Well.  It’s official.  Not only do we have an economic crisis, but now we have an economic debate crisis…. apparently that is.

Why is it so important?

Easy… because without being able to spend more money than we can realize in revenue through taxation, we’re all going to die.  Just look around, this theoretically historically unprecedented permanently damaging possibility is sure to end the Republic as we know it:

President who tells us our senior citizens and military members will not get paid….

Bernake warns of catostrophy…

For others, our national security is at stake…. in fact, Al Qaeda itself might attack just because of this!

& on and on….

 With all of that looming, it’s not wonder someone has to be at fault….

There are alternative answers to defaulting itself, for instance let’s get rid of the ceiling altogether.  Or maybe, since a five dollar treasury bond and a five dollar bill are virtually the equivalent, why not give out more IOUs in a different form thereby removing the need for the ceiling in the first place?

But those ideas are centrist, so largely ignored and with a problem this large… someone has to be to blame.

So who is at fault?

Maybe the Tea Party’s fault?  Or maybe, like much of everything else, it’s Bush’s fault?  How about Governor Norquist?!?!

Or maybe there is no maybe.  Ask the brilliant policy minds over at The Rolling Stones, and they’ll tell you, that without question it’s the GOP’s fault.

For the logic minded, one might contend that the President, who refused to pass this perfect budget a year ago when his party controlled both legislative houses shares some blame.

But what do I know…. according to some Barack supporters, his only problem is being too much like the Big Gipper, the famous “let’s raise taxes” President…

The issue is, when you push predictions of doom and gloom for some scenario, blame has to be affixed quickly and preferably without relation to actual facts as that just muddies the waters.  Nope, the goal for almost every writer, seems to be scare tactics followed by blame.

There are a couple who have offered advice.  HBR for one had an interesting post about needing a moderator, perhaps Adam Smith.  It’s not an unpleasant thought and certainly a brilliant economic mind serving as moderator cannot help, but what most struck me about their advice is the same thing that struck me about most of those pieces blaming this or that: it misses who is truly responsible.

For when HBR states the Debt Ceiling Debate needs a moderator, I have to stop and say, they already do: the American public.  Certainly one could make the argument that the current moderators are abdicating their responsibilities and I might agree, but as much as one can delegate tasks, authority and responsibility cannot be delegated.

So sure, the public collectively can give moderator powers to Adam Smith or someone similar but alive, however the responsibility for the consequences of that process will still be the American people.

So…. is there a debate crisis?

Maybe not… as while many of us individually and seemingly ever single writer might view this whole process as out of control; seeing the whole thing as a demonstration in nothing more than the problems with this country, these are just mere opinions.

In all honesty, I’m sympathetic to that view.  However, the market place of ideas is free.  & If you analyze politics like one does the market, with the idea being the result cannot be wrong as the market is not wrong…

Then I think based upon the current political result I would submit a large enough percentage of voters have already cast their vote to continue the political infighting, applaud Pyrrhic victories, and any number of other actions which are designed to benefit their collective and not the average individual.

As proof of this reality, see incumbency rates, or polls which say cut things, but say no to all questions about what to cut, the current press articles being created because people are buying them, and more.  But even without those facts, the logic is simple: the current debate has to be ok with society at large because a free people is watching it happen and doing nothing, in a concerted effort, to substantially change anything.

So by virtue of its mere existence, it is the correct debate needed at this time.

& if it’s not?

Well, as Lincoln stated <paraphrased here>  ”As a nation of free men, we will live forever, or die by suicide.”

Infinite Monkey Theorems

Headlines 

Worth Reading 

….or at least pondering and forgetting….. 

From the First Amendment Center, the new Alabama governor displays amazing religious intolerance and arrogance.  I thought this was 2011….. (whole thing here): 

BIRMINGHAM, Ala. — Alabama Gov. Robert Bentley told a church crowd just moments into his new administration that those who have not accepted Jesus as their savior are not his brothers and sisters, shocking some critics who questioned yesterday whether he could be fair to non-Christians. 

“Anybody here today who has not accepted Jesus Christ as their savior, I’m telling you, you’re not my brother and you’re not my sister, and I want to be your brother,” Bentley said Jan. 17, his inauguration day, according to The Birmingham News. 

From the Obama Administration: Remember Obamacare?  Which was going to add 39 million previously uninsured people to the status of insured (here via CBO)?  

Well, here we are in 2011 – a time when Obamacare is *not* implemented and the provisions that have gone into effect only went into affect on January 1, 2011. 

Apparently that’s a very long time though….. as according to the WhiteHouse via the Department of Health and Human Services, repealing Obamacare will put 129 million insured at risk (here via HealthCare.gov). 

Seriously?  I wonder if DHHS is still accepting information on those (here via DA) dealing in misinformation with regards to Obamacare? 

From Wired, a meaningless, and based upon presented evidence, a false headline [emphasis added] Supreme Court Upholds Intrusive Government Background Checks.   

The actual article?  

The Supreme Court ruled that private contractors working for the government cannot be shielded from background investigations based upon a right to privacy.  That government contractors can in fact, by virtue that they are basically government employees, be treated just as any other federal employee. 

Maybe it’s just me, but subjecting yourself to a background check that resembles the exact same background check of others you work with doesn’t seem to be intrusive.  

Which is irregardless for Wired anyway, as even *if* this decision could be argued logically as intrusion, the article doesn’t even attempt to offer proof of such an assertion. 

From eScience News, US Office of Naval Research announces big news on the “Cool Things That Kill” front (here): 

Scientists at Los Alamos National Lab, N.M., have achieved a remarkable breakthrough with the Office of Naval Research’s Free Electron Laser (FEL) program, demonstrating an injector capable of producing the electrons needed to generate megawatt-class laser beams for the Navy’s next-generation weapon system. 

Artist's Rendering "PHALANX WITH LASER CANNON" Source: Raytheon

To put a little context into what megawatt means (1,000 kilowatts), Scientific American reports in July 2010 (here): 

In a grainy, black-and-white video that looks like a home movie of a UFO attack a sleek aircraft streaks through the sky one minute, only to burst into flames the next and plummet into the sea…. 

Using a 32-kilowatt laser (article cont’d): 

The defense contractor says it depicts part of a test conducted in May during which the U.S. Navy used a solid-state laser to shoot down unmanned aerial vehicles over the Pacific Ocean…. 

& Lastly – ESO’s Hidden Treasure Contest reveals winner (here): 

M78 for ESO Processing contest. WFI camera on 2.2m telescope

Hidden Treasures gave amateur astronomers the opportunity to search ESO’s vast archives of astronomical data for a well-hidden cosmic gem. Astronomy enthusiast Igor Chekalin from Russia won the first prize in this difficult but rewarding challenge…. 

More amazing astronomical artwork here: Top 100 from ESO

Well, we’re a week out from the terrorist attack launched by one lone individual on a small political gathering in Arizona and the trend is clear:  idiocy continues to press forward, non-exploitation of this tragedy seemingly illusory.

This time up, it’s Representative Peter King of NY.  Not to be outdone by Paul Krugman’s idiocy, Mr. King is trying to parlay one lone gunmen into a brand new set of gun control laws (here):

Rep. Peter King (R-NY) called for the gun-free zone in the immediate vicinity of federal officials…. he planned to introduce legislation next week incorporating his proposal….

It should seem obvious that this legislation has little chance of preventing or even acting as a deterrent to another such terrorist act, but not surprising the legislation is being pushed anyway.

As is usual with any legislation, it existed prior to the ‘crisis’ which was used as reasoning to pass it right now.  Truly the only way in which this is related to the Arizona shooting at all is in timing (article cont’d):

But many lawmakers have been concerned about the safety of themselves and their aides since Saturday’s shootings in Tucson and might be more open to King’s proposal than they would have been a week ago.

In a more perfect world, maybe we could point to this as the exception of a reasoned public debate, unfortunately this is just one of the idiotic ideas being pushed.

Their commonality?  Almost all arguments brought to the public so far ignore the very essence of a society: its culture.

Which is insulting to a degree; to think that given the wrong language or opportunity to carry a weapon near any sacred politicians, the average citizen might well use violence as a standard debate tactic.  However in America, and indeed most civilized societies, a basic thought is held by the vast majority of citizens is that the proper response to speech is speech.

For instance, we all know exactly what it means to say “sticks and stones” and as a society, we have a pretty firm belief that no matter what someone says to you, no matter how disgusting, no matter how insulting, violence is never an appropriate response to words.

To juxtapose, let’s look at the Islamists.

Their  religious and moral leaders constantly tell followers that violence is an appropriate solution to perceived or real slights.  They argue not just that violence is an answer, but specifically that it is a respectable solution even when it’s being used against those who are only using speech.

Remember the Mohammed cartoons?  That was 2005, but even in mid-2010 (more…)

President Obama is planning to sign an executive order to review business regulations (via LA Times here):

WASHINGTON (AP) — Taking another step toward mending his relationship with the business community, President Barack Obama will order a review of federal regulations with an eye toward getting rid of those that stifle job creation and hurt economic growth.

Upon hearing this news, I was immediately reminded of the Simpsons’ episode.  The episode is about NASA, who having problems with funding, decides to put an average man in space for marketing purposes.  The press conference (here):

Scientist: Ladies and gentlemen and members of the press.  I’d like to
           present the new generation of NASA astronauts: the average
           American.
            [Curtain rises to show Homer wearing a "Hail to the Chef"
           apron and Barney dressed as a golfer]
Reporter: Jim Wallace, Associated Press.  [clears throat] Is this a
           joke?
Scientist: [cheery] Far from it, Jim.  One of these men will prove space
           travel is within the reach of the common man.
Reporter: Toby Hunter, Minneapolis Star.  No really, is this a joke?
Scientist: No, Toby, and no more questions about whether this is a joke.
            [Everyone lowers their hand, dejected]

Please don’t misunderstand – I’m hoping, like a lot of people, that the President is serious about this.  However, almost every single action taken by this administration shows an absolute love of controlling by regulations, even when no obvious reason for doing so exists.

This is after all the same President who gave us an executive order which prevented anyone from drilling for oil offshore due to one oil spill on a platform owned by BP (DA post here). 

This was all prior to the government report released late last year, which held BP accountable, but even after blaming BP for the entirety of the incident, they announced a month later continued blanket regulations against an all of the industry.

Even the President’s own fact finding commission is wondering what many others questioned before – what is this continued ban is supposed to fix?  They plan to press the administration on the issue soon.

And that’s just regulations for a small part of the energy industry.  This is also the same administration who pushed for financial reform.  Financial reform which as pushed before they had anyone had any idea what took place.  The reform which included controls on market segments which are known to have little to no impact on the financial crisis like hedge funds, derivatives, executive compensation and more (here & here).  (more…)

The news about falling jobless claims has been continuing over the past couple months as new claims began to fall in late November, kicking off media reports in December about how great things were trending. In fact, not only were jobless claims receding, but even the 4 week moving average (here via ActionForex):

Initial unemployment insurance claims fell 34,000 to 388,000 for the week ending December 25th. The 4-week moving average of initial claims, a better indication of the underlying trend in labor markets, slipped to 414,000 from 426,500 the prior week….

Now for those of you unfamiliar with the end of the year in the United States, there’s this little holiday known as Christmas.  & with religious aspects aside, usually during Christmas in the US we see a great deal of increase employment due to need based solely upon Christmas cheer spending.  There are part time employees hired in all kinds of capacities such as catalog companies, larger retail stores, and even in restaurants as they see increased traffic as well.

Many actually interested in publishing accurate information, mentioned this repeatedly (article cont’d):

…This report needs to be viewed with a degree of caution given the significant volatility associated with the seasonal factors surrounding the Christmas holiday period and uncertainty as to whether these declines will be sustained….

Other accurate voices also noted another corollary; jobless claims drop for other reasons (here via ChicagoNow):

The national jobless rate for December dropped to 9.4% from 9.8% the previous month.  Unfortunately, the decline in jobless claims only dropped because 260,000 American job seekers stopped looking for employment last month,…

But you know - there’s reality & then there’s politics.  So many voices, quite pleased with a minor decrease of unemployment claims and quite willing to ignore the volatile season and other factors were ready to go to work.  After all, the numbers seem good for the President (here):

President Obama got some early New Year’s cheer Thursday — a positive report on jobless claims that increases the chances that next week will bring the first drop in the unemployment rate since June….

So why shouldn’t he market the glowing numbers on his website (here):

The number of Americans applying for unemployment benefits fell sharply last week, a positive sign that the U.S. job market is slowly improving….

With headlines everywhere reading this is the lowest rate in jobless claims since 2008 (here – they have pretty graphs too):

….The traditional interpretation suggests that the U.S. labor market, which has been a headwind for the economy, is improving as the economy slowly accelerates into the new year. New applications for unemployment assistance decreased by 34,000 to 388,000 (week ending December 25th). That is the lowest level since July 2008….

Prompting Mr. Obama himself to declare success (here via Bloomberg):

President Barack Obama said U.S. job growth is improving after a government report showed employers added 103,000 jobs last month and the unemployment rate fell to 9.4 percent in December from 9.8 percent in November.

In his weekly radio and Internet address, Obama today credited steps taken by his administration to reduce taxes and encourage business investment with helping to restore economic confidence and boost hiring….

The problem is that none of this matches reality. As was noted by many when the unemployment numbers were looking just great…. some employees stopped looking for jobs altogether and others were hired only for seasonal work. So the natural uptick is here via The Street:

The number of Americans filing unemployment claims unexpectedly rose last week, the Labor Department said early Thursday….

Don’t misunderstand, even with the uptick in jobless claims, there are still things that seem positive overall (article cont’d):

The four-week moving average in initial claims, which smoothes the volatility in week-to-week reports, was 416,500, an increase of 5,500 from the previous week’s revised average of 411,000….

Irregardless of what politicians and pundits say (even Nobel Prize winning ones), no matter how many people, no matter their collective resumes or IQs, no matter their fervor, and even for POTUS, or the Chair of the Fed Reserve, or their positions in life don’t matter to the two, very real things we actually know:

1) It’s too early to tell whether the volatility of the recent holiday season will or does have any impact on unemployment trends as a whole.

2) Even if the trend holds and the President claiming credit turns out to be prescient versus premature, let’s not forget.  We spent 1 trillion more dollars to keep the unemployment rate below 8% & by 2011, it should be around 7% (here via DA):

As all politicians told us not too long ago, without passing several “stimulus” bills quickly… way too quick to read (anyone remember the Patriot Act?), everyone would soon be looking for jobs as unemployment sky rockets.  Remember the 1.5 million jobs that would be saved?

So in the end, time will tell us what we know: increased regulations and taxes strangle business and decrease job growth and economic output.

For now, just remember the people telling you how great US economics are trending and how responsible their policies are for these successes are still a mile behind where they told us we’d be just a couple years ago.  As one other thing we do know, we’re still doing worse off than the government told us we would be doing had they one absolutely nothing (~10% higher UE than they predicted).

& when noting the fact that the stimulus they begged for and got; things make it look that much worse as we’re about ~50% higher than the government prediction:

Source: Michael’s Comments blog

A DA Post earlier this week (here) wondered if the level of rhetoric during the tax debate, like calling for pitchforked mobs or referring to the GOP as terrorists, seems a little odd now that we have President Obama’s compromise which includes continuing the same tax basis for all.

The President has even argued in that no so distant past (2009) that raising taxes during a recession was bad policy, but apparently he is now against the policy he was sort of for, but then again against….

Speaking on Monday he explains what really, really, might, sort of be true, depending upon whether he’s for it or against it… (whole thing here):

…A few minutes later, Chuck Todd of NBC News asked the president what he had to say to fellow Democrats. That prompted a different analogy – that he was trying to prevent harm to the American people, who were essentially being held hostage in the tax debate.

Quick side bar – I wonder how the voters who just sent this group of legislators to Washington DC feel about being associated with hostage takers?  Meh, probably nothing.  Continuing:

“I think it’s tempting not to negotiate with hostage-takers, unless the hostage gets harmed,” Mr. Obama said. “Then people will question the wisdom of that strategy.”

With all due respect, I think people should be questioning the wisdom of a sitting President who seems to be so insecure about a recent decision, that he feels the need to use inflamatory rhetoric in order to distance himself.

Though seen through this light, the Democrats’ prior inflamatory statements probably fits into the overall strategy for re-election.  When the President can “trumpet” the tax deal, while other top Democrats talk about the inevitable “screwing” without the deal, then you can see a basic strategy to take credit for the deal most Americans agree with, while simultaneously distancing himself from the deal his backers don’t like (poll info here).

But the best part of the President’s discussion on this issue has to be this:

“I don’t think there’s a single Democrat out there, who if they looked at where we started when I came into office and look at where we are now, would say that somehow we have not moved in the direction that I promised,” he said. “Take a tally. Look at what I promised during the campaign. There’s not a single thing that I’ve said that I would do that I have not either done or tried to do. And if I haven’t gotten it done yet, I’m still trying to do it.”

Which for those playing the home game means, “I know I haven’t done everything I said, but my intentions are in a good place.”

Just like the world’s worst surgeon saying something like, “I know I keep killing patients, but honestly I’m trying desperately not to”, the President is telling us directly, all that matters are his intentions.

If only it were that easy.

In the current political landscape which is America, with admissions from Senator Dodd for not reading the financial regulation he helped author (here), or Senator Baacus admitting he hadn’t read the health care reform bill he helped craft (here), you would be hard pressed to find a situation in which any politician seemingly cares about going overboard with their rhetoric, but the tax debate seemed to spark rhetoric like that only seen during war time.

Senator Menendez thinks things are sooooo bad, he calls the dealing with the GOP similar to dealing with terrorists (here):

Sen. Robert Menendez (D-N.J.) on Friday compared the tax-cut fight with Republicans to negotiating with terrorists…

& not to be outdone, Senator McCaskill thinks pitchforks and violence are needed (continued):

…while Sen. Claire McCaskill of Missouri suggested Americans might need to “take up pitchforks” if Congress renews tax breaks for the wealthy….

& let’s not forget, Senator Brown… who thinks paying people to stay home is the beginning of job growth (here):

….extending unemployment benefits that creates economic activity that creates jobs, not giving a millionaire an extra ten or twenty or $30,000 in tax cuts that they likely won’t spend,” Brown said….

No worries that Sen. Sherrod et al are wrong on the facts (here):

After the dividend tax rate came down, average dividends among the top 1% surged to $52,814 in 2004 and $83,072 by 2007. Reported dividends of the top 1% in 2007 were twice as large as the previous peak in 2000….

&

Average capital gains among the top 1% rose from $145,433 in 2002 (in 2008 dollars) to a record $427,930 in 2007….

But it does make one wonder where you go from there with their party leader has made a deal with terrorists & those deserving of pitchforks? (here):

An excellent publication overall, the Economist, is using their online debates to ask a question which doesn’t seem to have any useful answer (here):

This house believes that America’s political system is broken.

The current debaters are Matthew Yglesias, defending the motion and Peter Wehner arguing against.   In their second round of the debate, the house is winning with a full 75% agreeing to a broken US political system.

I say it doesn’t seem to have any useful answer as the most likely result from such a poll will be based mainly upon emotions.  Since most lay people don’t typically sit around and try to analyze political systems, the answers from the majority of respondents will have to fall back on other knowledge and human behavior demoonstrates this is likely to be emotions.  IE – if I like what’s going on, no fixing.  If I don’t like what’s going on, it needs fixing.

Reminds me a little of an argument I’ve seen a number of times in the health care debate.  Invariably, someone will put up a poll telling me how many people think their health care costs are too high.  & my retort stays the same, with some variation of Socratic questioning like… ”So?  Did you expect to see a poll that said most Americans want to pay more for anything?”

But I digress, the question has been asked and for Mr. Yglesias, things aren’t going well.  His baisc argument starts something like this:

American political institutions are in a period of crisis. The source of the crisis is relatively simple. Our institutions work only when leaders can reasonably expect broad bipartisan co-operation, but the emergence of more ideologically rigorous parties makes such co-operation extremely unlikely…

Which might make for a good thesis, assuming you can prove that broad bipartisan co-operation is indeed a requirement (hell, prove it’s useful…) as well as proving that more ideologically rigorous parties have come into existence.

His proof?  In the short, yet varied history of the US, he points to the last few election cycles – excluding all information about 9/11 and two wars and the nominal fact that the higher the consequence of any legislation the more ferocious the public debate – he starts his historical research by going all the way back to President Bush the younger; who entered the presidency with:

…an unprecedentedly weak electoral mandate. More voters marked their ballots for Al Gore than marked their ballots for Mr Bush. The median voter in the election supported Mr Gore. But thanks to a combination of litigation, stubbornness and the perversity of the electoral college, Mr Bush succeeded in prevailing and becoming president….

Just a quick note here – is it a little odd to start an arguement to theoretically prove that idealogically rigirous institutions are harming us, by being idealogically rigid… but whatever.

He contends that the result of the weak mandate  and an inability to overcome a Senate fillubuster worked well:

…This led to a fair amount of legislative co-operation in the first Bush term. A series of important changes to the Elementary and Secondary Education Act were approved; an extremely costly new prescription drug benefit was added to Medicare; income taxes were steeply cut—all on an at least somewhat bipartisan basis….

Somewhat bipartisan?  Like idealogically rigirous, “somewhat bipartisan” is undefinable in any concrete terms, but a quick look on just the tax cuts seems to indicate consistent partisan fighting.

What we know?

The cuts themselves were passed in two bills.

1. Economic Growth and Tax Relief Reconciliation Act of 2001 &
   1. Senate vote here, House vote here
2. Jobs and Growth Tax Relief Reconciliation Act of 2003.
   1. Vote totals here

In 2001: only 1 Republican voted against it in the Senate out of 33 nay votes (the other nays were Democrats), and in the House, all but one of the 154 nay votes were cast by Democrats.  & of course out of the yea votes, while less one sided, still doesn’t appear to be bipartisan.  In the Senate, 12 of the 58 yea votes were cast by Democrats and in the House 28 votes our of 240 yea votes were cast by Republicans.

& 2003?  I guess Mr. Yglesias would also be surprised to learn that in the 2003, the tax debate was even more lopsided (more…)