It’s Not About Obamacare!

Financial FAQs

We know the federal government’s shutdown isn’t really about Obamacare. We know this because Tea Party Republicans have been trying to shut down government since the 2010 election, as MSNBC’s Rachel Maddow and others have pointed out. The uncertainties around such a major new social program as Obamacare has become the issue they are using to shut it down.

It’s even in their campaign promises. "We're very excited," Rep. Michele Bachmann (R-Minnesota), one of their leaders, told the Washington Post after the shutdown. "It's exactly what we wanted, and we got it."

"President Obama can't wait to get Americans addicted to the crack cocaine of dependency on more government health care," she said. "All they want to do is buy love from people by giving them massive government subsidies."

Who are the Tea Partiers? The New York Times stated in a 2010 poll that the 18 percent of Americans who identify themselves as Tea Party supporters tend to be Republican, white, male, married and older than 45.

So why shut down all of the federal government then? Many of its constituents live in those Red States with lower incomes that depend so much on government programs like social security, Medicare, and now the Affordable Care Act for insurance coverage. In fact, the 26 states who have rejected the Medicaid expansion for poorest Americans have about half of the population, but 60 percent of the uninsured, says the New York Times. These are the so-called ‘have-not’, mostly Republican-led states in the Midwest and south.

Wikipedia states the Tea Party is not a political party, but a movement named after the Boston Tea Party. “It is an American decentralized political movement that is primarily known for advocating a reduction in the U.S. national debt and federal budget deficit by reducing U.S. government spending and taxes.”

This is the Adam Smith philosophy from his The Wealth of Nations, written in 1776, of all years. And that has been the credo of conservatives since then. The problem is that most of the national debt and budget deficit was caused by Republican administrations who espoused Adam Smith's philosophy of lower taxes without cutting government spending.

The resultant record income inequality that helped to cause the Great Recession has left the rich and powerful free to accumulate as much wealth as they can, but not pay for the services that enabled them to do so, as was so clearly said by Senator Elizabeth Warren in a famous campaign talk.

"You built a factory out there? Good for you," she says. "But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did."

"…you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along."

So it is really about a much earlier economic system I’ve called medieval economics in past columns, which had a very different social contract. It was the philosophy that protected the privileged who were thought to be divinely protected in Adam Smith’s day. The less privileged were to be protected by an “invisible hand” of enlightened self-interest. That is, it should be in the interest of the powerful to take good care of their constituents. But that hasn't happened with the Tea Partiers, at least, who don't want to finance programs that aid the under privileged.

This is also the core Tea Party philosophy that believes the U.S.Constitution protects those privileges. Indeed, during its formation, this country was governed by the privileged who wrote the Constitution—those albeit enlightened white males who owned land. And that is the medieval system the Tea Party wants to restore, whether they realize it or not.

Harlan Green © 2013

Follow Harlan Green on Twitter: www.twitter.com/HarlanGreen

No ‘Double-Dip’ (In Spite of Republican Efforts)

Financial FAQs

There will be no double-dip recession, in spite of the wild rumors and the S&P downgrade of U.S. debt to AA+. So what are the markets worried about? It is the lack of political leadership, which means government support of jobs’ and other growth programs.With corporations’ record profits over the past 2 years plus a $2 trillion cash hoard, and banks’ $1 trillion in excess reserves, there is no way the U.S. economy can sink back into recession territory. No, but Republicans efforts to stymie further stimulus spending could slow growth enough to upset Obama in 2012.

In other words, Republicans are purposely blocking any new efforts to stimulate growth. They want the economy to fail, so that President Obama will fail. They hate Barack Hussein Obama so much, in other words, they are willing to blatantly lie about the effectiveness of government stimulus spending. Obama’s problem is he doesn’t’ welcome their hate, as did President Roosevelt, and thus hasn’t unmasked their blatant hyprocrisy.

It is not new news, unfortunately, that Republicans’ words have not matched their actions. They love government stimulus when it is spent in their districts, and they even know it creates jobs—in their districts, of course.

Rachel Maddow has been talking about this for some time, and Huffington Post’s Sam Stein reported on leading Tea Partier Michelle Bachman’s many requests for some of the Obama stimulus $$ to be spent in her Minnesota district.

“A Freedom of Information Act request filed by The Huffington Post with three separate federal agencies reveals that on at least 16 separate occasions, Bachmann petitioned the federal government for direct financial help or aid”, says Stein. “A large chunk of those requests were for funds set aside through President Obama's stimulus program, which Bachmann once labeled "fantasy economics." Bachmann made two more of those requests to the Environmental Protection Agency, an institution that she has suggested she would eliminate if she were in the White House.”

Rachel’s ‘They’re Not Embarassed Hall of Fame’ includes 110 Republicans who have touted the success of the Obama stimulus spending in their districts in 2009-10, while saying publicly it wasn’t a success. Her Blog links to research by such as the Center For Public Integrity.

“Individually, over half of the entire Republican caucus has hailed nearly every aspect of the stimulus as a success — from infrastructure funds, to food programs, to education grants,” said the Center in joint research on their past record. “But politically, admitting its success might harm the GOP’s chances in November (2010). So with Republicans fixated on winning politically, they have focused on deceiving the public by calling the stimulus a failure, while pretending successful programs aren’t stimulus funded.”

Then, “Rep. Pete Sessions, the firebrand conservative from Dallas, Texas, who has relentlessly assailed the Democratic-passed stimulus law as a wasteful "trillion dollar spending spree", said the Center For Public Integrity, didn’t prevent him from asking for stimulus funds in 2010 that “…will create jobs, stimulate the economy, improve regional mobility and reduce pollution,” in his district.

In fact, the list is huge. Those asking for money before the 2010 election included “Tea Party favorites like freshman Massachusetts Sen. Scott Brown and Rep. Michele Bachmann, R-Minn., former presidential candidates Ron Paul and John McCain and Republican congressional leaders like Senate Minority Leader Mitch McConnell of Kentucky and Rep. Mike Pence of Indiana,” said the Center for Public Integrity.

But the economy is in fact reviving, as lower initial jobless claims and the Labor Department’s JOLT survey point to more hiring in the second half of 2011. For instance, Bond Trader Wrightson-ICAP said the June report on job openings and labor turnover (JOLTS) was a little less sluggish than expected. Total job openings climbed to 3.11 million, which is just below the March peak of 3.12 million.

“The pace of new hires and separations both fell modestly in June, as expected, but did so from upwardly-revised May levels. While the labor market remains less dynamic in terms of gross worker flows than was the case prior to the recession, the data for May and June were not quite as soft as anticipated.”

Wrightson ICAP has also taken issue, as has this reporter, with the recent downward revisions to GDP growth that were one of the causes for alarm that a double-dip was immanent. (The BEA had released revisions for GDP that showed the recession was significantly worse than originally estimated, mostly because consumers had cut back.) Hiring during the first 3 months of 2011 totaled more then 200,000 per month, with 1.96 million nonfarm private payroll jobs created in just the past 13 months. And 154,000 private payroll jobs were added in July, with expectations it will be revised upward. In fact, quarter GDP growth numbers are notoriously inaccurate. For instance, last year’s Q2 growth was revised upward from 1.8 percent to 3.8 percent, largely due to the government stimulus spending.

But consumers aren’t cutting back, as the Fed’s consumer credit report cited a huge surge in consumer borrowing. Though personal consumption was reported to have contracted in June (a lagging indicator?), you'd never know it from June consumer credit data, which show a $15.5 billion surge for the largest gain in more than four years. This is in part because auto sales are surging again, as well as back to school sales.

The gain is led by a $10.3 billion surge for non-revolving credit, less of a surprise given June's strength in motor vehicle sales, says Econoday. But the best news may be revolving credit which rose $5.2 billion for a second straight solid gain.

The result is that retail sales have surged to more than 8 percent—a number from the boom times. So look for higher GDP growth ahead, and no double-dip. The question is why haven’t Democrats called the ‘They’re Not Embarassed Hall of Famers’ on their incredibly blatant hypocrisy that gained the Republicans so many seats in 2010? Why can’t Democrats welcome the hate of their enemies, as did President Franklin D Roosevelt?

Harlan Green © 2011