Monday, May 25, 2009

Moore's Sicko, England's Voter Revolution, and our Roadmap to Insolvency

Micheal Moore's Movie Sicko is playing on Showtime and the people's (the poor's) revolution he called for looks like the USA with Obama and Pelosi. I think it is a good reference for conservatives for the coming Health care reform battle as well as a warning for our possible future as a nation. In addition Moore's tour though Europe interviewing people that are extremely happy with the great free public services that their government provides while they all live rich lifestyles is Classic entertainment. Apparently there is no waiting with socialized medicine, in Europe they are treated immediately. The entire movie Sicko can be seen free here Sicko at Google.

Given the insolvency of Great Britain with the USA following there is a interview in the movie you should be familiar with. The scene starts with Narrator Michael Moore asking former Britain's Parliament member Tony Benn when the idea came that every citizen should have the right to free health care. He says "It all began with democracy. Before we had the vote all the power was in the hands of rich people. If you had money you had health care, education you could take care of yourself when you were old. Democracy gave the poor the vote and moved power from the market place to the polling place, from the wallet to the ballot. What we said is we had massive unemployment in the 1930s but not during the war (WWII) and If you can have full employment by killing Germans, why cant you have full employment by building schools, building hospitals, recruiting nurse, recruiting teachers? If you can find money to kill people, you can find money to help people."

Moore then talks about how the British pulled together after WWII devastation by providing free health care for everyone making a reference to America's pulling together after 9/11. More Tony Benn gems:"I think democracy is the most revolutionary thing in the world far more than socialist ideas because if you have power you use it to meet the needs of you and your community.”and "This idea of choice that Capitalists talk about all the time. Choice depends on the freedom to choose and if you are shackled with debt you don’t have the freedom to choose. People in debt become hopeless and hopeless people don’t vote. They always say that that everyone should vote but I think that if the poor in Britain or the United States turned out and voted for people that represented their interests there would be a real democratic revolution.” Moore also goes to France where he points out that the French government is terrified of the people who will demand their services and their four day week and march and protest for it.

The entire clip of Tony Benn is here:
Youtubelink :Sicko (Michael Moore) - Tony Benn

So Tony (and Moore) tells us that Britain pulled together after WWII and gave themselves free health care. He also says the people rose up and demanded government services on the basis that a country that could afford war with Germany can afford free health care and other free services. But we know England couldn't afford WWII. WWII destroyed the great British Empire and they lost their colonies as a result. Moore seems to be implying that WWII, Afghanistan and Iraq were all wars of choice and we can just choose free government services instead of War. England's war with Germany was not a luxury. In fact the further breaking of the government with new rights to free services made sure that Britain could never again fight a WWII by keeping it in a continuous bankrupt condition.

James Dale Davidson wrote a book in 1994 called The Great Reckoning: Protect Yourself in the Coming Depression that explained how Britain was THE world military and economy power for centuries but lost it's empire due to multiple wars and welfare spending that bankrupting the country. He pointed out how historically spending on war leads to more demands on the government for increased welfare spending which results in the end of the World Power. The United States took England's place as the military and economic world leader after WWII. Now in 2009, 60 years after England got their Moore revolution and the people demanded free health care from the government; the country is insolvent. Here's two articles about Britain's success in Micheal Moore's revolution: Budget 2009: Britain's debt will not be under control until 2032 and Britain: Brown’s fiscal stimulus no longer an option for G20 summit . To end this thought watch our favorite British Parliament member speech on British Prime Minister Gordon Brown's fiscal disaster and Moore's dream come true:

Daniel Hannan MEP: The devalued Prime Minister of a devalued Government("You have run out of our money"):

Youtubelink :Daniel Hannan MEP: The devalued Prime Minister of a devalued Government

Tuesday, May 19, 2009

Nancy Pelosi : “The CIA misled the Bush Administration (on torture and WMDs) just like with me”

At today’s House leadership press conference Speaker Nancy Pelosi was once again ambushed with questions about her CIA briefings on Enhanced interrogation Techniques. Today she stunned reporters when she said that the Bush White House was misled by the CIA on WMDs. She stated, “Former President George W Bush was misled into thinking Saddam had WMDs just like we were both misled on the CIA policy on torture. We need an investigation to find out if the CIA tortured prisoners to force them to say Iraq was producing WMDs to deceive the former White House into going to war.“ The House Speaker implied that the CIA conspired to trick both the President and the congress into invading Iraq. Reporters were in shock when the speaker defended the honor of the ex-president, “President Bush is an honorable man who only had the nation's best interest at heart and he was deceived on WMDs just as I was on the CIA torture policy. I will introduce a bill in congress to defund the CIA so this can never happen again.”

Pelosi also spoke on Valerie Plane/Joe Wilson scandal, “It is obvious that the Wilson/Plane scandal was all about classified leaks to hurt the President and his staff just like what is going on now with my investigation into CIA torture. We need an immediate investigation into both Plane’s and Wilson’s classified leaks relating to the production of WMDs in Iraq. In addition I call on President Obama to give a full pardon to Scooter Libby who was a victim of CIA leaks and lies just like I am. National Security trumps politics We are all Americans first. "

Saturday, May 2, 2009

Was Keynes a modern Republican?

Supply Side Economics versus Republican Keynesian Economics
Remember the term Supply Side Economics? It seems so long ago in 1993 when Clinton got elected and invisible Republicans were replaced by real conservatives (in the minority.) We heard about the market, and capitalism and capital and how federal deficits were bankrupting our children. After years of controlling the congress, Republicans finally got the White House and a slowing economy and then September 11, 2001 happened. The economy slowed dramatically after the attack and three things were done to generate a major recovery :1) Bush finally got a number of different tax cuts through a (barely) Republican Majority Congress, 2) Greenspan Federal Reserve Bank created a huge amount of money for low interest rates loans and to help fund the government spending, and 3) there was a increase in huge government spending much of which was defense and War. There was also deregulation that allowed foreign investors to buy bundled home loans. This provided a huge economic Keynesian stimulus that could not help but get the economy moving. Add massive legal and illegal immigration to fuel both ends of a housing boom. But none of this could last because it was all borrowed and printed money, both private and public foreign borrowing.

Tax Cuts Pay for Themselves?
One of the supply side theories repeated on talk radio and is that tax cuts pay for themselves. This was first proposed by Reagan and then Rush repeated it in his book. It has never been proved because whenever federal taxes were cut (under Reagan and GWB) both social and military deficit spending went up increasing both tax revenues and deficits. The reason why this "pay for itself" theory seems to make sense is that taxing something will in general decrease the demand for it, like with higher prices. But what about the fact that tax cuts always go along with spending increases, huge spending increases mostly for political reasons? And what about that fact that government spending increases tax revenue, but not NET tax revenue (taxes minus spending.)

Bush Tax cuts Saved the Economy?
Now we are left with Obama who is increasing spending, borrowing money, passing tax credits (for many that pay no income taxes ) and Federal reserve Chair Bernke creating Trillions of $$$ to supposedly cure the economy. Something seems strangely familiar about the path we are on. We are told on talk radio that the Bush tax cuts alone saved the economy back in 2003 and paid for themselves through increased tax revenue. But again, the federal debt went up every year, with deficits exploding 2008 (the burst housing bubble is another topic.) Not only that but back in 2002 to 2005 Greenspan/Federal Reserve created a huge amount of NEW money for economic stimulus: loans and government borrowing. Talk radio never talks about that increase in money supply because it weakens the "Bush Tax Cuts saved us" narrative. In fact is the Federal Reserve that had to start contracting that money supply in 2007 and 2008 to control inflation, and that triggered the inevitable housing bust. The narrative of temporary growth and economy crash is not what anyone wants to take credit for.

'Tax Cuts paying for Themselves' disconnects Voters from Costs of Government
Instead of 'tax cuts paying for themselves' let me propose another theory: 'Tax cuts paying for themselves theory' disconnected the voter from the spending. So the voter can ask for more and more spending without worrying about paying for it. We invaded Iraq and republicans paid less. We gave free drugs to seniors and democrats paid less. We hired school teachers and the single Mom's paid less. So where was the limitation on spending going to come from? Talk radio has ideas on that : 1) We need to teach the public that social spending/borrowing is unconstitutional but military spending/borrowing is constitutional and 2) All that matters is the debt to GDP ratio. The political problem with pitch (#1) is when you rebuild a school in Iraq and then a voter wants his school rebuilt too, he will not appreciate it if you try to tell him his kids school project is not constitutional. The other problem is the supreme court is not likely to rule this way again in our lifetime. The debt to GDP ratio argument (#2) causes a problem when the GDP becomes comprised of mostly debt and consumption (and government spending.)

Repealing Keynesian Tax Cuts Hurts the Economy and Tax Revenues?
So how about making the voters pay for increases in government services and military spending so there will be a limit on government growth? I certainly see why the elected don't want this, but we are taught (and I mean taught) by talk radio that ANY tax increases will decrease tax revenue. Really? All tax increases? Always? What about the worker who got removed from the income tax rolls under the GWB tax cuts? (This was politically popular.) Is his paying no income taxes now creating more revenue than before when they paid taxes? Is that a supply side tax cut? He is most likely consuming that additional income. If he had to pay that tax again to pay for the increased government, how would that raise less money in tax revenue? Now Obama just gave him a tax credit, extra money he did not originally pay in federal taxes, except maybe payroll taxes. He will either spend that borrowed money or pay off bills too. Is that supply side? Will that pay for itself too? Democrats have co-opted republican language and claim their tax credit will jump start the economy and raise tax revenues, eventually. In both cases the taxpayers, at least those taxpayers, pay less taxes and revenue is less. This disconnects them from the cost of government so they want more. In fact this guy still feels entitled to social Security Benefits.

Tax Revenue increasing with government Spending and Debt
Now let's look at the tax/revenue question again. GWB cut taxes but increased government workers. So the government hires a worker, he pays new income taxes and tax revenues go up. He also cut the income taxes which reduced that tax revenue a bit. But the government is still in debt for his salary minus the taxes he pays. Where did that money go? Into the economy! Where is it now? It is consumed! He bought a couple houses and cars and TV sets. Did that grow the economy? Temporarily but now only the debt is left. Another case is federal funding of education. A public school hires a teacher with federal money. She pays federal taxes which increases tax revenue. A single Mom was happy too with Bush because her kids school got a new teacher. The teacher was happy with Bush because she got a job (until Ted Kennedy told her No Child Left Behind was underfunded.) The single Mom was also happy because Bush gave her a tax credit, the single Mom tax credit. That's money the government borrowed to give to her for having kids, and she spent it hopefully on the kids(and the child support too.) Did this tax credit "pay for itself" ?? Would there be less tax revenues if the government took it back by raising both their taxes? Ironically all that money is borrowed and those two Bush voters are unhappy with him now and voted for Obama. So now we have debt. I am not saying tax increases are are good or tax cuts are bad, here, just that Keynesian tax cuts do not pay for themselves. They are when combined with spending 'consuming today, to hell with tomorrow'. These Keynesian tax cuts and credits are passed for political reasons..

In conclusion the theory that 'tax cuts pay for themselves' just leads to increased spending and increased debt. It removes any limitations in spending. It disconnects spending from the costs of spending. Republicans moved from Supply Side economics to Keynesian economics for political reasons, they were in charge (ala Jack Kemp rest his soul.) Unfortunately the passing of productive supply side tax cuts (not the Keynesian one's above) themselves creates pressure for more spending, as democrats yell and scream and call for "priorities" and how the rich are getting away with murder. This is not to argue against tax cuts themselves as long as spending is being cut at the same time, a VERY difficult task. But I finish with a conclusion that will irk conservatives that have grown up on talk radio. " Government spending is redistribution even if it comes with tax cuts". In fact, those that get the tax cuts are likely to be demanding the "government do more" just like those that don't. In this case, is it still their money? (Rhetorical question) The economy is so socialised by BOTH parties, everyone demands something. Republicans claim they earned Social Security for example. So maybe we need to limit government by not claiming it is free.