Year: 2010

THE REPUBLICAN MESS

Ralph Sierra: “You may already have seen this.”

☞ It’s not the most nuanced 46 seconds – it’s shrill. But there’s a lot to be shrill about! The Republicans really did drive the country into the ditch! It may be unseemly to point that out, or hopelessly clichéd to underscore it with melodramatic music. But the choice we have to make 70 days from now could hardly be more stark.

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THE WAY OUT

Dan Stone, MD: “I agree with you that infrastructure spending is the way to address the anemic economy. It’s interesting to me that in the run up to the stimulus package, the Republicans criticized public spending as a way to address the recession, commenting that the Depression had been solved not by New Deal spending but by World War II. But they never seemed willing to take the next step and ask, what was it about World War II that addressed the economic ills of the Depression? It was sustained government spending [that dwarfed the deficit spending of] the New Deal! And, there’s nothing curative in building bombs and tanks. Infrastructure spending would have the same stimulating effect on the economy as war spending, but would improve our future efficiency as well. Unfortunately, the Obama Administration [forced to compromise with the Republicans] repeated the New Deal error of underspending. Like the New Deal, the stimulus improved a dire outlook but did not lead to a full recovery. Republicans want to address this by reducing taxes. But, as you suggest, why would reducing taxes on a profitable employer stimulate him to hire workers he doesn’t need?* And how will it help to go deeper into National Debt to cut personal taxes? Most of the lower taxes will go to paying down debt, building up saving, and buying Chinese-made goods. Admittedly, the problem of the budget deficit, cited by Republicans opposing more stimulus, is a real one. If only they would have realized the problem back when the Bush administration was cutting taxes for the wealthiest and taking us ever deeper into debt. But restoring the economy, the engine of national prosperity, is worth incurring debt.”

☞ Indeed, what other rational choice do we have?

*Cutting taxes wouldn’t help struggling unprofitable employers hire – those employers pay no tax. And if you’re small business owner who does pay a lot in taxes, cutting the rate actually makes it more expensive for you to hire. (Think about it. If you’re earning $700,000 a year, taxed on the margin at 35%, the after-tax cost to you of adding $100,000 to your payroll is $65,000. Right? If the effective rate went back to the Clinton/Gore 39.6%, then the after-tax cost to you of adding $100,000 to your payroll would be $60,400.)

Instead, President Obama proposed a $5,000 tax credit for each new worker hired (up to a total of $500,000 per business). That would bring down the cost of hiring new workers – even for struggling businesses. What actually passed was an exemption from the employer’s side of the Social Security payroll tax that cut the cost of a new hire by 6.2% – $3,000 on a $48,000 hire – plus $1,000).

TARGET THE TAX CUTS

What the Republicans want is an extension of cuts for those at the top. But they can’t come right out and say it. (“In these extremely difficult economic times, we want to keep borrowing from China in order to keep the Bush tax cuts on the wealthy that helped turn Clinton’s ‘surpluses as far as the eye can see’ into horrific deficits.”) So instead, they justify “making the tax cuts permanent” by pretending to champion small business and job creation.

But that’s bull. Here is White House view:

Extending High-Income Tax Cuts is the Wrong Answer for the Recovery
Posted by Christina Romer on July 28, 2010 at 03:20 PM EDT

President Obama has made it clear that he favors extending the 2001 and 2003 tax cuts for middle-income families, but letting those for high-income earners expire as called for in current law. Recently, some have argued that extending the high-income cuts is necessary for the economy. This is simply wrong.

. . . The Congressional Budget Office lists a tax cut for high-income earners as a particularly ineffective job creation measure. Private sector forecasters have reached the same judgment.1 The vast majority of economic research shows that higher-income earners spend less of a tax cut and so tax cuts to those earners create fewer jobs throughout the economy.2

That doesn’t mean that all tax cuts are ineffective in creating growth. In fact, tax cuts designed in the right way can be highly effective. That is why the President supported numerous tax cuts in the Recovery Act and why continuing the middle-class tax cuts from 2001 and 2003 is so important.

. . . If lawmakers are truly concerned about job creation, as they should be given the painfully high rate of unemployment, many approaches would be more cost effective than extending the Bush tax cuts for high-income earners. For example, a private sector study recently concluded that a third year of the Making Work Pay tax credit would be far more stimulative.1 Likewise, estimates by the Council of Economic Advisers suggest that spending $10 billion to prevent the layoffs of teachers, firefighters, and police would lead to nearly twice as many jobs as the estimated $30 billion of high-income tax cuts—that’s twice as many jobs for one-third the cost. The small business jobs bill currently before the Senate, which contains both targeted tax cuts for small businesses and measures to improve their access to credit, would also be a far more powerful and cost-effective way to stimulate economic growth and job creation.

It is ironic that many who are now arguing that the high-income tax cuts must be extended on stimulus grounds opposed the Making Work Pay tax credit [that] went to 95% of working families . . .

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PIEZOELECTRICITY – MAYBE NOT

When you walk or drive, your weight, or your vehicle’s weight, would press down on a little gizmo (piezmo?) that generates electricity. The concept is to have such generating pads at high traffic locations like subway entrances – or to embed such systems as we repave roads. “Utterly ridiculous,” responds one skeptical commenter. “The amount of energy that can be harvested is tiny compared with the investment required.”

LED LIGHTING – MAYBE!

The linked post above is short on numbers, possibly because the math just doesn’t work out. This post, by contrast, is all about the numbers, as you consider whether to go LED; and makes the case that the quality of available LEDs varies dramatically. It includes a buying guide.

ONE DEGREE OF SEPARATION . . .

Well, it seems my pal Brad Gooch actually knows the Ground Zero imam – who apparently is no more threatening than, say, Dr. Phil. (The imam’s wife’s name is Daisy. The imam went to Columbia. The imam is exactly the kind of peace-preaching Muslim leader we’ve been saying we want speaking out – so we’ve been sending him around the world to speak out). So I went to read Brad’s piece and discovered that one of the imam’s principal patrons is a woman I dated in high school.

Kevin Bacon is likely to appear at any moment.

MITT

Here’s a surprise. Presidential candidate Mitt Romney wants to cut corporate taxes and protect the wealthy.

Former Labor Secretary Robert Reich responds: “For Romney, the key to America’s recovery is to cut taxes on businesses and on people who invest in them. … But anyone looking closely at the American economy today would see this is nonsense. American corporations have an unprecedented $1.8 trillion of cash. …In other words, businesses have all the capital they need … It’s pushing on a wet noodle. Businesses create jobs only if consumers are pulling the noodle from the other end.”

Exactly – though I don’t agree with Reich’s solution, either.

Professor Reich would borrow hundreds of billions to cut the payroll tax on those already with jobs. Not me. I would borrow hundreds of billions to make our economy more efficient, and in ways that would create new jobs – renewing our failing infrastructure, for example, and providing big incentives to weatherize tens of millions of homes and commercial buildings to cut their energy consumption.

FOX

Fred Campbell: “Uh…Andy…NBC’s parent corporation (GE) donated money to democrats in the 2008 election cycle. ABC’s parent corporation (Disney) did the same. Don’t know how this is different than Fox News’ parent donating to republicans.”

☞ I think most people see News Corp’s primary business being “news.” Very few people would say that of GE or Disney.

Under current law, News Corp has every right to make this contribution to advance its corporate interests. But it’s nonetheless a pretty large and clear statement of whom they’re rooting for. And if you work at Fox News, and hope to advance, my guess is that knowing who the boss is rooting for has an influence on your work product.

And listen, the same is true of me. My views are obviously slanted to the left. The difference is that – while I actually do try hard to be scrupulously honest and reasonably fair and balanced – I do not purport to be an unbiased news source, constantly proclaiming to you that “I report, you decide” or that I’m fair and balanced.

Another difference is that News Corp is in it for the money. That’s fine, but it doesn’t always lead to the most thoughtful reporting. (“Thoughtful” doesn’t sell as many papers or get the same ratings as “sensational.”) And a lower corporate tax rate and fewer restrictions on cigarette advertising, and so on – while good for News Corp’s shareholders – aren’t necessarily good for society as a whole.

Steve Nevarez: “You write: ‘Imagine CBS giving the Democrats $1 million. Or Super Bowl referees betting on the game. Well, Fox News parent News Corp just gave the Republican Governor’s Association $1 million. Fox News: always looking for a way to give the wealthy and powerful an edge.’ Are your readers really so blind that they believe your slanted writings? Imagine the New York Times saying after an election that they helped Barack Obama win. Imagine the LA Times killing a story before the election because they didn’t want to influence the election. The New York Times admitted it and the LA Times killed an anti-Obama story. Stuff like this is happening in our media today as they are blatantly campaigning for the democrat candidates. You aren’t interested in truth. You are interested in leading the flock to your side and truth is not to stand in the way. Shame on you. When I read the news about the donation I was disappointed. But I guess since journalism is no longer about unbiased reporting, all gloves are off. In that respect, the Republicans are still way outgunned since most of the media is liberal. You’re a smart man. Give your readers some credit and don’t act like this stuff isn’t going on. The liberal press started it and has a huge advantage in this game. There just aren’t many News Corp type outlets.”

☞ I think almost anyone comparing the journalistic standards of the New York Times or CBS News with those of the News-Corp-owned New York Post or Fox News (or comparing the Wall Street Journal before and after its transfer to News Corp ownership) would conclude that the former make more of an effort to fulfill their roles as unbiased news sources, independent of the views of their editorial pages.

That you were disappointed to learn of that $1 million contribution suggests that on some level we must have points of agreement. One disagreement: I would dispute that “there just aren’t many News Corp type outlets.” There are, for starters, all the News Corp properties. But then you also have virtually all of talk radio – so anyone who drives anywhere is constantly exposed to the “echo chamber.” And you have hundreds of millions of dollars fueling that echo chamber, and hundreds of visible Republicans in Congress and elsewhere, and Tea Party folks, with easy access to the media and unlimited access to the Internet.

Somehow, 70% of the folks who voted to reelect George W. Bush believed Iraq attacked us on 9/11. Somehow, 18% of Americans think President Obama is a Muslim. I don’t think they’re getting this from CBS or the New York Times. A further 43% don’t know what religion he is. (He’s a Christian.) I don’t have comparable statistics for John Kennedy (where, again, the candidate’s religion was an issue in the campaign), but didn’t the whole country simply know Kennedy was Catholic?

Is it the New York Times and CBS that have contributed to our relative ignorance these days? Or might it possibly be the Karl Rove echo chamber (to shorthand it), of which Fox News is a linchpin?

IRAQ

Just in case you missed the news, U.S. combat troops are now entirely out of Iraq. It’s more complicated than this when you read the whole story; but it’s still something to note and feel good about.

Have a great weekend!

Last Wednesday’s exciting solar-pavement video was one of 50 from “YERT” – Your Environmental Road Trip. I thought you might enjoy watching some more. For example, I’m headed to St. Louis this week – and now have something special to see while I’m there – this art museum of recycled junk.

Basically, I’m taking the day off.

MITCH McCONNELL IS AMUSED

“I am amused with their comments about obstructionism,” [Senate Minority Leader Mitch] McConnell told the New York Times. “I wish we had been able to obstruct more. They were able to get the health care bill through. They were able to get the stimulus through. They were able to get the financial reform through. These were all major pieces of legislation, and if I would have had enough votes to stop them, I would have.”

☞ If only we could go back to the Bush years. That’s the direction we need to go – backwards!

And boosting that agenda . . .

FOX

Imagine CBS giving the Democrats $1 million. Or Super Bowl referees betting on the game. Well, Fox News parent News Corp just gave the Republican Governor’s Association $1 million. Fox News: always looking for a way to give the wealthy and powerful an edge.

WING NUTS

Wayne Seibert: “I live just north of Congressman Inglis’ district, in the same media market, and I watched his campaign with interest. Much of what you and Mother Jones say is true: this district is one of the ten most conservative in the country, and they are not happy. I don’t think a few anecdotes Inglis peddles in this article really discredit the entire Republican Party; I’m positive I could get ten times as many wacky quotes from Maxine Waters’ district, not to mention Barack Obama’s pastor. Inglis blames the yahoos, blames the establishment Repubs, blames everyone but himself, but he would not have had a credible challenge except for one thing – he voted for the bank bailout, without including safeguards against bonuses or perks being siphoned off. I still don’t think you folks in the elite know how grievous a wound that was to Obama’s Presidency, and I really don’t think it’s a right-wing issue. I think it’s more a populist thing, and it really opened a lot of people’s eyes to the fundamental crony-capitalist nature of our political economy that needs radical, hot-headed opposition. When Ronald Reagan was confronted by a similar crisis in the first few months of his administration, he showed what leadership looked like by firing the air traffic controllers who thought they were indispensable. If Obama had forced the AIG and Wall Street greedhogs to put their bonus money in escrow until the bailout funds were repaid he would be on track to being a transformative president. But you don’t get a Ronald Reagan very often.”

☞ I agree with only some of this. First, it’s worth noting that the bank bail-out was a creature of the Bush Administration. The vote was cast in 2008 during the Bush term, at Bush’s request. Though I, too, would have liked to see the legislation be tougher on bonuses and perks, how exactly that gets hung on Obama’s presidency is unclear. (Perhaps the Fox News bias helps explain it?) Second, the push to protect the wealthy is supported almost unanimously by the Republican Party, which has long had as a top priority making permanent its tax cuts for the rich. Third, look what happened when the President got BP to agree to set aside $20 billion for the little guys hurt by Gulf damage claims. Quite a few on the right – but no one I know on the left – attacked this as big government bludgeoning private enterprise.

You’d think most of America would long since have been outraged at the way the Republicans have so successfully skewed the game in favor of the rich and powerful – and that a populist movement would have emerged back when the Administration in power was not on the side of the middle class, as it is now.

And speaking of Ronald Reagan . . .

OUR ECONOMIC QUAGMIRE

One of the founding executives of Cisco offers this economic analysis at the Huffington Post:

The Jobs Crisis: What Hit Us?
Bob Burnett
Posted: August 13, 2010 09:20 AM

The US is stuck in an economic quagmire featuring near ten percent unemployment. As politicians argue about the solution — massive tax cuts or increases in Federal spending — what’s missing is a succinct analysis of the problem. Why has America lost 8 million jobs?

The roots of the jobs crisis stretch back to the Ronald Reagan presidency when conservative economic ideology began to dominate American political discourse. At the forefront of this philosophy were three malignant notions: helping the rich get richer will inevitably help everyone else, “a rising tide lifts all boats;” markets are inherently self correcting and therefore there’s no need for government regulation; and the US does not need an economic strategy because that’s a natural consequence of the free market.

What followed was a thirty-year period where America’s working families were abandoned in favor of the rich. Inequality rose as middle class income and wealth declined. As corporate power increased, unions were systematically undermined. As CEO salaries soared, fewer families earned living wages.

Conservative ideology produced a warped and brittle US economy, where more than two-thirds of our GDP was housing related: building, buying, and furnishing new homes or borrowing against existing homes in order to maintain a decent standard of living. When the credit bubble burst, the debt-based consumption model failed, taking down first the housing sector and then the entire economy, resulting in catastrophic job losses.

In order to be sustainable, the US economy has to generate 125,000 jobs each month. (To bring unemployment down to acceptable levels — below 7 percent — the US economy needs to generate 300,000 jobs each month for the next three years.) For this to happen, there have to be three positive conditions.

First, consumers have to be willing to spend money. Regardless of the conservative ideology, the US economy depends upon steady consumption by working Americans. The Reagan Republican theory incorrectly assumes that rich folks buying yachts and vacation homes catalyzes the consumer economy. Nonetheless, wealthy Americans have as much income as they have ever had but their purchases of Ferraris or diamonds has not been sufficient to boost the economy. Average Americans aren’t consuming because they either don’t have the money or are saving it because they are fearful.

Second, businesses have to be willing to hire. At the moment, many businesses — outside of construction and commercial real estate — have the funds available to hire but they either aren’t hiring or are filling what should be full-time permanent positions with part-time temporary workers.

Third, the new jobs have to be decent jobs paying a living wage. Unfortunately, the Associated Press reported that of the 630,000 jobs created in 2010, 81 percent are low-paying service-sector positions. That’s the sad backdrop to terrible unemployment data.

Since the Reagan presidency the number of decent jobs has steadily eroded. When a worker retires from a GM assembly line, and a job that pays good wages, he isn’t replaced by his son or daughter; they go to work at McDonalds. There was an under-acknowledged “structural adjustment” that meant the US consumer economy could not function unless average Americans went deeply in debt: borrowed up to the limit on their credit cards or used up their home equity.

It’s necessary to understand what went wrong with the US economy because fundamental changes are required to deal with the jobs crisis. So far the political rhetoric has been underwhelming. Republicans blame unemployment on the policies of the Obama Administration and argue the solution is to cut taxes, particularly for the wealthy. Democrats blame unemployment on the policies of the Bush Administration and argue the solution is to increase Federal spending. The New York Times correctly condemned both approaches noting that Republican policies produced the current economic decline and the “cut taxes to solve all problems” clearly does not work. The Times also described the Democratic approach as timid, failing to attack the systemic nature of the problem.

America has economic cancer and radical surgery is required. First, there has to be a massive redistribution of income by increasing taxes on both the wealthy and financial institutions (particularly those that were at the heart of 2008’s economic meltdown).

Second, there has to be a second stimulus package that not only supports America’s teachers and public safety workers but also strengthens the US infrastructure, in general. It’s not logical to propose that American businesses provide better jobs without also ensuring that our schools produce workers who can meet employers’ needs.

Third, the Federal government has to be involved in economic policy. The last thirty years has demonstrated that it’s insane to assume the free market will do this. What we’ve learned is that the market follows the path of least resistance and dictates economic policy solely based on greed. Creating wealth for a handful of CEOs isn’t consistent with the national interest. What are needed now are economic policies that produce decent jobs for average Americans.

The Federal government has to intervene and create the jobs that the greedy, shortsighted private sector hasn’t provided.

☞  I don’t like the word greedy.  It conjures up images of fat little boys taking more than their share of Jujyfruits.  I don’t think CEOs are motivated by greed, I think they’re motivated by a competitive need to excel – to rack up a high score.  But because that score is expressed in terms of their own wealth and perks, you can see how some critics might mistake it for greed.  Whatever their motivation, CEO pay packages do not take fully into account the “externalities” – costs their actions impose on the rest of us – and thus fail to keep their interests from being adequately aligned with the greater good.  So either we have to “price those in” somehow, or impose regulation, or both.

DCTH

Guru:  “So the good news is that DCTH, after this sale of new shares, will have the cash it needs to get through the approval and early launch of its product.  The bad news is that, the way the company was talking a couple of weeks ago, the idea was to generate enough cash from an Asian deal not to have to raise equity cash immediately.  It must be taking longer than they thought a couple of weeks ago.  No reason to assume it won’t happen – they already have a deal in Taiwan, so this would be for other countries.  Still, would have been nice for an Asian partnership to be the next news item.”

☞  Hang on.

ENERGY INDEPENDENCE

Cal Hullihen: “As a follow-up to your video on Solar Panels in Pavement, I was really impressed by this video clip of what Cool Planet Biofuels is doing. Additionally, the work that Shai Agassi is doing with battery powered vehicles.”

☞ This is all so hopeful. We really can get to energy independence and sustainability. Cool Planet Biofuels plans to put container-size “biofractionator” near the corncobs that would otherwise be plowed under and convert them, instead, to gasoline and carbon fertilizer. The cost, they say, would be well below today’s gasoline price; and the process actually takes carbon out of the air, “sequestering” it in the soil.

So it’s a matter of (a) funding/deploying new technologies like this, and their successors (which the Department of Energy is encouraging); (b) getting from here to there; (c) learning to live with each other, as a species, to share the prosperity.

EMIS – TSURIS

Yesterday’s press release highlighted the riskiness of this speculation. (“EMIS may absolutely lose every penny you invest,” I wrote last week, “but Guru thinks the risk/reward at $1.25 is good. If you have profits in some of his other suggestions, maybe take a little for a small gamble here?”)

Guru notes: “Yes, EMIS is about out of money. They’ve been this way for a year. Supposed to be just on the verge of a B12 partnership – but not yet as you see in the press release. Data on Phase III calcitonin for osteoporosis is out next year. Meanwhile, the stock is likely to remain under pressure. A sad tale of misused resources. The published data suggest the osteoporosis trial should show good results – with all the usual caveats. We know calcitonin is an effective product for osteoporosis. Their data indicate that they are giving doses orally that are at or above the injected doses that work [and most people would prefer a pill to a shot]. Owning the stock here is like owning an out-of-the-money option. Most expire worthless, but some don’t.”

VOTE FOR SOLAR ROADWAYS

I’m telling you, this is so cool:  Pave not with petroleum based asphalt but with sand-based photovoltaic panels – one giant electric grid.  If you haven’t already, watch last week’s video.  Then consider voting for the three game-changing ideas here.  You have to register with GE’s Ecomagination Challenge but it takes just a minute; and right now, the ideas are so close to snagging GE’s seed money – with just a few hundred votes for each idea, your vote could actually make a difference.  Not to say I’ve evaluated all the other ideas competing for GE’s dough (or have the competence to do so).  But some of you are awfully good at this stuff.  Take a look!  You can vote for all the ideas you like.

VOTE FOR MOVING FORWARD

I know politics is tacky and simplistic.  But the broad themes are clear and real:  The Republicans really have tried to block everything the President has done.  The President really is leading the country forward – on education, on energy, on health, on financial reform.  Here he asks us to choose DRIVE over REVERSE this November.

Spread the word.  Make the choice.

DETROIT

To those who lambasted the Obama Administration for throwing Detroit a lifeline (aka “bailout” aka “nationalization”), this may be worth a read – “Jobs are growing.  Factory workers are anticipating their first healthy profit-sharing checks in years.  Sales are rebounding . . .”   Uncle Sam’s 61% stake in GM may turn out to have been a good investment for the taxpayer.

. . . Detroit has vowed to change before, slimming down when sales slumped or pouring resources into vehicle quality to catch up to foreign competitors. Those efforts stalled or failed. But many auto analysts say the current makeover has a more permanent feel, largely because of the presence of the outsiders at the top and the lessons learned from the near-death experience of last year’s bankruptcies at G.M. and Chrysler.

Ford’s chief executive, Alan R. Mulally, broke the mold four years ago when he came from Boeing and set out to streamline Ford’s bureaucracy and integrate its worldwide operations. At G.M., Edward E. Whitacre Jr., a former AT&T chief, has replaced dozens of top officials with outsiders and younger executives, and driven the company to make decisions faster.  Those efforts are likely to be accelerated under Daniel F. Akerson, who was named on Thursday to succeed Mr. Whitacre as chief executive in September.

And at Chrysler, Mr. Marchionne, an Italian raised in Canada who is both a lawyer and an accountant, is systematically upgrading the carmaker’s aged product lineup and revamping its plants in Fiat’s image.

“Fundamentally this thing has been reshaped, resized and rethought,” Mr. Marchionne said of Detroit. . . .

☞  I want a Chevy Volt.  I just need a place to plug it in, and a reason to drive it.

THANKS, LESS

Re yesterday’s ETF comments from Less Antman . . . Kirk Elliot: “I think Less Antman offers great advice. I go to the ‘Ask Less’ link [at left] all the time and also subscribe to his free newsletter ‘Simply Rich.’ I have a Target Date Fund in my 401(k) account that includes a slice of a commodities fund, which is a good inflation hedge I think (one of the ‘four prongs’ as you say). Please tell Less thanks for his free advice, it is much appreciated by us commoners.”

IMPEACH!

Joe Devney: “I saw the interviews you linked to in Tuesday’s column, and I’m not surprised that someone is calling for Judge Walker’s impeachment. Tony Perkins seemed to believe that a judge had no right to strike down Prop 8 because millions of people voted for it. How can he have so little understanding of how things work? A couple of months ago I read an article on a conservative website about President Obama being a criminal because he is using a Social Security number issued in Connecticut. (No indication of how the people making the accusation know the president’s SSN.) Some of the commenters thought he should be impeached, but didn’t seem to know a thing about the process. ‘Maybe I’ll write to Hillary and see if she will start the process.’ Doesn’t he know that Hillary Clinton is no longer in Congress, and Barack Obama is now her boss? ‘Let’s write to the Supreme Court and tell them to impeach him.’ What? Impeachment is done by Congress, and the Supreme Court doesn’t initiate the cases that come before it. ‘He should have been impeached on day one.’ How could he be impeached within hours of being sworn in? He wouldn’t have had time to commit any high crimes or misdemeanors in office, so there could be no grounds for impeachment.”

WHEN THE CONSERVATIVES MEET THE WING NUTS

How I miss William F. Buckley, Jr. Even Ronald Reagan, I think, would be horrified by what’s happened to “conservatism.” Here, in Mother Jones, is the totally absorbing story of a Congressman with a 93% lifetime approval rating from the American Conservative Union who was massacred 71% to 29% in his primary by a Tea Party candidate for, basically, being too honest and thoughtful. Too responsible.

Most of the more colorful socialist / racist / conspiracy stuff is near the beginning of the piece. It would be funny if it weren’t so scary.

This more substantive part comes near the end:

. . . As an example of both the GOP pandering to right-wing voters and conservative talk show hosts undercutting sensible policymaking, Inglis points to climate change. Fossil fuels, he notes, get a free ride because they’re “negative externalities”—that is, pollution and the effects of climate change—”are not recognized” in the market. Sitting in front of a wall-sized poster touting clean technology centers in South Carolina, Inglis says that conservatives “should be the ones screaming. This is a conservative concept: accountability. This is biblical law: you cannot do on your property what harms your neighbor’s property.” Which is why he supports placing a price on carbon—and forcing polluters to cover it.

Asked why conservatives and Republicans have demonized the issue of climate change and clean energy, Inglis replies, “I wish I knew; then maybe I wouldn’t have lost my election.” He points out that some conservatives believe that any issue affecting the Earth is “the province of God and will not be affected by human activity. If you talk about the challenge of sustainability of the Earth’s systems, it’s an affront to that theological view.”

Inglis voted against the cap-and-trade climate legislation, believing it would create a new tax, lead to a “hopelessly complicated” trading scheme for carbon, and harm American manufacturing by handing China and India a competitive edge on energy costs. Instead, he proposed a revenue-neutral tax swap: Payroll taxes would be reduced, and the amount of that reduction would be applied as a tax on carbon dioxide emissions—mainly hitting coal plants and natural gas facilities. (This tax would be removed from exported goods and imposed on imported products—thus neutralizing any competitive advantage for China, India, and other manufacturing nations.)

Here was a conservative market-based plan. Did it receive any interest from House GOP leaders? Inglis shakes his head: “It’s the t-word.” Tax. He adds, “It’s so contrary to the rhetoric we’ve got out there, to what Beck, Limbaugh, and others are saying.”

For Inglis, this is the crux of the dilemma: Republican members of Congress know “deep down” that they need to deliver conservative solutions like his tax swap. Yet, he adds, “We’re being driven as herd by these hot microphones—which are like flame throwers—that are causing people to run with fear and panic, and Republican members of Congress are afraid of being run over by that stampeding crowd.” Inglis says that it’s hard for Republicans in Congress to “summon the courage” to say no to Beck, Limbaugh, and the tea party wing. “When we start just delivering rhetoric and more misinformation…we’re failing the conservative movement,” he says. “We’re failing the country.” Yet, he notes, Boehner and House minority whip Eric Cantor have one primary strategic calculation: Play to the tea party crowd. “It’s a dangerous strategy,” he contends, “to build conservatism on information and policies that are not credible.”

☞ I’ve written about Bob Inglis before – you can watch him on C-SPAN. But this profile in the current Mother Jones is worth the read. (Thanks, Kevin.)

PAVEMENT II

Yesterday I offered this exciting video about paving roads with solar panels.

Meanwhile, Rachel Maddow was running her own decidedly less upbeat paved-roads segment.

Under the heading, “Unpaved: Out-Of-Cash America Undoing Its Infrastructure,” Dave Johnson blogs:

In case you missed Rachel Maddow Monday night, she had a segment on American cities and counties actually undoing their infrastructure because they are out of money. She listed city after city across the country that is shutting off its streetlights, turning paved roads into gravel, shutting down bus systems, shutting down schools, firing police, and other steps to save money.

To me, the most striking comment was, “Somewhere in China it is entirely possible that a businessperson sat down for a ride on a 200mph state-of-the-art levitating bullet train, and cracked open the Wall Street Journal, and read about how in American we’ve decided we can’t afford paved roads anymore.”

JPMORGAN – WHAT ARE YOU DOING?

According to my friend Janet Tavakoli, here, JP Morgan Chase is a giant commodities speculator (losing, most recently, hundreds of millions of dollars on coal). And this is appropriate for a bank . . . how?

CHEAP +AND+ GAY?

Zac Bissonnette: “OK, so there are two things about this that you wouldn’t normally see: A piece about a gay couple in a magazine for senior citizens; a pair of frugal gay men. It’s written by my friend Jeff Yeager, whose new book The Cheapskate Next Door is quite good.”

☞ Can I just say what a nice thing this is? A long time ago, I wrote about the “hohumization” of the whole gay thing. (Like: who cares?) We’re not there yet, to be sure. But when “the world’s largest-circulation magazine” runs a piece like this (why not? who cares?), it’s one more sign of progress.

ETFs

Greg Stroud: “I double checked the archives and can’t find a recent ETF article. I thought ETFs would be ideal ways to get into certain areas (like gold) but with the ease of just buying a stock. But recently I heard ETFs can have surprising tax bills based on how they are structured and surprising problems (like contango).”

☞ Two things you definitely need not know about are contango and backwardation, which is why I never remember what they are – and turn in such matters to Less Antman, who knows everything:

ETFs are just closed-end mutual funds whose issuers minimize discounts and premiums by the judicious issuance and redemption of large units of the underlying securities: there are no special tax issues related to them. [This much I knew.] However, some ETFs invest in exotic instruments that have special tax issues related to them, and the ETFs have the same treatment as those underlying investments. Plain vanilla ETFs that invest in stocks and bonds are no more complicated than any other mutual fund.

For a discussion of the tax complications associated with commodity, leveraged, and inverse ETFs, I recommend this fine article by Paul Justice of Morningstar. Justice, not being a tax professional, does as good a job as can be done in translating the applicable tax rules into English.

Contango is a word that many people are learning for the first time from a recent Business Week article trashing commodity funds (unfairly, in my view, but that’s another subject entirely). It refers to the very natural tendency of most commodity futures contracts to trade at values higher than the underlying commodity, because the owner of the futures contract doesn’t have the storage costs associated with holding the commodity itself. I assure you that it is far less expensive and far more pleasant to have a six month pork belly futures contract in your possession than to have the pork bellies themselves for half a year.

On the other hand, there is also a reason for commodity futures contracts to sell for less than the underlying commodity, because these contracts are typically sold by the producers of the commodities in order to protect themselves against the devastating consequences of a drop in the price of the product they sell, and the buyers of insurance are willing to pay something for the value of that insurance. If the insurance value to the producer is high enough, the net effect can even be for the futures contract to sell for less than the spot commodity, and this is called backwardation (I have no idea why it isn’t called protango).

Complicating all this is the fact that virtually all commodities are expected to fluctuate in value on a seasonal basis, or for other reasons, and the futures contract has no reason whatsoever to sell for the same price as the commodity itself today. Indeed, the very point of futures speculation is to anticipate fluctuations in prices and thereby avoid future surpluses and shortages and reduce price volatility. There is plenty of evidence that speculation does, in fact, reduce volatility: the one commodity on which commodities trading is prohibited, onions, suffers from larger fluctuations and supply/demand imbalances than other commodities. (If you’re wondering why onion futures are banned, it was because of special interest legislation pushed in 1958 by a farm state Congressman named Gerald Ford. The history of the legislation would bring tears to your eyes).

The reason to include commodity-based investments in a portfolio is that radical changes in commodity prices have a tendency to destabilize the business environment and hurt stocks; so commodities have tended to do well when stocks have been doing poorly, and vice versa. Indeed, 2008 was the first year in which both the S&P 500 and the Reuters Continuous Commodity Index suffered double-digit losses, and those indexes go back more than a half century. The losses and gains from contango and backwardation are dwarfed by the diversification benefit of commodity futures, in my opinion.

The bottom line is that ETFs are nothing special, but some investments held in them are.

SOLAR ROADWAYS

According to this video, 25,000 square miles of U.S. roads and highways absorb the sun’s rays. If we paved a third of that with solar-panels, we’d meet all our electricity needs without burning a single lump of coal. And this guy has a plan. It’s the most exciting video – or certainly the most exciting road-surface video – you will see all year. (Thanks, Ed!)

HIS BAR WILL HAVE BETTER MUSIC

Thanks to The Daily Beast for pointing me to this story: the Fox News guy planning to open a gay bar next to the Ground Zero mosque.

EMIS

Want another truly, truly speculative little drug stock? EMIS may absolutely lose every penny you invest; but guru thinks the risk/reward at $1.25 is good. If you have profits in some of his other suggestions, maybe take a little for a small gamble here?

RANGEL

Last week, I posted this New York Sun piece to the effect that Charlie Rangel is being railroaded.

Herewith the Washington Post:

Charlie Rangel is No Crook
By Eugene Robinson
Washington Post
August, 5, 2010 p. A17

Charlie Rangel is no crook. He’s right to insist on the opportunity to clear his name, because the charges against him range from the technical all the way to the trivial.

All right, there’s one exception: On his federal tax returns, Rangel failed to declare rental income from a vacation property he owns in the Dominican Republic — a mortifying embarrassment for the one-time chairman of the House Ways and Means Committee, which writes the tax code. But certain facts about this transgression rarely get mentioned. For one thing, Rangel’s so-called “villa” can’t be very palatial, since it cost only $82,750 when he bought it in 1987. For another, Rangel has already filed amended tax returns and paid everything he owed, plus penalties and interest.

The remaining charges are yawn-inducing. Even assuming that the allegations, as presented to the House Ethics Committee, are wholly true, the case against Rangel has a Gertrude Stein problem: There’s no there there.

☞ In much more detail, but actually quite fascinating, Congressman Rangel’s own response to the Ethics Committee: here. (As someone who follows the ins and outs of rent-stabilized versus rent-controlled apartments, I found the stuff on Apartment 10U particularly interesting and, at least as presented, exculpatory.)

One snip:

Congressman Rangel helped a public college in his Congressional district to establish and fund an academic program in public service for disadvantaged students [horrors!]. To support that effort, he agreed to donate his official papers, allowed the school to name the program in his honor and introduced college officials to potential donors [none of whom had pending matters before his committee] [horrors!]. Congressman Rangel is hardly the only member of the Congressional leadership to engage in such activity. Senate Minority Leader McConnell, for example, has donated his official papers, lent his name and raised millions of dollars from corporate donors to launch the McConnell Center for Political Leadership at the University of Louisville . . .

☞ No one is saying Rangel made no errors. All of us make errors – or, if we’re hugely busy, have staffs that make errors on our behalf. We need to apologise for them and make them good – as Charlie Rangel has. And then move on.

Tomorrow: ETFs (sorry, got bumped by that not-to-be-missed Solar Roadway video)