Monday, November 12, 2012

Fear NOT the 'Fiscal Cliff'': Embrace It!

Ben Bernanke: Left, coined the term ‘Fiscal cliff’ in order to try to strike terror into the hearts of citizens and politicos alike, the better to support his speculator –Wall Street culture.

“Let's establish that no one in Washington actually cares about balancing the budget. If they did, they would love this so-called Fiscal Cliff. It raises taxes and cuts spending, so it would massively reduce the deficit. Isn't that what all of Washington has been pretending to care about all of this time?”- Cenk Uygur, blog (11/13)

“the “fiscal cliff” is another classic example of what Naomi Klein called “Disaster Capitalism.” Create a panic, and then profit from it. For example, Wall Street is helping fund groups like the Third Way that are pushing hard for us to give our Social Security Trust Fund – which has over two and a half trillion dollars in it – to Goldman Sachs and Citibank so they can take care of it for us. Doesn’t that make you feel all safe, and warm-and-fuzzy?”  – Thom Hartmann,, (11/15)

It's been known from time immemorial that corrupted use of language, to create lingual "mind fucks", is one of the best ways to control and master a placid, passive population. After all, George Orwell exposed the basic template in his novel '1984' -showing how normative interpretations of language were transformed into degeneracies via "Newsspeak" - thus 'war' became 'peace', and 'hate' became 'love' and so on. Fast forward to the modern era and the same has been occurring but perhaps with more subliminal language approaches: after all as one wit once put it, if you don't KNOW you're being mind-fucked, how can you combat it? You have to be able to possess the critical thinking skills to rip the debased language to shreds and expose it to others.

Thus, for example, we have already seen the use  (mainly by the warmongering Bushies) of  'the war on terror' when one cannot possibly make war on a MODE of war. One can only make war on another nation state. But never mind: the ruse worked so well that it mindfucked  (and scared) enough citizens into willingly going along with an invasion of a sovereign nation (Iraq) that had nada to do with 9/11, even as it made al Qaeda and its robed band of lunatics the equivalent of the USSR during the Cold War. No one stopped to consider that if trillions were spent on this "war" it made the opponents the equivalent of a superpower! Neither did anyone stop to ponder, in the rush to full war and more invasions, that Osama bin Laden's main plan was never simply to kill Americans - but to bait the warmongering screwballs into running up the deficits and spending this country into bankruptcy - while basic needs like infrastructure went unmet.

So now, 11 years later, something like $3.8 trillion has been pissed away via the occupations of Iraq and Afghanistan, and much more will be added to that as veterans' future needs have to be met, both physical and psychological. Meanwhile, to indicate the magnitude of the mindfuck perpetrated by the Bushies, citizens were advised in this time of alleged "war" to go out shopping, oh and look forward to your yearly TAX CUTS! When those of us with sober and rational intellects kept telling anyone who'd listen that a REAL WAR or "wartime" would require INCREASED taxes, not tax cuts!  But few processed it.

So now, 11 years after the initial Bush tax cuts, they are still alive and continuing to cause fiscal mayhem, to the tune of nearly $3.2 trillion, including interest.

Add together the fiscal effects of the "wars" plus the tax cuts, and you get: $3.8 trillion + $3.2 trillion = $7 trillion. In other words, almost HALF of our current deficit of $16 trillion. Note also, please, that Social Security has not contributed to this deficit, but in fact been used to disguise a LOT of it! See e.g.  The effect has been to already have plundered nearly $1.73 trillion from Social Security, and now - using the ruse of a "fiscal cliff' - they want to CUT its benefits! Probably using a deformed cost of living adjustment known as the "chained CPI".

Consider that the "fiscal cliff" was invented by Ben Bernanke, who as Fed Chairman must first and foremost attend to the demands of the speculator class. Like the 'war on terror' it is designed to seed hysteria and a panic response, which also by definition means an unthinking reaction. Like the "war on terror" which isn't at all about real war, the "fiscal cliff" isn't at all about any genuine fiscal cliff - but a political doom and gloom Mcguffin.  People have a hard time accepting this temperate view because - hey! - the stock market keeps plummeting, and LOOK! The headlines are blaring it all over and the politicos are hand wringing.

But don't buy it, not for one second. Try to grab a cold one, sit down, chill out and put on your thinking cap. Get your higher cortical centers engaged, as opposed to allowing your reptilian brain (reticular formation) and amygdala, to run amuck.

To give you a perspective here, allowing all the high end Bush tax cuts to expire would amount to a barely noticeable 0.003% contraction of the U.S. economy according to Moody’s, and it would raise tens of billions of dollars in desperately-needed tax revenue next year. That’s no small thing when you consider that federal revenue has fallen to its lowest point in more than half a century. Ending these tax cuts for the wealthy would bring in cash to reduce deficits or increase funding for cash-starved priorities like higher education.

Now, if all the Bush tax cuts were allowed to expire (as they really ought to be, if Middle class folks wish to see future Social Security-Medicare benefits later) the contraction would be barely 0.01% - certainly higher but still tolerable. Meanwhile, the paydown on the national deficit would be roughly $3.7 trillion over 10 years, or nearly equal to the 'Grand Bargain' $4 trillion deal Obama's seeking with the Reeps, but will likely never come close in terms of revenues. And most importantly, unlike the so-called "Grand Bargain" no future cuts to Social Security and Medicare will have to be played, only people having to live on a bit less in terms of net income. What would you rather:  THAT,  or cat food and kibbles in your elder years coupled with higher medical expenses and limited access to care?

The most noteable immediate effect of the lessened income, would mean pulling back on indiscriminate consumption, which - btw, has been ramping up with the savings rate diving again. It is the savings rate which adds quality to our nation's fiscal health, as it benefits far more people than millions wantonly spending on crap they don't need. (See, e.g. 'The Indebted Society', the chapter 'Let Them Eat Cake')

As for the apocalyptic dive in growth as forecast by the CBO, I don't buy it. Not for one nanosecond. I do not buy that there'll be 2%-4%  or more retrenchment, or that a 9.1% unemployment rate will greet us at the end of next year. That is only fanning the hysteria. Let's also grasp that the GDP itself is a very imperfect economic indicator.

Univ. of Maryland Economics Professor Hermann Daly addressed the American "GDP" idiom in a lecture he delivered, in April, 1999. This was at Trinity College in Ireland, where his topic was "Uneconomic Growth: in Theory and in Fact". Focusing on the U.S., he laid out the work of Nordhaus and Tobin which seemed to suggest that as long ago as the late 1960’s the welfare costs of growth had exceeded the marginal benefit. He also proposed that the use GDP as a measure of welfare was not efficient and so suggested the use of the Index of Sustainable Economic Welfare (ISEW).

Daly criticized the fact that when it comes to "counting all the beans in the United States the only cookbook that matters is the Gross Domestic Product or GDP". If the Gross Domestic Product is going up, people say the economy is growing. And if the GDP is falling, they say we're in a recession. Daly showed if the ISEW measure is used instead, most forecast recessions vanish. The GDP is supposed to measure the total production and consumption of goods and services in the United States. But the numbers that make up the Gross Domestic Product by and large only capture the monetary transactions we can put a dollar value on. Almost everything else is left out. And that's why some economists have a problem with this influential accounting system.

Ignoring these "externalities" leads us into a fool's paradise where we come to believe things are much better than the GDP numbers show. For example:

We look at utility bills, but don't recognize that unlisted in them is the damage to our water, forests, air etc. Those externalities again. How much of a cost to put on forests (which absorb CO2), or clean air? Who knows, but some guestimate is needed.

We look at nursing homes and the number there, and those paid to care for them. But we blithely ignore the more than 33 million people that are cared for by their own families, without remuneration! Many of these people - caregivers rely on gov't benefits which, if cut - say as appeasement to repukes for trimming a few tax loopholes, they can no longer do the job and shift the responsibility to government.

We behold productivity increasing but don't realize that has nada to do with work, or labor - but rather corporations reducing their costs (increasing "efficiency") by moving jobs to cheaper places offshore, like Bangalore.

We focus on tax cuts at the "supply side" but forget that there has never been any proof that tax cuts cause job growth. (See, 'The Tyranny of Bad Ideas') And even if they did, the degenerate effects are ignored - e.g. continued collapse of the infrastructure because no tax dollars are going to maintain it.

We fret also about the mythical jobs lost if those tax cuts aren't extended, but seem to forget or dismiss that corporations are still sitting on more than $1.8 trillion in cash, which - if infused into the economy - would instantly surpass the lost growth that the fiscal cliff hysterics project.

We also forget, as we are mesmerized by the DOW, that our infrastructural capital is of real value, not merely paper or virtual value. When all our water mains have burst, along with the sewer lines, and bridges -roads collapse, will the public works effort finally get onto the GDP radar? Doubtful!

All of these factors can skew the GDP to artificially higher values, once ignored. And conversely, can project much lower values of real growth if over-emphasized while externalities are cloaked.

Prof. Daly noted that the concept of the GDP was developed to help steer the US economy out of the Great Depression, and through World War Two. It was for another time and place, and is no longer relevant to this time and place. It needs to be dunned and ditched in favor of the Index of Sustainable Economic Welfare.

To summarize, GDP is an inadequate barometer because of a number of fundamental problems: we don't measure unpaid work or services that may benefit society, we treat expenses as income, and we often fail to value natural resources.

Lastly, as all the nervous nellies in the media wet themselves over the sequester and the coming "Pentagon cuts" they also need to take a deep breath and understand these are not absolute cuts at all. but merely slight decelerations in the RATES of growth! There is a vast difference there, and this is what our fellow citizens need to process. See also:

Further, while the 'bought and paid' for Office of Management and Budget can soon be expected to recycle the baloney that the military budget is "small relatively as a percentage of GDP", the true fact is that it has more than doubled since 2000, from 2.4 % of GDP to nearly 4.9%. This uptick in GDP percent (which translates to twice the rate in terms of ISEW, owing to lost finite resources for weaponry)   led former Pentagon Analyst Chuck Spinney (the same person who exposed the unaccounted for $1.2 trillion) to remark that the increase was nothing less than "a war on domestic programs, including Social Security and Medicare".  

Understand then that the fiscal "cliff" is all about political manipulation by the Neoliberal Elites and nothing to do with reality. It is a political "mind fuck" pure and simple. Do not let yourselves be mind-fucked or bamboozled by the inevitable fear talk, Wall Street spin and doom and gloom likely to ramp up in weeks leading to the "cliff date" of Jan. 1. Further, President Obama and the Dems must not let themselves be turned into weak wussies again, but dare the pukes to go over the cliff.

To quote Nobel winning economist Paul Krugman:

"the president is in a far stronger position than in previous confrontations. I don’t place much stock in talk of “mandates,” but Mr. Obama did win re-election with a populist campaign, so he can plausibly claim that Republicans are defying the will of the American people. And he just won his big election and is, therefore, far better placed than before to weather any political blowback from economic troubles — especially when it would be so obvious that these troubles were being deliberately inflicted by the G.O.P. in a last-ditch attempt to defend the privileges of the 1 percent".

I couldn't have stated it better!

Lastly, and most importantly, the recent special TIME election issue article ('A Subtle Message Abnout Things to Come May', p.46, Nov. 19) is totally mistaken when the authors claim about Obama:

"The signature accomplishment of his second term, if he can pull it off, will not be an expansion of entitlements but a reduction of them."

In fact, such an unwise move in view of the capital his voters have invested, would mark the end of the line for the Democratic brand, which will then be irreparably damaged. The authors of the piece, obviously Neo-liberal elites, fail to grasp - or prefer not to - that the solution to "entitlements" is not cutting them, but making simple basic changes, such as increasing the payroll taxes threshold beyond the current level, to at encompass at least $1 million income, and increasing Medicare's share of the FICA contributions to the same 6.2% as Social security. Oh wait,....but that would mean raising taxes on the rich! We can't do that now, can we? Better to have oldsters sitting in their apartments eating cat food and with no heat, than for millionaires and billionaries to make do with one less 200' Yacht.

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