Krugman: China is a 'rogue economic power'

As if more than enough evidence weren't enough, there's this:

Last month a Chinese trawler operating in Japanese-controlled waters collided with two vessels of Japan’s Coast Guard. Japan detained the trawler’s captain; China responded by cutting off Japan’s access to crucial raw materials.

And there was nowhere else to turn: China accounts for 97 percent of the world’s supply of rare earths, minerals that play an essential role in many high-technology products, including military equipment. Sure enough, Japan soon let the captain go.

I don’t know about you, but I find this story deeply disturbing, both for what it says about China and what it says about us. On one side, the affair highlights the fecklessness of U.S. policy makers, who did nothing while an unreliable regime acquired a stranglehold on key materials. On the other side, the incident shows a Chinese government that is dangerously trigger-happy, willing to wage economic warfare on the slightest provocation.

He goes on to talk about how, starting in the 1990s, the Chinese were allowed to take over the world's rare earth production industry, necessarily killing off our own industry in the process. About the Bush II era response, when we were supposedly doing everything and then some to protect our national security:

[P]olicy makers simply stood by as the U.S. rare earth industry shut down.

Seems like the Barons of the New America (and their political retainers and gophers) are willing to do anything for money.

As to lessons, the Professor suggests three, including:

China’s response to the trawler incident is, I’m sorry to say, further evidence that the world’s newest economic superpower isn’t prepared to assume the responsibilities that go with that status.

Let's put that a little differently. As the Republicans are to the Democrats, China is to all U.S. policy-makers — facing a self-neutered opponent, relentless, and willing to do anything to win. It's a match made in heaven — if you're a Republican, or the Chinese government.

GP Read More......

Rachel on the Chamber of Commerce & foreign money in U.S. elections

If all you have read of the Chamber of Commerce story are the headlines and snippets, you probably got the bottom line correctly. The "U.S." Chamber of Commerce has very likely been taking foreign money and "investing in" U.S. politicians (and I know you know I mean "donating to") — in massive doses. Shock! say you. Yet more Citizens United money carpet-bombing our electoral process! And this time, foreign!

I raised the spectre here of a descent into client-nation status. When your creditors put money into (buying) your political process, you get the rulers they want, not the ones you want. The U.S. has client nations and rulers all around the world. They don't make the news; only when clients push back — Iraq and Afghanistan — is it news. And then only because of our clearly recognized desire that they be "better" (more submissive) clients. I would venture to guess that most U.S. voters would prefer that Iraq and Afghanistan be better clients. (Needless to say, that's the inverse of "spreading democracy.")

But Rachel raises a more direct point. What is the immediate interest of those foreign contributors to U.S. elections? Well, more outsourced jobs, of course. And that's why I called them the "U.S." Chamber of Commerce; because they are themselves clients, and not of U.S. interests.

The segment is rich in information:



"These corporations are trying to pay for a Congress that will keep these policies going" — Celinda Lake in the clip.

There seems to be only two resolutions. The first is a wage-race to the bottom by U.S. labor, so they can compete with third-world sweatshops (and second-world engineering firms). The second is some way of keeping U.S. capital from going overseas. Earlier I noted Ian Welsh's take on this aspect of the issue:

If you can build a factory overseas which produces the same goods for less, meaning more profit for you, why would you build it in the US?

Until that question is adequately answered, by which I mean “until it’s worth investing in the US”, most of the discretionary money of the rich will either go into useless speculative activities like the housing and credit bubbles, which don’t create real growth in the US, or they will go overseas.

Mr. Welsh offers a range of options in his own post here.

You can see this issue through a business lens, or a nationalist lens. Oddly, this time the business lens is also a nationalist lens — if you're rooting for all of our national competitors.

The U.S. [sic] Chamber of Commerce, ladies and gentlemen; here through the end of this century.

GP Read More......

Frank Rich: We're watching 'a billionaires’ coup'

Frank Rich has an interesting column that draws a nice line between the idiocy of Christine O'Donnell (our friend the Handmaiden) to the mega-billionaires who fund it, to what he calls a "coup" ... in print.

The column is excellent, a nice walk through the garden of logic that gets him from A to B to C. Do check it out. I'll leave you with just two quotes. The first:

Everyone knows that tax cuts for the G.O.P.’s wealthiest patrons must come out of Social Security and Medicare payments for everybody else.

And by the logic of post-election flim-flam, it all goes down in the lame duck session (or Lame Duck Session, since this will be a Lame Duck for the ages). Here we can watch both betrayals at the same time — the water will start to drain from the Social Security glass, straight to the Big Boy tax cuts glass. Voilà.

I plan to develop my list of good Dems–bad Dems after that session. The second quote, from Rich's final paragraph:

Christine O’Donnell, Tea Party everywoman ... just may be the final ingredient needed to camouflage a billionaires’ coup as a populist surge.

The whole close is strong, but I didn't want to hide the bomb. "A billionaires' coup." Score one for the good guys.

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Portrait of the Bush economy

Continuing our swirl through the land of the Rich and the devastation left behind them, here's our friend David Cay Johnston with an exclusive peek at a new report on the Bush economy.

We knew it wasn't pretty; these are the gruesome details:



Notice Bush's list at about 1:05 of the clip — the cuts will help "businesses that create jobs," those at the "low end of the economic ladder," and "small businesses."

The first isn't true unless you replace jobs with profits. The second is just a lie. And the third isn't true unless you replace small businesses with billionaires. ("Replacement phrases" that make Movement Conservative nonsense make sense are discussed here.) The facts are these:

Income for the average worker (adjusted for inflation):

2000 average income — $61,500
2008 average income — $58,000

"Jobs":

Bush created 3.5 million jobs over 8 years. Recall that one of our magic numbers is 150,000 new jobs/month — that's what it takes to break even with population growth. 96 Bush months x 150,000 = 14.4 million jobs needed to break even. He missed by a factor of four.

But true to form, profits were way up. The number of people making $200,000/year or more increased almost ten-fold.

And finally "small businesses" (i.e. billionaires):

30% or more of the tax savings in 2007 (the height of the "boom") went to those with incomes over $1 million/year.

12.5% of the savings went to the top .1% — those with $2 million/year income or more. (Johnston misspoke; "one in a thousand" is the top .1%, not the top .01%, as Table 7 here shows.)

Johnston's summary: "Clearly this was focused on helping a narrow group of people at the very top." Note also Keith's implication that Bush was deliberately "starving the beast" — deliberately strangling government of revenue.

Here are some more magic numbers, by the way — easy-to-remember breakpoints for income distribution (not wealth distribution). Sources for this include the excellent Slate multi-part series, Emmanuel Saez's academic site, plus the google. There's a mix of years and methodologies here, so this isn't gospel; but it's good enough:

Top 20%   = $100,000 per year
Top 10%   = $150,000 per year
Top  5%   = $200,000 per year
Top  2%   = $250,000 per year (tax cut point)
Top  1%   = $400,000 per year
Top  .5%  = $600,000 per year
Top  .1%  = $2 million per year
Top  .01% = $10 million per year

Check the Slate article for changes in the ratios over time. The highest income I'm aware of is David Tepper, Appaloosa Management — $4 billion in 2009. I'm sure he's piker compared to some.

Welcome to Bush-world, the real one, and Blue Dog–world as well. There's a movement afoot in parts of our ever-helpful press to rehabilitate the ex. Resist, guys.

GP Read More......

Ian Welsh: 'Tax Cuts for the rich create jobs outside the US'

This is a drive-by, and it won't be news to some of you. But it's not a connection that many have made, since it's a series of dots, where the endpoints aren't obviously related.

Ian Welsh says it simply: Tax cuts for the rich create jobs outside the US. And he's right. If you sweeten the purse of the rich, they put money where it will earn. At this point, that's not the U.S. So if you want jobs here, make investment attractive here, or unattractive abroad. Or both.

Yes, that's managed capitalism (but so are bailouts). And yes, that's contra what Bush defined as "freedom" — meaning freedom for capital to move wherever (you didn't think the Bush definition of "freedom" involved real people, did you?).

But so what. You want jobs here, keep money here. Ian Welsh:

If you can build a factory overseas which produces the same goods for less, meaning more profit for you, why would you build it in the US?

Until that question is adequately answered, by which I mean “until it’s worth investing in the US”, most of the discretionary money of the rich will either go into useless speculative activities like the housing and credit bubbles, which don’t create real growth in the US, or they will go overseas.

There are a number of ways this question can be answered.

Then he lists the ways. A good read, highly recommended.

If when you're done reading, the details float away, just remember — every dollar you hand to the rich in this post-Reagan fever to serve them, means fewer Wheaties for Americans.

If we don't stand up for us, who will?

GP

Update: Edited the last sentence for clarity. Read More......

Majority of Americans believe free trade agreements hurt the US

So was it a poor job of selling free trade or is free trade in fact a bad thing for the country? NBC/WSJ Poll:

A new NBC News/Wall Street Journal poll shows that 69 percent of Americans believe free trade agreements with other countries have cost jobs in the United States, while just 18 percent believe they have created jobs. A 53 percent majority—up from 46 percent three years ago and 30 percent in 1999—believes that trade agreements have hurt the nation overall.

Moreover, that rising skepticism extends across the political spectrum—a sign that continued trade expansion may be no easier for Republican leaders to promote if they regain control of Congress than it has been for Democrats.

While 65 percent of union members say free trade has hurt the U.S., so do 61 percent of Tea Party sympathizers. Democratic pollster Peter Hart and his Republican counterpart Bill McInturff, who conduct the NBC/WSJ poll, say the greatest shift against free trade has come among relatively affluent Americans, or those earning more than $75,000 a year.

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More on 'small businesses' and the Bush tax cuts

Continuing to post the connections that emerged during my recent adventure on trains, planes and strangely-named buses, here's a follow-on discussion between Keith Olbermann and Chris Hayes from the excellent "small businesses means billionaires" show.

Note, however, that this discussion veers wider than the earlier one:

It brings in Karl Rove's Billionaire Boys Club & Election Purchase Boutique (introduced here by Chris in Paris).

It includes a discussion of the real motives of our snarling can't-live-without-em Blue Dogs (Movement Conservatives in People's Party clothing).

It adds a soupçon of Citizens United, the gift that keeps on taking.

Then wraps the package in a metaphor that technically can't be applied.

Here's the discussion:



An interesting mash-up — a very small number of ever-hungry billionaires buying congressional tax benefits over the corpses of the middle class; a well-bribed Congress eager to drain those corpses to feed that hunger; specialty pass-through shops to funnel those bribes to waiting congressional hands; and a court case (Citizens United, a Mr. Roberts specialty) poised to turn a fire hose of cash into a river.

It's all very neat. Chris doesn't want to call it a putsch, but he may as well have. The phrase "slow-motion coup" also comes to mind.

Side note: If you care, here's a taste of the Amazon blurb for Winner-Take-All Politics, the book Chris Hayes mentioned:

A groundbreaking work that identifies the real culprit behind one of the great economic crimes of our time— the growing inequality of incomes between the vast majority of Americans and the richest of the rich. ... Jacob S. Hacker and Paul Pierson demonstrate convincingly that the usual suspects—foreign trade and financial globalization, technological changes in the workplace, increased education at the top—are largely innocent of the charges against them. Instead, they indict an unlikely suspect ... American politics.

Sounds like a well researched read. Available now in poor houses and homeless-shelter bookstores everywhere.

GP Read More......

What 'small business' really means

While I've been traveling, much has happened; and much of it connects. So let's start here, with the concept of "small business" beautifully explored by Keith Olbermann in a brilliant Countdown segment late last week. First the video, then a few comments:



This looks like original reporting, or at least original research. Big kudos to Olbermann and his staff.

The video is rich; I want to make just a few points:

1. I've touched lightly on the concept of "replacement phrases" but not really explained myself. A replacement phrase is what you do to convert something said by Movement Conservatives (the "say anything to win" crowd) from something that makes no sense, to something that perfectly expresses what they mean.
   
   For example, if you take any statement containing the word "jobs" and substitute "profits", the statement is wonderfully transparent. Test it and see; "job creation" means "profit creation" every time, for instance (h/t Noam Chomsky for that one).
   
   So let's add to our library. New replacement phrase: When a Movement Conservative says "small businesses", substitute "billionaires".
   
   In the recent Pledge to Wipe Out America, for example, we have the statement "small business must have certainty that the rules won't change every few months". A quick substitution and you know exactly what they want. Don't go changing the rules on billionaires, especially those pesky tax rules we're just now discussing.
   
   
2. 3% of "small businesses" control 50% of small business gross profit. That's worth memorizing. For me this is the most stunning statistic of them all, and John Boehner, the Tan Who Would Be Speaker (hereinafter, "the Tan") offered it up on MTP without beginning to think he was giving away multi-decade language fraud. For that, thank you sir.
   
   And I'm not just referring to Republicans in that multi-decade deception. Clinton did quite a lot for "small businesses" as well. I'll bet they were ever so grateful.
   
   
3. The technical definition of "small business" makes this usage perfectly clear. It's worth memorizing as well. If you file taxes as part of an S corp, a partnership (LLC or law firm, for example), or a sole proprietorship, you're a "small business" — period. This means you get Form K-1 or 1099, and/or file income on Schedule C and Schedule E. That's it. In this definition, "small" has no relation to size (for a change), simply to type.

So let's apply Boehner's Rule to this world. The 3% that enjoy 50% of SB gross income are huge entities. They range from the Koch brothers to Bechtel ($31 billion in revenue), down to the KKR range (a paultry $445 million). A big chunk of the pie for a very small world. The rest of us, the other 97%, divvie up the remaining 50% (yep, I'm included here). This part of the pie is small, given the number of sharers. A struggling writer in Hollywood making $5000/year (a recent average of all WGAW writers) files a Schedule C. The woman who runs the restaurant near me files a Schedule C; I hope she survives the recession. Both Stephen King and Sarah D'Almeida (author of Death of a Musketeer, which few have read) file Schedule C or E for royalties. So yes, "small business" really does mean small business — when normal people say it. But when Movement Conservatives say it — and you're going to hear it a lot between now and when Congress caves* in December — just keep the replacement phrase in mind. "Small business" means billionaires who bought tax breaks from both parties for their partnership and S corp earnings. They paid for a service, and they want it delivered, or at least not stopped.

GP

*Yes, I think it's now certain that Congress will cave in December. I'll have more on that soon, but just ask yourself — if the rich-man fanboys (conservaDems & Repubs) are a risk to lay down even under hard pre-election populist scrutiny, how fast will they debase themselves when all the pressure is off?

I say if both houses don't vote now, it's a done deal. The only game left will be ID-ing the ones who pretend to stand straight in December when there's no risk the slimy deal will fail — but would fold in a minute if the deal were at risk. That list will be worth having, for later. Read More......

Republicans tell Obama they want a more business friendly replacement for Summers

Lucky day for the GOP because Obama is already on that path. He's doing his best to kowtow to whatever it is that the GOP is demanding today. And no, that would not be the center. That would be even more to the right of the current team, if that's even possible for a Democrat. If I wanted to vote for Republicans I would vote for Republicans. The difference between the two gets less and less every day so maybe it's time I sit things out until a Democrat shows up who is somehow interested in being a Democrat and in working with other Democrats. That doesn't look like it's the case today. Much like the problem with the bankers, who really wants to support bad behavior? I don't and I won't.

A day after Summers announced plans to step down as director of the National Economic Council, speculation about his replacement focused on female candidates, many of whom would bring business expertise that some say is lacking in the Obama White House.

The administration needs someone who has a "good understanding of what it takes to create private-sector jobs," Senator Lamar Alexander, chairman of the Senate Republican Conference, told Reuters in an interview.

"One of the real problems with this administration -- it seems like they don't know how. And they don't have very many people who've ever tried."

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British Business Secretary speaks out against 'corporate short-termism'

At least there's one Liberal Democrat left who has a clue. It would be nice if the same attitude existed on the other side of the Atlantic but it won't be happening during this administration. It's laughable to listen to mainstream (and Teabagging) US politicians who fail to accept the basic truth that the economic system has always had deep government involvement when it's successful. Even today, the Republican economy has meant the government supporting big business.

The UK's Vince Cable is being criticized for an "emotional" speech but he's completely right. It's those who fear change from the current rigged system who are upset. The system as it stands today is most definitely rigged in favor of those who have the deepest pockets. The Guardian:

The business secretary will announce the launch of a major consultation on takeovers and executive pay, with the intent of ending "corporate short-termism".

"Let me be quite clear," Cable will tell the Liberal Democrat conference in Liverpool. "The government's agenda is not one of laissez-faire. Markets are often irrational or rigged."

The business secretary plans to identity the sort of malpractices that are causing harm to the wider economy. "Why should good companies be destroyed by short-term investors looking for a speculative killing, while their accomplices in the City make fat fees? Why do directors forget their wider duties when a fat cheque is waved before them? Capitalism takes no prisoners and kills competition where it can," he will say.

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Obama promotes economic advisor to chairman

He's to the left of Larry Summers but is that really saying much? Just in time for the election, it's more of the mushy middle. Who knew "change" could be more of the same?

President Obama on Friday will promote a longtime economic adviser, Austan D. Goolsbee, to chairman of his Council of Economic Advisers, signaling continuity even as a high unemployment rate has left much of the public dissatisfied with administration policies.

Mr. Obama’s decision to elevate Mr. Goolsbee, a left-of-center economist, to succeed Christina D. Romer, who returned this month to the University of California, Berkeley, is part of a broader flux within the White House economic team, as architects of the government’s response to the worst recession in 80 years begin moving up and out and their roles shift.

Mr. Goolsbee has been serving as a member of the three-person advisory panel since the beginning of the Obama administration.

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Slate: A historical look at Income Inequality in the U.S.

A new series on income inequality in the U.S. is starting in Slate, and it's excellent. I hope to write more about it as time goes on, but this will get you started.


From the intro, Timothy Noah (my emphasis):

In 1915, a statistician at the University of Wisconsin named Willford I. King published The Wealth and Income of the People of the United States, the most comprehensive study of its kind to date. The United States was displacing Great Britain as the world's wealthiest nation, but detailed information about its economy was not yet readily available; the federal government wouldn't start collecting such data in any systematic way until the 1930s [pdf]. One of King's purposes was to reassure the public that all Americans were sharing in the country's newfound wealth.

King was somewhat troubled to find that the richest 1 percent possessed about 15 percent of the nation's income. (A more authoritative subsequent calculation puts the figure slightly higher, at about 18 percent. [pdf])

This was the era in which the accumulated wealth of America's richest families—the Rockefellers, the Vanderbilts, the Carnegies—helped prompt creation of the modern income tax, lest disparities in wealth turn the United States into a European-style aristocracy. The socialist movement was at its historic peak, a wave of anarchist bombings was terrorizing the nation's industrialists, and President Woodrow Wilson's attorney general, Alexander Palmer, would soon stage brutal raids on radicals of every stripe. In American history, there has never been a time when class warfare seemed more imminent.

That was when the richest 1 percent accounted for 18 percent of the nation's income. Today, the richest 1 percent account for 24 percent [pdf] of the nation's income. What caused this to happen? Over the next two weeks, I'll try to answer that question by looking at all potential explanations—race, gender, the computer revolution, immigration, trade, government policies, the decline of labor, compensation policies on Wall Street and in executive suites, and education. Then I'll explain why people who say we don't need to worry about income inequality (there aren't many of them) are wrong.

If I sussed the code right, you can see the embedded slide show by clicking here. It looks like three parts are already posted. I'm really looking forward to the whole thing.

(Hmm. From the chart, the divergence really gets going in the early 1980s. Wonder what happened in the early '80s? Could it have been those Reagan tax cuts? Stay tuned.)

GP Read More......

Joe Bageant on 'Washington's political class'

Thanks to this post by Ken Silverstein, the Washington editor of Harpers, I'm pointed to one of my favorite writers and stylists, Joe Bageant. Bageant makes an astute observation, one that helps us understand the slavishness of the political class to the ruling class (the very rich).

I'm using these terms literally, by the way. By "political class" I mean those who enter politics, win national elections, and serve as office-holders and advisers. Bill Clinton, Madeleine Albright and Tim Geithner are in this group.

By "ruling class" I mean those with enough money to finance the high cost of campaigning and "maintaining" elected officials (those bribes don't pay themselves, you know). The ruling class includes the über-rich, people like Richard Mellon Scaife, the Coors family ("Twins for Jesus"), the Koch brothers and Pete Peterson. It also includes those at the top of the corporate money machines — Jack Welch, for example, or Jamie Dimon.

Bageant makes his point via rich, pungent prose (catch the second sentence), and in passing touches on a subject I touched on once before. Joe Bageant (with my intrusive emphasis):

How about them political elites, huh? Five million bucks for Chelsea Clinton's wedding, 15K just to rent the air-conditioned shitters -- huge chrome and glass babies with hot water and everything. No gas masks and waxy little squares of toilet paper for those guys.

Yes, it looks big time from the cheap seats. But the truth is that when we are looking at the political elite, we are looking at the dancing monkey, not the organ grinder who calls the tune. Washington's political class is about as upwardly removed from ordinary citizens as the ruling class is from the political class. For instance, they do not work for a living in the normal sense of a job, but rather obtain their income from abstractions such as investment and law, neither of which ever gave anybody a hernia or carpal tunnel. By comparison, the ruling class does not work at all.

Moneywise, Washington's political class is richer than the working class by the same orders of magnitude as the ruling class is richer than the political class. This gives the political class something to aim for. To that end, they have adopted the ruling elite's behaviors, tastes and lifestyles, with an eye on becoming members. Moreover, it is a molting process that begins with the right university and connections, and culminates in flying off to Washington with the rest of your generation's most privileged and ambitious young moths.

I don't agree with everything he says, but it's certainly food for thought. Joe Bageant, ladies and gentlemen; here all week.

GP Read More......

Corporate America crying over executive pay disclosure

Oh the humanity. One of these days Democrats are going to learn that no matter what they say or do, the corporate greed types are going to scream bloody murder no matter what. Everyone with open eyes knows that the middle class has been on the decline since the 1970s and that executive pay has been exploding ever since. Instead of spending big bucks on analyzing comparable pay at other similar businesses - which is hardly a cheap exercise - to make sure corporate executives are keeping up with the Jones' maybe they can spend a few more hours looking at the widening gap. Any chance these companies would like to provide full disclosure on how much they've spent doing pay analysis for the top 20 people in their company? I didn't think so.

The Democrats need to quit being so fearful of taking on this problem and the constant whinging by these companies. Again, they will complain no matter what as we have witnessed on Wall Street so Democrats might as well implement real change that brings real substance to the middle class again. How do the Democrats not see helping the middle class as a good thing? We all know that the GOP will bend over backwards to promote corporate greed so it would be great if the Democrats can help the other 99% of the population every now and then.

Waaahhhhhhhhhh:

US companies face a “logistical nightmare” from a new rule forcing them to disclose the ratio between their chief executive’s pay package and that of the typical employee, lawyers have warned.

The mandatory disclosure will provide ammunition for activists seeking to target perceived examples of excessive pay and perks. The law taps into public anger at the increasing disparity between the faltering incomes of middle America and the largely recession-proof multimillion-dollar remuneration of the typical corporate chief.

S&P; 500 chief executives last year received median pay packages of $7.5m, according to executive compensation research firm Equilar. By comparison, official statistics show the average private sector employee was paid just over $40,000.

The argument that this may create "false comparisons" is laughable because this is precisely what the same people have been doing at the executive level for decades. They are afraid of a spotlight being placed on this obvious problem. End of story. Read More......

Boehner wants Obama to fire Geithner and Summers

Get in line John because so do quite a few Democrats though for different reasons. Democrats are fed up with Geithner and Summers (and Obama) continuing GOP economic policies or scaling back the stimulus to win over Republican support that never materialized. Maybe Boehner could tell us how the Obama economic team has differed from the Bush team because it's not obvious.

U.S. House Minority Leader John Boehner in a speech today called on President Barack Obama to fire Treasury Secretary Timothy Geithner and the other remaining members of the president’s economic team.

In a speech to the City Club of Cleveland, Boehner said Obama’s stimulus policies are failing to create jobs.

It would be interesting to hear Boehner expand more on his plan to privatize Social Security and turn health insurance back in the wrong direction. Read More......

Krugman: 'Our political culture has become ... deeply corrupt'

Despite the headline, this is not about the state of the economy (we know what state that's in). It's about the state of the Krugman.

As you may know, I've been monitoring the state of the Krugman for a while (the most recent sounding is here, but there's a bunch of them). The key question: When does the Professor call out the full dimensions of the storm he says is coming. When does he accurately describe what's flying toward the fan?

He's sneaking up on it. When last we left our Krugman, he'd moved through two important preliminary stages:

Partial call-out: It's gonna be bad, and I just don't understand why conservative economists and ministers don't understand. 'Cause, you know, I've already explained it.

Semi-partial call-out: Hmm. Maybe something else is going on. What could that be?

As of last week, he seemed to be stuck at the end-with-a-question phase, Semi-partial call-out.

With that in mind, here's new Krugman, talking about the push by "Republicans and conservative Democrats" to extend tax cuts on the "richest 120,000 people in the country" (my emphasis):

So, for example, we’re told that [extending tax cuts for the very rich is] all about helping small business . . . [o]r we’re told that it’s about helping the economy recover. But it’s hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren’t likely to spend a windfall.

No, this has nothing to do with sound economic policy. Instead, as I said, it’s about a dysfunctional and corrupt political culture, in which Congress won’t take action to revive the economy, pleads poverty when it comes to protecting the jobs of schoolteachers and firefighters, but declares cost no object when it comes to sparing the already wealthy even the slightest financial inconvenience.

So far, the Obama administration is standing firm against this outrage. Let’s hope that it prevails in its fight. Otherwise, it will be hard not to lose all faith in America’s future.

Not bad. Hemi-demi-semi-partial call-out: "The political culture is corrupt" (which it is).

Now if only he would move to Full Call-Out, like that guy, um, Paul Krugman, in his 2003 book, and talk about Movement Conservatives as a "revolutionary force" who are taking us over the way the mafia takes over a manufacturing business and strips it clean.

Or to be more pointed — Yes, the political culture is deeply corrupt. But that's almost passive voice. Talk about the politicians, the actual doers, what they are doing, and why. It's already in your book.

These are radical revolutionaries with radical plans; the Movement is big, organized and very well funded; and we're already in the 3rd quarter of a game that's not going well. Professor, please say so.

GP Read More......

China expected to pass Japan, and become world's 2nd largest economy this year

Nasty government.

China is expected to surpass Japan this year as the world's second-largest economy, an unprecedented position for a still-developing country and one that has brought strains as well as triumphs.

Second-quarter GDP figures from Japan reported Monday morning show that its economic output, at $1.288 trillion, fell short of the $1.339 trillion China reported for the three months ended in June.

Once final numbers for all of 2010 are compiled, many economists expect China to overtake Japan as the world's second-largest national economy in U.S. dollar terms. The gap between China's $5 trillion economy and the U.S.'s nearly $15 trillion output remains very large, and even at current growth rates—which may not be sustained—it would take China a decade or more to match the No. 1 U.S.

A decade. As if that's a long time for something that significant. Read More......

Extending tax cuts for the rich, in one handy picture

This chart is getting some play, but it deserves to be put everywhere. Obama's $250,000 point is well chosen; that's where the numbers diverge. From Ezra Klein (h/t Joan McCarter at DailyKos):


About that bottom circle, as Groucho once said, "Clip me off a piece of that." As to the chart, pass it on.

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Bachmann blames Obama for trying to force US into a global economy

Is she trying to be like Sarah Palin or is she really that much of an idiot? And to think the GOP gets defensive when the Democrats rightly link current problems to Bush. Bachmann may not like this crazy "new" global economy thingy, but others such as Coca Cola, IBM, Microsoft probably feel differently about it. In fact, quite a few US-based companies have been increasing their profits thanks to business overseas in that "global economy" world that she so fears. Exports from the US into this nutty "global economy" have been one of the bright spots for the US economy. So why does Bachmann want to destroy economic growth? More from Think Progress:

In an interview on Scott Hennen’s radio show today, Bachmann claimed that the purpose of the G-20 was to “bind together the world’s economies.” Neglecting the already interconnected nature of the global economy, Bachman declared that “President Obama is trying to bind the United States into a global economy”:

BACHMANN: What really concerned me was Treasury Secretary Tim Geithner said that we don’t want to see one country’s economy doing better than another. What? This is the U.S. Treasury Secretary? We don’t want to see Zimbabwe’s economy do better than the United States? Aren’t we supposed to be about the United States and making sure that our economy can be the greatest in the world. If you look at the G20, what they’re trying to do is bind together the world’s economies. Look how that played out in the European Union when they bound all of those nations economies together and one of the smallest economies, Greece, when they got into trouble, that one little nation is bringing down the entire EU. Well, President Obama is trying to bind the United States into a global economy where all of our nations come together in a global economy. I don’t want the United States to be in a global economy where, where our economic future is bound to that of Zimbabwe. I can’t, we can’t necessarily trust the decisions that are being made financially in other countries.

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Income gap in US is increasing

When I look at the mild reform of the Obama administration, I can't help but wonder how they can't see this issue and take more serious action. How can it be so obvious to everyone else but not to the Larry Summers economic team? We've been moving in the wrong direction for decades and Obama can only stay the course.

The new CBO data — the most comprehensive data available on changes in incomes and taxes for different income groups — also show the following:

* In 2007, the share of after-tax income going to the top 1 percent hit its highest level (17.1 percent) since 1979, while the share going to the middle one-fifth of Americans shrank to its lowest level during this period (14.1 percent).
* Between 1979 and 2007, average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation — an increase in income of $973,100 per household — compared to increases of 25 percent ($11,200 per household) for the middle fifth of households and 16 percent ($2,400 per household) for the bottom fifth (see Figure 1).
* If all groups’ after-tax incomes had grown at the same percentage rate over the 1979-2007 period, middle-income households would have received an additional $13,042 in 2007 and families in the bottom fifth would have received an additional $6,010.
* In 2007, the average household in the top 1 percent had an income of $1.3 million, up $88,800 just from the prior year; this $88,800 gain is well above the total 2007 income of the average middle-income household ($55,300).

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