I am truly disappoined and depressed.

Understand that I have been a life long Registered Republican. But when Bush authorized torture and searches without warrants, I became an Independent because we are not the people who condones such behavior.

So when Barack Obama promised to change the way Washington works, I signed on 100%.
I was at an organizing meeting the day he announced, and attended a lot more meetings. I made telephone calls to voters in California, Texas and South Dakota. I wrote a check every month and on election day, I drove little old ladies to vote.

The point is that I really put some skin in the game because I thought it was important for the future of the country, and that is why I am now disappointed and depressed.

To be fair, Obama has done some really good things. Bob Gates is doing a really good job of reigning in an out of control defense department. Arne Duncan has stuck a finger in the eye of the teacher's union AND the NCAA. You gotta love that guy. General Shinsiki and his right hand person, Tammy, are really fixing the VA. You have to agree that Hilary, George and Richard have made amazing progress in how the world looks at us.

But on the big deals, Obama has been a total failure so let's walk through them.

1) Healthcare. An utter failure because it does absolutely nothing to slow down, let alone stop, the out of control health care costs. He turned to whole thing over to Nancy and Harry, the most incompetent members of Congress and they promptly sold it out to big Pharma and hospital lobbyists. It is so ugly that costs are already increasing and a RECORD number of Americans now have no coverage whatsoever.

2) The Economy. Fifteen million Americans are unemployed. Fifteen million more Americans are working short hours. Forty-four million Americans are now living in poverty. And this is all because he has surrounded himself with some of the dumbest human beings, i.e, Economists, and he doesn't seem to understand that all the programs they have produced are UTTER failures.

3)Financial Reform. This bill is a huge piece of garbage because it does not do the single most important job it should have done, e.g., it completely failed to take Too Big To Fail off the table. As a result, the next huge financial crisis is just a matter of time. Goldman Sachs, et al, are already at work finding ways around the restrictions in this stupid piece of legislation. Judging by their previous work, I have every confidence that Wall Street will screw all of us while making incredible riches for themselves. Obama just caved into the big money from Wall Street. Just check who are his big campaign contributors.

4)Afghanistan. This is a little bit more complicated and the jury is still out. Cheney, et all, bitched endlessly about the time Obama took to make a decision about AF/PAK as the region is now called. Compare that with Bush's overnight decision to invade Iraq. Obama has said that he did that to demand 100% commitments from the military that they would be able to win (whatever that means) if he gave them what they wanted. Fair enough and a good idea. But now David Petraeus (whom I have huge respect for)is already weaseling about the withdrawal date. Obama has screwed himself by being too clever by half. We are going to be in AF/PAK when your grandchildren are born.

But here is the thing that has finally broken my back/spirit/whatever. Today, Obama appointed Elizabeth Warren to be an "Assistant" to Timmy Geithner instead of nominating her to run the consumer protection agency she devised ten years ago. Don't believe any of the complete bullshit that the White House is offering for an explanation of this piece of complete cowardice. Here are the real facts. Timmy hates Elizabeth because she threatens the profits of his patrons on Wall Street. (And if you don't understand that fact, read earlier entries here.)

So here we are three years later. Instead of producing real change, Obama has sold out to his Wall Street contributors. He is already a millionaire. How much is enough? Apparently, there is "NO Enough"!

I don't remember being more depressed in my entire life, and it has been a long one. I guess, more than anything I feel betrayed, and that is a truly bad thing.

So what I am going to do is to take a long road trip and look at this incredibly beautiful county that is being stolen from us people we have sent to Washington to manage this country, and who have sold us out completely. Yes, I going to lick my wounds (and yours) in private.

I will be back with this rant in November when the elections are over and I have run out of road trip money.

And Now, Some Really Bad News

As of today, 44,000,000 Americans are living in poverty and the number will go up steadily as unemployment benefits run out.

For a rich country, that is a shameful number.

And Obama's economic policy wonks have no idea what to do about it.

Some Good News....At Last

In all previous recessions and depressions, the crime rate has risen as more and more people became desperate for money. In The Great Recession Conspiracy, we pointed out the increase in violent crime.

Now the FBI has released data showing that the nation's crime rate declined 5% last year and that is in line with a twenty year trend. In 1991, there were 758.2 violent crimes per 100,000 population. Last year, it was 429.4. That's really good news.

And the decline is across all kinds of crimes. Here are the numbers, 2009/2008.

Robbery -8.0%
Murder -7.3%
Aggravate Assault -4.2%
Rape -2.6%
Burglary -1.3%
Larceny/Theft** -4.0%
Motor Vehicle Theft -17.1%

**Does not include Goldman Sachs.

We Are On A Role!!

Now there is another economist arguing our side of an idea. Simon Johnson also endorses Elizabeth Warren. See his reasoning below.

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The Baseline Scenario

What happened to the global economy and what we can do about it
Republican Nightmare: Putting Elizabeth Warren to Work Now

with 64 comments

By Simon Johnson

President Obama is finally looking for bold, creative, and clever ways to change the way the US economy operates – preferably with measures that will take effect by the November midterms and change the tone of the broader political debate. His tax proposals this week have some symbolic value, but in the broader sense all of these fiscal suggestions are tinkering at the margins.

What could he possibly do that would grab people’s attention, mobilize his political base, and put his opponents on the defensive? There is an easy answer: Appoint Elizabeth Warren to start running the Consumer Financial Protection Bureau (CFPB) immediately.

And the brilliant part of this idea – as explained by Shahien Nasiripour at the Huffington Post (see also David Dayen’s Thursday coverage)– is that the Dodd-Frank financial reform legislation allows the person charged with setting up this new agency to be an outright appointment, rather than a nomination subject to Senate confirmation.

Elizabeth Warren’s credentials are impeccable – she came up with the original idea for the CFPB, she pushed effectively for it to become legislation, and she has proved most effective in her oversight role as chair of the Congressional Oversight Panel (COP) for the Troubled Asset Relief Program. And her manifesto for the CFPB is sensible and actually pro-business – although she naturally opposes the specific ways in which big banks mistreat people.

No doubt Republicans in the Senate would try to derail her nomination to head the CFPB as they have done with numerous other nominations over the past year and a half. Their motivation would not be her views or expertise – she has earned serious Republican respect as a result of her COP role – just part of their electoral strategy to block the president’s agenda and to undermine an agency they have consistently opposed.

The Treasury Secretary is explicitly authorized by an Act of Congress to pick an interim head for the new agency – with a view to getting it up and running immediately (in fact, what has he been waiting for?) Presumably the Senate (and the House) passed this specific measure expressly to expedite the CFPB’s work.

Professor Warren has strong political support and would get the new agency off to a great start. She would represent the Obama administration’s serious attempt to rein in financial misbehavior – at the same time as keeping the economic recovery on track. Anyone who thinks she would be bad for American families has not been paying close attention. And best of all, she is very good at explaining what she is doing and why that makes sense.

The president needs clearer messages and stronger substance – and he needs them fast. He should move at once to appoint Elizabeth Warren.

Another Economist Agrees With Us.

In The Great Recession Conspiracy, we pointed out that the best stimulus was to put cash into the economy and end the Contraction would be to spend it on repairing our rapidly deteriorating infrastructure. A year ago, I sent Robert Frank a copy of the book. His column in today's New York Times is good evidence he read it.

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September 11, 2010
Building the Bridges to a Sustainable Recovery
By ROBERT H. FRANK

LAST year’s economic stimulus program helped stem a crisis that was poised to rival the Great Depression. That’s the conclusion of the nonpartisan Congressional Budget Office, which recently assessed the program’s impact.

Now, those stimulus payouts are waning, and are being offset by spending cuts by state and local governments. As a result, a fragile economic recovery is faltering.

Many policy economists from both major political parties agree that additional stimulus would help put the recovery back on track. But many analysts say that growing fears about budget deficits make that step politically unthinkable.

All the while, however, we’re facing vivid examples of failing infrastructure across the country. Clearly, the maintenance and rebuilding of bridges, roads, water systems and the like can’t be postponed forever. And the work will never be cheaper to accomplish than right now, when high unemployment and excess capacity have put the opportunity cost of the necessary labor and equipment near zero.

In short, circumstances cry out for an immediate rebuilding effort. President Obama’s proposal last week to create a $50 billion infrastructure renewal bank is thus a small but welcome first step.

Europe spends about 5 percent of its annual gross domestic product on infrastructure, while China spends about 9 percent, according to the “Report Card for America’s Infrastructure” by the American Society of Civil Engineers. In the United States, which spends less than 2.5 percent, chronically deferred maintenance has left the infrastructure in dangerously substandard condition.

More than 25 percent of the nation’s bridges, for example, were structurally deficient or obsolete in 2007, according to the Federal Highway Administration.

Many problems have grown worse. The Association of State Dam Safety Officials estimated that 4,404 dams were unsafe or deficient in 2008. That was up from 4,095 in 2007 and 3,500 in 2005.

According to data compiled by the civil engineers’ society, planned spending across 15 categories of infrastructure, including aviation, drinking water systems, energy programs, levees, roads, schools and wastewater treatment, will fall short of needed investment by a cumulative total of more than $1.8 trillion in the next five years.

And periodic disasters — like Hurricane Katrina and the Interstate 35 bridge collapse in Minneapolis — have continued to remind us that we should not be neglecting these investments.

Deferring maintenance does nothing to alleviate our national indebtedness; in fact, it makes the problem far worse. According to the Nevada Department of Transportation, for instance, rehabilitation of a 10-mile section of I-80 that would cost $6 million this year would cost $30 million in two years, after the road deteriorated further.

If such a project is at all representative, spending an extra $100 billion nationwide on interstate highway maintenance now would reduce the national debt two years from now by several hundred billion dollars, relative to its level if no action were taken.

Some people object that infrastructure spending takes too long to roll out. But many projects could be started immediately. And remarkably low long-term interest rates imply that markets expect several more years of sluggish economic activity, so even projects that take a little longer would still be timely.

But won’t this extra spending make the deficit problem worse? A better question is this: Why is anyone worried about short-run deficits in the first place?

Deficits are a long-run problem. Every cent the government borrows must eventually be repaid with interest (or, equivalently, be carried at interest indefinitely), so it’s important to pay our bills. Although spending cuts will help, the retirement of millions of baby boomers will also make it necessary to increase revenue.

But not now. With consumer and investment spending remaining far below normal, the short-run imperative is to increase total spending by enough to put everyone back to work as quickly as possible.

Even if we ignore the savings from worthy investments in roads and bridges, additional government spending has a much smaller effect on deficits than is commonly assumed. Conventional economic models estimate that each dollar of deficit-financed stimulus spending will increase the deficit by 40 to 50 cents. But getting the economy back on track more quickly also has many offsetting long-run benefits that those models ignore.

For example, by reducing the number of children who spend part of their formative years in poverty, timely government spending will increase their lifetime earnings trajectories and, as a result, their lifetime tax payments. By improving their health and the health of their parents, such government spending will also reduce demand for costly public services.

SPEEDING the economic recovery also has positive effects on revenue through its effect on capital markets. By increasing investment, it permanently increases the nation’s capital stock, causing an upward shift in wages, with corresponding increases in tax revenue. In addition, it increases spending on research and development, causing similar increases in income and revenue. It also increases the ultimate revenue yields from the dividend, capital gains and estate taxes.

Economists have made no systematic attempt to estimate the present value of these effects. But it is clear that many of them are large and long-lived. And because they help avert more costly problems, timely investments in infrastructure may be the most powerful debt-reduction strategy of all.

With the midterm elections looming and deficit hysteria at a fever pitch, it is far from certain that even the president’s modest proposal can gain Congressional approval. If it can’t, our infrastructure clearly isn’t the only thing that needs fixing.

Robert H. Frank is an economics professor at the Johnson Graduate School of Management at Cornell University.

The New York Times Understands How The Economy Works.

In our book, The Great Recession Conspiracy, we point out that during the Contraction Phase of the Business Cycle it is of utmost importance to put money into the economy so that small businesses (the source of 70% of all new jobs)have full and growing order books. They will then have to hire new people to handle the expanding business. It is as simple as that. However, nobody in Congress or the Administration seems to understand that simple fact.

We are not alone in this view. Pay attention to the last paragraph and then join us in screaming.
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Tax Cuts May Prove Better for Politicians Than for Economy
By DAVID KOCIENIEWSKI

With Congressional midterm elections looming, the financial debate in Washington this fall will probably be consumed by one incendiary and expensive issue: whether, and how, to extend the multitrillion-dollar Bush tax cuts.

President Obama is advocating a mixed bag of tax proposals. He wants to extend the cuts for all but the wealthiest 2 percent of Americans and offer businesses hundreds of billions in breaks and write-offs intended to encourage investment and hiring.

Republicans, and a few Democrats, assert that the Bush tax cuts should be extended for everyone, warning that a tax increase right now, even if limited to the highest income bracket, would hurt small businesses and choke off an economic recovery that is already gasping.

Given the economy’s persistent weakness and an unemployment rate hovering above 9.5 percent, those arguments have gained traction. And because another round of government stimulus spending is considered politically unviable even if it were warranted, the debate over the tax cuts will be laced with promises to spur economic activity and reduce unemployment. The concept of lower taxes is so appealing to voters that many embrace them as an economic cure-all.

But economic research suggests that tax cuts, though difficult for politicians to resist in election season, have limited ability to bolster the flagging economy because they are essentially a supply-side remedy for a problem caused by lack of demand.

The nonpartisan Congressional Budget Office this year analyzed the short-term effects of 11 policy options and found that extending the tax cuts would be the least effective way to spur the economy and reduce unemployment. The report added that tax cuts for high earners would have the smallest “bang for the buck,” because wealthy Americans were more likely to save their money than spend it.

The office gave higher marks to the proposal, now embraced by President Obama, to allow small businesses to write off 100 percent of their investment costs.

Neither of those options, though, would do as much to stimulate the economy as offering direct payments to the unemployed and Social Security recipients or reducing the payroll taxes of workers, the study found. But those proposals — as well as aid to states and municipalities — are considered politically untenable with many elected officials reluctant to even utter the word “stimulus” after the $787 billion stimulus.

So while the decision on whether to extend the tax cuts will have a lasting impact on the deficit and on how the nation’s tax burden is distributed, economists and tax experts say it is unlikely to offer much immediate relief for high unemployment and sluggish growth.

“It may have some small impact along the margins, but firms don’t hire based on tax breaks; they hire based on demand,” said Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center. “So a lot of the tax breaks are likely to be rewarding people and companies for that they were going to do anyway.”

When they were signed into law in 2001 and 2003, the huge package of income and capital gains tax reductions that became known as the Bush tax cuts were hailed as a way distribute the government surplus and promote long-term economic growth. Mr. Bush was so confident in their power to generate business growth and revenue that he predicted they would enable the government to pay down $1 trillion in debt in just four years.

Those surpluses have now become crushing deficits because of a combination of factors, including the recession, the cost of the wars in Iraq and Afghanistan, the Medicare prescription drug benefit, and the $1.7 trillion in forgone revenue from the tax cuts themselves.

The specter of a ballooning national debt has led even some of the early supporters of the cuts, including the former Federal Reserve chairman Alan Greenspan, to advocate letting them expire.

Republicans, however, argue that it is essential that they be extended, because taking money out of an economy this frail would derail any hope of a robust recovery.

“We don’t think taxes ought to be increased in the middle of a recession for anyone,” Senator Mitch McConnell, the minority leader from Kentucky, said this summer.

The Obama administration dismisses that argument, saying that nearly a third of the cost of the cuts — more than $700 billion during the next decade — would go to the wealthiest 2 percent of Americans.

“They are essentially arguing that we add $700 billion to the deficit in return for $35 billion in what has been found to be the least effective means of stimulus,” said Jason Furman, a deputy assistant to the president overseeing economic policy.

Mr. Obama’s proposal would preserve the tax cuts for families that earn less than $250,000 a year (or individuals who make less than $200,000) at a cost of $2.8 trillion over the next decade.

Rather than continuing the breaks for the wealthy, however, Mr. Obama proposes an assortment of tax cuts to encourage business investment and hiring. While he has carefully avoided calling his plan a stimulus, Mr. Obama is calling for a permanent extension of the research and development tax credit for businesses and a change that would allow companies to write off 100 percent of any investments made through 2011.

The president has also called for the creation of a $50 billion infrastructure bank to improve roads, airports and railways, which would stoke business and hiring in the moribund construction industry.

Those plans have received mixed reviews from business groups and economists.

R. Glenn Hubbard, an economist who helped write the Bush tax cuts, said Mr. Obama’s proposals borrow heavily from Republican ideas but would have little impact on business activity.

“Nothing in the administration’s program is good stimulus,” said Mr. Hubbard, now dean of the Columbia Business School. “Investment incentives coupled with a tax increase are not going to get the economy moving.”

But Kevin A. Hassett, an economist at the conservative American Enterprise Institute, predicts the business tax breaks might be enough to reignite the economy and increase investment by 5 to 10 percent. Because some investors and business owners have viewed Mr. Obama’s policies as antibusiness, he said, the very fact that the president is offering the tax incentives could also help to encourage investment.

“I think at some point Americans are going to finally accept that the worst is behind us and that we’re ready to boom again,” Mr. Hassett said. “And this is the kind of proposal that could change the psychology and create the positive momentum we need to really get out of this malaise.”

One curious omission in the Obama plan is the tax cut proposal that many, including the Congressional Budget Office, believe would do the most to spur hiring: a payroll tax holiday. According to various news reports, Obama economic advisers passed on the idea because they feared it would be too expensive or would deprive Social Security and Medicare of crucial revenue. Administration officials declined to discuss their decision.

Whatever Congress and the administration ultimately decide about extending the Bush cuts, however, the narrow confines of the debate show how successful antitax groups have been in defining the terms used to discuss tax policy. Since the tax protests of the 1980s, elected officials have increasingly used tax breaks to finance social programs and business subsidies, and today the cost of those “tax expenditures” is $1.2 trillion — about 25 percent of all spending.

Edward D. Kleinbard, former chief of staff of the bipartisan Joint Committee on Taxation, said the reliance on tax expenditures had distorted the budget process because it induced the public to overlook the fact that — unless they are accompanied by spending reductions — tax cuts have the same effect on the deficit as additional spending. It also allows politicians to make unsubstantiated claims about the power of tax-cutting to accomplish other economic goals, he said.

“The thought that tax cuts pay for themselves or that tax cuts alone can turn around this economy is magical thinking,” said Mr. Kleinbard, now a law professor at the University of Southern California. “The debate has become so unrealistic it makes you want to scream.”

Two Numbers To Contemplate

1% of all the U.S. households receive 24% of the U.S. Gross Domestic Product, e.g., the pie we all have to share.