Friday, November 30, 2012

Fiscal Cliff – Republican Leadership?

Igor Bobic brings us the latest from Speaker Boehner:
Asked on Friday what kind of specific entitlement cuts he seeks in a deal with the White House over the so-called fiscal cliff, House Speaker John Boehner pointed reporters to previous GOP budgets, declining to name further demands in a potential counteroffer … Boehner also added that talks with President Obama had come to a significant stand-still. “There’s a stalemate," Boehner said. "Let’s not kid ourselves.”
Earlier this month, Greg Mankiw did his best to defend what the Republicans have been saying about fiscal policy:
According to the Tax Policy Center, if we cap itemized deductions at $50,000 and keep tax rates as they are today, we would raise $749 billion in tax revenue over ten years … This may be the germ of a possible deal between President Obama and Speaker Boehner: The speaker agrees to this tax hike if the president agrees to some fundamental reform of the entitlements
Notice that he had to project the extra revenues over an entire decade to get to a significant number. Truth be told – there are only a handful of Republican Senators and Congressmen willing to buck the Norquist pledge in the least. And none of them are willing to accept higher tax rates, which mean revenue enhancements would be modest at best. While Greg Mankiw tossed out “raising the age of eligibility for Social Security and Medicare”, Speaker Boehner is too chicken to do even that. It is time for the Speaker to “lead, follow, or get out of the way” (a line that Mitt Romney misattributed to Thomas Paine). Then again - Max is offering some real insights if anyone of our political “leaders” wish to listen.

Wednesday, November 28, 2012

Cliff Notes

By C.A. Rotwang

By now if you're tuned into progressive commentary in the 'blahgosphere', on MSNBC, and on Current TV, you've heard the misnamed "fiscal cliff" referred to as an "austerity bomb" or a "fiscal curb." Neither is quite right.

What the "cliff" actually refers to is a raft of automatic tax increases and spending cuts that under current law take effect on Jan. 1. In other words, measures that on their face would drastically reduce the Federal budget deficit.

Lower deficits, what everybody complains about, wouldn't that be great? Well no, actually. It would be a freaking disaster at this particular point in time. Timing is everything in romance and fiscal policy. Now that the president has been reelected, we can all admit the economy still sucks. In 2000 the ratio of employment to population was 64.7 percent. At the more recent business cycle peak in 2007, it was 63.4 percent. Today it's 58.8. Sorry, Obamians, but that's terrible. That's roughly nine million unhappy people watching their futures wither away. Just ask Mitt Romney.

A tax increase and a spending cut both drain expenditure for goods and services from the economy. This depresses employment, which further reduces spending. You can see how that will go round and round. It is true that some pieces have less impact than others. In particular, tax increases on the richest have relatively little impact on spending because these folks will spend what they want with or without the tax increase. The difference will come in their saving, which is another word for 'not spending.'

What if we go over this so-called cliff? The result will not be a thousand-foot drop into recession, but the start of a slow slide into one. The expenditure drain noted above is spread over a year, and within limits it is easily reversed. An agreement even a month or two into the new year could remediate any short-term damage. So there is no explosion worthy of a 'bomb.' The cliff is more like a curb.

The problem with the curb metaphor is it glosses over the ultimate rationale for this drive for austerity. We don't want to fall off the cliff, but we can easily step off the curb. But should we? For the Republicans, it should be clear that neither the deficit nor spending are the issue. Otherwise they would drive off the cliff with all the enthusiasm of Thelma and Louise. It is not deficits or spending that exercise them; it is taxes.

But what of Obama and the Democrats? The sad fact is that Obama's rhetoric about the deficit is grossly misleading. The deficit cannot be closed with a "balanced" approach. The reason is that the root cause of the long-term deficit is not an excess of tax cuts and spending growth, but the ballooning cost of health care. Revenue increases and spending cuts elsewhere have no impact on the long-run problem, such as it is. The reason is that revenues and most spending grow more slowly than health care spending, so cuts in the former are more than offset by the latter.

The doctrine of balance, so appealing to the reasonable person, is a shallow matter of mere arithmetic. The health care problem is not arithmetic, but one of the structure of health care. We in the U.S. pay twice as much and don't get any better than other countries. Ironically, one of Obama's great achievements -- the Affordable Care Act -- takes a sizeable dent out of health care spending. It reduces the deficit. (Remember, the Obamacare-phobic GOP doesn't care about the deficit.) A serious follow-up attack on the deficit would a) focus on the medium to long term, after the recession is well behind us; and b) aim to further improve our health care system. Too bad nobody in this debate is serious.

I have just elaborated a serious, centrist view of the budget. Now you could argue that a centrist approach is necessitated by the political reality of the House of Representatives -- it is controlled by moonbats. But if you combine centrism and moonbattery, you get half of each, and who needs that? Obama's initial negotiating position is as cold as yesterday's mashed potatoes. Worse, support for Obama tends to morph into acceptance of his policies as a matter of principle, rather than the least-bad of available choices. What about a progressive view?

A progressive view starts with the recognition that the current tax system, with revenues of less than 16 percent of GDP, is appropriate to the Federal budget of the 1950s. At minimum we ought to be looking at getting the share of GDP back up to 21 percent, as in the Clinton years. Unfortunately, this will require Clinton-era tax rates on households below the current, more conservative Administration's (roll that around in your head for a second) fabled $250,000 a year income.

One of Obama's two original sins (the other being the celebrated "pivot" from Iraq to Afghanistan) was promising a slim revenue system. (With ACA he violated this pledge, since low-income persons will be required to buy health insurance, which the Supreme Court classifies as a tax, but I digress.)

The proper progressive object of higher taxes is higher social spending: public investment, aid to state and local governments, and expansion of social insurance. Remember the poor? Remember New Orleans? Remember Long Island and the Jersey shore?
On the spending side, rather than balanced spending cuts, the object is a transfer of resources from defense to not-defense. Here again the reductionist, arithmetic view is a distraction. The real question is not how to achieve some kind of "fair" cut out of defense. It is: what are we doing, and why? We are presently defending Europe from nobody, and defending the rich nations of South Korea and Japan from the impoverished nation of North Korea. We have an empire of bases dedicated not to defense but to meddling in the affairs of all the world. Now is the time for a peace dividend. An army of assassins to go after the truly deserving bad guys would be very cheap, compared to the current Pentagon money pit.

That's a progressive budget view. Support for the president's pragmatic, debatable negotiating tactics should not ratify fundamentally illiberal principles. There was a great candidate who talked a progressive game in 2008... oh wait.

Never mind.

Sunday, November 25, 2012

Fiscal Cliff – Republican Senators Negotiating with President Romney

Sahil Kapur listened to Senators Graham and John McCain so we didn’t have to:
Republican lawmakers are increasingly abandoning Grover Norquist’s no-taxes pledge and declaring a willingness to raise tax revenues as part of a deal to avoid the severe austerity measures set to take effect in January. On the Sunday talk shows, Sens. John McCain (R-AZ) and Lindsey Graham (R-SC) called for raising revenues by scaling back tax deductions and credits. “I would be very much opposed to raising tax rates, but I do believe we can close a lot of loopholes,” McCain said on “Fox News Sunday.” He said that could be achieved by imposing “a limit on the amount of deduction on charitable giving, a limit on the amount you can take on your home loan mortgage deduction.” Graham, who has previously spoken out against Norquist’s pledge, reiterated his position on ABC’s “This Week,” arguing that he will support higher taxes if Democrats agree to meaningful entitlement cuts. “I’m willing to generate revenue. It’s fair to ask my party to put revenue on the table. We’re below historic averages,” he said. “I will not raise tax rates to do it. I will cap deductions. If you cap deductions around the $30,000, $40,000 range, you can raise $1 trillion in revenue, and the people who lose their deductions are the upper-income Americans.”
These two have jumped on the Saxby Chambliss bandwagon offering the President something similar to what Mitt Romney campaigned on – entitlement spending cuts with base broadening. But no increases in tax rates including no increases on those already very low tax rates on capital income. If we don’t eliminate the tax break for capital, then the notion that we are raising revenues from upper-income households rings hollow. This is the same old GOP trickery that strives to reign in deficits by socking it to the poor and the middle class. Excuse me but Mitt Romney lost the election. If elections are to have consequences, President Obama should reject this Trojan Horse.

Saturday, November 24, 2012

Refinery Insights and Nonsense ala Exxon

For my day job, I’ve been thinking about gasoline prices, which means I’ve been re-reading an excellent post by James Hamilton as well as looking over data from this source. But I should also mention an interesting discussion by Ken Cohn - vice president of public and government affairs for Exxon Mobil. Let’s first focus on his discussion of the role of the refinery gross margin:
As the EIA figures show, however, refining doesn’t always produce a profit. In December, the data indicate that the U.S. market price for gasoline coming out of refineries was on average about 7 cents per gallon (-2 percent) below the refiners’ cost of crude oil alone, and before accounting for their costs of upgrading the crude into gasoline. In other words, refineries faced a market where domestic gasoline prices were very weak relative to global crude prices.
Actually operating profits equal gross profits minus operating expenses so a refinery could incur losses even when gross profits are slightly positive. But let’s not cry for the refinery as the refinery margin is quite volatile and has been very high during periods such as the one right after Katrina. It is true that the refinery margin turned negative for the last two months of 2011 as retail gasoline prices were temporarily falling as oil prices rose. The only other time the refinery margin turned negative was towards the end of Bush’s term in office when gasoline prices were plummeting even ahead of the fall in oil prices. Deep recessions will do that. Of course, we all know that gasoline prices and hence refinery margins recovered after Obama became President – a fact that Republicans reminded us of during the recent Presidential campaign. But I would never confuse Exxon Mobil with being a pure refinery:
U.S. crude oil production in 2010 was 5.5 million barrels per day. But U.S. refineries processed 15.2 million barrels of oil per day – almost three times more oil than was produced in the U.S. That means U.S. refiners, like ExxonMobil, have to purchase millions of barrels of crude oil – at market prices – to produce gasoline and other products for American consumers. For example, in 2010, ExxonMobil spent $198 billion purchasing oil around the world for its refining operations.
But their 10-K filing for fiscal year ended December 31, 2011 reads:
Divisions and affiliated companies of ExxonMobil operate or market products in the United States and most other countries of the world. Their principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products.
Could some of the oil they import be produced by Exxon foreign affiliates? If Cohn is peddling the notion that Exxon’s profits were squeezed during 2011, the 10-K filing shows that the impression is incredibly wrong. Their upstream operating profits rose from $24.1 billion in 2010 to $34.4 billion in 2011. In fact their downstream profits (which include distribution profits) rose from $3.6 billion in 2010 to $4.5 billion in 2011. Exxon – like most integrated oil companies – make most of their profits from production. So when oil prices rise, overall profits tend to increase even if refinery margins take a temporary hit. Cohn’s discussion isn’t that bad despite my quibbles with it. But note that James Hamilton provides even more insights without the excuses for ExxonMobil.

Friday, November 23, 2012

Is China Heading for Another Round of Capitalist Roading?

It is now several days since the once-every-ten years Congress of the Central Committee of the Chinese Communist Party that decides on the top leadership of the party and the nation for the coming decade closed up shop.  On the surface the main winner is Xi Jinping, a reputed "princeling" whose father was a general of the Long March era and thus one of the leading cadres of the party in the early days of Mao's leadership.  The main post that he was awarded is to be the Secretary-General of the party, which in communist-ruled countries has traditionally been the top leadership position, at least as long as the party rules the government and society. 

However, Xi is doing even better than just that and his predecessors.  His two predecessors were Jiang Zemin and Hu Jintao.  Both were initially selected to become leaders by Deng Xiaoping, who only held a few official positions, Vice Premier and Chairman of the Military Commission, the latter position making him Commander-in-Chief.  But he was never Secretary-General of the party or President, the official Head of State, those two positions wandering among various others while he was Vice Premier and Military Commission Chairman.  However, both Jiang and Hu would come to hold the three positions: Secretary-General, President, and Chairman of the Military Commission.

Xi's move into these is going faster than was the case for his predecessors.  He is Sec -Gen already, and this has been widely announced.  Hu Jintao continues to be President, however it is all but certain that he will step aside next March when the new Peoples' Congress elects the President and Premier.  This gap in transition imitates what happened when Hu came to power and when Jiang came to power before him. 

Where Xi is breaking precedent is that he has also been chosen now to be Chairman of the Military Commission, reportedly at the request of his predecessor Hu.  Hu had to wait two years after becoming Sec-Gen to get this position, and his predecessor, Jiang, also had to wait for two years, while Deng Xiaoping remained as Commander-in-Chief and effective shadow boss to make sure that Jiang did as expected and hoped for.  Hu's handing over this very powerful position means that indeed he will not be exercising any further effective power.  Xi is more clearly the boss.

Ah, but things are not so simple.  The Chinese invented bureaucracy (although the French invented the term), and they have more layers within the party than other nations.  The old USSR had a Central Committee and then a Politburo [Political Bureau] of that group that was the real leadership group, with its numbers fluctuating over time, but in later years consisting of 7 members, with the Secretary-General being the Chairman of that body.  In China there are 106 members of the Central Committee, but the Politburo is an unwieldy 25.  So, the top body is the Standing Committee of the Politburo of the Central Committee.  That group was 9, but at this Congress its number was reduced to 7.  Xi Jinping is in it as is incoming Premier, Le Kiaoqeng. 

But this is not the end of the story.  In the days of Deng, it was believed that the real power resided in an unofficial group of older leaders who all resided in Zhongnanghei, a compound not too far to the west of the Imperial Palace in central Beijing.  This unoffical group was known as the "Sitting Committee," presumably because they were so old they sat all the time.  Those in the Standing Committee were just their flunkies.  It appears that this body is being reconstructed.  The sign of this is that Xi and 4 others of the new Standing Committee are reportedly proteges of past president Jiang Zemin, now 86.  He addressed the opening session of the party Congress,  but holds no official positions at all.  His rival for power in that body is apparently Hu Jintao, but Hu has only one clear protege in the new Standing Committee, incoming Premier Le.  The fact that Hu is stepping down now in favor of Xi for the position of Military Commission Chairman is the bottom line sign of his defeat by Jiang in this power struggle.

So what does this mean in terms of policy?  This is not entirely clear.  However, Jiang's group seems to be full of princelings and also many involved in businesses, often with accusations of corruption coinciding.  They are also thought to be somewhat more market capitalist oriented.  Hu's group largely come from the Youth organization of the party, most from modest backgrounds.  When Hu came to power he made much noise about attempting to equalize incomes, particularly across regions.  However, he has been accused of being too cautious, and it does not appear that there has been much movement towards such equalization.

Perhaps lying behind this victory of Jiang over Hu is an earlier fight over the past year involving the former party chief of Chongqing, Bo Xilai.  Strongly supported by some in the military (since purged) he pushed a neo-Maoist populist line of moving much more sharply towards equality and a revival of cultural Maoism.  Ironically he was personally a princeling but running to the left of the Hu crowd.  However, he was brought low by charges of corruption and a murder charge against his wife involving a British diplomat.  It may well be that the fall of Bo was the real power struggle, with Jiang the main player behind the scenes in that.  With this victory, he probably also had won the day over the more moderate Hu faction, although they appear not to have been totally purged.  Hu can stick around to joust with Jiang on the Sitting Committee in Zhonganghei.  But for now, it appears that the princeling proteges of Jiang Zemin are in charge, with a high likelihood of more moves towards market capitalist reforms, even as newly appointed figures in the military may push a more aggressive and hardline stance in terms of relations with the rest of the world.

Thursday, November 22, 2012

"It was a flash mob with weapons"

The title is a quote from a "senior US official" reported by super well-informed WaPo columnist David Ignatius weeks ago.  The gist of it is also backed up by a report by David Kilpatrick in the NY Times of the same period, both of which have been conveniently forgotten in the general rush to declare that the Benghazi attack was "a terror attack, not a spontaneous response to a video."  This is constantly being repeated by almost everybody discussing whether or not Susan Rice lied to the public on TV about what happened in Benghazi.  In fact, while some of her wording was a bit off, she was pretty close to the truth, and Ignatius reports that the CIA knew that the Ansar leaders had been watching the demonstrations in Cairo just before they set off to attack the consulate, the Cairo demo of course being inspired by the anti-Muslim video.  In short, it was a terror attack inspired by the video, or, "a flash mob with weapons."  People need to understand this.

A very recent report that reprises all of this and makes this point with cites to and quotes from the original articles is http://www.rutlandherald/com/article/20121121/OPINION04/711219953/1108/OPINION .

A further note on this is that while critics of Rice are quoting Petraeus as saying in closed testimony that references to Ansar-el-Sharia and al Qaeda were removed from the briefing materials given to Rice, what they are conveniently ignoring is that these were removed so that the groups would not know how well CIA was tracking them, and indeed, given the report from Ignatius that CIA was watching Ansar so closely that they knew they were watching TV footage of the Cairo demos is a sign that indeed there was very close surveillance and indeed why Petraeus was working so hard to keep news of CIA's involvement, including sending its rapid response team in within 20 minutes from being publicly reported.

People really need to know.  Liberal media repeating the story that "it was a terror attack, not a response to the video" are simply wrong.  It was both.  It was a terror attack inspired by the video."

Thursday, November 15, 2012

Can Borrowing From Abroad Avoid The Debt Ceilinlg?

No, but Allan Sloan in the Washington Post today thinks it can, or maybe it can.  He proposes that Treasury borrow $200 billion in US government securities from China to use to continue to pay bills if we hit the ceiling, thereby supposedly overcoming dumb gridlocks that should not be happening and have led to such stupidities as the current "fiscal cliff."  Sloan modestly calls this the "Sloan Strategem" (Ahem, rule against people naming things for themselves holds here, ahem!)

But the answer is no.  Treasury already has a bunch of delaying mechanisms that hold off the moment of truth for several weeks.  We saw that in 2011, when we breezed past technical bankruptcy in June only to fact it in early Augusst when the fiscal cliff got cooked up.  This device would only add some other arbitrary amount of time that would simply delay the moment of blackmail reckoning.

The answer is to abolish the debt ceiling.  People ranging from Bill Clinton through Bruce Bartlett to me and a lot of others have argued that the debt ceiling is unconstitutional on multiple grounds, quite aside from being bizarre and self-contradictory, actually incoherent.  Obama should bite the bullet when it next comes really due, and declare it unconstitutional.  I bet the markets will go up if he does so, although there will of course be a Supreme Court case on the matter.  But better to fight that fight than to be set up to constantly have to deal with these blackmail threats that the House Tea Partiers have made it clear they will continue to impose repeatedly, no matter what comes out of the current fiscal cliff negotiations, which may well be things that voters most definitely did not vote for in this recent election and should not be put into place.

Fiscal Crock

I think I know what the grand bargain will be.  Obama will be a hero to the left by marginally increasing taxes on the people who earn more than $250,000.  Then you will cave on Social Security and Medicare while bragging about his dedication to progressive causes.  Also, in the name of reforming taxes, he will close the loophole on tax breaks that the middle class relies on by, for instance current collecting taxes on medical insurance provided by employers.

Friday, November 9, 2012

Virginia Considers the Fiscal Cliff

Today the Washington Post reported that Virginia Governor Bob McDonnell has ordered that state agencies should plan for a 4% reduction in funding expected to occur if America falls off the fiscal cliff.  While many have pointed out from Dean Baker to Paul Krugman and beyond that the fiscal cliff is oversold, an event that is not some disaster on 1/1/13 if not resolved by then, but one that gradually brings its potentially recessionary impact on the US in gradually over weeks and months, it is true that Virginia may well be more negatively impacted by it than any other states due to its greater reliance on DOD spending than any other state in per capita terms, and in order to get House Republicans to buy into a tax increase as part of a compromise (which they refused to go along with, despite this cliff), major cuts in DOD spending were put into it along with ending the Bush tax cuts (and we all know how terribly the US economy performed under the Clinton tax code), so that indeed it is not at all ridiculous of Virginia's governor to make appropriate plans in case of the worst possible outcome, although the fact that the Commonwealth has been running budget surpluses for the past three years mitigates this danger to the point that only a 4% contingent cut is being planned for.

The other matter that the governor is dealing with is that of the reality that Obama's ACA, that offshoot of a Republican Heritage Foundation proposal, will now remain the law of the land given the election outcome.  However, the implementation of it into practice depends on a major expansion of Medicaid. Indeed, when one gets down to the real gist of how Obamneycare expands insurance coverage, this is the main mechanism, well beyond what is expected to occur from the creation of the various state and federal and state/federal individual mandated exchanges.  However, the SCOTUS has stupidly and carelessly decided that states do not need to expand the program (and Medicaid should always have been a strictly federal program like Medicare, but... ).  In any case, Gov. McDonnell, facing the possibility of fiscal shortfalls arising from the falling off the fiscal cliff, is making clear that one of the first things to go would be any ACA-prescripted expansion of Medicaid coverage.  Indeed, even if the fiscal cliff is elided, he is not necessarily inclined to expand it anyway.

This indeed makes it clear that the major program most at risk due to the forthcoming fiscal cliff negotiations is indeed Medicaid. This has been clear for some time, and it is clear that if in fact Romney had won the election, Medicaid would have been on a serious chopping block.  It may still be.  After all, if there is an effort to seriously reduce federal spending being pushed in the upcoming negotiations between Obama and the Congress, there are only five programs that exceed $100 billion per year in the face of a budget deficit still more than ten times that.  Those programs are Defense, Social Security, Medicare, Interest Payments on the National Debt, and Medicaid.  The powerful political forces lined up to defend the top four (and some would argue that interest payments on the debt are beyond cutting, although a default on our debt would change that one) may indeed lead to the outcome of seriously cutting Medicaid, whose main recipients and supporters are poor and powerless.  The farce would be to fake a spending cut by sending Medicaid to the states, possibly entirely as Paul Ryan has suggested at times. But, as we are seeing in Virginia, sending it to the states may amount to ending it, or at least really seriously cutting it, leaving the poor uninsured en masse.

The deeper issue is that the whole fiscal cliff is a fabricated farce, drummed up out of the House Republicans' ridiculous and irresponsible effort to play serious games with raising the 94-year old debt ceiling.  That this ancient and unconstitutional limit has not been a serious issue in the past is precisely because no one was so stupid or irresponsible to mess with raising it when that needed to be done.  Now that the House GOP has decided to play blackmail games with it, it has become clear that this monstrosity that no other country in the world has ever had (some have targets based on percents of GDP, not absolute nominal debt ceilings), must go.  Bill Clinton told Obama back when this issue erupted in 2011 that he should just declare it unconstitutional and proceed paying the bills legally mandated previously by Congress, a move initially suggested by Bruce Bartlett back in the 80s when he was serving as Assistant Treasury Secretary for Ronald Reagan.  That issue is not immediately in play for the negotiations the last blackmail round set up for this totally unnecessary fiscal cliff, but when it comes up sometime later this spring, Obama should do the right thing and declare the debt ceiling unconstitutional, thus saving the republic any further fooling with this ridiculous farce.

Thursday, November 8, 2012

Free at Last! Free at Last! Thank God Almighty, We're Free at Last!

In President Obama's victory speech last night, he touched on a theme that he has stressed on two previous, conspicuous occasions:
"I am hopeful tonight because I've seen the spirit at work in America. I've seen it in the family business whose owners would rather cut their own pay than lay off their neighbors, and in the workers who would rather cut back their hours than see a friend lose a job."
That "spirit" Obama defined in the preceding paragraph as. "The belief that our destiny is shared; that this country only works when we accept certain obligations to one another and to future generations." Obama made almost exactly the same reference to workers cutting back they hours in his Inaugural Address in 2009:
"For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies. It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job, which sees us through our darkest hours."
But that's not all. In his 2008 acceptance speech at the Democratic Convention in Boston, Obama said:
"I've seen it in the workers who would rather cut their hours back a day than see their friends lose their jobs..."
The context of that first utterance is a bit more intriguing than the generic allusions to selflessness, faith and determination and shared destiny. It is a paean to the Rev. Martin Luther King Jr.'s "I Have A Dream" speech at at the 1963 March on Washington for Jobs and Freedom. The key passage begins with the declaration that "the change we need doesn't come from Washington. Change comes to Washington" and ends with the words of Rev. King, "'We cannot walk alone,' the preacher cried. 'And as we walk, we must make the pledge that we shall always march ahead. We cannot turn back.'":
You have shown what history teaches us - that at defining moments like this one, the change we need doesn't come from Washington. Change comes to Washington. Change happens because the American people demand it - because they rise up and insist on new ideas and new leadership, a new politics for a new time.

America, this is one of those moments.

I believe that as hard as it will be, the change we need is coming. Because I've seen it. Because I've lived it. I've seen it in Illinois, when we provided health care to more children and moved more families from welfare to work. I've seen it in Washington, when we worked across party lines to open up government and hold lobbyists more accountable, to give better care for our veterans and keep nuclear weapons out of terrorist hands.

And I've seen it in this campaign. In the young people who voted for the first time, and in those who got involved again after a very long time. In the Republicans who never thought they'd pick up a Democratic ballot, but did. I've seen it in the workers who would rather cut their hours back a day than see their friends lose their jobs, in the soldiers who re-enlist after losing a limb, in the good neighbors who take a stranger in when a hurricane strikes and the floodwaters rise.

This country of ours has more wealth than any nation, but that's not what makes us rich. We have the most powerful military on Earth, but that's not what makes us strong. Our universities and our culture are the envy of the world, but that's not what keeps the world coming to our shores.

Instead, it is that American spirit - that American promise - that pushes us forward even when the path is uncertain; that binds us together in spite of our differences; that makes us fix our eye not on what is seen, but what is unseen, that better place around the bend.

That promise is our greatest inheritance. It's a promise I make to my daughters when I tuck them in at night, and a promise that you make to yours - a promise that has led immigrants to cross oceans and pioneers to travel west; a promise that led workers to picket lines, and women to reach for the ballot.

And it is that promise that forty five years ago today, brought Americans from every corner of this land to stand together on a Mall in Washington, before Lincoln's Memorial, and hear a young preacher from Georgia speak of his dream.

The men and women who gathered there could've heard many things. They could've heard words of anger and discord. They could've been told to succumb to the fear and frustration of so many dreams deferred.

But what the people heard instead - people of every creed and color, from every walk of life - is that in America, our destiny is inextricably linked. That together, our dreams can be one.

"We cannot walk alone," the preacher cried. "And as we walk, we must make the pledge that we shall always march ahead. We cannot turn back."
Those words, in Dr. King's speech, were followed by others:
We cannot walk alone, and as we walk, we must make the pledge that we shall always march ahead. We cannot turn back. There are those who are asking the devotees of civil rights: "When will you be satisfied?" We can never be satisfied as long as the Negro is the victim of the unspeakable horrors of police brutality. We can never be satisfied as long as our bodies, heavy with the fatigue of travel, cannot gain lodging in the motels of the highways and the hotels of the cities. We can not be satisfied as long as the Negro's basic mobility is from a smaller ghetto to a larger one. We can never be satisfied as long as our children are stripped of their selfhood and robbed of their dignity by signs stating "For Whites Only." We cannot be satisfied so long as the Negro in Mississippi cannot vote and the Negro in New York believes he has nothing for which to vote. No, no, we are not satisfied and will not be satisfied until justice rolls down like water and righteousness like a mighty stream.*

I am not unmindful that some of you have come here out of great trials and tribulations. Some of you have come fresh from narrow jail cells. Some of you have come from areas where your quest for freedom left you battered by the storms of persecution and staggered by the winds of police brutality. You have been the veterans of creative suffering. Continue to work with the faith that unearned suffering is redemptive.

Go back to Mississippi. Go back to Alabama; go back to South Carolina; go back to Georgia; go back to Louisiana; go back to the slums and ghettoes of our northern cities knowing that somehow this situation can and will be changed. Let us not wallow in the valley of despair.

I say to you today, my friends, even though we face the difficulties of today and tomorrow, I still have a dream. It is a dream deeply rooted in the American dream. I have a dream that one day this Nation will rise up and live out the true meaning of its creed--"we hold these truths to be self-evident that all men are created equal."

I have a dream that one day on the red hills of Georgia the sons of former slaves and the sons of former slaveowners will be able to sit down together at the table of brotherhood. I have a dream that one day even the state of Mississippi, a state sweltering with the heat of injustice, sweltering with the heat of oppression, will be transformed into an oasis of freedom and justice.

I have a dream that my four little children will one day live in a Nation where they will not be judged by the color of their skin, but by the conduct of their character.

I have a dream today.

I have a dream that one day down in Alabama, with its vicious racists, with its Governor, having his lips dripping the words of interposition and nullification -- one day right there in Alabama, little black boys and black girls will be able to join hands with little white boys and little white girls as brothers and sisters.

I have a dream today.

I have a dream that one day every valley shall be exalted: every hill and mountain shall be made low, the rough places will be made plane, and the crooked places will be made straight and the glory of the Lord shall be revealed and all flesh shall see it together.

This is our hope. This is the faith that I go back to the South with. With this faith, we will be able to hew out of the mountain of despair a stone of hope. With this faith, we will be able to transform the jangling discords of our Nation into a beautiful symphony of brotherhood. With this faith, we will be able to work together; to pray together; to struggle together; to go to jail together; to stand up for freedom together, knowing that we will be free one day.

This will be the day when all of God's children will be able to sing with new meaning "My country 'tis of thee, sweet land of liberty, of thee I sing. Land where my fathers died, land of the Pilgrim's pride, from every mountainside let freedom ring." 

And if America is to be a great nation, this must become true. So let freedom ring. From the prodigious hilltops of New Hampshire, let freedom ring.  From the mighty mountains of New York, let freedom ring, from the heightening Alleghenies of Pennsylvania, let freedom ring, from the snow-capped Rockies of Colorado. Let freedom ring from the crevatial slopes of California.

But not only that.  Let freedom ring from Stone Mountain of Georgia. Let freedom ring from Lookout Mountain of Tennessee. Let freedom ring from every hill and molehill in Mississippi.  From every mountainside.

Let freedom ring and when this happens...And when we allow freedom ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God's children, black men and white men, Jews and Gentiles, Protestants and Catholics will be able to join hands and sing in the words of the old Negro spiritual, "Free at Last! Free at Last! Thank God Almighty, We're Free at Last!"
Just as Dr. King's "I Have A Dream" speech puts President Obama's remarks about "workers who would rather cut their hours back a day than see their friends lose their jobs" into a much broader context there is also a little-known context for the most famous part of that speech -- the part which gave it the name it now bears -- which is described in the account presented by the "Civil Writes Movement Veterans History and Timeline":
Today, Dr. King's address is famous as the I Have a Dream speech. But the dream section, which is forever repeated in TV sound-bites and classroom recordings, is not part of his original draft. When King nears the end of his seven minutes of prepared text — the metaphor of the bounced check and the echo of Amos that “... we will not be satisfied until justice rolls down like waters, and righteousness like a mighty stream” — he senses — as do others on the platform — that something more has to be said. That the march itself requires some summing up, some articulation of the vision that moves the Movement, some expression of the aspirations, pride, determination, and courage of not just these marchers, but the Freedom Movement as a whole.

Sitting behind him, Mahalia Jackson leans forward, “Tell them about the dream, Martin.” She had heard him speak the dream at recent rallies. And with that, he steps over the seven-minute limit and off his prepared text to soar, speaking from the soul of the struggle to the heart of oppressed people everywhere, “Go back to Mississippi, go back to Alabama, ... go back to the slums and ghettos of our northern cities, ... Let us not wallow in the valley of despair ... And so even though we face the difficulties of today and tomorrow, I still have a dream. I have a dream that one day this nation will rise up and live out the true meaning of its creed: We hold these truths to be self-evident that all men are created equal ... I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character. I have a dream today! ...“ As he rolls on with his majestic cadences towards his ringing conclusion, “Free at last, free at last. Thank God Almighty, free at last,” Mahalia and others on the platform can be heard over the loudspeakers backing him up with the traditional affirmation of the Black church, “My Lord! My Lord!”"
The account of the March on Washington concludes on a sober note:
But while the march does affect Congress in regards to basic civil rights, it has little affect on the economic issues that form a key portion of the 10 demands…. Unemployment remains high — doubly so for non-whites — and the call for dignified jobs at decent wages falls on deaf ears, as do demands to increase the minimum wage to a living wage.

Looking back on the march later, Evelyn Cunningham, New York Editor for the Pittsburgh Courier, recalls:

"I must've cried for an hour and a half at one point during the march. Part of it was sheer happiness, part of it was pride, and part of it was my family. I'm steeped in my respect for my people. After the march, I thought, 'Oh my God, we're almost there' — God, was I wrong."

Friday, November 2, 2012

Commercialization and Rhetorical Polarization

I don’t know if opinion is more polarized in the US than it used to be.  I do feel, however, that the rhetoric has become more polarized.  Let me explain what I mean.

Rhetorical strategies depend on the intended audience.  An effective strategy begins with identifying this audience and divining its initial cognitive and emotional state.  This makes possible an appeal whose style and content are tailored to produce the best possible reception.  There isn’t a single optimal rhetoric because there isn’t a single potential audience.

Broadly, we can distinguish between two types of rhetorical strategies, those that appeal to an audience already disposed to agree and whose purpose is to heighten their sense of identification and disposition to take action, and those that reach out to as yet unpersuaded audiences, where the goal is to bring them closer to accepting your own position.

The impression I get is that we are seeing a lot more of the first set of strategies than the second.  This means more use of emotive adjectives and appeals to shared identity, along with less use of a sympathetic voice to express opposing points of view (to convey a sense of fair-mindedness).  The cumulative effect is a cacophony of parallel echo chambers, lots of hectoring and very little listening.  I don’t mean to imply that this phenomenon is symmetrical across the political/intellectual spectrum, much less that it is universal and represents how every one of us is communicating—just that the balance has shifted overall to rhetorics more suitable for stirring up the believers.

Now for an explanatory hypothesis: perhaps this is due in significant part to the increasing commercialization of political discourse.  More and more political expression is undertaken in a for-profit context, where return is a function of market share.  Talk radio is a pure example: the pay of those in this business depends on audience size.  If an announcer loses his or her ratings mojo, the show is pulled and it’s time to find another line of work.

If so, however, we face the problem that identifying and selling to market segments leads in most cases to the adoption of an intra-tribal stategy, reinforcing what people think they already believe, rather than one of outreach and persuasion of the differently-minded.

Can we test this hypothesis?

And, if we think it’s true, can we rebuild a space for political discourse whose incentives are not tied so closely to audience size and enthusiasm?

Romney’s Take on the Employment Report

Benjy Sarlin listens to Mitt Romney so we don’t have to:
Today’s increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill.
You might be protesting that the Employment Report said employment rate rose by 171 thousand. But remember that’s the Payroll Survey so let’s take a look at the Household Survey to see why the unemployment rate rose from 7.8% to 7.9%. The employment to population ratio actually rose from 58.7% to 58.8%, while the labor force participation rate rose from 63.6% to 63.8%. Either Mr. Romney is incredibly stupid or amazingly dishonest.

Tax Policy: You Can’t Handle the Truth

Sahil Kapur reports on something that does not surprise me on two levels:
The author of a Congressional Research Service study, who found no evidence that tax cuts for high income earners lead to economic growth, is standing by his work, after the legislative branch’s nonpartisan research arm withdrew the report under pressure from Republican leaders. And Democratic principals are demanding to know why CRS caved to GOP pressure. CRS quietly and quickly pulled the six-week old report, despite the wishes of the research arm’s economic team, the New York Times reported Thursday ... The study, which TPM and others reported on at the time, delved into the last 65 years of U.S. tax policy — specifically how marginal rates on high incomes and capital gains taxes impact decision-making. It concluded that reducing effective taxes on the rich does not generate economic growth, but that it does correlate with rising income inequality in the short term. The report’s conclusions aren’t terribly controversial in mainstream economics.
What Thomas Hungerford wrote has indeed been the consensus view among economists who are not prostituting themselves for Mitt Romney. One would think this study would have received more attention but we have seen the Republican Party pushing a certain agenda for over 30 years. We have also seen a lot of incredibly dishonest claims about the wonders of tax cuts for the rich. That the leaders of the Republican Party decided to censor results of a credible analysis to the contrary is also old news. Even though it is old news – it needs to be highlighted over and over. But something tells me that not one word of this will be uttered over at Fox “fair and balanced” News.