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Fiscal Policy For The COVID-19 Outbreak

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The internet is full of ideas for dealing with the economic problems associated with the outbreak of COVID-19. As usual, the first suggestions are for tax cuts to protect the corporations facing problems. I assume tax cuts for business entities like the airlines are the logical outcome of my general rule that the point of neoliberal caitalism is to protect the interests of capitalists. But tax cuts are the only bipartisan policies possible, because Republicans only care about tax cuts and have no interest in sound policy; while Democrats are happy to oblige their donor class, and wring their hands about the mean Republicans who won’t let them do anything for their voters. Another widespread ideas is a payroll tax cut; that would benefit people who keep their jobs in the downturn.

Good policy starts with the identification of the problem. At a first approximation, I think the problem involves the following:

1. Sick people. They require medical care, and many can’t afford it, even if it’s available, and even if they have insurance.

2. Unemployment. There will be an uptick in unemployment. Maybe employers close down, maybe business is slower, maybe people don’t want to be out in public and around possible vectors of the illness.

3. Shortages of goods. This will include many of the goods we get from China, but it will also include medical supplies and equipment, and drugs. There will be spot shortages of other goods.

Tax cuts aren’t going to address those problems. Sick people don’t have income, and tax cuts won’t matter to them. Unemployed people won’t have income either. Increasing the amount of money in the hands of consumers and businesses will only create inflation in goods in short supply if the money is spent. Using the money to pay down debt will stabilize some companies and people, but any money used to buy stocks or bonds will not stimulate anything except the wallets of Wall Streeters. I doubt that people will increase their spending on restaurants or movies or other public activities because of fear of contagion even if they have more money from the tax cuts.

The thing that will work is direct government spending on infrastructure. It puts the unemployed back to work. It won’t increase prices for goods that are not in short supply. For goods in short supply, increases in prices will encourage businesses to expand to supply the new needs. Hopefully this will include mostly resources we have here in the US, or can set up here in reasonably short order. We don’t need vast amounts of plastic crap, more computers or smart phones, and other tech goods. What we need are roads, efficient electrical transmission lines, more solar power, better internet service, and other basic electronics that rely mostly on simple sturdy chips. We need new schools, new state and local agencies for a variety of purposes, more buses and subways and light rail, more affordable housing especially in urban areas, more research facilities, more drug manufacturers and a long list of things I don’t know about.

This is a public crisis. Therefore we have a social responsibility to pay for all medical treatment for infected people, all testing, and all necessary medicines. No one should be bankrupted or financially hurt by the cost of treatment of COVID-19. Also we should build public facilities to provide that treatment.

But alone, this isn’t enough. If people use the income from these jobs to bid up the prices of consumer goods in short supply, we will see an increase in inflation. Therefore the goal is to get people to pay down debt and to save the extra income for the future. This should be relatively easy. The fear induced by this crisis should make it obvious that things are going to change, and conservative finances are the best protection for all of us.

One more thing. I don’t believe in pay-fors as a general rule. But the fact is that almost all politicians either actually do believe or pretend to believe in them. This is a great time to demand higher taxes on the 1%, not because we need the cash, but to reduce their obscene domination of our politics (I’m looking at you Michael Bloomberg). Raise taxes on the rich to cover the costs of at least a portion of the expenditures I have described. That means at least the amount of payroll tax cuts, medical treatment for infected people, increased research into viral diseases, vaccines, and production of vaccines, and any additional cuts for corporations and other business entities.

So there’s my take. Please treat this as an open thread on these issues.

Graphic: Quino Al via Unsplash (mod by Rayne)

Three Things: Take Action on Tax Bill, Net Neutrality, and a Courtroom Virgin

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There’s a lot of crappy stuff going on, but three things need your urgent attention and action: Tax cuts for wealthy, net neutrality, and an unqualified federal judicial appointment.

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So-called Tax Reform Legislation

Tax cuts for people who don’t need them and won’t even feel them, paid for by the people who can least afford them — it’s a recipe for disaster. If Putin wanted to damage our economy he couldn’t have done a better job in one go. I could rant all day about the stupidity required to believe trickle-down or supply-side economics work, but this wealthy dude does a succinct job. As he says it’s a trickle-down lie; this bill is simply a wealth transfer from the lower deciles to the upper deciles.

You can also bone up by reading this Forbes article, and this Forbes article, and hello, another Forbes article.

This is a nightmare in the making which will tank our economy and literally threaten American lives by reducing access to healthcare. The only real driver behind this bill is extortion — the GOP’s biggest donors have threatened to shut their wallets if they don’t get their tax cuts, and GOP members of Congress are too fucking weak to tell them to pound sand.

Go ahead, selfish billionaires, primary GOP incumbents. You think you can rustle up more sycophantic (and pedophilic) candidates like Roy Moore and still retain control of the House and Senate in 2018, even if you suppress the vote? Hah.

More than half this country struggles to scrape up enough cash to pay for an emergency, like a car repair or a broken appliance, and the GOP thinks increasing their taxes and undermining their health care will magically make the economy better?

And now the kicker: Alaska’s Senator Murkowski, who has been a champion for health care, just agreed to support the repeal of the individual mandate included in this tax bill. The stupid, it burns. Or perhaps it’s some ill-considered kickback burning its way through Murkowski’s cred.

Here’s a script for your use, provided by the ever-helpful @celeste_pewter. Call Congress’ switchboard at (202) 221-3121 or look for your senators’ closest in-state office and leave a message there — all senators are home this week.

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FCC Chair Ajit Pai’s Blowjob for ISPs

It’s really far more than a blowjob and it’s definitely obscene. Allowing ISPs to discriminate against bits in the pipe by throttling, blocking, or additional charges to further their agenda is absolutely unacceptable. There’s far too much at risk, beginning with the end of moderately priced internet. Some industries will be damaged — filmmakers, for example, already have problems with releasing films across the U.S. over the internet, as users do not have the same quality of network. Streaming providers like Netflix will also experience problems; angry users will blame them for poor service, when it may be the ISP throttling them. Marketplace’s Molly Wood does a pretty good job reviewing the problems with Pai’s proposed changes and the challenges with the existing regulatory framework.

Let’s be frank: your porn will be affected, too, as removing net neutrality means ISPs can audit the content you request and block/throttle/demand more to release it, or strong arm you into using their brand of porn using a combination of price differentiation and delivery constraints.

And then there’s the issue of Pai’s handling of comments on this change, which New York’s AG Eric Schneiderman has been investigating — little cooperation with Schneiderman to date and a decision made based on a manipulated feedback process — all suggest the FCC is taking illegitimate action.

So, so shady. Ajit Pai should never have been approved by this Congress as FCC chair; Congress needs to reign in his overreach by legislating net neutrality. Could the existing FCC regulations be improved? Sure, but Pai’s proposal does nothing of the sort — Congress should address this.

ACLU’s prepared a short-and-sweet script for you use. Use the ACLU’s call routing through their website, or call Congress’ switchboard at(202) 221-3121.

@Celeste_pewter offers more detailed script with a more thorough ask at this link.

Also via miracle worker @celeste_pewter, here’s a script for writing to Ajit Pai at FCC. Please personalize your message — don’t just cut-and-paste. Take a stand.

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Incredibly Wretched Judicial Nominee Talley

What. The. Fuck? I can’t even begin to explain how awful a nominee Brett Talley is; he should never have been allowed to get this far. Read up on their hideousness here. How can the Senate Judiciary Committee think for a moment that ghost-hunting,White-House-lawyer-married, ABA-‘unqualified’, courtroom-virgin Talley, is well qualified for a lifetime appointment? This is a complete rejection of the Senate’s power to advise and consent.

Call your senators at (202) 221-3121 or their home state offices and ask them to vote NO on Talley, deny their consent. We can and must do better with these lifetime appointments. Need a script? Once again, Celeste is on top of it.

In my opinion, the Senate should refuse to approve any more judiciary nominees before the 2018 election. Talley is the latest of four Trump nominees the ABA found ‘unqualified’. If somebody is drafting articles of impeachment, these nominees should be cited as an example of Trump’s failure to faithfully execute this country’s laws.

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There’s so much more that’s wrong, like the lack of funding and inadequate labor for Puerto Rico and California wildfire recovery, Puerto Rico’s Medicaid funding, another horribly qualified nominee for U.S. Census, attacks on the DREAM/DACA/SECURE Acts, or the lapse of CHIP putting the health of NINE MILLION AMERICAN CHILDREN at risk. But the three issues listed above are the ones which will have the greatest affect on the largest number of Americans.

If you have Republican legislators, your calls are even more important, though Democratic and Independent legislators do need to hear from you so they can validate their resistance. Call your elected representatives pronto — don’t take this crap without a fight. Get out in front of these turkeys.

This is an open thread. Bring your comments here which are off topic in other threads, thanks.

Wal-Mart Hikes Toy Prices Just as Congress Gives the Waltons Huge Tax Breaks

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If there was ever any illusion that the super-rich would start acting nicer after Congress gave them both income and estate tax breaks, I present Wal-Mart’s thanks for Congress’ willingness to make the Walton family even richer: (h/t Consumerist)

Wal-Mart managers in the U.S. received instructions to mark up an average of 1,800 types of toys per store, according to a company e-mail dated Nov. 30 obtained by Bloomberg News. The e- mail didn’t disclose specific increases.

[snip]

“In previous years Wal-Mart has come out and hammered everyone with unbelievably low toy prices,” said Eric Johnson, director of the Center for Digital Strategies at the Tuck School of Business at Dartmouth in Hanover, New Hampshire. “They stepped away from that this year, and after Thanksgiving their prices have crept back up.”

In a year when kids keep begging Santa for bare necessities for Christmas, the Walton family has been made even richer by Obama and Congress. And the thanks Congress and the American people get is higher prices for toys.

Bernie Sanders Quotes Jeff Immelt: “I am a Nut on China”

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This was, IMO, the highlight of Bernie Sanders’ non-filibuster on Friday:

GE is of course one of our major corporations, and in fact this recent disclosure pointed out the taxpayers of this country, through the Fed, provided $16 billion in bailout to General Electric during the recent crisis. This is what the head, CEO, of General Electric, Jeffrey Immelt, said in 2002, December 6. Quote, Jeff Immelt, head of CEO [sic].

“When I am talking to GE managers, I talk China, China, China, China, China. [Five Chinas] You need to be there. You need to change the way people talk about it and how they get there. I am a nut on China. Outsourcing from China is going to grow to 5 billion. We are building a tech center in China. Every discussion today has to center on China. The cost basis is extremely attractive. You can take an 18 cubic foot refrigerator, make it in China, land it in the United States, and land it for less than we can make an 18 cubic foot refrigerator ourselves.”

End of quote. Jeffrey Immelt, Chairman, CEO of General Electric, quoted in an investor meeting, on December 6, 2002.

Gee! When GE had, a couple of years ago, some really difficult economic times, they needed $16 billion to bail them out, I didn’t hear Mr. Immelt going to China, China, China, China, China. I didn’t hear that. I heard Mr. Immelt going to the taxpayers of the United States for his welfare check. So I say to Mr. Immelt, and I say to all these CEOs that have been so quick to run to China, that maybe it’s time to start reinvesting in the United States of the America.

No word yet whether Jeff Immelt will be among the CEOs Obama hosts at the White House tomorrow. Though the companies of the CEOs who have been publicly invited–Google, Cisco, IBM, AmEx, Dow, and Pepsi–have been all pushing into China.

On Sunday, Masaccio described this entire CEO summit as just Obama’s effort to outsource the effort the government should, instead, be leading: job creation. I guess Obama has gone to the experts on that front!

The Obama Disconnect: Arlington, Korea and Catfood

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Marcy wrote earlier this morning about David Axelrod’s despicable announcement of Obama’s capitulation to the oligarchs on tax cuts (another lead balloon the Obama White House incompetently tried and failed to walk back). Later this morning, however, were a couple of events that put an even starker gloss on this pig.

First, was this from The Oval:

President Obama is in Seoul, South Korea, where today he said lawmakers in the United States should hold off on comments about his fiscal commission’s proposals to slash the federal budget deficit through spending cuts, ending tax breaks, and a revamping of the Social Security system.

“Before anybody starts shooting down proposals, I think we need to listen, we need to gather up all the facts,” Obama told reporters.

He added: “If people are, in fact, concerned about spending, debt, deficits and the future of our country, then they’re going to need to be armed with the information about the kinds of choices that are going to be involved, and we can’t just engage in political rhetoric.”

So, Barack Obama is in Korea lecturing Americans to suck it up and embrace the catfood he and the wealthy elite have deemed necessary to feed us in order to pay for their grotesque largesse. Notably, at the same time Vice President Biden was left to be the White House representative at the traditional Arlington National Cemetery ceremony to honor America’s Veterans, where Presidents usually pay their respects and appreciation to veterans and the military. Especially during a “time of war”. Obama couldn’t make it to Arlington for the Memorial Day Ceremony either.

But Mr. Obama could not be present at Arlington this time because he was in Korea. And just what was so pressing in Korea? As Jane Hamsher points out, it is the desire to press for a horribly conceived US-Korea free trade deal:

It would be a truly horrific blow to whatever is left of American manufacturing at a time when unemployment is rampant. But from a political standpoint, fighting for another so-called “free trade” agreement right now has got to represent some kind of death wish for the Democratic party.

Yes indeed, but thus is what we are constantly served by Barack Obama. As Paul Krugman today rightfully termed it, Mush From the Wimp.

You know, it is not just that the arrogant and cluelessly detached President Pangloss is steaming toward a one and done Presidency, it is that he is literally destroying the Democratic Party and liberal ideology in the process and leaving them in his wake.

UPDATE: I guess Obama couldn’t even sell crack free trade to Charlie Sheen the Koreans.

David Axelrod’s Quaint Idea of Middle Class “Security”

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There’s a lot to despise about David Axelrod’s announcement of Obama’s capitulation to the oligarchs on tax cuts, not least that he made this announcement on the same day Obama’s Catfood Commission Chairs started the process of stealing from seniors to “fix” our deficit.

Let yesterday be marked as the day when a nominally Democratic President began to dismantle Democrats’ signature policy achievement, social security, so he could shovel $700 billion to the very rich.

But I was particularly irked by what Axe described as “middle class security.”

“There are concerns,” he added, that Congress will continue to kick the can down the road in the future by passing temporary extensions for the wealthy time and time again. “But I don’t want to trade away security for the middle class in order to make that point.

Here, Axe is defining “security for the middle class” as tax cuts. Not “jobs.” Not “access to health care, not just insurance.” Not “a guarantee a bankster can’t just foreclose on their house with a trumped up piece of paper.” Not “some basic safety net for retirement.” But “tax cuts.”

According to Axe, we have to shovel even more money on the already rich so as to ensure the “security” of the middle class by giving them a tax cut.

And while I agree that raising middle class tax cuts at this point would be bad for the economy, it’s not the worst thing that could happen to the economy.

In fact, the worst thing that could happen to this economy may well be passing legislation that continues to hollow out of the middle class and with it increasing the massive income inequality that continues to subject the American people to the craven demands of a few very rich people. That is, precisely what Axe and Obama have now agreed to do.

These men either don’t know or don’t give a damn about the security of the middle class.