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Indebtedness

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The Middle, Sinking.

“Nostalgia is just about the only thing the middle class can still afford. That’s because median wealth is about 20 percent lower today, in inflation-adjusted dollars, than it was in 1984. Yes, that’s three lost decades.”

Wonkblog’s Matt O’Brien briefly surveys the downward pressure on our sinking middle class. “[I]t’s still a heckuva lot better than households in the bottom 25 percent, whose wealth never grew during the good times, and then plunged 60 percent during the bad ones. That’s because, for both the middle and working classes, real wages have been stagnant the past 30 years, and housing equity has taken a nosedive.”

Rolling in the Deep.

“The Deep State is the big story of our time. It is the red thread that runs through the war on terrorism, the financialization and deindustrialization of the American economy, the rise of a plutocratic social structure and political dysfunction. Washington is the headquarters of the Deep State, and its time in the sun as a rival to Rome, Constantinople or London may be term-limited by its overweening sense of self-importance and its habit, as Winwood Reade said of Rome, to ‘live upon its principal till ruin stared it in the face.’ ‘Living upon its principal,’ in this case, means that the Deep State has been extracting value from the American people in vampire-like fashion.”

In very related news, and in a somewhat overwritten but otherwise worthy piece, former GOP Congressional staffer Mike Lofgren summarizes the problem of America’s Deep State (a term Lofgren did not coin, borrowed from Turkey.) Think the military-industrial complex, now infused with financial sector/Pete Peterson-style rent-seeking. “[This] is not an exposé of a secret, conspiratorial cabal; the state within a state is hiding mostly in plain sight, and its operators mainly act in the light of day.”

Banksters of America.

“‘Everyone knew that we weren’t helping people,’ said Erik Schnackenberg, a customer-service manager who left Urban Lending in 2011…’They were giving us all the pressure and none of the power to change anything. It was this absurd, self-contained ecosystem of worthlessness.'”

Bloomberg‘s Hugh Son delves into Urban Lending, the fraudulent front group/vendor that serial offender Bank of America worked with to profit from families facing foreclosure. “Instead of helping homeowners as promised under agreements with the U.S. Treasury Department, Bank of America stalled them with repeated requests for paperwork and incorrect income calculations…Tens of thousands of HAMP modifications were improperly denied by Bank of America and Urban Lending since April 2009.” Sure would be nice if somebody went to jail for this. (Image via Rolling Stone.)

Update: “As Judge Jed Rakoff recently wrote in a scathing essay in the New York Review of Books, the failure to prosecute those responsible for the biggest financial crisis since the Great Depression ‘must be judged one of the more egregious failures of the criminal justice system in many years.'” In very related news, David Dayen makes the case for Jamie Dimon’s long-overdue perp walk. “Open the business pages at random and they often read like the police blotter.”

Nihilists, Dude.

“‘It’s imperative to act now, Cruz warns, before the full benefits of Obamacare kick in and Americans get “hooked on the sugar, hooked on the subsidies.’ His plan: Yoke the defunding of Obamacare to the must-pass budget bill the House will take up in September. The endgame? To force a government shutdown so painful and protracted that Barack Obama would have no choice but to surrender the crown jewel of his presidency. ‘As scary as a shutdown fight is,’ Cruz insists, ‘if we don’t stand and defund Obamacare now, we never will.'”

Another dispatch from the madhouse: In a fine piece of reporting, Rolling Stone‘s Tim Dickinson delves inside the Republican suicide machine. “Having backed the GOP into a shutdown fight that congressional leaders never wanted, the insurgents are winning, and establishment leaders are running scared. America is now careening toward a catastrophic voluntary default on our debt because no one in the Republican Party with the authority to put on the brakes has the guts to apply them, for fear of being toppled from power.”

An important point Dickinson makes here that cannot be emphasized enough: We didn’t just stumble into this crisis: Taking the government and the debt ceiling hostage was the strategy all long, and the right-wing insurgents have been planning for this for months. “They’d drawn a dangerous lesson from the previous battle: Brinksmanship works…In February, the House temporarily suspended the debt ceiling — intending to give the president’s poll numbers three months to come back to earth.”

Hey, speaking of polling numbers coming back to Earth

In any case, see also the NYT on this: “To many Americans, the shutdown came out of nowhere. But interviews with a wide array of conservatives show that the confrontation that precipitated the crisis was the outgrowth of a long-running effort to undo the law, the Affordable Care Act, since its passage in 2010 — waged by a galaxy of conservative groups with more money, organized tactics and interconnections than is commonly known.”

So we’re not in this hostage crisis by accident. The GOP even changed the House rules so they could maximize this confrontation. Republicans saw Obama fold in December 2010 on the Bush tax cuts and in August 2011 on the last debt ceiling hike. They think they can make him fold again here, and on every subsequent debt ceiling hike, and sadly, history is on their side on this. As Ted Cruz put it a few months ago: “If you have an impasse, you know — one side or the other has to blink. How do we win this fight? Don’t blink.”

Another small digression: If, like Ralph Nader this morning, you’re wondering why the right-wing of the GOP always seems to pull these sorts of stunts off while the left-wing of the Dems are usually completely marginalized, two quick answers: 1) The lefties don’t have billionaires backing their plays, and 2) we’re the People’s Front of Judea. They’re the right, they’re inherently better at the goose-stepping.

That being said, this whole episode also illustrates why it’s useless for Democrats to try to meet these fools halfway on policy: Republicans have now spent almost three years voting constantly to end the Affordable Care Act. To break a health care law originally penned by the Heritage Foundation and enacted by Mitt Romney, they have shut down the government and sent us to the brink of an economic default. So, how, exactly, would things be different if we had just passed Medicare for all, and/or a public option? They were going to lose their shit regardless, just like they did on Social Security, on Medicare, and any other progressive issue you can think of. There’s no point in trying to placate people who aren’t bargaining in good faith.

Anyway, as it happens, and as Andrew Sullivan recently pointed out, we’ve seen a minority party in America rejected at the polls try to take the entire nation hostage before. Here’s Abe Lincoln in 1861:

“What is our present condition? We have just carried an election on principles fairly stated to the people. Now we are told in advance, the government shall be broken up, unless we surrender to those we have beaten, before we take the offices. In this they are either attempting to play upon us, or they are in dead earnest. Either way, if we surrender, it is the end of us, and of the government. They will repeat the experiment upon us ad libitum. A year will not pass, till we shall have to take Cuba as a condition upon which they will stay in the Union.”

So too here: This time the scalp the GOP wants is the Affordable Care Act, or the Ryan budget, or social insurance cuts, or Malia Obama. “‘The girl. Bring us the girl,’ said Congressman Steve King (R-IA)..’The bill may pass, but the firstborn shall be ours.'” It’ll be something else the next time and the time after that.

That’s why John Judis is calling this “one of the worst crises in American history“, and why Jon Chait wrote that “Allowing Republicans to default on the debt now is better than trading something that allows them to threaten it later.” Because if Obama buckles this time — and, let’s remember, we already gave the GOP their sequester-funding-levels — the Republicans will just keep taking the American government and economy hostage to get whatever they want. And quicker than you can say he-said, she-said, the rest of the lazy Beltway media will come to treat this sort of hostage-taking as politics as usual. It has to end here, or it never will.

Yes, the Game is Rigged.

“Well, the plutocrat class — that’s the top 16,000 households in this country — are where all the gains have been going since the end of the recession. Thirty-seven cents out of every dollar of increased income between 2009 and 2012 went to these 16,000 households — in a country of 314 million people…[Meanwhile] The average income of the bottom 90 percent of us has fallen 20 percent below where it was in the year 2000 — it fell from about $36,000 to $30,000. It has fallen back to the level of 1966, when Mustangs were new, Lyndon Johnson was president and we were prosecuting a war in Vietnam. 1966.”

In an interview with Joshua Holland, journalist and tax expert David Cay Johnston discusses how our current tax code, among other things, is fueling inequality. For example:

1) “Very, very wealthy people…are not required to report most of their economic gains and legally they can literally live tax-free or nearly tax-free by borrowing against their assets. You can borrow these days, if you’re very wealthy, against your assets for less than 2 percent interest and the lowest tax rate you could pay is 15 percent…[I]f you’re a billionaire and you borrow, let’s say, $10 million dollars a year to live on, you pay $200,000 interest, but your fortune through investing grows by $50 million. At the end of the year you pay no taxes, your wealth is up almost $40 million dollars and your cost was just the interest of $200,000.”

2) “Well, one of the reasons some Americans feel they’re being taxed to death is that if you add up our taxes, which are low compared to other modern countries, and then you add in private expenditures for things the tax system pays for in other countries — a lot of our health care costs, higher education costs, admissions and fees and tickets and licenses for a lot of things — lo and behold, we end up being a relatively high-tax country.”

The Tao of Steve.

“Graduates from College — Gets Hired.” In the Burgeoning Meme department — and as a counterpoint to the recent trolling of the youth of today in TIME — experience the wit and wisdom of Old Economy Steve. “Fights Universal Healthcare at All Costs — Bitches About $5 Medicare Co-Pay for Viagra Refill.”

Inequality is Way UnCool.


A must-watch going around the Interweb: A fellow who sounds not unlike the guy from King Missile explains concisely and succinctly how terrible wealth inequality has gotten in America. “Since 1976, the share of national income earned by the top one percent of workers has nearly tripled, from 9 percent to 24 percent…While the earnings of the top 1 percent have tripled, the average household income has effectively stagnated.”

In very related news, the Dow reaches a new high — 14,164 — even as household income hits a decade low. “As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966.”

Piled Higher and Deeper.

At latest count, we have 1.5 million university professors in this country, 1 million of whom are adjuncts. One million professors in America are hired on short-term contracts, most often for one semester at a time, with no job security whatsoever – which means that they have no idea how much work they will have in any given semester, and that they are often completely unemployed over summer months when work is nearly impossible to find (and many of the unemployed adjuncts do not qualify for unemployment payments). So, one million American university professors are earning, on average, $20K a year gross, with no benefits or healthcare, no unemployment insurance when they are out of work. Keep in mind, too, that many of the more recent Ph.Ds have entered this field often with the burden of six figure student loan debt on their backs.

By way a history friend, How the American University was Killed in Five Easy Steps. (Hint: It has to do with the Powell Memo.) I’m finishing up my PhD because I’m pot-committed at this point but, when anyone asks, I never recommend that they follow suit. It is UGLY out there. When the chips were down, I was fortunate enough to have a prior career in speechwriting to fall back on. Most people don’t have that luxury.

Decades of Divergence.


In its report, the budget office found that from 1979 to 2007, average inflation-adjusted after-tax income grew by 275 percent for the 1 percent of the population with the highest income…By contrast, the budget office said, for the poorest fifth of the population, average real after-tax household income rose 18 percent. And for the three-fifths of people in the middle of the income scale, the growth in such household income was just under 40 percent.

A brand-spankin’ new CBO report concludes what we all already know: Income inequality has surged since 1981, and government, post-Reagan, has consistently failed to address the problem. “‘The equalizing effect of federal taxes was smaller’ in 2007 than in 1979, as ‘the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,’ the budget office said.” But, hey, let’s sweat that deficit.

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