Republicans claim it will be a “Democrat tax hike” if Congress allows the Bush tax cuts to expire in January, under the terms of the tax bills the Republicans enacted in 2001 and 2003. As Ezra Klein noted at WashingtonPost.com (7/19), Republicans were forced to pass the tax cuts through the budget reconciliation process, which meant that the tax cuts had to expire within 10 years.

Steve Benen noted at WashingtonMonthly.com (7/19) that Democrats are likely to let the tax cuts expire for people in the highest income brackets, which would restore rates to those of the 1990s, when the economy was strong and the deficit was nonexistent. “This, in turn, will help lower the deficit, which the GOP pretends to care about. Republicans are screaming bloody murder about a ‘tax increase,’ but in reality, Democrats aren’t raising taxes, so much as they’re executing the Republicans’ plan and allowing the lower rates on the wealthy to revert back to 1990s levels. In effect, the GOP is whining incessantly about Democrats following the Republican script too closely. The GOP shouldn’t complain — this was their idea.”

COST OF POST-9/11 WARS TOPS $1T. The cost of America’s post-9/11 wars around the world has soared to more than $1 tln, according to a new congressional study, and that’s not counting long-term costs like veterans benefits and interest on borrowed money. The Congressional Research Service study, first posted by Secrecy News at fas.org (7/19), looks strictly at congressional appropriations for the wars in Iraq, Afghanistan, and other military operations in the Horn of Africa and elsewhere. The grand total for post-9/11 wars: $1.15 tln, adjusted for inflation. (Defense Secretary Bob Gates, by the way, is pressing Congress to approve another $33 billion in supplemental war funding.)

World War II is still our most expensive war, costing 35.8% of GDP at its height and $4.1 tln in FY2011 dollars. In comparison, the American Revolution cost $2.4 bln in 2011 dollars, the Civil War cost the Union $59.6 billion (while it the Confederacy $20.1 billion) and Vietnam cost the US $738 billion.

MORE SPOOKS, LESS RESULTS. Of course we don’t know how much the national intelligence industry costs the United States, but it has greatly expanded since 9/11 and become what the Washington Post called a “fourth branch” of government. After a two-year investigation, Dana Priest and William M. Arkin reported in the Post (7/19) and at TopSecretAmerica.com that at least 263 agencies have been created or reorganized since 9/11 and each has required more people, and those people have required more administrative and logistic support, with “lines of responsibility so blurred, that even our nation’s leaders don’t have a handle on it.” The US intelligence budget was publicly announced last year as $75 bln, 2-1/2 times the size it was pre-9/11, but that figure doesn’t include many military activities or domestic counterterrorism programs.

Priest and Arkin report that “(1) Some 1,271 government organizations and 1,931 private companies work on programs related to counterterrorism, homeland security and intelligence in about 10,000 locations across the United States. (2) An estimated 854,000 people, nearly 1.5 times as many people as live in Washington, D.C., hold top-secret security clearances. (3) In Washington and the surrounding area, 33 building complexes for top-secret intelligence work are under construction or have been built since September 2001. Together they occupy the equivalent of almost three Pentagons or 22 US Capitol buildings — about 17 million square feet of space. (4) Many security and intelligence agencies do the same work, creating redundancy and waste. For example, 51 federal organizations and military commands, operating in 15 US cities, track the flow of money to and from terrorist networks. (5) Analysts who make sense of documents and conversations obtained by foreign and domestic spying share their judgment by publishing 50,000 intelligence reports each year — a volume so large that many are routinely ignored.”

Priest and Arkin also noted, “lack of focus, not lack of resources, was at the heart of the Fort Hood shooting that left 13 dead, as well as the Christmas Day bomb attempt thwarted not by the thousands of analysts employed to find lone terrorists but by an alert airline passenger who saw smoke coming from his seatmate.”

This is a concern of the people who are supposed to be in charge. Retired Army Lt. Gen. John R. Vines was asked last year to review the method for tracking the Defense Department’s most sensitive programs. Vines, who once commanded 145,000 troops in Iraq and is familiar with complex problems, was stunned by what he discovered. “I’m not aware of any agency with the authority, responsibility or a process in place to coordinate all these interagency and commercial activities,” he told the Post. “The complexity of this system defies description.” The result, he added, is that it’s impossible to tell whether the country is safer because of all this spending and all these activities. “Because it lacks a synchronizing process, it inevitably results in message dissonance, reduced effectiveness and waste,” Vines said. “We consequently can’t effectively assess whether it is making us more safe.”

Glenn Greenwald wrote at Salon.com (7/19) that the Post report shows, “[W]e keep sacrificing our privacy to the National Security State in exchange for less security.”

Robert Dreyfuss commented at TheNation.com (7/19), “What’s missing from the story ... is any assessment of the threat against which this vast and growing machinery is arrayed. The Post notes that 25 separate agencies have been set up to track terrorist financing, which admirably shows the overlapping and redundant nature of the post-9/11 ballooning of agencies and organizations targeting terrorism. But the article barely mentions that there are hardly any terrorists to track.

“The Post points out that among the recent, nuisance-level attacks by Muslim extremists — the Fort Hood shooter, the underwear bomber, the Times Square incident — the intelligence machine failed to detect or stop them. True. That’s an indictment of the counterterrorism machinery that has become a staple for critics of the outsize budgets and wasteful bureaucracy that has been created since 9/11.”

Dreyfuss concluded: “The core problem, which the Post doesn’t address, is that al Qaeda and its affiliates, its sympathizers, and even self-starting terrorist actors who aren’t part of al Qaeda itself, are a tiny and manageable problem. Yet the apparatus that has been created is designed to meet nothing less than an existential threat. Even at the height of the cold war, when the Soviet Union and its allies were engaged in a brutal, country-by-country battle across Asia, Africa and Latin America to combat the United States, NATO, and American hegemonism, there was nothing like the post-9/11 behemoth in existence. A thousand smart intelligence analysts, a thousand smart FBI and law enforcement officers, and a few hundred Special Operations military folk are all that’s needed to deal with the terrorism threat. It’s been hugely overblown. Yet in the Post story, sage-like gray beards of the counterterrorism machine stroke their chins and pontificate about how difficult it is to coordinate all these agencies, absorb all the data, read all the reports and absorb the 1.7 bln e-mails and phone calls that are picked up every day by the National Security Agency. It’s an ‘Emperor’s New Clothes’ problem. The emperor isn’t naked, but no one, really, is threatening him.”

KEY PIECE ON GULF BLOWOUT RIG OVERHAULED IN CHINA. A crucial piece of the Deepwater Horizon’s safety equipment was overhauled in China to save money, the British newspaper The Observer reported (7/18). The blowout preventer — the last line of defense against an out-of-control oil well — subsequently failed to activate and is suspected of having caused the disaster. Experts told The Observer that the practice of having such engineering work carried out in China, rather than the US, saves money and is common in the industry. (See observer.guardian.co.uk.)

Alliance for American Manufacturing (AAM) Executive Director Scott Paul said, “If China can’t keep cadmium and lead out of children’s bracelets, it’s hard to understand why BP would trust a Chinese firm to overhaul a key component in the Deepwater Horizon rig simply to ‘save money.’  This is, after all, a life or death issue for oil rig workers.”

OBEY HAS REGRETS. Rep. David Obey (D-Wis.), soon to retire after 40 years in Congress, told TheFiscalTimes.com (7/16) he detested the bailout of Wall Street but “We had no choice. He added that it turned out to be “a pretty damn good deal for the taxpayers,” ending up costing less than $100 bln of the $700 bln Congress put up to save the economy. He wishes the White House had pushed a bigger stimulus, but the White House wanted to keep it under $1 tln. “Then [Pennsylvania Senator Arlen] Specter and the two crown princesses from Maine [Sens. Olympia Snowe and Susan Collins] took it down to less than $800 bln. Spread over two and a half years, that’s a hell of a lot of money, but spread over two and a half years in an economy this large, it doesn’t have a lot of fiscal power.”

Obey said he regrets he didn’t accomplish more. “I leave more discontented when I came here because of the terrible things that have been done to this economy by political leaders who allowed Wall Street to turn Wall Street banks into gambling casinos which damned near destroyed the economy.

“I think the more important thing was what was my biggest failure. I think our biggest failure collectively has been our failure to stop the ripoff of the middle class by the economic elite of this country, and this is not just something that happened because of the forces of the market.”

MASS. HEALTH PLAN LIMITED SUCCESS. In recent weeks, critics of the Affordable Care Act have turned their attention to Massachusetts, where there’s evidence that the reforms signed into law by then-Gov. Mitt Romney (R) in 2005 are struggling, Ezra Klein noted at his WashingtonPost.com blog (7/19). Gov. Deval Patrick (D) has been tussling with insurers over rates, and there’s anecdotal evidence of small employers dropping coverage (though recent studies also show employer coverage is expanding). But insurance coverage among non-elderly adults dumped from 87.5% in 2006 to 95.2% in 2009; access to preventive care went from 70.9% to 77.7%; and the gap in coverage between minority and non-minority residents has disappeared. Costs are more complicated, as premium costs in Massachusetts fell by 40% in the “non-group” market — which is where the reforms were concentrated — while they were rising 14% nationwide. In the employer market, which did not see major reform, costs rose 21%, about the same as the national average. The plan’s popularity remains high: The Urban Institute found approval at 67% in fall 2009.

Klein noted that the Massachusetts law was designed to expand coverage but it did not try to control costs with features such as an excise tax, an independent commission to fast-track cost controls, efforts to generate evidence for comparative effectiveness reviews. “Insofar as that contains lessons for the national effort, it’s that we should stick to the law and make sure to implement the cost controls and delivery-system reforms,” he wrote.

TEA PARTY MOTIVATED BUT NOT POPULIST. Too many reporters have described the Tea Party movement as a populist uprising against “elites,” channeling economic anxiety about the recession. But Joan Walsh noted at Salon.com (7/19) that a recent Democracy Corps survey that included 2,600 interviews between April and June, in which “strong supporters” of the Tea Party made up a quarter of respondents found that, far from being an uprising against Wall Street and big business, Tea Partiers are among the most pro-big business segments of the electorate. The poll found 54% rate big business warmly; only 20% coolly. It also found that the Tea Party is far from the independent, nonpartisan movement some in the media have made of it: The Tea Party is strongly affiliated with the GOP, as 86% of movement supporters and activists either identify with or lean toward the Republican Party, and 82% said they’ll vote for the GOP candidate in the November midterms; only 9% said they won’t. And 90% believe that centrist corporate-friendly President Obama is a socialist.

Democracy Corps reported (7/19), “The driving force behind their negativity toward Obama is the belief that his actions and goals are un-American. Throughout the focus groups, people repeatedly invoked ‘Obama’s Socialist Agenda’ — with the occasional communism comment thrown in. Participants said it is this socialist agenda — which underlies all of Obama’s policies seeking to make citizens more dependent on the state — that has put people over the edge and launched a movement that has been percolating for a long time.”

There’s bad news and good news for Democrats in the findings. The bad news is, Tea Partiers make up a quarter of likely voters in November, and they’re fired up: 94% say they are almost certain to vote, 10% more than the general likely electorate. (They comprise slightly fewer likely voters for 2012, 21%.)

The good news is, there seems to be little chance for the Tea Partiers to cross over and convert the rest of the electorate. In a separate poll of likely voters who said they are not Tea Party supporters, done in mid-June, 56% described the movement as “very extreme,” only 20% said it “shared their values,” and just 17% said it “has realistic solutions to the country’s problems.” That group was split on whether the Tea Party is “motivated by racial feelings about Barack Obama,” with 39% answering yes, and 38% answering no.

Walsh noted that Democracy Corps, run by Stan Greenberg and James Carville, mostly works for Democrats, but its polling is respected, “and they don’t shy away from giving Democrats bad news.”

GOP CHOICE: BASE OR INDIES. A Gallup Poll conducted the week the Senate passed the financial reform bill showed a surge of support for congressional Democrats, but Kevin Drum suggests at MotherJones.com (7/19) that the reason Democrats have gone from 2 points down to 6 points up in two weeks is that independents are drawing back from Republicans pandering to their right-wing Tea Party base. The poll was conducted 7/12-18; the financial reform bill cleared the Senate 7/15, but Drum expressed doubt that a complex and barely understood regulatory bill could cause that swing. He noted that the Democratic surge is largely due to a jump in support from indies, and a chart from April through July shows that whenever enthusiasm goes up among registered Republicans, preference for Republicans goes down among independents. During the recent polling period, GOP congressional leaders were blocking extension of unemployment compensation, claiming that Bush-era tax cuts for the wealthy were not responsible for the federal deficit and endorsing wild Tea Party claims about Obama. Drum’s guess: “Every time Republicans do something that gets the Tea Party base excited, it simultaneously turns off independents ... So this is the GOP’s big problem for November: They need to motivate their base, but their base is so stone crazy that the only way to pander to them is with tactics so outrageous that non-crazies start to turn away.”

REID PULLING AWAY FROM TEABAGGER. Republicans had high hopes of unseating Senate Majority Leader Harry Reid until teabagger Sharron Angle upset establishment candidate Sue Lowden in the GOP primary. Reid publicized some of Angle’s extreme positions, such as her proposals to do away with Social Security, eliminate the departments of Energy and Education and ship nuclear waste to Nevada, and now Reid appears to be pulling away from Angle, as Jon Ralston of the Las Vegas Sun noted that three recent polls show Angle trailing Reid, including a Mason-Dixon survey (7/16) that showed Reid — while still unpopular — was ahead 44-37. With three months until the election, Ralston wrote of Angle’s chances, “The race is lost.”

A Public Policy Poll out 7/20 found Reid leading Angle 48-46, but still rates it a “tossup.” Where Lowden trailed Reid 51-41 among moderate voters, Angle faces a 64-28 deficit. “The price of nominating Angle for Nevada Republicans appears to be 26 points with moderate voters,” Tom Jensen wrote at PPP’s blog.

LOUISIANA-STYLE FAMILY VALUES. Louisiana Republicans face a choice in the 8/28 primary between a “family values” incumbent senator who solicited prostitutes and a “family values” challenger who is sleeping with his stepson’s estranged wife. When retired state Supreme Court Justice Chet Traylor filed a primary challenge against Sen. David Vitter, Traylor’s campaign signaled it was going to focus on the scandal over Vitter’s patronage of prostitutes and his assignment of an aide to work on women’s issues even after he was charged with assaulting his girlfriend with a knife in 2008. But the Monroe, La., News-Star reported (7/20) allegations that Traylor had affairs with two married women. State Rep. Noble Ellington (D-Winnsboro) said Traylor was “significantly involved” in the cause of his divorce from Peggy McDowell, the News-Star reported. Traylor denies the accusation and said the couple were separated when he started the relationship with McDowell. After her divorce was finalized, she married Traylor but she died last year. Now Traylor is involved in a romantic relationship with Denise Lively, the estranged wife of his stepson, Ryan Ellington, the son of Noble Ellington. And Ryan Ellington and Noble Ellington III are suing Traylor, claiming that Traylor has resisted efforts by the sons to collect information on the estate of their mother, who left no will. More salacious details in the GOP primary can only encourage US Rep. Charlie Melancon, the likely Dem nominee.

ACORN HOAX VICTIM SUES PRANKSTERS. One of the many victims of Andrew Breitbart’s ACORN video hoax is finally striking back in court, against pseudo-pimp James O’Keefe and pseudo-ho Hannah Giles, if not Breitbart himself. Former San Diego ACORN office employee Juan Carlos Vera, who was falsely portrayed in a heavily edited videotape as conspiring with O’Keefe and Giles to traffic underage girls across the Mexican border, is suing both of the right-wing filmmakers, seeking $75,000 in damages under California’s privacy statutes.

Filed in US District Court in San Diego (7/8), Vera’s complaint claims that O’Keefe, Giles and others violated his “reasonable expectation of privacy” by conspiring to secretly videotape him and then posting the tapes on the Internet without his consent, causing him to lose his job and other damages. Indeed, as the complaint notes, the “pimp and prostitute” explicitly asked Vera whether their conversation would be confidential.

The notorious tape featuring Vera — with his friendly smile and hesitant English — was aired repeatedly on Fox News and cited as proof of the most incendiary charge against ACORN by conservative Web impresario Breitbart: namely, that the anti-poverty organization was in fact a criminal conspiracy to promote teenage prostitution.

But as California Att’y Gen. Jerry Brown discovered when he investigated the ACORN matter last spring, the actual meaning of the Vera tape was severely distorted by dishonest editing to suggest that he had agreed to help smuggle young girls for O’Keefe’s mythical brothel. To obtain unedited versions of the tapes from O’Keefe, Brown gave him and Giles immunity from any criminal prosecution under the state privacy statutes.

What really happened in the San Diego ACORN office, as Fox News and many other outlets neglected to report, was that immediately after O’Keefe and Giles departed, Vera called a cousin who is a detective in the National City Police Dept. to report the planned crime. Police detectives later confirmed Vera’s effort to local news outlets and to the California attorney general’s office. When Vera learned that O’Keefe and Giles were hoaxing him, he again called the police, who terminated their investigation.

“The evidence illustrates,” said Brown when he released his report last April, “that things are not always as partisan zealots portray them through highly selective editing of reality. Sometimes a fuller truth is found on the cutting-room floor.” And soon that fuller truth may be weighed in the halls of justice. — Joe Conason at Salon.com (7/16).

WHITE HOUSE DUPED BY FOX NEWS HATCHET JOB — AGAIN. Andrew Breitbart and Fox News scored another hit on the Obama administration when the USDA reflexively asked for the resignation of agency official Shirley Sherrod after Fox News (7/19) aired a video of her remarks to the Georgia NAACP was edited to make it appear that she withheld federal assistance from a farmer in Georgia because he was white. Breitbart claimed that the speech showed that “her federal duties are managed through the prism of race and class distinctions.”

The NAACP released a statement critical of Sherrod (7/19) and Agriculture Secretary Tom Vilsack asked for her resignation, saying the USDA had “zero tolerance” for discrimination.

In fact, Sherrod was talking about her work 24 years ago for the Federation of Southern Cooperatives/Land Assistance Fund, a nonprofit organization that was created specifically to help black farmers. But the point of the story, which was edited out of the Fox video, was that Sherrod eventually realized that the white farmer, Roger Spooner, was simply a poor farmer who needed her help. She worked with the man over two years to ward off foreclosure, and she became friends with the farmer and his wife.

After seeing the entire video and speaking with Sherrod, NAACP President Ben Jealous apologized for getting “snookered,” and it urged Vilsack to reconsider. But the White House said it stands by Vilsack’s call.

At least the NAACP admitted (7/20) it made a mistake in trusting Fox News. Wednesday (7/21), the White House came to the same conclusion and Vilsack offered to hire back Sherrod at another unspecified job.

If there is any conclusion to be drawn from this episode, after Breitbart's manipulation of videos to attack ACORN and Fox's distortion of Van Jones' record to drive him out of the White House, it is that Fox News and Andrew Breitbart cannot be trusted. Shame on the White House and the USDA for believing what Fox News broadcast without checking with Sherrod first.

POLLS SHOW SENATE MAJORITY NARROWING. Numbers cruncher Nate Silver at fivethirtyeight.com (7/18) said polls indicate that the Senate will end up with 53 Democrats (including two independents), 46 Republicans and new independent Charlie Crist. He expects Dems to lose seats in North Dakota, Arkansas, Indiana, Colorado, Delaware and Pennsylvania and rates Illinois, Nevada and Washington as tossups. Dems’ best chances for pickups are in Ohio, Kentucky and Missouri. Silver computes Dems’ chances of holding off those losses and reclaiming a 60-seat majority at 7% — or 10% if they can persuade Crist to caucus with them.

Another numbers cruncher, Chris Bowers at OpenLeft.com (7/19) sees the most likely outcome as 52 Dems, 47 Repubs and Crist.

TROUBLE IN RIVER CITY. Dana Milbank, in the Washington Post (7/18), noted that “conservative leaders and Republican politicians, in their blind rage against Obama these last 18 months, invited the epithets of the fringe into the mainstream.” Thomas Sowell of the conservative Hoover Institution in June wrote an irresponsible column likening Obama’s presidency to the rise of Hitler in Germany and Lenin in the Soviet Union. Sarah Palin tweeted her followers with instructions to read Sowell’s column. Rep. Louie Gohmert (R-Texas) went to the House floor to read aloud the Obama-Nazi comparison by the “brilliant” Sowell.

Then a Tea Party group erected a billboard in Mason City, Iowa, depicting Hitler (with swastika), Lenin (with hammer and sickle) and Obama (with 2008 campaign logo). Over Hitler were the words “National Socialism,” over Lenin was “Marxist Socialism’ and over Obama was “Democrat Socialism.” Radical leaders prey on the fearful & naïve,” the billboard informed passing motorists in the town that served as the model for River City in Meredith Wilson’s The Music Man.

Milbank noted that Glenn Beck’s show on Fox News had 202 mentioned of Nazis or Nazism since Obama’s inauguration, 147 mentions of Hitler, 193 mentions of fascism or fascist and 24 mentions of Nazi propagandist Joseph Goebbels. Most were directed in some form against Obama — as were the majority of the 802 mentions of socialist or socialism on Beck’s nightly show.

“Isn’t there a grown-up to rein in these backbenchers when they go over the top? Don’t ask House Minority Leader John Boehner, the man who would replace Nancy Pelosi as speaker. He accuses the Democrats of ‘snuffing out the America that I grew up in’ and predicts a rebellion unlike anything ‘since 1776.’ Boehner also said one Democratic lawmaker ‘may be a dead man’ for his vote on health care and predicted that the bill would bring ‘Armageddon.’”

GOP GETS OFFICIAL TEA TIE. Congressional Republicans may be put on the spot by the formation of a congressional Tea Party Caucus by loose-cannon Rep. Michelle Bachmann (R-Minn.). Politico.com reported (7/20) that Bachmann applied to the Democratic House leadership for official caucus status without forewarning the Republican leadership. When asked if he would join the caucus, Rep. Pence (R-Ind.), chairman of the Republican Conference, said “You betcha.” But Minority Leader John Boehner (R-Ohio) won’t be on the caucus list and Minority Whip Eric Cantor and his chief deputy, Kevin McCarthy (R-Calif.) are undecided.

NUMBERS SHOW SENATE MAJORITY NARROWING. Numbers cruncher Nate Silver at fivethirtyeight.com (7/18) said polls indicate that the Senate will end up with 53 Democrats (including two independents), 46 Republicans and new independent Charlie Crist. He expects Dems to lose seats in North Dakota, Arkansas, Indiana, Colorado, Delaware and Pennsylvania and rates Illinois, Nevada and Washington as tossups. Dems’ best chances for pickups are in Ohio, Kentucky and Missouri. Silver computes Dems’ chances of holding off those losses and reclaiming a 60-seat majority at 7% — or 10% if they can persuade Crist to caucus with them.

Another numbers cruncher, Chris Bowers at OpenLeft.com (7/19) sees the most likely outcome as 52 Dems, 47 Repubs and Crist.

GALBRAITH: PANEL HAS NO BUSINESS URGING ENTITLEMENT CUTS. James K. Galbraith made the case against cutting Social Security and Medicare as a “deficit strategy” in a combative statement to the “Bipartisan Deficit Commission”(6/30) that challenged the commission’s legitimacy.

Speaking on behalf of Americans for Democratic Action, Galbraith, an economist professor at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin and former director of the Joint Economic Committee of Congress, opened with an attack on the secretive nature of the commission and conflicts of interest of commissioners.

He then observed that the current deficits and rising debt were caused by the financial crisis. “The financial crisis, the fall in asset (especially housing) values, and withdrawal of bank lending to business and households has meant a sharp decline in economic activity, and therefore a sharp decrease in tax revenues and an increase in automatic payments for unemployment insurance and the like. According to a new [International Monetary Fund] staff analysis, fully half of the large increase in budget deficits in major economies around the world is due to collapsing tax revenues, and a further large share to low (often negative) growth in relation to interest payments on existing debt. Less than 10% is due to increased discretionary public expenditure, as in stimulus packages.

“This point is important because it shows that the claim that deficits have resulted from ‘overspending’ is false, both in the United States and abroad.”

Future deficit projections are based on forecasts that are unrealistic, he said, but the only way to reduce public deficits is to restore private credit. “To cure the financial crisis would require two comprehensive measures. The first is debt restructuring for the entire household sector, to restore private borrowing power. The second is a reconstruction of the banking system, effectively purging the toxic assets from bank balance sheets and also reforming the bank personnel and compensation and other practices that produced the financial crisis in the first place. To repeat: this is the only way to generate deficit-reducing, privately-funded growth and employment.” Until the private financial sector is “fully reformed,” he added, high deficits are inevitable.

Galbraith also challenged the commission’s authority to make recommendations about Social Security and Medicare. “Your mandate is strictly limited to matters relating to the deficit, debt-to-GDP ratio and fiscal stability of the US Government as a whole. Social Security and Medicare are part of the government as a whole ... [but] to make recommendations about the matching of benefits to payroll taxes — now or in the future — would be totally inappropriate.”

He added that there is no solvency issue. “The federal government is ‘solvent’ so long as US banks are required to accept US Government checks — which is to say so long as there is a Federal authority in the Republic.” He added, “This point has been demonstrated repeatedly in times of stress, notably during the Civil War and World War II.”

Markets are not calling for deficit reduction, since the Treasury is able to sell bonds at low rates, he noted. “As I write, 30-year Treasury bonds are yielding just over 4% — or just a little more than half their yield a decade back. ... It seems that Wall Street has made a strong vote of confidence in the fiscal probity of our current policies. This vote is unqualified, backed by money, contingent on nothing. It therefore represents a categorical rejection, by Wall Street itself, of the CBO’s doomsday scenarios and all other deficit-scare stories.”

He concluded that the best place in history for this commission would be no place at all. “You are plainly not equipped by disposition or resources to take on the true cause of deficits now and in the future: the financial crisis. Recommendations based on CBO’s unrealistic budget and economic outlooks are destined to collapse in failure. Specifically, if cuts are proposed and enacted in Social Security and Medicare, they will hurt millions, weaken the economy, and the deficits will not decline. It’s a lose-lose proposition, with no gainers except a few predatory funds, insurance companies and such who would profit, for some time, from a chaotic private marketplace.

“Thus the interesting twist in your situation is that the Republic would be better served by advancing no proposals at all.”

See the entire speech at newdeal20.org.

GOP CLAIMS FELONS TIPPED FRANKEN WIN. Fox News and other right-wing media are promoting a report issued (6/28) by Minnesota Majority, a conservative “watchdog” group, that claims that 341 felons in Hennepin and Ramsey counties illegally voted in 2008 and may have made the difference in the Senate race between Al Franken (DFL) and Norm Coleman (R), which Franken won by 312 votes. Jay Weiner wrote at MinnPost.com (7/19) that various panels of judges and even Coleman’s lawyer in court last year found there was no widespread fraud in the election. But that hasn’t stopped Coleman from calling Franken “an accidental senator” and Gov. Tim Pawlenty (R) saying there was “credible evidence” that the alleged felons could have flipped the election.

Weiner noted that the Minneapolis *Star Tribune* quoted Ramsey County prosecutor Phil Carruthers as saying of the Minnesota Majority investigation, “Overwhelmingly, their statistics were not accurate.” But even if 341 convicted felons voted, Weiner noted, there is no proof that felons would have voted for Franken. In fact, Franken’s legal team during the recount trial found a felon in northern Minnesota who voted for Coleman.

Republicans have used the controversy to call for photo IDs for all voters, but Weiner noted that convicted felons have driver’s licenses or other photo IDs.

Weiner noted that Pawlenty has been “fast and loose with his facts” in at least three comments on the recount. And Coleman won the 2002 Senate election 11 days after incumbent Sen. Paul Wellstone (DFL), who was leading in polls, was killed in a plane crash. “For Coleman to call Franken ‘an accidental senator’ is tragically ironic,” Weiner wrote, “for there are some who believe Coleman was the original accidental senator.”

GOP HINTS AT IMPEACHING OBAMA OVER IMMIGRATION. Rep. Lamar Smith (R-Texas), ranking member of the House Judiciary Committee, raised the possibility of impeaching President Obama if Republicans take control of the House. On Lou Dobbs’ radio show (7/14), Smith agreed with Dobbs’ statement that Obama is “awfully close” to violating his “oath to protect the Constitution of the United States” by not completely securing the border:

DOBBS: “The fact that we’ve witnessed both the Bush administration and now the Obama administration … refuse to secure the borders, refuse to enforce immigration law — at what point does this rise to the level of a breach of oath to protect the Constitution of the United States?”

SMITH: “I think we’re on the verge of being there right now. … Whatever law they’re not enforcing, I think it comes awfully close to a violation of their oath of office.”

ThinkProgress.org noted that neither Dobbs nor Smith mention the word impeachment, but purported violations of the oath of office were central to the grounds of impeachment of President Bill Clinton by the Republican House in 1998.

IRISH AUSTERITY DOESN’T LURE INVESTORS. Budget austerity doesn’t reassure financial markets, the Republic of Ireland has found. When Ireland’s economy collapsed two years ago, the small, heavily indebted country cut spending and raised taxes. But lacking stimulus money, Ireland stagnated. Moody’s agency cut Ireland’s credit rating to AA2, two notches below the highest AAA rating (7/19), citing the country’s swelling national debt, the unpredictable cost of its bank bailout plans and its weak growth prospects for the next three to five years, the Associated Press reported.

Matt Yglesias noted at ThinkProgress.org (7/19) that Ireland, as a relatively small economy tethered to the euro, had little choice but to follow the austerity measures demanded by the German-dominated central bank. Ireland and other “Eurofringe” states do not have the path to recovery that is available to a large economy such as the US, which can borrow in its own currency to promote growth with expansionary fiscal policy, Yglesias added.

Still, the Republican Party urges the US to follow the austerity plan, although they rule out any tax increases to help close the budget deficit.

From The Progressive Populist, August 15, 2010


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