Dec 22 2012

Schadenfreude: Fiscal Cliff Edition

Posted by Steve Ross in National Politics, Policy, shenanigans, snark

schadenfreude: pleasure derived by someone from another person’s misfortune.

You’d cry too if you had to herd feral cats

So I know just about everyone is talking about the NRA’s crazy town response to the Newtown shootings. I think all that needs to be said about the speech delivered Friday is nicely summed up here.

Quite frankly, I’m shocked that anyone was shocked by that announcement. LaPierre has been spouting crazy for the NRA since 1991. Same song and dance, over and over again. It ain’t about gun ownership…its about gun sales. Manufacturers pay the bills at the NRA. Don’t forget it.

So aside from providing a distraction, the NRA event was irrelevant. Unfortunately for everyone, a distraction was needed, in the wake of the massive failure to herd feral cats, some called the display “a clown show”.

How We Got Here

It’s important to remember is how we got here, where it started and who is responsible.

November, 2010 – A wave of of GOP wins in Congressional races, led by 40 candidates claiming “Tea Party” affiliations, leads to the composition of the US House of Representatives flipping from 255 Democrats to 242 Republicans.

August 2, 2011 – In the wake of a contentious battle over the debt ceiling limit, the Budget Control Act of 2011 was passed with bipartisan support. The bill raised the debt ceiling and put in place a series of deep budget cuts and tax increases if the Congress could not reach an agreement.

66 Republicans voted against the deal, which would not have passed without Democratic support.

August 5, 2011 – In the wake of the vote on the Budget Control Act, Standard & Poor’s downgraded the US Credit rating stating concerns with the current state of political affairs in the Congress.

February 2012 – Fed Chairman Ben Bernake coins the term “fiscal cliff”.

July/August 2012 – On July 25th the US Senate passed a proposal that would have avoided the tax increase portion of the fiscal cliff. The proposal was rejected by the House on August 1st.

November 2012 – Elections result in more GOP moderates losing. Democrats gain 8 seats in House. Incoming makeup of the House: 201D – 234R. Incoming makeup of the Senate: 55D – 45R

December 2012 – Negotiations between Speaker Boehner and President Obama net a compromise. Said compromise not brought before the House. Boehner’s bill pulled for lack of support. The House did pass a bill dealing with spending cuts, however that bill has little chance of passage in the Senate and faces a Presidential veto.

This list is hardly exhaustive, but mentions most of the highlights. Had Republicans not tried to make political hay over increasing the debt ceiling, we wouldn’t be where we are today.

The Failure Option

Now I want to be very clear here: while I do get some pleasure from the outright #FAIL that was the Speaker’s effort to pass a watered down version of what he and the President were negotiating, I also understand that a failure to act by the end of the year will have some serious consequences for regular folks. Those consequences will be immediate for all of us, though many of them will have a limited impact.

If they fail to act, the payroll tax cut will disappear, the Bush era tax cuts will disappear, and some pretty stiff spending cuts that no one seems to want will be enacted.

What does this mean to you? Well based on the median household income you will see about $1000/yr less as a result of the payroll tax hike, about $1500 less as a result of the income tax hike, and a whole lot fewer services.

Interestingly, if the Obama proposal were to pass, a household making the median income would see a tax DECREASE of about $225/yr (payroll and income) rather than the increase of $2500 House Republicans seem to favor in the wake of their inaction. You can see how the fiscal cliff and the Obama proposals would impact your income here.

(Note: The tax calculator is provided by the anti-Keynsian, pro-business group The Tax Foundation. They bear responsibility for any inaccuracies.)

The Failure Option – Part II Electric Boogaloo

The financial impact of failure for household incomes is pretty dire. Considering that inflation adjusted incomes have been flat since 1967 for 80% of the population, losing $2500 for a median income represents a nearly 5% hit in real purchasing power. That’s not going to be good for an economy that is just really starting to emerge from weakness. Add to that increased instability from a potential market panic and Joe 6-pack is going to take a huge hit.

Investors know this. They make lots of money knowing this. And while we haven’t seen an increase in incomes to rival the increase in markets (1967 Dow was 825, 2012 Dow was 13190.84 as of the closing bell on Friday, a nearly 1600% increase), the panic that will ensue due to uncertainty if the fiscal cliff is not avoided will hurt average Americans more than investors, who will certainly lose wealth, but not much standing.

Investors have more ways to make money in the face of a market panic that regular folks don’t, including betting on failure. This kind of risky bet is usually only played by the wealthiest individuals and huge investment houses. It may seem counter-intuitive and to fly in the face of what we consider to be patriotic, but remember, in the church of the almighty dollar, anything goes that makes you rich.

Plenty of folks profited from the pain of the Great Depression and the more recent “Great Recession”. There will be winners if a huge market panic ensues come Jan. 2 as well.

Joe 6-pack won’t be one of them, so don’t even think about it.

I feel confident that a solution won’t be found before the end of the year. The House Republicans don’t seem to have the will to give any ground, and in their disarray they have given their Democratic counterparts some resolve to stand their ground. With 201 incoming votes, it will take just 17 Republicans to pass a Democratic measure…should it reach the floor. That seems like a possible scenario now that people are starting to point to conservative recalcitrance as the problem.

The Senate has already passed a bill, which was rejected by the Tea Party led House in August. The House could take the measure back up if they chose to. I can’t imagine that happening before the end of the year. I just don’t think the votes are there before the end of the year.

This means that a market panic is almost a certainty come Jan. 2. The next Congress convenes the next day. We’ll see what they do, but I’m putting my money on passing something like the Senate proposal and dealing with the spending side later…probably right before the next debt ceiling vote which will need to happen before February of 2013.

In the current climate, I just can’t see this leadership actually…you know…leading.

Dec 09 2012

Why Costas Was Wrong

Posted by Steve Ross in Puke

First of all, I think it was pretty courageous of Bob Costas to take on a controversial issue like gun control in the middle of a football game, and just hours after Jovan Belcher killed his girlfriend and then himself. Surely he knew what he was getting into.

Unfortunately, I feel like Costas missed the larger discussion that needed to be had, both as it relates to Football, and society in general.

If you managed to miss his comments, I’ve included them below.

Its pretty obvious, on the surface anyway, that if Belcher didn’t have a gun he wouldn’t have shot anyone. Its anything but clear that, absent a gun, he or his girlfriend would have survived the events of last week. The circumstances that led to the problem, and the ones that brought the final result might not have been any different.

When things like this happen, the natural and easiest reaction is to go to the thing that “caused” it…in this case people pointed to the gun. A similar reaction has followed other events, like the 2011 shooting in Arizona that killed 6 and wounded 13 others including Rep. Gabrielle Giffords.

One thing that is clear, guns are not sentient beings. I think everyone on both sides of the debate can agree with that.

Since guns can’t make decisions, blaming the gun is, by definition, missing the point. The old saying “people kill people” rings true here.

And while it is certainly easier to kill someone with a tool like a gun rather than say, a hammer, the result is the same. They’re still dead.

I didn’t hear a loud chorus of hammer control advocates speaking up when this guy killed his parents with one in 2011.

So maybe blaming the tool is misappropriating blame. The ease of use may play a role in the decision, but certain things have to be in place to even seriously contemplate the taking of a life. Maybe there’s something else that binds these three cases together other than the fact that tools were used to kill someone.

Its hard for me to imagine what kind of thinking brings someone to the decision that taking a life is any kind of a solution. Absent the incredibly rare “kill or be killed” moments I can’t imagine why anyone would even consider taking the life of another.

What I do understand is that considering murder as a solution is a pretty good indicator of some kind of mental health issue. What we learned in the wake of the Arizona shooting and the week since Belcher took the life of his girlfriend and himself, is mental health played a role in each.

According to reports, Belcher was struggling with head injuries and addiction. There are reports of domestic violence in the relationship. So do pervasive head injuries and violence in the home, coupled with addiction play a role in the taking of a life? Sure, but they’re not the final determining factors. If they were, we’d see a lot more violent crime than we do.

There has to be more to it.

That’s where things get complicated…much more so than dismissively blaming the gun. See, for someone to decide that taking a life is an option, they must first believe that there is no other solution. For someone to get to the point that taking their own life is the best choice, they must first believe there are no other options.

Of course, there are always other options, but those options can be lost in the haze of the moment, particularly in a society that places a fair amount of shame on mental health issues generally.

If we really want to see a decrease in violence, be it gun violence or any other kind, we need to focus on addressing mental health issues that lead to the violence rather than the violence or guns themselves. That’s the root of the problem. And that’s where Costas got it wrong.

Had Costas chosen to talk about mental health issues rather than the tool used in the violence, the size and scope of his platform might have opened up a discussion about role of mental health in the larger violence problem in our society.

That discussion is valuable, and something we, as a society need to start thinking about if we are serious about decreasing violence generally. An ounce of prevention…

Unfortunately, its just so easy and, to a certain degree, we’ve been conditioned to fall into the “blame the tool” argument that having that discussion right now seems as far away as a distant planet in another universe.

Costas was right about one thing. The outrage from this event has, just a week later, largely faded. We’ve already forgotten and moved on to the next outrage of the moment, in part because Costas chose an argument that pretty much everyone feels is unwinable and unproductive, and partially because that’s just what we do.

Hopefully, one day, we’ll make a decision to really start a dialogue about violence in our society, and work for real long-term solutions to the problem. That’s not in our nature, but here’s to hoping we start acting out of character soon. It would be a refreshing change.

Dec 08 2012

My (Continuing) Battle With Smoking

Posted by Steve Ross in Puke

More addictive than Heroin

I remember exactly when I decided to start smoking. I was in Jr. High. A lot of the kids that I went to school with smoked. I was the new kid. I didn’t really know many folks. I wanted to fit in. It was an easy way to immediately have something in common with the people around me. Turns out, it was about the only thing we had in common.

We moved to the neighborhood after a difficult time in NW Arkansas. It was the mid-80’s. A pack of cigarettes cost about $1.25. At the time, laws that required you to be 18 to buy cigarettes weren’t enforced, and penalties hardly outweighed the financial upside of increased sales.

In my early life, my dad had smoked. He quit for good when I was 11 or 12. From my pre-teen perspective it was effortless. I had no idea how hard it would be to kick the habit later on in life.

Addiction is not just physical. There’s an emotional side to addiction that’s hard to explain. Part of it has to do with the rationale for smoking. Smokers regularly smoke to relieve stress or other emotional events. It can feel calming and comforting. This feeling of comfort is the first thing you miss when you decide to quit.

Over the years since the mid-1980’s I’ve quit several times. In 1989 I quit for 8 months. That was by far the longest stretch I’ve ever made it through.

You’re probably asking yourself why I started back. The answer is complicated and not something I really want to rehash, but lets just say I sought the comfort that I once had in the form of a cigarette. I think this describes all kinds of addiction.

I quit a couple of other times, usually for a month or two before falling off the wagon again. They say that after three days you’ve kicked the physical addiction. I don’t know if that’s right or wrong, but I can tell you you never kick the psychological addiction.

Back in October, after months of respiratory problems that began in earnest 8 months before, I quit again. My resolve was strong, the reasons were evident, quite honestly, it was easy…for a while.

The problem with quitting for purely health reasons is that once you start feeling better, your reason has gone away. The first month was easy. The second, as my health concerns faded, it became harder.

I was just days away from two months when I decided to buy a pack of cigarettes. I had been slipping for a couple of weeks, but managed to convince myself that it was temporary and I could get back on track at any time.

Now I’m not so sure.

Its not the physical addiction that I’m worried about, its the emotional dependency. That’s the thing that I’ve never been able to kick. That’s the thing that I think keeps lots of people from quitting…and not just cigarettes, any number of addictive substances.

I’m neither a professional addiction expert nor a prohibitionist. I don’t think making something illegal stops anyone from attaining that something. This should be clear based on the success of our 40 year “War on Drugs” alone. Demand will primarily determine supply, though other factors may weigh in on that relationship as well.

What I do believe is that in our search for a quick fix to all kinds of problems, from addiction to education, we’ve squandered our most precious resource…time. For decades now we’ve known about the psychological…the mental health element to a vast array of problems in our country. For that time and longer we’ve done everything in our power to try anything else to correct them…and failed.

We’ve doubled down on bad policy, enacting mandatory minimums on people suffering from addiction, and in the process, created a gateway for people who never engaged in violent crime to be forced into it in prisons, while truly violent criminals were let out to make room for people suffering from a mental health issue.

I won’t delve into the decriminalization issue except to say two things:

1. Washington and Colorado will save hundreds of millions of dollars over the next decade by not prosecuting and incarcerating non-violent marijuana users who would have been declared criminals just weeks ago.

2. If those governments would set aside just 10% of the savings and appropriate them for increased mental health services, they will ultimately save hundreds of millions more on healthcare and incarceration for any number of other issues and see increased revenues through increased productivity as more people do more than they ever imagined possible with their lives.

Because the problem isn’t the drug, be it nicotine or an opiate…the problem is the addiction…a mental health issue that when untreated, leads to all kinds of other problems.

I’m starting my battle with addiction again today, and hopeful that I’ll find more success this time. I know it won’t be easy, but I’m working to strengthen my resolve and fight the urge to give in again.

There are thousands of people, just like me, who are struggling with their addiction, be it nicotine or something else. While its easy to judge these people as weak or broken in some way, I hope we all would find the strength and courage to not pass judgement…but show them the support they need to fight their addiction.

It’s only through that support that they will find any success.

Dec 06 2012

I do not understand Sheldon Adelson

Posted by Steve Ross in National Politics

I get crazy, but not this kind of crazy.
via @Wikipedia


That’s how much Sheldon Adelson spent on the 2012 election.

If total spending was around $2b, Adelson made up 7.5% of that spending.

One dude. 7.5% of all political spending in the country.


Adelson spent all that money with the slew of conservative “dark money” groups that have popped up in the wake of the Citizen’s United decision.

Considering the investment, one might be led to believe that Adelson is a staunch conservative warrior, funding the cause.

According to this interview with the Wall Street Journal, (h/t @HuffPo) Adelson is anything but.

The pro-science, pro-choice, pro-socialized medicine Adelson spent $150,000,000 on candidates that are anti-science, anti-choice, and think people should trade chickens for healthcare.

I’m really speechless.

What’s more, he intends to spend twice as much the next time around.

Damn x2.

Of course, Adelson has been under investigation by the DOJ since 2011, so that may explain some of his animosity toward the Obama Administration. It doesn’t explain why he would work so hard against what seem to be his core political values.

When I’m irritated with a politician, either personally or politically, I just send them a letter explaining why I’m sitting this one out with them. In only one case (that I can think of) have I actively worked against anyone, and that was in a primary with no general election opposition. I can’t fathom working both against a candidate and my core values. Seriously, its unfathomable.

Of course, I also don’t have a gazillion dollars.

So I’m flummoxed. Next thing you know Adelson will come out in support of a tax increase for wealthy Americans.

If that happens, my head might explode.

Dec 05 2012

Much is required

Posted by Steve Ross in National Politics

I don’t normally write about national issues, but this fiscal cliff thing is one particularly dumb set of concern trolling on the part of the national media so it seems like a prime target.

Beep! Beep!

Its dumb because as the Wonk Blog explains this is anything but a cliff. It’s a slope at best. A slope to recession, sure, but it’s not as if this is a Wyle E. Coyote moment. Nope, Just a leisurely stroll down Recession Lane.

To be clear, I don’t want to see a recession happen any more than anyone else, but considering the players involved, and the lack of real governance from the Tea Party caucus that rules the roost in the House, there’s no real reason to believe anything other than a pull of the trigger, or an extension of the deadline is on the immediate horizon.

Now I’m sure some of my more moderate friends are screaming compromise right about now. Compromise is a two way street. Getting rid expensive tax cuts for 2% of the American populous at a time when everyone (wrongly) seems to think deficit reduction is what we need to do is the definition of compromise. 98% of the people benefit and there’s some new revenue to satisfy the deficit chicken hawks. Seems like a good deal. If you don’t get that, your definition of compromise involves a great deal of ankle grabbing.

Ward, don’t you think you were a little hard on the Beaver…

Not my idea of a good time, but to each his own.

Of course, ankle grabbing compromise has defined the politics of the past 30+ years. As Nick Kristof candidly explains in this NY Times editorial we’ve been screwing up the future for, by his estimation, 50 years now with cheap tax rates for folks who didn’t need them, that were supposed to create jobs and growth and didn’t. That strategy hasn’t worked and its not going to work. Its time to bring back a new look at an old strategy that did work. 1950’s era tax rates here we come!

In the 1950’s top earners paid as much as 92% on everything they made over $400,000/yr. Don’t believe me? Here’s the chart from the IRS.

Of course, no one’s asking that from the top 2%. Just a return to the 39.6% marginal rate of the Clinton era. You know, the Clinton years, where we had that huge recovery and 4% unemployment? Yeah, doesn’t sound so bad does it?

Republicans are losing their minds over this because according to the funders of their campaigns, any kind of tax increase is devastating. But if the GOP wants a return to the 1950’s, which is something they’ve been saying essentially for 30 years, then why not the tax rates that went with them? Seems to me you can’t have one without the other.

Because, more than anything else, that’s what Republicans want right? A return to a simpler time that never really existed. Remember the coded language of the 1980/90’s GOP? A return to a “simpler” time when “family values” were values and the world was a picturesque reflection of “Leave it to Beaver”.

Honestly, the GOP rhetoric hasn’t changed much since. The difference now is that rather than “Family Values” the right is pushing Prosperity doctrine. If you’re not familiar with prosperity doctrine here it is in a nutshell:

“If you believe/give to the church/etc. more you will succeed”, which by implication means that because you haven’t succeeded, you therefore do not believe enough.

Sounds just like GOP rhetoric doesn’t it? They built it!

Interesting that they ignore the gospels when they quote the bible. Probably because its just too inconvenient. Here’s what Jesus had to say about people who are without want.

For unto whomsoever much is given, of him shall be much required: and to whom men have committed much, of him they will ask the more. Luke 12:48

See, if you read the gospel literally, and I understand that’s all the rage these days, folks that are without want are REQUIRED…called by God, to do more to help people. If they actually did it, then maybe we could talk about some of the rewards they’ve received over the years. But since those guys don’t seem to be holding up their end of the bargain, only bringing mythical job creation, imaginary investment, and the like, I guess its time to return to the prosperity of the distant past to pressure them to do their part for society. We won’t get there by continuing tax cut policies of the past 40 years.

Here’s the dirty truth: tax cuts don’t drive expansion, they drive savings…and we’ve seen a mass expansion of savings for those who have something to save. The rest of us have been limping along barely keeping up with inflation.

He’s so sensitive about saving the wealthy

If it continues, we’ll have the first generation of folks since the Great Depression that didn’t see an appreciable increase in their standard of living or quality of life. That’s something you’re going to be hearing from me a lot over the coming months, because that’s what’s at stake.

As for the fiscal cliff, we’ll just have to see, but I’m not that worried. House Republicans have made their counter offer, weak and repackaged as it may be. Now the Kabuki Theatre can start in earnest. Chances are, they still will not vote for any tax increases, even if it only impacts the top 2% of earners.

That’s right, they’re ready to throw the other 98% of us under the bus for the 2% that pay for their campaigns…like Sheldon Anderson.

Jesus may have said For unto whomsoever much is given, of him shall be much required but you’d be hard pressed to convince the funders of the GOP that their assault on tax equity over the past 40-50 years makes them anything other than victims of the majority, all while they’ve benefitted from our collective 30+ year slumber.

So, you have a choice. You can choose to be scared as hell about this fiscal cliff and all the rhetoric that’s being bandied about, or you can look at what we’ve been doing that’s not working, what we’ve done in the past that did work, and make an intelligent choice.

One thing should be clear. After 30 years of tax cuts for people who don’t need it amidst declining incomes and lower standards of living for millions of middle class Americans, you need to ask yourself if you’re better off than you were, or your parents. If you aren’t, maybe its time to do something different.