Happy New Year!

First, to my family and friends; also,

The new 112^th Congress of the United States convening in January,

John Boehner, the new Speaker of the House of Representatives,

Nancy Pelosi, former Speaker of the House, now House Minority Leader,

John Lewis, Congressman from the Fifth Georgia District in Atlanta,

Harry Reid, Majority Leader of the Senate,

President Barack Obama,

Vice President Joseph Biden, and

Hillary Clinton, Secretary of State.

The 111^th Congress successfully addressed and passed, over obstinate opposition, more desperately needed, controversial legislation than any other Congress since the 89th when voter rights legislation passed in the 1960s!

I hope the 112^th is inspired by the 111^th example to do as well or better, and that new members, including Republicans and their Speaker, John Boehner, will help the nation weather its worst economic crisis since the Great Depression of the 1930s.

My Cousin Kathleen, focused on other issues, didn’t like the emphasis in my “Taming the Borrowing Beast” blog on the fact that, "The last time the United States operated on balanced budgets. . .was during the Democratic Administration of President Clinton." In reply, my “Nation Becoming A Dysfunctional Family” blog described election feuding over divisive issues that avoid government “addiction to irresponsible credit expansion during the last forty years...

“We are a marvelously diverse and contentious country of many shapes, sizes, colors, races, religions and sexual orientations. We're a nation of immigrants from every corner of the earth; a miniature United Nations of people live on every city block and small town. Our family mirrors our country, every bit as diverse and very contentious. . . . We have married people from many distant lands. These differences make life exciting and interesting; but there are times when we have to put them aside; now is such a time.

“The answer is not to avoid discussing our differences—as if this were possible— — but in remembering the law of love that holds our disputatious family together.

“Your Father, Kathleen, as you know so well, was talented in keeping . . . rhetoric in bounds with humor. Other members of our clan share this gift. That's why no one, whatever their cultural roots, wants to miss one of our family parties.

I have but one concrete suggestion to Republicans in the 112^th Congress:

Prove that I am wrong in claiming that little if any job stimulus will flow from the billions in tax breaks you recently won in the 111^th Congress for your wealthiest patrons and the corporations they own and control. It’s not hard:

A. Persuade your patrons to stop hoarding their enormous cash reserves such as I describe in my “Hatching a Brand New Beast” blog;

B. Persuade your patrons to spend or invest their cash reserves and tax breaks like Warren Buffet, in new enterprises that will create jobs, instead of “safe” aging enterprises approaching the down side of their secular trend curve;

C. Persuade your patrons and the state governments they dominate to stop firing, start hiring and begin serving their constituents’ needs;

D. Persuade your patrons and the media they control to stop trashing on efforts to accomplish these things and those who advocate them, like George Soros;

E. If your patrons do these things they’ll make a lot of money, avoid a class war, and like themselves better.

photo credit: flickr, rkramer62

Democrats Pay Scrooge Ransom

A New Republican Borrowing Beast is Born!

I have been waiting since the November election to see how Republican Borrowing Beast scams play out. That fearsome beast has now, despite campaign deficit reduction talk, once again been unleashed. We will continue to borrow money to reward our richest billionaires with new billions in tax breaks. Scrooge’s clerk, Bob Cratchit, and his impoverished family will continue to suffer; Tiny Tim may lose his health insurance; and the miserable Scrooge will continue to speculate, hoard money and foreclose.

Thursday, December 16, 2010 Congress finally approved, and the next day the President signed, an $858 billion extension of all Bush 2001 and 2003 tax cuts for two years and created additional new tax breaks as well. One fourth of all income tax reductions go to the richest one percent of taxpayers. They are also rewarded with a $5 million inheritance tax exemption and reduced rates. Democrats were coerced into voting this monstrous giveaway to the rich as ransom for extending middle-class tax reductions and unemployment benefits for thirteen months. See a graphic illustration of the cost of this plan here.

In my August 15, 2010 blog, “Paper Money Makes Voters Happy,” I quoted Canby Balderston, then a governor of the Federal Reserve Board, summing up a speech at a Wharton School Alumni luncheon during the Nixon Administration:

“We will soon run out of that nothing with which to make no down payment.”

I then explained: “Despite the warnings of true conservatives like Canby Balderston and Paul Volker, former Chairman of the Federal Reserve Board, Republican politicians, beginning with President Nixon, could not resist the temptation to buy elections with ever-expanding extensions of credit.”

After some details about how this works, I quoted a moving description in the Atlanta Journal-Constitution by a long unemployed, decorated war veteran of how it feels trying to live on the “nothing” of which Dean Balderston spoke.

August 30 I wrote a sequel, “Taming the Borrowing Beast,” in which I pointed out: “The last time the United States operated on balanced budgets, that is, spending no more money than collectable in taxes, was during the Democratic Administration of President Clinton. In its final annual quarters, that administration’s budgets yielded a surplus; that is, the federal government collected more in taxes than it spent.

“According to the still dominant business cycle theory of British economist Lord John Maynard Keynes (1883-1946), governments should take in more money than they spend during good times so that in hard times they may ease the pain by spending more than they take in. . . .

“Continuing in the Nixon tradition, President George W. Bush, at the first sign of declining economic prospects in 2001, applied a big dose of Nixon voter happiness balm with risky inflationary tax cuts to the wealthy, and, as if that was not enough, began a war in Afghanistan. In 2003, came more tax cuts to the wealthy and the Iraq war.

“Tax cuts plus war spending are wildly inflationary. They induce voter euphoria for a while—a seemingly endless feast of dollars garnished with patriotic fervor are delicious—but eventually the happiness bubble breaks, and we are at the mercy of a grouchy Borrowing Beast.

“That beast leaves us, in the words of Alan Greenspan, with choices that are no longer between “the good and the better,” but between “the bad and worse.”

How do we, an electorate addicted to an illusory prosperity from a political financing fix, tame our Borrowing Beast?

“First, as in the ‘twelve steps’ method, we have to face the fact of our addiction.

For more on this topic: “Hatching a Brand New Beast.”

cartoon credit: HikingArtist.com