetown restaurants.
I have seen it written and heard it said that fully 70% of the restaurant meal tax would probably be paid by out-of-town diners; given the evidence of the Tourism Board’s own survey, I would counter that it looks more like Georgetown residents will be paying the 70%. And, claiming the Interstate traffic argument doesn’t work when travelers know that Lexington is just around the bend.
As for the consequences to locally-owned restaurants, I did a phone survey of restaurants in Berea and Mt. Sterling. In Berea, which most recently passed its meal tax measure, four of the seven restaurants surveyed indicated a definite drop in month-to-month revenue since the tax went into effect, on top of the year-to-year loss experienced as a result of the recession. One reported no discernible effect beyond a lot of complaining about the new tax. Another, to my surprise and the owner’s admitted own, had actually seen an uptick in sales. The seventh restaurant I attempted to contact had closed since the imposition of the tax.
In Mt. Sterling, I could not locate a single locally-owned restaurant that was under the same ownership as before their meal tax went into effect. I contacted a couple of Winchester restaurants, and they didn’t seem to know anything about a restaurant tax.
I will be following up on this to give everyone a clearer picture about the possible consequences of a restaurant meal tax in Georgetown at this time. It seems that the meal tax will have a de-stabilizing effect felt most by those restaurants that help define the community atmosphere. Many of the few truly locally owned places are already financially distressed, and this new tax may be the needle that tips the cart.
19 February 2009
US Postal Service Refuses to Enforce Law
I have decided to write this because I have recently been robbed on two occasions by, I believe, someone working in my local Post Office. A couple months ago, I was to receive an inheritance check in an amount exceeding $50,000, but I never received it. In the same week, I sent, from my residential mailbox, my new wife our Marriage Certificate. She never received that. Also, in the same time frame, I noticed many “stiff-paper” mailings had been opened if the originator’s identity could not be determined form the return address on the envelope. I reported my concerns to the Georgetown Postmaster, and was given very little in the way of support. He basically said that tracking individual pieces of mail was next to impossible, and that the Post Office couldn’t be responsible.
His statements in this matter remind me of other, similar refusals to do their jobs on the part of local Postmasters in other parts of the US. Federal law and US Postal Service regulations place certain requirements on the handling of mail for those institutionalized for various reasons. The requirements include that mail be delivered to the intended recipient promptly upon completion of necessary security measures, that the mail be unedited or censored, and that mail only be “scanned” for keywords. These regulations have been emplaced over the years to ensure that inpatients and inmates not be denied their fundamental right to regular communication with friends, loved ones and family and to ensure that they are not subjected to unlawful abuse or discrimination as a result of conveying their thoughts and opinions in private correspondence. In many places, these laws and regulations are regularly ignored and violated with the full complicity of the local US Postal Service agents. Their response is usually along the lines of lacking responsibility for enforcement once the mail is delivered to an institution; however, statements to such effect are false.
Less than three years ago, in either Randolph or Lawrence County, Arkansas, the jail actively censored mail, incoming and outgoing, and would actually mark out words and passages deemed offensive. One inmate reported that any less than complimentary reference to the jailers in either incoming or outgoing mail would be blacked out with a marker and result in the “offending” inmate being placed in solitary. This sort of censorship is fundamentally illegal and the retributive punishment is outrageously so.
In Sharp County, Arkansas, the Sheriff and deputies regularly photocopy all mail for supposedly investigative purposes. This is a criminal act in itself, but it is additionally so as they usually share these photocopies with just about anyone they please. At one point, as a result of misconduct and abuse, an Arkansas State Police officer was barred from any contact with an inmate or involvement with his case. The Sheriff continued to share that inmate’s correspondence with the barred officer. The officer had been barred regarding the inmate because, during the serving of a void, out of state warrant, the officer had shot the unarmed, underwear-only-wearing individual in the back.
Most penal institutions that I have known regularly hold mail for unusual periods of time, deliberately delaying delivery after all necessary security measures have been taken. In most locations, it is reasonable to expect that mail be delayed for a day or two and then delivered at the beginning of the second shift, usually between 4 and 6 PM. This is the practice required by law and regulation. However, most places actually allow the jailers to deliver whenever they please, in violation of the regulations. If an inmate or patient complains, then they can expect to see their mail delayed even further, sometimes as long as two weeks.
All of these practices have been raised with the local and regional postmasters, who have, barring a court writ of mandamus, generally excused themselves from enforcement. This appears to be a case of viewing the victims of these crimes as deserving of the unconstitutional punishment and sharing the view that the inmates and patients won’t be able to mount a legal effort to demand the law be enforced. As a consequence of the irresponsibility of local postmasters in many locations, federal crimes against institutionally captive persons are committed by the thousands every day.
16 February 2009
Roland Burris has Honesty Problems
Illinois: Roland Burris Problems
I called it in December, and now I am basking somewhat in smug satisfaction. Ongoing work in the Illinois Congress with regard to the investigation of former Governor Rod Blagojevich has brought forth new affidavits from Roland Burris. Roland Burris was appointed under something of a cloud of dubiousness by the former governor before Mr. Blagojevich’s impeachment at the hands of the Illinois legislature. During the appointment process, I wrote that I thought Mr. Burris, now holding President Obama’s vacated Senate seat, was devoid of the character that the people of Illinois and the Democratic Party should require. Mr. Burris’s new affidavits indicate that Mr. Burris lied to the Illinois Congress when he stated that he had no prior contact with then Gov. Blagojevich regarding the Senate seat or requests for money in return for that same seat. Mr. Burris has revealed that he had been contacted on at least three occasions and that Rod Blagojevich’s had asked him for $10,000 in “campaign contributions” to secure the Senate seat.
One can read about ongoing issues here: http://www.suntimes.com/news/brown/1432864,CST-NWS-brown16.article, in a Chicago Sun-Times piece by Mark Brown
Following is the piece I posted in December regarding my thoughts on the then potential Burris nomination. I have added emphasis to the parts most foretelling and important.
Illinois Governor Rod Blagojevich has appointed long time Illinois politician Roland Burris as a replacement for President-elect Barack Obama’s seat in the US Senate. This appointment comes in the face of criminal indictment and probable impeachment for the Illinois governor, who allegedly attempted to trade Mr. Obama’s vacated seat for cash and/or favors. Democrats from the Illinois state house to Washington have instructed Blagojevich to not make any appointment, but the governor has refused to heed the call and warning. In appointing Roland Burris, Rod Blagojevich has made what, at first blush, appears to be the appointment of a an acceptable, reasonable, seasoned politician to take over representation of the State of Illinois in the United States Senate; this is not the case.
In 1992, against the advice of his own staff, which possessed more intimate knowledge of the case and its problems than did Mr. Burris, Roland Burris authorized the re-prosecution of Rolando Cruz, and was actively seeking the death penalty. By that time, Rolando Cruz was known to have been the innocent victim of a police frame job. In 1985, Rolando Cruz, in a highly controversial case, was convicted and sentenced to die for the 1983 kidnapping, rape, and murder of 10 year old Jeanine Nicario. The original conviction was secured through alleged “confessions” which were subsequently discredited as police fabrications with no corroboration. Subsequent convictions were obtained with the assistance of false witnesses, including one who was a barmaid girlfriend of one of the investigators and others who recanted in later testimony, and a return to the originally discredited “confessions”. In 1995, DNA evidence, which had been available and sufficient for analysis for many years, exonerated Cruz, but the DuPage County State’s Attorney and Illinois Attorney General Burris continued to claim Cruz’s guilt. No one ever offered an apology for the obvious railroading of the defendant. Ultimately, the continuation of prosecution, under the recommendation of Roland Burris when he had the opportunity to have the case dropped, of Rolando Cruz led to the investigation and prosecution of police and county prosecutor’s office personnel for evidence and witness tampering, as well as perjury and other crimes.
Mr. Burris' support for the continued prosecution of an obviously innocent man is far worse than showing leniency to one obviously guilty. Roland Burris' actions in this case alone show him to be more interested in political preservation than in sound judgment or moral,ethical, and legal decency.
Roland Burris has made a career as the also-ran politician of the Chicago/Illinois system. His lack of judgment in the Cruz case along with his general lack of campaign performance do not qualify him for the Senate seat being vacated by Mr. Obama. Mr. Burris’s actual campaign to ascend to Obama’s Senate seat only began in earnest after the indictment of Rod Blagojevich. This may be because Mr. Burris did not have the resources to entice Blagojevich’s notice. It makes the case for one lackluster in-trouble politician offering a helping hand to another so that both might mitigate the apparent unsuitability for their offices. There have been no real scandals surrounding Mr. Burris, but that seems to be more a lack of opportunity than of desire.
Some have suggested that it would be good for the GOP to push for the seating of Roland Burris in the US Senate; this suggestion represents a problem in itself. If there is an idea among conservatives that seating Burris will help the GOP overall, then perhaps the Burris nomination is more fraught with peril for the Democrats than currently believed. I believe that Mr. Burris should be dropped like the moldy potato he is; he isn’t hot, he isn’t fresh, and he just might be poison. There are plenty of other candidates available, and Mr. Blagojevich should not, as a matter of good sense and good ethics, be involving himself in appointments for which he has been accused of crimes.
13 February 2009
http://www.latimes.com/news/nationworld/world/la-fg-uspakistan13-2009feb13,0,4776260.story
Feinstein comment on U.S. drones likely to embarrass Pakistan
The Predator planes that launch missile strikes against militants are based in Pakistan, the senator says. That suggests a much deeper relationship with the U.S. than Islamabad would like to admit.
A GOP History Lesson in Stimulus
Today, the US Congress prepares to hopefully present a stimulus package for President Obama’s signature. Economists agree that this is necessary, both in purpose and scope, to prevent further caving in of both American and world economies. The package now making the rounds of Capitol hallways is more balanced than either of the proposals to emerge from the separate houses of Congress. The GOP complains still, despite enormous Democratic concessions, that the bill is partisan and wasteful. But, in their arguments, the Republicans largely prove themselves ignorant or misleading about history, particularly the New Deal and successful economic stimulus. This stimulus package, though not quite representing the best hopes of the White House, does show more promise than the separate packages proposed by either the House of Representatives or the Senate.
The final stimulus has come out, and it looks like an improvement over either version previously negotiated by the House of Representatives and the Senate. In light of Republican intransigence during the earlier separate negotiations, large corporations have lost some of their tax cuts, while small businesses, the true drivers of employment in the US, have been favored with new cuts. On this balance, Congress has struck a note for equity in the American business milieu. The large corporations that have been generally responsible, through crass mismanagement and unbridled greed, for our current economic crisis, gone to the government for assistance, and historically paid less in taxes than middle class America, have lost out to those who have been responsible, self-reliant, and productive. The corporate favor-seeking GOP has been largely denied in its misguided attempts to secure greater concessions for the wealthy, whose interests are the only ones they truly represent. People, any country’s most important commodity, have been generally placed ahead of institutions. Most of the special ear-mark funding presented by Democrats in the original House package has been trimmed, while education and unemployment have been bolstered from the cuts made in the Senate.
Talk about gracious winners and sore losers. Though the White House and Congressional Democrats offered the GOP nearly 80% of their demands in tax cuts, the Republicans continue to lambast the package as inappropriate, partisan and wasteful. Most economists’ analyses show that the only ones proposing genuinely inappropriate, partisan, and wasteful modifications to the stimulus are the Republicans. The continuing cry for the now mantric tax cuts for the wealthy show that the GOP cannot or will not learn from the past. It is evident that, in the future, the Democrats should offer the Republicans nothing at the start of any legislative negotiations and thereby prevent wholesale concessions which, in the end, reduce the overall effectiveness of inspired and better reasoned attempts to address GOP-wrought American economic woes.
The GOP argues constantly that FDR’s New Deal didn’t pull us out of the Great Depression, and they are correct. What happened, though, is not exactly the truth that Rush Limbaugh and the GOP attempt to describe. In 1933, at the start of the New Deal, unemployment was at 25%; by 1938, unemployment had shrunk to 10%, an obvious sign of success. From 1933 until 1937, when the New Deal was firmly in place, the American economy grew by 13% annually. In concessions to Republicans and “Blue Dog” Democrats (economically conservative), FDR scaled back government spending, and the recovery stagnated, until 1941, when World War II forced an unprecedented amount of government spending, which broke the stagnation imposed by fiscal conservatives. After the conservative spending restrictions of 1937-38, economic growth slowed to 10% annually while unemployment again rose, but only to about 15%, until the start of World War II. So, the New Deal, in all likelihood, would have broken the Great Depression by 1940, if fiscal conservatives had not been appeased. This re-contraction points only to the success of the New Deal usurped by fiscal conservatism. One telling failure of the modern Republican/Rush/conservative argument to explain all of this is illustrated by the consistent electoral return of FDR to the White House. Apparently, if the conservative argument is accepted, New Deal policies were so out of favor that the people of the US wanted to see the same man in charge. Like most GOP arguments, the logic doesn’t follow.
Although assigning responsibility for our current economic mess may seem like playing the “blame game”, it is actually fundamentally necessary to foment understanding of the problem and its underpinnings. Only by addressing the who, what, where, when, how, and why of the financial crisis can the solutions for the present and preventions for the future be found. This issue goes beyond party and required a bi-partisan approach. In the end, the party and its supporters who, in encouraging the meltdown, proved its philosophies wrong had nothing new to offer.
07 February 2009
Ruining the Stimulus
A great deal has been in the press this past week about the stimulus package now in debate and negotiations in the US Senate. Herein, I try to sort through the muddle, listing articles and websites that clearly delineate where the spending package stands. I also offer my own analysis and commentary where I believe it to be appropriate. In this entire process, certain things have become abundantly clear. The Congressional Republicans continue their calls for bipartisanship while making singularly partisan demands of the bill. Although Democrats have given the Republicans most of their demanded tax cuts and significantly reduced social program spending, the Republicans still claim that the stimulus is not bipartisan. In this process, the GOP has revealed that it plans to be obstructionist at every turn, thus greatly reducing the opportunity for the new President and Democratic leadership to succeed. The Republicans, not having a plan of their own now seek only to prevent the Democrats from the success that this country desperately needs. Democrats have given up too much to those Republican demands and the package will now be far less effective than even the pork-laden package approved by the House of Representatives last week. The Republicans have called for smaller government, but have removed practically all spending that would have benefitted smaller state and local governments in favor of increased federal allocations for the Department of Defense.
Sen Nelson (D-Neb) and Collins (R-Maine) have co-sponsored amendments that scrap educational and school construction increases in favor of increasing, by the same amount, spending for the Pentagon. Where are their priorities; hasn’t the discussion of old militarism versus new progressivism been had and lost? What do we need more of, better public education or more bloated military spending? Veterans know that those Pentagon increases will not be seen by the average troop on the ground, nor those who have gone before, but will be wastefully mismanaged to the benefit of defense contractor cronies of the GOP.
Greg Sargent's blog, The Plum Line, at whorunsgov.com, contains the article, Latest Cuts To The Stim Package: Head Start, Child Nutrition, Food Stamps Public Transit, which can be found at http://theplumline.whorunsgov.com/stimulus-package/latest-cuts-to-the-stim-package-head-start-child-nutrition-food-stamps-public-transit/, lists program cuts and upgrades. According to his list the following programs are to be cut from the stimulus package entirely: Head Start, Education for the Disadvantaged, School improvement, Child Nutrition, Firefighters, Transportation Security Administration, Coast Guard, Prisons, COPS Hiring, Violence Against Women, NASA, NSF, Western Area Power Administration, CDC (Centers for Disease Control), Food Stamps. Meanwhile these federal spending areas are to receive increased funding: Defense operations and procurement, STAG Grants, Brownfields, Additional transportation funding
Also cut was direct federal stimulus aid to states, which, unlike the federal government, cannot engage in deficit spending on a recurring basis. This is an interesting demand from the GOP, the party of smaller government, to hold, since the concession indicates that any direct market infusion should come only at the level of the larger government entity. In appeasement to Republicans and economically conservative Democrats (“Bluedogs”), the Senate bill was stripped of direct stimulus spending to states in order to afford increases in spending within the federal government, particularly the Pentagon. This betrays the hypocrisy of economic conservatives’ already, via the Bush administration, discredited calls for smaller government.
In his New York Times article, What the centrists have wrought, found at http://krugman.blogs.nytimes.com/2009/02/07/what-the-centrists-have-wrought/, Paul Krugman writes, “Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.”
In the CNN article, Senators debate stimulus after reported deal, which can be found at http://www.cnn.com/2009/POLITICS/02/06/stimulus/index.html, Senator McCain’s comments on the stimulus package making its way through the Senate reveal that he has entirely fallen victim to failed conservative economic ideology. "This is not bipartisan," said Sen. John McCain, "If this legislation is passed, it'll be a very bad day for America." The Senate version of the stimulus package contains nearly 80% of Republican demands for tax cuts. Sen. McCain misses the facts; all of the most respected economists have agreed with the Obama plan and also conclude that Sen. McCain’s plan would not have stimulated the economy much at all. These same experts came to the conclusion that Sen. McCain’s plan would in fact have lengthened the recession and probably produced a worldwide depression. The Congressional Budget Office did not claim, as Republican leadership has said, that the Obama stimulus package would do little or nothing to relieve the recession; the CBO statement, in fact, made the opposite claim; that the Obama stimulus would have good short and long term effect upon the economy.
Another by Senator McCain, “ This is not a stimulus bill, this is a spending bill.” Huh? How else do you propose to stimulate? More tax cuts? The stimulus package already contains major concessions granting tax cuts wanted by the Republicans. That is still spending, as it reduces the revenue to support the expense stream. And a stimulus bill is a spending bill, by definition. While responsible spending is a worthy ideal on the microeconomic level, it must be remembered that Republican insistence on reducing spending in the middle of a crisis is what lengthened the Great Depression.
In Ryan Grim’s Piece, GOP Opposes Pay Limits On Bailed-Out Bankers, found at http://www.huffingtonpost.com/2009/02/06/gop-opposes-pay-limits-on_n_164544.html, it is reported that Sen. James Inhofe (R-OK) said that he is "one of the chief defenders of Obama on the Republican side" for the president's efforts to reach across the aisle. But, said Inhofe, "as I was listening to him make those statements [regarding Obama’s executive pay-cap at bailed out institutions] I thought, is this still America? Do we really tell people how to run [a business], and who to pay and how much to pay?"
Sen. Inhofe, these businesses went begging to congress for this assistance and then abused the aid given them so that they now again need money. The government is now a major shareholder in these institutions, and, as all shareholders are, is entitled to a say in operations, especially when the American people are footing the bill. One part of implied government assistance etiquette is that one not use the funding to throw a party celebrating one’s previous failure. Over the weekend it has become apparent that even the Europeans are seeing the need to reel in the high living of banking executives in favor of returns on investment that help maintain prosperity. In Europe, this move is coming more from the banks themselves rather than being mandated in conjunction with government assistance.
This entire week we have seen that the Republicans plan to entrench themselves in their tried and failed economic ideology. The GOP has nothing new or workable to offer, so they intend to promote failure through obstructionist action. It is obvious that the Republicans do not have the best interests of America or Americans in mind. Their loyal opposition to the Democrats is rapidly becoming disloyal opposition to America.
03 February 2009
Thoughts on Economic Stimulus
Where They are Missing the Boat
The Republicans are finally giving voice to some actual problems with the economic stimulus, but, as usual, their proposals are not about helping the average American. The Republican leadership successfully lobbied Obama to bar mortgage bankruptcy reform from the bill, keeping those duped and ensnared by predatory lenders from being able to maintain their ownership and avoid foreclosure. The Republicans in the Senate are now talking about mortgage foreclosure protection, but only for the banks and not for individual homeowners victimized by predatory lending practices. Those mortgages inflated by the housing bubble and encouraged by greedy bankers and investors ought to be revaluated to appropriate real estate values.
The predatory part of the mortgage crisis was created by the lenders in offering variable rate mortgages at inflated prices to induce the less informed to make dangerous decisions in the purchase of their homes. When the Federal Lending Rate, to which variable-rate loans are tied, was below 1.5% in 2003 to 2004, these loans looked attractive to first time and low income buyers because of their apparent affordability. Through 2005, 2006, and 2007 the Federal Rate surged to 3.22 and then 5%, making these marginal loans unaffordable as the interest portion of the payments increased the overall bill beyond the budgeting threshold for these inexperienced buyers. Also, in many of these loans, the interest rate goes up with the Fed, but they frequently do not correspondingly retract with the Fed. Once their mortgage payments, almost inevitably, fell into arrears, these homeowners faced increasing liability as the interest rates automatically surged to the maximum allowed and penalty fees accrued.
The obvious profiteering came from offering these variable rate mortgages to less qualified buyers in hopes that they would, in fact, default and allow the lenders to resell foreclosed homes at an even higher inflated value. The belief was that the price of housing would continue to rise, and each subsequent resell would result in ever-increasing profits. The problem arose in that too many of these predatory loans were defaulted and the market suffered a glut of available housing just as first time and low income buyers became appropriately fearful of the whole process.
In order to fix the housing market side of the current economic crisis, economic stimulus should focus not on bailing out and rewarding the greed and carelessness of the lenders, but on the individual homeowners. Proposed tax incentives for home buyers are a good idea, but there should also be protections for those currently in danger of losing their homes. All mortgaged property values should be reset to current valuation levels, and the corresponding mortgage recalculated to reflect the adjusted valuation with interest rates permanently set in accordance with the current Federal Lending Rate. This will protect homeowners and punish, without bankrupting, predatory lenders, thus stabilizing the housing market by increasing affordability and trust.
Republicans in Congress frequently promote the business interest of America; that is, the big business interests. There have been no attempts made in the stimulus bill to address the interests and concerns of our nation’s greatest engine for economic growth: small business. Small business accounts for roughly 70% of American employment, yet it has not been addressed in the current versions of the economic stimulus. Although infrastructure plans contained within the stimulus will in all likelihood present opportunities for small businesses, that benefit will likely accrue primarily to those businesses associated with the construction and transportation industries and will not be of as much help to other industries in similar need of assistance. The further one gets from hammer and shovel labor, the less the impact for the better will be. Infrastucture includes telecommunications and information as well as financing at the local level, and the stimulus should address these issues in greater detail and with greater funding. A primary goal of economic stimulus should be to provide enhanced opportunity at all levels rather than simply bailing out proven failures.
In a concession to the Republicans, the Senate version of the stimulus bill now carries an expansion of the corporate Net Operating Loss (NOL) carryback. Currently, NOL carryback limits loss recovery from past tax bills to just two years. The Senate stimulus would increase that to five years. Companies who have lost money in the current fiscal year, 2008, can receive an immediate refund of taxes paid during previously profitable years. Meaning that any corporation that lost money this past year can currently receive a complete refund for all taxes paid in preceding two, soon to be five, years. The Republicans think that major corporations who have failed should be rewarded, not only with a tax cut, but with a tax rebate on the little amount of taxes they paid previously. As I have discussed before, most major US corporations effectively pay nothing in taxes, but conservative Republicans want to give these same companies taxpayer money. Perhaps this NOL carryback expansion could be applied to small businesses who carry the bulk of the US business tax burden, but there is no reason for it to be applied to major corporations. It is time for real competition to return to the American marketplace.
The money for all of this is available. But, Congress must realize that American tax-spending priorities must change. Trickle-down does not work; water and fertilizer both have to get to the roots in any economy with long-term sustainability. We must reward those who succeed by honest effort and not those who callously hoard money at the top while sending jobs and money overseas. The Iraqis have an oil fund and other means of generating revenue, it is up to them to exercise their responsibility to do so. There is no sane or rational reason for an American member of Congress to vote for the funding of building Iraqi schools and vote against the funding for repair and maintenance of American ones; yet, that is exactly the sort of thing going on among the Republican caucus. At the same time, all members of Congress need to just, for now, forget about pet projects and focus on core issues: infrastructure, American jobs on American soil whenever possible, small business, healthcare in general, and education.
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