12 Graphs – Jared Bernstein

Jared Bernstein, — an economist that actually makes an effort to get the facts out in a way that the guy on the street can understand, —  put up a dozen graphs on his blog.  Dealing, in a clear, understandable way, with several issues and misrepresentations that have been out there for some time. ( and he always does this funny thing that republicans usually don’t bother with,… he shows his sources. Imagine that)

Anyway, if anyone has even a passing interest in the economic situation why’s and wherefores, they should take a look at these graphs.

The Best of CBPP Graphs: Guideposts on the Road Back to Factville

A couple that especially interested me:

>> This kills the republican standard talking point that when taxes are a few percentage points higher on the wealthy,… jobs disappear and the economy sinks. The 90s boomed. Now that the rich guys taxes are where GW Bush wanted them, the economy is in the dumper.

#4: And those at the top of the wealth scale have seen a much reduced tax burden as a share of their income.

>>>  Privatizing medicare will cost people more. The average person has no leverage with big health systems or big Pharma. Please don’t let anyone tell you differently. The republicans free market mantra, where grandma “negotiates” a better deal, (in between bouts with her dimentia, I suppose), will bankrupt hundreds of thousands in a much more expiditious manner. I know that personally, when I’m very sick, I’m much better at swinging the best deal out there.

#9: You can’t emphasize this point enough: health care spending grows faster in the private than in the public sector. It’s just not a normal good, friends, and market solutions, like “everybody get out there and shop for the best deal,” are not a magic bullet.

 

It’s Getting Good

• A little publicized provision of ‘ObamaCare” has gone into effect this month, and it it is one of the bigger deals of the legislation.  Starting this month insurers are being required to have a medical loss ratio of 80/20  What that means is that insurance companies must spend at least 80% of your premiums on actual *gasp* health care.  Needless to say, conservatives are aghast at this.  Republican controlled states such as Michigan and Florida have requested waivers for this provision, but these have been solidly denied by Feds. A good summary over at Balloon Juice here

“President Obama claims the new healthcare reform law will decrease healthcare costs for Americans,” said Coffman (R-CO). “However, the new Medical Loss Ratio included in the law may have the opposite effect by forcing insurers to increase— not decrease— premiums, because insurers will be discouraged from investing in administrative services, such as anti-fraud or anti-waste services, that could save consumers money…

Are you fucking kidding me?

• The pummeling of Newt continues even as his bubble seems to be bursting.  And now that Ron Paul is ascending in Iowa, the knives are coming out here, here, and here.  The Republicans are dead set on making Mitt the 2012 Bob Dole.

• Apparently the EU did not learn from our fuck ups here

• There is already a plug-in for Firefox to circumvent SOPA should it become law.  Technology, or more importantly, geeks, will always come up with ways to circumvent the laws.

• And today the House Republicans are still dead set on making themselves look like assholes.  This one just kills me.  I personally am against the payroll tax cut itself, it is just a political ploy and has the potential to undermine Social Security if continued ad infinitum.  The Republicans should be all over this because A) it’s a tax cut B) if they continue to push it year after year they could ultimately get their wish and undermine Social Security.  But no, Obama wants it, therefore no tax cut.  They are making it glaringly obvious with this simple maneuver that all they care about is denying Obama ANYTHING and that they don’t give one wit about the middle class and the poor.

 

The 2011 Lexicon

In 2011 we have seen the rise of three new euphemisms into the political lexicon.

         The first is “Job Creators.” It is the Conservative/GOP term for very wealthy people. It is used in their lame ass attempt to convince those of us who are not very wealthy that that these people are noble creatures who want nothing more than to be freed of the chains of taxation and regulation so that they can create jobs for the rest of us … so that we lowly workers can pay our underwater mortgages, buy their shiny trinkets and generally eek out a living. The problem with this is twofold.

    One is that the whole premise is demonstrable bullshit.  Taxes are at their lowest levels since before the Great Depression (no this does not include payroll taxes, but those make nary a dent in a Job Creator’s wallet).  This fallacy is evidenced in the fact that the top one percent have seen their incomes and wealth rise dramatically in the last thirty years, even during the Great Recession, and that corporations are currently back to record profits overall and are sitting on historic amounts of cash.  Companies are collectively sitting on more than 1.2 trillion in cash (1).  That is approximately 9% of the GDP.  So why aren’t they out hiring? Maybe it is the regulations?  Nope not that.  The level of regulation has not increased appreciably under the Obama administration (2) (3).  Well, what then is it preventing these Job Creators from hiring? Oh Yeah! it is the fact that the rest of us are either broke or unemployed, hence we are not buying stuff, hence companies are not hiring.   A company is not simply going to hire employees for the sake of hiring.  They are going to hire when people buy more shit, such that they need more employees to make more shit to meet people’s increasing demand for shit.  Real simple, Econ 101.  You could lower the taxes on the top 1% and companies to zero and it wouldn’t make a damn bit of difference to anyone except Tiffany’s, Bentley, Gulfstream and the like.

    The other problem with this is the narrative that conservatives and the GOP have set up.  If you look at the underlying premise, it is that we, “the 99%”, are lazy peons who should lie before the Job Creators, grateful for the scraps from their table.  “We” are completely devalued as being contributors in the society since we are not wealthy, and are reduced to wards of the state and of capitalism itself.  It should piss each and every one of you off every time a politician blathers on about helping Job Creators, for they are telling you that you are dirt, and not worth direct consideration.

        As a counter to “Job Creator”, a few months ago the terms “The 1%” and “The 99%” rose out of the fledgling Occupy Wall Street protests.  These monikers gave a simple way in which to express the terms of the economic divide and class warfare that has been growing quietly in this country for three decades.  Now there was an opposing view.  Now “the 1%” were no longer noble Job Creators, but simply the uber wealthy that had rigged the system for their own advancement at the expense of the rest of us, “the 99%”.  I think the effectiveness of these two terms and their quick adoption into the political  lexicon is the fact they are divisive.  It is laid out as an us versus them situation, which frankly it is.  The narrative here is that “the 99%” find themselves in their current lot, in the worst economy since the Great Depression NOT because “the 1%” were crippled by taxation and regulation, not because they are lazy,but because the Job Creators rigged the system and drove the entire economy off of a cliff in order to enrich themselves; and that “the 99%” are worthy, caring, hardworking people who deserve to be treated decently and fairly by the government and the Job Creators

We will see over the next year which of these narratives wins the day.  Personally I hope it is the later.

 

National Debt …

OK so we have all heard the numbers.  The US is $15 trillion in debt, and we are told that this comes out to ~$50,000 per person.  For you and I (this assumes there aren’t any of the 1% reading this blog) this is a big, very scary number. But this is a simple division by the population.  In reality, if a bill was to come due we would all pay a percentage based on our wealth and income.

So let’s do a little math.

The population of the US is estimated to be ~311 million, giving us the $50K number above. Now lets look at the US wealth and income distributions.  I got the numbers from Mother Jones as I had the article handy,

If we divvy up the debt by share of wealth:

The average 1% share is $1.67 million

The average 1-10% share is $206,599

The average 90% share is $14,435

If we compare this with the average incomes the results look skewed.  The bottom 90% owe roughly half of their yearly income while the top 1% owe roughly 145% of their yearly income.  This is due to the higher wealth to income ratio of higher income earners compared to lower income earners. Assuming a balanced-ish budget, we could mostly pay this down over 10 years with a 5% income surtax or over 20 years with a 2.5% surtax.  If we include corporate income the surtaxes would drop a bit more.

Another way to look at this is strictly in terms of national wealth.  The current aggregate national wealth is about $50 trillion.  So the national debt is 30% of the national wealth.  Using this as a basis, the debt would be retired if everyone paid 3% of their wealth each year for 10 years or 1.5% per year over 20 years.

These are admittedly very simplistic calculations, but what they show is that while the situation sucks, it is entirely manageable, especially if you consider the debt has been decades in the making.  In fact, simply going back to the Clinton Era tax rates would be a huge step in the right direction.  There is no reason to shred our safety net, abandon environmental regulations, labor regulation, gut schools and public services, all in the name of debt reduction.  It is a red herring we are being fed in an attempt to lead us into another gilded age.