On Holding Down The Conversational Fort, Or, Jobs, Republicans, And Hooey

As the next Congressional fight over payroll tax extensions and unemployment benefits and pipelines gets set up in the next few weeks for either its final chapter or to be kicked down the road a bit farther, one or the other, you’re going to hear a lot from our Republican friends about how much they value work and workers; most especially, they’ll tell you, they value American jobs for American workers.

After all, they’ll say, creating American jobs is the most important thing of all.

But if we were to look back over just the last few months, some would tell us, we could quickly find examples of how Republicans promote ideas that don’t seem to value work or workers at all, much less American jobs.

Well as it turns out, “some” seem to be right; to illustrate one of those examples we’ll look back a month or two or three to a time some Republicans might wish was long, long, ago, in a galaxy far, far away.

A successful comedian usually becomes more megalomaniacal as the success barometer rises. Initial success might be achieved from stand-up but then the comedian envisions a sitcom, then Broadway, albums, extended tours, Europe, and then his or her own production company. These things are all fine. Don’t do dinner theater. Don’t open stuff, like shopping centers or bowling alleys. Don’t do fairs, especially if you follow the pig contest.

--From the book “How To Be A Stand-Up Comic”, by Richard Belzer

So…the House Republicans went and promoted and passed out their payroll tax cut plan, and within that plan was a demand that the Junkie XL Pipeline – sorry, that should be Keystone XL Pipeline – get special “expedited” approvals, despite the objections of those who are worried about their water supply, and we have to do this, right now, those same House Republicans tell us, in order to put more or less 6500 folks to work getting the thing built.

And as we mentioned above, this is because the House Republicans care about American jobs and American workers.

So…it may strike you as a bit odd that the exact same House Republicans sent to the Senate in September the “Protecting Jobs From Government Interference Act” (HR 2587), which has only one purpose: it tells the National Labor Relations Board (the “NLRB”) that if workers at a company decide to form a union, or the company even thinks a union might be coming, and the company, in retaliation, decides to move work from that plant – or, for that matter, decides to move the entire plant – then neither the NLRB nor the United States Courts shall have the authority to do anything about it.

All of this stems from an effort by Boeing to move work from Washington State to South Carolina in retaliation for union activity by the Puget Sound workforce; the NLRB has ruled that Boeing cannot move the work, and the Company and its friends in Congress have joined forces with other anti-Union Members of Congress to move this legislation.

Need a third-party expert opinion to help make sense of the NLRB’s involvement and remedies? Consider this comment from University of Pennsylvania Law Professor Ellen Dannin, via Dennis Kucinich:

The NLRB has decades of experience with cases of this sort, and the National Labor Relations Act is clear that employer actions like Boeing’s violate the law. If this were a murder case, it would be a case in which the police found a person saying : “I did it,” while standing over a fresh corpse with smoking gun in hand.

Decades of experience, did she say? Yes she did – and she was right. In 1964, the Supreme Court ruled that the NLRB had the power to order remedies that include making companies “bring work back”, the relevant case being Fibreboard Paper Products Corp. v. Labor Board, 379 U.S. 203.

The 250 law professors who wrote a letter explaining why HR 2587 is such a bad idea point out that it’s not just about Boeing: companies will no longer have any reason to even bargain with unionized workers (or those who wish they were) before closing plants and moving work overseas, as they have to do now under the law; again, that’s because no one will have the power of enforcement in these cases anymore.

As you might imagine, that’s going to accelerate the departure of jobs overseas, and it won’t take very long to get to 6500, which makes all that Republican fussin’ and fightin’ and sanctimoneoussin’ about Keystone look a bit hollow, eh?

Let’s jump to the side track, as it were, and take a moment to talk about why the question of which Party controls Congress matters: HR 2587 was introduced into the House, and if the Democrats controlled the Chamber it would have died in Committee, and that would have been that…but they don’t, and it didn’t, so the bill made it to the House floor, where it passed with no Democratic “aye” votes and six Republicans voting “nay”.

Then it went to the Senate.

Senate Majority Leader Harry Reid (D-Sometimes Frustrating) has a bit more power than a Speaker of the House to kill any bill before his Chamber, if he’s so inclined; in this case the bill sits on the Senate Legislative Calendar, and unless he says otherwise, that’s where it’ll stay. Of course if Mitch McConnell (R-Hates Obama With The Fire Of A Thousand Suns) were Majority Leader, he would have that bill on the Senate Floor in a heartbeat – and it would pass with a Republican majority, unless Democrats were willing to stand firm and filibuster the thing or the President was willing to use the veto pen, neither of which seems particularly certain.

A companion bill, S 1523, was introduced by Lindsey Graham; it was referred to Committee, possibly to never be seen again – which is also thanks to Harry Reid, with an assist from Tom Harkin, who is the relevant Chair.

At this point I was going to move on to the “what have we learned today” part of the deal, but before I do, I want to take a moment to show you just what kind of legislation our GOP friends will bring to the table, given the chance:

S 1720, the “Put All Your Crazy Eggs In One Basket Act” (not the real bill title, but close enough), was introduced by John McCain just before Halloween (it’s now on the Legislative Calendar, not doing much), and it’s a classic.

This one single bill calls for a Balanced Budget Amendment vote, a semi-flat income tax, repeals “ObamaCare”, repeals Dodd-Frank (Wall Street reform), says you basically can’t sue for medical malpractice anymore, says that if Congress fails to approve any Federal Agency regulation in 90 days, it’s invalid, and then says no Agency can pass any regulation, of any kind, until unemployment hits 7.7%...and there’s a lot more besides, including, I kid you not, forbidding the EPA from regulating the discharge of pesticides into water.

So now let’s get to “what have we learned?”

How about this:

We are going to hear a lot over the next 60 days about how the GOP loves you, the American worker, but at the exact same time they are looking to…well…put all the crazy eggs in one basket, if they can get away with it, and at the same time they’re looking to make it easier and easier to send more jobs to more countries than ever before, even to the point of trying to tell courts and regulators that they can no longer enforce laws Republicans can’t get repealed.

As our GOP friends stand before you, these next couple months, professing their undying love, remind them of this conversation today, and HR 2587, and S 1720, McCain’s “Crazy Egg Basket” bill, and then ask them if they think the GOP really cares about American jobs, or if they’re just getting hustled by slightly-slicker versions of used-car dealership credit managers?

Then you lean in close, look ‘em in the eye, smile just a bit, and you say to ‘em: “And hey, while you’re here…what do I gotta do to get you into a slightly used 1993 Buick Roadmaster Estate Wagon…today?”

Then you can both have a little laugh – while you take their money and run.

On The Question Of Virginity, Or, “Starter? I Can’t Make Her Stop!”

I got a weird little story about my friend Blitz Krieger to bring to you today.

He’s had a crazy car problem, he has, and over the past few months he thought he had found a solution – in fact, he thought he had found the solution of his dreams – but in the end, he’s discovered that the things you dream about often don’t go according to plan.

The way it’s worked out for him so far, it’s been a lot of anticipation followed by a sudden wave of frustration, but I feel like he’s a lot better off having his particular problem with his car…because if he’d had cancer instead, he’d surely be dead by now.

The community is always embarrassed by the drag queens because straight society says, “A faggot always dresses in drag, or he’s effeminate.” But you got to be who you are. Passing for straight is like a light-skinned woman or man passing for white. I refuse to pass. I couldn’t have passed, not in this lifetime.

--Sylvia Rivera, describing the founding of Street Transvestite Action Revolutionaries (STAR), quoted in the book “Becoming Visible: An Illustrated History of Lesbian and Gay Life in Twentieth-Century America”

So here’s what happened to Blitz: he waited forever to buy his first car because he wanted, more than anything else in life, to drive his “perfect” car: a 1982 American Motors Eagle SX/4.

It’s a wild car: it was designed as a small hatchback…with a V-8 engine…and “switchable” 4WD…which allowed it to travel easily in snow in a way that virtually no other passenger car at the time could manage.

So he waited all this time, and two years ago, in California, he literally found a little old lady from Pasadena who sold him his “Dream Car”, which, ironically, was the same brown color as Al Bundy’s Dodge.

It drove great for about six months, but it’s been suffering from a strange malady that presents as a horrible grinding noise when he tries to start the car. He has no idea what to do – and standing in the way of a solution is an obsession that I find a bit strange:

He is absolutely determined that he is not going to go to just any mechanic.

Instead, Blitz told me that since it’s the first time the Dream Car needs to be repaired, he intends to go to a mechanic who has never worked on any car before his – and he says he wants to do this because he feels the experience of having the work done this way will make it more “special” for the both of them.

It took him almost a year to find someone, but when he did, it was truly perfect: he met a woman named Jenna Talia who wanted more than anything to be a mechanic.

She’d been studying through one of those “learn at home” programs, and, amazingly, she had an attitude similar to my friend Blitz’s: she knew about how to fix a car from what she’d read in a book, but she refused to actually repair one until she got the chance to work on her Dream Car – and even more amazingly, her Dream Car…was a 1982 American Motors Eagle SX/4.

They actually met on the bus (Blitz, naturally, refused to drive any other car except the Dream Car), and after a few months of knowing each other, Blitz proposed that Jenna might work on his car in his garage, and she agreed.

Fun Fact I Just Made Up: In a recent poll, 32% of voters thought the Iowa Caucuses were a country located near the former Soviet Georgia.

So we’re going out last Saturday night, and I get a call from Blitz asking if I could come by and pick ‘em both up there at his house, and I’m OK with that, because with two drinks in a night being a big evening for me I’m more or less a permanent designated driver.

I was wondering how it was going with the car, and what I saw was stunning: the upper half of the engine was sitting in the living room, entirely disassembled. There were rockers and rods and all kinds of stuff there, neatly arranged for easy reassembly, and it looked like they had really put a lot of effort into the thing, but it was clear that they just couldn’t get it quite figured out…which isn’t surprising, considering it was the first time for both of them.

And you could see, in just that first second, that the two of them were some kind of frustrated. But it gets worse: Blitz told me that this was her third “diagnosis”, and that, now that she was actually face-to-face with a real car, she seemed to be entirely confused about exactly what to do.

Apparently things had gone so bad that Jenna wouldn’t even leave his house at night to go home until she could get things figured out…and, from what he’s telling me, he’s ready to throw her out, buy a different car, and get that car fixed by a mechanic who’s been there and done that – a lot.

To put it another way, he’s ready to dump his virgin mechanic…for a slut.

Now here’s the really crazy part of the story: I’ve had a bit of experience with cars breaking down over time, and I knew what was wrong from the beginning, as many of you probably did, too: the starter was bad – and that’s located on the very bottom of the engine, not the top, which means everything they’d been doing was pretty much pointless.

But I couldn’t tell them that in the beginning…because, again, it would’ve just spoiled the experience…and I sure wasn’t gonna say “I told you so” now…so even though I could have offered them both useful advice about how ignorance ain’t bliss, they surely didn’t want to hear it.

So look, folks, we could have a lot more fun following out this comic premise, but there’s a bigger point: I don’t want a virgin mechanic, and surely not a virgin doctor – and they don’t even allow virgin pilots to carry passengers.

What is it about sex (and politics, for that matter) that makes people think they’ll be able to simply “get it” with no experience at all? What is it that makes them think that celebrating their own ignorance is the best way to show they’re ready to take on something that, frankly, requires a bit of trial…and error…before you really get it right?

I don’t know the answer, but the next time someone tells you how their ignorance makes them a lot smarter about something, do me a favor and think about Blitz and Jenna and the Dream Car – and the living room full of engine parts – and if that person’s running for office, run the other way. Quickly.

I’d appreciate it; so will you – and if I know Blitz, he will, too.

On The Emergence Of China, Or, Zhou Knew This Was Coming

After doing a bit of mountain hiking a few days back, I had a chance to get involved in a great afternoon conversation with the Alliance for American Manufacturing’s Mike Wessel, who also serves as a Commissioner with the U.S.-China Economic and Security Review Commission; the conversation was about how we’re doing when it comes to our relationship with China.

As it turns out, the two events went well together, because what I’m hearing from these guys is that we have a great big ol’ mountain to climb if we hope to get back to a level playing field in our interactions with this most important country.

There’s news to report across a variety of issues; that’s why today we’ll be talking about trade, human rights, cybersecurity, poverty and development, and the methods by which you can apply “soft power” to achieve hard results.

The entirely unanticipated result: all of this will reveal the naïveté of Ron Paul when it comes to foreign policy; we’ll discuss that at the end.

The King of China's daughter
So beautiful to see
With a face like yellow water
Left her nutmeg tree

--From the song “The King of China’s Daughter”, by Natalie Merchant

So let’s start with the background stuff: the U.S.-China Economic and Security Review Commission exists today because of the legislative wars surrounding China being granted Most Favored Nation status back in the day.

At the time, there were concerns about the way China does business on the international stage, and the Commission provides a follow-on monitoring program to examine questions regarding the Chinese human rights record, issues related to economics, cybersecurity issues, the intentions of the Chinese military, and lots more.

The Commission issues annual reports to Congress, and this year’s report has just been released.

Now normally I would present a point of view, followed by a counterpoint; today, we’ll do the opposite: there are folks I listen to out there, including Thomas P. M. Barnett, who would tell you that you are not going to be able to keep spending $900 billion a year on the defense budget if you can’t find an opponent worth $900 billion a year, and China looks like that kind of opponent, in a number of ways that Al Qaeda never could…even if, in Barnett’s opinion, China is a great big paper tiger.

Al Qaeda will never build aircraft carriers, or intercontinental ballistic missiles; they’ll never put to sea in submarines or build a stealth fighter, and they darn sure aren’t going to be mounting military operations in space or engaging in cyberwarfare.

And yet, if you’re a defense contractor, a General, or an Admiral, that’s where all the money is; naturally, if the money goes away, some of those Generals and Admirals are not going to have the chance to “graduate” from the military and become defense contractor representatives themselves.

Put it all together, and some would tell you that the biggest battle facing the Military/Industrial Complex today…is making sure we’re always nervously looking under our beds at night, just to be safe.

You should also know that our first Secretary of the Treasury, Alexander Hamilton, convinced his brand-spanking-new country to put in place a series of protective tariffs. The intent was to foster manufacturing in the then-agrarian United States; this was intended to create a climate favorable for non-farm businesses and to allow a far more disparate group of immigrants to come to the new Nation than what would have occurred if the only major business activities around the country were farming-related.

So with all that in mind, let’s talk China.

The U.S.-China Economic and Security Review Commission (the USCC) wants you to know that China is very much on a knifedge: the country is ruled by the Chinese Communist Party (the CCP) and the People’s Liberation Army (the PLA).

The USCC would tell you that the primary goal of the CCP and PLA leadership is to “protect their phony-baloney jobs” and the corruption that goes with ‘em (thanks for the line, Mel Brooks), and that they have to do a few things to keep those jobs safe: they have to find a way to make 900 million near-peasants into a middle class, quickly, because the peasants have seen how the other 300 million live, to secure markets and resources China has to begin to project power around the world, by military or other means, and they have to make extra sure that nobody in China, except the CCP, gets the opportunity to take over the political conversation – in other words, ensure that the “Arab Spring” doesn’t become the “Jasmine Spring”.

There’s more: in a country without something like Social Security, China’s population will age faster than any in history, and many of the 900 million seem to want to move from the country to the city in numbers so large that they literally can’t build cities fast enough.

So how does the Chinese Government deal with all this?

What China has been doing is seeking internal “quietude” by growing the economy through manufacturing, and they have decided to choose certain industries as the linchpin of “valuing up” that growth, so that China’s low-tech manufacturing becomes more high-tech. (Think computers and telecommunications, space, alternative fuel vehicles, aviation, green energy technologies, that sort of thing.)

China has decided that virtually the only way a foreign company can do business in any of the “chosen” areas is to mandate technology transfers that allow Chinese companies to obtain the methods and tools needed to compete with the foreign supplier down the road. (This is officially against WTO rules; China disputes that assertion. The USCC says they now make these demands in subtle ways that are less “enforceable”.) Chinese buyers are told to give preference to “state-innovated” technologies.

China also uses their currency as a way of “preferencing” the local economy. The Renminbi (RMB) is, according to most observers, deliberately undervalued in order to make Chinese goods cheap overseas and imported goods expensive at home. Mike Wessel would tell you it’s about 40% undervalued, and that that “trade tax” (my term, not his) costs the US budget about $500 billion a year, with a similar impact on State budgets. Despite much USA pressure and some recent upward valuation (roughly 6% last year), it looks like China is not going to move much on the RMB anytime soon.

Wessel anticipates China will spend about $1.5 trillion on anti-poverty subsidies to quell unrest over the next 5 years; that would become a lot more difficult if a revaluation were to occur.

During the 1990s China began to move to a free-market model that emphasized the growth of privately-owned businesses; Wessel says today China is going back to promoting the State-Owned Enterprises (SOEs) to the detriment of a free market.

This has been bad for our own industrial strategy, such as it is, which assumed we would be selling China lots of high-tech goods, even as they sold us cheap goods. That has not worked out; in fact, China is now the largest market for cars and cell phones, among other products…and those products are not being manufactured in the USA.

It’s reported that the theft of intellectual property is the normal way business is done in China; as an example Wessel notes that something like 80% of the software on Chinese corporate computers is stolen.

We are told that the PLA is looking to create an “area of influence” that extends from the South China Sea to space; to this end the first Chinese aircraft carrier is being readied for service, a stealth fighter is in development, antiship missile systems are being upgraded, and a “counterspace” capability has been demonstrated. (The idea is that Chinese satellites explode near other satellites, thus disabling them. The USA and Russia seem to have similar capabilities.)

Chinese military doctrine, Wessel tells us, advocates shutting down the “network-centric” model of US military operations; it is believed that a significant campaign of computer-based intrusions and attacks on the USA have already taken place, including two events that took place at Department of Defense-operated satellite-control facilities that seem to have been external attacks.

Wessel anticipates that a war with China would begin with China attempting to disable various USA computer networks and infrastructure; the resulting confusion would be used to China’s advantage.

Beyond that, Wessel worries that we’re buying so much of our telecommunications and computing infrastructure from China that we may be vulnerable to being spied upon by our own laptops; he cited two examples of this problem: a computer sale to the State Department that involved Lenovo laptops and classified data, and a sale of network equipment by Huawei to Sprint that might have allowed classified computer traffic to be compromised.

Chinese spying, Wessel would tell you, is widespread and not limited to government: trade secrets are up for grabs in a big way, and even the US Patent and Trademark Office had to upgrade its security after it discovered patent applications were being snatched out of the system and appearing as Chinese products, with Chinese patents, before the applications could even be acted upon in the USA.

Wessel also wants you to understand that China uses “soft power” to advance its interests: there are lots of “hosted” opportunities to study in China, former military officers of various nations, including the USA, are recruited as “representatives”, and there are lots of “get to know us” opportunities that have been created around the world; all of this is intended to “sell” China in ways we do not.

And with all that said, let’s talk about Ron Paul.

Paul’s attitude toward China seems to be that we should allow free, unimpeded trade, and that the currency manipulations about which many complain would not exist if we went back to a gold standard. Paul stated in 2001 that:

Concern about our negative trade balance with the Chinese is irrelevant. Balance of payments are always in balance. For every dollar we spend in China those dollars must come back to America. Maybe not buying American goods, as some would like, but they do come back and they serve to finance our current account deficit.

Free trade, it should be argued, is beneficial even when done unilaterally, providing a benefit to our consumers.

If I’ve been paying attention during the recent Republican debates, this is still what Paul believes about China, and here are a couple of thoughts about how he’s got it entirely wrong:

Paul may not like it, but Hamilton succeeded when he used tariffs to jump-start a manufacturing economy in this country, and not having free trade is working pretty well for China as well. Unfortunately, it’s working very badly for us.

On the one hand, Wal-Mart and all the others who import less-expensive products from China have done a great job of masking the fact that incomes have been either stagnant or declining for about 99% of us, but Wessel would say that’s been at the cost of sending millions upon millions of jobs to a country that is working hard on every level to ensure we can never again compete as a manufacturing nation – and while we thought we would make up that difference with our high-tech advantages, theft and spying and a devalued currency and “partnerships with benefits” and protectionist “state-innovation” rules have made sure we don’t.

A gold standard won’t fix this, and simply advocating that we allow China unfettered access to USA markets while they rob us blind seems a bit like suggesting everyone leave their houses unlocked so that the market can more efficiently decide which ones are the best for burglars.

So we’ve covered a lot of ground today, and let’s wrap this thing up with a summary of where Commissioner Wessel says we’ve been:

We have a competitor in China who will do more or less anything to keep its current political leadership in power, even as that leadership is forever worried that 900 million of its citizens will discover that you can overthrow a government.

The PLA is busy as well, with the South China Sea and everything above being the “area of influence”; computer warfare seems to be the next phase.

“Soft power” is also being applied; we have former military officers and Chinese language students and lots of other folks either hearing or telling China’s story all over the world and we don’t do a good job of answering back.

All the while, the CCP is working hard to create a higher-tech Chinese economy, by hook or by crook, and that’s putting the future of our own economy at risk, not to mention the operations of our government.

We, as a people, seem to be unaware of all of this, and that plays out in the form of ignorance in our politicians, with Ron Paul being a recent prominent example.

So now it’s up to you to figure out what all this means: is this really a substantial threat that we have to defend against (and there’s lots of evidence to suggest it is), or is this an effort to find a way to keep spending that $900 billion every year?

My take: Wessel’s not a defense lobbyist, even as he is trying to promote manufacturing in the USA, and there is a lot of evidence to support his thinking; with all that in mind I’m more inclined to believe he’s sending a warning we better pay attention to than he is seeing Commies under the bed.

Nonetheless, there are lots of folks who would like to keep stackin’ that big cheddar, at your expense, and even as we think very hard about China, we better also keep in mind that Northup Grumman could be just as dangerous.

On Punishing The Job Creators, Or, “The Poor Have It So Good Today”

You know what the problem is with America?
The poor don’t get just how great they have it.

I’ve hear this a lot lately; the basic thrust of the discussion is that all those cars, TVs, DVD players, refrigerators, and stoves that have found their way into the homes of the economic underclass are proof there’s really no such thing as “poor” in America.

If they were truly poor, the argument goes, well…think recycled corn.

And if the poor want things to get better, let ‘em pull themselves up by their own bootstraps – and if they can’t, then let ‘em rot, because that’s the best thing for the economy.

But I don’t buy all that, and by the time we’re done today, I hope to have given you a whole new perspective on how jobs get created in this country.

There isn't a rich man in your vast city who doesn't perjure himself every year before the tax board. They are all caked with perjury, many layers thick. Iron-clad, so to speak. If there is one that isn't, I desire to acquire him for my museum, and will pay Dinosaur rates.

--From the letter "A Humane Word From Satan", by Sam Clemens

We must have completely misjudged how many Americans live here about 15 years ago, because everywhere I go I see vacant buildings.

Empty retail space, empty office buildings, empty factories, and all of it apparently just thrown up for no reason whatsoever.

But then I recently saw some historical pictures from the 1990s, and it turns out a lot of those buildings used to have businesses operating within their now-abandoned walls – businesses which have since gone away.

And that’s when I began to get confused.

You see I’ve always known, just as you have, that it’s all about capital; that’s why it’s only the very wealthiest people who can create jobs in this country.

And I’ve always known that they can only do that when they are 100% certain that nothing was going to hurt their current economic condition, and that any sacrifice on our part, no matter how large, was crucially important to keep this very special source of economic vitality full and happy and creating jobs for America’s future.

And when I look at the statistics, I know we’ve been doing our part: the wealthy have been getting wealthier, faster, over the past 30 years than at any time in memory…and yet, for some reason, all those businesses were closing down.

So many, in fact, that I began to question whether America actually understands how jobs get created. It even began to cross my mind that maybe we’ve been coddling the wrong people.

I mean, what if the actual job creators…are the people who no longer work in those empty buildings?

It makes sense, if you think about it.

The common argument is that those with capital make investments, which creates jobs.

But why would anyone invest capital unless there was perceived demand for a product, or a need to do research to meet perceived future demands?

That seems to suggest demand drives investment; a good way to “prove” the point would be to consider what happens to capital without demand: building factories and ships and warehouses does no good if there are no buyers at the store.

Of course, I’m not the first to think workers drive demand: Henry Ford famously paid his workers double the prevailing wage; part of the idea was to create demand for all those Model Ts he was cranking out in his new factories.

So now that we know who the job creators really are, and we established years ago that we have to do every single possible thing on the face of the Earth to keep the job creators happy, happy, happy…how do we get started?

Well, here’s an idea: the Fed willingly gave more than $1.5 trillion to banks for bailouts, mostly by simply “creating” money; now I’m proposing we do the same for homeowners.

If you have a loan backed by Fannie Mae or Freddy Mac, let’s allow you to apply for a one-time $200,000 markdown on your mortgage – and let’s allow the first “tranche” of any markdown to apply to any back-due loan payments.

The amount of “haircut” (fancy technical term) you might impose on each loan could vary, but $1.5 trillion would allow 7.5 million writedowns at $200,000 each; if you limited the haircut to 50% of the loan value many would be less than $200,000. (It’s estimated that 11 million homes in the USA from are underwater; $2.5 trillion or less would cover all underwater loans.)

Since Fannie and Freddy back $10 trillion or so in mortgages, and you probably won’t be able to write down every loan, how would you decide who gets writedowns?

One way would be to create a “triage score” that incorporates things like the odds an applicant/borrower can pay off a restructured loan and the amount of foreclosed or underwater homes in any given community; the 7.5 million highest (or lowest) scores get the writedowns.

(One caveat: many who are having trouble today with home loans are also laid off; unless we can find ways to keep those folks in homes until they can find work, we’ll still have a substantial foreclosure problem.)

Writing down mortgages does several things: it quickly applies a “moral hazard cost” to those who deliberately lent to unqualified borrowers, it turns millions of “underwater” loans into homes with equity, it turns millions of “nonperforming” loans into “performing” loans, keeping millions out of foreclosure, it gives communities a chance to either stabilize or recover from “mass foreclosure-itis”, and it finally breaks the deadlock between banks and regulators over who will blink first on loan “haircuts” versus bank recapitalizations.

Wait? What was that last one?

Banks are scared to death that if they write down all these loans they will have to find new capital to make up the losses – and they probably won’t be able to raise that new capital by charging a $5 fee to have a debit card.

That could mean a few things: it could mean big banks are going to have to more sneakily raise lots of other fees and sell things to raise capital, or, perhaps, the Feds ease back a bit on capital requirements.

Or…it may mean that the banks end up having to get smaller. Consider this scenario: a forced haircut of significant size, followed by regulators who stand firm on capital requirements, followed by a less-than-stellar round of stock offerings or asset sales; next thing you know, “too big to fail” becomes “we have to spin off some part of the retail business for reasons related to the rules governing capital requirements”.

This could happen without the passage of new regulations or legislation beyond the initial bailout authorization – and even that might be within the power of Federal regulators already, since Fannie and Freddy, as the owners of many of these loans, have the power to forgive some or all of that debt, and capital requirements are not set by legislation.

And where does all that leave you?

Well, you’d have 7.5 million families that could more easily afford to make house payments than before, and those folks will probably take that money and spend it on things they haven’t been buying for several years: home improvements, cars, appliances, and the travel and entertainment markets could all see substantial bumps in sales.

Many, if not most of those families, would immediately go from being “underwater” to having equity, which always helps turn reluctant consumers into willing consumers.

Cities could begin to recover as well, as the number of foreclosures bottoms out; once banks are forced to write those properties down from “2006 value” to today’s market value they’ll be looking to sell ‘em at bargain prices; that’ll help soak up today’s housing supply “overhang”. All of this is good for beleaguered new home builders, who are today in a holding pattern.

And here’s the best part: if you get a handle on foreclosures, and put some cash back in some pockets, and start selling stuff…well, that looks like a bit of a jobs program, even if Congress might not be willing to sign up for one just at the moment.

So how about that?

If we make an effort to give to the actual job creators the same level of incentives that we gave to the “demand responders” since November of ‘08, we could actually find ourselves creating actual jobs with our money – and doing it by the millions, just when we need ‘em.

Considering how fast we were able to find ways to create TARP, QE1, QE2, an alternative auto industry bailout, and anything else a banker could ask for, including, I’m sure, partridges in pear trees…well, we should be able to knock this out over a weekend, assuming we can either make a really convincing argument – or do like the banks do, and lay out a million a day for lobbyists until it gets convincing enough to get things done.

Of course, if we have to we could also start Occupying the Offices of reluctant Members of Congress to help make the point; as long as the end result is some serious pampering of the real job creators, I’m all good.

On Protecting The Innocent, Or, Is There A Death Penalty Compromise?

I don’t feel very good about this country this morning, and as so many of us are I’m thinking of how Troy Davis was hustled off this mortal coil by the State of Georgia without a lot of thought of what it means to execute the innocent.

And given the choice, I’d rather see us abandon the death penalty altogether, for reasons that must, at this moment, seem self-evident; that said, it’s my suspicion that a lot of states are not going to be in any hurry to abandon their death penalties anytime soon now that they know the Supreme Court will allow the innocent to be murdered.

So what if there was a way to create a compromise that balanced the absolute need to protect the innocent with the feeling among many Americans that, for some crimes, we absolutely have to impose the death penalty?

Considering the circumstances, it’s not going to be an easy subject, but let’s give it a try, and see what we can do.

Let’s Fix An Error Dept.: Apologies are in order, because in our last story we identified The Riverside Church in Manhattan as the place where George Carlin learned to be Catholic – and that could not have been more incorrect. Bad research was the culprit here, and it’s something that we’ll obviously be working to improve. So, once again: sorry, and my bad.

Now if all the states want to limit the imposition of the death penalty to just the guilty (and after what we just saw in Georgia, that’s no longer 100% certain), one way you could do it would be to make it a lot harder to prove guilt – and that’s what we have in mind for today’s proposal.

As you may recall, we convict today with a “burden of proof” that is described as “guilt beyond a reasonable doubt”; as we now know, it is possible to prove guilt, beyond a reasonable doubt, even when there’s a whole lot of reasonable doubt to be found.

In Davis’ case, he was given a chance on appeal to prove his innocence, and despite this conclusion from the Judge hearing the case…

"Ultimately, while Mr. Davis's new evidence casts some additional, minimal doubt on his conviction, it is largely smoke and mirrors…"

…Davis was still executed.

So the way I would get at this problem would be to change the burden of proof in these cases: if you want to execute someone who is facing an aggravated murder or other capital charge, instead of “guilt beyond a reasonable doubt”, I would require “guilt beyond all doubt”.

If you can’t get to guilt beyond all doubt, but you can prove guilt beyond a reasonable doubt, then you could impose no sentence harsher than life without parole.

If this proposal had been in effect in Davis’ case, there could have been no execution after he argued that he was denied the effective assistance of counsel, because that would have erased “all doubt”; after that he would have had the rest of his life to demonstrate that he was wrongly convicted.

There are going to be a few reasons people might not like this proposal, and I’ll try to address some of them briefly:

Right off the bat, many will complain that because of the new burden of proof it will be virtually impossible to have executions at all; I would tell those folks that if that were to occur…then the system is working. The entire purpose of this plan is to make executions an extraordinarily rare occurrence and to move just about everyone on Death Rows nationwide to a “life without parole” future.

Beyond that, many will say that capital punishment is morally unacceptable under any circumstances, and to those folks I would respond that y’all make a pretty good point…but at the moment there are a lot of Americans who do not hold that moral position – and they have strong feelings too – and unless we can move them to a different point of view, then the best chance we have to prevent the innocent from being executed is to find some sort of compromise like this one.

(Don’t believe me about that “strong feelings” thing? How many of the readers here would be OK with the death penalty for Osama Bin Laden, if he were proved “beyond all doubt” to have been the person behind 9/11?)

A similar line of thought is expressed in the idea that we are seeing more and more voters who do oppose capital punishment, and with a bit of patience, this problem will go away.

After what happened to Troy Davis, I think there’s more urgency now than there was in times past, and that’s because we now see that at least one State will quickly kill a prisoner in order to “clear the case”, suggesting to me that patience is not as good an option as it was before.

Finally, I suspect many will feel that the effort to pass a proposal like this one would distract from the effort to end the death penalty, which is, again, a pretty good argument.

To those folks I would respond that we may get some states to end the death penalty today, but there are a lot of other states that are not going to want to give up the death penalty for some time to come (remember the people who cheered Rick Perry’s execution record?), and if we aren’t going to be able to end the death penalty completely, then I think we have to offer some sort of compromise; a compromise based on the concepts of “killing the innocent isn’t The American Way” or “you could still execute Osama” could appeal to voters who simply won’t give up on the death penalty altogether.

So that’s what we have for you today: even though I personally would prefer that we end the death penalty and just go to life without parole for all these crimes, I don’t think we’re going to achieve that in a lot of states; with that in mind I’m proposing a compromise that would protect the innocent by ending virtually all executions, even as it allows an extraordinarily difficult to reach exception that could satisfy those who absolutely do not want to see the application of the death penalty come to an end.

It’s an imperfect compromise, I’ll admit – but in a big ol’ swath of America that runs from roughly Florida to Idaho, it may be the best compromise we can make right now, and right now, in those places, that might have to be good enough.

Entirely Off The Subject Dept.: We are still trying to get signatures for the petition to change the name of Manhattan's W 121st St (one block from Seminary Row) to George Carlin Street, and we need your help; you can sign right here. The goal is to reach 10,000 signatures by Monday, so...get to it.

On Bilking The Sophisticated, Or, Check It Out: We’re Suing Banks!

I took a break to enjoy the holiday, as I’m sure many of you did, but my inbox kept busy, and on Friday came a doozy, courtesy of the Washington Post.

You remember that little bit of a banking crisis we had a couple of years back, where banks around the world might have possibly, maybe, just a little, conspired in a giant scheme to package toxic mortgage loans into Grade A, investment-ready securities instruments, which then blew up in everyone’s faces to the tune of a whole lot of taxpayer bailouts?

Well all of a sudden, it looks like an agency of the Federal Government is looking to do something about it, in a real big way.

Last Friday the Federal Housing Finance Agency (FHFA) announced they’re suing 17 firms (I’ll give you a list, bit it’s pretty much all the usual suspects); depending on who you ask the Feds are seeking an amount as high as $200 billion.

As Joe Biden would say, it’s a big…well, it’s a big deal, anyway, and that’s why we’re starting the new week with this one.

“An artist is only answerable to himself. He promises nothing to the centuries to come save his own works. He stands caution only for himself. He dies childless. He has been his own king, his own priest, and his own god.”

--Charles Baudelaire, as quoted in the book “Cezanné and Beyond”, edited by Joseph J Rishel and Katherine Sachs

So what do we know?

As we said, on Friday the Washington Post and others reported that there were a series of lawsuits filed by the FHFA in their capacity as Conservator of the assets of Fannie Mae and Freddy Mac against darn near everyone.

The FHFA is alleging, to make a long story short, that everyone involved misled Fannie Mae or Freddy Mac (the “Entities”, in the words of the lawsuits), to some extent, and that the misleading involved making representations to the Entities about the various metrics related to what Fanny and Freddy were buying from these banks.

For example, it’s alleged that when certain banks sold batches of mortgage loans to the Entities, they lied about how many of the owners were actually living in the homes; that makes a difference when you’re trying to figure out how likely a borrower is to pay back a loan.

It appears that a defense the banks will offer is that Fannie and Freddy were “sophisticated investors” who should have known the risks buried in the batches of loans they were buying (and they were sophisticated investors: they bought, literally, trillions of dollars worth of loans) – but if it can be proven that the banks were lying about what was in the loan packages, that defense might not do so well in front of a jury.

“Everyone involved” includes Bank of America (B of A), Citigroup, JP Morgan Chase, Countrywide (which means B of A is actually being sued twice), Deutsche Bank, Credit Suisse, the UK’s HSBC and Barclays Banks, France’s Société Générale, the Royal Bank of Scotland, Nomura Securities (representing Japan), and GE and GM (GE Capital is a surprisingly large and varied business; GM got in the banking business to finance auto sales, and you may today know them as Ally Bank).

Of course, Wall Street is also part of “everyone”; that’s why the list also includes Goldman Sachs, Morgan Stanley, and Merrill Lynch (which means, thanks to acquisitions, that B of A is actually getting sued three times). The City of Memphis also proudly makes the list, thanks to First Horizon.

Some notable names not on the list? Key Bank and Wells Fargo, who seem to have escaped action so far; there’s also UBS (Union Bank of Switzerland), who was already served with a similar lawsuit in July.

It is difficult to determine exactly how much money is involved, as various sources disagree, but we know that Deutsche Bank is being sued for about $14 billion, all by itself. (B of A is being sued, all told, for a bit over $50 billion; they’ve already paid out more than $12 billion this year to settle another similar claim.)

Felix Salmon, at the Seeking Alpha website, has created a chart that seeks to measure who is in the most trouble here; by his measure JP Morgan Chase is far and away at the top of the list…except that the current incarnation of B of A represents three of the top eight spots on his list, which suggests the FHFA is targeting them for the most recovery. (Salmon used the number of individual defendants, how many pages were in the lawsuit, and whether the suits seek punitive damages as his yardsticks; from there he calculated a score that makes up his rankings.)

All this had to happen right now, it appears, because a statute of limitations is in play; the WaPo reports that a failure to file the suits would have meant the FHFA would have lost the ability to recover those monies. (It’s also reported that pre-lawsuit negotiations were stalling, and those negotiations will presumably continue, with a series of impending court dates to help, shall we say, sharpen the focus.)

Now that is pretty much all the story I have for you today on this one – except for a bit of a “discuss amongst yourselves” to finish things up:

It has been suggested that the FHFA is in an inherently conflicted position in all these cases. That’s because the agency is acting as both the regulator of these banks and the “victim” as we seek any monies that may be due from any fraud.

So what would be a better situation?

Should the FHFA continue to regulate the banks they’re suing as a victim, or should another regulator be put in place…or should another Conservator be appointed, leaving the FHFA as “just a regulator”, and not a victim?

It’s a question worth about $200 billion, more or less – and even in these times, that’s still a lot of your money.

On Doing Better Than 50%, Part Two, Or, Is “Made in USA” A Jobs Program?

When last we met, it was to discuss a Big Idea that the Obama Administration might apply to get some job creation going, despite a difficult Congress; the Big Idea was to look at the “Buy American” provisions that exist in our laws, regulations, and Executive Orders and see if we could practice a bit of “jobs arbitrage” by not just meeting the “Made in USA” requirements when governments across this country make purchases, but exceeding them.

(As it stands today, pretty much any “good or service” with more than 50% Made in USA content qualifies as a Made in USA purchase, even if 49% of the “good or service” comes from somewhere else).

At the time, I told you that if all went well we could look forward to comments from both Labor and the Administration as to the practicality of the Big Idea, and as it turns out I have comments for you that hit close to that mark – and a bit more besides:

On Saturday I just happened to bump into Congressman Adam Smith (WA-09); in the course of that conversation I told him what we’re doing here, and he wanted to offer a few thoughts of his own…and when you put all that together, I think we’re going to have a lot to talk about.

“Tis surprising to see how rapidly a panic will sometimes run through a country. All nations and ages have been subject to them; Britain has trembled like an auge at the report of a French fleet of flat bottomed boats; and in the fourteenth century the whole English army, after ravaging the kingdom of France, was driven back like men petrified with fear; and this brave exploit was preformed by a few broken forces collected and headed by a woman, Joan of Arc.

--From “The Crisis”, by Thomas Paine; essay of December 23, 1776

So the two-second recap of the Big Idea is that if government, at all levels, were Buying More American we could create More American Jobs, and as we mentioned above, the way the rules stand today, 51% Made in USA is good enough – and that seems to leave a lot of room to do better.

Of course, nothing is as simple as it seems, and despite what Tom Lehrer might say, it’s not all skittles and beer for this proposal either.

I have a source in the Administration who would not go on the record for this story; nonetheless I was sent a detailed email response “on background”, which I’ll paraphrase for our use today:

We are looking to expand US trade abroad, and we have made deals for access. We agree not to restrict, for the most part, where purchases can be made, and we expect reciprocity from the rest of the world when their governments do their purchasing - or at least from those governments with whom we have a WTO Government Procurement Agreement (GPA) or a Free Trade Agreement (FTA). (Want even more details? Check out either the Trade Agreements Act of 1979 or this Congressional Research Service report).

The Administration would tell you that 95% of the world’s consumers live outside the USA, making trade reciprocity particularly valuable for the US.

They would also tell you that if we decide on our own to “change the deal”, then we should expect retaliation from other governments.

Beyond that, they would suggest that there are US companies that source many of their products or product components globally, and those companies would actually be hurt by stricter Made in USA requirements.

Finally, the Administration points out that there is a dollar cost for more Made in USA, as opposed to using what can often be cheaper foreign sourcing.

In the introduction I suggested that I had a comment from Labor, and that’s somewhat correct. I contacted the Washington Sate Labor Council (WSLC) for a comment, and they sent me material that came from the Alliance for American Manufacturing (AAM), at the same time telling me that the AAM’s position on Buy American is the same as their own.

It is inaccurate to refer to the AAM as a Labor organization, however, as they are a partnership of Unions, manufacturers, and other interested parties. Among those partners are the AFL-CIO and the United Steelworkers (USW); the USW was one of the founders of the group.

They take issue with a great deal of what the Administration has to say, and I’ll start with a quote from an email sent to me Friday by the AAM’s Steven Capozzola:

The threat of retaliation for buy America is ridiculous. The law [the Buy American Act, 41 USC 10a-d] is specifically written so as to be applied when permissible under our existing trade obligations.

Here’s a quote from AAM material that was referred to me by the WSLC:

…the U.S. is, by far, the world’s largest importer, soaking up a net $819 billion in goods in 2007…The U.S. imports far more than it exports, a balance of sales that our trading partners are anxious to preserve. This is not about restricting imports. It is about using taxpayer dollars, when allowed by our international obligations, to purchase U.S.-produced goods. As the global downturn has progressed, many industrialized countries such as France and China have already taken similar action to support their domestic manufacturing base.

…These trade agreements do however allow for domestic preference under a number of circumstances…These preferences were negotiated for a reason. It would be irresponsible not to utilize them to the fullest extent possible.

…By contrast, other countries have held themselves out of the reform movement and have instead opted to promote their own manufacturing base through closed self-procurement programs. A good example is China, which, in addition to a recent $586 billion stimulus program, continues to subsidize its own producers via deliberate (and illegal) currency undervaluation. Until countries like China make the same commitments, and sign-on to internationally accepted procurement agreements, the U.S. will accomplish nothing by making yet more unilateral concessions.

In addition, as noted above, these contentions rely on the baseless assumption that the U.S. currently has any significant access to foreign procurement markets that would be at risk if other countries “retaliated.” The majority of the foreign stimulus in PPI’s tally is made up of $614 billion being spent by countries that have no procurement obligations towards the United States and that already apply domestic procurement preferences (principally China, but also India and Brazil).

-- Alliance for American Manufacturing, “The Facts on ‘Buy America’ and Domestic Sourcing”, February 2009

The AAM would also want you to know that in addition to China numerous other countries, specifically Canada, certain European nations, Japan, and Brazil all use other forms of “discrimination” to “preference” their goods over ours when it comes to government procurement: impossible-to-meet technical standards, “murky” purchase procedures, and bid rigging are all tools used around the world to make sure local suppliers are just a bit more, shall we say…reciprocal…than a US supplier might be.

Look, I hate to do this to everyone, but we’re once again running longer than we should, and we still have a lot more to talk about, so at this point I’m going to call “cliffhanger!” and set us up for a Part Three.

Here’s the “agenda”:

We’ll be talking about how the devil’s in the details: specifically, we’ll be looking at what “Buy American” is already excluded from these various trade agreements– and there’s a lot more than you might think, even as some of it is targeted in amazingly specific ways (to do that we’ll be paying particular attention to the annexes to the WTO agreement); we’ll also get Congressman Smith’s reaction to all of this…and once again, we’ll see if we can’t get it all done in 1500 words or less.

And on a lovely summer’s day, what could possibly be better beach reading…what with the redolence of the lazy sea breezes and the surf washing gently up on the shore and all…than 1500 more words on the annexes to the WTO agreement and how it all relates to sneaking a jobs program past recalcitrant Republicans?

I can’t think of anything else either, and I can’t wait to see you there.

On Speaking To Power, Or, When Sanity’s Gone, There’s Always Satire

So everybody’s hearing the news, right?

There is a tentative debt ceiling deal, and this Administration and Congressional Democrats seem to have won everything they wanted: Republicans get to have multiple “we don’t approve” votes before 2012 on raising the debt ceiling, there won’t be any new revenue, there’s going to be another “hostage-taking” event around Christmastime, for many Democrats the issue of the Ryan Budget and the dismantling of Medicare is likely off the table for the 2012 electoral cycle, and the Administration seems to have figured out a way to not involve itself in shaping the way that entitlement reform will work out.

All in all, it’s some pretty slick negotiating, and I’m sure this Administration and Democratic Congressional leaders must be very proud.

Even on bad days, however, you gotta have some fun, and that’s why I’m encouraging everyone to take a minute today to say #thanksalot.

“This is tremendous, Don, just tremendous. The atmosphere heavy, uncertain, overtones of ugliness; a reminder in a way of how it was in March of 1964, at Miami Beach, when Clay met Liston for the first time and nobody was certain how it would turn out.”

--Howard Cosell, from the Woody Allen movie “Bananas”

There are a thousand other people today who will detail exactly where this went wrong, but I’m all about at least sending some kind of message; in order to say “thanks a lot” I’ve been Tweeting satire to the White House, and I’m hoping you’ll take some time today to do the same thing, using the #thanksalot hashtag.

“But I don’t Twibble, or Twister, or whatever they do on twitter”, you might say “and I don’t really get how it works”.

No problem.

If you want to send a message to a twitter user, you just put an “@” in front of their name, as in @whitehouse, usually right at the beginning of your message.

Hashtags are keywords that allow for lots of similar messages to be located, all together; when you put an “#” in front of a “word” it becomes a hashtag, as in #thanksalot or #arentyoutiredof. Popular hashtags become “trending” hashtags, and that’s one way how you make a big public statement on twitter (“Retweeting” someone else’s message is another way it’s done; retweeting and the sending of hastagged messages often occur symbiotically.)

Just to get you in the sarcastic spirit of the thing, here are some of the Tweets I’ve sent so far today:

@whitehouse Obama visits fallen building, a collapsed trench, and Carlsbad Caverns; says he'll "never cave" on debt deal. #thanksalot

@whitehouse republicans propose "logan's run", obama seeks reasonable compromise. #thanksalot

@whitehouse offers 1 Wet-Nap for each American thrown under bus yesterday; Republicans protest new "entitlement" #thanksalot

@whitehouse Prozac pill commits suicide; says in note that White House caving once again is "too depressing" #thanksalot

@whitehouse To avoid uncertainty in December, Obama Administration announces today they're caving on Bush tax cut extension #thanksalot

@whitehouse Dec. 23, 2011-Boehner: "We'll agree to revenue increases when both houses have a clean vote to repeal Obamacare..." #thanksalot

@whitehouse Dec 25, 2011-Administration announces entitlement compromise: cat food now food stamp-eligible #thanksalot

@whitehouse Obama Administration announces they prefer to negotiate with hostage-takers: "It makes us feel less guilty..." #thanksalot

@whitehouse Obama Administration "feels America's pain", announces nationwide program to distribute K-Y after debt deal #thanksalot

@whitehouse is there some sort of political viagra that could make obama "stand firm", just once? #thanksalot

At this point it looks like the only way this stinker goes down is if House Democrats vote against this bill and take the “Debt Ceiling Sword of Damocles” that the President has placed over their heads and put it right back on his, forcing either a 14th Amendment solution or a “clean” debt limit increase; if they do they not only stop this next hostage-taking dead in its tracks, but they create, for this Administration, the same level of fear that the Tea Party has today, and if that happens, then we move into the next stage of debt reduction negotiations from a position of strength.

If they fail to stop this deal, then when Medicare gets whacked in December the Democrats become co-conspirators – and at that point, for a Congressional Democrat up for reelection in ‘12 it’s gonna be either go down with all the other incumbents or run against Obama.

And at that point, the most interesting political question might be: did Obama depress turnout enough to cause Democrats to lose even more seats in Congress, or, when the details are better-known, is there going to be a huge “throw out all the bastards” vote that hammers Republicans just as ferociously as it does Democrats?

And what about Michelle Bachmann?

I don’t know, but it should be quite a soap opera between now and then, so stay tuned, make sure to say #thanksalot…and then do it a few times more…and most importantly of all, try to have as much fun in a bad situation as you can.

After all, as long as it’s happening to everyone else, it’s still comedy; until it finally does hit you…it’s not yet officially tragedy.

On Running Your Own Government, Or, Why Pay The Military?

I have not been talking about the insanity around the debt ceiling and debt and deficit and the efforts of Republicans to drive us all off the cliff, but I am today – and I’m going to do it by allowing you to grab ahold of this problem and see for yourself just how unbelievably bad this manufactured crisis is going to be.

You will hear a lot of conversation about the consequences from others; today, however, you are going to get the chance to be both the President and the Secretary of the Treasury, and you will get to decide for yourself exactly what bills the Federal Government should and should not pay as the cash runs out if a deal is not made by the time borrowing authority runs out.

At that point you’ll be able to see what’s coming for yourself – and once you do, you won’t need me to tell you what ugly is going to look like.

“…no state has the right to secede unless it wishes to…[and] it is the President’s duty to enforce the laws, unless somebody opposes him…”

--William H. Seward, deprecating President James Buchanan’s efforts to preserve the Union, as quoted in the book “Battle Cry of Freedom: The Civil War Era”

So before I go sending you off to take the reins of power, let’s fill you in on a few things that you’ll need to know.

If no one has explained it to you yet, the Great Big Fuss that is going on right now is set around two issues: there are those who feel that the best way to make this economy better is to ensure that the Federal Government is a smaller player in our economy and not running on a deficit; many of these folks feel the way to achieve this is to make immediate, drastic, cuts in Federal spending.

At the same time, the United States has run up against its “debt limit”. That means the US will be unable to borrow money to fund ongoing government operations, and as you’ll soon see, right now we borrow a lot of the money we need to run today’s Government.

So if you are one of those who seeks to immediately cut Federal spending, you could force that to happen by refusing to allow the Federal Government any more borrowing authority; the fear of what could happen after that is presumably going to force the opposition to accept any deal, no matter how draconian, just to obtain that borrowing authority.

Naturally, the bigger a hostage you’re holding, the more draconian of a deal you hope you can make, and holding the “Full Faith and Credit of the United States” hostage is about as big as it gets; that’s why the Republicans are pushing for everything right this very second, from the end of Medicare and Medicaid to the right to mine uranium right next door to the Grand Canyon.

So with all that in mind, let’s talk money.

In the month of August, the Federal Government is expected to take in $172.4 billion.

There will be a mess of bills that are coming due during the month; that amount totals $306.7 billion, and that means about 44% of the bills must go unpaid.

Where’s that money go?

The Big Five are interest on current debt, which must be paid to avoid a default, payments due to defense contractors, Social Security, Medicare, and Medicaid; the five of those, alone, will be just about $160 billion.

And that leaves $12.4 billion to fund everything else the Federal Government has to do.

That would include the remaining cost of supporting our several wars, the entire Federal law enforcement establishment (for example, the FBI, DEA, ATF, Immigration and Customs Enforcement, the TSA, the Border Patrol, the Federal Marshals’ Service and the Bureau of Prisons), the National Parks Service and the Forest Service, the Centers for Disease Control, the Weather Service…well, just about every single thing the Federal Government does, except the Big Five.

So that’s the situation – and now it’s time for you to become the boss and make the choices:

The fine folks at Bloomberg Government have created an interactive tool that allows you to point and click your way to figuring this stuff out.

You will find your spending choices, and you just click on what you want until you run out of money, which the handy bar on the left will manage for you. When the bar turns red…you’re out of money.

“…Each month, I put all my bill collectors’ names in a hat, reach in, and pull out a name. That’s who I pay. If you keep calling here, then your name is not going in the hat next month.”

--Steve Harvey, quoted in October 2003’s “Vibe” magazine

OK folks, so now you know where to go, and you know what to do, so let’s make something happen.

Take this tool and use it to create a conversation about just what really is at stake, and watch the look on your friends’ faces when you point out that the entire Federal Government is about to go out of business if Republicans have their way.

I’d tell you the looks on their faces would be priceless – but that’s not true.

Absent a debt ceiling deal, the price is actually going to be about $134 billion, which is the money we’re just not going to have next month, when we’re not doing things like paying for the salaries of active-duty servicemembers or food inspectors or the guards out there at the Supermax.

It should be a fun time, all the way around – unless, of course, you’re one of the 300 million or so of us who are gonna get screwed over by it all.

Hitler Holds News Conference, Blames Balanced Budget Amendment For U.S. Defeat

(FNS - Washington, New Germany, April 17, 1947) America’s new Führer, Adolf Hitler, announced today that his official War History would in fact acknowledge that one of the biggest contributing factors to the defeat of the Allies was the insistence of the former United States of America on sticking to its Balanced Budget Amendment, which left them unable to fund the wartime conversion of the US economy for the benefit of the Alliance.

“All those ideas Mr. Roosevelt spoke of”, said Hitler, “Lend-Lease, modular shipbuilding, War Bonds, secret weapons…in the end, all of them were just words, since the Americans’ Congress was never willing to allow the country to fully fund its war effort.”

As has been previously disclosed, Waffen SS historians have already located caches of documents in Washington describing plans to fund a massive military expansion in the former United States by selling War Bonds.

These debt instruments would have allowed the Roosevelt Administration to spend up to 40% of the Gross Domestic Product of the former Nation in defending itself, the former United Kingdom, and other nations against the Fatherland, but for reasons that are still not well understood Conservative politicians demanded that the former US Government never “take on debt for outsiders”, or, in the words of Mae Cadoodie, leader of the American Tea Party movement, “Never invite a foreign entanglement that raises our taxes”.

Had the Americans been allowed to sell War Bonds, or to raise taxes to fund the War, it is estimated that they could have provided tens of thousands of aircraft, millions of military vehicles, and hundreds of ships, but the Balanced Budget Amendment prevented any of that.

This represents the end of a series of political arguments that had been taking place since the 1930s, when some American economists were suggesting that a new idea called “deficit spending” could be helpful in bringing the former USA out of the Great Depression; at that time the Roosevelt Administration was unable to establish agencies such as the Work Projects Administration, which would have built public works projects throughout the USA in an effort to revive the moribund economy.

Mae Cadoodie and others fought back successfully against these ideas, pointing out that the last thing the US economy needed in a bad economy was new taxes; they made the same arguments when the Roosevelt Administration first proposed Lend-Lease as a war emergency measure.

“We cannot inflict punishing new taxes on American industry at this fragile time in our recovery” Cadoodie said in a famous speech in 1939, “and if the market is really there for this military materiel, if it’s not just some boondoggle manufactured by Roosevelt to take money out of the pockets of the American people, then I’m sure the British will be able to find the funding they need from the markets or from charitable donations”.

Cadoodie was unavailable for comment, as she and most other former American politicians are still serving on the Eastern Front, and will be for the foreseeable future.

In a related story, the conversion of the remainder of the American industrial base is underway for the fight against the Russians, and millions of otherwise unemployed Americans are being drafted into the military services in preparation for the final assault.

On Anticipation, Or, I’m In Seattle, So It’s A Dennis Kucinich Story

It was a beautiful day in Seattle last Saturday, and at the unholy hour of 7:30 AM I was steering my car into the parking lot of Qwest Field, preparing to take advantage of the spectacular weather by descending into the showroom of The Comedy Underground – in order to spend the day surrounded by politics and politicians.

The only thing that could have made the irony more prefect…is if all the espresso shops had been closed.

Thank your favorite deity (or, perhaps, the power of serendipity) that they weren’t, or we might not been able to cover the events at NWroots 2011 at all.

We’ll have a lot to talk about over the next few days, and to lead things off I’ll tell you about the series of events that might – or might not – have to do with why I happened to bump into Ohio Congressman Dennis Kucinich as he came down from the sunlight into the same dark room as the rest of us.

Your emperor may be a great prince: I do not doubt it, seeing as he has sent his subjects so far across the waters; and I am willing to treat him as my brother. As for the pope of whom you speak, he must be mad to speak of giving away countries that do not belong to him.

--Atahualpa, the last Sapa Inca of Tahuantinsuyu, quoted in the book “The Native Americans: An Illustrated History”

So here are today’s “need to knows”: the Constitution mandates that the Census be used to determine how many Representatives each State sends to Congress; based on the last Census, Ohio’s losing two seats in the House, Washington’s gaining one.

In Ohio, the most significant population declines occurred in urban areas, particularly Dennis Kucinich’s 10th District (Cleveland’s western suburbs; Cleveland’s population today is more than 15% smaller than it was a decade ago.)

Combine that with the fact that the proudly liberal Kucinich has been a thorn in the side of Ohio Republicans, who, cycle after cycle, just can’t seem to knock him off when it comes time to count the votes, and you have a lot of rumors that all come to the same conclusion: if you can’t beat Kucinich in an election…why not just make his District disappear?

In the meantime, Washington is looking to have at least two open seats in the politically “purple” western half of the State: Democratic Congressman Jay Inslee is running for Governor, freeing up the 1st; there’s also going to be this new 10th District, the boundaries of which are as yet uncertain.

The odds are pretty good that the Redistricting Commission (two Republicans, two Democrats, and a fifth member appointed by the other four), will assemble a District from an “area of overpopulation” that would probably include parts of Thurston, Pierce, and King Counties:

--Thurston Country includes liberal, liberal, Olympia, the State Capitol, as well as suburbs for residents who work as far away as Seattle – but it also includes areas that are quite rural. Around the county there’s a wide range of incomes, but there’s also rising unemployment.

--Pierce Country (Tacoma is the big city in the County) has a healthy suburban and rural crime problem that has evolved over time as the methamphetamine business changed from a “local manufacturing” model to one based on imported Mexican drugs (there are fewer meth labs today, but meth possession and the associated auto thefts, burglaries, and family problems are still going strong…), and the street violence in Tacoma itself has been moderated. That said, the underlying economic causes of these problems are still there, which probably sounds familiar to a lot of readers around the country.

Fort Lewis and McChord Air Force Base are now “Joint Base Lewis McChord” and that large military presence is amplified throughout the region by the presence of dependants, retirees, and civilian workers. Because there’s a war on unemployment in the County is relatively low.

--King County is the place everyone thinks of when they think of Washington: Seattle’s here, and it appears, if the legends are to be believed, like a woodsy Upper West Side with high-tech campuses dotting the landscape and producing billionaires by the bucketful – and all that thanks to the gentle mists of espresso falling from the sky.

The reality’s a bit different: King County is surprisingly purple at election time, and about 2/3 of the population is located outside the city limits of reliably liberal Seattle. The 8th District, out in the eastern suburbs, has elected two Republicans to the House for almost 20 years in a row: the annoyingly effective Jennifer Dunn and the amazingly ineffectual Dave Reichert.

--Much of Inslee’s 1st District is located west of Seattle, and much of it is rural – but also included in his District are Seattle’s northern suburbs, including Everett, home to a giant Boeing assembly facility. The District is also one of the most military in the Nation; within the District or immediately next door are elements of Naval Base Kitsap (which is actually several facilities combined under one name) and Naval Station Everett (which homeports a Carrier Battle Group).

So with all that in mind, here’s the first couple of minutes of Kucinich’s speech, where he describes his connection with Seattle and his rejection of war as a concept:



Bonus Video: check out this little “Hey, how’s it goin’?” moment between Kucinich and the aforementioned Seattle Congressman Jim McDermott, who spoke just after Kucinich:



So the question now becomes: if Kucinich were to run for Congress in Washington…where and how?

To help answer that question, I’m going to fall back on the electoral results of 2009’s Referendum 71, which represents the most recent example of Washington voters making the “liberal” choice in a Statewide election (R-71 was enacted to protect certain rights of qualified domestic partners).

WA-01, Inslee’s current District, includes portions of Snohomish and Kitsap Counties; in 2009 R-71 passed in Snohomish County 53-47% with about 100,000 votes cast. More significantly, most cities with more than 2000 votes cast voted for the measure.

Kitsap County voted heavily in favor of the measure; the entire County voted 65-35% and cast about 24,000 votes.

What about a potential WA-10?

Let’s start up north and go south: for the most part, southern King County voted against R-71, for the most part, it was somewhere around 52-48%; if you were to cut off all of King County south of Seattle and plunk it in WA-10, there would be about 75,000 votes in play.

Pierce County voted exactly 50-50% on R-71, with 110,000 votes cast – but Tacoma accounted for 40,000 of those votes, and they went 58-42% in favor of the more liberal position.

Thurston County went very heavily for R-71 (63-37%; 33,000 votes), but 15,000 of those votes were cast in Olympia (73-27%); if Olympia’s not in the 10th the rest of the County looks more like 53-47% in favor of the liberal choice.

More Bonus Video: here’s Kucinich talking about Social Security:



So if those are the apparent numbers…who might show up to help a Kucinich campaign?

Let’s start with Labor: I had the impression that Jeff Johnson, who is President of the Washington State Labor Council (WSLC), might like to work with a (well-known Friend Of Labor) Kucinich – but I have been warned, more than once, that the WSLC can’t endorse anyone until the Union’s State Convention debates and votes on the matter. (This year’s Convention is in the first week of August; that could be an issue if Kucinich were to announce his intentions this Fall or Winter).

Seattle’s "Portlandia", for want of a better word, will come out to help Kucinich in a big way; that would probably be true whether he ran in the 1st or the 10th.

In Washington elections, “boots on the ground” become doorbellers and phone bankers - but 100% vote-by-mail means no driving voters to the polls, and that means ensuring turnout becomes more of a messaging issue. We can probably assume that the number of volunteers Inslee was able to pull last time is gonna be about what is required if a Kucinich WA-01 run were to occur.

Beyond that, there's a lot of out-of-state help available as well: for example, if Kucinich were to get public about repeal of the Washington State Defense of Marriage Act, it seems likely that LBGT money and help would come in from around the country.

There are groups like IAVA, the Iraq/Afghanistan Veterans' group, that might step up (and they do recognize Kucinich as an ally), which would be helpful (lots of active duty and their families, civilian contractors, vets, and retirees in both WA-01 and a likely WA-10). You could expect to see Progressive PAC money and virtual “phone bank” help from folks like MoveOn as well, just as there will likely be a ton of "Crossroads GPS"-like cash and Conservative volunteering coming to any opponent.

What about timing? The Ohio Redistricting Commission (three Republicans, two Democrats) will have the first say in what happens; that process has just begun with the first meeting of the Ohio Legislative Task Force on Redistricting, Reapportionment, and Demographic Research on June 16th.

(Wanna make some money? Draw The Line Ohio is sponsoring a competition to draw the best Districts, which they intend to present to the Commission, and they’re willing to pay cash prizes for the best work: check it out at the Draw The Line Midwest website.)

I told Kucinich that I’d love to see him come out and run in the 8th, against the ineffectual Dave Reichert; his response: “I’m not here as a candidate”.

I winked, he did not nudge.

Should Kucinich run, I would expect attacks to cover ground such as: “He’s a carpetbagger!” or “He’s too liberal for the (insert name here) District” or what might become my favorite: a variation of “Vote against Nancy Pelosi: Vote against Dennis Kucinich”.

So that’s what I know: Kucinich was in town to stir up the troops, and if things don’t go well in Ohio there are several scenarios that could place him here in Washington – and there are at least two Districts where he could have a shot at winning.

And with all that seen and said, I climbed the stairs from the darkened underground political comedy lair and returned to the world of light, where people do things like knit tree cozies – you know, the normal world.

Obama Wants To Attack The Middle Class? Take Congress Hostage!

By now you have heard that President Obama has chosen to throw Social Security and the Medicare and Medicaid Programs over the side of his proverbial fishing boat as bait to see if he can get Republicans to give him another really lousy compromise, much as he did last December when he gave up billions upon billions of deficit reduction in order to help Republicans preserve tax cuts for billionaires.

And it looks like the President doesn’t really lose if you or I get hurt here: in fact, it seems that, in his eyes, it’s to his advantage to fight against his own base as he seeks to be “the adult in the room” in the runup to the ’12 election.

So we’re going to have to find a way to put The Fear on this guy – and I think I’ve got a plan to force this President to listen.

And it works like this: if this President ain’t gonna be moved by our message…we do it by holding the rest of his Party hostage.

"You've got to put the points on the board. Good effort and style aren't enough. Everyone loves the Chicago Cubs, but no one expects them to win. Be more like the New York Yankees."

--Greg Swienton, COO of Ryder Systems, advising Army NCOs at a leadership seminar, July 2009.

First things first: let me tell you how the hustle is potentially going to go down.

Republicans are going to try to force Obama to offer up 100% cuts in spending, with no new money coming in to Government at all, or they’ll let the whole “debt default” thing come crashing down, which looks like The Best Thing To The Tea Party Ever – and based on past history, this is a deal that Obama, around 11:56 PM on August 1st, will be willing to take.

The two most likely ways to cut spending and get results in the trillions of dollars are to change the connection between increases in your future Social Security benefits and the cost of living (which guarantees that you and I will forever be behind the inflation eight-ball), or to cut the payments coming out of Medicare or Medicaid, which is going to stick it, immediately, to medical service providers, the poorest of the poor, your Grandma and Grandpa (or, maybe, you), and the disabled.

It is rumored that both of these approaches have been put out as options by the President. It is also rumored that, in return, he wants some amount of revenue increases – but it’s also rumored that he went from seeking a dollar in cuts for each dollar in new revenue to something that looks more like $6 in cuts for every $1 in new revenues – with lots more time available for Republicans to play chicken and get even more.

So if the President is not going to put a stop to all this, I think we, ourselves, are going to have to step up and get it done.

What I’m going to propose is brutal, unfair to many of our friends, and vindictive to the point of risking an even worse situation than we have now…but these are desperate times, and I suspect it’s now time for desperate measures.

So here’s what I think we have to do:

Now, today, before this gets any farther, we have to call every single Democratic Member of Congress, House and Senate, friend and foe, and deliver this message:

“I don’t care what you ever did for us before, we are not going to let you do this to us now. We cannot stop Barack Obama directly – but we can do this.

We can target Congressional Democrats.

Each and every one of you, as a group.

And with that in mind, you are now on notice: if you allow this President to make a deal that includes any cuts, adjustments, alterations, or anything else, to Medicare, Medicaid, or Social Security, and you don’t get at least a dollar of new revenue for every dollar of cuts…then you are done.

We will immediately stop giving any Democratic incumbent even one dollar of donations, we will not help you win elections by volunteering – and we will vote for any candidate that’s running against you in the next primary.

Even if it’s not your fault.

That’s how serious we are, and that means you better figure out, right now, how to stop Obama from caving…because now, it’s all on you.

If Obama slips on the stairs and his pen accidentally signs the bill…it’s now your fault.

If Obama puts his pen back in the desk set upside down, and there’s an open window in the Oval Office, and an errant breeze drags the bill across the upside-down pen… it’s now your fault.

So what you better do is you better go make sure there aren’t any roller skates on the stairs at the White House, and go close the windows, and do whatever you have to do, because now, you, and every other Congressional Democrat…all of you, together…are going to be held responsible for what happens.”

And then we gotta stick to it – even if it costs us Jim McDermott and Raul Grijalva and Barney Frank, all on the same day.

We have to show that we will bring even more wrath and destruction than the Tea Party – and we have to be ready to support new Democrats who rise up to oppose the current ones.

And consider this: Labor is already making the effort to recruit and train Progressive candidates, and there are lots of opportunities to partner with unions who would presumably love to have some new partners of their own.

The next negotiating session between the President and Congressional leadership is Sunday, and that means we need to move fast if we want this to work – but Sunday is unlikely to be the last day of negotiations, and after that is when we can really crank up the pressure on Democrats.

Is this unfair to our friends?

Yup.

But that’s too bad, because we have been unfairly taking hits from our friends and Republican bullies alike for three years now - and the only thing that’s going to make it stop is if our friends fear us more a whole lot more than they fear Republicans.

And if you don’t think this can work…well, guess what? The LBGT community got “Don’t Ask, Don’t Tell” repeal passed when Republicans said they would never let it get through Congress – and then the LBGT community told Democrats that if repeal didn’t pass…the gAyTM was gonna be forever closed.

And then, mirabile dictu, repeal passed, in a lame-duck Congress, even when virtually all observers had said it had no chance.

That is the power of The Fear, and if we want to win this fight, we need to be the ones putting The Fear on our Democratic friends, not the other way around.

So get up, grab the phone, and start reminding the nearest Democrat that unemployment, in this economy, really, really, sucks – and there’s no reason in the world why they can’t be just as unemployed as anyone else.

It’s time for hardball, folks – and in this fight, we need to be the ones with the hardest balls.

Because if we’re not…the terrorists win.