It’s Not a Fiscal Cliff, It’s an Austerity Crisis

It’s Not a Fiscal Cliff, It’s an Austerity Crisis

Washington is not known for the stunning clarity with which it frames and addresses tough issues. But has there ever been a debate so mired in confusion as the one around the so-called fiscal cliff?

The trouble starts with the term “fiscal cliff,” which misstates the nature of the problem and provides no hint of how to solve it. I prefer the term “austerity crisis,” which at least describes the real issue -- too much austerity, imposed too quickly. (This has the added advantage of sidestepping an increasingly inane discussion over whether the problem is really a “cliff,” “curb,” “slope” or perhaps a “bomb.”)

Here is the crux of it: Depending on what you throw into the pot, the sum of the expiring Bush tax cuts along with currently mandated spending cuts would equal somewhere between $500 billion and $700 billion in deficit reduction in 2013. That’s more than enough fiscal contraction to throw the U.S. into recession. The tax increases alone would reduce the average family’s take-home pay by more than 6 percent. Because everyone agrees that’s a bad thing, Congress could pass a law, tomorrow, preventing it. Done.

But Congress won’t pass that law. Although the problem may be too much austerity too quickly, most everyone in Washington is insisting that the solution should encompass much, much more. In theory, this crisis should be easily resolved: If you have too much austerity, lighten the load. The reason the austerity crisis has become so messy is that the connection between the problem and its solution has been severed.

Wrong Solutions

In fact, proposed solutions inevitably include four or even five distinct categories of policy. There are proposals to address the crisis itself -- to reduce the dangerous size and speed of the scheduled deficit reduction in 2013. There are proposals to replace the scheduled deficit reduction with a different set of deficit-reducing tax increases and spending cuts, to be phased in over a longer term. There are policies to redesign the tax code or reform certain entitlements. There’s the need to raise the debt limit, as the Treasury is expected to run out of borrowing authority in February. Finally, there are policies to increase the amount of short-term stimulus and boost infrastructure investment.

So while the proximate problem is too much austerity, too quickly, the solutions being offered address an array of other concerns. Meanwhile, amid these wide-ranging proposals, the conversation in Washington tends to focus exclusively on achieving deficit reduction -- even though the economic threat we face in January is too much deficit reduction.

A more sensible approach would deal directly with the problem at hand: the austerity crisis. And that could be defused fairly simply, without doing overly much to harm the deficit. The path would involve identifying policies that pack a big stimulus punch without significantly increasing the deficit. Such “mismatched” policies abound.

The liberal Economic Policy Institute estimates that continuing the payroll-tax cut would create 1 million jobs in 2013 at a cost of about $115 billion. By contrast, maintaining the Bush tax cuts -- yes, all of them, including those on income less than $250,000 -- would create only 600,000 jobs while costing $202 billion. Adding to the appeal of the payroll- tax cut is that it’s designed to expire once the economy has strengthened. The Bush tax cuts, once renewed, will probably continue costing the Treasury year after year.

This is what the public sees - we have to make balancing the budget a top priority and we have to make massive spending cuts. You know why the public sees the fiscal "cliff" in that frame, because the media have become hand maidens for the radical Right conservatives. Conservatives do not want to admit that we have a revenue crisis, another way of saying austerity crisis - because that would point to one somewhat simple solution -raising revenue from taxes on people who have so much money they ponder how many McMansions they feel like owning or whether they should have the chauffeur wash the Mercedes seven days a week or just every week day.

Facts About Conservative Republican Fairy Tales: State and Local Government Workers

Facts About Conservative Republican Fairy Tales: State and Local Government Workers 

This brief report presents some basic facts about state and local employees:  the jobs they perform, how many there are, how their pay compares with pay in the private sector, and how much states and localities — mainly school districts, cities, and counties — spend on pay and benefits.

Who Are Public Employees?

By far the largest share of state and local government workers are the nearly 7 million teachers, aides, and support staff working in the nation’s elementary, middle, and high schools.  (See Figure 1).  Other prominent categories of state and local employment are protective services (including police officers, fire fighters, and correctional officers), higher education, health care (including nurses and other workers at public hospitals and clinics), and transportation (including road maintenance workers and bus drivers).
How Has the Number of Public Employees Changed Over Time?

Over the last 30 years, the number of state and local workers grew modestly relative to the overall population, from about 59 per 1,000 in 1980 to 65 per 1,000 in 2008 before declining to 61 per 1,000 in 2011.  (See Figure 2).  All of that growth has been in education workers and reflects demographic changes and policy initiatives, such as efforts to reduce class sizes and better help children with special needs.  Over the same period the number of non-education workers remained about the same relative to the overall population until declining somewhat after 2008.   Since August 2008, the total number of state and local government employees has declined by 662,000.

How Do Their Pay and Benefits Compare to Those of Private-Sector Workers?

Studies find that public workers are paid 4 to 11 percent less than private-sector workers with similar education, job tenure, and other characteristics.[1]   This wage disadvantage is greatest for higher-wage public workers.  The typical middle-wage worker earns about 4 percent less in the public sector than the private sector.[2]  Low-wage state and local workers, by contrast, receive a small wage premium.  (See Figure 3.)

While the average pay for all public employees exceeds that of all private workers, this reflects the fact that public-sector jobs are much more likely to require higher education; teaching positions require a college or master’s degree, for example.  State and local employees are twice as likely as private-sector workers to have a college or advanced degree.[3]

Public-sector workers also earn less than their private-sector counterparts when one counts both their wages and benefits such as pensions and health insurance.  Benefits are typically more generous and secure for public employees than for most private-sector workers, but factoring in the value of these benefits does not eliminate the gap between state and local employees and their counterparts in comparable private-sector jobs.[4]  

The Center for Retirement Research at Boston College, widely recognized as an authoritative source on retirement income issues, recently found that total compensation for public-sector workers — including the value of benefits — is 4 percent less than that of comparable private-sector workers.[5]

Thank Your Conservative Republican Neighbors For Killing America The Land of Opportunity

Thank Your Conservative Republican Neighbors For Killing America The Land of Opportunity

America likes to think of itself as a land of opportunity, and others view it in much the same light. But, while we can all think of examples of Americans who rose to the top on their own, what really matters are the statistics: to what extent do an individual’s life chances depend on the income and education of his or her parents?

Nowadays, these numbers show that the American dream is a myth. There is less equality of opportunity in the United States today than there is in Europe – or, indeed, in any advanced industrial country for which there are data.

This is one of the reasons that America has the highest level of inequality of any of the advanced countries – and its gap with the rest has been widening. In the “recovery” of 2009-2010, the top 1% of US income earners captured 93% of the income growth. Other inequality indicators – like wealth, health, and life expectancy – are as bad or even worse. The clear trend is one of concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.

It would be one thing if the high incomes of those at the top were the result of greater contributions to society, but the Great Recession showed otherwise: even bankers who had led the global economy, as well as their own firms, to the brink of ruin, received outsize bonuses.

A closer look at those at the top reveals a disproportionate role for rent-seeking: some have obtained their wealth by exercising monopoly power; others are CEOs who have taken advantage of deficiencies in corporate governance to extract for themselves an excessive share of corporate earnings; and still others have used political connections to benefit from government munificence – either excessively high prices for what the government buys (drugs), or excessively low prices for what the government sells (mineral rights).

Likewise, part of the wealth of those in finance comes from exploiting the poor, through predatory lending and abusive credit-card practices. Those at the top, in such cases, are enriched at the direct expense of those at the bottom.

It might not be so bad if there were even a grain of truth to trickle-down economics – the quaint notion that everyone benefits from enriching those at the top. But most Americans today are worse off – with lower real (inflation-adjusted) incomes – than they were in 1997, a decade and a half ago. All of the benefits of growth have gone to the top.

America has become a country not “with justice for all,” but rather with favoritism for the rich and justice for those who can afford it – so evident in the foreclosure crisis, in which the big banks believed that they were too big not only to fail, but also to be held accountable.

Defenders of America’s inequality argue that the poor and those in the middle shouldn’t complain. While they may be getting a smaller share of the pie than they did in the past, the pie is growing so much, thanks to the contributions of the rich and superrich, that the size of their slice is actually larger. The evidence, again, flatly contradicts this. Indeed, America grew far faster in the decades after World War II, when it was growing together, than it has since 1980, when it began growing apart.

Conservative Republicans seem to be stuck in permanent adolescent mode with a wild crush on the super rich kids. That is not politics, that is some kind of deep-seated physiological problem. Conservatives are concerned that some poor kid and his mother might be getting some apple juice they do not deserve, but could care less that billionaires - 1% of so of the population - are sucking up three fifths of the nation's productivity.

Romney's (non) military record faces new scrutiny. Just call Mitt, Mr. Deferment.

Conservative Republicans Want to Rise Taxes for Low Income Americans and Lower Taxes Again for Millionaires

Conservative Republicans Want to Rise Taxes for Low Income Americans and Lower Taxes Again for Millionaires

An oft-repeated Republican talking point is that close to half of all federal income tax filers have no tax liability. Prominent Republicans often imply that these people ought to be paying federal income taxes — and that they don’t is a major cause of the budget deficit.

Last year, Senator Orrin Hatch of Utah, the ranking Republican on the tax-writing Senate Finance Committee, declared that taxes on the rich should not be raised until the poor are taxed. “I think many taxpayers are skeptical that the answer to our fiscal problems is for them to sacrifice more, when almost half of all households are not paying any income taxes,” Mr. Hatch said.

In April, Representative Eric Cantor of Virginia, the House majority leader, said it was “unfair” that 45 percent of people don’t pay any federal income taxes. Asked if he wanted to increase taxes on these people, he replied, “You’ve got to discuss that issue.”

In May, Richard Mourdock, the Republican Senate nominee in Indiana, likened the current split between taxpayers and nontaxpayers to the pre-Civil War division of the nation between slave and free. Consciously using Abraham Lincoln’s famous “house divided” terminology from 1858, Mr. Mourdock said, “When 47 percent are paying no income taxes — they do pay Social Security, but they are not paying income taxes — and 53 percent are carrying the load, we are a house divided.”

In a McClatchy-Marist College poll in early November, 71 percent of Republicans said they believed the poor should not be exempt from income taxes and only 26 percent said they thought the poor should not have to pay them.

This is ironic, because two of the measures most responsible for the rise in the number of nontaxpayers are the earned income tax credit and the child credit — both Republican initiatives. Together they account for 30 percent of the nontaxpaying population, according to the Tax Policy Center.

Once upon a time, Republicans were more concerned about the number of rich people with no income tax liability.

On Jan. 17, 1969, just days before Richard Nixon’s inauguration, the departing treasury secretary, Joseph Barr, disclosed that in 1967, 155 Americans with an income of more than $200,000 had no income tax liability, including 21 with an income above $1 million.

This was considered such a scandal that Nixon sent a tax package drafted by the Johnson administration to Congress with his endorsement. When the Tax Reform Act of 1969 was enacted, including a minimum tax to force rich people to pay something, he praised that provision.

As Nixon said in his signing statement:

    A large number of high-income persons who have paid little or no federal income taxes will now bear a fairer share of the tax burden through enactment of a minimum income tax comparable to the proposal that I submitted to the Congress, which closes the loopholes that permitted much of this tax avoidance.

Ronald Reagan defended his tax reform proposal on the grounds that it would reduce the number of nontaxpaying rich people. In a June 6, 1985, speech, he said:

    We’re going to close the unproductive tax loopholes that have allowed some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary, and that’s crazy. It’s time we stopped it.

Among the specific measures Reagan supported to increase tax fairness was an increase in the tax on capital gains to 28 percent from 20 percent.

From Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. Bartlest is partially wrong on one point - the earned income credit - mostly aimed at low income families - was a bi-partisan effort. remember when every once in a while Washington would do something good and bi-partisan. Conservatism has become a joke. It ran up massive deficits and as Dick Cheney explained - "deficits don't matter". Then that Democratic guy became president and suddenly deficits became urgent. Only conservative busted the economy - not a good time to focus on deficits. A time when sane people would focus on rising revenue from the people that can most afford it - the very wealthy.

The knuckle draggers at Breitbarf are trying to recycle the Bill Ayers meme against Obama. Not able to find any actual damning evidence they just make things up - because having all the integrity of a cockroach is a conservative value - #Breitbart.com Bombshell Exclusive: Professor Did Not See Barack Obama at Bill Ayers’ House!

Why Does Mitt Romney Hate Retired Americans and the Disabled

What Does Mitt Romney Hate Retired Americans and the Disabled

Mitt Romney’s proposals to cap total federal spending, boost defense spending, cut taxes, and balance the budget would require extraordinarily large cuts in other programs, both entitlements and discretionary programs, according to our revised analysis based on new information and updated projections.

For the most part, Governor Romney has not outlined cuts in specific programs. But if policymakers exempted Social Security from the cuts, as Romney has suggested, and cut Medicare, Medicaid, and all other entitlement and discretionary programs by the same percentage — to meet Romney’s spending cap, defense spending target, and balanced budget requirement — then non-defense programs other than Social Security would have to be cut 29 percent in 2016 and 59 percent in 2022 (see Figure 1). Without the balanced budget requirement, the cuts would be smaller but still massive, reaching 40 percent in 2022.

The cuts that would be required under the Romney budget proposals in programs such as veterans’ disability compensation, Supplemental Security Income (SSI) for poor elderly and disabled individuals, SNAP (formerly food stamps), and child nutrition programs would move millions of households below the poverty line or drive them deeper into poverty. The cuts in Medicare and Medicaid would make health insurance unaffordable (or unavailable) to tens of millions of people. The cuts in non-defense discretionary programs — a spending category that covers a wide variety of public services such as elementary and secondary education, law enforcement, veterans’ health care, environmental protection, and biomedical research — would come on top of the deep cuts in this part of the budget that are already in law due to the discretionary funding caps established in last year’s Budget Control Act (BCA).
Box 1: The Romney Tax Cuts and Our Estimates

Governor Romney has said he would offset an unspecified portion of his proposed tax cuts by reducing tax exemptions, deductions, and other preferences known as “tax expenditures.” Because of Romney’s spending cap (which covers interest payments along with other spending) and his balanced budget requirement, the depth of his required budget cuts depends on the degree to which the cost of his tax cuts would be offset through reductions in tax expenditures. In this analysis, we assume that Governor Romney would offset half of his proposed tax cuts, though we also provide estimates under alternate assumptions. This is a generous assumption: estimates from the Urban Institute-Brookings Tax Policy Center indicate that the Romney tax cuts would cost about $4.9 trillion over ten years. Securing tax-expenditure savings equal to half that amount — about $2.4 trillion — would be extremely difficult, especially since Governor Romney has said he would not increase the low tax rate on capital gains and dividend income and would not cut heavily into tax expenditures for the middle class. Analysts at the Congressional Research Service recently concluded that securing savings of more than $100 or $150 billion a year from tax expenditures is likely to be difficult to achieve.

As explained below, our estimates of the depth of spending cuts that the Romney proposals would require are broadly consistent with what Governor Romney himself has said about the magnitude of his spending reductions. These updated estimates are based on new information and proposals from the governor, updated budget and economic projections from the Congressional Budget Office (CBO), modifications in our own assumptions about “current policy” to match those that CBO and other budget analysts use, and other relevant factors.

Governor Romney’s cuts would be substantially deeper than those required under the austere House-passed budget plan authored by Budget Committee Chairman Paul Ryan (R-WI). Over the 2014-2022 period, Romney would require cuts in programs other than Social Security and defense of $7 trillion to $10 trillion, compared with a little over $5 trillion under the Ryan budget. By 2022, Romney’s cuts would shrink non-defense discretionary spending — which, over the past 50 years, has averaged 3.9 percent of gross domestic product (GDP) and has not fallen below 3.2 percent — to between 1.1 percent and 1.6 percent of GDP.
The Romney Budget Proposals

During his campaign, Governor Romney has made four proposals that would significantly affect the overall level of federal spending, taxes, and the deficit:

    Cap total spending:  "Reduce federal spending to 20 percent of GDP by the end of my first term" and "cap it at that level."[1]
    Increase defense spending:  "Set a core defense spending floor of 4 percent of GDP."[2]   "Core defense spending," as Governor Romney defines it, encompasses 93 percent of the national defense budget function.
    Cut taxes:  Continue current tax policy by permanently extending the 2001 and 2003 tax cuts and other tax cuts that are scheduled to expire, further reduce income tax rates by another 20 percent (the top tax rate thus would be 28 percent), eliminate the estate tax, eliminate the taxation of investment tax for people other than those with high incomes, reduce the corporate income tax, and repeal the taxes enacted in the 2010 health reform legislation.[3] 
    Balance the budget:  "I am planning on getting a balanced budget."[4]

This paper examines the combined effect of these four proposals, since they interact, to determine the amount of spending that would be available for programs other than core defense.

because it has been generally such a well run program Medicare costs have risen much slower and lower than private insurance costs. Mitt Romney's plans would accelerate medicare costs to exceed those of private insurance - imagine seniors having to pay 29% to 59% more out of their pocket.

Time for the Department of Justice to Investigate Criminal and Currently Gov of Florida Rick Scott For Purging Eligible Voters From Florida’s Rolls

Mitt Romney Embraces the flip-flop to pander to extreme conservative voters, Romney Campaign Attacks Stimulus Mitt Once Supported

Who Killed Womens Jobs? The Conservative Republican Pretend Patriots

Who Killed Womens Jobs? The Conservative Republican Pretend Patriots

Yesterday on Meet the Press David (the GOP Talking Point Spigot) Gregory peppered Treasury Secretary Tim Geithner on the issue of jobs losses faced by women under President Obama.  Most news items covering his response have only pointed out the first said...

    "It's a ridiculous and misleading way of looking at the economy"

You can find that quote as the headline at the L.A. Times,, ABC News, Business Insider, Politico, and CBS News among others.

But what I found more interesting is what he said next.  He pointed out that many of the job losses that have occurred while Obama has been President have been in the Public Sector and that's has disproportionately affected police, firemen, nurses and Teachers who are overwhelmingly female.

    I asked Geithner about the technical accuracy of the Romney claim and he explained “this crisis was a very damaging crisis, hurt everybody.  And it began in, as you know, in early 2008.  And a lot of the early job losses in 2008 affected men, because they affected construction and manufacturing. And as the crisis spread and state and local governments were forced to cut back on services and fire a lot of teachers, that caused a lot of damage to women, too.”

Politifact Rated the Romney claim as Mostly False and correctly noted that it come from the BLS:

    Romney’s campaign pointed to U.S. Bureau of Labor Statistics employment figures from January 2009, when Obama took office, and March 2012, for all employees and for female employees.

    Here they are:

    * Total Nonfarm Payroll Jobs:

    January 2009: 133,561,000

    March 2012: 132,821,000

    Net loss: 740,000 jobs.

    * Total Female Nonfarm Payroll Jobs

    January 2009: 66,122,000

    March 2012: 65,439,000

    Net loss: 683,000 jobs.

    They then divided the net loss among women by the total net loss and came up with 92.3 percent.

Although the number is technically true, it doesn't tell the complete story as noted by former Reagan Official Bruce Bartlett:

    "To the extent there have been excessive job losses among women, a lot of it has to do with the fact that there has been an enormous reduction in state and local government employment," Bartlett said. "The decline ... has been especially pronounced in this recession as opposed to other recessions."

This is what the loss of public sector jobs looks like compared to private sector gains under President Obama.

It's not like the GOP has necessarily been a fan of job growth among the public sector.

    "Over the last two years since President Obama has taken office, the federal government has added 200,000 new federal jobs," Boehner said. "And if some of those jobs are lost in this, so be it. We're broke. It's time for us to get serious about how we're spending the nation's money."

And the Center for Budget and Policy points out, State Budgets have been hit hard by this Recession.

    The Great Recession that started in 2007 caused the largest collapse in state revenues on record. Since bottoming out in 2010, revenues have begun to grow again, but states are still far from fully recovered. As of the third quarter of 2011, state revenues remained 7 percent below pre-recession levels, and are not growing fast enough to recover fully soon.

    Meanwhile, states' education and health care obligations continue to grow. Next year, states expect to educate 350,000 more K-12 students and 1.7 million more public college and university students in the upcoming school year than in 2007-08.[2] And some 5.6 million more people are projected to be eligible for subsidized health insurance through Medicaid in 2012 than were enrolled in 2008, as employers have cancelled their coverage and people have lost jobs and wages.[3]

    Consequently, even though the revenue outlook is trending upward, states are still addressing large budget shortfalls by historical standards as they consider budgets for the upcoming year. In some states with two-year budget cycles, projected shortfalls for fiscal year 2013 have already been closed through spending cuts and other measures scheduled to take effect in the next fiscal year, but in the majority of states they must be closed through legislative action in the coming months in order to meet balanced-budget requirements. Extremely large shortfalls addressed in recent years have led to deep cuts in critical public services like education, health care, and human services; the new shortfalls likely will prompt legislators to make further cuts in those areas on top of those already enacted.

And in which states have those public sector cuts been the worst?  You guessed it - in Republican Controlled States.

    The 11 states that the Republicans took over in 2010 laid off, on average, 2.5 percent of their government workforces in a single year. This is compared to the overall average of 0.5 percent for the rest of the states. [...] [T]hese 11 states as a whole account for a total of 87,000 jobs lost, reflecting around 40.5 percent of the total.

    ...

    Texas and the 11 newly-Republican states accounted for a total of 71.5 percent of the year’s public sector job losses, even though they account for less than one-third of the nation’s public sector workers.

    ...

    Many government job losses were due, indeed, to the recession’s impact on state budgets. But in many of the newly-Republican states, the GOP made the problems worse. In Wisconsin, New Hampshire, and Maine, Republican-controlled legislators not only cut public sector jobs, they led assaults on public sector unions, targeting government workers under the guise of balancing their budgets. In those and others, Republicans exacerbated their states’ deficits with tax breaks for corporations and the wealthy, thus leading to even more public sector layoffs that didn’t take place in states that didn’t pursue similar policies.

In several states the attack on public sector jobs has exempted police and firefighters, which leaves teachers and nurses unions to take the majority of the brunt simply so that GOP could give their corporate and Wall Street buddies Bigger Tax Breaks.

The bottom line is that President Obama attempted to stop these types of job losses by extending his emergency stimulus funding to the states.  Guess who stood in the way of that?  I'll let Jeff Hayes of the Institute for Women's Policy Research say it via Politifact:

    "If you break out the 683,000 jobs women lost between January 2009 and March 2012, 64 percent were in government and only 36 percent in the private sector."

    That leads us to a point made by Eileen Appelbaum with the left-leaning Center on Economic and Policy Research. She noted that after the first wave of money in the president’s stimulus bill had run out, Obama asked for another $23 billion in "emergency aid" for state and local governments. The money was sought to avert the layoffs of as many as 300,000 public school teachers, but House Republican leaders stripped it.

    "You could hardly blame Obama for that," Appelbaum said.

There you have it, we now see who killed all those jobs for women.  It wasn't President Obama.  It wasn't Col. Mustard in the Kitchen with a candlestick.

It was the G.O.P., in the Legislature, with a Tax Cut.

Lots of charts at the link. Conservatives cannot have it both ways - cutting jobs that disproportionately affect women and older workers, then turn around and claim someone else is to blame. When a political movement is constantly contradicting itself, telling the public long convoluted stories that bury the truth in bullsh*t, that political movement never has the best interests of the people at heart.

Ann Romney's and the Conservative Republican war on women has an actual body count.

Two of The Biggest Myths of Our Time - Conservatives Are For Small Government and Freedom

Two of the biggest myths of our time - Conservatives are for small government and freedom

A new "emergency" law backed by right-wing think tanks is turning Michigan cities over to powerful managers who can sell off city hall, break union contracts, privatize services—and even fire elected officials.

When the city of Pontiac, Michigan, shut down its fire department last Christmas Eve, city councilman Kermit Williams learned about it in the morning paper. "Nobody reports to me anymore," Williams says. "It just gets reported in the press." This was just the latest in a series of radical changes in the city, where elected officials such as Williams have been replaced by a single person with unprecedented control over the city's operation and budget.

Gov. Rick Snyder put Louis Schimmel in charge of Pontiac last September, invoking Public Act 4, a recent law that lets the governor name appointees to take over financially troubled cities and enact drastic austerity measures. Under the law, passed last March, these emergency managers can nullify labor contracts, privatize public services, sell off city property, and even dismiss elected officials.

Schimmel got to work quickly, firing the city clerk, city attorney, and director of public works and outsourcing several city departments. City fire fighters were told that they would be fired if their department was not absorbed by Waterford Township's. Schimmel has proposed putting nearly every city property up for sale, including city hall, the police station, fire stations, water-pumping stations, the library, the golf course, and two cemeteries.

Williams and his six colleagues on city council have been stripped of their salary and official powers. "Nearly the whole city has been privatized," he laments.

Michigan's emergency-manager law is the centerpiece of the fiscal program enacted by state Republicans after they took over the Legislature and governor's mansion in early 2011. The law's supporters say it allows for a more efficient and nimble response to the budget crisis confronting local governments in the wake of the housing crash and near collapse of the auto industry. Critics are seeking to block and repeal what they call an illegal power grab meant to usurp local governments and break up public-sector unions.

"We haven't seen anything this severe anywhere else in the country," says Charles Monaco, a spokesman for the Progressive States Network, a New York-based advocacy group. "There's been nothing in other states where a budget measure overturns the democratic vote." Williams says emergency managers are able to enact draconian policies that would cost most city officials their jobs: "They couldn't get elected if they tried."

Benton Harbor, Ecorse, and Flint are also currently under emergency management. In Flint, the emergency manager has promised to restructure collective bargaining agreements with the city's police and firefighters unions. Benton Harbor's emergency manager banned elected officials from appearing at city meetings without his consent. Detroit, which is facing a more than $150 million budget shortfall, could be next: Mayor Dave Bing has proposed laying off 1,000 city workers and wrung concessions from public-sector unions in hopes of preventing Gov. Snyder from appointing an emergency manager.

Schimmel has pursued the most aggressive turnaround plan in the state. He says he's simply doing what elected officials have been unable to do: execute a plan for balancing the city's books quickly and efficiently. He's not there yet: The city of 60,000 is projecting a $9 million deficit for 2012. "One thing we can't do is print money," Schimmel says. "We're always chasing the dropping knife, fixing something here and losing revenue somewhere else."

With an indefinite term and a city salary of $150,000, Schimmel doesn't answer to anyone but the governor, at whose pleasure he serves. The city council can no longer make decisions but still calls meetings, which are routinely packed with angry residents. Asked by radio station WJR if the emergency-manager law hands power over to a "dictator," Schimmel sighed, "I guess I'm the tyrant in Pontiac, then, if that's the way it is."

Emergency managers aren't new in Michigan, which has been in dire financial straits for decades. Public Act 4 (officially titled the Local Government and School District Fiscal Accountability Act) beefed up a 1990 law that brought in state-appointed managers to several cities in the 2000s, without much success at stemming the flow of population, jobs, and tax revenue. Pontiac has been under some form of state-appointed management since 2009. Schimmel's predecessor laid off dozens of police officers, hired the county sheriff to patrol the city, and dismissed Mayor Leon Jukowski (whom Schimmel has rehired as a consultant paid at half his previous $104,000 salary). During that time, Pontiac's credit rating had dropped from B to triple-C. "They aren't creating revenue," Williams says of the managers. "You can't just cut your way out of a deficit."

Pontiac is not Schimmel's first clean-up job. In 2000, he was named the emergency manager of Hamtramck, where he served for six years. In 1986, a judge appointed him to oversee Ecorse's finances after the city landed in state receivership; he stepped in and privatized city services. Today, the city is back in debt, and back under state management. Schimmel concedes that the privatization strategy can backfire, but he blames inept local government. "If you don't have an overseer of the contractor, privatization can be much more expensive than in-house services," he explains.

Schimmel is also a former adjunct scholar and director of municipal finance at the Mackinac Center for Public Policy, a free-market think tank that shares his enthusiasm for privatizing public services. The center has received funding from the foundations of conservative billionaire Charles Koch, the Walton family, and Dick DeVos, the former CEO of Amway who ran as a Michigan Republican gubernatorial candidate in 2006.

Conservatives say they are the intellectual descendants of the Founders. Where did the Founders say that officials elected by the people are be arbitrarily replaced by little dictators that represent the interests of crazy right-wing corporations and think-tanks. Thus far these little dictators cannot even claim that privatizing everything in sight solves budget problems. If you privatize the fire department the people should have to pay the corporation that owns the fire service. The only thing these anti-American conservatives and libertarians have done is place a middleman - a corporation that has to make a profit - in the mix. Adding a level of unaccountable bureaucracy.

Liberal media? Why is the conservative media not calling out Mitt Romney's lies?

Liberal media? Why is the conservative media not calling out Mitt Romney's lies?

Steve Benen flags a Mitt Romney interview with Mark Halperin, in which Romney pushed back on criticism of his Bain years by claiming that Obama didn’t create “any new jobs.” Romney said:

    “I’ll compare my experience in the private sector where, net-net, we created over 100,000 jobs. We created over 100,000 jobs. I’ll compare that record with his record where he has not created any new jobs. This President has seen a reduction in jobs, 25 million people out of work or stop looking for work or in part-time jobs needing full-time employed. So, we’ll have that debate. ”

Halperin didn’t bother challenging Romney on this claim. But as Steve notes, according to the Bureau of Labor Statistics, the private sector has added around 2.3 million jobs since March of 2010.

Not only that, but it’s clear Romney knows it’s false to make this claim. In previous statements, the Romney campaign has been careful to qualify this assertion by saying that Obama didn’t create a single “net” new job. That’s an accurate claim in the most narrow of technical terms. The situation that Obama inherited was so catastrophic that the economy continued hemorraging jobs at a furious rate for months and months until Obama’s stimulus kicked in; as a result, the numbers overall are still negative. But even that assertion ignores the fact that the stats clearly show that job loss slowed, and eventually turned around into job gain, once Obama’s policies began taking effect. Romney must know the claim that Obama didn’t create “any new jobs” is false. (see chart above for how the jobs cycle started to recover under President Obama).

Did Romney mean to make a comparison of net numbers? Perhaps, but Romney did say that Obama didn’t create any “new” jobs.

Either way, Halperin didn’t press him for any clarification. And there’s good cause to believe that Romney meant to make this claim in its false incarnation. He has also repeatedly claimed that Obama made the economy “worse,” even though that assertion, too, has been debunked.

Look, Romney is going to make the claims that Obama didn’t create any jobs, and that he made the economy worse, countless times between now and next fall. They will be central to his entire campaign rationale. Can we please start pressing him to justify it when he says this stuff?

Mitt Romney is a thoroughly corporate socialist. Take everything Marx said in The Communist Manifesto and substitute corporate collective for collective and you get what Romney and Wall Street conservatives believe in.

Federal Workers Are Underpaid Compared To Their Private Sector Counterparts, Despite What Flawed Republican Study Says

Federal Workers Are Underpaid Compared To Their Private Sector Counterparts, Despite What Flawed Republican Study Says

To hear Republican presidential primary candidates tell it, the federal workforce under President Obama has experienced ballooning job growth and huge wage increases. Such claims are a staple of Rep. Michele Bachmann’s (R-MN) stump speeches, and for months, former Massachusetts Gov. Mitt Romney (R) has promised to bring the rest of the workers’ pay into line with comparable employees in the private sector.

Speaking at the Koch brothers-backed Americans for Prosperity annual summit Friday, Romney repeated this pledge, saying the pay gap between public and private workers “must be corrected.” “Public servants shouldn’t get a better deal than the taxpayers they work for,” Romney added.

But if Romney truly wants to match the pay of public employees to that of private workers, he would have to give the federal workers a raise, according to a new report from the Bureau of Labor Statistics. And such a raise wouldn’t be a small one — according to the report, federal workers are underpaid compared to their private sector counterparts by an average of 26.3 percent, and that gap is widening, the Washington Post reports:

    The federal government reported Friday that on average, its employees are underpaid by 26.3 percent compared with similar non-federal jobs, a “pay gap” that increased by about 2 percentage points over last year while federal salary rates were frozen.

When asked if, given the BLS report, Romney was promising to give federal workers a raise should he become president, a Romney campaign spokesperson sent ThinkProgress a report from the conservative Heritage Foundation that said federal workers “receive 30 to 40 percent more in compensation than private-sector employees” once wages and benefits were included. “The federal pay system gives the average federal employee hourly cash earnings 22 percent above the average private worker’s. Including benefits raises the average compensation disparity to between 30 and 40 percent,” James Sherk, the report’s author, wrote.

The Project on Government Oversight (POGO) took an extensive look at the Heritage study, however, and found that it was riddled with errors and “methodological problems that call into question the validity of its findings and recommendations.” The Heritage study, for instance, used a BLS survey with a much smaller sample size than the one normally cited in such reports, leading to distortions in its analysis of federal worker pay. In fact, POGO found that the less reliable data distorted Heritage’s wage differentials by 21 to 146 percent.

When I was growing up a lot of the older adults - relatives and their friends - who worked for the government used to complain about their pay, but they always ended by saying that at least they have more job security than the big corporations that would lay off thousands of people every year. I think that is why some people still prefer government work even though state and federal government has slashed payrolls over the last 5 years.

Poll: 50 Percent Say GOP Is ‘Intentionally Stalling’ Economy To Hurt Obama

Five Reasons Patriots Should Move Their Money From Bank Of America

Five Reasons Patriots Should Move Their Money From Bank Of America

As hundreds of people remain encamped on Wall Street in New York City, and thousands of people across the country are taking part in a 99 Percent Movement aimed at battling economic inequality spurred on by enormous income gains by the richest one percent of Americans.

One of the financial institutions being targeted by protesters is foreclosure mill and government bailout recipient Bank of America (BOA). In Boston, thousands of people marched against BOA’s greed and in Los Angeles, numerous people were arrested while staging a sit-in at a local branch.

While many Americans may feel powerless against this banking behemoth, the truth is that Americans have a simple way to protest its greed and corporate malfeasance: simply move your money out of the bank to one of its competitors, such as a local credit union. Sen. Dick Durbin (D-IL) recently encouraged Americans to do just that.

ThinkProgress has assembled five reasons why American consumers could consider moving their money and striking a blow to this abusive banking giant:

    1. Bank of America Just Unveiled A Shocking New Debit Card Fee: Late last month, BOA announced that it would start charging a $5-a-month fee simply for consumers to use their debit cards for purchases. Although a few of its competitors have started using similar fees in recent times, BOA’s presence as America’s largest banking chain means that if it successfully enacts such a fee, it may be able to set a trend in the industry to make such charges the norm. More than 137,000 Americans have signed an online change.org petition protesting the fee. Most credit unions do not charge for using one’s debit card, and one credit unions, Delta Credit Union based in Atlanta, is even holding a “Switch Day” to encourage BOA’s customers to switch over to its services instead.

    2. Bank of America Has Spent Millions Lobbying To Gut Reforms With Your Tax Dollars: Despite being bailed out to the tune of billions of dollars by the federal government, Bank of America has still had the gumption to spend millions of dollars in Washington battling new reforms meant re-regulate the financial sector. It spent nearly $4 million hiring a double-digit number of lobbyists in 2010, mostly aimed at gutting legislation related to banking regulations. Meanwhile, it spent a million dollars on campaign contributions in the 2010 electoral cycle.

    3. Bank of America’s Practices Are At The Nexus Of The Foreclosure Crisis: Bank of America CEO Brian Moynihan raised eyebrows recently when he excitedly cheered for faster foreclosures of Americans’ homes. Despite being found to be a major user of error-ridden “robo-signing” foreclosure practices last year, the mega-bank only briefly halted its foreclosure proceedings nationwide. It is also facing lawsuits by multiple states over its mortgage practices.

    4. Bank of America Just Announced That It Was Laying Off 30,000 People: The “firm’s 30,000 job cuts are more than double what any other U.S.-based employer has announced so far this year, according to a employment tracking group.” The layoffs come after a decision by Bank of America, JP Morgan, and Citigroup earlier this year to “outsource IT and back office projects worth nearly $5 billion this year to India, as they seek to lower costs.”

    5. Despite The Poor Economy, Bank Of America Continues To Reward Its Executives With Multi-Million Dollar Salaries: Despite blaming economic woes for layoffs of employees and its new debit card fee, the mega-bank continues to deliver huge paydays to its executives. The bank just announced that two of its former executives, Sallie Krawcheck and Joe Price, will receive a salary of $850,000 and a payment of $5.15 million and a salary of $850,000 and a payment of $4.15 million respectively. Meanwhile, BOA maintained its CEO’s salary of $950,000 plus $9.05 million in performance-based stock awards this year.

Americans do not have to stand by and allow a mega-bank to continue to rip off its consumers, to develop and foster abusive mortgage practices, reward its executives lavishly, and shortchange own workforce. They can strike a blow against this institution by simply moving their money away from it, either to its major competitors or into the country’s large network of community banks and credit unions.

In order to facilitate this process, Rep. Brad Miller (D-NC) — shortly after meeting with Occupy Raleigh protesters in Bank of America’s hub city — has introduced the “Freedom and Mobility in Consumer Banking Act,” which would ensure that Americans “have the right to immediately close any account at any insured depository institutions on demand, without cost to the consumer, that consumers receive any balance in their account immediately, and for other purposes.” The Progressive Change Campaign Committee has launched a petition drive in support of Miller’s bill.

Americans who are afraid of the too big to fail merry-go-round should put their money into community banks and credit unions. It is one way not to have too big to fail financial institutions and another great recession in ten or twenty years..

Economics of Austerity - Serious Conservatives and The Consequences

Economics of Austerity - Serious Conservatives and The Consequences

Martin Wolf is getting frantic, as well he should. The austerians have brought us to the brink of a vast disaster. A recession in Europe looks more likely than not; and the question for the United States is not whether a lost decade is possible, but whether there is any plausible way to avoid one.

Wolf directs us to a recent speech by Adam Posen (pdf), which opens with a passage that very much mirrors my own thoughts:

    Both the UK and the global economy are facing a familiar foe at present: policy defeatism. Throughout modern economic history, whether in Western Europe in the 1920s, in the US and elsewhere in the 1930s, or in Japan in the 1990s, every major financial crisis-driven downturn has been followed by premature abandonment—if not reversal—of the macroeconomic stimulus policies that are necessary to sustained recovery. Every time, this was due to unduly influential voices claiming some combination of the destructiveness of further policy stimulus, the ineffectiveness of further policy stimulus, or the political corruption from further policy stimulus. Every time those voices were wrong on each and every count. Those voices are being heard again today, much too loudly. It is the duty of economic policymakers including central bankers to rebut these false claims head on. It is even more important that we do the right thing for the economy rather than be slowed, confused, or intimidated by such false claims.

Indeed. Posen’s “unduly influential voices” are my Very Serious People. And it has been an awesome spectacle watching the VSPs search, obsessively, for reasons not to fight mass unemployment. Fiscal policy must tighten to appease the invisible bond vigilantes and please the confidence fairy. Interest rates must rise because, well, um, inflation, well, no, low rates cause moral hazard — yes, that must be it.

And we’re not (just) talking about ignorant politicians. This stuff has been coming from the European Central Bank, the Organization for Economic Cooperation and Development, the Bank for International Settlements.

I don’t fully understand it. But a large part of it, it seems obvious, is the intense desire to see economics as a morality play of sin and punishment, where the sinners are, of course, workers and governments, not the bankers. Pain is not an unfortunate consequence of policies, it’s what is supposed to happen.

How obsessive are these people? So obsessive that when the financial doom they predict fails to materialize, they consider this a bad thing: punishment must be administered, so what are the markets waiting for? Here’s Alan Greenspan a while back:

    Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.

Gosh, it’s regrettable that the markets aren’t confirming my warnings! And today Ronald McKinnon laments, yes, laments the failure of the invisible bond vigilantes to show themselves — they’re supposed to be “disciplining the government”, so why aren’t they here?

Just to reiterate a point I’ve made before, none of this reflects actual economic theory. Throughout this crisis, people like Adam Posen and yours truly have been basing our arguments on standard textbook macroeconomics, whereas the Very Serious People have been making up stories on the fly to justify their calls for pain. As Wolf, who really seems to have eaten his Wheetabix, puts it,

    The waste is more than unnecessary; it is cruel. Sadists seem to revel in that cruelty. Sane people should reject it. It is wrong, intellectually and morally.

And this cruelty rules our world.

We have never cut spending and taxes to turn a corner during a recession. No country has ever cut spending to the bone to recover from a economic downturn. America cannot cut spending as a way to recovery. Don't worry if you disagree, the serious people, the cruel people, the people who do not have clue, are winning and the world is likely yo to fall back into another bad recession as a result.