Friday, April 11, 2014

Paul Ryan's Budget Deficit

Republican politicians like to rant against taxes and blame all taxation on Democratic politicians. So you would think that Republicans in the federal House of Representatives would present a balanced budget.

Why did the House Republicans pass a budget this week, written by Paul Ryan, that would not balance the budget (barring an economic miracle) until 2024, a decade from now?

It is not just politics as usual, even though everyone knew this budget bill, which passed 219 to 205, won't become law. It will die in the Democrat-controlled Senate, and in any case President Barack Obama won't sign it.

Take a step back and look at the bigger picture, both economic and historical. Deficit financing did not become a regular part of the American economy until the Great Depression. In 1933 progressives of both parties (Democrat and Republican), led by Franklin Delano Roosevelt, tried "pump priming," getting the economy headed back to normal by government deficit spending. Soon income tax rates were raised too. But what really ran up a deficit, and revitalized the economy, was World War II.

After World War II the U.S. had an unprecedented amount of debt, but we were the only industrialized nation that had not been devastated by the war. More important, both parties had seen what a little economic heroin could do for politicians. So while conservatives talked of balanced budgets, they became rare even in years when the economy was booming.

Now tax rates are far lower than they were from 1935 until 1980. Republicans can take most, but not all, of the credit for that. But if anything Republicans have been worse than Democrats about spending taxpayer dollars.

Ryan's budget advocates cutting back on payments for food stamps, health care, education and transportation. But it does not cut back on military and homeland security spending, or on subsidies and tax breaks for corporations and the rich. It does not prioritize dealing with the national debt. The Democrats will say its domestic spending cuts amputate important programs, but in fact Ryan's cuts are band-aid sized cuts. They are meant not to antagonize too many senior voters, just mostly the type of people who vote Democrat, if they can get a valid voter ID card.

Ryan's budget tries to please Tea Party Republicans with the smell of budget cuts without alienating the big defense corporations or too many middle class voters.

And in his heart-of-hearts, Ryan may worry that without the deficit spending his plan envisions, the economy might stall, which would reduce tax collections, increase the deficit, and make it harder for him to reward his sponsors with government contracts.

Then there is the over $17 trillion dollars of federal debt. Currently the Treasury and the Federal Reserve are pretending they are keeping interest rates low to stimulate the economy, but the rates are way under what they have been historically in a growing economy with well less than 7% unemployment and no overall inflation. The main result of the low interest rates is that the government can finance its debt cheaply. Since that is the main result, that is the real purpose.

Normal interest rates are about 5%. 10% of $17 trillion is $1.7 trillion. 5% is half of that, so $0.85 trillion. Per year, in interest alone. A trillion is a thousand billions, and a billion is a thousand millions. So take my word for it, as valueless as the dollar has become since the Great Depression, and as large a the economy has become, we are talking a high-magnitude earthquake-like impact on the federal budget and on the economy if interest rates normalize. If we actually had an old-fashioned strong economy interest rates could easily climb above 5%, if we had free markets or the Fed were to do its job of keeping inflation under control.

Folly begets folly, and investors around the world see U.S. debt as a safe thing right now. Just a switch in that attitude, which would result in investors refusing to buy bonds until interest rates were higher (like 5% on 10 year bonds), would throw the U.S. into bankruptcy.

Its kind of like global warming. You have politicians who are in denial, and you have politicians who see the problem, but are not willing to act on something decades away. Only the debt crisis is probably well less than a decade away. It could start any time, and the longer it takes, the worse it will be.

The problem may be fixable. Democrats and Republicans alike would have to give up quite a bit. Each party uses federal money, or exemptions from taxes, to buy campaign donations and votes. Each party would have to give up much of its gravy train. And each could do that, without harming the economy overall.

Homeland security spending is nearly a complete waste. Cut that budget by 90%. Cut the military budget by 50%. And yes, it would take toughter-than-Ryan cuts in food stamps and education subsidies. Cut payments to health-care organizations and doctors, focusing on high-cost low-benefit drugs, diagnostic procedures, and surgeries. Raise the IRS budget, double it, and have them go after tax shirkers at all levels.

What, cut education subsidies? Yes, cut them. I support public schools, and I served on a public school board for 8 years, and I was the most liberal member of a liberal board. But I also saw the details of how federal money is doled out. Cut the money in half, remove the red tape by 100%, and let the school boards micromanage how to best educate their pupils. Some will screw up, many will be mired in mediocrity, but most will do better with half the money.

Alternatively taxes on the rich, and in fact on individuals making $50,000 a year or more, will soon need to be doubled. That is right, doubled. Read my lips: doubled. With no exemptions for capital gains, dividends, or inheritances. Even small inheritances.

Or we could do some combination of severe spending cuts and severe tax increases.

I imagine I have alienated just about everyone by pointing out the problem and the only ways it can be solved. I know plenty of people who get food stamps and never worry about how that food is really being paid for. I know soldiers and veterans, and I know people who make plenty of money and consider themselves over-taxed even after they take their tax breaks. No one likes to hear the nation is sick, and they all have to take some medicine.

So as an analyst, my prediction is the federal government is not going to act any better than heroin addicts would act (I've known some of them too). It will continue to borrow money until no one will lend it money.

Then it will either collapse in agony or go out and hit someone over the head and take the money it needs for its addiction. And blow off its creditors.

Disclaimer: I am registered to vote in California, but with no political party.

Thursday, April 3, 2014

McCutcheon vs. Democracy, or Free Speech Gone Wild

According to the Supreme Court of the United States, Congress can't pass a law that sets overall limits on an individual's contributions to all federal candidates for office. The Supreme Court says that is unconstitutional because it violates your free speech rights, if you have over $48,600 to spend on free speech in a given election cycle. Leftists will say that this favors billionaires, but I can see millionaires being hit by the cap as well. They also struck down the limits on contributions to political party committees, which was $74,600.

The case is McCutcheon v. Federal Election Commission, No. 12-536.

Next up, is giving a Supreme Court judge a large gift of cash, as long as it is accompanied by free speech and not a tit-for-tat for a particular ruling, legal?

It is going to be hard for ordinary millionaires who don't follow legal disputes closely to get their heads around the new rules. Used to be, when some whiney politician held his hand out at a chicken dinner, you could say "Sorry boss, I'd like to help more but I already hit the $48,600 limit. Perhaps you'd like to accompany me on a trip to the whore houses, I mean ski slopes, of Switzerland?"

$48,600 to a billionaire, or even a $100 millionaire, is like pocket change to us. It isn't even pocket change, it is like fluff, it just accumulates in their pockets, they don't even know exactly how. Five minutes of interest, or the wife missing her spa appointment, or returning some designer boots and handbags, and there it is, the former 2-year cycle federal campaign contribution limit.

Me, I like free speech. Just as I can have a meal that is tasty and will keep me healthy for 1/10,000 of what the same would cost for a billionaire, I have some ideas about influencing politics with my $5 and $10 bills, and I'm sure the new, improved Supreme Court will rule in my favor, even if speechifying this way happens to be temporarily illegal under the unconstitutional laws written by Congress and those pesky State Legislatures.

First, let's review the two key passages from the Constitution.
The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations. [Article I, Section 4]
That seems pretty clear. "Manner" seems to cover a lot of ground, including prohibiting horse whipping candidates you don't like, buying votes, requiring Jewish candidates to wear yellow stars. Until yesterday "Manner" included regulating the amount of legal tender non-candidates can donate to the campaigns of candidates.

Opposed to that we have:
Congress shall make no law respecting an establishment of religion, or prohibiting the exercise thereof; or abridging the freedom of speech, or of the press, or the right of the people peaceably to assemble. [Amendment I]
Free speech is important, but is a law regulating election contributions an infringement of free speech?

If it is, then I think a lot of other laws are infringing free speech. For instance, punching someone in the nose could be free speech, if your fist is acting as an extension of your mouth or pen, as opposed to merely assaulting someone for ordinary aggressive or criminal reasons. Maybe this would only be true if the punched person holds office, or is running for office, or going door to door soliciting votes for someone who is running for office.

Courts have consistently ruled that workers forming a picket line that interferes with commerce (that is, the business they are working for) is not a form of free speech. Maybe that is what we are not getting about Chief Justice Roberts and crew: the campaign limits interfere with commerce. What about a picket line than prevents a candidate from reaching a debate? What about two powerful political parties that exclude third party candidates from debates?

What about blowing Robert's head off with a shotgun? That is probably going too far. What about advocating that someone should blow Robert's head off with a shotgun? As Robert's said, that sounds "repugnant," and neither Gandhi nor your average citizen who thinks we should all obey all of the laws no matter how stupid they are unless they are personally inconvenient would want to split that hair too finely. What about a billionaire paying an assassin more than $48,600 to blow off Robert's head? Well, as best I can tell from Robert's reasoning in McCutcheon, that would be just fine, now. That is just free speech. Of course, billionaires are selective in whom they send their free speech implementers after.

I'm not sure why smoking marijuana is not free speech. Perhaps because not even a billionaire can smoke up over $48,600 in two years, not without help from the wife and kids?

Why isn't stealing from campaign funds (including candidate's using campaign funds for non-political purposes) not free speech? Isn't speaking negatively about something okay? If not, why can campaigns run attack ads?

Why not just abolish the charade of Congress and let the Supreme Court decide everything?

Let's just hope that one or more of the five rich people's whores on the court dies soon, no matter which way. As much as I don't trust President Obama's judgment, I would expect him to appoint at least slightly better replacements.

What can a true patriot do in this situation to prevent the Rule of Money? I would say there are a number of options, but the Homeland Security Apparatus and the current Supreme Court might consider it conspiracy, not protected speech, if I were to mention certain of them.

Wednesday, April 2, 2014

The Bataan Death March v. the Trail of Tears

The War of 1812 almost saw the demise of the nation still known as the United States of America. Miscalculating America's military capabilities, members of Congress initiated the war with the British Empire with an aim to conquering Canada and Florida, if not the entire continent of North America. Towards the end of the war the New England states nearly revolted (see Hartford Convention). After the war was over the U.S. won a single battle, near New Orleans, and that is what we are trained to remember.

General Andrew Jackson, a man noted for his cruelty towards slaves and animals, was credited with winning the Battle of New Orleans. With other friends in high places he compensated for failing to grab Canada by grabbing vast expanses of Native American Indian lands, essentially all of what are now the states of Alabama and Mississippi. Jackson created the Democratic Party, dedicated to the principles of genocide, slavery, and hoodwinking the the common voter, and then got himself elected President of the United States in 1828 and again in 1832.

Back in the state of Georgia the Cherokee Nation had built up a civilization and used the federal court system to defend their property from appropriation by the white racists who ran the state. President John Adams had defended the Cherokee, but Jackson would not. He signed a law "exchanging" Indian national lands east of the Mississippi River for lands to its west. The actual death march of the Cherokee, along the Trail of Tears, took place in 1838, after Jackson was dead and the Choctaw (1831-1833), Seminole (1834), and Creek (1836) had been "removed." About 4000 Cherokee died during their death march, which was accompanied by U.S. Army troops.

Today this is not a "hidden" part of U.S. history. The federal government even established a Trail of Tears National Historic Trail. But it is ignored in the moral calculus of most Americans' thinking.

Compare the Bataan Death March. It too may fade from the memories of most Americans, but from World War II until today its memory is kept alive by our institutions. They need it; it is a lynchpin of the psychology of the American empire (which is mainly an empire of commerce, backed by the U.S. military and administered by puppet leaders of other nations).

In 1898 the U.S. government decided it wanted some of the remaining territory of the Spanish Empire, including the Philippines. The people of the Philippines had almost finished throwing out the Spanish, but the Spanish sold the Philippines to the U.S. anyway after losing the Spanish-American War. The U.S. proceeded to slaughter any Filipino who objected. The sugar plantations were profitable, and Manila provided easy access to China, but brown people were not wanted as American citizens, so they were eventually forced into a "commonwealth." Which is an American word for colony.

When Asian people finally got tired of being bullied by white people and revolted in 1941... Scratch that. Unacceptable to Americans. Try this: General Douglas MacArthur, commanding the U.S. forces in the Philippines, was given the go ahead by President Franklin D. Roosevelt (FDR) to attack the Japanese in Formosa (now Taiwan) a couple of weeks before the Battle of Pearl Harbor. But the General was planning to run for President, and did not want to precipitate war with Japan without authorization by Congress (because most Republican voters, until a few days later, were Isolationists).

Anyway, a huge fleet of reinforcements had already left San Diego, heading for Manila, and MacArthur thought the Japanese could be defeated in a few weeks. MacArthur at that time was best known for slaughtering unarmed U.S. veterans who had been protesting in Washington D.C. during the Great Depression, explicitly disobeying the orders of President Hoover.

The great military strategist put his air force on a runway, with the planes as close together as possible. When he heard about Pearl Harbor, he left them that way. The next day Japanese planes came in and destroyed them all, on the ground. MacArthur awoke from his stupor and realized maybe the Japanese were not such bad fighters after all.

They were not, not even the second-rate tier, old men fighters given to General Homma to capture the Philippines. American resistance (the larger part of MacArthur's army consisted of poorly equipped Filipinos. The U.S. was afraid if they were well-equipped they might try for independence) quickly collapsed. The U.S. forces retreated to the Bataan Peninsula, while MacArthur and his staff his out in the safety of the island fortress Corregidor.

MacArthur had no way to supply his troops. He told his superiors who told FDR. The President lied (well, that is what Presidents do best, and FDR was a master of lies) and said reinforcements were on the way. They were not. The troops in Bataan were low on ammunition, and reduced to 3/4 rations, then 1/2 rations, then whatever they could scrounge. The commanders in Bataan begged MacArthur to evacuate the troops or allow them to surrender. FDR said no; he wanted Japanese troops tied down, and to use the tragedy to whip up the American people against the Japanese.

Under orders from FDR, General MacArthur turned tail and ran for Australia (in a submarine) on March 12, 1942. The Japanese army, reinforced, started their final attack on April 3rd. U.S. resistance largely collapsed by the 5th. General King surrendered his troops on April 9.

About 60,000 Filipino troops and 15,000 American troops surrendered. Many were wounded or sick, almost all were starved to near death.

General Homma was prepared for the U.S. surrender. He had established a POW camp at Capas, which ironically had been a U.S. military base. The POWs would gather in Balanga, then march to San Fernando, about 80 miles, and would go the rest of the way by rail.

It was not a good plan, but it was not a bad plan either. Some of the Japanese troops who had just been fighting the Americans purposefully mistreated them, which is a war crime. It is the most common war crime, and a different sort of crime than commanders ordering mass executions of POWs. It is the kind of crime U.S. soldiers committed against American Indians, and against each other all too often in the Civil War. Not respecting POW conventions is to be condemned, no matter which soldiers are committing the crimes.

But consider the state of the POWs at the time of capture. Normal, healthy troops should have had no trouble walking the 80 miles to San Fernando.

In the chaos of war it is hard to say exactly how many troops died after surrendering. Many tried to escape; some succeeded, some were shot while trying to escape (not a war crime).

The high estimate for American (excluding Filipino) deaths is 650; it is unlikely less than 100 died. That may be appalling, but these were sick and starving men who had been betrayed by their own commanders. It is a testament to both the soldiers themselves and the Japanese military that over 14,000 white U.S. troops survived the march. In detailed interviews with the marchers, many reported acts of kindness by their Japanese guards. The Filipinos fared worse, probably because they were discriminated against within the U.S. forces prior to surrender (given inferior equipment and rations). Thousands of Filipinos died during the march, but again over 50,000 lived.

In short, the Bataan March was not a death march for most involved. There was Japanese brutality, but it was mostly ordinary bad soldiering brutality, not an organized slaughter.

The combination surprise attack on Pearl Harbor and propaganda about the Bataan Death March became an excuse for wide range of U.S. atrocities, many of them ordered by FDR himself. The U.S. engaged in unrestricted submarine warfare, which the U.S. had claimed was illegal when the Germans did it during World War I. The U.S. bombed Japanese cities; before the war FDR had condemned nations that bombed cities because, in fact, targeting civilians is a war crime. U.S. soldiers often killed Japanese soldiers that surrendered, particularly in the campaign in which MacArthur recaptured the Philippines. It also led to American citizens of Japanese descent being placed in concentration camps in the U.S. for the duration of the war.

Finally, there was the demand for unconditional surrender (which was unprecedented, and prolonged the war both in Germany and in Asia) and the Atomic Bomb attacks on Hiroshima and Nagasaki. These are usually rationalized as "saving the lives of American soldiers." But the basic idea of war crimes is that civilians are not to be killed for military advantage. The U.S. could have saved the lives of American soldiers by negotiating a peace with Japan.

I know very few Americans think of the Trail of Tears and the Bataan Death March as related in any way. But they are more than just two sad instances of historic inhumanity. They are a test of how well people are trained to make excuses for the behavior of national governments. They are also a test of racist sentiments.

Note too that the Bataan March involved soldiers, who were moved a short distance to POW camps. The Trail of Tears involved forced removal of civilians, including children who were forced to march over 1000 miles to their new concentration camp. Soldiers are professional killers. The agreement among the world's nations to treat each other's professional killers nicely if captured is a bit difficult for some of the soldiers themselves to comprehend.

The Philippines was granted official (but not real) independence by the U.S. in 1946. They had declared independence, encouraged by the Japanese, on October 14, 1943. Most Filipinos cooperated with the Japanese. Later, after MacArthur reconquered the islands, a legend grew that large numbers of Filipinos guerillas fought the Japanese during the war. In fact very few did. Jose Laurel, President of the Philippines, cooperated closely with the Japanese during the war, as did most upper-class Filipinos. Laurel also ran for President of the Philippines in 1949, but lost to Elpidio Quirino.