Strong wind ahead, avoid the fan

This is from In These Times:In 2004, the United States imported a record $617.7 billion more than it exported, a 24.4 percent increase over 2003. The annual deficit with China was $162 billion, the largest trade imbalance ever recorded by the United States with a single country. Equally important, as of March 9, 2005, the public debt of the United States was just over $7.7 trillion and climbing, making us easily the world's largest net debtor nation. Refusing to pay for its profligate consumption patterns and military expenditures through taxes on its own citizens, the United States is financing these outlays by going into debt to Japan, China, Taiwan, South Korea, Hong Kong and India. This situation has become increasingly unstable, as the United States requires capital imports of at least $2 billion per day to pay for its governmental expenditures. Any decision by Asian central banks to move significant parts of their foreign exchange reserves out of the dollar and into the euro or other currencies in order to protect themselves from dollar depreciation will likely produce a meltdown of the American economy. On February 21, 2005, the Korean central bank, which has some $200 billion in reserves, quietly announced that it intended to "diversify the currencies in which it invests." The dollar fell sharply and the U.S. stock market (although subsequently recovering) recorded its largest one-day fall in almost two years. This small incident is evidence of the knife-edge on which we are poised.

China sits on a $609.9 billion pile of U.S. cash. As William Greider is quoted, the "adverse balance of power accumulating" is alarming.

These are not good times for the financial picture of the US. In the life just before I became a political consultant, I was a day trader (actually, more of a swing trader). I've not played the markets at all for the previous 5 or so years, but about a month ago, with the market around 11,000, it looked pretty obvious that the trend was peaking, and I went back in, investing into PRUDENT BEAR funds. No matter how much homework you do trading always still has guesswork, but it seems correct.

Meanwhile, symbolically speaking, it doesn't seem a coincidence that the Republicans were all focusing on legislating to keep death at bay. Things are rotting, financially speaking, in DC. Plutonium Page had a telling graph the other day on DailyKos, of increased military spending for higher-cost weapon items. What I found ironic, was the GAO projecting flat spending for the next four years. Chalmers Johnson is right, Wake Up!

Update: Also, Opening a New Front in the Economic Debate, by Simon Rosenberg and Robert Shapiro, deals with the same economic reality that the delusioned Republicans have created. I agree that "...it is essential that Democrats agree only to proposals which deal substantively with the long-term structural problems created by recent Republican policies." And those legislative proposals must begin from Bush. This is the Republicans chance at governing, there's no need for the Democrats to come to the table without a Republican plan offered-- 2006 will reckon the cost of Republican failure.

Maybe Unregulated Trade Isn't Perfect

Unlikely sources are stepping forward: A man-bites-dog story of momentous implications is unfolding in Washington: The US multinational establishment, having successfully championed free-trade orthodoxy for decades, may now be flirting with protectionist heresy--a stiff tariff against China to stanch America's hemorrhaging trade deficits. Fred Bergsten, the multinationals' leading economic authority, warns that the United States is in "big trouble," taking on foreign debt beyond anything any industrial nation has experienced and comparable to Mexico and Thailand just before they crashed in the 1990s. Bergsten, director of the Institute for International Economics, is lobbying elite circles to demand decisive action by the Bush Administration--an "import surcharge" as high as 50 percent on all Chinese imports--to avert financial meltdown.

Meantime, a bipartisan group of senators--nine Democrats, five Republicans--has introduced Senate Bill 295, which targets China with a 27.5 percent tariff. Charles Schumer, the lead sponsor, calls it "a tough-love effort." The co-sponsors include Democratic minority leader Harry Reid and, more surprising, Hillary Clinton, a longtime free trader close to financial leaders like former Treasury Secretary Robert Rubin, now an executive at Citigroup. The bill lets politicians express solidarity with constituents who lost their jobs, without offending big hitters.

Our current trade imbalance has potentially castrophic consequences for our eocnomy. With this criticism of unregulated trade coming from folks who were once free-trade fundies, could cracks in the almost universally pro-unregulated trade punditacracy be far behind?

The Conservative Money Matrix Is Funding Schiavo's Parents

The Conservative Message Machine Money Matrix, famously identified by Rob Stein and David Brock, is the source of almost all funding behind the wingnut Schiavo push. A two-week old article from Jon Eisberg identifies how the Philanthropy Roundtable is involved with the case, among other familiar faces of uber-rich conservative donor fame: Schindler lawyer Pat Anderson "was paid directly" by the anti-abortion Life Legal Defense Foundation, which "has already spent over $300,000 on this case," according to the foundation's Web site. Much of the support for Life Legal Defense Foundation, in turn, comes from the Alliance Defense Fund, an anti-gay rights group which collected more than $15 million in private donations in 2002 and admits to having spent money on the Schiavo case "in the six figures," according to a recent article in the Palm Beach Post. Mediatransparency.org states that between 1994 and 2002, the Alliance Defense Fund received $142,000 from Philanthropy Roundtable members that include the Lynde & Harry Bradley Foundation and the Richard and Helen DeVos Foundation.

Wesley Smith and Rita Marker also work for organizations that get funding from Roundtable members. Smith is a paid senior fellow with the Discovery Institute, a Seattle-based think tank that advocates the teaching of creationist "intelligent design" theory in public schools. Between 1993 and 1997, the Discovery Institute received $175,000 from the Bradley Foundation. Marker is executive director of the International Task Force on Euthanasia, which lobbies against physician-assisted suicide. In 2001, Marker's organization received $110,390 from the Randolph Foundation, an affiliate of the Smith Richardson family.

Roundtable members also played a role in financing the Bush v. Schiavo litigation.

The Family Research Council, which uses its annual $10 million budget to lobby for prayer in public schools and against gay marriage, filed an amicus curiae brief in Bush v. Schiavo supporting Gov. Bush, at the same time its former president, attorney Kenneth Connor, was representing the governor in that litigation. Between 1992 and 2000, the council received $215,000 from the Bradley Foundation.

Another amicus brief backing Bush was filed by a coalition of disability rights organizations that included the National Organization on Disability and the World Institute on Disability. The former received $810,000 between 1991 and 2002 from the Scaife Family Foundations, the Richard and Helen DeVos Foundation, and the JM Foundation; the latter received $20,000 in 1997 from the JM Foundation.

These connections may be just the tip of the iceberg. I'm no Woodward or Bernstein. I got this information using only the most rudimentary Google skills. I imagine that a thorough search by a seasoned investigator would yield quite a bit more.

Pardon my language, but these fuckers seem to be everywhere, funding every wingnut crusade imaginable. This is why Republicans in congress had to take the wildly unpopular stance of intervening, overstepping their bounds, and damaging the Constitution. They had to become involved: all of the top donors and architects of their propaganda apparatus demanded it.

The real leaders of the Republican Party are not named DeLay, Bush, Hastert or Frist. They are named Scaife, Olin, Koch, McKenna, Bradley, Richardson, Smith and Coors. The public puppets simply had no choice but to dance when the real powers that be told them to do so. The Republican base had been funding this for years and they were not about to let it go by without at least a very public debacle in return for their investment.

Five Easy Pieces

With Bush's Social Security support in free-fall, and with only a few weeks left until conservatives temporarily abandon their dream of destroying Social Security, I thought it prudent to remind everyone that even in defeat on Social Security, Bush seems poised to claim victory over the fifth and final element of the five easy pieces radical tax legislation overhaul long sought by conservatives as a backdoor means of achieving their destructive "flat-tax" scheme. Chait wrote about this scheme back in January. It is known as five easy pieces:The Five Easy Pieces strategy postulates that the long-time conservative goal of a sweepingly radical tax overhaul, such as replacing the income tax with a flat tax or a national sales tax, runs too much political risk. Instead, [longtime tax lobbyist Ernest] Christian has argued, conservatives can achieve the same goal by doing five things: cutting marginal tax rates, eliminating taxes on capital gains and dividends, allowing more generous treatment of business investment, doing away with the estate tax, and establishing tax-free personal savings accounts. The three major Bush tax cuts to date have achieved the first four pieces, partially or completely. Based on this tax strategy, Kevin Drum wrote a possible script that is coming eerily true:
  • 1. Bush proposes private accounts for Social Security.

  • 2. As expected, Democrats go to the mattresses in opposition. However, in an effort to demonstrate reasonableness they all agree -- almost in passing -- that of course they have nothing against encouraging savings, but that it should be done in addition to Social Security, not in place of it.

  • 3. After pretending to give it a good try, Bush counts noses, realizes he can't win, and reluctantly agrees to settle for tax-free private accounts on top of Social Security, just like the ones Dems say they have nothing against. Of course, this will be the Republican version of tax-free private accounts -- big, unrestricted ones that mostly help the well off -- but by now the Dems can hardly oppose a compromise like this, can they?

  • 4. Part 5 of Five Easy Pieces is now enshrined in law.
To show how close this is to reality, check out this passage from the letter Senate Demcorats recently sent to Bush about Social Security, a letter that received near unanimous support among the Democratic Senate caucus: Democrats in the Congress believe this approach is unacceptable, and it appears that most Americans agree with us. Funding privatized accounts with Social Security dollars would not only make the program's long term problems worse, but many believe it represents a first step toward undermining the program's fundamental goals. Therefore, so long as this proposal is on the table, we believe it will be impossible to establish the kind of cooperative, bipartisan process we need to truly address the challenges facing the program many decades in the future.

We were encouraged that Treasury Secretary John Snow suggested that you might be willing to abandon your privatization proposal and move instead to an alternative approach in which investment accounts would be established entirely separate and apart from Social Security. As you know, many Democrats, including President Bill Clinton, have advocated just such an approach, with benefits targeted to working and middle class families who need help the most. So long as such accounts remain entirely independent from Social Security and do not put the program's guaranteed benefits at risk in any way, we believe they deserve serious consideration as part of a broader effort to promote retirement security.

In other words, Democrats now have no ability to stop the advent of tax-free savings accounts, even if we stop Republicans from using them to replace and destroy Social Security. Nearly every single Senate Democrat is on record supporting part five of the five easy pieces tax strategy as a way to compromise on Social Security. So, even if we succeed in saving Scoial Security, which it appears we are about to do, Bush and conservatives will, at the very least, suceed in achieving the radical tax overhaul that is the equivalent of a flat-tax.

Even our victories are reduced to slowing down conservatism, rather than stopping it. And the beat goes on.

Bush Flailing Wildly On Social Security

Two days ago, he veered off topic in a speech supposedly about oil, and snapped at some seniors: The topic was energy policy, but in the midst of his speech yesterday President Bush veered off to address older Americans concerned about his Social Security plan.

"I want all seniors here and seniors listening to know that nothing will change for you," he said, animated and leaning into the lectern. "You will get your Social Security check. The government will keep its promise."

A couple of days earlier, Bush had abruptly changed his position on Social Security, claiming that the private accounts were an add-on to the current system, rather than a carve out of the current system. The White House admitted it had not idea what Bush was talking about (emphasis in original): the president on Friday described private and personal accounts as an add-on to Social Security, something extra. And that set off a lot of bells because Democrats said either he's being deceptive or he's completely changed his negotiating position. I checked on this. The White House says he has not changed anything. They said it's just how it came out and you won't hear that again. Now, Bush is calling those who oppose his plan racist: And so there are guidelines as to what you can invest in. I was being somewhat facetious on the lottery -- but really not. There's a proper risk reward, a portfolio that will allow you as a younger worker to pick a mix of stocks and bonds. Oh, I know they say certain people aren't capable of investing, you know, the investor class. It kind of sounds like to me, you know, a certain race of people living in a certain area. I believe everybody's got the capability of being in the investor class. Also, he is claiming that Social Security is risky, but private accounts are not: PERSONAL ACCOUNTS A safety net for the risks of Social Security? The latest free-form policy improvisation from our president. And now, the latest development, with the Fainthearted Faction collapsing, he is overtly giving up and asking for a compromise (emphasis mine): In the clearest sign yet that Bush's efforts to win bipartisan support are flagging, several Democrats whom the White House has been courting said they will not support the accounts at all. They include Sens. Thomas R. Carper (Del.) and Mary Landrieu (La.). Three other Bush targets -- Sens. Kent Conrad (N.D.), Joseph I. Lieberman (Conn.) and Mark Pryor (Ark.) -- said they will not support individual accounts financed by heavy borrowing.

Bush, who has needed the support of some moderate and conservative Democrats to push through his major initiatives, yesterday appealed to all Democrats to cut a compromise. "If you see a problem, members of Congress, regardless of your party, you have an obligation to come to the table," he said in a speech in Louisville. "Let's work together to solve it. All ideas are on the table." Once the public realizes the seriousness of Social Security's long-term problems, Bush said, "I pity the politicians who stand in the way of a solution."

Rarely have I seen someone with an approval rating consistently under forty (and sometimes under thirty) on a given issue claim that his opponents will suffer political backlash on that issue. Hey Bush, if you are so certain opposing privatization will cost your opponents, why not force a vote and make them pay for that opposition? We all know exactly why he won't do this.

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