Sorry – I know I promised Municipal Bonds and Smelly Cat, but fat cats and catlovers will just have to wait until tomorrow, because Paul Krugman’s New York Times column yesterday and a heavily-bleeped CBS Evening News Report last night, if you missed them, are far more important.
Start with Krugman. I’ve bolded parts, but with so much at stake I hope you can find time to read it all – and if it strikes you as it strikes me, pass it on to everyone you know.
June 1, 2004
Dooh Nibor Economics
By PAUL KRUGMAN
Last week The Washington Post got hold of an Office of Management and Budget memo that directed federal agencies to prepare for post-election cuts in programs that George Bush has been touting on the campaign trail. These include nutrition for women, infants and children; Head Start; and homeland security. The numbers match those on a computer printout leaked earlier this year – one that administration officials claimed did not reflect policy.
Beyond the routine mendacity, the case of the leaked memo points us to a larger truth: whatever they may say in public, administration officials know that sustaining Mr. Bush’s tax cuts will require large cuts in popular government programs. And for the vast majority of Americans, the losses from these cuts will outweigh any gains from lower taxes.
It has long been clear that the Bush administration’s claim that it can simultaneously pursue war, large tax cuts and a “compassionate” agenda doesn’t add up. Now we have direct confirmation that the White House is engaged in bait and switch, that it intends to pursue a not at all compassionate agenda after this year’s election.
That agenda is to impose Dooh Nibor economics – Robin Hood in reverse. The end result of current policies will be a large-scale transfer of income from the middle class to the very affluent, in which about 80 percent of the population will lose and the bulk of the gains will go to people with incomes of more than $200,000 per year.
I can’t back that assertion with official numbers, because under Mr. Bush the Treasury Department has stopped releasing information on the distribution of tax cuts by income level. Estimates by the Urban Institute-Brookings Institution Tax Policy Center, which now provides the numbers the administration doesn’t want you to know, reveal why. This year, the average tax reduction per family due to Bush-era cuts was $1,448. But this average reflects huge cuts for a few affluent families, with most families receiving much less (which helps explain why most people, according to polls, don’t believe their taxes have been cut). In fact, the 257,000 taxpayers with incomes of more than $1 million received a bigger combined tax cut than the 85 million taxpayers who make up the bottom 60 percent of the population.
Still, won’t most families gain something? No – because the tax cuts must eventually be offset with spending cuts.
Three years ago George Bush claimed that he was cutting taxes to return a budget surplus to the public. Instead, he presided over a move to huge deficits. As a result, the modest tax cuts received by the great majority of Americans are, in a fundamental sense, fraudulent. It’s as if someone expected gratitude for giving you a gift, when he actually bought it using your credit card.
The administration has not, of course, explained how it intends to pay the bill. But unless taxes are increased again, the answer will have to be severe program cuts, which will fall mainly on Social Security, Medicare and Medicaid – because that’s where the bulk of the money is.
For most families, the losses from these cuts will far outweigh any gain from lower taxes. My back-of-the-envelope calculation suggests that 80 percent of all families will end up worse off; the Center on Budget and Policy Priorities will soon come out with a more careful, detailed analysis that arrives at a similar conclusion. And the only really big beneficiaries will be the wealthiest few percent of the population.
Does Mr. Bush understand that the end result of his policies will be to make most Americans worse off, while enriching the already affluent? Who knows? But the ideologues and political operatives behind his agenda know exactly what they’re doing.
Of course, voters would never support this agenda if they understood it. That’s why dishonesty – as illustrated by the administration’s consistent reliance on phony accounting, and now by the business with the budget cut memo – is such a central feature of the White House political strategy.
Right now, it seems that the 2004 election will be a referendum on Mr. Bush’s calamitous foreign policy. But something else is at stake: whether he and his party can lock in the unassailable political position they need to proceed with their pro-rich, anti-middle-class economic strategy. And no, I’m not engaging in class warfare. They are.
Copyright NY Times 2004
And just when you thought the cynicism could grow no more offensive, here is a transcript of a report from last night’s CBS Evening News. (If you have broadband, you can watch it.)
You will recall that shortly after the 2000 election, in which California voted overwhelmingly for Gore and Texas overwhelmingly for Bush, an ‘energy crisis’ sprang up in California that siphoned billions of dollars from California to Texas. Naturally, the Bush Administration maintains this is just coincidence. And if memory serves, in the early hours of the brewing Enron scandal, President Bush was said not really even to know Enron chief Ken Lay, except to have met him a few times. That, of course, proved wildly off the mark.
You will also recall that an Energy Task Force, convened by former Halliburton CEO Dick Cheney, met in such secrecy in those early months that even a lawsuit from the General Accounting Office could not pry loose the names of the attendees. And we still don’t know who they were or what they discussed.
Anyway, let’s go to the videotip. I find it hard to believe there is not an iceberg below.
(CBS) When a forest fire shut down a major transmission line into California, cutting power supplies and raising prices, Enron energy traders celebrated, CBS News Correspondent Vince Gonzales reports.
“Burn, baby, burn. That’s a beautiful thing,” a trader sang about the massive fire.
Four years after California’s disastrous experiment with energy deregulation, Enron energy traders can be heard – on audiotapes obtained by CBS News – gloating and praising each other as they helped bring on, and cash-in on, the Western power crisis.
“He just f—s California,” says one Enron employee. “He steals money from California to the tune of about a million.”
“Will you rephrase that?” asks a second employee.
“OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day,” replies the first.
The tapes, from Enron’s West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down.
“If you took down the steamer, how long would it take to get it back up?” an Enron worker is heard saying.
“Oh, it’s not something you want to just be turning on and off every hour. Let’s put it that way,” another says.
“Well, why don’t you just go ahead and shut her down.”
Officials with the Snohomish Public Utility District near Seattle received the tapes from the Justice Department.
“This is the evidence we’ve all been waiting for. This proves they manipulated the market,” said Eric Christensen, a spokesman for the utility.
That utility, like many others, is trying to get its money back from Enron.
“They’re f——g taking all the money back from you guys?” complains an Enron employee on the tapes. “All the money you guys stole from those poor grandmothers in California?”
“Yeah, grandma Millie, man”
“Yeah, now she wants her f——g money back for all the power you’ve charged right up, jammed right up her a—— for f——g $250 a megawatt hour.”
And the tapes appear to link top Enron officials Ken Lay and Jeffrey Skilling to schemes that fueled the crisis.
“Government Affairs has to prove how valuable it is to Ken Lay and Jeff Skilling,” says one trader.
“Do you know when you started over-scheduling load and making buckets of money on that?
Before the 2000 election, Enron employees pondered the possibilities of a Bush win.
“It’d be great. I’d love to see Ken Lay Secretary of Energy,” says one Enron worker.
That didn’t happen, but they were sure President Bush would fight any limits on sky-high energy prices.
“When this election comes Bush will f——g whack this s–t, man. He won’t play this price-cap b——t.”
Crude, but true.
“We will not take any action that makes California’s problems worse and that’s why I oppose price caps,” said Mr. Bush on May 29, 2001.
Both the Justice Department and Enron tried to prevent the release of these tapes. Enron’s lawyers argued they merely prove “that people at Enron sometimes talked like Barnacle Bill the Sailor.”
©MMIV, CBS Broadcasting Inc. All Rights Reserved.
Tomorrow: Municipal Bonds and Smelly Cat
Quote of the Day
On the day of the 1983 economic summit, James A. Baker 3rd, then chief of staff, realized Mr. Reagan had not read his briefing book. When Mr. Baker asked why, Mr. Reagan responded, 'Well, Jim, The Sound of Music was on last night.'~Professor Herbert S. Parmet reviewing President Reagan: The Role of a Lifetime
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